Archives January 2016

On January 20, 2016, Supreme Court ruled that an ERISA plan cannot sue to recover medical expenses paid on the participant’s behalf after the settlement funds have dissipated. This high court decision also protects hospitals from all health plan’s overpayment recoupment.

On January 20, 2016, Supreme Court ruled that an ERISA plan cannot sue to recover medical expenses paid on the participant’s behalf after the settlement funds have dissipated, because “…a plaintiff ordinarily cannot enforce any type of equitable lien if the defendant once possessed a separate, identifiable fund to which the lien attached, but then dissipated it all…. This rule applied to equitable liens by agreement as well as other types of equitable liens.” Op. at 9

Supreme Court case info: Robert Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, case #: 14-723, January 20, 2016

Link to PDF Copy: Montanile v. Board of Trustees of the National Elevator Industry Health Plan.

On January 23, 2016, Avym Corporation announced 2016 hospital ERISA appeal & litigation department support services to demystify why this high court decision also protects hospitals and doctors from any health plan’s overpayment recoupment and to recover all overpayment recoupment unlawfully withheld or embezzled by all payers under any incorrect ERISA equitable lien arguments, because “this rule applied to equitable liens by agreement as well as other types of equitable liens.” Op. at 9

Nationwide, over the past 10 years, overpayment offsets and recoupments have directly resulted in billions of dollars of revenue losses, and even bankruptcies in many cases, for medical providers of all types. These recoupments by payers are done using ERISA equitable lien arguments, both inside and outside the courtrooms. Consequently, this new Supreme Court decision is critical for every healthcare provider’s financial survival.

At minimum, any overpayment offsets or recoupment across separate plans and/or patients are not permissible under ERISA equitable lien law in accordance with the Supreme Court decision on January 20, 2016, because the alleged overpayment equitable lien is attached to another person’s separate fund or property, where no ERISA equitable lien existed, or otherwise is clearly not permitted.

“For all pending overpayment court cases in absence of any fraud claims, this Supreme Court decision could be a rainmaker for all healthcare providers, both in-network and out-of-network”, predicted Dr. Jin Zhou, president of ERISAclaim.com, a national expert on ERISA appeals and compliance, and an ERISA “Special Collection Agent”, as recently ordered by a Federal Bankruptcy Court for a bankrupt hospital system in Texas.

Avym Corporation’s 2016 hospital ERISA appeal & litigation department support services will brainstorm on this Supreme Court order and assist hospital executives and legal departments in assessing and immediately complying with the Supreme Court decision, in advocating for ERISA rights of the plan participants and beneficiaries in the hospital’s financial survival ordeals, or otherwise preventing hospitals and doctors from being bankrupt as a result of the totally out-of-control revenue losses from the endless and relentless overpayment recoupment or offsets under ERISA in absence of any fraud claims.

These new ERISA compliance services include, but are not limited to, executive brainstorming and education, ERISA & PPACA appeal practice, ERISA litigation strategy & support, overpayment prevention through corporate compliance in fraud & abuse prevention.

In a personal injury subrogation overpayment lawsuit, after the District Court and 11^th Circuit Court ruled for the health plan, on January 2016, the Supreme Court ruled for the plan participant. In an 8-1 ruling penned by Justice Clarence Thomas, the majority said that the National Elevator Industry Health Benefit Plan couldn’t sue plan beneficiary Robert Montanile under ERISA §502(a)(3) for overpayment reimbursement of about $122,000 from a $500,000 auto accident settlement because the settlement fund had already been dissipated and  therefore, the plan fiduciary may not sue to get at the participant’s additional assets.

According to the Court Documents, the Supreme Court ruled:

• “Plan fiduciaries are limited by §502(a)(3) to filing suits “to obtain … equitable relief.”
• “[A]s here, an equitable lien by agreement, only against specifically identified funds that remained in the defendant’s possession or against traceable items that the defendant purchased with the funds.”
• “If a defendant dissipated the entire fund on nontraceable items, the lien was eliminated and the plaintiff could not attach the defendant’s general assets instead.”
• “The Board’s arguments in favor of the enforcement of an equitable lien against Montanile’s general assets are unsuccessful. Sereboff does not contain an exception to the general asset-tracing requirement for equitable liens by agreement.”
• “In sum, at equity, a plaintiff ordinarily could not enforce any type of equitable lien if the defendant once possessed a separate, identifiable fund to which the lien attached, but then dissipated it all. The plaintiff could not attach the defendant’s general assets instead because those assets were not part of the specific thing to which the lien attached.”
• “This rule applied to equitable liens by agreement as well as other types of equitable liens.”

(This article was originally published by Dr. Jin Zhou)

Federal judge allows ILWU-PMA, a self-insured health plan, to move forward in lawsuit against Cigna and Carewise for allegedly engaging in “prohibited transactions” and “self-dealing” by entering into “auto-discount agreements with providers for which it received a portion of the amount discounted”

As healthcare admin fees increase, more and more self-insured health plans are looking to engage in out of network “cost containment” or third party “repricing agreements” with out of network provider claims, in an effort to lower costs or save money.However, plaintiff’s allegations in this and other recent cases, shed light on possible abuses that take place disguised as legitimate practices.

On Dec 22, 2015, a Northern District of CA Federal court ruled in favor of a self-insured health plan and allowed an ERISA lawsuit to go forward against Cigna and third party fee negotiating company, Carewise (formerly called SHPS Health Management Solutions, Inc.). Cigna and Carewise were sued by the ILWU-PMA Welfare Plan Board of Trustees and ILWU-PMA Welfare Plan, for alleged ERISA “prohibited transactions” and “self-dealing”

Case info: ILWU-PMA Welfare Plan Board of Trustees v. Cigna and Carewise, U.S. District Court for the Northern District of CA Civil Docket for Case #:C15-cv-02965-WHA, Filed 12/22/2015.

This lawsuit against Cigna in ERISA healthcare claims disputes comes on the heels of another recent lawsuit against a different Cigna administered self-insured ERISA plan client, CB&I and its Plan Administrator, Dennis Fox, who were sued for alleged ERISA plan assets embezzlement, deceptively concealed through “fake PPO (CO) discounts” and Cigna’s “fee forgiveness protocol scam”.

TPA’s tactics of engaging in prohibited transactions, self-dealing or applying non-existent or “fake” PPO discounts can expose the plans and plan administrators to costly litigation as well as civil criminal liability. As these lawsuits become more prevalent, self-insured health plans should be aware of possible embezzlement or conversion of plan assets and act accordingly.

According to industry experts, and as illustrated in the Hi-Lex case, a BCBS survey was conducted and found that 83 percent of its self-insured clients were completely unaware of the hidden fees. Other documents revealed a course of conduct designed to conceal evidence of the company’s wrongdoing. Based on the foregoing, 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.

According to the court documents in the ILWU-PMA v. Cigna case:

“The Board’s…claims allege Carewise engaged in prohibited transactions under ERISA. Specifically, claims four and five allege that Carewise engaged in self-dealing as a plan fiduciary by entering into auto-discount agreements with providers for which it received a portion of the amount discounted”… “Moreover, by implementing auto-discounts, rather than negotiating claims on a case-by-case basis, Carewise received compensation for fee-negotiation services it never actually performed. Plaintiffs have adequately alleged that Carewise received unreasonable compensation for negotiation services it did not perform. Accordingly, Carewise’s motion to dismiss the plaintiffs’ sixth claim is hereby DENIED.”

The court goes on to say:

“The Board’s sixth claim alleges that Carewise engaged in a prohibited transaction in violation of Section 1106(a)(1)(C) of Title 29 of the United States code. Section 1106(a)(1)(C) generally prohibits transactions between an ERISA plan and a “party in interest” although Section 1108 allows such transactions for “services necessary for the establishment or operation of the plan, if no more than reasonable compensation is paid” for services rendered by the party in interest. Section 1002(14)(B) defines a “party in interest” as “a person providing services to [a] plan“

Interestingly, ILWU-PMA Coastwise Trustees, Cigna, TPA Zenith American Solutions and TC3 Health were all slapped with a class action lawsuit in mid 2015 for various ERISA violations. According to that complaint, the ILWU-PMA and Plan’s own independent fact finder confirmed there were “286,000 unprocessed claims” at one point and the “backlog became worse, with about 90,000 new claims each month” added to the backlog.  The suit also alleges that the plan attempted to  “delay processing of legitimate claims, increasing interest income for the Plan’s fund” as well as create the “misimpression that the PMA Trustees have been diligent in the exercise of their fiduciary obligations”, according to court documents.

In accordance with these lawsuits and national epidemic of self-insured health plan assets embezzlements, self-dealing and prohibited transactions, Avym Corporation (Avym) announces cutting edge, unconventional Fiduciary Overpayment Recovery programs for private self-insured health plans. In 2011 private health insurance funded approximately 33% and Medicare funded approximately 21% of the $2.7 trillion national healthcare expenditure. Approximately 82.1% of all large health plans (>500) are self-insured. Avym’s innovative new programs consist of:

• The Fiduciary Overpayment Recovery Specialists (FOR) training program which is designed for private self-insured plans.
• The Fiduciary Overpayment Recovery Contractor (FORC) program which is designed to create partnership networks nationwide to immediately offer FOR programs to self-insured plans.

These groundbreaking programs are unique and unlike any other traditional health plan overpayment auditing programs and are designed to recover alleged overpayments, regardless of the reason including allegations of fraud, that have been recouped by the TPA’s but have not been restored or refunded to the ERISA plan assets as required under ERISA statutes and fiduciary responsibilities.

Over the past 6 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.

Avym Corp. has been at the forefront and 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.