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As One Door Potentially Closes, Another, More Substantial Door Opens For Self-Insured Health Plans
The January 20, 2016 Supreme Court Montanile decision potentially limits ERISA plan rights to subrogation lien recovery, but also potentially rewards trillions of dollars in plan assets recovery for all self-insured ERISA plans nationwide, from cross plan overpayment recoupments and offsets done by plan TPAs. All self-insured health plans should understand the Montanile decision’s trillion dollar impact.
The Supreme Court Montanile decision on January 20, 2016 limits an ERISA plan rights to subrogation lien recovery, but this decision also ensures potentially trillions of dollars in plan assets recovery for all self-insured ERISA plans nationwide, from all cross plan overpayment recoupments and offsets by plan TPA’s, as the Supreme court ruled: “[t]his rule applied to equitable liens by agreement as well as other types of equitable liens“.
The Supreme Court Montanile decision also limits and prohibits self-insured plan TPA’s from offsetting or converting self-insured plan claims payments into the TPAs own fully-insured account, for any alleged overpayments made from the TPA’s fully-insured plans, by claiming equitable relief under ERISA §502(a)(3);
While the case potentially limits ERISA plan rights to subrogation lien recoveries, the entire auto or personal injury subrogation lien market is relatively insignificant compared to the trillion dollar overpayment recoupment and offset market nationwide that exists within the $3.5 trillion in national healthcare expenditures.
Avym Corporation announces new, 2016 self-insured ERISA plan assets auditing and recovery projects, which are open to all large and medium self-insured ERISA plans, in order to (a) brainstorm, assess and realize the immediate true economic value of the Supreme Court Montanile decision; (b) immediately audit the plan assets for any possible conversion, embezzlement from the plan TPA’s cross plan overpayment recoupment or offset; (c) immediately recover or restore the plan assets under the Supreme Court Montanile decision and as required under ERISA statutory duties.
Supreme Court case info: Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, case #: 14-723, January 20, 2016
Supreme Court link to PDF copy.
Based on federal court documents and leading healthcare experts, billions of self-insured health plan claims assets may have been recouped or offset in order to satisfy alleged overpayments of fully insured plan claims.
Although the Supreme Court’s Montanile decision may have limited a plan’s right in the relatively small PI subrogation lien market, it has fundamentally and profoundly changed the landscape for medical claim overpayment offsets and recoupments, across separate plans and members, by self-insured plan co-fiduciary TPAs, in a practice otherwise known as “embezzlement ATM operations”
According to the Court Documents, the Supreme Court ruled:
- “Plan fiduciaries are limited by §502(a)(3) to filing suits “to obtain … equitable relief.“
- “[A]s here, an equitable lien by agreement, only against specifically identified funds that remained in the defendant’s possession or against traceable items that the defendant purchased with the funds.“
- “If a defendant dissipated the entire fund on items, the lien was eliminated and the plaintiff could not attach the defendant’s general assets instead.“
- “The Board’s arguments in favor of the enforcement of an equitable lien against general assets are unsuccessful. does not contain an exception to the general asset-tracing requirement for equitable liens by agreement.“
- “In sum, at equity, a plaintiff ordinarily could not enforce any type of equitable lien if the defendant once possessed a separate, identifiable fund to which the lien attached, but then dissipated it all. The plaintiff could not attach the defendant’s general assets instead because those assets were not part of the specific thing to which the lien attached.“
- “This rule applied to equitable liens by agreement as well as other types of equitable liens.“
The Supreme Court Montanile decision makes it perfectly clear, any alleged overpayment lien of a fully-insured plan cannot attach to a different, self-insured plan fund or claims payment and it’s a basic principle of ERISA that a TPA for a self-insured plan is absolutely barred from converting claims payment of plan assets from the self-insured plan to pay for an alleged overpayment lien and retain all recovery for its own fully-insured account, and can be viewed as self-dealing and embezzlement.
The only question now is whether self-insured plan fiduciaries will take immediate corrective actions to safeguard plan assets or wait till the DOL knocks on their door with an audit alert.
Ironically, the Supreme Court’s Montanile decision also protects the respondent, the Board of Trustees of the National Elevator Industry Health Benefit Plan, from any and all offsets or patient embezzlements based on alleged overpayments to non-National Elevator Industry Health Benefit Plan members.
Over the past 6 years, Avym has closely followed the decisions from the Supreme Court and federal appeals courts on ERISA prohibited self-dealing against ERISA plan TPA’s for managed care savings. These new ERISA embezzlement cases are just the initial impact of the court’s Hi-Lex decisions. This lawsuit in particular should serve as a warning and wake up call for all Plan Administrators to continually monitor their TPAs in accordance with the Plan Administrator’s statutory fiduciary duties and to discharge its duties with respect to a plan solely in the interest of the participants for the exclusive purpose of providing benefits to them.
Avym Corp. has been at the forefront and advocated for ERISA plan assets audit and embezzlement recovery education and consulting. Now with the Supreme Court’s guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs click here.
Your blog post somewhat explains what’s going on in this case but it would be helpful if you could put the court’s statements in plain English. Further, explain with specific examples in layman’s language what sorts of things are going on that could be stopped. This is still filled with industry jargon and legalese that is tough to process for mere mortals.
Dave,
Thanks for reading. The SC Montanile decision limited a plan’s right of recovery in the relatively small Personal Injury subrogation lien market, but it had a colossal effect on the nation’s #1 type of health care claim denial, cross-plan “Overpayment Recoupments or Offsets”. Correspondingly, for self-insured health plans, the No. 1 hidden cost is overpayment recoupment and plan assets embezzlement.
The Supreme Court (SC) Montanile case was a decision regarding a typical third party subrogation case. I won’t go into all the details, but the case involved an unlucky defendant named Robert Montanile, who was hit by a drunk driver and suffered severe injuries. While Mr. Montanile settled with the driver who injured him, those monies were insufficient to cover his medical bills and other necessary expenses. Nonetheless, Mr. Montanile’s health plan (employer) sued him, demanding that he personally reimburse it for the six figures in medical bill expenses it had paid for on his behalf. Before this case the circuit courts of appeal were split on whether ERISA allowed a plan to obtain reimbursement (recoupment) in those and similar circumstances” so an answer was needed, In other words, could the (employer) health plan go after the member general assets to recoup monies the health plan paid for the members medical bills? http://strismaher.com/case-study/montanile/
Information on terms and processes.
(Cross-Plan) Overpayment Recoupments or Offsets: This is when a TPA (insurance carrier) takes money (plan assets) that should be used to pay member claims form health plan A but instead uses that money to pay for debts or alleged overpayments of another complete separate health plan B. Thus it is called cross plan recoupments or offsets because the recoupment or offset occur across different and separate plans regardless if from plan A to plan B or plan B to plan A.
An “overpayment recoupment or offset” is typically done when a TPA (usually insurance carrier) unilaterally decides they overpaid on a specific patient claim on health plan A. The TPA ins. company then takes, offsets, or recoups money from a completely separate patient claim and or separate employer health plan B, to cover the cost of the alleged “overpayment” from health plan A.
This usually happens and hurts (employer) self –insured health plans when these “overpaid” claims are from the TPA’s (insurers) own fully insured plan account where the (carrier is responsible for claims payments not the employer). The TPA then acts as judge, jury and executioner by withholding or “Offsetting” recouping self-insured member claims monies (employer health plans monies that the TPA controls). The TPA then keeps or siphons the (employer) self-insured plans funds into its own TPA fully insured account. To make matters worse, the self-insured (employer) health plan has no idea their funds were re-directed into the TPA’s own account! In some instances the TPA alleges an “overpayment” on an (employer) self-insured plan A claim. In that instance, the TPA does the exact same thing, and recoup or offset from (employer) health plan B except they never return any of the “offset” recouped money from employer health plan B to the (employer) self-insured plan A (whose claims were allegedly overpaid to begin with). This recouped or offset money is kept by the TPA (insurance carrier).
As you can now see there are billions of monies that should be returned to (employer) self-insured health plans.
http://avym.com/health-providers-seek-level-playing-field-against-insurers-in-overpayment-recoupment-battle-rely-on-erisa-for-protection-in-claim-disputes/
The Supreme Court Montanile decision limits and prohibits self-insured plan TPA’s from offsetting or converting self-insured plan claims payments into the TPAs own fully-insured account, for any alleged overpayments made from the TPA’s fully-insured plans, by claiming equitable relief under ERISA §502(a)(3); Thus, the Montanile ruling set a precedent for Overpayment Offsets or Recoupments; ERISA health plans (or TPAs) cannot sue to recover medical expenses paid on the participant’s behalf after the settlement funds have dissipated. The Plan cannot attach the provider’s general assets as a substitute. Furthermore, ERISA does not contain an exception to the general asset-tracing requirement for equitable liens by agreement. This ERISA lien law applies to equitable liens by agreement as well as other types of equitable liens
Ultimately, The SC Montanile decision ruled that a plan cannot sue under ERISA for reimbursement of medical expenses ($$$) from a third-party settlement that has been already spent. In other words, the plan, National Elevator, could not recover the medical expenses from the patient, Montanile’s general assets because it would not amount to equitable relief under law. Specifically, the SC held “We hold that, when a participant dissipates the whole settlement on nontraceable items, the fiduciary cannot bring a suit to attach the participant’s general assets under [ERISA] because the suit is not one for appropriate equitable relief…”[t]his rule applied to equitable liens by agreement as well as other types of equitable liens”, according to the opinion. http://webcache.googleusercontent.com/search?q=cache:7mO4hbIVcOQJ:www.law360.com/articles/748487/justices-say-erisa-plan-can-t-chase-spent-settlement-funds+&cd=1&hl=en&ct=clnk&gl=us
Let’s see if I understand this. Cigna overpaid Charity Hospital for services provided to an employee of employer A. Thereafter, Charity Hospital provided services to an employee of employer B. Cigna does not pay Charity Hospital for these services. Instead, Cigna puts the money it would have paid to Charity Hospital for these services into Cigna’s own bank account. It is not clear to me what the court thinks should happen here. I can see two possibilities: 1.Cigna does not pay Charity Hospital and does not charge employer B’s account, in which case Charity Hospital will presumably sue employer B and the patient for non – payment. 2. Cigna pays Charity Hospital using employer B’s funds. I think that the answer has to be number 2. It should be noted that, after overpaying Charity Hospital for services provided to the employee of employer A, Cigna would have to pay back that money. The only way I can see the recoupment provision working is if employer B is fully insured and Cigna indemnifies the employee against any claim by Charity Hospital.
Santiago,
Thanks again for reading and taking time to comment. Using your hypothetical example and consistent with court cases, these are “ALLEGED” overpayments and as such, the carrier MUST allow the provider/member the right to appeal before 1 penny is refunded. Part of the appeal process is to ensure no conflict of interest, where the carrier processes, prices, pays and makes the determination they overpaid, in essence they are judge, jury and executioner all in one. This practice of offsetting, as you know, has already been determined to be an “ongoing conflict of interest” by at least one federal court. Lastly, to your final point, I don’t know how Cigna can indemnify the patient of Charity Hospital’s claims when the hospital is an out-of-network provider. Even if they could figure out a way to indemnify the patient, under ERISA, any cross-plan offsets are simply not allowed and barred as a prohibited transaction. Cross plan offsets may also trigger Plan/Co-Fiduciary liabilities for other violations such as self-dealing, conversion of plan assets, breach of fiduciary duty etc…