Search results for overpayment

UHC “Overpayment” Offset Practice Dealt Deathblow-ERISA Court Rules Cross-Plan Offset Constitutes “Grave Conflict Of Interest”

In Landmark Class Action Case, a Federal Judge would shut down United HealthCare’s “cross-plan offsetting” practice as a “troubling use of plan assets”, ruling the industry standard practice of “Cross‐plan offsetting creates a substantial and ongoing conflict of interest” for all claims administrators who “simultaneously administer both self‐insured and fully insured plans.” The court also called into question United’s practice of reaching “into the pockets of the sponsors of self‐insured plans” and putting that money “in United’s pocket”.

In an extraordinary decision, US District Judge Patrick J. Schultz has effectively barred cross-plan offsets. The judge weighed in on two very important questions: First, whether UHC acted “reasonably” in interpreting its client’s plans to permit cross‐plan offsetting; and whether the practice complies with the “fiduciary duties imposed by ERISA”. The court offered an answer to both issues while providing very clear guidance for Plans, claims administrators, medical providers and patients.

As we have written about many times before, the No. 1 health care claims denial in the country is “overpayment” recoupments through “Cross-Plan Offsets”; correspondingly, the No.1 hidden cost for Self-Insured health plans, is “Overpayment” recoupment through “Cross-Plan Offsets” and subsequent embezzlement of plan assets. With the new legal guidance this landmark case provides, will self-insured plan sponsors, like AT&T and Gap Inc. be held accountable to allowing United to engage in such ERISA violations such as embezzlement, self-dealing and breach of fiduciary duty?  

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

In this class-action, originally filed in 2014, healthcare providers alleged ERISA violations by UnitedHealthcare Group for withholding and offsetting newly adjudicated claim payments from one patient to satisfy an alleged overpayment in the past, from separate, unidentified patients in complete violation of ERISA, and even worse, by misrepresenting to the patients and the plan sponsors on patient EOB’s “payment made to provider”, when in truth and in fact no such payment was ever made to the providers, according to the Court Complaint.

In answering the first question, Judge Schultz considered whether the language in UHC’s client health plans at issue in the case, identified as 46 Plan Bs, authorized UHC to engage in the offsetting practice known as “Cross-Plan Offsets”. According to the court they did not: “the Court finds that United’s interpretation is unreasonable. The plans themselves do not authorize cross‐plan offsetting. To the contrary, most of the plans contain specific overpayment and recovery language that would be rendered meaningless if United was authorized by the generic clauses that it relies upon to engage in cross‐plan offsetting.”

The court went on to clarify: “Every one of the overpayment provisions is triggered only when the plan itself makes an overpayment…In other words, each Plan B authorizes the recovery of overpayments made by the Plan B.

“None of the overpayment…provisions contain any language allowing other plans to recover their overpayments from the plan. “In other words, not one Plan B authorizes recovery of an overpayment made by a Plan A.”, according to the court order.

Remarkably, the judge chided UHC for or creating its cross-plan offsetting process for its own benefit and without examining the language of the plans. The judge specifically drew attention to this point, according to the court order: “It should be noted, that in looking carefully at the language of the plans…the Court is doing something that United itself did not do before implementing cross-plan offsetting…”

“Only after getting sued did United hunt through the plans for any language that might provide a post hoc justification for its conduct…United admits that it was not able to find a single provision of a single plan that explicitly authorizes cross-plan offsetting.”, according to court records.

The judge also questioned whether UHC ever disclosed their intention to engage in “cross-plan offsets” or the likely conflict of interest to its plan clients: “It appears, however, that disclosures concerning United’s system of cross-plan offsetting are mostly or entirely handled by United’s banking team during what appear to be fairly technical explanations for banking, account-setup and account-funding processes. It also appears that such disclosures mostly occur orally and on a somewhat ad hoc basis”.

UHC argued that it did disclose its cross-plan offset provisions to its clients’ “benefits and finance and treasury folks”, to which the court responded “it is not clear whether those individuals have authority to make plan-wide fiduciary decisions, nor is it clear whether these disclosures are made before or after a plan sponsor decides to become a United Client.”

Regarding the second question, whether the practice of cross-plan offsetting violates ERISA, the judge, while weighing possible conflicts of interest in violation of ERISA, went so far as to mention the fact that UHC lined its own pockets with self-insured plan assets: “the money that reimburses United for its alleged overpayment comes out of the plan sponsors’ pockets. Several internal United documents emphasize this point and gush about how cross-plan offsetting will allow United to take money for itself out of the pockets of the self-insured plans…”

“In other words, every one of the cross‐plan offsets at issue in this litigation put money in United’s pocket, and most of that money came out of the pockets of the sponsors of self‐insured plans.” according to the court records.

The court went into great detail regarding UHC’s conflict and possible prohibited transaction and breach of fiduciary duty: “In light of this case law and the strict fiduciary duties imposed by ERISA, cross-plan offsetting is, to put it mildly, a troubling use of plan assets—one that is plainly in tension with “the substantive or procedural requirements of the ERISA statute . . . In stark terms, cross‐plan offsetting involves using assets from one plan to satisfy debt allegedly owed to a separate plan—a practice that raises obvious concerns under §§ 1104 and 1106. These concerns are particularly acute in this case, in which every offset that United orchestrated did not just benefit a different, unrelated plan, but benefited United itself.”

“Cross‐plan offsetting creates a substantial and ongoing conflict of interest for claims administrators who, like United, simultaneously administer both self‐insured and fully insured plans…”, according to court records.

The judge, after examining the facts of the case, shed light on an enormous incentive for UHC: “As the single biggest payor of claims, United’s personal stake in cross‐plan offsetting dwarfs that of any self‐insured plan. [United] in this circumstance has every incentive to be aggressive about looking for overpayments from its own fully insured plans (which overpayments can be recovered from self‐insured plans) and less aggressive about looking for overpayments from self‐insured plans (which overpayments might be recovered from fully insured plans).”

“And indeed, this incentive is reflected in United’s internal documents, which enthusiastically describe how cross‐plan offsetting will permit United to reach into the pockets of the sponsors of self‐insured plans to recover the overpayments that United makes in connection with fully insured plans.” (emphasis added) 

The court further clarifies its reasoning and confirms: “It is also undoubtedly true, as United is reluctant to acknowledge, that cross-pan offsetting can harm plan participants” and “It is not fairly debatable, however, that the type of cross‐plan offsetting challenged in this case—that is, cross-plan offsetting engaged in by an administrator who insures some (but not all) of the plans—presents a grave conflict of interest.”

Ultimately, the court concludes, “United labors under a continuing conflict of interest in administering the cross‐plan offset system because United fully insures some but not all of the plans. More importantly, the fact remains that cross‐plan offsetting is in tension with ERISA’s fiduciary rules, is not provided for in the plans, and is at odds with the specific offset language contained in most of the plans. As a result, United did not act reasonably in interpreting the Plan [documents] that are at issue in this case to permit cross‐plan offsetting. The Court therefore grants plaintiffs’ motions for partial summary judgment and denies United’s motions for full summary judgment.”

In ruling against UHC on almost every argument, the judge certified the case for immediate appeal, acknowledging that this was a landscape changing and “exceptional case,” and taking into consideration that United, as the nation’s largest insurer will have to “undertake the extremely expensive and disruptive process if unwinding its cross-plan offsetting practice.”

“This order resolves a controlling and dispositive question of law: whether United acted reasonably in interpreting the plans to permit cross‐plan offsetting.”

“IT IS HEREBY ORDERED THAT:

  1. Defendants’ motions for summary judgment are DENIED.
  2. Plaintiffs’ motions for summary judgment on Phase I issues are GRANTED.”

Based on the fact that ‘cross-plan offsetting” is pervasive throughout the health care industry, this legal guidance will undoubtedly have tremendous ramifications on all Plans, TPAs, medical providers and patients. Medical providers must be proactive and adopt compliant practices and policies. Health plans must also be proactive in validating that plan assets get returned to their plan, and not applied to cover shortfalls in another plan.

Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. With new Supreme Court guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars of self-insured plan assets, 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 contact us.

United HealthCare Administered ERISA Plan Sued for Embezzlement in Medical Claims Overpayment Offset Dispute

On May 10, 2016, in the southern district of Texas Federal Court, United HealthCare administered self-insured ERISA plan, GAP Inc. and its Plan Administrators, Cynthia Radovich and Lesley Dale, were sued for alleged ERISA plan assets “self-dealing and embezzlement”, deceptively concealed through an “illegitimate recoupment scheme that financially rewards United for wrongfully recouping valid benefits”.

As we have written about before and as part of a growing trend, another self-insured health plan is being sued for alleged embezzlement and self-dealing. United HealthCare administered self-insured ERISA plan, GAP Inc. and plan administrators, Cynthia Radovich and Lesley Dale, were sued by out-of-network (OON) hospital, Redoak Hospital, LLC, for alleged ERISA plan assets “Self-dealing and embezzlement”, based on its co fiduciary, United HealthCare’s (UHC) alleged cross plan overpayment offset practices, according to court documents.

This extraordinary and multifaceted ERISA lawsuit will impact all ERISA self-insured plans, employer sponsored plan employees, and healthcare providers, resulting in uncertainties for every healthcare claim. Overpayment refund demands and cross-plan offset practices are the nation’s most insidious claim denials and may ultimately determine the fate of the entire U.S. ERISA healthcare system. 

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 Court Case Info: Redoak Hospital, LLC v. Gap Inc., Gap Inc. Health and Life Insurance Plan, Cynthia Radovich, and Lesley Dale,  in the United States District Court for the Southern District of Texas, Houston Division, Case 4:16-cv-01303, Filed on 05/10/16.

According to court documents, Redoak Hospital Plaintiff filed a DOL EBSA Complaint on the alleged overpayment offset by the Defendants Plan, Gap, Inc, and the plan’s co-fiduciary, UHC, prior to filling this ERISA lawsuit, alleging:

 “This dispute arises out of Defendants’ ongoing and systematic ERISA violations consisting of an elaborate scheme to abstract, withhold, embezzle and convert self-insured Plan Assets that were approved and allegedly paid to Plaintiff for Plaintiff’s claim, to purportedly, but impermissibly, satisfy a falsely alleged ―overpayment‖ for another stranger claim, especially when the stranger is a plan beneficiary of a fully-insured plan that is insured by the Plan’s co-fiduciary, United Healthcare (hereinafter, ―United‖). Defendants knew or should have known that the Plan’s overpayment recovery provisions cannot be triggered until there is an allegation of overpayment by the Plan to the Plan Beneficiary subject to this action, and that converting the Plan Assets by a fiduciary or co-fiduciary of the Plan, in this case United, to the use of another and his own use, to ultimately pay to United’s own account is absolutely prohibited under ERISA statutes. Regardless, Defendants and United recklessly conspired, orchestrated and authorized to this kind of self-dealing and embezzlement even while being under active investigation by the Department of Labor and after repeated detailed alerts and notices from Plaintiff regarding the aforementioned.” according to the Court Documents.

In the Compliant, the Plaintiff makes the following:

 “COUNTS AGAINST DEFENDANTS:

The Plaintiff, as a statutory defined Claimant with a valid and unchallenged Assignment of Benefits, is entitled to ERISA rights ―to bring a civil action under section 502(a) of the Act following an adverse benefit determination on review‖ after Plaintiff has legally and administratively exhausted any and all appeal remedies.14 Therefore the Plaintiff is entitled to pursue Benefit claims: (i) to recover benefits due for already approved claims but abstracted and converted by the Defendants’ co-fiduciary, United; (ii) breach of fiduciary duty claims under 29 U.S.C. § 1132(a)(2) in violation of 18 U.S.C. § 664, 29 U.S.C. § §1104, §1105, §1106(b)(1)(d); injunctive relief to enjoin the Defendants from engaging in prohibited transaction 29 U.S.C. § 1132(a)(3); and (iii) injunctive relief to permanently remove the Defendants Cynthia Radovich and Lesley Dale from serving as fiduciaries to the Plan permanently under 29 U.S.C. § 1132(a)(3).” according to the Court Documents.

Avym Corp. announces a timely new ERISA Compliance Forum on May 17, 2016. At this new ERISA Compliance Forum, through Pittsburgh Business Group on Health (PBGH) Legislative Updates Forum, we will brainstorm, assess and demystify the potential impact of this unprecedented ERISA lawsuit for all interested parties.  PBGH is “The only employer-led, non-profit coalition of large, mid-size, and small organization representing various business segments including private and public employers, government and academia.”

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

Over the past 6 years, Avym has closely followed decisions from the Supreme Court and federal appeals courts on ERISA prohibited self-dealing against ERISA plan TPA’s for managed care savings.

This latest lawsuit against a self-insured plan and plan administrators, for alleged plan assets embezzlement by the ERISA plan’s third party claim administrator (TPA), comes less than 6 months after a Cigna administered self-insured plan was sued in federal court for similar violations.

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, the 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 court documents.

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

These cases together with the pending ERISA cases listed below, offer insight into the healthcare industry’s prevalent overpayment offset wars:  

Peterson, D.C. et al v. UnitedHealth Group Inc. et al, U.S. District Court, U.S. District of Minnesota (DMN) CIVIL DOCKET FOR CASE #: 0:14-cv-02101-PJS-BRT,

Riverview Health Institute v. UnitedHealth Group Inc. et al, U.S. District Court, U.S. District of Minnesota (DMN), CIVIL DOCKET FOR CASE #: 0:15-cv-03064-PJS-BRT

These new ERISA embezzlement cases are part of a growing trend consistent with 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.

For over 6 years, Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. With new Supreme Court guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars of self-insured plan assets, 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.

US Supreme Court ERISA Decision Protects Hospitals from “Overpayment Bankruptcies”

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 11th 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)

Aetna Class Action-Aetna Sued for Overpayment Offsets in Violation of ERISA and for “Illegal Self Help” Designed to Circumvent ERISA

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

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

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

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

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

According to the lawsuit,

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

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

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

In particular, the complaint alleged the following:

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

The complaint goes on to allege that:

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

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

Located in Los Angeles, CA, AVYM is a leading provider of services focusing entirely on the resolution of denied or disputed medical insurance claims by participating in the nation’s first ERISA PPACA Claims Appeals Certification program.  AVYM also offers free Webinars, basic and advanced educational seminars and on-site claims specialist certification programs for doctors, hospitals and commercial companies, as well as numerous pending national ERISA class action litigation support services.

Court Dismisses Cigna Overpayment Lawsuit Against Surgical Center after Self-Insured Plans were Counter-Sued

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

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

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

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

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

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

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

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

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

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

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

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

UnitedHealthcare Class Action-UHC Sued for Overpayment Offsets in Violation of ERISA and for Misleading Patients and Plan Sponsors

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

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

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

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

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

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

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

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

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

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

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

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

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

For more information click here.

BCBSM Overpayment ERISA Fraud – Self Insured Plan Award of $6.1 Million Upheld in Federal Appeals Court as BCBSM admits 83% of self-insured clients had no idea fees were being charged

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

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

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

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

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

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

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

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

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

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

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

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

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

FINAL NAIL IN BCBS IBC OVERPAYMENT CLASS ACTION COFFIN

BCBS IBC Ordered To Permanently Reform Its Overpayment Policies In Provider Class Action

In what is being seen as provider’s class action victory in the insurer-provider overpayment battle, an Illinois federal judge finalized a permanent injunction requiring BCBS Independence Blue Cross (IBC) to permanently reform its overpayment policies.  BCBS IBC is permanently restrained and enjoined from issuing or pursuing any demand for repayment, or offsetting any new claims unless IBC complies with ERISA.

This permanent injunction in federal class action court establishes the first complete set of case laws for overpayment recoupment and offsetting denials, the number one health claims denial in the country and is a huge victory not only for Pennsylvania Chiropractic Association (PCA) members but also for every patient and provider in the country.

This court case provides final and absolute clarity to the “legal gray area” of overpayment recoupment practices engaged in by many of the nation’s biggest insurance carriers.  The court has effectively answered the central question of whether insured’s overpayment demands trigger ERISA appeal rights with a resounding yes as insurers and Health Plans will be forced to comply with all applicable federal laws, ERISA and PPACA claims regulations, as well as statutory fiduciary duties before recouping one single dollar. Providers or patients that face BCBS or any payor recoupments or offsets would do well to understand the implications of this court ruling as well as their rights under ERISA.

In this landmark decision against a BCBS entity, Independence Blue Cross (IBC), “After a bench trial on December 2, 3, and 4, 2013, the Court found in favor of the Pennsylvania Chiropractic Association (PCA) on its ERISA claims against Independence Blue Cross (IBC). See Pa. Chiropractic Ass’n v. Blue Cross Blue Shield Ass’n, No. 09 C 5619, 2014 WL 1276585 (N.D. Ill. Mar. 28, 2014). The Court also concluded that PCA is entitled to an appropriate permanent injunction and directed the parties to brief “the question of the precise contours the injunction should take.” Id. at *18. PCA has now submitted a proposed permanent injunction, which requires IBC to provide ERISA-compliant notice and appeal when demanding that a health care provider repay previously issued health insurance benefits. For the reasons stated below, the Court approves PCA’s proposed injunction in part.” according to court document.

The injunction entered by U.S. District Judge Matthew F. Kennelly, forces IBC to comply with a “full and fair review” process, as established by ERISA, when denying any medical claims.  Although this specific injunction only covers members of the Pennsylvania Chiropractic Association (PCA), it can be used as a “roadmap” for all providers and patients when dealing with overpayment requests or offsets.

If a provider or patient receives any requests for overpayments, the provider or patient has the right to request an appeal of the decision BEFORE any monies are recouped or offset.  Also, the insurer must clearly explain why the money is being requested.  The insurer must also detail the specific plan provision that it used in making its determination.  Additionally, the insurer must let the provider or patient know exactly what material or documentation is needed to avoid repayment.  Finally, the insurer must notify the provider or patient of appeal and litigation rights.

If the insurer continues with the recoupment demands, once the provider or patient appeals, the insurer must allow extra time for the appeal, provide a new reviewer of the claim (cannot be reviewed again by the same person), provide, free of charge, access to any relevant material that was used in the decision process such as documents, formulas or methodologies.

Case Info: Pennsylvania Chiropractic Association, et al. vs Blue Cross Blue Shield Association, et al., Case: 1:09-cv-05619 Document #: 919 Filed: 05/19/14, in the United States District Court for the Northern District of Illinois Eastern Division

Lost in all the excitement is the fact that the new healthcare reform regulations have adopted ERISA Claims regulations in their entirety.  This means that these rules should apply across all health plans with very few exceptions.  “(i) Minimum internal claims and appeals standards. A group health plan and a health insurance issuer offering group health insurance coverage must comply with all the requirements applicable to group health plans under 29 CFR 2560.503–1 …. with respect to health insurance coverage offered in connection with a group health plan, the group health insurance issuer is subject to the requirements in 29 CFR 2560.503–1 to the same extent as the group health plan.” according to PPACA regulations for Internal Claims and Appeals and External Review. http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=24056

Avym Corporation offers new basic and comprehensive ERISA and PPACA overpayment appeals and litigation support programs, for all hospitals, providers and healthcare attorneys.

BCBS Overpayment Practice Dealt Deathblow -ERISA Court Grants Permanent Injunction

On March 28, 2014, a federal ERISA court ruled against BCBS (Independence Blue Cross, IBC) overpayment practice by granting a permanent injunction and ruling in favor of providers in an ERISA overpayment class-action.  According to the court’s opinion, the insurer’s “practices come nowhere near substantial compliance with ERISA’s notice and appeal requirement.”  This might be the first time in US healthcare history that a federal ERISA court grants a permanent injunction against a violative insurance company or health plan.

As the final legal chapter of this ERISA overpayment provider class-action unfolded it was a clear message for Plan Administrators and their TPAs seeking to recoup alleged overpayments- they must afford notice and appeal rights that comply with ERISA before recouping one single dollar.

According to the provider’s complaint, IBC issued payments for medical services and then, with very little explanation, requested the money that had been paid back, saying the payments were made in error for uncovered services. If the providers did not return the money, IBC allegedly withheld or offset funds for services rendered to other insureds that hadn’t yet been paid.

Alleged overpayment recoupments and offsets (post payment adverse benefit determinations) are the nation’s No.1 medical claim denial.  Industry experts estimate claim denials range in the hundreds of millions to billions of dollars in medical claims denied across America.  As Insurers and TPA’s are increasingly using post-payment audits as a means to recover what they allege to be prior overpayments of health care benefits, in 2009 BCBS alone reported more than half a billion dollars in collections for “Anti-Fraud Efforts” marking a $7 dollar return for every $1 invested into these practices.

Moreover, recent reports have revealed that medical bills are the No. 1 cause for all personal bankruptcies in the USA and this epidemic of wrongful overpayment recoupments and offsetting may be a significant cause of skyrocketing medical bills.

“The court’s decision on Friday just gave back all working families the minimum security and protections afforded by federal law ERISA,” says Dr. Jin Zhou, a national expert in ERISA & PPACA compliance and appeals.

In a final finding of the facts and conclusion of the law in this provider ERISA class action, initially against more than 23 BCBS entities in 2009, “the Court finds in favor of PCA on its claims against IBC and concludes that PCA is entitled to an appropriate permanent injunction. Because the parties have not yet briefed the question of the precise contours the injunction should take, the Court orders further briefing in that regard … The court concludes that IBC’s practices come nowhere near substantial compliance with ERISA’s notice and appeal requirement.” according to the court documents.

As more and more cases are being filed in this ‘legal grey zone” of nationwide overpayment recoupment and offsetting practices by almost every insurance company and health plan, this landmark healthcare decision signals a paradigm shift and will surely provide a road map to both payers and providers in all similar overpayment disputes.

Case Info: Pennsylvania Chiropractic Association, et al. vs Blue Cross Blue Shield Association, et al., Case: 1:09-cv-05619 Document #: 912 Filed: 03/28/14, in the United States District Court for the Northern District of Illinois Eastern Division (Click Here to see Court Documents)

In general, the court finds in favor of the plaintiff providers in each and every following legal position in part, according to the court documents:

A.        Whether PCA can sue under ERISA

1.       Defining “benefit” under ERISA

2.       PCA members’ status as beneficiaries

a.     Whether PCA’s evidence constitutes plan documents

b.     Whether direct payment from IBC makes PCA’s members beneficiaries

c.         Whether plaintiffs’ assignments from patients make PCA’s members beneficiaries

B.        Adverse benefit determination

C.        Notice and appeal requirements under ERISA

D.        Permanent injunction

 

In particular, the court finds in favor of the plaintiff providers in the following key legal positions in part:

“Notice and appeal requirements under ERISA: For these reasons, this Court finds that the notice that IBC provides to PCA members from whom it is recouping payments does not substantially comply with ERISA.” according to the court documents.

“Permanent injunction: The evidence showed that it has been IBC’s usual course of business to provide inadequate notice and appeal rights in connection with recoupments of payments from PCA’s members. The injuries at issue are irreparable, and PCA’s members lack an adequate remedy at law to redress them….Finally, requiring a plan administrator to afford notice and appeal rights that comply with ERISA serves the public interest in enforcing duly enacted national legislation whose purpose is to protect workers who are the direct beneficiaries of employer-provided health and welfare benefit plans.” according to the court documents.

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

Court Rules against BCBS in Landmark Provider Overpayment ERISA Class Action

On November 7, 2013, the United States District Court for the Northern District of Illinois granted in Summary Judgment against BCBS in an overpayment ERISA class action for certain plaintiff providers. The court clarified among other issues that:

  • Providers are entitled to sue under ERISA;
  • Certain BCBS entities completely violated ERISA;
  • These providers are not liable to BCBS overpayment claims;

The federal court summary judgment decisions were made in the wake of the court’s prior decision on October 12, 2012, denying BCBS motion to dismiss and in favoring of the provider ERISA arguments.  The suit dates to 2009.

In response to this landmark court decision, Avym Corporation announces new webinars and advanced ERISA claim specialist programs to demystify this federal court decision on the nation’s No. 1 health care claim denial issue: overpayment demand recoupments and offsetting.  This training will also examine how to correctly appeal every overpayment demand with a valid ERISA assignment and in complete compliance with ERISA & PPACA claim regulations.

Provider overpayment recoupment demands or offsets have become the number one claim denial in the nation.  Industry estimates put the offset amounts in the hundreds of millions annually.  This court case provides clarity with respect to the overpayment recoupment practices engaged in by many of the nation’s biggest insurance carriers.  The court has effectively answered the central question of whether insured’s overpayment demands trigger ERISA appeal rights with a resounding yes as insurers and Health Plans will be forced to comply with all applicable federal laws, ERISA and PPACA claims regulations, as well as statutory fiduciary duties before recouping one single dollar. Providers that face BCBS or any payor recoupments or offsets would do well to understand the implications of this court ruling as well as their rights under ERISA.

According to providers complaints BCBS insurers made reimbursement payments for medical services rendered.  A short time after BCBS came back to those providers and said the payments were made in error for uncovered services. If the providers failed to submit to the demands and the money wasn’t returned, BCBS allegedly withheld funds for services rendered to other BCBS members that hadn’t yet been reimbursed:

“Plaintiffs allege that defendants improperly took money belonging to plaintiffs. They allege that they provided medical services to BCBS insureds. Defendants would initially reimburse plaintiffs for these services. Sometime afterward, plaintiffs allege, defendants would make a false or fraudulent determination that the payments had been made in error. Defendants then would demand that plaintiffs repay the supposedly overpaid amounts immediately. If plaintiffs refused to do so, defendants would forcibly recoup the amounts they sought by withholding payment on other, unrelated claims for services plaintiffs provided to other BCBS insureds.”

All of this was allegedly done without any explanation as to why or how BCBS determined the errors:

Plaintiffs allege further that when defendants made these repayment demands, they typically did not provide adequate information regarding the reason for the demands or procedures for challenging the demands. Plaintiffs allege that defendants sometimes failed to offer any appeal process at all. When an appeal process was available, plaintiffs allege, defendants refused to provide details about which patients, claims, and plans were claimed to be the subject of overpayment or “effectively ignored” Case: 1:09-cv-05619 Document #: 846 Filed: 11/07/13 Page 2 of 40 PageID #:368953 plaintiffs’ appeals. Fourth Am. Compl. ¶ 18. Plaintiffs contend that this conduct deprived them of their right to a “full and fair review” under ERISA. 29 U.S.C. § 1133.”

“This federal court decision doesn’t mean that no insurance company can ask any providers for any money back as overpayment, it simply means that no insurance company can do so without complying with ERISA, which governs and regulates medical claim disputes for all private healthcare plans,” cautions by Dr. Jin Zhou, a national expert in ERISA & PPACA compliance and appeals.

Plaintiffs’ attorney D. Brian Hufford of Pomerantz Grossman Hufford Dahlstrom & Gross LLP praised the ruling: “The decision found for us on the merits of our claim that an insurer must comply with ERISA when seeking to recover from providers previously paid health care benefits,” he said. “Given the hundreds of millions of dollars recouped by insurers every year, this decision could have widespread implications.”

In denying motion for summary judgment for BCBS entities and granting motion for summary judgment for certain plaintiff providers, among other things, the federal court makes the following conclusion:

Conclusion:    For the foregoing reasons, the Court grants plaintiff Reno’s motion for summary judgment [docket no. 793] on the question of liability as to defendant Anthem Health Plans of Virginia, Inc. but denies the motion with regard to defendant WellPoint, Inc. The Court grants plaintiffs Barnard & Wahner’s motion for summary judgment [docket no. 795] as to liability on their claim against defendant Independence Blue Cross for improper denial of benefits but denies in part plaintiffs’ motion on their claim that Independence denied them the appropriate notice and appeal rights, while making findings in plaintiffs’ favor on certain points pursuant to Rule 56(g). At tomorrow’s status hearing, counsel should be prepared to discuss what further proceedings are required on the claims of these plaintiffs.” according to court records

In particular, the court makes the following legal reasoning and discussion in part:

Reno’s summary judgment motion against Anthem and WellPoint:

“1. Standing: ……The Court concludes that Reno is a beneficiary for purposes of ERISA and thus has standing, conferred on him by section 1132, to bring his claims.” according to the court records.

“2. Denial of notice and appeal rights: ……The Court therefore concludes that Reno is entitled to summary judgment as to liability on his claim that Anthem denied him the notice and appeal rights to which he was entitled under ERISA. The only matter that remains for determination on that claim is the appropriate relief.” according to the court records.

“3. Denial of benefits: …… The Court therefore grants summary judgment to Reno against Anthem as to liability on this claim as well.” according to the court records.

Case Info: Pennsylvania Chiropractic Association, et al. vs Blue Cross Blue Shield Association, et al., Case No.: 1:09-cv-05619, Document #: 846, Filed: 11/07/13, in the United States District Court for the Northern District of Illinois Eastern Division

As part of best practices for reimbursement purposes, we further advocate for ERISA compliance by every healthcare provider to appeal every overpayment denial or offset, regardless whether a plan or provider may be right or wrong on its overpayment determination, as specifically advised by DOL, federal agency in charge of ERISA interpretation and enforcement:

DOL Tri3 Enterprises Amicus Brief, supporting plaintiff-appellant, No. 12-2308, File on 11/30/2012, In the United States Court of Appeals for the Third Circuit

The crux of the question at issue here is not whether the plaintiff or the defendant is correct in their views of the plan terms, but whether Aetna must comply with the procedures mandated by ERISA section 503 and its accompanying regulations in rendering a determination based on a plan interpretation that is adverse to the plan participants and beneficiaries. Under the statute and regulations, the beneficiary or participant is entitled to a claims procedure that “afford[s] a reasonable opportunity . . . for a full and fair review by the appropriate named fiduciary of [a] decision denying [a] claim,” …… In either event, Tri3 is entitled to insist upon its assigned right to challenge the allegedly wrongful decision to deny benefits through a process that complies with the claims regulation.”   http://www.dol.gov/sol/media/briefs/tri3-enterprises(A)-11-30-2012.htm#.UMfi5z9MHFo