Archives October 2012

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.