In a Significant Ruling for All Plan Sponsors, Insurers and Medical Providers, the Seventh Circuit Court of Appeals Sides With Medical Provider; Rules Plan Must Provide Third Party Repricing Documents & Methodologies Relied Upon by Plan to Determine “Usual, Reasonable and Customary Rates” and Medical Provider is Eligible for Statutory Damages; “Must be a Beneficiary”
The case is based on very common fact patterns where an out-of-network medical provider verified benefits for the patient of an ERISA governed plan, confirming benefits would be paid at the “usual, reasonable and customary rate”. Before performing services the patient assigned the provider rights under the plan to “pursue claims for benefits, statutory penalties, [and] breach of fiduciary duty ….” The provider then performed services expecting a certain level of reimbursement. When the Plan failed/refused to pay the expected amount, the medical provider appealed for, among other things, the SPD and documents, rate tables and methodologies used to support her payment.
After 6 months, the Plan responded that a third party vendor, data iSight, priced the claim and the provider should reach out to them to try and negotiate a higher amount. The provider decided she had exhausted the administrative remedy, under the premise that 6 months was “unreasonable” and sued for: Damages for Unpaid Benefits, 29 U.S.C. § 1132(a)(1)(B); Breach of Fiduciary Duty, 29 U.S.C. § 1132(a)(3) and Statutory Penalties, 29 U.S.C. § 1132(c)(1). The district court dismissed her complaint. However, the 7th Circuit court disagreed, holding that: “Dr. Griffin adequately alleged that she is eligible for additional benefits and statutory damages, we affirm the judgment only as to Count 2, vacate the judgment as to Counts 1 and 3, and remand Counts 1 and 3 for further proceedings.”
Case info: W.A. Griffin v. TEAMCARE, Central States Health Plan 7th Cir., and TRUSTEES OF THE CENTRAL STATES Case No. 182374 US District Court of Appeals Seventh Circuit
On the first count, Damages for Unpaid Benefits, 29 U.S.C.§ 1132(a)(1)(B) the court held:
“Dr. Griffin challenges the district court’s ruling that she did not state a claim for unpaid benefits. She argues that she adequately plead that the plan covered the medical treatment she provided T.R. and that she did not need to cite in her complaint a plan provision establishing coverage at the amount she billed. We agree. “[P]laintiffs alleging claims under 29 U.S.C.§ 1132(a)(1)(B) for plan benefits need not necessarily identify the specific language of every plan provision at issue to survive a motion to dismiss under Rule 12(b)(6).” Innova Hosp. San Antonio, Ltd. P’ship v. Blue Cross & Blue Shield of Ga, Inc., 892 F.3d 719, 729 (5th Cir. 2018).
The court goes on to explain, that the Plan’s argument, “Requiring that Dr. Griffin to allege provisions to support something that was undisputed, -the existence of coverage-was error.” The court further noted that because Dr. Griffin was paid “something“, it was plausible the services were covered.
Additionally, the court reasoned that requiring Dr. Griffin to name a specific plan provision entitling her to higher reimbursement, was not necessary, since she clearly alleged she was not paid the usual, reasonable and customary amounts, consistent with section 1109 of the plan. According to the court:
To require her to be more specific is to turn notice pleading on its head. Indeed, as discussed later, Dr. Griffin did not have the information necessary to allege with more detail where the plan’s calculation of the usual and customary rate went astray.”
On count 3, Statutory Penalties, 29 U.S.C. § 1132(c)(1), the court explains why Dr. Griffin could be entitled to statutory penalties :
“Finally, Dr. Griffin argues that as T.R.’s assignee, she is a beneficiary of the plan, eligible for statutory penalties based on Central States’s failure to provide the documents she requested within 30 days. See 29 U.S.C. §§ 1024(b)(4), 1132(c)(1). Central States takes the position, supported by one citation to a district-court decision, that an assignee does not step into a beneficiary’s shoes for the purpose of enforcing statutory penalties. See Elite Ctr. for Minimally Invasive Surgery, LLC v. Health Care Serv. Corp., 221 F. Supp. 3d 853, 860 (S.D. Tex. 2016). Thus, Central States concludes, it could not be liable for not timely providing documents to Dr. Griffin.
But in Neuma, Inc. v. AMP, Inc., we remanded to the district court for a determination of whether penalties should be awarded to an assignee under section 1132(c)(1), thus assuming that assignees could seek penalties. 259 F.3d 864, 878–79 (7th Cir. 2001). Central States’s position is inconsistent with our prior precedent and is contrary to the purposes of a plenary assignment of rights under the plan. ERISA defines “beneficiary” as “a person designated by a participant … who is or may become entitled to a benefit [under an employee benefit plan].” 29 U.S.C. § 1002(8). An assignee designated to receive benefits is considered a beneficiary and can sue for unpaid benefits under section 1132(a)(1)(B)—something the plan does not dispute. See Kennedy v. Conn. Gen. Life Ins. Co., 924 F.2d 698, 700 (7th Cir. 1991). Bringing that suit (or an administrative appeal) requires access to information about the plan and its payment calculations— here, how Central States determined the usual, reasonable, and customary rate. Mondry, 557 F.3d at 808; see also Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 118 (1989) (disclosure ensures that “the individual participant knows exactly where he stands with respect to the plan” (citing H.R.Rep. No. 93–533, p. 11 (1973), U.S.Code Cong. & Admin. News 1978, p. 4649)).
It follows that Dr. Griffin also must be a beneficiary able to sue when she is denied requested information.
Central States argued that even if Dr. Griffin is a beneficiary, she still did not state a claim for statutory damages because it sent her the summary plan description, and ERISA did not require it to provide either Data iSight’s fee schedules and rate tables or its contract with Blue Cross Blue Shield. The court shot down the Plans arguments regarding the disclosure of documents as “meritless“, based on the fact the Plan ultimately provided Dr. Griffin the SPD, albeit 6 months late, and because the Plan readily admitted that it used Data iSight’s figures to calculate the payment which constituted, in part, the Plan’s “pricing methodology” and the basis for the payment.
This case illustrates the importance of ERISA compliance and properly disclosing all relevant materials used to determine benefits payments. 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, fiduciaries, TPAs and medical providers all 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 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.
For nearly a decade, 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 medical providers and 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.