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Popular Posts
Cigna Sued for RICO Violations, “Brazen Embezzlement and Conversion Scheme” -Health Plan Litigation Tsunami: Part 2
January 3, 2020- UnitedHealthcare Class Action-UHC Sued for Overpayment Offsets in Violation of ERISA and for Misleading Patients and Plan Sponsors
July 11, 2014 Aetna Class Action-Aetna Sued for Overpayment Offsets in Violation of ERISA and for “Illegal Self Help” Designed to Circumvent ERISA
October 29, 2014
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…