Archives 2014

On Dec 15, 2014 a federal judge certified a class of healthcare providers suing UnitedHealth for alleged improper over-payment recoupments.  This case is another in a series of cases involving insurance carriers and alleged over-payment recoupment tactics.

The crux of the cases is the notion that healthcare providers must be allowed due process and a “full and fair” review for denied claims, even if they are denied post payment. As more and more of these cases make their way through the courts, it is clear that the questionable or “legal gray area” of overpayment refund demands and unauthorized offsets effectively triggers ERISA appeal rights. Overpayment demands and recoupments that do not comply with ERISA rules have become the nation’s #1 claim denial reason.

These offsets can go as far back as several years, in order to retrieve payments made years ago, and affect all types of claims, potentially resulting in inevitable provider bankruptcy and subsequent patient bankruptcy. Providers or patients that face UHC or any payor refund demands, recoupments or offsets must understand the implications of these lawsuits as well as their rights under ERISA.

The total dollar amount at issue nationwide is tremendous.  According to industry estimates, successful industry overpayment recoveries have reached into the billions of dollars nationwide over the past 5 to 7 years and involve many large carriers.  Thus recoupment, when used as an anti-fraud initiative, has become an increasingly popular source of revenue for some insurers. While it is important to implement anti-fraud initiatives in healthcare today, it is critical that every health plan comply with all applicable federal laws, ERISA and PPACA claims regulations, as well as statutory fiduciary duties. Insurers and Health Plans will be forced to comply with all applicable federal laws, ERISA and PPACA claims regulations, as well as statutory fiduciary duties before recouping one single dollar.

The issue has also drawn the attention of the Obama Administration, where in a different case before the Third Circuit, the U.S. Department of Labor filed an Amicus Brief in support of plaintiff providers in an overpayment ERISA class-action urging judges to allow a lawsuit against Aetna Inc. to proceed under ERISA, which allows for appeal and review rights protections for providers before insurers can recoup reimbursements.

The DOL’s position on the pertinent issues included:

• Compliance with federal law ERISA for all post-payment overpayment demands due to ERISA plan coverage dispute guidelines;
• Healthcare providers with valid assignments have federal rights to ERISA appeals and lawsuits in federal court;
• A post-payment, retroactive, overpayment demand is an ERISA adverse benefit determination, triggering full and fair reviews guaranteed under ERISA;
• Any 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.

Significantly, this ERISA putative provider class-action for the “Recoupment Class” was certified in the wake of and in accordance with a similar provider class-action filed recently in Minnesota for the “Offset Class”

Case Info: Premier Health Center, P.C. et al v. UnitedHealth Group et al., Case#: 2:11-cv-00425-ES-SCM, Filed 12/15/2014, United States District Court for The District of New Jersey. (Unpublished)

In this case the court Previously opined against UHC in its overpayment recoupment practice and rejected many of UnitedHealth’s arguments, labeling them at times as “irrelevant,” “misguided” and “red herrings”.

Specifically, Judge Debevoise stated:  “To be sure, as previously discussed, United’s recoupment procedures violate three specific ERISA regulations across the class.” according to the court document.

“In 2011, United recovered approximately $430 million in overpayments to providers. 58% of the $430 million was recovered as a result of providers’ voluntarily sending a check to United, while 42% was recovered through offsets”, according to the court document.

“However, they all violate ERISA in three respects. First, they fail to provide “[a] description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring acivil action under section 502(a) of [ERISA] following an adverse benefit determination on review.” 29 C.F.R. § 2650.503-1(g)(1)(iv).25 Second, they fail to indicate that the provider, “upon request and free of charge, [will have] reasonable access to, and copies of, all documents, records, and other information relevant to the” overpayment determination. 29 C.F.R. §2650.503-1(h)(2)(ii). Third, they fail to “[p]rovide claimants at least 180 days following receipt of a notification of an adverse benefit determination within which to appeal the determination.” 29 C.F.R. § 2650.503-1(h)(3)(i).” according to the court document.

The trend continued in Judge Debevoise’s latest ruling. UnitedHealth argued that Integrated Orthopedics is not a suitable plaintiff because of insurance policy anti-assignment provisions. However Judge Debevoise rejected that argument, finding that UnitedHealth previously paid Integrated Orthopedics and therefore waived the anti-assignment provision.

Additionally, UnitedHealth unsuccessfully argued that “the patient-insured does not currently have standing to pursue the ERISA claims set forth by the ONET Repayment Demand Class because the patient-insured is no longer a subscriber to a United healthcare plan. “The patient thus has no stake in the forward-looking injunctive relief that is sought by [Integrated Orthopedics], and has no Article III standing to raise these claims.” (ECF No. 315.) Integrated Orthopedics “cannot derivatively acquire standing to raise ERISA claims through an assignment executed by a patient who does not himself have standing[.]” (Id.)”

Again, Judge Debevoise disagreed with UnitedHealth’s argument and basically reiterated his prior description of that position as a “red herring,” writing: “This argument is a red herring. While the patient-assignors who are no longer United insureds may not submit future benefit claims to United that would be subject to future repayment demands, the fact remains that there are pending repayment demands regarding claims while they were United-insureds. Thus, in challenging United’s overpayment recoupment procedures, those patient-assignors would necessarily seek prospective relief because the repayment demands on their claims have yet to be resolved. That such relief may also apply to benefit claims of other United-insureds is of no moment, as it would not in any way restrict those individuals’ rights or ability to sue under ERISA”

The court document went even further on the subject of standing by saying: “As a general matter, the Court fails to see how an insurer who makes a direct payment of benefits to a provider, and subsequently seeks repayment from that provider, can later turn around and logically contend that the provider has no valid assignment of benefits. Such a contention would mean that the insurer should have been dealing directly with the patient-insured all along.”

This and other cases illustrate the need for all employer sponsored health plans to comply with federal ERISA regulations when making demands for overpayment refunds.  Attempts to recoup or withhold monies from providers are and should be treated as any other claim denials.  Providers need to level the playing field by ensuring they submit ERISA/PPACA compliant appeals which properly request due process and a full and fair review. Additionally, as a matter of best practices, all healthcare providers should comply with ERISA claims regulations using a valid ERISA compliant designation of authorized representative before appealing any claim (be it an overpayment recoupment or any other type of denial) on behalf of any member of any employer sponsored health plan.

A copy of the initial Class Action Complaint is available Here

A copy of the First Amended Complaint is available Here

On November 5, 2014, only 15 days after the high court’s denial of BCBSM’s appeal, a federal district court in Michigan lifted a previous stay order for one of the more than 50 similar pending cases. The federal district court in Michigan reopened a separate but identical case after the U.S. Supreme Court, on Oct. 20, 2014, rejected BCBSM appeal of a $6.1 million fraud judgment in favor of a self-insured plan.

Pursuant to the HHS, OIG and the National Health Care Anti-Fraud Association’s conservative estimate, at least 3 percent—or more than $60 billion each year—is lost to fraud, in the current $3 trillion annual healthcare expenditure.

Additionally, in accordance with the Supreme Court Hi-Lex decision and the reopening of pending cases, all self-insured health plans nationwide should look to recover at least $30 to $45 billion in refunds from the past 10 years of successful plan assets TPA/ASO anti-fraud recoupments and managed care savings in the private sector.

“Failure to safeguard plan assets is definitely a fiduciary breach under ERISA, and now the Supreme Court has given us a legal formula for plan assets recovery, a timely and true resolution to today’s U.S. healthcare crisis,” says Dr. Jin Zhou, president of ERISAclaim.com, a national expert and the “ERISA Godfather” in ERISA healthcare compliance and medical claim appeals.

As the DOL ramps up audits and enforcement actions in health plan claims and appeals, every ERISA self-insured health plan sponsor or fiduciary should keep in mind that they are required to monitor TPA/ASOs successful overpayment recoveries and managed care savings, in order to determine whether:

• any of the billions of dollars of successful TPA/ASO overpayment recoupments and offsets nationwide each year are ERISA plan assets;
• all TPA/ASOs must refund all ERISA plan assets as ERISA prohibits all self-dealings;
• all self-insured plan administrators are liable for fiduciary breach in failing to safeguard or recover plan assets.

As illustrated by the Supreme Court decisions and the reopening of similar cases, it is extremely critical for all self-insured health plans and TPAs to understand the implications of the Supreme Court decision rejecting BCBSM’s $6.1 million appeals. Moreover, the high court’s decision will likely have a multi-billion dollar impact on all self-insured plans.

Avym Corporation demystifies this high court decision with new 2015 ERISA Fiduciary TPA Auditing & Plan Assets Recovery Programs designed to enable self-insured health plans in the recovery of potentially billions of dollars in similar TPA/ASO hidden fees. These advanced Recovery Programs can assist all self-insured plans recover all hidden fees in TPA/ASO overpayment recoupments and managed care savings and are based on the Supreme Court’s new interpretation of ERISA plan assets, fiduciary and ERISA prohibited transactions and self-dealings with respect to the managed care industry and ASO contracting practices.

On Oct. 20, 2014, the U.S. Supreme Court announced: “Petition DENIED”, and ultimately declined all appeals of BCBSM’s $6.1 million fraud judgment in favor of a self-insured ERISA plan by the U.S. Court Of Appeals for the Six Circuit, upholding the decision by the District Court for the Eastern District of Michigan. (http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/14-168.htm.)

Supreme Court Case Info: Blue Cross Blue Shield of Michigan, Petitioner v. Hi-Lex Controls, Inc., et al., Case No. 14-168, Docketed: August 14, 2014, Lower Ct: United States Court of Appeals for the Sixth Circuit, Case Nos.: (13-1773, 13-1859), Decision Date: May 14, 2014

The high court announced its decision, without comments, on October 20, 2014 that it will not review a ruling by the U.S. Court of Appeals for the Sixth Circuit in Cincinnati, concluding:

“BCBSM committed fraud by knowingly misrepresenting and omitting information about the Disputed Fees in contract documents”,

after it affirmed a District Court decision, in May 2013, concluding that Michigan’s largest health insurer violated the Employee Retirement Income Security Act (ERISA) in ERISA prohibited transactions and ERISA fraud by concealing BCBSM’s hospital claims markup as much as 20% and pocketed the overcharge for over 20 years, according to the Supreme Court website: (http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/14-168.htm.)

On November 5, 2014, only 15 days after the high court decision on October 20, 2014, the federal district court in Michigan lifted a previous stay order for one of the more than 50 similar cases pending in the same court. (Fisher & Company, Inc. et al v. Blue Cross and Blue Shield Michigan, U.S. District Court, Eastern District of Michigan (Detroit), CIVIL DOCKET FOR CASE #: 2:13-cv-13221-GER-MAR.)

On November 5, 2014, the district court explained its decision to reopen the pending case:

“On May 14, 2014, the U.S. Court of Appeals for the Sixth Circuit issued its opinion in the Hi-Lex Conrols matter, affirming the district court’s judgment. Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Mich., 751 F.3d 740 (6th Cir. 2014). BCBSM timely filed a petition for a writ of certiorari to the United States Supreme Court on August 12, 2014, and the Supreme Court denied the petition on October 20, 2014. Blue Cross Blue Shield of Mich. v. Hi-Lex Controls, Inc., cert. denied, 83 U.S.L.W. 3109, 2014 WL 3965217 (U.S. Oct. 20, 2014) (No. 14-168)….Accordingly, IT IS HEREBY ORDERED that Plaintiffs’ Motion to Lift Stay (Dkt. # 19) is GRANTED and that this matter is REOPENED.”,

according to court documents.

To find out more about Avym’s 2015 ERISA Fiduciary TPA Auditing & Plan Assets Recovery Programs or to contact us about educational programs please click here.

To sign up for our newsletter and become an Avym Insider please click here.

On Nov. 5, 2014, federal Court of Appeals ruled for out-of-network provider’s ERISA right to sue UnitedHealth on behalf of patients for out-of-network deductible waiver claim denials. In a much anticipated case, the 9th Circuit sided with Spinedex Physical Therapy USA Inc., saying the clinic had standing to sue because the plan beneficiaries had assigned them their rights.

This case represents the first shot over the bow at insurer’s attempts to limit payments to providers and discourage patient out-of-network utilization based on patient deductibles and co-pays.

The court rejected defendant UnitedHealth’s argument, and explained that an out-of-network provider has ERISA rights for payment and to sue–and whether a provider balance bills a patient, after the assignment when seeking payment from the health plan, is irrelevant. This is a clear court victory for all out-of-network patients and providers.

The federal Court of Appeals for the Ninth Circuit in California ruled for the plaintiff out-of-network provider’s ERISA right to sue UnitedHealth on behalf of patients for out-of-network deductible waiver claim denials, because

“Defendants point out that Spinedex has not sought payment from its patients for claims, or portions thereof, that United and the Plans have refused to pay.”

All out-of-network providers must understand this court decision as it affects both patients and providers, with an increasing number of out-of-network deductible waiver claim denials.

Avym Corp. announces new ERISA out-of-network claims specialist special training programs in accordance with this federal appellate court decision:

“It also included a statement in which patients acknowledged that they were liable for all costs of the services rendered…….But the patients’ injury in fact after the assignment is irrelevant. As assignee, Spinedex took from its assignors what they had at the time of the assignment. At the time of the assignment, Plan beneficiaries had the legal right to seek payment directly from the Plans for charges by non-network health care providers.”

according to court documents.

Case Info: Spinedex Physical Therapy USA, et al v. United Healthcare of Arizona et al, Case No. 12-17604, in the United States Court of Appeals for the Ninth Circuit, filed on Nov. 5, 2014.

Regardless of upfront deductible or co-pay collection after the assignment, an out-of-network provider has ERISA rights to sue for payment from an ERISA health plan, as long as the provider has a valid patient ERISA assignment and establishes the patient’s legal obligation to pay. Deductible and Co-Pay waiver claim denial has been the No. 1 out-of-network claim denial reason, with an increasing number of out-of-network patient bankruptcies as a result of the national epidemic and disastrous three-invoice patient collections practice. Approximately 76% of Americans insured through their employer-sponsored health plans have paid for out-of-network coverage, according to the December 2013 National Composition Summary from DOL Bureau of Labor Statistics.

This historical out-of-network case is a classic example of the most pressing issue facing out-of-network patient and providers across the nation.  The scenario plays out every day: the health plan will usually deny all out-of-network claims for alleged out-of-network deductible and coinsurance waivers by a provider, and allegedly the patient “has not suffered injury in fact”, then the health plan is not liable for any payment to the provider. This is usually followed by alleged overpayment requests and unauthorized offsets.

In Spinedex, United Healthcare denied all out-of-network claims:

“Defendants point out that Spinedex has not sought payment from its patients for claims, or portions thereof, that United and the Plans have refused to pay. Defendants argue that because Spinedex has not sought payment from its assigning patients for any shortfall, those patients do not have the “injury in fact” necessary for Article III standing. Defendants argue that since Spinedex stands in the shoes of, and can have no greater injury than, its assignors, Spinedex has not suffered injury in fact.”

The court rejected defendant Unitedhealthcare’s argument, and explained that an out-of-network provider has ERISA rights for payment and to sue and whether a provider balance bills a patient, after the assignment when seeking payment from the health plan, is irrelevant. The court explained why:

“We are aware of no circuit court that has accepted defendants’ argument. …… The flaw in Defendants’ argument is that they would treat as determinative Spinedex’s patients’ injury in fact as it existed after they assigned their rights to Spinedex. We agree with Defendants that Spinedex has not sought to recover from its patients any shortfall in Spinedex’s recovery from the Plans, and that the patients have not suffered injury in fact after assigning their claims. But the patients’ injury in fact after the assignment is irrelevant. As assignee, Spinedex took from its assignors what they had at the time of the assignment. At the time of the assignment, Plan beneficiaries had the legal right to seek payment directly from the Plans for charges by non-network health care providers. If the beneficiaries had sought payment directly from their Plans for treatment provided by Spinedex, and if payment had been refused, they would have had an unquestioned right to bring suit for benefits.”

While Defendant United Healthcare prevailed in certain other claims, the Ninth Circuit concluded:

“We hold that Spinedex had Article III standing to bring benefit claims against Defendants as assignee of its patients. Its injury in fact is the same injury its assignees had at the time of the assignment.”

The best explanation for out-of-network ERISA patient protections is from DOL, Obama administration’s Amicus brief and oral arguments in this case:

“Thousands of healthcare claims are made in this country every day, and some are litigated, and yet no circuit court has ruled that providers must first bill their patients before they may enforce legitimately assigned benefits claims. …. Limiting physicians’ first recourse to their patients will have chilling effects both on providers and plan participants. Participants may forgo or delay vital healthcare because they cannot finance or they cannot pay for their care, and providers may limit their care to those participants whose health plans have previously paid properly assigned healthcare claims or participants who are able to first to pay for the care, or the provider can recognize as creditworthy.”

according to court audio records.

DOL oral argument recording can be heard HERE

For a case summary click HERE

Avym is dedicated to providing plaintiff providers with ERISA appeal compliance and ERISA litigation support in all cases as well as ERISA class actions.  All medical providers and Plans should understand several critical issues regarding the profound impact of this final court decision on the nation’s No. 1 health care claim denial – overpayment demand recoupment and offsetting; including how to correctly appeal every wrongful overpayment demand and subsequent claims offsetting with valid ERISA assignment and the first ERISA permanent injunction.  In addition, when faced with pending litigation and or offsets or recoupments, providers should look for proper litigation support against all wrongful overpayment recoupment and offsetting, to seek for enforcement and compliance with ERISA & PPACA claim regulations.

For more information or to contact AVYM, click HERE

On October 24, 2014, Aetna was slapped with a new provider class-action lawsuit alleging ERISA violations and fraud for its overpayment recoupment and offset practice. The suit also alleges Aetna engaged in withholding or offsetting new payments from providers as part of an “enterprise level” scheme of “illegally” withholding payments for covered services.

Case Info: MAYER-et-al-v.-AETNA-INC.-et-al U.S. District Court for the Central District of CA Civil Docket For Case #: 2:14-cv-08266, Filed 10/24/14.

This class action comes on the heels of another overpayment provider class action lawsuit filed against United Healthcare (UHC) on June 23, 2014. In that case, the overpayment recoupment and offset practices of UHC are alleged to be in violation of ERISA and fiduciary fraud. Avym’s support services were instrumental in allowing multiple plaintiffs the chance to fight back.

Overpayment offset and recoupments continue to be the Healthcare provider industry’s No. 1 claim denial as evidenced by UHC’s own admission that it had recovered $430 million worth of overpayments in 2011 alone. Correspondingly, for self-insured health plans, the No. 1 hidden cost is overpayment recoupment and possible plan assets embezzlement. In another recent case that intertwines ERISA violations and hidden fees, the U.S. Supreme Court rejected an appeal by BCBSMI of a lower court’s ruling which awarded a self-insured ERISA health plan a $6.1 million fraud judgment. The immediate impact of all these cases could be billions of dollars for all self-insured ERISA health plans nationwide, as a result of the ASO/TPA industry’s potential recovery of a billion dollars in overpayment recoupments and anti-fraud campaigns over the past 10 years.

This Aetna case illustrates the need for all employer sponsored health plans to comply with federal ERISA regulations when making demands for overpayment refunds. Attempts to recoup or withhold monies from providers are and should be treated as any other claim denials.  Additionally, Providers need to level the playing field by ensuring they submit ERISA/PPACA compliant appeals which properly request due process and a full and fair review.

According to the lawsuit,

• Aetna has been withholding or offsetting new payments in part or in whole from providers from one patient to satisfy another alleged overpayment in the past from other unidentified and completely separate patients in violation of ERISA;
• Aetna then misleads patients and the plan sponsors as to payments made to the providers by claiming that a “payment” had been “issued” when in fact it was not paid;
• Aetna has never complied with ERISA claims regulation when requesting alleged overpayments and offsetting new payments from other patients.

The putative class on behalf of all similarly situated providers is seeking for ERISA benefits payments due, injunctive and declaratory relief. The provider class action also alleges additional ERISA violations by Aetna for withholding and offsetting newly adjudicated claim payments from one patient to satisfy another alleged overpayment in the past from other unidentified patients which in some cases are members of a completely separate plan, in violation of ERISA.

The complaint also alleges that Aetna misled patients and the plan sponsors on patient EOB’s that indicated “payment” had been “issued”, when in truth and in fact no such payment was ever made to the providers, according to the Court Complaint.

In particular, the complaint alleged the following:

“Aetna is engaged in an enterprise-level scheme whereby it illegally withheld such payments. It did so in order to offset what it believes to be prior overpayments to Plaintiffs made by different Aetna Plans relating to services provided to different Aetna Insureds. It has done so without any legal authority under the Aetna Plan or otherwise, and leaves the Aetna Insureds financially responsible for unpaid bills for Covered Services that their respective Aetna Plans are obligated to pay”

The complaint goes on to allege that:

Instead of availing itself of lawful means of recovering such overpayments under ERISA, Aetna instead engages in illegal self-help designed to circumvent the ERISA regulatory regime. Neither the Aetna Insureds, their ONET providers, nor the language of the Aetna Plans granted Aetna the rights to recover alleged overpayments in this manner”.  The Plaintiffs also allege that Aetna “did not provide any of the informational items or appellate procedures mandated by the ERISA Claims Procedure.”

As more and more of these cases make their way through the courts, it is clear that the previously questionable or “legal gray area” of overpayment recoupment practices engaged in by many of the nation’s biggest insurance carriers, effectively trigger ERISA appeal rights.  Insurers and Health Plans will be forced to comply with all applicable federal laws, ERISA and PPACA claims regulations, as well as statutory fiduciary duties before recouping one single dollar. Providers or patients that face Aetna or any payor recoupments or offsets would do well to understand the implications of these lawsuits as well as their rights under ERISA.

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 services.

Case No. 13–2233.

Submitted January 14, 2014. Filed on August 7, 2014 United States Court of Appeals, Eighth Circuit

Silva v. Metropolitan Life Insurance Company, No. 13-2233 [8th Cir]

Brief of the Secretary of Labor, Thomas E. Perez-As Amicus Curiae in support of plaintiff

Ramifications of Court Decision:

1. Following the Supreme Court’s decision in Amara, the 8th Circuit recognizes the remedy of surcharge could be available to provide monetary “compensation” for a loss resulting from a trustee’s breach of duty.  The court cited the 4th circuit decision saying,”The Fourth Circuit stressed why allowing plan participants to seek the full amount of benefits for a breach of fiduciary obligations under § 1132(a)(3) is so important:
   Quote:

   [W]ith Amara, the Supreme Court clarified that remedies beyond mere premium refunds . . . are indeed available to ERISA plaintiffs suing fiduciaries under Section 1132(a)(3). This makes sense—otherwise, the stifled state of the law interpreting Section 1132(a)(3) would encourage abuse by fiduciaries. Indeed, fiduciaries would have every incentive to wrongfully accept premiums, even if they had no idea as to whether coverage existed—or even if they affirmatively knew that it did not. The biggest risk fiduciaries would face would be the return of their ill-gotten gains, and even this risk would only materialize in the (likely small) subset of circumstances where plan participants actually needed the benefits for which they had paid. Meanwhile, fiduciaries would enjoy essentially risk-free windfall profits from employees who paid premiums on non-existent benefits but who never filed a claim for those benefits. With Amara, the Supreme Court has put these perverse incentives to rest and paved the way for [the plaintiff] to seek a remedy beyond mere premium refund.

2. Reformation and Equitable Estoppel could be allowed as a remedy to the fiduciary’s failure to provide the SPD.  According to the court, “Silva argues that MetLife “waived” the “evidence of insurability” provision in the Plan because the company appeared to approve Abel’s request for coverage when it began to deduct premium payments. Silva argues a remedy for his claim exists in the equitable theory of reformation. We find support for this in Amara’s discussion of reformation under § 1132(a)(3).See Amara, 131 S. Ct. at 1879. There, the Court stated that “[t]he power to reform contracts (as contrasted with the power to enforce contracts as written) is a traditional power of an equity court, not a court of law, and was used to prevent fraud.” Id. (citations omitted). On remand, the District of Connecticut described the reformation remedy available under § 1132(a)(3) as allowing courts “to reform contracts that failed to express the agreement of the parties, owing either to mutual mistake or to the fraud of one party and the mistake of the other.” Amara v. CIGNA, 925 F. Supp. 2d 242, 252 (D. Conn. 2012).“
3. The court finds that a claimant can plead, in the alternative, claims for benefits and breach of fiduciary duty.  The court goes on to say, “It [is] well established in [the Sixth] Circuit that plaintiffs [can] bring claims for breaches of fiduciary duty in ERISA cases, and [can] even do so alongside a claim for benefits in certain circumstances.”

According to the court documents, “However, the Supreme Court’s decision in Amara changed the legal landscape by clearly spelling out the possibility of an equitable remedy under ERISA for breaches of fiduciary obligations by plan administrators. Amara, 131 S. Ct. at 1881. The Amara Court directly addressed the need for this remedy, stating: “[i]t is not difficult to imagine how the failure to provide proper summary information, in violation of the statute, injured employees. . . . We doubt that Congress would have wanted to bar those employees from relief.” Amara, 131 S. Ct. at 1881.

Silva argues the remedy for his claim against Savvis is the equitable theory of surcharge. The Amara Court described equitable surcharge under § 1132(a)(3) as follows:

Amara, 131 S.Ct. at 1880 (internal citations and citations to authority omitted). To obtain relief under the surcharge theory, a plan participant is required to show harm resulting from the plan administrator’s breach of a fiduciary duty. See Amara, 131 S. Ct. at 1881–82 (“We believe that, to obtain relief by surcharge for violations of §§ [1022 and 1024(b)], a plan participant or beneficiary must show that the violation injured him or her. But to do so, he or she need only show harm and causation. Although it is not always necessary to meet the more rigorous standard implicit in the words ‘detrimental reliance,’ actual harm must be shown.”).”

With respect to the Reformation remedies, the court concluded:”On remand, Silva may be able to show mutual mistake or “fraud of one party and the mistake of the other.” See Id. It was arguably fraudulent for MetLife to collect premiums from a Savvis employee who, MetLife now argues, never had an approved policy. Further, MetLife did not just erroneously collect premiums from Abel—an internal MetLife investigation showed that roughly 200 Savvis employees had been paying premiums for policies that were never approved by MetLife. We conclude that Silva is allowed to make his waiver argument on remand, and if successful, receive monetary damages, as will be discussed below.”

The court goes on to recognize an equitable estoppel remedy may be available, “Because MetLife admitted error in collecting the premiums and Abel relied on that collection as proof that he had a policy, Silva argues that MetLife should also be equitably estopped from claiming that no policy existed. Again, without resolving Silva’s claim on the merits, we find that this alleged wrong can survive a Rule 12(b)(6) motion because relief could be granted under § 1132(a)(3)’s catchall provision using the traditional equitable estoppel theory discussed in Amara, 131 S. Ct. at 1880. The concept of equitable estoppel is simple; it “operates to place the person entitled to its benefit in the same position he would have been in had the representations been true.” Id. (citation omitted).”

Case No. 12–55210.

Argued and Submitted January 7, 2014. Filed on August 20, 2014 United States Court of Appeals, Ninth Circuit

Pacific Shores Hosp v United Behavioral Health 9th Cir

US Department of Labor Office of the Solicitor-Pacific Shores Hospital Amicus Brief in support of plaintiffs

Ramifications of Court Decision:

1. United Behavioral Health violated it’s fiduciary duty under ERISA
2. Medical records outside the Administrative Record can be considered if helpful
3. DOL argues that an Administrator’s benefits decision is an abuse of discretion if it is not based on a full and fair review of “ALL RELEVANT FACTS AND CIRCUMSTANCES”

The appeals court determined that the initial court decision in this case, Pacific Shores Hospital v. United Behavioral Health, (UBH) was based only on the administrative record provided by UBH, which contained numerous errors and inconsistencies, and not on any additional materials.

In its appeal, Pacific Shores Hospital argued that procedural irregularities in UBH’s benefits denial made it necessary for the appeals court to consider the denial anew. It also argued that the patient’s hospital records should be considered. Pacific Shores Hospital also argued that UBH was operating under a conflict of interest because it was concerned with maintaining its relationship with Wells Fargo, and Wells Fargo had its own self-interest in wanting to hold down the cost of benefits.

The 9th Circuit decided “all of the relevant circumstances” needed to be considered, including the hospital records and the fact that UBH had never seen the patient and instead relied merely on a paper review of her case.

“It is painfully apparent,” wrote appeals court Judge William Fletcher, “that UBH did not follow procedures appropriate to (the) case.” And this “raise[s] questions about the thoroughness and accuracy of the benefits determination.”

“UBH owed a fiduciary duty to (the patient) under ERISA,” said the decision, citing Pegram v. Herdrich. “The statute provides that fiduciaries shall discharge their duties with respect to a plan ‘solely in the interest of the participants and their beneficiaries,’ [29 U.S.C.] § 1104(a)(1), that is, ‘for the exclusive purpose of (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan,’ § 1104(a)(1)(A).”

The court goes on to say, “Fiduciaries must discharge their duties “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” Id. at 224 n.6 (quoting 29 U.S.C. § 1104(a)(1)(B)).”

“UBH fell far short of fulfilling its fiduciary duty to Jones. Dr. Zucker, UBH’s primary decisionmaker, made a number of critical factual errors. Dr. Center, as an ostensibly independent evaluator, made additional critical factual errors. Dr. Barnard, UBH’s final decisionmaker, stated that he arrived at his decision to deny benefits “after fully investigating the substance of the appeal.” He then rubberstamped Dr. Center’s conclusions. There was a striking lack of care by Drs. Zucker, Center, and Barnard, resulting in the obvious errors we have described. What is worse, the errors are not randomly distributed. All of the errors support denial of payment; none supports payment. The unhappy fact is that UBH acted as a fiduciary in name only, abusing the discretion with which it had been entrusted.“, the 9^th circuit said.

“A plan administrator abuses its discretion if the administrator rendered its decision without any expla­nation, construed provisions of the plan in a way that con­flicts with the plain language of the plan, failed to develop necessary facts for its determination, or relied on clearly erroneous findings of fact in making benefit determinations.“, according to the court records.

Click here for a link to the DOL website and Amicus Brief

On Sep. 15, 2014, in the United States Supreme Court, Blue Cross Blue Shield Association, et al. filed an Amici Curiae Brief in support of BCBSM, appealing a Sixth Circuit Court award of $6.1 million to a self-insured plan. The implications of this Supreme Court decision could potentially return billions of dollars to self-insured health plans across the nation.

In a new twist about a case we have written about before, Hi-Lex Controls v. BCBSM, the BCBS Association has enlisted the help of insurance industry associations America’s Health Insurance Plans (AHIP) and Pharmaceutical Care Management Association (PCMA) in petitioning the US Supreme Court to overturn the lower court’s ruling that the insurer allegedly perpetrated fraud against its customers for nearly 20 years, namely for violating ERISA’s prohibition against self-dealing and breaching its fiduciary duties as well as engaging in fraud and concealment to hide its violations from plaintiffs.

If the Supreme Court upholds the Sixth Circuit decision of $6.1 million award for just one self-insured plan, the immediate impact could be billions of dollars for all self-insured ERISA health plans nationwide, as a result of the TPA industry’s potential recovery of a billion dollars in overpayment recoupments and anti-fraud campaigns over the past 10 years.

Avym Corporation announces new advanced ERISA Embezzlement Recovery Programs in preparation of the forth-coming Supreme Court decision, which will have a multi-billion dollar impact on self-insured health plans nationwide.  Specifically the advanced programs will examine the following issues: (1) determine if any TPA overpayment recoupments and offsets, which are in the billions of dollars nationwide, are ERISA plan assets, (2) ensure all TPA’s properly refunded ERISA plan assets as ERISA prohibits all self-dealings, (3) communicate and clarify self-insured plan administrator’s potential liability for fiduciary breach in failing to safeguard or recover plan assets.

These groundbreaking TPA/ASO auditing programs are unique and unlike any other traditional self-insured health plan overpayment auditing programs and are designed to identify and recover alleged overpayments that have been recouped by the TPAs –but have not been disclosed, restored or refunded to the ERISA self-insured plan assets as required under ERISA statutes and fiduciary responsibilities.  All self-insured health plans and TPAs should monitor this extremely critical Supreme Court decision on the BCBS appeals, in view of the fact that almost every TPA for self-insured health plans has engaged in successful overpayment recoupment and offsetting from healthcare providers in today’s multibillion-dollar overpayment recovery and offset industry.

For over 6 years, Avym Corp. has 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.

On May 14, 2014, in Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Michigan, 2014 WL 1910554, a federal appeals court (Sixth Cir. 2014) upheld a district court’s $6.1 million decision for Hi-Lex, a self-insured ERISA plan against BCBSM for violating ERISA in prohibited transactions and fiduciary fraud. Sixth Cir. concludes that (1) BCBSM served as a fiduciary for self-insured because it held or controlled plan assets and exercised authority over covered assets; (2) the Hi-Lex complaint was not time-barred because BCBSM’s actions triggered ERISA six-year fraud and concealment statute of limitations; and (3) BCBSM’s use of fees by self-paying it discretionarily charged for its own account is exactly the sort of self-dealing that ERISA prohibits fiduciaries from engaging in, according to the court document. (Sixth Circuit, Case Nos.: (13-1773, 13-1859), Decision Date: May 14, 2014).

The district court awarded Hi-Lex over $5 million in damages and prejudgment interest of almost $914,241. According to Hi-Lex’s allegations, BCBSM misrepresented and intentionally concealed these additional fees in contract documents and assured Hi-Lex that no fees were charged other than the administrative fee. Upon learning about the additional fees, Hi-Lex sued, claiming that BSBSM violated ERISA by engaging in self-dealing, according to the court document. (Sixth Circuit, Case Nos.: (13-1773, 13-1859), Decision Date: May 14, 2014).

In the Supreme Court, on Aug 12, 2014, BCBSM filed a Petition for a writ of certiorari, asking the high court to reverse a Sixth Circuit Court decision upholding a district court award of $6.1 million for a self-insured plan for fiduciary breach and ERISA fraud in concealing hidden fees as a TPA to Hi-Lex, a self-insured plan.

On Sep 15, 2014, an Amici Curiae Brief in support of BCBSM was filed by Blue Cross Blue Shield Association, America’s Health Insurance Plans, and Pharmaceutical Care Management Association, arguing “(I) the court of appeals’ decision creates uncertainty about when a third-party administrator is exercising control over plan assets”, and “(II) the court of appeals has created the specter that all third-party administrators could be deemed ERISA fiduciaries”, according to the court document.

BCBSA et al specifically argued: “In short, the determination as to whether an entity is an ERISA fiduciary is an important question with far-reaching ramifications that, in the context of the Sixth Circuit’s incorrect and aberrational decision, warrants this Court’s review. Review of that decision would ensure that the decision does not result in an ill-considered expansion of fiduciary litigation and liability for potentially thousands of ERISA plans covering millions of participants and billions in plan assets.” according to the court document. (Supreme Court Case No. 14-168, Title: Blue Cross Blue Shield of Michigan, Petitioner v. Hi-Lex Controls, Inc., et al., Docketed: Sep 15, 2014).

To find out more about Avym’s Overpayment Recoupment and Embezzlement Recovery Services or to contact us about educational programs please click here.  To Sign up for our newsletter and become an Avym Insider please click here.

On September 3, 2014, a California federal judge ruled in favor of a Los Angeles surgical center by dismissing with prejudice, Cigna’s overpayment lawsuit against La Peer Surgery Center after Cigna administered self-insured plans were counter-sued by the surgical center.  The dismissal came in spite of the fact Cigna prevailed over the provider’s motion to dismiss.

Cigna initially sued the surgical center in March 2013 for allegedly waiving collection of patient deductibles and co-insurance.  The court’s decision represents another surprising resolution to the escalating payor-provider court battles over payor overpayment claims for provider deductible waivers and also punctuated a speedy and effective resolution as the dismissal came less than 30 days after Lapeer’s counter claim against Cigna and many of the Cigna administered self-insured plans.  Surgery centers nationwide dealing with inappropriate overpayment demands and unauthorized payment offsets or recoupments should understand the importance of this case

The case is Cigna. v. La Peer Surgery Center, case number 2:13-cv-03726, in the U.S. District Court for the Central District of California.

On January 17, 2014, La Peer filed a motion to dismiss the amended complaint, arguing that because Cigna only administers the claims for the ERISA-governed plans: 1.Cigna did not use its own money to pay La Peer and is not seeking damages for itself, 2. Cigna must be a fiduciary to have standing under ERISA, a standard La Peer contends Cigna can’t meet.

On March 10, 2014, after a minutes-long hearing in Los Angeles, U.S. District Judge Christina A. Snyder issued a tentative ruling dismissing Cigna’s suit with leave to amend, saying Cigna couldn’t sue as a fiduciary of the health benefit plans because it was not in fact a fiduciary.

On August 7, 2014, following the filing of the amended complaint by Cigna, La Peer filed a counterclaim against CIGNA and many of the Cigna administered self-insured pans that were identified. The La Peer counterclaim against Cigna and the self-insured plans alleged Breach of Fiduciary Duty under 29 U.S.C.§1132(a)(2), seeking for Recovery of Benefits under 29 U.S.C. §1132(a)(1)(B) and Productions of Documents and Penalties under 29 U.S.C.§§ 1024(b), 1133(2), and 1132(c)(1) among other claims.

Among the self-insured plans countersued by La Peer were: A&E Television Networks, Akin Gump Strauss Hauer and Feld, AFTRA Health Plan, Anschutz Entertainment Group, Automobile Club of Southern California, Avnet, Inc., CBRE Services Inc., colony Advisors, LLC, Cornerstone OnDemand, Inc., David M. Lewis Company, LLC, Equity-League Health Trust Fund, Elliott Management Corporation, Forest City Enterprises, Inc., Hillstone Restaurant Group, Inc., Horizon Media, Inc., Jeffer, Mangels, Butler and Mitchell, LLP, Maritz Holdings, Inc., Marriot International, Inc., Morgan Stanley, NetApp, Inc., Newmont USA Limited, Omnicom Group, Inc., Orrick, Herrington & Sutcliffe, LLP, Pillsbury Winthrop Shaw Pittman, LLP, Richemont North America, Sullivan & Cromwell, LLP, The Walt Disney Company, Vubiquity Entertainment Corporation, William Morris Endeavor Entertainment, LLC, XL Reinsurance America, Inc. and Xceed Financial Credit Union.

On August 22, 2014 Judge R. Gary Klausner denied Cigna’s request for an extension to respond to La Peer’s counterclaim.  On September 3, 2014 Less than 30 days after La Peer’s counterclaim, the court dismissed Cigna’s case in its entirety with prejudice.

In response to the dismissal of Cigna’s case against La Peer, Avym Corporation announces new webinars devised to examine the implications of this case to Out of Network providers and facilities everywhere.  These webinars are designed to educate Out of Network providers and facilities in dealing with nationwide overpayment recoupment and offsetting practices by almost every insurance company and health plan, leaving many American workers and their families as well as their health care providers no protections as afforded under federal law ERISA.

Avym announces new webinars and advanced ERISA claim specialist programs in order to:

• Demystify the profound impact of this court decision regarding the nation’s No. 1 health care claim denial – overpayment demand recoupment and offsetting;
• Correctly appeal every inappropriate overpayment demand and subsequent claims offsetting with a valid ERISA assignment and the first ERISA permanent injunction;
• Provide proper litigation support against all unauthorized and inappropriate overpayment recoupments and offsets, to seek for enforcement and compliance with ERISA & PPACA claim regulations;

Avym is headquartered in in Los Angeles, CA and is the leading provider of ERISA/PPACA health claim appeal services, reimbursement compliance, dead claims recovery services and ERISA/PPACA healthcare claim litigation support services.  To get more information or to contact Avym, click here.

On June 23, 2014, UnitedHealthcare was sued in a new provider class-action for its overpayment recoupment and offset practice, alleging ERISA violations and fraud. The new suit also alleges UHC engaged in withholding or offsetting new payments from providers while misinforming patients.

Overpayment offset and recoupments are Healthcare provider’s No. 1 denial; correspondingly, for self-insured health plans, the No. 1 hidden cost is overpayment recoupment and possible plan assets embezzlement. On June 23, 2014, UnitedHealthcare (UHC) was sued in a new provider class-action for its overpayment recoupment and offset practice for alleged ERISA violations and fiduciary fraud. The new ERISA class-action suit alleges:

• UHC has been withholding or offsetting new payments in part or in whole from providers from one patient to satisfy another alleged overpayment in the past from other unidentified patients in violation of ERISA;
• UHC then misleads patients and the plan sponsors as to payments made to the providers;
• UHC has never complied with ERISA claims regulation when requesting alleged overpayments and offsetting new payments from other patients.

The new putative class on behalf of all similarly situated providers is seeking for ERISA benefits payments due, injunctive and declaratory relief, and ERISA notice and appeal rights.

“The No. 1 health care claim denial in the nation is payer overpayment recoupment and offset practice that does not comply with ERISA rules.  These offsets can go as far back as several years and affect all types of claims, potentially resulting in inevitable provider bankruptcy and subsequent patient bankruptcy”, according to Dr. Jin Zhou, president of ERISAclaim.com, a national expert on ERISA compliance and appeals.

The court case info: Peterson, D. C, et al v. UnitedHealth Group. et al, U.S. District Court U.S. District of Minnesota (DMN), Civil Docket For Case #: 0:14-cv-02101-PAM-SER, Filed 06/23/14.

Significantly, this ERISA putative provider class-action for the “Offset Class” was filed in the wake of and in accordance with a similar provider class-action filed recently in New Jersey for the “Recoupment Class”: Case Info: Premier Health Center, P.C., et al. v. UnitedHealth Group, et al., Case#: 2:11-cv-00425-ES-SCM, Filed 08/01/13, United States District Court for The District of New Jersey.

In last year’s court decision the court ruled against UHC in its overpayment recoupment practice:  “To be sure, as previously discussed, United’s recoupment procedures violate three specific ERISA regulations across the class.” according to the court document. “In 2011, United recovered approximately $430 million in overpayments to providers. 58% of the $430 million was recovered as a result of providers’ voluntarily sending a check to United, while 42% was recovered through offsets”, according to the court document. “However, they all violate ERISA in three respects. First, they fail to provide “[a] description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring acivil action under section 502(a) of [ERISA] following an adverse benefit determination on review.” 29 C.F.R. § 2650.503-1(g)(1)(iv).25 Second, they fail to indicate that the provider, “upon request and free of charge, [will have] reasonable access to, and copies of, all documents, records, and other information relevant to the” overpayment determination. 29 C.F.R. §2650.503-1(h)(2)(ii). Third, they fail to “[p]rovide claimants at least 180 days following receipt of a notification of an adverse benefit determination within which to appeal the determination.” 29 C.F.R. § 2650.503-1(h)(3)(i).” according to the court document.

In the new UHC provider class-action, healthcare providers alleged additional ERISA violations by UnitedHhealthcare Group for withholding and offsetting newly adjudicated claim payments from one patient to satisfy another alleged overpayment in the past from other unidentified patients which in some cases are members of a completely separate plan, in violation of ERISA.

Additionally, the new lawsuit alleges that UHC misled patients and the plan sponsors on patient EOB’s that indicated “payment made to provider”, when in truth and in fact no such payment was ever made to the providers, according to the Court Complaint.

In particular, the plaintiff Lutz Surgical Partners alleged the following:

“For example, ……Instead, United identified a different United Insured covered by a different United Plan who had been treated by Lutz on December 16, 2012. According to the PEOB, United caused that United Plan to pay Lutz $19,460.00 for this treatment which was now characterized by United as the “ORIGINAL OVERPAYMENT AMOUNT.” The PEOB then explained that the entire amount owed to Lutz for the services provided to the June 12, 2013 patient ($2,700.00) was being unilaterally offset against the prior alleged overpayment relating to the December 16, 2012 patient ($19,460.00), with the added explanation that “THIS REPRESENTS PREVIOUS BENEFITS THAT WERE PAID IN ERROR.” United therefore reported that the “TOTAL PAID TO THE PROVIDER” for services rendered to the June 12, 2013 patient was $0.00. In the “REMARKS” section of the PEOB, United stated: “The amount payable for this Explanation of Benefits has been used to reduce an overpayment made on the given claim(s). Please adjust your patient account balance accordingly.” according to the court document.

As more and more of these cases make their way through the courts, it is clear that the questionable or “legal gray area” of overpayment recoupment practices engaged in by many of the nation’s biggest insurance carriers, effectively triggers ERISA appeal rights.  Insurers and Health Plans will be forced to comply with all applicable federal laws, ERISA and PPACA claims regulations, as well as statutory fiduciary duties before recouping one single dollar. Providers or patients that face UHC or any payor recoupments or offsets would do well to understand the implications of these lawsuits as well as their rights under ERISA.

For more information click here.

Overpayment offset and recoupments are Healthcare provider’s No. 1 denial; correspondingly, for self-insured health plans, the No. 1 hidden cost is overpayment recoupment and possible plan assets embezzlement.

On May 14, 2014, a federal appeals court upheld a district court’s $6.1 million award for a self-insured ERISA plan against Blue Cross and Blue Shield of Michigan (BCBSM) for violating ERISA’s rules regarding prohibited transactions and fiduciary fraud.  The federal courts agreed that federal ERISA law prohibits BCBSM’s TPA self-dealing as an ERISA fiduciary by withholding all hidden fees or overpayment recovery, despite a prior state court decision upholding the enforceability of BCBSM’s TPA/ASO agreement.  This unprecedented decision will have tremendous repercussions for all self-insured health plan TPAs, as well as the Self-Insured Plans that employ them, in all overpayment recoupment actions.

In the first ruling of its kind, on behalf of all self-insured health plans, the federal courts ruled:

1. ERISA prohibits BCBSM TPA self-dealing by retaining or withholding from plan assets regardless of BCBSM TPA/ASO agreement;
2. ERISA prohibits BCBSM TPA fraudulent concealing or misrepresenting the plan claim hidden fees and TPA recoveries/savings,
3. ERISA mandates BCBSM to refund self-insured plan assets for $6.1 million, according to the Sixth Circuit Court document.

(The court case info: Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Michigan, NOS. 13-1773/1859. United States Court of Appeals, Sixth Circuit, Decided and Filed: May 14, 2014).

In compliance with new federal appeals court decision for self-insured plans, Avym Corporation announces timely and critical solutions to the nation’s No. 1 health care cost driver for all self-insured plans: health claim overpayment recoupment/offset and plan assets embezzlement under ERISA.   The groundbreaking TPA/ASO auditing programs are unique and unlike any other traditional self insured health plan overpayment auditing programs and are designed to identify and recover alleged overpayments that have been recouped by the TPAs —but have not been disclosed, restored or refunded to the ERISA self insured plan assets as required under ERISA statutes and fiduciary responsibilities.   These federal court decisions are critical for all self-insured health plans to understand, in view of the fact that almost every TPA for self-insured health plans has engaged in successful overpayment recoupment and offsetting from healthcare providers in today’s multibillion-dollar overpayment market.

In the healthcare provider arena the No. 1 health care claim denial in the country today is the overpayment recoupment and claims-offset.  Correspondingly, for self-insured health plans, the No. 1 hidden cost is overpayment recoupment and plan assets embezzlement.

“This is the first appellate court decision to protect self-insured health plans and millions of hard-working American workers and their families,” says Dr. Jin Zhou, president of ERISAclaim.com, a national expert in ERISA compliance and overpayment recoupment plan assets recovery.

The Six Circuit Opinion: “SILER, Circuit Judge. The Hi-Lex corporation, on behalf of itself and the Hi-Lex Health & Welfare Plan, filed suit in 2011 alleging that Blue Cross Blue Shield of Michigan (BCBSM) breached its fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) by inflating hospital claims with hidden surcharges in order to retain additional administrative compensation. The district court granted summary judgment to Hi-Lex on the issue of whether BCBSM functioned as an ERISA fiduciary and whether BCBSM’s actions amounted to self-dealing. A bench trial followed in which the district court found that Hi-Lex’s claims were not time-barred and that BCBSM had violated ERISA’s general fiduciary obligations under 29 U.S.C. § 1104(a). The district court also awarded pre- and post-judgment interest. We AFFIRM.” according to the Sixth Circuit Court document

In particular, Sixth Circuit noted: “Furthermore, after a nine-day bench trial, the district court ruled that BCBSM had violated its general fiduciary duty under § 1104(a) and that Hi-Lex’s claims were not time-barred. The court awarded Hi-Lex $5,111,431 in damages and prejudgment interest in the amount of $914,241.” according to the Sixth Circuit Court document.

In finding against BCBSM for fiduciary fraud, the Sixth Circuit states: “BCBSM committed fraud by knowingly misrepresenting and omitting information about the Disputed Fees in contract documents. Specifically, the ASC, the Schedule As, the monthly claims reports, and the quarterly and annual settlements all misled Hi-Lex into believing that the disclosed administrative fees and charges were the only form of compensation that BCBSM retained for itself. BCBSM also “engaged in a course of conduct designed to conceal evidence of [its] alleged wrong-doing…… Finally, according to BCBSM’s own survey of its self-insured customers, a substantial majority – 83% – did not know the Disputed Fees were being charged.”, according to the Sixth Circuit Court document.

In concluding against BCBSM’s self-dealing and withholding, the Sixth Circuit concluded: “A fiduciary with respect to an ERISA plan “shall not deal with the assets of the plan in his own interest or for his own account.” 29 U.S.C. § 1106(b)(1). As interpreted by this court, that statute contains an “absolute bar against self dealing.” Brock v. Hendershott, 840 F.2d 339, 341 (6th Cir. 1988). Because this case involves the same ASC, same defendant, and same allegations, our decision in Pipefitters IV controls with respect to the § 1106(b)(1) claim. See Pipefitters IV, 722 F.3d at 868 (holding that BCBSM’s use of fees it discretionarily charged “for its own account” is “exactly the sort of self-dealing that ERISA prohibits fiduciaries from engaging in”).” according to the Sixth Circuit Court document.

To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs click here.