Archives 2015

ERISA-The Gift That Keeps On Giving-Part 2: Court Grants Bankrupt Hospitals ERISA “Special Collection Agent” for All Denied Claims

Just in Time for the Holidays, Federal Court Grants Bankrupt Hospitals ERISA “Special Collection Agent” for All Denied Claims

On Dec 03, 2015, a federal Bankruptcy Court approved an application to employ an ERISA “Special Collection Agent” for Debtors filed by Victory Parent Company, LLC in the wake of the Hospital group’s Chapter 11 bankruptcy filings. The approval underscores the profound impact ERISA will have for the entire hospital industry and medical providers, particularly out-of-network, facing economic hardships, including bankruptcy filings. Compliant ERISA and PPACA appeals and litigation are the only way to protect a hospital or healthcare provider from bankruptcy.

The Employment Retirement Income Securities Act (ERISA), enacted in 1974, is the key governing law for all employer sponsored plan’s healthcare claims in the private industry. ERISA is a federal law that sets minimum standards for most voluntarily established health plans in private industry to provide protection for individuals in these plans. In September of 2010, the Patient Protection & Affordable Care Act, (aka Obamacare), adopted ERISA in its entirety, as the governing federal laws, for internal appeals in all group plans and individual policies or PPACA exchange market plans, for both ERISA and non-ERISA plan claims.

The court approval allows the hospitals to immediately start filing ERISA/PPACA compliant appeals on all denied claims as well as the option to pursue judicial reviews in federal court in order to advocate for all patient ERISA/PPACA appeal rights.

This unprecedented approval will also have a profound impact on available collection remedies and affords the hospitals an alternative to, inevitably, dragging patients into medical bankruptcies, the leading cause of personal bankruptcy in the nation today.

 The U.S. Bankruptcy Court for the Northern District of Texas approved the application to employ a “Special Collection Agent” for debtors filed by Victory Parent Company, LLC in the wake of the hospital group’s Chapter 11 bankruptcy filings on June 12, 2015 (Victory Medical Center Mid-Cities, LP et. al., Chapter 11, Case No. 15-42373-Rfn-11). The Court ordered that ERISA godfather Dr. Jin Zhou be employed as a “Special Collection Agent to provide all necessary collection services to the Debtor as described in the Application pursuant to 11 U.S.C. §§ 327(a) and 328(a).

On June 12, 2015, Victory Parent Company, LLC and four Texas medical centers voluntarily filed under Chapter 11 to preserve value, effect asset sales, according to the Victory Parent Company web site.

According to Robert N. Helms, Jr., Chairman, CEO and Manager of Victory, who managed six for-profit Victory Healthcare medical and surgical centers in Texas before the filing for Chapter 11, Victory built an extremely high quality, state-of-the-art group of community-centric medical centers and hospitals. Unfortunately, due to their out-of-network provider business model, they came under attack by large insurance carriers. Even though they were able to secure in-network agreements with three large insurers, sluggish claim processing and lack of payment from the carriers constrained liquidity significantly.

Unfortunately the situation with Victory is becoming all too common. According to a recent Becker’s Hospital Review industry report published on Sep 15, 2015, 10 hospitals had filed for bankruptcy as of Sept 2015. In fact, Hospital bankruptcy filings are headline news every day, mainly due to alleged denied claims and failed claims reimbursement.

In Re: Victory Medical Center Mid-Cities, LP et. al., “The Debtors in these cases, along with the last four digits of their respective taxpayer ID numbers, are Victory Medical Center Mid-Cities, LP (2023) and Victory Medical Center Mid-Cities GP, LLC (4580), Victory Medical Center Plano, LP (4334), Victory Medical Center Plano GP, LLC (3670), Victory Medical Center Craig Ranch, LP (9340), Victory Medical Center Craig Ranch GP, LLC (2223), Victory Medical Center Landmark, LP (9689), Victory Medical Center Landmark GP, LLC (9597), Victory Parent Company, LLC (3191), Victory Medical Center Southcross, LP (8427), and Victory Medical Center Southcross GP, LLC (3460).” according to the Court document.

 According to the court document published on December 3, 2015, the Court ORDERED THAT:

1. Dr. Jin Zhou d/b/a ERISAclaim.com be employed as Special Collection Agent to provide all necessary collection services to the Debtor as described in the Application pursuant to 11 U.S.C. §§ 327(a) and 328(a);

  1. Dr. Zhou is employed, effective November 3, 2015, as Special Collection Agent to provide all necessary collection services to the Movant in this case as set forth in the Application.
  2. Dr. Zhou shall be entitled to compensation as set forth in the Application and in the Claims Recovery Service Agreement attached hereto as Exhibit A without further application or order of this Court.”

Avym is dedicated to empowering providers with ERISA appeal compliance and ERISA litigation support in all cases as well as ERISA class actions.  All medical providers and Health Plans should understand critical issues regarding the profound impact of this and other court decisions on the nation’s medical claim denial epidemic. Providers should also know how to correctly appeal every wrongful claim denial and 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 claim denials and overpayment recoupment and offsetting, to seek for enforcement and compliance with ERISA & PPACA claim regulations.

Inside Corporate America’s Campaign to Ditch Workers’ Comp

One Texas lawyer is helping companies opt out of workers’ compensation and write their own rules. What does it mean for injured workers?

STANDING BEFORE A GIANT MAP in his Dallas office, Bill Minick doesn’t seem like anyone’s idea of a bomb thrower. But backed by some of the biggest names in corporate America, this mild-mannered son of an evangelist is plotting a revolution in how companies take care of injured workers. His idea: Let them opt out of state workers’ compensation laws — and write their own rules.

 

 

ProPublica and NPR obtained the injury benefit plansof nearly 120 companies who have opted out in Texas or Oklahoma — many of them written by Minick’s firm — to conduct the first independent analysis of how these plans compare to state workers’ comp. The investigation found the plans almost universally have lower benefits, more restrictions and virtually no independent oversight.

Already in Texas, plans written by Minick’s firm allow for a hodgepodge of provisions that are far different from workers’ comp. They’re whyMcDonald’s doesn’t cover carpal tunnel syndrome and why Brookdale Senior Living, the nation’s largest chain of assisted living facilities, doesn’t cover most bacterial infections. Why Taco Bell can accompany injured workers to doctors’ appointments and Searscan deny benefits if workers don’t report injuries by the end of their shifts.

And it’s Minick’s handiwork that allows Costco to pay only $15,000 to workers who lose a finger while its rival Walmart pays $25,000.

Unlike traditional workers’ comp, which guarantees lifetime medical care, the Texas plans cut off treatment after about two years. They don’t pay compensation for most permanent disabilities and strictly limit payouts for deaths and catastrophic injuries.

The list of what the plans don’t cover runs for pages. They typically won’t pay for wheelchair vans, exposure to asbestos, silica dust or mold, assaults unless the employee is defending “an employer’s business or property,” chiropractors or any more than 75 home health care visits. Costco won’t cover external hearing aids costing more than $600. The cheapest external hearing aid Costco sells? $900.

The plans in both Texas and Oklahoma give employers almost complete control over the medical and legal process after workers get injured. Employers pick the doctors and can have workers examined — and reexamined — as often as they want. And they can settle claims at any time. Workers must accept whatever is offered or lose all benefits. If they wish to appeal, they can — to a committee set up by their employers.

Dallas attorney Bill Minick is leading a national effort, backed by some of the biggest names in corporate America, to let companies “opt out” of workers’ comp and create their own injury benefit plans. (Dylan Hollingsworth for ProPublica)

In many cases, ProPublica and NPR found, the medical director charged with picking doctors and ultimately reviewing whether injuries are work-related is Minick’s wife, Dr. Melissa Tonn, an occupational medicine specialist who often serves as an expert for employers and insurance companies.

Workers’ comp was founded on the premise that employers owed a duty to injured workers and their families. And laws in every state require them to pay workers’ medical bills and some of their lost wages until they recover — or for life if they can’t.

Earlier this year, a ProPublica and NPR investigation detailed how states have chipped away at these guarantees. A series of new laws has cut benefits, given employers and insurers more control over medical care, and made it more difficult for workers to qualify for coverage. But other than Texas and Oklahoma, no state has allowed companies to simply opt out.

Minick, 55, markets his vision as a cure for the endless cycle of cuts.

“It’s not about reducing benefits,” he said. “We can objectively show you that we have saved our clients over a billion dollars against Texas workers’ comp over the past decade. When you’re saving that kind of money, you don’t have to get hung up on squeezing the employee.”

Yet Minick’s push has united an unlikely set of allies — unions, trial lawyers and insurance companies. They say his idea isn’t progress, but a return to the Industrial Age before workers’ comp, when workers and their families had to sue their employers or bear the costs of on-the-job injuries themselves.

“That’s the system we had in place 100 years ago,” said Trey Gillespie, senior workers’ comp director for the Property Casualty Insurers Association of America. “This is not an innovative concept.”

Mike Pinckard, a Fort Worth truck driver for 31 years, remembered when his employer, Martin-Brower, McDonald’s largest distributor, announced last November that it would be switching to an opt-out plan.

“They told us this was going to be the best thing, that this was going to be better than workers’ comp,” he said.

Two months later, Pinckard said, he was pulling a cart loaded with frozen French fries when he slipped on some ice in his trailer and suffered a hernia. He had previously had two hernias on the job that were covered by workers’ comp and figured this time would be no different.

But the denial letter said the plan for Reyes Holdings, which owns Martin-Brower, only covers two types of hernias — not the kind Pinckard suffered.

“The only way it was covered was if it was directly under my belly button,” he said. “Mine was slightly above my belly button.”

In this instance, as in others ProPublica and NPR found, the costs of the injury were shifted to the employee, group health or government programs.

Pinckard, 58, said he’s spent over $10,000 in deductibles and copays after getting the hernia covered by his health plan.

“I gave my body and soul to the company, and they were doing the same back until last year,” he said. “It’s just an easy way for the company to get out of when you get hurt. It’s all it is.”

The Texas Way

Texas has always allowed employers to opt out of workers’ comp. But until insurance premiums started rising rapidly in the late 1980s, most companies considered it foolish because carrying workers’ comp protected them from lawsuits.

Minick was a young lawyer for one of Dallas’ oldest firms in 1989, when some of the firm’s business clients, gambling that the cost of any lawsuits would be cheaper, began dropping workers’ comp. The senior partners assigned Minick and several colleagues to come up with an alternative.

They found it in the Employee Retirement Income Security Act, a federal law passed in the early 1970s to protect workers as employers were shedding their pensions.

ERISA had been applied similarly to other worker benefits, such as health plans and disability policies. Minick and his colleagues decided it could provide a legal framework for plans covering on-the-job injuries.

Texas courts agreed, even though, compared to workers’ comp, the ERISA-based plans gave employers critical advantages. Under ERISA, appeals are heard in federal court, rather than state workers’ comp courts. And in general, judges could rule only on whether a denial was reasonable — not whether it was fair. This gave employers far greater control.

As more and more companies adopted plans, in 1994 Minick struck out on his own. His consulting firm, PartnerSource, soon became a one-stop shop for companies looking to drop workers’ comp. For a flat fee, PartnerSource hooks companies up with insurance carriers, claim administrators, medical networks and defense lawyers. It also serves as the first line of defense, reviewing claims and advising companies how to avoid lawsuits.

Already, such plans cover nearly 1.5 million workers in Texas and Oklahoma — more than are covered under 21 states’ workers’ comp systems. PartnerSource writes about 50 percent of the opt-out plans in Texas and nearly 90 percent in Oklahoma, alone covering more workers than 14 state programs.

Bill Minick’s company PartnerSource writes about 50 percent of the opt-out plans in Texas and nearly 90 percent in Oklahoma. “We’re talking about reengineering one of the pillars of social justice that has not seen significant innovation in 100 years,” he said. (Dylan Hollingsworth for ProPublica)

PartnerSource’s offices overlook a posh part of Dallas. The firm’s walls are a monument to Minick’s success, decorated with framed thank you letters from companies who’ve hired him. Inside his office, the mementos are different, reflecting his values. There are pictures of Boy Scouts trips he’s led and letters from charities he’s supported. The radiant plumage of a pheasant he shot is stuffed and mounted next to the doorway.

Minick sells his idea earnestly, speaking with a matter-of-fact certainty that disarms skeptics and defies arguments to the contrary.

With practiced ease, he rattled off the common gripes about workers’ comp: Companies dig in their heels at the first sign of a claim and turn workers into adversaries. Insurers don’t communicate about benefits, causing workers to hire lawyers. Doctors are often picked based on discounts rather than quality. And the system, he said, has created a huge bureaucracy in the name of protecting workers’ rights.

As a result, injured workers no longer have any accountability, he said. They can report claims late, skip doctors’ appointments and appeal every perceived wrong to workers’ comp court rather than trying to work it out with their employers.

Under opt-out plans, Minick said, companies must be engaged in the process, educating new workers about their benefit plans and managing their medical care if they get hurt. This control allows employers to better monitor workers’ progress and ensure they return to work as soon as possible, he said.

“This is not the Industrial Age,” he said. “Workers’ compensation systems grew up at a time when employers did not care about their employees. If one got hurt, you cast him aside and brought in the next immigrant to fill that job. Now companies are competing to be a best place to work.”

An analysis by Minick’s firm shows that opt-out plans save companies between 40 and 90 percent because they have lower costs per claim, get injured employees back to work faster and handle fewer disputes. That means greater employee satisfaction, Minick said.

If the analysis is correct, Minick’s plans would herald an important answer to the nation’s eroding workers’ comp systems.

But the only data available to assess his claims comes from his firm. More than 30 companies contacted by ProPublica either wouldn’t discuss their programs in detail or didn’t return calls.

Steve Schaal, associate general counsel of Tyson Foods, said the company opted out in Texas to give it more control over which doctors workers can see and “to try to get our injured employees the best possible medical care.” Schaal said the company hasn’t taken a position on expanding opt out to other states. Tyson wouldn’t provide an updated copy of its plan.

Employers aren’t required to submit any information about their plans with the state, since Texas doesn’t regulate opt-out plans. For several legislative sessions, employers have fought bills that would have required them to share their data.

PartnerSource’s analysis comes with some significant, unstated caveats: Employers with opt-out plans tend to work in safer industries like retail, which typically has less severe, less expensive claims. The plans also don’t offer entire categories of benefits that state laws require and give employers more options to exclude complicated claims.

For example, workers’ comp gives employees 30 days to report an injury in Texas. Under opt-out plans, employees typically must report by the end of the shift or in 24 hours or lose all benefits.

Costco, which saw its costs drop 53 percent after opting out, acknowledged in a 2012industry report that it denied some employees with legitimate work injuries because they reported late. Those workers, the report said, used their denial letters to get treatment under the company health plan.

Minick and other proponents say while plans can make exceptions, such rules ensure workers get medical care as soon as possible, speeding their recovery.

But public health experts say workers might not report minor injuries right away for valid reasons: They fear looking like troublemakers or worry about child care if they need to see a doctor or stay late filling out forms.

Or, like Rebecca Amador, they simply might not realize an injury’s severity. Amador, a nursing assistant, was helping a patient transfer to a wheelchair at a Stephenville, Texas, nursing home in November 2013, when the chair’s brake unlocked, causing her to support the patient’s weight.

“I felt like a pinch in my back and I thought well, it’s been a long day, I’m tired,” said Amador, then 51. “So I paid no mind to it. I figured it would go away. Usually it goes away.”

She took a hot shower and went to bed. By the next morning, she remembers being in so much pain she could hardly breathe.

As soon as she got to work, Amador told her supervisor, who sent her to the hospital. Only 19 hours had passed. But her employer, Fundamental Long Term Care, rejected her claim, saying she had failed to report it by the end of her shift.

The company’s decision left Amador in a Catch-22. Even though her injury happened at work, the company’s Texas plan wouldn’t cover it. But because it was work-related, neither would her health insurance or short-term disability plan. Had she worked for Fundamental in one of the other states where it operates, her injury would have been covered under workers’ comp.

Amador sought help at a publicly funded health clinic, where her doctor recommended a specialist. But she couldn’t afford one. She tried light-duty work until her doctor warned she could do further damage.

Since then, Amador said, she’s been living off her son’s Social Security benefits and borrowing from a lawsuit settlement fund set up for him after his father died of mesothelioma. Her daughters help pay for medications, and she’s applying for Social Security disability.

Sitting in her trailer nearly two years after the incident, she said her back burns like she’s in a fire, and she can’t even carry a two-liter soda bottle.

“I would probably still be working there” if Fundamental had workers’ comp, Amador said. “Maybe I could have gotten better, maybe I could have gotten my therapy done, and I wouldn’t be in the situation I’m in.”

Reading the Fine Print

The fine print of opt-out plans contains dozens of opportunities for companies to deny benefits. Employers can terminate workers’ benefits for being late to doctors’ appointments, failing to check in with the company or even consulting their personal doctors.

One truck driver for a food and beer distributor complained in court documents that his direct supervisor accompanied him to medical appointments for his hernia — a requirement under the plan.

Some plans have restrictions that read like the terms of criminal probation. While they’re healing, injured workers at W. Silver, a steel products manufacturer in El Paso, are prohibited from leaving the area, even temporarily, or engaging in any “pleasure” that may delay recovery.

Sometimes the plans of PartnerSource and others abandon fundamental principles of workers’ comp.

For nearly 40 years, every state has covered occupational diseases and repetitive stress injuries, recognizing medical research that some conditions develop over time. But in Texas, a number of companies, including McDonald’s and the United Regional Health Care System, don’t cover cumulative trauma such as carpal tunnel. U.S. Foods, the country’s second largest food distributor, also doesn’t cover any sickness or disease “regardless of how contracted,” potentially allowing it to dodge work-related conditions such as heat stroke, chemical exposures or even cancer.

Since its beginning, workers’ comp has paid benefits regardless of whether the employer or worker was at fault. But several companies, including Home Depot, Pilot Travel Centers and McDonald’s, exclude injuries caused by safety violations or the failure to obtain assistance with a particular task.

Under workers’ comp, employees can’t be fired in retaliation for a claim. But employers that opted out argued that their workers weren’t entitled to that protection, and in 1998 the Texas Supreme Court agreed.

Gillespie, of the insurance association, said such provisions blatantly shift costs to taxpayers, in the form of Social Security disability, Medicare and Medicaid. Some plans state it explicitly: The plan for Russell Stover Candies said its benefits are secondary to all other sources of benefits. Home Depot requires its employees to “take whatever benefits are available,” including enrolling in Social Security disability.

And as Joe Becker, a truck driver in Abilene, Texas, discovered, workers no longer have the promise of lifetime medical care for on-the-job injuries.

After truck driver Joe Becker herniated discs in his back on the job, his employer, Dent Truck Lines, paid for surgery. But when he needed a second operation to remove screws causing him pain, Dent refused to pay, saying it was past the two-year time limit. Becker, who lives in Abilene, Texas, now lives on Social Security disability. (Dylan Hollingsworth for ProPublica)

Becker said he herniated several discs in his lower back in June 2012 when he hopped off his flatbed trailer after adjusting a load. His employer, Dent Truck Lines, paid for surgery that put rods and screws in his back. The surgery helped, but the screws dig into his back, occasionally hitting a nerve.

The doctor recommended surgery to remove the screws in 2014, medical records show. But because Dent’s benefit plan provides only two years of medical care, Becker was out of luck.

His boss, Cliff Dent, said he’d go out of business if he had to carry workers’ comp and doesn’t think Becker is “deserving.”

“The whole deal is just kind of silly, like most of these deals are — people looking for free money,” he said.

On the edge of being homeless, Becker, 44, applied and qualified for Social Security disability. He struggles to pay bills. For several weeks this spring, he said, he subsisted on a half a can of ravioli or SpaghettiOs a day.

“Sometimes I have to make a choice,” he said, sitting uncomfortably on his worn sofa. “Do I buy my pain meds or whatever other medicine that I need or do I buy groceries?”

So, Sue Me — Or, Rather, Arbitrate

Under the bargain of workers’ comp, employees gave up their right to sue their employers in return for guaranteed care and wages. The tradeoff in Texas is that injured workers covered by opt-out plans can sue their employers for negligence, potentially winning millions of dollars.

This risk is why many companies cap medical benefits at two years, Minick said. When injuries are severe enough to require lengthy medical care, many companies settle with workers, giving them a lump sum to cover future medical expenses and permanent disabilities.

On a more basic level, the threat of lawsuits, Minick and other proponents assert, creates a healthy incentive for companies to keep their workplaces safe.

But over the years, large companies have found a series of ways to reduce the risk of lawsuits.

Under workers’ comp, employees denied benefits can typically get hearings before administrative law judges. They can appeal further to a workers’ comp commission and even up to the state supreme court.

Under opt-out plans, workers’ only avenue of appeal is a committee set up by their employers for what is largely a paperwork review. Lowe’s hardware and Albertsonssupermarkets have contracted out their appeals to a Pennsylvania company called ELAP Services, which describes its mission as helping employers “control employee health care costs.”

ELAP’s president said the goal is to provide an objective review of the claim outside of the company’s basic business model of reducing medical bills.

But Gillespie said, “It’s potentially still somebody who either has a vested interest or is employed by somebody who has a vested interest.”

If the claim is still denied, workers can file an ERISA lawsuit in federal court. But the judge is typically limited to deciding if the company followed its plan or acted arbitrarily and capriciously — not whether the company was right.

A number of rulings by Texas courts have added to employers’ leverage, creating a higher bar for workers to prove their employers were negligent for common slip-and-fall and lifting injuries.

Many companies have further limited the risk by requiring employees to sign arbitration agreements. Instead of going before a jury, workers’ disputes are handled confidentially, out of court, before an arbitrator, typically a former judge or defense lawyer.

A 2010 survey of large employers with opt-out plans by a Stanford law professor found that 85 percent used arbitration agreements. Arbitration appeared to save companies money. Only a quarter of those companies had paid a claim over $500,000. And only 10 percent had paid more than one claim over $500,000 — compared with 38 percent of companies that didn’t use arbitration.

More strikingly, 81 percent of employers reported having no or hardly any “trouble with litigation.”

For many years, several companies that opted out required new employees to sign pre-injury waivers saying they wouldn’t sue the company if they got hurt. Texas banned that practice in 2001.

But many large meat and poultry companies, such as Tyson Foods, Cargill and Pilgrim’s Pride, continued to use post-injury waivers. After reports of workers signing waivers at hospitals — sometimes while still bleeding — the legislature tried to ban that too.

The debate over waivers presented a turning point for Minick to demonstrate his political savvy.

The largest group for employers that opted out, the Texas Association of Responsible Nonsubscribers, decided to support the ban, considering such practices abusive.

That rankled several members of the state’s business chamber, who had opted out and wanted to preserve their ability to avoid lawsuits.

With Minick’s help, they drafted legislation in 2005 that allowed waivers so long as there was a cooling off period of 10 days after the injury. Following the success of that measure, Minick helped chamber members form a new group for employers with opt-out plans. They called it the Texas Alliance of Nonsubscribers and hired the chamber’s longtime lobbyist, Richard Evans, who had been deputy legislative affairs director for George W. Bush when he was governor.

For the first time, Minick became his clients’ political partner, guiding their ambitions to shape legislation and the future of workplace injury benefits.

Recognizing the growth potential, the global insurance brokerage Arthur J. Gallagher & Co. acquired PartnerSource in 2009 in a deal that left Minick in charge. The financial terms weren’t disclosed, but documents filed with securities regulators in 2012 reveal that Minick and his partners, which included two charities, received $7 million in Gallagher shares as a bonus payment.

Minick would soon begin justifying the investment. Spurred by Texas clients eager to opt out in other states, PartnerSource started looking at opportunities elsewhere.

Their first target was due north: Oklahoma.

Sweepin’ Down the Plain

Year after year, Oklahoma’s legislature had tried to overhaul its workers’ comp system to lower insurance rates, which were higher than those in surrounding states. But the changes only brought modest drops.

In 2011, Minick brought a group of his frustrated clients together in the Oklahoma Injury Benefit Coalition, led by Hobby Lobby and the Unit Corp. drilling company. The group recruited Steve Edwards, the former state Republican Party chairman, as its lobbyist.

“Our claims process in Texas was a lot quicker and resolved a lot faster than anything we ever had in Oklahoma,” said Mark Schell, Unit’s senior vice president and general counsel. “We’ve had claims in other states including Oklahoma that are two to three years old because we can’t get them resolved. You have no control over them and they just drag on and on.” (Unit recently opted back in in Texas after a spate of serious injuries during the oil boom increased their legal costs. But Schell said he still believes in opt out.)

The group’s first effort to pass an opt-out bill was narrowly defeated in 2012. But they returned in 2013 with a new partner, the State Chamber of Oklahoma, and a more ambitious plan — not only to pass an opt-out option, but to rewrite the entire Oklahoma workers’ comp law.

The bill differed from Texas’ version in two ways. Employers would have to provide a minimum level of benefits matching state law. And, unlike Texas, employers would get to keep their immunity from lawsuits.

A chamber lobbyist and a Unit lawyer wrote the bill, incorporating language from various interests, including Minick. “I was one of the primary drafters,” Minick said.

“Is there a potential conflict of interest between our desire to see workers’ comp options adopted in other states and our firm’s revenue model? Yes,” he said. “But the conflicts of interest are only a problem when they’re not disclosed.”

One thing not disclosed: the Oklahoma bill copied language nearly verbatim from PartnerSource plans — making the definition of “accident” more restrictive than it was in traditional workers’ comp.

Walmart’s Texas plan, which Minick wrote the year before, defines “accident” as “an event involving factors external to the participant which was unforeseen, unplanned and unexpected,” that “occurred at a specifically identifiable time and place,” and “occurred by chance or from unknown causes.”

The Oklahoma bill defined it as “an event involving factors external to the employee that was unintended, unanticipated, unforeseen, unplanned and unexpected,” that “occurred at a specifically identifiable time and place,” and “occurred by chance or from unknown causes.”

Gillespie, of the insurance association, said the wording could be used to deny almost any claim because nearly every injury has a cause.

Since the law took effect last year, 59 companies, covering an estimated 22,500 workers, have opted out, ranging from small home health care agencies to national brands likeMacy’s and Swift Transportation. Fifty-three have plans that were written by PartnerSource.

On paper, the benefits look similar to — or even better than — state workers’ comp. Both replace at least 70 percent of workers’ wages. Some plans pay 90 or even 100 percent of wages.

But there’s one big difference. Benefits under opt-out plans are subject to income and payroll taxes; under workers’ comp, they’re not. As a result, 80 percent of the plans actually provide lower benefits, ProPublica and NPR’s analysis found.

Minick said that the analysis missed a key point: Because the plans that offer benefits above the minimum are larger employers, the majority of workers under opt-out plans receive equal or higher benefits. In addition, he said, those companies start benefits on the first day of the injury instead of waiting three days, like workers’ comp does.

And their plans don’t have wage limits. As part of the 2013 law, the Oklahoma legislature capped benefit payments under workers’ comp at $561 a week. In March, ProPublica and NPR profiled an injured Goodyear Tire worker whose family was evicted from their home when his income dropped so much they could no longer afford the rent.

But the Oklahoma plans incorporate many of the rigid rules from Texas. As opt-out got underway, injured workers, lawyers and even the insurance commissioner quickly learned what that meant.

Learning the Hard Way

Rachel Jenkins, 32, was denied further treatment after a doctor hired by her company said she had a shoulder condition caused by aging, not her work accident. “What’s age got to do with anything?” she asked. (Nick Oxford for ProPublica)

Last March, Rachel Jenkins was working as a job coach and personal care aide for ResCare, the nation’s largest private provider of services for the physically and mentally disabled, when a man attacked her client at an Oklahoma City facility.

While trying to pull the assailant off her client, she was thrown to the ground, injuring her shoulder. ResCare told her to bring her client home, and after finishing her shift, Jenkins went to the emergency room. The doctor prescribed pain medication, which knocked her out, she said.

The next day, ResCare sent Jenkins to its doctor, where she called the company’s claims hotline. The adjuster told her the injury wouldn’t be covered because she called 27 hours after it happened — instead of the required 24.

“They told me that I should have called the next morning at 10 o’clock. But I was asleep. I was on meds,” said Jenkins, a single mother with four kids, ages 1 through 12.

Jenkins’ supervisor, who witnessed the incident, complained to the corporate office, and a week later, ResCare reversed its decision.

To ResCare and Minick, who wrote the company’s plan, Jenkins’ case illustrates the discretion that companies have, in this case to accept claims even when they’re not reported on time.

“The system worked and took care of her and fully paid her benefits,” Minick said.

Not so, said Jenkins. Her shoulder remains in constant pain, she said, preventing her from returning to work fulltime.

In May, the company sent her for an MRI of her shoulder. Reading it, the doctor ResCare sent her to — an ear-nose-and-throat doctor at an urgent care clinic — noted inflammation and recommended that she see an orthopedic specialist, medical records show.

But ResCare’s adjuster wouldn’t authorize it. Instead, the company scheduled an independent medical exam with a doctor flown in from Arizona to review her case.

That doctor said the MRI didn’t reveal any evidence of an acute injury that could be causing the pain and instead showed a wearing of her rotator cuff caused by aging.

Jenkins is 32.

Rachel Jenkins praises her daughter’s good grades at their home in Boley, Oklahoma. Jenkins, who works with disabled adults, was initially denied care for an on-the-job injury because she reported it in 27 hours — instead of the required 24. (Nick Oxford for ProPublica)

“What’s age got to do with anything?” she asked. Until the incident, “I didn’t have no problems with my shoulder at work.”

Workers’ lawyers in Oklahoma also noticed that many companies, including ResCare, were using a Dallas physician, Dr. Melissa Tonn, as the medical director responsible for managing workers’ care.

Tonn, they learned, not only once shared an office with PartnerSource, she was Minick’s wife.

The situation had been an open secret in Texas, where lawyers grumbled privately for years. “Melissa Tonn has a vested interest in PartnerSource making more money,” said James Grantham, a Houston lawyer who has handled about 700 opt-out cases in the last few years.

As medical care is often the most expensive part of a claim, Tonn can greatly influence how much claims cost. And that ultimately affects how much money PartnerSource saves employers, allowing it to keep clients happy and recruit more business.

“So if Melissa Tonn says you don’t need back surgery, PartnerSource will profit from that,” Grantham said. “It’s absolutely rigged.”

Tonn insisted her assessments were based on workers’ conditions and were unaffected by the interests of employers or PartnerSource.

“The decisions I make are not based on how much money is going to be saved,” Tonn said.

Minick said his wife stood on her own credentials as the former director of two hospitals’ occupational health programs and as past president of both the Texas College of Occupational and Environmental Medicine and a national organization of physicians who evaluate disabilities.

The couple were already independently successful, Minick said, when they met at a workers’ comp opt-out conference. As their businesses grew and they started having clients in common, they took steps to keep them separate, he said. Tonn moved to an office one floor up in the same building. And Minick discloses the relationship in client contracts.

“They can visit with whatever vendor they want to,” Minick said. And Tonn is “one of them that they should consider.”

While opt-out plans have to be submitted to Oklahoma’s insurance commissioner, there is little review.

ProPublica and NPR obtained more than 2,000 pages of internal emails between the Oklahoma Insurance Department and companies that wanted to opt out.

The emails regarding a chain of long-term care facilities are typical. An insurance department lawyer notes that a paragraph is missing a period, causing a run-on sentence. But he fails to point out that the paragraph promises “no interference” with the doctor-patient relationship while at the same time warning workers that seeing their own doctor “may result in a complete denial” of benefits.

Gordon Amini, the department’s general counsel, said the insurance commissioner doesn’t have the power to question such provisions and can’t reject plans under the law.

“We are supposed to confirm; it never uses the word ‘approve,’ ” he said.

The law also states that settlements must be voluntary. But our review of Oklahoma plans written by PartnerSource showed that nearly every one contains a section titled “Mandatory Final Compromise and Settlement,” which instructs workers that “no further benefits will be payable” if they refuse the company’s offer.

After being made aware of the inconsistency by NPR and ProPublica, Amini said the insurance department “immediately took action” and contacted PartnerSource to revise it.

“The reality is, under the current scheme there is no regulation of these plans,” said Bob Burke, a longtime Oklahoma workers’ comp attorney. He said it’s setting a dangerous precedent. “We can’t as a society say, ‘Okay, employers, write whatever plan you want to write, provide what benefits or lack of benefits you want to, set up whatever scheme you want to award those benefits, and by the way, no one is looking over your shoulder.’ ”

‘Where Else Can We Do It?’

Studying the map in PartnerSource’s office, Minick surveyed the country like a commander strategizing the next offensive.

“Tennessee,” he said. “There’s more dots there than anywhere else. You get all these Tennessee companies that know what it’s like to have better care, lower costs. So then they start saying, ‘Where else can we do it?’ ”

In 2012, Tennessee seemed primed to allow employers to opt out of workers’ comp. For the first time in at least a century, Republicans controlled both legislative chambers and the governor’s office. Employers were already pushing for major changes to the workers’ comp system. And the new governor’s family owned Pilot Travel Centers, which had opted out in Texas.

But after a series of public meetings, the state workers’ comp division hired consultants who produced a scathing report, raising concerns that letting companies opt out would shift costs to government programs.

“Giving firms this option would have potentially significant consequences on some injured workers, other Tennessee employers, and the state taxpayers generally,” the consultants wrote.

The legislature passed an overhaul of workers’ comp in 2013, but it contained nothing about opting out.

Despite the defeat, Minick started pulling together employers and others. In December 2013, they formed a group called the Association for Responsible Alternatives to Workers’ Compensation.

K. Max Koonce, Walmart’s senior director of risk management became chairman. Nordstrom’s vice president of risk management was appointed president, Lowe’s vice president of risk management was vice president, and the chief executive of the Combined Group insurance company was treasurer. Minick became secretary.

The rest of the board was made up of top managers at Kohl’s, J.B. Hunt, Big Lots, Sysco, Safeway, Brookdale Senior Living and others in the insurance industry. Joined by Macy’s, Whole Foods and Brinker International (owner of Chili’s Grill & Bar), they paid as much as $25,000 each to finance ARAWC’s efforts, according to association webpages.

The group planned to go state by state to pass opt-out legislation, starting with the South.

The association’s address was the lobbying firm of Richard Evans, whom Minick had worked with at the Texas alliance. In addition, the group hired Edwards, who ran the successful Oklahoma effort. In each new state, they would team up with connected local lobbyists to navigate the politics.

In February 2015, a bill pushed by ARAWC was introduced in the Tennessee legislature that contained a mix of the Texas and Oklahoma laws. Like Oklahoma, employers had to provide a minimum level of benefits — up to three years of medical care, or $500,000. That was less than the benefits provided by the state’s workers’ comp law, which set no limits on medical care.

But, like Texas, catastrophically injured workers could sue for higher benefits. Their employers would face limited damages and have additional legal defenses that Texas employers don’t.

The bill stalled in April, after it failed to be endorsed by the state’s workers’ comp advisory council. But supporters plan to revive it in the next legislative session.

With the Tennessee push underway, ARAWC settled on its next target: South Carolina.

As lobbyists, it hired former political directors of the national and state GOP.

A bill was introduced in the state assembly in May, with the goal of generating discussion before the legislature reconvenes next year.

Rep. David Hiott, a small business owner frustrated with workers’ comp, said he sponsored it after receiving a synopsis of the bill from another legislator and ARAWC’s lobbyists. “They told me they would tell me more about it this fall,” he said.

The bill represented a new gambit for ARAWC and Minick.

The Tennessee campaign “drew so much criticism from employee advocates saying that we were trying to reduce benefits,” Minick said, “that we said fine, just to prove that’s not the point, the South Carolina bill was introduced to say we’ll pay benefits higher than workers’ comp.”

While workers’ comp replaces 66 percent of wages, South Carolina employers that opt out would have to pay at least 75 percent, albeit taxable. They would not be allowed to cap medical benefits and would have to match the state maximum of 500 weeks of death benefits. Burial benefits are three times as high.

“The intent of this movement is to pay better benefits,” Minick said.

But in Texas, where the movement began, people like Krystle Meloy are hard-pressed to say how it has made things better for injured workers and their families.

Meloy was 23 with a 4-month-old daughter when her husband, Billy Walker, fell 180 feet from a communications tower in 2012.

Under the company’s opt-out plan, she and her daughter, Kaylee, were entitled to $250,000 for his death. She tried to sue after federal investigators found the company had violated safety laws. But the company filed for bankruptcy a few weeks later.

Under workers’ comp, she would have received 75 percent of her husband’s wages until her daughter finished college and until death if she never remarried. Based on his wages in previous years, that would have guaranteed Meloy and her daughter at least as much as the opt-out plan and likely far more — potentially $1 million or more, depending on the circumstances.

On a recent day, Kaylee, now 3, climbed up on a cushy chair and flipped through a small photo album containing pictures of the day she was born.

“See, look, mama’s going to doctor,” she said in a chipmunk voice. Turning to a picture of her father cradling her in his arms, she giggled. “Look at him. Daddy Billy.”

Meloy receives Social Security survivor benefits and is applying for food stamps. She’d like to get a job, she said, but can’t afford daycare.

“I have to go through this for the rest of my life; I’m having to teach our daughter who her daddy is through a picture,” she said. “If other states are considering not having workers’ comp, I mean, look what happened to me.”

Hearing her story, Minick, who climbed radio towers when he was in college, paused reflectively.

“This is a difficult situation, it sounds like,” he said. “There’s no occupational injury system that we’ve found yet that will provide perfect results in a 100 percent of cases.”

What’s more important, he said, was which system would provide the best results in most cases. In an earlier interview, Minick described what drove him to launch his crusade to remake America’s system for caring for injured workers.

“All you can do is pray that the Lord gives you a calling where you can really do good for society,” he said. “That’s what gets me up every day, knowing that I’m getting better employee satisfaction and generating economic development. That’s as good as it gets.”

Update, October 15, 2015: After this article published, the Association for Responsible Alternatives to Workers’ Compensation released this statement.

NPR intern Courtney Mabeus contributed to this report. Produced by Emily Martinez.

This story was co-published with NPR.


author photoMichael Grabell covers economic and labor issues for ProPublica.

author photoHoward Berkes is a correspondent for the NPR Investigations Unit who has reported on coal mine and workplace safety.

 

To read article in its original form click HERE

Cigna Administered ERISA Plan Sued for Embezzlement in Out Of Network Medical Claims Disputes-Cautionary Tale for All Self-Insured Health Plan Administrators

This bellwether lawsuit in ERISA healthcare claims disputes presents a cautionary tale for all self-insured plan administrators with “Head in the Sand” TPA monitoring practices. Cigna administered self-insured ERISA plan, CB&I and its Plan Administrator, Dennis Fox, were sued for alleged ERISA plan assets embezzlement, deceptively concealed through “fake PPO (CO) discounts” and Cigna’s “fee forgiveness protocol scam”.

On Oct. 29, 2015, in southern district of Texas Federal Court, a Cigna administered self-insured ERISA plan, CB&I and its Plan Administrator, Dennis Fox, were sued by an out-of-network (OON) surgical center, True View Surgery Center One, for alleged ERISA plan assets embezzlements, deceptively concealed with alleged “fake PPO (CO) discounts” and “fee forgiveness protocol scam”. This innovative and cutting edge ERISA health Plan lawsuit, by an OON healthcare provider for alleged plan assets embezzlement by the ERISA plan’s third party claim administrator (TPA), was filed just eight (8) days after a different self-insured plan filing on a similar lawsuit, (FAC on Oct. 21, 2015), against the plan’s TPA for allegedly similar plan assets conversion with respect to OON claims administration between the ERISA plan and TPA.

According to the court documents:

“Under this backdrop, together Defendants and Cigna concocted an intricate scheme to transfer and embezzle plan funds. Transfers are first concealed by processing out-of-network claims under a fabricated Preferred Provider Organization (PPO) “contractual obligation,” even though Defendants and Cigna are fully aware that no such contract exists. Then, Defendants and Cigna knowingly implemented a system to willfully and wrongfully refuse payments to the out-of-network provider under a sham “fee-forgiveness” protocol.”

In pursuance of this signpost lawsuit, Avym Corp. announces a new division of its ERISA litigation support and/or prevention program, in order to:

  1. Closely track this type of unprecedented but most dramatic emerging trend in ERISA healthcare litigation in today’s evolving managed care market including:
    • Analyze new litigation allegations of plan assets embezzlement to be made by plan sponsors and plan administrators, healthcare providers and federal regulatory and enforcement agencies against TPAs;
    • Understand managed care TPA litigation defense strategies and trial evidence;
    • Decipher court decisions and alternative resolutions to this new trend in the alleged conflict in ERISA prohibited transaction against health plan TPA’s for managed care costs containment and savings tactics;
  2. Demystify these new lawsuits and the implications to plan sponsors and providers, specifically, how the lawsuit will ultimately impact all out-of-network claim disputes.

It is standard industry practice for self-insured health plans to engage in out of network “cost containment” or third party “repricing agreements” with out of network providers, in an effort to lower costs or save money. However, plaintiff’s allegations shed light on possible abuses that take place disguised as legitimate practices. TPA’s tactics of applying non-existent or “fake” PPO discounts are very familiar to all out-of-network medical providers. According to court documents:

“The self-dealing embezzlement scheme perpetrated by Cigna and Defendants is even more repugnant because Cigna duplicitously demands proof from the provider that it collected the patient’s co-insurance and deductibles in full when it explicitly instructed the provider not to bill the patient.”

Over the past 5 years, Avym has closely followed the decisions from the Supreme Court and federal appeals courts on ERISA prohibited self-dealing against ERISA plan TPA’s for managed care savings. These new ERISA embezzlement cases are just the initial impact of the court’s Hi-Lex decisions. This lawsuit in particular should serve as a warning and wake up call for all Plan Administrators to continually monitor their TPAs in accordance with the Plan Administrator’s statutory fiduciary duties and to discharge its duties with respect to a plan solely in the interest of the participants for the exclusive purpose of providing benefits to them.

The Court Case info: True View Surgery Center One L.P., v.Chicago Bridge And Iron Medical Plan, Chicago Bridge And Iron Company, And Dennis Fox, Case #: 3:15-CV-00310, filed on Oct. 29, 2015, in the United States District Court For The Southern District of Texas.

In the Oct 29, 2015  lawsuit filed by OON provider True View Surgery Center, against the Cigna administered ERISA plan, the Plaintiff alleged in part:

“Specifically, in spite of the glaring conflict of interest and inherent breach of fiduciary duties, Defendants agreed to an unlawful compensation structure that financially rewards Cigna for wrongfully denying and underpaying benefits claims. Under this backdrop, together Defendants and Cigna concocted an intricate scheme to transfer and embezzle plan funds. Transfers are first concealed by processing out-of-network claims under a fabricated Preferred Provider Organization (PPO) “contractual obligation,” even though Defendants and Cigna are fully aware that no such contract exists. Then, Defendants and Cigna knowingly implemented a system to willfully and wrongfully refuse payments to the out-of-network provider under a sham “fee-forgiveness” protocol. As a result of the wrongful claims denials, the transferred plan funds are ultimately misappropriated by Cigna, who then fraudulently pays itself with the plan funds, falsely declaring the embezzled funds as compensation generated through managed care and out-of-network cost containment “savings,” when in truth the claims were never paid and the plan beneficiaries were left exposed to personal liability for their unpaid medical bills.”

On Oct 21, 2015, in a separate but similar lawsuit filed by an ERISA plan against a separate ERISA plan TPA, the Plaintiff alleged in part:

“MagnaCare represented to Plaintiffs in a written contract between the parties that providers of diagnostic laboratory and ancillary services had “accepted” a “fee schedule” which included a “management fee” for MagnaCare. In fact, the providers had never “accepted’ a fee schedule containing a “management foe” for MagnaCare. Rather, the providers had agreed to a fee schedule, which was a fraction of the amounts collected by MagnaCare from Plaintiffs. MagnaCare – without disclosure to Plaintiffs or the providers – simply misappropriated the difference between what Plaintiffs paid MagnaCare and what MagnaCare negotiated to pay the providers.” 

Court case info: UNITED TEAMSTER FUND, et al v. Magnacare Administrative Services, LLC et al, Case 1:13-CV-06062-WHP-FM, First Amended Complaint (FAC), filed on Oct. 29, 2015, original Complaint, filed on august 27, 2013,  in United States District Court Southern District Of New York.

These lawsuits come on the heels of the Oct. 20, 2014 U.S. Supreme Court decision to deny all appeals on a BCBSM’s $6.1 million fraud judgment for 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.

On May 14, 2014, a federal appeals court (Sixth Cir. 2014) upheld the 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, according to the court documents.

Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Michigan, ((SC Case #. 14-168, 6th Cir. Case #: 13-1773, 13-1859).

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

 

Federal Court Slams Plan With $61,380 Penalty For Failing to Provide Plan Documents, Rules Plan “Belies Logic”

On September 21, 2015 a Federal Court slammed a Plan Sponsor for not providing Plan Documents, ruling the Plan’s action “belies logic”. The Federal Court hit the Plan Sponsor with a $61,380 penalty on top of the previously awarded $12,760 statutory penalty for not providing insurance policy in a timely manner.

Here is a cautionary tale for all Plan Administrators, Plan Sponsors and Fiduciaries. In this case, the member participant of an ERISA Plan requested all relevant documents from the Plan but the plan did not respond in a timely manner. According to court records, there were two Plan Documents, the insurance policy (SPD) and another Plan Document. The Plan provided the insurance policy (SPD), albeit still too  late, and was initially hit with a $12,760 penalty for its failure to provide that document in a timely manner. However, the Plan did not provide the other additional Plan Document until much later in the process.

The Plan argued that the other Plan Document did not need to be furnished because it did not mention the insurance policy and because there were conflicting terms between it and the SPD. The court disagreed saying the Plan’s argument “belies logic” and found the other Plan Document to be a “controlling ERISA document” and as such, the Plan “was under an obligation to furnish a copy of the Plan Document” at the request of the plan participant. Because the Plan failed to do so, it was hit with an additional $61,380 penalty in spite of the fact there were no inconsistencies between the SPD insurance policy and Plan Document.

According to the court:

“Defendant Board of Trustees argues that its failure to provide Plaintiff with the Plan Document is excused because the Plan Document contains no terms that specifically address the life insurance benefit, and because there are no conflicting terms between the SPD and the Plan Document regarding same. This argument represents two sides of the same coin, and is dispelled with the same reasoning. Even if the parties agree that the SPD is a controlling document for Mr. Harris’ life insurance policy, the terms of the SPD specifically state that in the event of any inconsistency between the SPD and the Plan Document, the Plan Document will control. Ergo, armed only with access to the SPD and not the Plan Document, Plaintiff could not have known the unequivocal terms of the life insurance policy because she did not have the opportunity to discover any inconsistencies, or lack thereof, between the SPD and the Plan Document. In this case, it happens that there are no inconsistencies between the SPD and the Plan Document with regards to the life insurance policy. This, however, was not known by Plaintiff until she received the Plan Document on December 10, 2014, despite multiple requests to Defendant Board of Trustees for copies of all controlling or relevant ERISA documents. In sum, to claim simultaneously, as Defendant Board of Trustees does, that only the SPD (and not the Plan Document) is a controlling ERISA document, but at the same time stating that “[i]f there is any difference between the Plan Document and [the SPD], the Plan Document will control,” (id.), belies logic. Accordingly, the Court finds that the Plan Document is a controlling ERISA document.”

The court goes on to say:

“Having found that Defendant Board of Trustees was under an obligation to furnish a copy of the Plan Document at Plaintiff’s request, the Court now turns to the appropriate time frame for statutory penalties under 29 U.S.C. 1132(c).”

According to the court:

“Given Defendant Board of Trustees’ deliberate choice not to respond to Plaintiff’s unambiguous third request for documents, and Defendants failure to respond at all to either the second or third request for documents, (see Doc. 39 at 15–16), the Court finds that assessing the maximum penalty is appropriate in this case. Accordingly, Defendant Board of Trustees will be assessed a penalty of $61,380.00 for its failure to furnish a copy of the Plan Document, calculated at $110.00 per day for the 558 days between May 31, 2013 and December 10, 2014. This penalty is in addition to the $12,760.00 for Defendant Board of Trustees’ failure to provide a copy of the Policy, discussed supra Section IV.B.”

The case is Harris-Frye v. United of Omaha Life Insurance Company, and Board of Trustees, Mid-South Carpenters Regional Council Health and Welfare Fund, Case No. 1:14-cv-72. United States District Court, E.D. Tennessee, Chattanooga Division

It is clear that Plan Administrators and Fiduciaries should respond to any appeals and document requests in accordance with section 104 (b) (2) and 104 (b) (4) of ERISA, and pursuant to the interpretation of “plan document” from DOL Advisory Opinions, 96-14A, which states:

it is the view of the Department of Labor that, for purposes of section 104 (b) (2) and 104 (b) (4), any document or instrument that specifies procedures, formulas, methodologies, or schedules to be applied in determining or calculating a participant’s or beneficiary’s benefit entitlement under an employee benefit plan would constitute an instrument under which the plan is established or operated, regardless of whether such information is contained in a document designated as the “plan document”. Accordingly, studies, schedules or similar documents that contain information and data, such as information and data relating to standard charges or calculating a participant’s or beneficiary’s benefit entitlements under an employee benefit plan would constitute “instrument under which the plan is… operated.

Plan Administrators and fiduciaries should also look to the DOL for guidance on the matter, specifically, DOL FAQs About The Benefit Claims Procedure Regulation:

FAQ B-5: For purposes of furnishing relevant documents to a claimant, what kind of disclosure is required to demonstrate compliance with the administrative processes and safeguards required to ensure and verify appropriately consistent decision making in making the benefit determination?

What documents will be required to be disclosed will depend on the particular processes and safeguards that a plan has established and maintains to ensure and verify appropriately consistent decision making. See 65 FR at 70252. The department does not anticipate new documents being developed solely to comply with this disclosure requirement. Rather, the department anticipates that claimants who request this disclosure will be provided with what the plan actually used, in the case of the specific claim denial, to satisfy this requirement. The plan could, for example, provide the specific plan rules or guidelines governing the application of specific protocols, criteria, rate tables, fee schedules, etc. to claims like the claim at issue, or the specific checklist or cross-checking document that served to affirm that the plan rules or guidelines were appropriately applied to the claimant’s claim. Plans are not required to disclose other claimants’ individual records or information specific to the resolution of other claims in order to comply with this requirement. See § 2560.503-1(m)(8)(iii). See question D-12.

Avym is dedicated to empowering providers with ERISA appeal compliance and ERISA litigation support in all cases as well as ERISA class actions.  All medical providers and Health Plans should understand critical issues regarding the profound impact of this and other court decisions on the nation’s medical claim denial epidemic. Providers should also know how to correctly appeal every wrongful claim denial and 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 claim denials and overpayment recoupment and offsetting, to seek for enforcement and compliance with ERISA & PPACA claim regulations.

Federal Appeals Court Reverses District Court-Rules UnitedHealth May be Sued for Violating ERISA

In a significant ruling for providers and patients, a three-judge panel of the U.S. Court of Appeals for the Second Circuit unanimously reversed a district court and ruled that third-party benefits administrator UnitedHealth Group can be sued under the Employment Retirement Income Security Act (ERISA) for violating a federal law requiring equal coverage for mental health treatment.

On August 20, 2015 a panel of judges for the 2nd U.S. Court of Appeals ruled that UnitedHealth Group, as a third-party administrator has “sole and absolute discretion” to deny benefits and makes “final and binding” decisions as to appeals of those denials, for an employee health plan and as such, is not exempt from ERISA, which regulates most employer-provided health benefits.

“We ultimately reject United’s argument that it cannot be sued under [ERISA] in its capacity as a claims administrator,”

Judge Raymond Lohier, Jr., wrote. “Indeed, when a claims administrator exercises total control over claims for benefits under the terms of the plan, that administrator is a logical defendant in the type of suit contemplated by [ERISA]. —- a suit ‘to recover benefits,’ ‘to enforce … rights,’ ‘or to clarify…rights to future benefits under the terms of the plan”.”

According to Judge Lohier,

“United appears to have exercised total control over the CBS Plan’s benefits denial process. It enjoyed “sole and absolute discretion” to deny benefits and make “final and binding” decisions as to appeals of those denials. UnitedHealth’s control over the benefits denial process appears total.”

The case is New York State Psychiatric Association et al v. UnitedHealth Group et al, case number 14-0020 in the U.S. District Court of Appeals for the Second Circuit.

The court goes on to say “And assuming that United’s actions violated Denbo’s rights under ERISA, United is the only entity capable of providing direct relief to Denbo. We therefore hold that where the claims administrator has “sole and absolute discretion” to deny benefits and makes “final and binding” decisions as to appeals of those denials, the claims administrator exercises total control over claims for benefits and is an appropriate defendant in a § 502(a)(1)(B) action for benefits. United is such an administrator and is accordingly an appropriate defendant for Denbo’s claim under § 502(a)(1)(B). Our holding is in accord with six of our sister circuits, which have held that claims administrators may be sued as defendants under § 502(a)(1)(B).”

On the breach of fiduciary duty claim, UnitedHealth Group argued the breach of fiduciary duty claims should be dismissed because adequate remedy was available under the benefits claim but the Second Circuit disagreed, holding that the district court prematurely dismissed these claims on the belief he had adequate relief through other claims.

According to the court, “We disagree with that ground for dismissal, but only because we think that the District Court’s dismissal on this basis was premature.” The court goes on to say, “Here, Denbo’s § 502(a)(3) claims are for breach of fiduciary duty, he has not yet succeeded on his § 502(a)(1)(B) claim, and it is not clear at the motion to‐dismiss stage of the litigation that monetary benefits under § 502(a)(1)(B) alone will provide him a sufficient remedy.

“In other words, it is too early to tell if his claims under § 502(a)(3) are in effect repackaged claims under § 502(a)(1)(B). We therefore hold that the District Court prematurely dismissed Denbo’s claims under § 502(a)(3) on the ground that § 502(a)(1)(B) provides Denbo with adequate relief.”

The circuit vacated the dismissal of a case brought by the New York State Psychiatric Association and an individual patient alleging that UnitedHealth Group, as claims administrator, ran afoul of both the act, known as ERISA, and the Mental Health Parity and Addiction Equity Act of 2008.

Southern District Judge Colleen McMahon had initially dismissed the case, ruling the association had no standing to sue on behalf of its members and that, as a third party administrator of health insurance plans, UnitedHealth could not be sued under ERISA §502(a)(3) for violations of the Parity Act or under ERISA §502(a)(1)(B).

Judges Dennis Jacobs, Debra Ann Livingston and Raymond Lohier reinstated the suit Thursday in New York State Psychiatric Association, Inc. v. UnitedHealth Group, 14-20-cv, following arguments heard on Dec. 15, 2014.

Lohier, writing for the circuit, said the psychiatric association (NYSPA), suing to “prevent interference with their provision of mental health treatment,” has standing because it “plausibly alleged that its claims do not require individualized proof.”

The court remanded the association’s claims for McMahon to consider whether it had stated a plausible claim for relief.

Avym is dedicated to empowering providers with ERISA appeal compliance and ERISA litigation support in all cases as well as ERISA class actions.  All medical providers and Health Plans should understand critical issues regarding the profound impact of this and other court decisions on the nation’s medical claim denial epidemic, including how to correctly appeal every wrongful claim denial and 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 claim denials and overpayment recoupment and offsetting, to seek for enforcement and compliance with ERISA & PPACA claim regulations.

 

ERISA-The Gift That Keeps On Giving

Federal Judge Rules Out-Of-Network Provider Has Standing Under ERISA-Rules Anti-Assignment Provision Not Enforceable

On July 17, 2015 US District Judge, Melinda Harmon, upheld an out-of-network healthcare provider’s right to sue and denied the Health Plan’s motion to dismiss, despite the Plan’s anti-assignment provision.

In a victory for out-of-network providers, a federal judge gives legal guidance and a roadmap for medical providers seeking to overturn improper claims denials, finding that the language in the plan’s anti-assignment provision “does not prohibit assignments to medical service providers such as TrueView.”

According to the court order, the out-of-network provider’s right to sue was upheld and the health plan’s anti assignment provision was unenforceable, with the court concluding, “For the foregoing reasons, it is hereby ORDERED that Defendant’s Motion to Dismiss (Doc. 5) is DENIED.”

Court case info: TrueView Surgery Center One L.P. v. OneSubsea LLC Comprehensive Self-Insured Welfare Benefits Plan et al, No. 4:2014cv02577 – Document 16 (S.D. Tex. 2015)

The case fact pattern is a very familiar scenario in out-of-network claims and benefits for plan participants and beneficiaries. TrueView Surgery Center One L.P. (TrueView), a non-contracted surgery center performed services for a member of a self –insured health plan. According to court documents, the claim was submitted to the claims administrator, CIGNA, along with an “Assignment of Benefits and Designation of Authorized Representative” form executed by the plan participant giving the provider “the right to pursue the Plan directly for any “insurance benefits otherwise payable to [the Patient].” The claim was subsequently denied by CIGNA.

After filing “ERISA & PPACA Appeal” letters and exhausting the administrative remedy, the provider initiated a lawsuit against the plan. The provider asserted various ERISA violations, including (1) Breach of fiduciary duty,( 2) failure to provide full and fair review, (3) failure to provide requested documentation (4) unpaid plan benefits and (5) violations of claims procedure.

The plan, was seeking dismissal on two grounds. First, the provider failed to allege in injury-in-fact and second, because “the assignment of benefits by the plan participant was void because of an anti-assignment clause in the Plan”, according to the court order.

The plan’s first argument was declared moot based on the recent Fifth Circuit ruling, (North Cypress Medical Center v.CIGNA) which held that “a medical service provider “has statutory standing under ERISA for the benefit claims at issue because of assignments from plan beneficiaries,” even if the patient was “not billed for the amount allegedly due from the insurance plans.”

Next the court turned to the plan’s second argument regarding the plan’s anti-assignment provision. The court upheld the provider’s assignment and consistent with the Fifth Circuit ruling, found that language in the plan’s anti-assignment provision “does not prohibit assignments to medical service providers such as TrueView.

The court agreed with the provider’s argument and ruled that language in the plan’s anti-assignment provision only applied to non-healthcare providers. The court explained that the plans’ anti-assignment provision should not be enforceable because “it was not intended to preclude assignments to medical service providers such as TrueView. In Hermann Hospital v. MEBA, the Fifth Circuit held the following anti-assignment clause did not apply to medical service providers but applied only to “unrelated, third-party assignees . . . such as creditors”. The court further clarified, “Here, the anti-assignment clause in the Policy is almost identical to the language in Hermann II and therefore does not prohibit assignments to medical service providers such as TrueView.”

According to the court order, “The Plan seeks to distinguish its anti-assignment clause from the one in Hermann II by arguing its clause was more “direct,” because it provides that all assignments are “void and of no effect” and separates the garnishment and attachment section by a semicolon. Doc. 9 at 8. The Fifth Circuit, however, rejected a clause with these exact elements in Abilene Reg’l Med. Ctr. v. United Indus. Workers Health & Benefits Plan, No. 06-10151, 2007 WL 715247, at *4 (5th Cir.Mar. 6, 2007). The Abilene court reaffirmed Hermann II, distinguishing LeTourneau on the grounds that the relevant clause “did not resemble a spendthrift provision and unambiguously stated that the plan would not be ‘liable to any third-party to whom a participant may be liable for medical care, treatment, or services.’”

The court further clarified, “(“[I]n LeTourneau, neither party contested the fact that the plan beneficiary’s hospital entrance form constituted a valid assignment of her rights under ERISA to the plan provider despite an anti-assignment clause in the plan documents; the dispute was over that plan’s coverage of the services rendered. Because the services rendered in that case were not covered by the plan in the first place, the provider lacked standing.”). The Court is compelled by Hermann II to hold the anti-assignment clause in the Policy does not prohibit the Patient’s assignment to TrueView of his rights to pursue benefits.

According to many recent surveys, reports and case studies, one in five American adults will struggle to pay medical bills. In fact, medical bills are the leading cause of personal bankruptcy, affecting even those with health insurance with approximately 76% of those insured Americans paying for out-of-network coverage through their employer-sponsored health plans, according to a December 2013 National Composition Summary from DOL Bureau of Labor Statistics.

It’s clear that the epidemic of wrongfully or improperly denied of out-of-network claims imposed by ERISA plans has inevitably contributed significantly to unexpected medical bills and personal bankruptcy.

Avym is dedicated to empowering providers with ERISA appeal compliance and ERISA litigation support in all cases as well as ERISA class actions.  All medical providers and Health Plans should understand critical issues regarding the profound impact of this and other court decisions on the nation’s medical claim denial epidemic, including how to correctly appeal every wrongful claim denial and 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 claim denials and overpayment recoupment and offsetting, to seek for enforcement and compliance with ERISA & PPACA claim regulations.

UnitedHealth Care, Health Net, 4 Other Insurers Fined For Misleading Medicare Customers

CMS Regulators fine carriers for giving Medicare Advantage private plan policyholders inaccurate information on costs, benefits and access to out-of network providers.

On July 14, 2015, Centers for Medicare and Medicaid Services slapped multiple insurers with fines for giving their policy holders inaccurate or incomplete and delayed information about benefits and costs including errors related to maximum out-of-pocket costs and situations in which policy holders could visit out-of-network providers.

All six letters were concerning Medicare Part D prescription drug benefits through the private Medicare Advantage plans. According to the recent 2016 Call Letter, CMS finalized its proposed reinforcement of existing rules to make certain plans are aware of their responsibility to maintain accurate directories, among other issues.

CMS also clarified its expectation that plans update directories in real time, and have regular, ongoing communications with providers to ascertain their availability and, specifically, whether they are accepting new patients or not

In the case of UnitedHealthcare, CMS regulators issued a $150,000 penalty because approximately 6,000 New York customers “received untimely information about their 2015 benefits in UnitedHealthcare’s CY 2015 ANOC documents.” The New York policyholders did not receive required information about increased premiums, cost-sharing, co-payments and deductibles until the first week of May — more than seven months after a Sept. 30 deadline. This at a time when United attributed a 13% jump in its 2nd quarter profits to the company’s Medicare and Medicaid plans.

Health Net AZ, which was recently acquired by Centene, was slapped with the largest fine of the group, nearly $350,000, for providing inaccurate information to approximately 14,000 policyholders. According to the letter, Health Net AZ had been warned about noncompliance before. In 2014, Health Net AZ received a letter of non-compliance for failing to accurately describe benefits and/or cost sharing information to its enrollees.

The additional 4 letters were sent to: Indiana University Health Plans, which was slapped with a $100,000 fine; Oregon based ATRIO Health Plans, which was slapped with approximately $70,000 in fines; Massachusetts based Fallon Community Health Plan, which was slapped with a $52,000 in penalties, and the Illinois based Carle Foundation, which was slapped with a $34,000 fine. The fines were based on various violations including incorrect information on out-of-network costs and when policyholders could access out-of-network providers.

Copy of CMS Announcement

FEDERAL COURT GRANTS CLASS CERTIFICATION AGAINST BLUE SHIELD FOR VIOLATING ERISA

Blue Shield of California routinley denies procedure as “investigational” despite having been approved by the Govt. for over a decade.

On July 14, 2015 a federal judge certified a class of members suing California Physician’s Service dba Blue Shield of CA (BSCA) for alleged improper medical claim denials in violation of ERISA. The court found that because members are seeking “declaratory and injunctive relief, allowing a class action to be brought would be in the interests of judicial economy”.

Defendant BSCA members have requested approval for back surgery only to be denied based on BSCA’s company policies that the procedure is deemed “investigational”. BSCA denied the procedure, artificial disk replacement (ADR) because “the efficacy of [ADR] has not been validated by the peer reviewed literature”.

Court records show that between April 2010 and October 2014, 19 members of BSCA have requested approval for the surgery and all 19 have been denied coverage for the ADR procedure.

Additionally, the FDA first approved of a type of ADR in 2004 and that the type of ADR sought by the Plaintiff was approved in 2006, according to court records.

According to court records, plaintiffs allege that defendant BSCA’s “medical policy of categorically excluding lumbar ADR procedures from coverage” is a violation of ERISA. The court goes on to say “Plaintiff’s proposed definition on includes individuals who were advised or learned that Defendant deemed ADR surgery “for their back conditions” was “investigational” and thus not covered. The relief sought is for Defendant to change their policy and to review previously denied claims. None of the relief requested requires individualized inquiry.

Case file info: Luis Escalante v. California Physicians’ Service dba Blue Shield of CA case number 2:14-cv-03021, in the U.S. District Court for the Central District of California.

According to Judge Pregerson, “A judgment either affirming or overturning Defendant’s classification of ADR procedures as “investigational” on a classwide basis would avoid duplicative suits brought by other class members demanding coverage for ADR procedures.

Avym is dedicated to empowering providers with ERISA appeal compliance and ERISA litigation support in all cases as well as ERISA class actions.  All medical providers and Health Plans should understand critical issues regarding the profound impact of this and other court decisions on the nation’s medical claim denial epidemic, including how to correctly appeal every wrongful claim denial and 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 claim denials and overpayment recoupment and offsetting, to seek for enforcement and compliance with ERISA & PPACA claim regulations.

Self Insured Health Plans Should Seek Return of Plan Assets After US Supreme Court Decision

Health Insurance Industry Watchdog and Others, Starting to See the Light

As more and more federal cases involving medical claim reimbursement disputes make their way through the courts, it is becoming increasingly clear that ERISA regulations will continue to pave the way for providers. However, ERISA can also pave the way for employers as well. Recently, a health insurance industry watchdog wrote about a very important development in the US Health Insurance Industry that I have been writing about since 2012. The case is Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Michigan.

The details of the case are fairly simple. BCBS Michigan was the claims administrator for multiple self-insured plans and had been charging the plans “hidden fees” by essentially adding markups to the medical claims submitted to the self insured plans. The problem was that BCBS Michigan never disclosed the markups.

“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.”

In May of 2014, the 6th Circuit Court of Appeals upheld the district court’s $6.1 million award against BCBS Michigan Michigan for violating ERISA’s rules regarding prohibited transactions and fiduciary fraud.  The federal courts agreed that federal ERISA law prohibits BCBS Michigan’s TPA self-dealing as an ERISA fiduciary by withholding all hidden fees or overpayment recoveries. In September of 2014, BCBS Michigan, along with other insurance industry lobby groups, filed a petition to the US Supreme Court, requesting a hearing to challenge the 6th Circuit’s decision. The Supreme Court refused the request, on October 20 2014, thereby upholding the circuit courts decision. 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 immediate impact of the Supreme Court’s decision 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.”

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 appeal. Furthermore, 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 Plan Asset refunds from the past 10 years of successful plan assets TPA/ASO anti-fraud recoupments and managed care savings in the private sector.

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.

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. The immediate impact of the Supreme Court’s decision 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.

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

5th Circuit Vacates Order in Aetna’s $8.4 Million Fight-Rules Judge Abused Discretion

On April 2, 2015, the 5th Circuit ruled a federal district Judge’s decision was an abuse of discretion and vacated the district order in favor of Aetna which prohibited provider defendants from transferring funds.


In what can only be seen as vindication, the 5th Circuit Court ruled that Hon. Judge Hughes’ decision was an abuse of discretion and vacated the district court’s order in favor of Aetna. In an extraordinary turn of events, the 5th Circuit Court ruled that Judge Hughes “essentially ordered an asset freeze from the bench” and did not have authority to do so, thereby abusing his discretion.  The appellate court also vacated Judge Hughes’ order compelling “post judgement discovery”. This is not the first time Judge Hughes has butted heads with the appellate court.

Recent court decisions have shed light on the insurance industry’s global strategy of monopolizing PPO and Managed Care discount agreements and discouraging members from accessing out of network benefits. In this case, Aetna originally filed suit in 2012 against multiple healthcare providers alleging fraud. In August, 2014, U.S. District Judge Lynn N. Hughes ruled that Aetna could take $8.4 million from multiple health care providers for allegedly defrauding the insurer of millions dollars.

In October, 2014, one of the provider defendants, Trinity, moved to disqualify Judge Hughes from the case and to vacate his prior orders. The judge holds stock in Chevron Corp., which sponsors one of 325 ERISA plans at issue in the case, amounting to a conflict of interest, Trinity argued.

Immediately after Judge Hughes’s order allowing Aetna Life Insurance Co. to take $8.4 million from the defendants the receiver for one of the defendants, Cleveland Imaging, filed a “suggestion of bankruptcy”.

Awareness of this 5th Circuit Court decision may save providers from seemingly inevitable but preventable bankruptcies, however providers and healthcare attorneys must understand their rights, including when and how a federal district court judge may abuse their discretion and authority.

“Apparently, a provider in this case has only two options, file for a bankruptcy or appeal a reversible decision to an appeals court. One defendant took the first choice, but the second took another one”, explains Dr. Zhou, president of ERISAclaim.com and national expert on ERISA compliance and appeals.

As part of the Out-of-Network provider training and compliance programs, Avym Corporation closely follows and explores important national landmark managed care lawsuits. On April 7, 2015, Avym Corporation announced case-specific brainstorming and training program for this and other dramatic developments in managed-care litigation as well as litigation support services to healthcare providers and healthcare attorneys.

Case info:

In re: 2920 ER, L.L.C., doing business as Trinity Healthcare Network, Petition for a Writ of Mandamus to the United States District Court for the Southern District of Texas, U.S.D.C. No. 4:12-CV-2451, Case No. 14-20734, in the United States Court of Appeals for the Fifth Circuit, filed on April 2, 2015.

Out of Network providers are advised to closely analyze this landmark case by evaluating and focusing on the following key elements, to the extent of the appellate court order to vacate the District Court Judge Hughes’s orders only relevant in abuse of discretion:

I.    A court order link to the court website is provided for all interested providers and attorneys to completely research this important development: http://www.ca5.uscourts.gov/opinions/unpub/14/14-20734.0.pdf

II.   On August 20, 2014, the district court entered an “opinion on partial judgment”: “The court ordered that ‘Aetna Life Insurance Co. will take $8,412,116.01’ from the defendants.” according to the court document.

III.   “After the district court entered its order granting ‘partial judgment’, the Receiver for Cleveland Imaging filed a ‘suggestion of bankruptcy’ to notify the court of Cleveland Imaging’s voluntary petition for Chapter 11 bankruptcy.” according to the court document.

IV.   “Meanwhile, 2920 filed a motion asking the district court to certify its “partial judgment” as “final and appealable” under Federal Rule of Civil Procedure 54(b) and 28 U.S.C. § 1292(b). The district court denied the motions to certify partial judgment for interlocutory appeal without explanation two days later.” according to the court document.

V.    “The district court also granted Aetna’s motion for “postjudgment discovery” in a very brief order that same day without explanation.” according to the court document.

VI.   “The district court then essentially ordered an asset freeze from the bench. The court ordered: “No payments to Spring Klein until some explanation has been made of what they’re for, no transfers that are not in response to a purchase order or some other objective commercial transaction.” according to the court document.

VII.  Fifth Circuit found Judge Hughes abused his discretion: “Because the district court did not have authority to freeze assets before judgment without following the requirements of Rule 65, the decision was an abuse of discretion that we must vacate.” according to the court document.

VIII. The 5th Circuit Court Orders and Concludes: “For the foregoing reasons, the petition for mandamus relief is DENIED, and the district court’s order signed on November 13, 2014, prohibiting 2920 from transferring funds is VACATED, as are its orders compelling “postjudgment discovery”—except to the extent that such discovery is reasonably necessary to investigate pending claims under Rule 26. We REMAND to the district court for further proceedings consistent with this opinion.” according to the court document.

Avym is dedicated to empowering providers with ERISA appeal compliance and ERISA litigation support in all cases as well as ERISA class actions.  All medical providers and Health Plans should understand several critical issues regarding the profound impact of this and other court decisions on the nation’s Out-of-Network claim denial epidemic, including how to correctly appeal every wrongful claim denial and 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 claim denials and overpayment recoupment and offsetting, to seek for enforcement and compliance with ERISA & PPACA claim regulations.