Archives July 2015

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.

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

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.