Archives 2012

Aetna Overpayment ERISA Class Action: DOL Advises Court That Aetna Must Comply with ERISA

On November 30, 2012 the Department of Labor (DOL), filed an Amicus Brief in the Court of Appeals for the Third Circuit in support of plaintiff providers in an overpayment ERISA class-action.  The DOL’s position on the pertinent issues includes:

  1. Aetna must comply with federal law ERISA for all post-payment overpayment demands due to ERISA plan coverage dispute guidelines;
  2. A healthcare provider with a valid assignment has federal rights to ERISA appeals and lawsuit in federal court;
  3. Post-payment, retroactive, overpayment demand is an ERISA adverse benefit determination, triggering full and fair reviews guaranteed under ERISA;
  4. Aetna’s hypothetical state law claims of fraud may not short-circuit federal ERISA procedural protections for both in-network and out of network providers and patients.

Avym Corporation will offer webinars, advanced trainings and litigation support to assess this DOL action for all healthcare providers.

According to the Court documents, the DOL advised the Court in part: “The crux of the question at issue here is not whether the plaintiff or the defendant is correct in their views of the plan terms, but whether Aetna must comply with the procedures mandated by ERISA section 503 and its accompanying regulations in rendering a determination based on a plan interpretation that is adverse to the plan participants and beneficiaries. Under the statute and regulations, the beneficiary or participant is entitled to a claims procedure that “afford[s] a reasonable opportunity . . . for a full and fair review by the appropriate named fiduciary of [a] decision denying [a] claim,” 29 U.S.C. §1133, and can then appeal the denial in federal or state court.” ….“Application of this term to “any” “reduction” or “termination,” and the reference to ” any utilization review” with respect to group health plans, makes plain that the claims regulations apply to post-payment, or retroactive, denials of health benefits.”

This is the first time the federal government has effectively clarified and interpreted federal law ERISA as the primary governing law for all overpayment conflicts due to plan coverage disputes.  The significance and timeliness of the DOLs action in federal appeals court cannot be overstated, as it comes less than two months after a federal court in Chicago reached the same conclusion for plaintiff providers in another provider ERISA overpayment class-action against numerous Blue Cross Blue Shield entities(http://avym.com/district-court-rules-against-bcbs-providers-entitled-to-erisa-notice-and-appeal-rights-in-overpayment-erisa-class-action/)

According to Court documents, the following is the Statement of Fact, in part, from the DOL Amicus Brief:

“Tri3 is a provider of medical equipment to, among others, participants and beneficiaries in ERISA health care plans insured by the defendant Aetna.”

“Aetna maintains a Special Investigations Unit (“SIU”) to detect and investigate incorrect or fraudulent insurance claims through post-payment audits.”

“Aetna rejected this evidence and concluded that, regardless of the billing code provided and its prior authorization of payment, no pneumatic compressors are covered under the plan and that the two devices at issue are, in any event, excluded from coverage because Aetna considers them to be experimental and/or investigational”, according to the court documents.

“Tri3, acting solely as an assignee of the beneficiaries and participants, sued Aetna pursuant to ERISA section 502(a)(1)(B) and for injunctive relief under section 502(a)(3)”, according to the court documents.

“Aetna moved to dismiss the claims, arguing that “the actions complained of arise in the context of fraud prevention and recovery” that other circuits have held may be pursued under state law without triggering ERISA preemption”, and “The district court granted the motion to dismiss”, according to the court documents.

DOL argued: “TRI3’S CLAIM THAT AETNA’S DEMAND FOR REIMBURSEMENT BASED ON A RETROACTIVE DENIAL OF BENEFITS ON GROUNDS THAT THEY WERE NOT COVERED BY THE PARTICIPANTS’ PLANS STATES AN ERISA CAUSE OF ACTION THAT THE DISTRICT COURT SHOULD NOT HAVE DISMISSED”, according to court the documents.

DOL Amicus Brief info: TRI3 Enterprises, LLC v. Aetna, Inc., Case No. 12-2308, Date Filed: 11/30/2012, in the United States Court Of Appeals for the Third Circuit, On Appeal from the United States District Court for the District of New Jersey.

For a complete copy of the DOL Amicus Brief in TRI3 Enterprises, LLC v. Aetna, Inc. click here

To find out more about PPACA Claims and Appeals Compliance Services from AVYM please click here.

Located in Los Angeles, CA, AVYM is a leading provider of services focusing entirely on the resolution of denied or disputed medical insurance claims by participating in the nation’s first ERISA PPACA Claims Appeals Certification program.  AVYM also offers free Webinars, basic and advanced educational seminars and on-site claims specialist certification programs for doctors, hospitals and commercial companies, as well as numerous pending national ERISA class action litigation support

2013 Emerging Trends for Out-Of-Network Health Claims: Total Claims Denial and Overpayment Recoupment

Out-of-network providers facing total claim denials and overpayment recoupment by individual payers with respect to every patient, every health plan and every claim due to provider’s failure to disclose self- referrals and routine cost sharing waivers.

Avym Corporation announces its 2013 special compliance assistance programs for out-of-network providers faced with overpayment recoupments in the millions of dollars and total claims denials by increasing number of payers with respect to every patient, every health plan and every claim.  These denials are allegedly due to provider’s failure to disclose self-referrals and/or routine cost sharing waivers among other fraud and abuse allegations, including breach of PPO contract, billing & coding errors, and medical necessity denials.

Based on the latest research in federal and state court records, Avym has developed the 2013 Out-Of-Network Healthcare Reimbursement model (OHR).  OHR will focus on compliance risk management and solutions for all out-of-network providers.  OHR will examine the most critical and emerging trend of 2013, total claim denials from multiple payers with respect to every claim.  Avym’s OHR model will examine the reasons for these total claim denials, specifically, if and when any one payer develops evidence that a provider allegedly fails to disclose the following:

  • Significant benefit interest and/or ownership;
  • Affiliation and remuneration (as required by federal and state laws);
  • Provider network status & UCR rates;
  • Patient out-of-network/out-of-pocket liabilities;
  • Patient’s freedom to choose an alternative facility;
  • Alleged routine waivers of patient deductibles, coinsurance and co-pays;

Such evidence may also be used against out-of-network providers and may be the genesis of endless lawsuits by private insurers or payers, and possible civil and criminal enforcement actions by governmental agencies.  In addition, these out-of-network providers may also face alleged overpayment recoupments or offsets by health plans for all new patients and new claims across multiple plans, patients and providers.

“More and more out of network providers and hospitals are experiencing total claim denials and overpayment recoupments by payers.  In 2013 it is likely that most out-of-network providers will face this crisis if they are not in compliance with all disclosure laws and patient cost-sharing (deductibles, coinsurance and co-pay) liability compliance,” said Vincent Flores, President and Co-Founder of Avym Corporation.

OHR and Overpayment Recoupment and Appeals Compliance Programs are available immediately, in provider specific, private formats.   These onsite programs consist of two-day fraud & abuse prevention and compliance seminars and /or two-day ERISA / PPACA appeal compliance seminars. The programs are specifically designed for out-of-network providers facing overpayment recoupments and total claim denials by payers as well as any in-network providers that have already received PPO termination letters.

Both programs are largely developed from the most recent federal and state court records, federal court decisions in nationwide provider UCR and overpayment class actions, DOL PPACA claims regulation guidance, HHS/OIG/CMS FAQ’s, OIG advisory opinions and DOJ/FBI press releases.

“In most cases, providers that are overly confident in these new payer challenges will most likely be taken by complete surprise by the payer’s total claims denial, victory in federal courts and then possible bankruptcy”, said Dr. Zhou, president of ERISAclaim.com, and a national expert on PPACA and ERISA appeals and compliance

According to the AMA news on June 25, 2012, “Aetna sues more physicians over out-of-network pay – The court fight is part of an ongoing battle between health plans and doctors over what constitutes fair health care bills.” http://www.ama-assn.org/amednews/2012/06/25/prsb0625.htm

As reported on 08-30-2012 by a Press Release from CMA, California Medical Association, “California Medical Association calls on Aetna to stop retaliatory behavior against physicians”. Dr. James T. Hay. M.D., CMA president, was quoted as saying: “Aetna is essentially saying that they will no longer do business with the 35,000 members of CMA.” http://www.cmanet.org/news/press-detail/?article=california-medical-association-calls-on-aetna

According To Houston Chronicle, November 7, 2012: “Federal Court Rules against BCBS in Overpayment ERISA Class Action: Providers Entitled to ERISA Appeal Rights http://www.chron.com/business/press-releases/article/Federal-Court-Rules-against-BCBS-in-Overpayment-3958959.php

The following main topics will be discussed in Avym’s 2013 special compliance assistance programs:

  1. Medicare recovery of $4.1 billion in 2011: “Health Care Fraud Prevention and Enforcement Efforts Result in Record-Breaking Recoveries Totaling Nearly $4.1 Billion” http://www.hhs.gov/news/press/2012pres/02/20120214a.html
  2. OIG Criminal and Civil Enforcement: https://oig.hhs.gov/fraud/enforcement/criminal/
  3. Health Care Fraud Prevention and Enforcement Action Team Provider Compliance Training: https://oig.hhs.gov/compliance/provider-compliance-training/index.asp
  4. DOL Affordable Care Act Regulations and Guidance: Internal Claims and Appeals and External Review: http://www.dol.gov/ebsa/healthreform/
  5. PCA v. BCBSA et. al. http://ww1.prweb.com/prfiles/2012/10/18/10028942/PCA%20v%20BCBSA.pdf

 

To find out more about PPACA Claims and Appeals Compliance Services from AVYM please click here.

Located in Los Angeles, CA, AVYM is a leading provider of services focusing entirely on the resolution of denied or disputed medical insurance claims by participating in the nation’s first ERISA PPACA Claims Appeals Certification program.  AVYM also offers free Webinars, basic and advanced educational seminars and on-site claims specialist certification programs for doctors, hospitals and commercial companies, as well as numerous pending national ERISA class action litigation support

District Court Rules Against BCBS; Providers entitled to ERISA Notice And Appeal Rights In Overpayment ERISA Class Action

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS- Case No. 09 C 5619 Filed: 10/12/12

PENNSYLVANIA CHIROPRACTIC ASSOCIATION, v. BLUE CROSS BLUE SHIELD ASSOCIATION

On October 12, 2012, the UNITED States District Court for the Northern District of Illinois denied BCBS motion for summary judgment in a Class Action Overpayment Dispute with providers. The court further determined that the disputed claims were subject to ERISA Notice and Appeal rights. 

A Federal Court ruled that allegations of overpayments to providers due to plan coverage and medical necessity are ERISA denials and trigger ERISA notice and appeal rights.  Providers are entitled to ERISA/PPACA compliant Explanation of Benefits (EOBs) and ERISA /PPACA appeal rights.  This decision’s profound impact is that it protects patients and providers under the federal law ERISA in all overpayment disputes with ERISA plans.  Furthermore, ERISA provides at least 180 days to appeal all claim denials.  The District Court also denied the provider’s motion on class certification, due to the provider’s lack of valid ERISA assignment, among other things.

Avym Corporation offers webinars and advanced ERISA claim specialist programs to discuss the profound impact of the Court decision for all healthcare providers with respect to overpayment demands from payors.  Discussion will also focus on how to correctly appeal overpayment demands with valid ERISA assignments, and in compliance with ERISA claim regulations.

This case offers clear and authoritative legal guidance in dealing with the issues of overpayment demands to providers.   The Court made the summary judgment against the defendants and in favor of the plaintiffs on the following:

  • Entitlement to ERISA notice and appeal rights”
  • “Adverse benefit determination”
  • “Appeal rights”
  • “Assignment”
  • “Authorized Representative”

All employer sponsored health plans must comply with federal ERISA regulations when making demands for overpayment refunds.  According to industry estimates, the amount of money that payors seek to recover from providers through overpayment demands is in the billions of dollars.

The following is the case background information according to court documents:

“Plaintiffs have sued a number of Blue Cross and Blue Shield entities for violations of the Employee Retirement Income Security Act (ERISA) and Florida law…… The defendants are Blue Cross and Blue Shield of America (BCBSA) and individual Blue Cross and Blue Shield entities (BCBS entities). BCBSA is a national umbrella organization that facilitates the activities of individual BCBS entities. Individual BCBS entities insure and administer health care plans to Blue Cross and Blue Shield customers (BCBS insureds) in various regions.” 

Plaintiffs allege that defendants improperly took money belonging to plaintiffs.   They allege that defendants would initially reimburse the provider plaintiffs for medical services they provided to BCBS insureds.  Sometime afterward, plaintiffs allege, defendants would make a false or fraudulent determination that the payments had been in error. Defendants then would demand that individual plaintiffs repay the supposedly overpaid amounts immediately. If plaintiffs refused to do so, defendants would forcibly recoup the amounts they sought by withholding payment on other, unrelated claims for services plaintiffs provided to other BCBS insureds. 

“Plaintiffs allege further that when defendants made these repayment demands, they typically did not provide adequate information regarding available review procedures. Plaintiffs allege that defendants sometimes failed to offer any appeal process at all. When an appeal process was available, plaintiffs allege, defendants refused to provide details about which patients, claims, and plans were claimed to be the subject of overpayment or “effectively ignored” plaintiffs’ appeals. Fourth Am. Compl. ¶ 18. Plaintiffs contend that this conduct deprived them of their right to a “full and fair review” under ERISA. 29 U.S.C. § 1133.”

“Although their complaint indicates otherwise, all four plaintiffs involved in the current motions state that they are not seeking final determination that the defendants’ repayment requests and recoupments were improper, but only an order “remanding” the claims to the insurance plans so that the plans can provide ERISA-compliant notice and appeal rights. As part of that remand, however, plaintiffs argue that defendants should be required to return all the money they have received from their repayment demands and recoupments, in order to return the situation to the status quo ante, that is, the situation as it existed before the repayment requests.”

“Overpayment determinations are basically ‘adverse benefit determinations’ and this court decision confirms ERISA as a powerful tool that must be understood by providers in this environment of escalating healthcare overpayment disputes.” said Vince Flores, President and Co-Founder of Avym Corporation and Certified ERISA/PPACA Medical Claims Appeals specialist .

To find out more about PPACA Claims and Appeals Compliance Services from AVYM please click here.

Located in Los Angeles, CA, AVYM is a leading provider of services focusing entirely on the resolution of denied or disputed medical insurance claims by participating in the nation’s first ERISA PPACA Claims Appeals Certification program.  AVYM also offers free Webinars, basic and advanced educational seminars and on-site claims specialist certification programs for doctors, hospitals and commercial companies, as well as numerous pending national ERISA class action litigation support

Federal Appeals Court Rules En Banc against UnitedHealthcare in Landmark ERISA and Provider Rights Case

Court of Appeals Docket #: 10-20868, United States Court of Appeals for the 5th Circuit, Filed on 10/05/2012

Access Mediquip, L.L.C. v. UnitedHealth Group, Inc., et al, Court of Appeals-En Banc Decision

On October 5, 201, the Federal Court of Appeals for the Fifth Circuit ruled against UnitedHealthcare (UHC) in a landmark ERISA case with wide-ranging implications regarding the scope of ERISA pre-emption in the context of medical-provider claims. 

According to the en banc decision, Access Mediquip, L.L.C. v. UnitedHealth Group, Inc., et al, against UHC: ERISA does not preempt a service provider’s state law claims against an ERISA plan’s insurer for negligent misrepresentation, promissory estoppel, and violations under the Texas Insurance Code.  Federal ERISA Law protects healthcare providers.  Providers can seek new remedies and expand the scope of liabilities for health plans.

“In order to successfully appeal and litigate adverse benefit denial decisions, healthcare providers and their attorneys must be educated on the implications of ERISA preemption in order to prevail in ERISA claims and state law claims,” said Vincent Flores, President and Co-Founder of Avym Corporation (Avym) and national expert on PPACA and ERISA appeals and compliance.  Avym offers webinars to discuss the profound impact of this landmark court decision for healthcare providers.

This decision will have far-reaching effects not only in the Fifth Circuit, but also in courts across the country.  It dramatically changes the landscape for all healthcare providers, health plans, insurers and defense attorneys that have strategically used ERISA pre-emption against healthcare provider claims for decades.

“ERISA preemption has been the No. 1 defense by the healthcare insurance industry for more than 95% of healthcare claims in the past 37 years,” said Dr. Zhou, President of ERISAclaim.com, a national expert on PPACA and ERISA appeals and compliance.

Nearly all healthcare and managed care cases appealed to the Supreme Court over the last 30 years have been denied based on ERISA pre-emption.

Health care providers typically rely on insurer representations when planning or carrying out treatment for patients.  Therefore, the risk of loss should reasonably be imposed on the entity making the inaccurate representation.  In the absence of shared risk with the entity that makes an inaccurate representation, providers must prioritize the economic viability rather than the medical needs of the patient in order to ensure they get paid for their services.

According to the Fifth Circuit en banc decision:

“The court took en banc this case, which raises questions about the scope of liability of an ERISA plan administrator and fiduciary for allegedly misrepresenting a plan beneficiary’s coverage in its advice to a provider of health devices.”

Without any detailed explanation, the Court made a very short en banc decision:

“Having reconsidered this case en banc, we reinstate the panel opinion and overrule, to the extent inconsistent with its reasoning, the court’s opinions in Cypress Fairbanks, Hermann I and Hermann II.

The judgment of the district court is REVERSED and the case REMANDED for further proceedings consistent herewith.”

A summary of the case, which embodies typical problems faced by providers in their daily routine, is provided below by the DOL Access Mediquip Amicus Brief:

STATEMENT OF THE CASE

Plaintiff, Access Mediquip, LLC (“Access”), supplies medical devices to healthcare providers. Am. Compl. at ¶ 14. Typically, providers ask Access to furnish a medical device before the procedure is done. Id. Rather than selling the device to the provider, Access contacts the patient’s insurer to confirm that the insurer will reimburse Access for the device and pay for Access’s services. Id. at ¶ 19.  Access generally refuses to procure or finance a device, if the insurer tells Access that the patient is not covered. Id. at ¶ 58.

    In this case, Access sued defendant-insurer, UnitedHealthcare Insurance Company (“United”), with respect to alleged misrepresentations concerning coverage and payment for Access devices for over two thousand patients covered by numerous health care plans.  Access, Mediquip L.L.C. v. UnitedHealthcare Ins. Co., 662 F.3d 376, 377 (5th Cir. 2011) (panel decision). The district court limited the Summary Judgment Motions to three “test” cases that would serve as examples. Id. at 378.

    In each of these test cases, the patients obtained United’s health insurance through participation in an ERISA health plan benefit. Access Mediquip L.L.C. v. UnitedHealth Group Inc., Case No. H–09–2965, 2010 WL 3909544, at *1 (S.D. Tex. Oct. 4, 2010) (district court decision). The facts of these cases are similar: a hospital asked Access to procure or finance a medical device for an operation. Id. When Access contacted United, a representative assured Access that the patient was covered and authorized Access to bill United directly for the device. Id. After Access provided the device for the procedure, United concluded that the applicable ERISA plan did not cover the procedure requiring the device and thus refused to fully pay for the device. Id. at *1-*3.”

 

The DOL goes on to opine:

“as several circuits have recognized, preempting the service provider’s claims against the plan’s insurer in these circumstances would likely harm participants and beneficiaries, and thus undermine ERISA’s purposes. “[P]reemption of a third-party provider’s independent state law claims would discourage health care providers from treating patients without first evaluating the solvency of each patient or requiring patients to pay in advance the cost of their medical services.” In Home Health, 101 F.3d at 606-07; accord The Meadows, 47 F.3d at 1011; Mem’l Hosp., 904 F.2d at 247; see St. Joseph’s Hosp., 742 P.2d at 313 (citing testimony from a hospital employee). Without any legal remedies, “health care providers can no longer rely as freely [on representations of health care coverage] and must either deny care or raise fees to protect themselves against the risk of noncoverage. . . . [T]he employees whom Congress sought to protect would find medical treatment more difficult to obtain.” Lordmann, 32 F.3d at 1533. Thus, the panel decision is consonant not only with the law of ERISA preemption as set forth by the Supreme Court, other courts in analogous circumstances, and the best-reasoned decisions of this Court, but with ERISA’s policy goals in general and its preemption provision in particular.”

CONCLUSION

    For the reasons set forth above, the Secretary requests the en banc Court to adopt the panel decision’s reasoning and holding regarding the non-preemption of the plaintiff’s state law claims for promissory estoppel, negligent misrepresentation, and violations of the Texas Insurance Code.”

 

The fifth circuit en banc decision can be found here

The fifth circuit panel decision can be found here

DOL Access Mediquip Amicus Brief, in support of plaintiff-appellant can be found here

To find out more about PPACA Claims and Appeals Compliance Services from AVYM please click here.

Located in Los Angeles, CA, AVYM is a leading provider of services focusing entirely on the resolution of denied or disputed medical insurance claims by participating in the nation’s first ERISA PPACA Claims Appeals Certification program.  AVYM also offers free Webinars, basic and advanced educational seminars and on-site claims specialist certification programs for doctors, hospitals and commercial companies, as well as numerous pending national ERISA class action litigation support.

Borroughs Corp. v. Blue Cross Blue Shield of Michigan

United States District Court Eastern District of Michigan,  Case No: 11-12557 Filed- 9/7/2012

Federal Court Rules Blue Cross Blue Shield Acted As ERISA Fiduciary & Engaged in Self Dealing

Borroughs v. BCBS Michigan

Ramifications of the Court Case

  1. Court determined that Blue Cross acted as an ERISA fiduciary in its role as third-party administrator and engaged in self-dealing by unilaterally determining its administrative fees.
  2. One aspect the Court relied upon in finding that the administrator exercised control over plan assets, and was therefore a fiduciary, is that it “allott[ed] to itself an administrative fee . . . .”

These cases are about certain “Access Fees” that Blue Cross Blue Shield Michigan (BCBS) allocated to itself as additional administrative compensation.  According to court documents, “in the late 1980s, BCBS was in poor financial shape. In order to increase revenue, it began charging its self-insured customers additional fees.”

Understandably, the self-insured customers were unhappy that these charges amounted to an add-on to their bill. They were also unhappy to be subsidizing insured customers. Many customers who stayed with Blue Cross simply refused to pay the fee because they did not believe it was fair.  Ultimately, BCBS remained in poor financial shape.

In 1993, according to court documents, “BCBS decided to hide the Disputed Fees by merging them with hospital claims on billing statements”

The court rules that:

Blue Cross is a plan fiduciary if it exercised “discretionary control over the disposition of plan assets” or “any authority or control over plan assets.” The U.S. Court of Appeals for the Sixth Circuit determines fiduciary status based on a functional test and applies ERISA fiduciary status to TPAs when they exercise “practical control over an ERISA plan’s money,” the court said, quoting Guyan International Inc. v. Professional Benefits Administrators Inc., No. 11-3126 (6th Cir. Aug. 20, 2012) (161 PBD, 8/21/12; 39 BPR 1635, 8/28/12).

The court relied upon the Sixth Circuit, in that it has treated TPAs as ERISA fiduciaries when they exercise authority and control over plan assets by depositing plan assets into accounts the TPA selects, writing checks from the accounts, advising contracting companies to deposit funds with the TPA, and determining when and how the funds are to be dispersed

In a third case in this district, with nearly identical facts, Judge Tarnow held that Blue Cross was a fiduciary when it assessed an “other than group” (“OTG”) fee, a type of cost-transfer subsidy. As quoted by the Sixth Circuit, Judge Tarnow ruled on the record:

I find that [BCBSM], in fact, exercised authority or control over the Plan assets, and under ERISA it was a fiduciary. That’s because the [Fund] had to advance funds to [BCBSM], which then paid the claims on the [Fund]’s behalf to the providers. Sometimes, as it has been mentioned here, [BCBSM] had to pay more than was advanced, but [the Fund] was responsible for making up the difference, which is an inherent nature of self-insuring arrangement.

….

This shows that [BCBSM] exercised control over Plan assets, and there’s really no factual dispute about this. The [Fund]’s knowledge of the OTG fee is not relevant or material to the question of whether [BCBSM] exercised control over the assets.

Accordingly, [BCBSM] was a fiduciary in assessing the OTG fee.

Pipefitters Local 636 Ins. Fund v. Blue Cross Blue Shield of Michigan, 654 F.3d

618, 626 (6th Cir. 2011).

Stephan v. UNUM Life Insurance Company of America

Case No. 10–16840.

Argued and Submitted Dec. 8, 2011. Filed on September 12, 2012 United States Court of Appeals, Ninth Circuit

Stephan v. Unum [9th Cir]

Ramifications of Court Decision:

  • Ninth Circuit Applies ERISA Fiduciary Privilege Exception to Insurer
  • Evaluation of conflict of interest is not limited to administrative record
  • The court held that because Unum was responsible both for evaluating benefits claims and paying them, it operated under a conflict of interest, which “ ‘must be weighed as a factor in determining whether there is an abuse of discretion

Ninth Circuit remands district court decision and also considers the Third Circuit’s holding in Wachtel v. Health Net, Inc., 482 F.3d 225 (3d Cir. 2007).  In the Wachtel case, the issue is whether the fiduciary exception to the attorney-client privilege applies to an insurer making claims decisions in a fiduciary capacity.  The Ninth Circuit, in an opinion, rejects the Third Circuit’s finding that the fiduciary exception does not apply to insured plans.

 

“We agree with the district court that the applicable standard of review is abuse of discretion. The district court also correctly held that because Unum was responsible both for evaluating benefits claims and paying them, it operated under a conflict of interest, which “ ‘must be weighed as a factor in determining whether there is an abuse of discretion’ “ (quoting Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 113, 128 S.Ct. 2343, 171 L.Ed.2d 299 (2008)). However, in determining what weight ought to be given the conflict, the district court erred in three ways: First, it failed to apply the traditional rules of summary judgment to its analysis of whether and to what extent a conflict of interest impacted Unum’s benefits determination. Second, it incorrectly held that certain internal memoranda between Unum’s claims analyst and its in-house counsel were not discoverable. Finally, it did not take into account substantial evidence that Unum’s conflict of interest “infiltrated the entire decision-making process” and therefore ought to be accorded “significant weight.” Montour v. Hartford Life & Accident Ins. Co., 588 F.3d 623, 634 (9th Cir.2009).

 

III. CONFLICT OF INTEREST

As we have explained, because the Plan grants discretionary authority to Unum, we review Unum’s benefits decision for an abuse of that discretion. See Glenn, 554 U.S. at 111; Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 673 (9th Cir.2011). Under this deferential standard, a plan administrator’s decision “will not be disturbed if reasonable.” Conkright v. Frommert, ––– U.S. ––––, ––––, 130 S.Ct. 1640, 1651, 176 L.Ed.2d 469 (2010) (internal quotation marks omitted); Salomaa, 642 F.3d at 675 (internal quotation marks omitted). This reasonableness standard requires deference to the administrator’s benefits decision unless it is “(1) illogical, (2) implausible, or (3) without support in inferences that may be drawn from the facts in the record.” Salomaa, 642 F.3d at 676 (internal quotation marks omitted).

 

“This abuse of discretion standard, however, is not the end of the story. Instead, the degree of skepticism with which we regard a plan administrator’s decision when determining whether the administrator abused its discretion varies based upon the extent to which the decision appears to have been affected by a conflict of interest. Id.”

In particular, [the district court] should, where relevant, permit the admission of evidence outside the administrative record. Although, for the most part, judicial review of benefits determinations is “limited to the administrative record”—that is, the record upon which the plan administrator relied in making its benefits decision—the evaluation of a conflict of interest is not so limited. Id. Evidence outside the administrative record is “properly considered” in determining the extent to which a conflict of interest affected an administrator’s decision. Id.

PPACA Protects 35,000 Soon to be Ex-Aetna PPO Doctors in California Managed Care Lawsuit

Aetna’s war against the California Medical Association (CMA) for patient’s right to choose provider versus Aetna’s right to save money has spurred the 10th Patient Protection and Affordable Care Act (PPACA) Claims Specialists Certification Program.

The timing of the PPACA Program, scheduled for Sept 15, 2012 is appropriate in light of recent CMA Press and LA Times Report, allegedly confirmed by Aetna, that Aetna is terminating or kicking out all 35,000 members of CMA as a result of the on-going court battles.  The PPACA Ex-PPO Programs are designed to provide 35,000 California doctors with compliant solutions to patient’s right to choose and protections under the new federal health reform law.  On June 28, 2012, the Supreme Court upheld PPACA’s constitutionality.

Avym Corporation’s 10th Ex-PPO Program is a comprehensive PPACA & ERISA compliance program covering PPACA and ERISA patient protections, appeals regulations and Corporate Compliance – Fraud and Abuse Prevention in order to avoid allegations and litigations currently faced by many PPO and Ex-PPO providers.  The two-day Ex-PPO program is a turn-key operation in education, with one day devoted to PPACA & ERISA appeals and the other day focusing on fraud and abuse prevention.

“The California Aetna v. CMA Managed Earthquake appears to be a war on patient’s rights to choose versus Aetna’s right to save, but this is clearly evidence of the beginning of the end of the U.S. managed care business model when patient in-network deductibles are greater than their monthly salaries and the providers’ profits are less than the costs of doing business.  In an unprecedented fashion, PPACA is constitutionally transforming the old PPO model to the new ACO or ACA models.”, said Dr. Jin Zhou, president of ERISAclaim.com and a national expert on PPACA and ERISA appeals and compliance.

CMA Letter to Aetna

CMA Letter to Aetna Lawyers

According to a LA Times Report on 08-30-2012, “Dispute between Aetna, California Medical Assn. heats up: California Medical Assn. accuses insurer Aetna of refusing to negotiate with member doctors or kicking doctors out of its network as retaliation for a lawsuit.”
http://www.latimes.com/business/la-fi-aetna-doctors-feud-20120830,0,7996610.story

As reported on 08-30-2012 by a Press Release from CMA, California Medical Association, “California Medical Association calls on Aetna to stop retaliatory behavior against physicians”.   Dr. James T. Hay. M.D., CMA president, was quoted as saying: “Aetna is essentially saying that they will no longer do business with the 35,000 members of CMA.”  http://www.cmanet.org/news/press-detail/?article=california-medical-association-calls-on-aetna

“While we cannot pass any judgment on the merits of the court allegations from Aetna or the CMA, as that judgment is entrusted to the Courts, we can provide PPACA compliant solutions for providers to fully and properly disclose any self-referrals and/or out-of-network referrals in accordance with all applicable federal and state laws, and to act as the patient’s advocates for patient’s right to choose and to appeal all claim delays and denials under ERISA and PPACA.”, said Mark Flores, PPACA ERISA Claim Specialist, co-founder of AVYM Corporation in Los Angeles, California.

As reported by an American Medical Association news report on June 26, 2012, according to the Kaiser’s Health Security Report in June 2012: “Insured, High-Income Patients Delay Medical Care, Too: Even among people who make $90,000 or more per year, nearly 40% skipped or delayed care because of cost”.  http://www.ama-assn.org/amednews/2012/06/25/bise0626.htm

“About 77% of insured Americans pay higher premiums for first-class out-of-network coverage, but only about less than 5% of out-of-network claims are filed each year,” says Vincent Flores, a certified PPACA and PPACA ERISA Claim Specialist, co-founder of AVYM Corporation in Los Angeles, California. http://avym.com/

The 10th PPACA Claims Appeals Specialists Certification Programs were announced today in Los Angeles by AVYM, in order to assist 35,000 soon to be Ex-PPO CMA member doctors from Aetna PPO Networks.  AVYM’s 10th PPACA Ex-PPO Program will cover the following topics:

  1. DOL Affordable Care Act Regulations and Guidance: http://www.dol.gov/ebsa/healthreform/
  2. DOL: About 77% of Insured Americans Purchased Out-Of-Network Coverage under Private Industry (DOL, BLS, NBS 2010, page 11 of 67):   http://stats.bls.gov/ncs/ebs/detailedprovisions/2010/ebbl0047.pdf
  3. Congressional GAO Reports: 39% to 59% denial reversal with valid appeals, only 0.5% appeals in Ohio –http://www.gao.gov/new.items/d11268.pdf
  4. ACA Indigency Discount v. PPO discount: http://archive.hhs.gov/news/press/2004pres/20040219.html
  5. Disclosures on estimated charge for each and all services, network participation status, billing and collection policies.
  6. Guaranteed Patient Satisfaction (GPS) for total disclosure and transparency on referring provider affiliation and remuneration arrangement, if any.
  7. PPACA/ERISA appeal assistance for both in-network and out of network claim delays and denials.
  8. OIG HEALTH CARE COMPLIANCE PROGRAM TIPS: http://oig.hhs.gov/compliance/provider-compliance-training/files/Compliance101tips508.pdf

 

To find out more about PPACA Claims and Appeals Compliance Services from AVYM please click here.

Located in Los Angeles, CA, AVYM is a leading provider of services focusing entirely on the resolution of denied or disputed medical insurance claims by participating in the nation’s first ERISA PPACA Claims Appeals Certification program.  AVYM also offers free Webinars, basic and advanced educational seminars and on-site claims specialist certification programs for doctors, hospitals and commercial companies, as well as numerous pending national ERISA class action litigation support.

Guyan Intern’l, Inc v. Professional Benefits Administrations, Inc.

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT-Nos. 11-3126/3640

TPA Is A Fiduciary of the Plan Subject To Suit By Plan Sponsors

GUYAN INTERN’L, INC v. PROFESSIONAL BENEFITS ADMINISTRATORS, INC.

Ramifications of Court Decision:

  1. What is a Fiduciary? The court reasons: ERISA provides that “a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets.” 29 U.S.C. § 1002(21)(A) The term person is defined broadly to include a corporation
  2. An entity that exercises any authority or control over disposition of a plan’s assets becomes a fiduciary. Id.at 490-91. So the threshold for becoming a fiduciary is lower for entities handling plan assets than for entities managing the plan. Id.at 491. An entity such as a third-party administrator becomes an ERISA fiduciary when it exercises “practical control over an ERISA plan’s money.” Id.at 494.
  3. What does this mean to TPA’s that handle “plan assets”?

“In light of these principles, PBA was a fiduciary under ERISA because it exercised authority or control over Plan assets. PBA had the authority to write checks on the Plan account and exercised that authority. Moreover, PBA had control over where Plan funds were deposited and how and when they were disbursed. PBA commingled Plan assets by depositing these funds into its general account rather than into the Plaintiffs’ separate accounts as the Agreement required. And then PBA used these Plan funds for its own purposes, again contrary to the dictates of the Agreement. The fact that PBA used Plan funds in ways contrary to how it had agreed to use them demonstrates that PBA had practical control over Plan funds once it received them from the Plaintiffs. “

 

Providers Placed In Precarious Position

CA State officials allege in court papers that Dr. Martello aggressively collected or attempted to collect more from patients than insurance companies paid, a practice known as balance billing.  According to the article, the underlying issue is familiar: many physicians don’t believe they are getting paid enough for their services.  Doctors bill insurance firms and frequently get a fraction of their full fees.

Martello’s attorney, Andrew Selesnick, acknowledged his client was “very persistent” about collecting bills but said she was lawfully pursuing her rights to recoup fees for her services. http://www.latimes.com/news/local/la-me-southpas-doctor-20120818,0,6165119,full.story

At the same time, AETNA has filed multiple lawsuits against various providers for allegedly NOT collecting patient’s out of pocket costs.  “Feb. 3 (Bloomberg) — Aetna Inc. is suing seven California surgery centers for a billing system that it claims “recklessly subverts” health care delivery.

“The lawsuit seeks to stop the centers from waiving the co-insurance payments people are supposed to be charged when they use doctors or facilities that don’t have contracts with their insurers according to the suit.”

The court case info: Aetna Life Insurance Co. v. Bay Area Surgical Management LLC, File 02/02/2012, Case #: 112CV217943, The Superior Court of California, County of Santa Clara.

It seems providers have been put in a very precarious position.   Selesnick argued that the state’s case against his client underscores a larger problem: no one wants to pay for medical services. “Dr. Martello is definitely passionate about being a physician,” he said. “She is equally as passionate about getting paid for the work that she did.”

In Aetna’s complaint, they allege that the providers participated in a “scheme” to “induce (Aetna’s) members to use a defendant facility’s out-of-network services, the defendant waives the patient member’s coinsurance and otherwise relieves the members from obligation to pay their charges. “

Aetna’s complaint further alleges that “By illegally striking at the very financial core of (Aetna’s) managed care network, their scheme also recklessly subverts and imperils (Aetna’s)  well-structured and successfully functioning managed care network made up of subscribers, medical care providers and medical facilities, which has heretofore served as a proven process for delivering excellent, affordable healthcare to citizens of California.”

On one hand you have carriers demanding providers collect all patient out-of-pocket costs or risk getting sued.  On the other hand when providers attempt to collect patient’s out-of-pocket costs that are legally owed to them, they are sued by the state.

Ultimately, patients and providers suffer by this process which undermines all Dr-Patient relationships.  Nancy Hauser, whose teenage daughter was treated by Dr. Martello, in CA, at Huntington Hospital in 2009 after falling at a friend’s house and cutting her head, said she was still dealing with the financial fallout of the physician’s billing practices.  “You go to a doctor with an understanding that the person has your interests at heart,” Hauser said.

It is essential for all providers to understand the rules and regulations that govern these issues.  Implementing compliant policies and procedures can go a long way in prevention.

CA Orders Anthem To Stop Trying To Collect On Old Overpayments

On July 16, 2012, California Department of Managed Health Care ordered Anthem Blue Cross to stop trying to collect millions in reimbursement from providers for medical claims the health plan thinks were overpaid.

Avym announces free executive webinars designed to examine the California Department of Managed Health Care’s order and discuss the profound impact of the entire overpayment recoupment market, estimated to be in the billions of dollars.

State regulators ordered Anthem Blue Cross on July, 16 2012 to stop trying to collect millions in reimbursement from providers for medical claims the health plan alleges were overpaid.

California State law allows health plans to seek reimbursement for overpaid medical claims within a year of the payment date. In order for a plan to collect on claims more than a year old, it must demonstrate fraud or misrepresentation by the provider.

Earlier this year, the California Department of Managed Health Care (DMHC) investigated collection attempts by Anthem Blue Cross between 2008 and 2011 and found the plan tried to collect overpayments from at least 535 providers for claims that were more than a year old. Anthem did not provide evidence of fraud or misrepresentation, the agency said in a news release Monday.

The plan alleged providers had improperly coded the claims using upcoding, unbundling or miscoding procedures, the cease-and-desist order shows.

Anthem, which is based in Thousand Oaks, CA, tried to collect payments from another 13 providers who allegedly had billed for services they had not rendered.

“Health care providers should not face unexpected demands for reimbursement of medical claims they believe were appropriately paid years ago,” agency director Brent Barnhart said in the release. “Anthem’s recoupment practices violate California law and are unfair to providers who are acting in good faith.”

Anthem spokesman Darrel Ng stressed in a prepared statement that the issue does not involve patient care or safety: “The issue is about Anthem Blue Cross’s efforts to keep health care affordable,” he said. “Anthem Blue Cross believes medical providers should be compensated for services provided, but should not receive payment twice for the same procedure.”

According to Mr. Ng, Anthem sought reimbursement for overpayments due to double billing which is consistent with guidelines from the American Medical Association.  “We will closely examine today’s action by DMHC and are considering our options,” he said.

Many providers are still trying to figure out what to do in light of the DMHC’s order.  The California Medical Association (CMA), which made the initial request to the DMHC to investigate, issued a press release urging the DMHC to take further action, including imposing heavy fines to deter future abuses. CMA is also asking DMHC to require Anthem refund to physicians any overpayments collected in violation of the law.

No decision has been made about whether the collected alleged overpayments will have repaid, but DHMC offered this advice: If a provider receives (or has received) a notice from Anthem (or any plan) requesting recoupment of alleged overpayments from claims older than one year, they should first file an appeal with the plan. If the appeal is unsuccessful, the plan is non-responsive or they are unsatisfied with the response, the provider should file a complaint with the DMHC Provider Complaint unit at: http://www.dmhc.ca.gov/providers/clm/clm_comp.aspx

This comes on the heels of Anthem’s recent troubles with the CA DMHC.  In January of 2012, Anthem was ordered pay doctors and hospitals money owed for services going back to 2007.  The action is a result of Anthem’s refusal to remediate providers following a financial claims audit that identified errors in payment of medical claims

This is in addition to a lawsuit, intended to be a class action, filed by consumer advocate group Consumer Watchdog.  the complaint challenges alleged “bait and switch” tactics affecting more than 100,000 individual plan members hit by deductible increases and other changes in May. It also targets other changes that allow Blue Cross to alter terms of health plan contracts several times in a year, with 60 days’ notice.

What does this mean to overpayment request by payors?  AVYM offers free webinars that will examine the importance of appealing overpayment requests, including an analysis of the GAO Report findings “When denied reimbursement by an insurance company, one of the biggest mistakes made is not appealing the decision. When denied reimbursement for services you have the right to appeal and the Insurance Company/Plan Administrator is required to explain why they denied the claim. Doing so often pays off, with an estimated 59 percent of appeals being decided in favor of the claimant.”

Avym webinars will:

  • Focus on the number one healthcare dispute right now in the U.S. against health plans, providers and patients as well as the relevance of recent US Supreme Court decisions and their effects on claims denials, audits, and litigation of claim disputes. 77% of insured Americans under employer sponsored health plans are affected by these issues;
  • Analyze the new federal health reform law, PPACA claim regulations, which have adopted ERISA law as the minimum claim regulations standard for all health plans which now includes individual market claims outside of Medicare;
  • Analyze and discuss ERISA claim regulation which, for the last 36 years, has provided very specific provisions regulating the “circumstances which may result in disqualification, ineligibility, or denial or loss of benefits”;

To find out more about ERISA/PPACA Claims and Appeals Compliance Services from AVYM please click here.

Located in Los Angeles, CA, AVYM is a leading provider of services focusing entirely on the resolution of denied or disputed medical insurance claims by participating in the nation’s first ERISA PPACA Claims Appeals Certification program.  AVYM also offers free Webinars, basic and advanced educational seminars and on-site claims specialist certification programs for doctors, hospitals and commercial companies, as well as numerous pending national ERISA class action litigation support.