All posts by mflores

Self-Insured Employer Health Plan Administrators, Plan Sponsors, and key decision-makers would do well to heed the old adage: if it sounds too good to be true, it probably is.

In the ever-changing employer healthcare landscape, there has been an increasing group of professionals espousing “new solutions” that purport to offer substantial savings to self-insured employer health plans, particularly with out-of-network claims. One of the issues with many of these “new solutions” is that very few vendors/entities agree to accept fiduciary responsibility and the accompanying liabilities.

One of those “solutions” involves reference-based pricing (RPB). While relatively few employer plans have adopted RBP, some employers are considering this “new solution” under the impression that there are no other alternatives.

Employer health plans considering any of these “new solutions” should factor in the substantial risks before implementing any of these provisions plan wide, lest they are left facing lawsuits from their own members as well as medical providers.

This case offers a cautionary tale to self-funded employer health plans, where a self-insured employer health plan implemented a reference-based pricing mechanism. The case is Central Valley Ag Cooperative v. Leonard, No. 8:17CV379, 2019 WL 4141061, D. Neb. The plaintiffs, a self-insured health plan, Central Valley AG Cooperative Healthcare Plan and its plan sponsor and fiduciary, Central Valley, (collectively the “Plan”) filed the lawsuit against their own third party administrator and medical claim reviewers, asserting claims for breach of fiduciary duty under ERISA as well as self-dealing.

The Plan alleged that the vendors created a systematic reimbursement scheme that financially benefitted themselves at the expense of the members.

In summary, the Plan accused the vendors of cutting claims payments so low, substantially lower than contracted rates, that Plan members were hit with extremely high balance bills from medical providers that did not accept the RBP rates. This led to lawsuits against the Plan by medical providers and possible lawsuits against the plan by its own members.

Although the self-insured employer plan and plan sponsor agreed to the new pricing structure, according to court records, “claims payments to health care providers under the Plan virtually ceased. Providers complained the Plan was not paying them for services rendered to Plan participants”. The plan also alleged their own plan members were harmed and “subjected to collection efforts by physicians and other providers.” The complaint also alleged that “Several providers refused to render further services to Plan participants, their spouses, and their dependents.” Amazingly the Plan also alleged that it had “lost benefits from its stop-loss insurance carrier due to the extended claim disputes.”

Ultimately, the court ruled against the Plan, leaving the Plan on the hook for costly litigation fees.

This case serves as a very important warning to self-insured health plans regarding “new solutions” where unscrupulous vendors will promise monumental savings with no adverse effects or balance billing to Plan members.

While there are many legitimate vendors providing valuable services, RBP at its core represents a zero-sum game, in that savings to employers have to come from somewhere, in this case, either the hospital, through negotiated reductions or the employees, through balanced billing.

Consequently, key decision makers should also be aware of overreaching promises such as “universally accepted fee schedules” and “total compliance” with state and federal laws.

Ultimately, legitimate vendors should be willing to accept fiduciary responsibility and all the liability that comes with it. Self-Insured Employer Health Plan Administrators, Plan Sponsors, and key decision-makers would do well to heed the old adage: if it sounds too good to be true, it probably is.

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.

This extraordinary lawsuit comes on the heels of a massive settlement, where CIGNA and American Specialty Health agreed to pay $20M after they were accused of misrepresenting medical expenses by concealing material information.

CIGNA Health and Life Insurance Company is one of the “big five” which represents the five largest health insurers in the United States. Prior to acquiring Express Scripts in 2018, Cigna relied heavily on its Third Party Administrator platform, providing services to health plans of all sizes for private commercial health plans as well as state and local government plans.

Among CIGNA’s customers are many large, well known, national companies that reach across different sectors of the economy, from banking to manufacturing to retailers.

According to the 150 page complaint: “Plaintiffs bring this lawsuit to expose Cigna’s brazen embezzlement and conversion schemes, through which it maximizes profits by defrauding patients, healthcare providers, and health plans of insurance out of tens of millions of dollars every year… The result is that Cigna succeeds in shifting financial responsibility for covered expenses onto the backs of patients, their employers, and Plaintiffs, while Cigna gets rich.”

This latest case seems to be the culmination of a spate of recent cases alleging similar violations. This troubling pattern may be an indication that no employer sector is immune to possibly fraudulent claims processing practices. All of this seems to provide more evidence of increased scrutiny for self-insured health benefits that has long been commonplace for retirement benefits.

Case info: Advanced Gynecology and Laparoscopy of North Jersey.et. al. v. Cigna Health and Life Insurance; Case Number: 2:19-cv-22234 in the United States District Court for the District of New Jersey, Filed December 31, 2019.

In summary, the lawsuit alleges that CIGNA accepts the out-of-network provider’s claims at the full billed charges and requests the same amount from the self-insured health plan. However, instead of paying the medical provider or member, CIGNA hires a Repricing Company to try and negotiate a reduction. If the provider refuses to negotiate, CIGNA pays the claim at an exorbitantly low level but appears to keep the difference between what was removed from the self-insured health plan and what was paid to the medical providers. In an attempt to conceal this from the patient and self-insured health plan, CIGNA issued Electronic Remittance Advice or paper Explanation of Benefits forms (collectively, the “EOB”) misrepresent the balance as “Discount” to the members, certifying the member is not responsible for the balance, while simultaneously representing the balance to the Plaintiffs as member liability or “Amount Not Covered”.

Astonishingly, the complaint alleges that CIGNA, after being advised of these anomalies, not only refused to correct the issues but instructed the medical provider plaintiffs to sue to rectify the situation! According to the court documents:

“After numerous detailed communications with Cigna management in which Plaintiffs protested Cigna’s unlawful processes and procedures, Cigna informed Plaintiffs that it has no compliance department capable of addressing these issues, and encouraged Plaintiffs to initiate legal action in order to prompt Cigna to act. Plaintiffs have decided to follow Cigna’s suggestion.”

The complaint further alleges that CIGNA has violated the Racketeer Influenced and Corrupt Organizations Act, (RICO) through four distinct schemes:

1. misrepresenting that a contract or agreement exists between the Plaintiffs and CIGNA or its vendor “Repricing Company”;
2. conspiring with its vendor “Repricing Companies” to submit fraudulent “Savings Fees” to the self-insured health plan;
3. attempting to conceal the scheme by altering the Explanation of Benefits (EOB), sent to the medical provider and to the patient for the same claims, where the patient’s EOB represents the outstanding balance as a negotiated “Discount”, however the medical provider’s EOB shows the outstanding balance as the “Amount Not Covered”;
4. again conspiring with its vendor “Repricing Company” by coercing the Plaintiffs to accept exorbitantly low reimbursements;

Ironically, CIGNA has been at the forefront of initiating litigation against out-of-network providers for not collecting patient liabilities in full. Yet, this suit alleges CIGNA misrepresents the balance of unpaid claims as “Discounts” to its members.

This case also alleges that CIGNA’s claims process for out-of-network claims, including the Cigna Claims, violates the “HIPAA standard transaction rules under 45 C.F.R. § 164”, by using incorrect “45” coding combinations”. The complaint also alleges CIGNA has violated the “uniform operating rules for the exchange of Automated Clearing House (“ACH”) electronic fund transfer payments among financial institutions that are used in accordance with Federal Reserve regulations and maintained by the Federal Reserve and the Electronic Payments Associations, known as the National Automated Clearing House Association or “NACHA.”

The first scheme allegedly involves CIGNA’s use of the “mails or wires to misrepresent to Plaintiffs, Cigna Subscribers, and the Cigna Plans, that Cigna underpaid Plaintiffs’ claims either because of a contract between an individual Plaintiff and Cigna as an in-network provider or with a third-party leasing contractor or negotiator couched as a repricing company (“Repricing Company”) to accept discounted rates (the “Fictitious Contracting Scheme”).”

The Plaintiffs allege they are not in-network nor have they agreed to any reductions with the “Repricing Company”. According to court records, “While repricing of in-network claims is permissible when there is an existing contract between a provider and Cigna, Plaintiffs are out-of-network providers who have not contracted with Cigna or any Repricing Company. Cigna profits from improperly withholding these payments from Plaintiffs by transferring ERISA Cigna Plan trust assets to a Cigna controlled bank account (which it otherwise is entitled to do under contracts between the ERISA Cigna Plans and Cigna) and earning interest off of funds that are rightfully Plaintiffs’ under the ERISA Cigna Plans. Cigna also embezzles or converts ERISA Cigna Plan trust assets by charging the ERISA Cigna Plans improper “cost-containment” fees.”

The complaint goes on to allege that CIGNA’s second scheme to defraud involves its conspiring with the Repricing Companies to “underpay Plaintiffs’ Cigna Claims via a euphemistically named “cost-containment process” that it misrepresents to the Cigna ERISA Plans as a cost-savings mechanism to save the Cigna ERISA Plans money on out-of-network claims administration (the “Repricing Reduction Scheme”).”

Plaintiffs allege that through this scheme, every out-of-network claim is sent through the wires to a Repricing Company where the Repricing Company recommends to CIGNA that CIGNA pay a deeply slashed reimbursement rate. CIGNA invariably adopts that recommendation and processes the claim for (under)payment. Additionally, the complaint alleges that “Cigna’s contracts with the Cigna ERISA Plans falsely state that this process is only applied to claims for which the Repricing Company has an existing contract with an out-of-network provider. Cigna uses these gross misrepresentations as cover for its embezzlement or conversion of ERISA Cigna Plan trust assets in the guise of cost-containment fees based on a percentage of the “savings.” Cigna then pays a commission to the Repricing Companies that is similarly based on a percentage of “savings.”

According to Plaintiff’s allegations, CIGNA’s third scheme to defraud involves its false and inconsistent statements on CIGNA-issued EOBs and is referred to as the “Contradictory EOB Scheme”. When processing a claim by an out-of-network provider, the suit alleges, “Cigna will state on an ERA or EOB issued to a healthcare provider (a “Provider EOB”) that the amounts wrongfully retained by Cigna are not covered under the terms of the pertinent Cigna ERISA Plan or are subject to certain “adjustments” that are inconsistent with the terms of the Cigna ERISA Plans. But on the EOBs issued to the Cigna Subscribers for the same claims (the “Patient EOB”), Cigna will report completely different information. Cigna may falsely state that Plaintiffs are either contracted with Cigna to accept certain rates, or have agreed with Cigna or a Repricing Company to accept a “discount;” both complete fabrications.”

By way of the example provided in the complaint, it appears CIGNA has told the provider:

“the unlucky Cigna Subscriber owes it $60,316.07 as the amount not covered under the Subscriber’s Plan, but has told the Subscriber that he/she owes the provider only $895.25 because Cigna negotiated a 98% discount with the provider. In doing this, Cigna misrepresents to Cigna Subscribers that the amounts improperly adjusted by Cigna are “discounts.” This misrepresentation appears on most Cigna Claim Patient EOBs.”

The suit alleges CIGNA’s fourth scheme to defraud involves its conspiracy with the Repricing Companies to force out-of-network providers like Plaintiffs to enter into negotiations for payment of valid claims, with the goal of either coercing or wearing down the providers so they accept drastic underpayments for the claims (the “Forced Negotiations Scheme”). In conspiracy with CIGNA, the Repricing Companies, such as Zelis or Medical Audit & Review Solutions (MARS), send offer letters through the mails designed to intimidate and coerce out-of-network providers such as Plaintiffs to accept the settlement offers. In some instances, the Repricing Companies will threaten that the services provided to the Cigna Subscriber will not be covered at all, or that they will be reimbursed at a percentage of the Medicare rate. And, as expected, the Pricing Companies will reimburse the providers even grossly insufficient amounts only if the provider waives all rights to additional payment.

According to the complaint, “the following is an example of Cigna’s Forced Negotiations Scheme, “whereby a provider Plaintiff rejected an offer of payment for $30,550 of total incurred charges of $41,680 from MARS, a Repricing Company contracted by Cigna. Once the provider refused the settlement offer, Cigna processed the claim, improperly misstated that the Cigna Plan covering the Cigna Subscriber only paid a percentage of Medicare, and reimbursed only $1,858.55, or 4.5% of the total incurred charges for the services rendered by the provider Plaintiff.”

“Through these four schemes, Cigna improperly deprives Plaintiffs and the Cigna ERISA Plans of funds and profits by engaging in any or all of the following conduct, among others: (1) embezzling and/or converting the amount characterized as a “discount” on the Patient EOB that is rightfully due and owing to the Plaintiffs under the terms of the Cigna ERISA Plans; (2) earning interest on these amounts, and (3) wrongfully profiting through embezzlement and/or conversion of ERISA Cigna Plan trust assets based on cost containment fees calculated as a percentage of the “discounted” amount.”

-According to court records

All ERISA health plans, medical providers and patients must educate themselves in order to understand the facts of these cases. For years, Cigna’s processes have been a thorny issue for out-of-network providers across the nation and now, self-insured plans are starting to feel the pain of these potentially illegal practices.

Medical providers must be proactive and adopt compliant practices and policies. Health plans must also be proactive in validating that plan assets are used to pay for their member’s medical expenses or otherwise 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.

Originally Published by By ROI-NJ, By Anjalee Khemlani; Trenton | Jul 1, 2019 at 10:00 am : http://www.roi-nj.com/2019/07/01/healthcare/third-party-auditor-bill-signed-into-law-despite-insurers-opposition/

Third-party auditor bill signed into law

A bill that some insurers lobbied quietly to quash made its way through the Legislature and was signed by Gov. Phil Murphy on Sunday.

The bill calls for a third-party auditor to real-time audit the State Health Benefits Plan and School Employees Health Benefits Plan.

It was first introduced in October 2018 by state Sen. Paul Sarlo (D-Wood-Ridge), and came from a report commissioned by a New Jersey doctor that alleged

health insurers were skimming off the top of claims payments for the SHBP and SEHBP.

The report was published by California-based AVYM.

ROI-NJ previously reported that the state’s contracts with Aetna and Horizon Blue Cross Blue Shield of New Jersey are set to expire this year, allowing a revamp of the Request for Proposal process and changing the type of contracts the state has with insurers who administer the state plans.

The Office of Legislative Services said in its fiscal analysis of the bill that it could not put a specific savings amount from the audited claims, even though

the AVYM report alleges savings of more than $1 million to the state.

“Hiring a third-party medical claims reviewer to provide regular, frequent and ongoing review and oversight of the claims process, which process includes, but is not limited to, the receipt, management, adjudication and payment of claims, serves the best interests of the state, participating employers and the thousands of employees and their dependents covered under the (SHBP and SEHBP),” according to the legislation.

The goal is to have a medical claims reviewer hired in time to review claims from plans that will be in effect in January 2020.

On January 15, 2019, in what turned out to be a belated Christmas gift for patients, out-of-network medical providers and self-insured health plans, the 8^th Circuit Federal Appeals Court stood with out-of-network medical providers, ruling they have standing to sue opposing UnitedHealth’s “cross-plan offsets”- by affirming the district court and opining:

“Because United’s interpretation of the plan documents is not reasonable, we affirm the district court’s grant of partial summary judgment to the plaintiffs.”

This bellwether appellate court decision undisputedly strikes a death blow to the collective, industry standard, practice of “cross-plan offsetting” and has national implications for patients, medical providers and self-insured health plans.  As we have written about 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 as UnitedHealth Group continues to see record revenues and earnings year after year.

With the new legal guidance this landmark case provides, self-insured plan sponsors, like AT&T and Gap Inc. may be held accountable for allowing United to engage in likely ERISA violations such as embezzlement, conversion, self-dealing and breach of fiduciary duty.

According to industry estimates, the total dollar amount at issue nationwide could be as high as 1/3 of total claim expenditures annually. Successful industry overpayment recoveries have reached into the trillions of dollars nationwide over the past decade and involve many large carriers as well as many of the nation’s biggest self-insured health plans such as Apple, JP Morgan Chase and Amazon.  Thus recoupment through offsetting, when used as an anti-fraud initiative, has become an increasingly popular source of revenue for many of the nation’s largest insurers. While there is a need for anti-fraud initiatives in healthcare today, it is critical that every health plan and claims administrator comply with all applicable federal laws, ERISA and PPACA claims regulations, as well as statutory fiduciary duties.

This 8^th Circuit Court of Appeals decision, along with the recent Supreme Court decision in Montanile, should act as a wake-up call to all self-insured health plans for potential rewards in the trillions of dollars in plan assets recovery for all self-insured ERISA plans nationwide, from cross plan overpayment recoupments and offsets done by all plan TPAs.

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.

In affirming the district court’s ruling, the 8^th Circuit rejected United’s argument that Dr Peterson lacked authority to sue as an authorized representative of his patients.  The appellate court also affirmed the district court’s ruling regarding offsets, where all of the plan documents that United cited explicitly authorized same-plan offsetting; and not one of those plans authorized cross-plan offsetting.

The appeals court further posited:

“To adopt United’s argument that the plan language granting it broad authority to administer the plan is sufficient to authorize cross-plan offsetting would be akin to adopting a rule that anything not forbidden by the plan is permissible.”

According to court records, “United’s assertion that it has the authority to engage in cross-plan offsetting can hardly be called an interpretation because it has virtually no basis in the text of the plan documents.”

The appeals court also maintained, that regardless of whether cross plan offsetting violates ERISA, it is at the very least, a questionable practice. Taking into consideration the fact that there is no plan language authorizing cross-plan offsetting, the appeals curt ultimately concluded that United’s interpretation is not reasonable.

As we have mentioned many times before, all ERISA health plans, medical providers and patients must educate themselves in order to understand the facts of these cases. Health plans must be proactive in ensuring benefits are adjudicated and ultimately paid solely based on the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Medical providers must be also proactive and adopt compliant practices and policies. Patients must understand their benefits plans and their rights as allowed under ERISA.

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.

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.

An Oklahoma jury slammed Aetna with a $25.5 Million verdict for improperly denying medical claims, awarding the family of the deceased patient $15.5 million in emotional distress and another $10 million in punitive damages. The verdict comes just months after an Aetna medical director admitted under oath, that he never actually looked at a patient’s medical records while at Aetna because it was Aetna’s protocol, and that he based his decision off “pertinent information” provided to him by a nurse.

The case details are very common and happen everyday across the nation: Patient pays for health insurance, patient gets sick and seeks treatment, insurer denies claim under the guise that services are deemed experimental or investigational. According to the family’s attorney, Doug Terry, “[this] case represents/exposes so much of what is wrong with health insurance,” Terry said.

“This case gave the jury a look behind the curtain so they could see what goes on at a health insurance company when they deny claims.  The evidence showed Aetna’s denial of her claim involved overworked, under-qualified doctors working in the interest of their employer’s bottom line who are compensated in part based on the profitability of the company.”

Court documents showed that evidence was presented to the jury, showing that Aetna’s doctors spent just minutes reviewing her case, despite the critical nature of her condition. Ultimately, Aetna’s  medical doctors denied the coverage, saying it was experimental and investigational, though clinical expert, Dr Andrew L. Chang, argued the treatment was not new, but a well established cancer treatment for decades, and had not only been approved by the Food and Drug Administration, it but is also covered by Medicare.

Interestingly, Aetna considers the treatment appropriate for pediatric patients; and Medicare pays for the treatment in 65 year olds, which raises the question: “what is it about 22-year-olds to 64-year-olds that makes proton therapy experimental? There is no good answer for that; insurance companies call it that because they decided to deem it as such.” according to Dr. Chang.

According to multiple outlets, several jurors mentioned that they believed Aetna had “Rubber Stamped” the claim denials, based on the very limited time Aetna medical doctors spent actually reviewing the claim. Ultimately, the jury found that Aetna had “recklessly disregarded its duty to deal fairly and act in good faith with the Cunninghams.“

Astonishingly, Aetna’s  attorney John Shely said in closing arguments that Aetna was proud of the three medical directors who denied coverage, even turning to thank them as they sat in the front row of the courtroom, according to jurors and other witnesses in court.

According to a CNN article, this decision represents the largest verdict in an individual claim denial insurance case in Oklahoma history, and could have major ramifications across the country for a form of cancer treatment called proton beam therapy.

The Case info: Ron Cunningham et al. v. Aetna Life Insurance Company, et al; Case number CJ-2015-2826 in the District Court of Oklahoma County, State of OK

For nealry 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.

Health Care Service Corp, dba Blue Cross Blue Shield IL, has been sued for fraud on behalf of the City of Chicago and its taxpayers, for inflating claim charges in order to skim taxpayer dollars.

As we have previously written, recent cases disputing “cross-plan offsetting” and improper cost containment activities have begun to see the light of day. While many of these cases involve private sector commercial health plans, the public sector is not immune to these questionable business practices. As more and more of these cases make their way through the courts, all self-insured health plan administrators, including public or municipal plans, charged with properly monitoring and safeguarding plan assets should do so, independent of their TPA’s own reporting. 

The lawsuit was brought by Kathleen Harper, on behalf of the City of Chicago and its taxpayers, and alleges BCBSIL inflates medical provider charges then submits the inflated charges to the City of Chicago and keeps the difference between what it collects from the City’s reimbursement and what it actually pays to medical providers. According to the amended complaint, filed on October 9, 2018:

“These representations were not true or accurate. They were in an inflated amount and rather than reflecting the actual amount HCSC paid its providers…HCSC admits that the amount HCSC bills and receives from the governmental entities ostensibly as reimbursement for payments it has made to providers on behalf of these self-insured governmental entities is substantially less than it actually pays these providers.”

The lawsuit also seeks unspecified damages and a  “full and complete accounting of said payments and receipts for the last ten years of any and all additional payments, ‘discounts’ or other sums HCSC has kept “for its own benefit” taken from the public funds taken by HCSC from one or more of the local government entities who have hired it to administer their self-insured health care plans“

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Other Blue Cross Blue Shield entities have faced similar problems before for this kind of activity. Recently, Blue Cross Blue Shield Michigan was hit with a flurry of lawsuits, for skimming unauthorized fees, from their self insured health plan clients. The lawsuits, filed between Aug. 9 and 11 2017 in federal court in Michigan, accuse Blue Cross of charging hidden and unauthorized fees to the employers’ health plan assets as a means of improving its financial position without alienating customers. The lawsuits build from a 2014 appeals court decision where Blue Cross was found liable for this conduct under ERISA and upholding a $6 million judgment against the insurer.

Since that 2014 decision by the U.S. Court of Appeals for the Sixth Circuit, more than 200 ERISA cases have accused Blue Cross of charging hidden health plan fees. The employers suing Blue Cross include a car dealer, a plastics manufacturer, an auto parts maker, and a college, among others.

Other recent cases illustrate the pervasiveness of these questionable practices. In one particularly egregious case, the Department of Labor sued TPA Magnacare, allegedly for charging fees that were not disclosed to its ERISA plan clients. According to court records, the plans paid MagnaCare the “full amount, yet MagnaCare remitted the lower charges to the providers and retained the undisclosed markup” 

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In this case, the complaint alleges the business model being used by BCBSIL for the City of Chicago benefit plan constitutes fraud:

“The misrepresentations described above as well as this scheme itself, one that HCSC has admitted in public is its “business model” and allowing it to profit from this scheme constitutes fraud under the Common Law of the State of Illinois”

Astonishingly, the complaint alleges that BCBSIL intentionally prohibits the City of Chicago or any of its taxpayers from seeing how much BCBSIL actually pays itself in fees or how much it contracts with providers:

“HCSC takes compensation for its services as the Third-Party Administrator under its contractual agreements with the City in an amount that is not disclosed in amount or in detail to the citizens of Chicago or to other members of the public. The amount HCSC takes for its services is also not limited to any amount on the face of its contract or available for the public in any manner whatsoever…HCSC does not disclose to the governmental entities or to the public that bears the ultimate burden of payments made by those entities the terms of these separate contracts with its providers, asserting before the Courts of Illinois that these contracts are private, privileged from disclosure or otherwise will not be made available for review by these local government entities or their taxpayers.”

The lawsuit also alleges that the City of Chicago has been aware of the practice since 1985 but has not acted to correct or change the practice. The City of Chicago is not named in the suit.

Court case info: Harper, Kathleen v. Health Care Service Corp dba Blue Cross Blue Shield IL;Case No. 2018-L-010842; Filed on 10/09/2018 in the Circuit Court of Cook County Illinois.

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It’s a well-known fact from federal court documents and in healthcare industry news reports, that Billion$ of ERISA plan claims payments from self-insured plans may have been recouped or offset by self-insured plan TPA’s for the TPA’s fully-insured accounts. Additionally, many Billion$ more may have been similarly siphoned off based on “Fake PPO” discounts or  Phantom “Savings” fees. 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. 

As we have written about before, this practice of keeping the difference between amounts actually paid to the medical provider and the amounts that are removed from Plan trusts accounts, are estimated to be between 30% to 60% of all Plan claims expenditures. Simultaneously, as a result of this and other cases, including the Supreme Court’s decision to deny the BCBSM challenge of the Sixth Circuit Court decision, these same self-insured health plan administrators nationwide, should seek return of Billions in plan assets as a result of the TPA industry’s potential recovery of a billion dollars in overpayment recoupments and anti-fraud campaigns over the past 12 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 contact us.

Originally Published by By ROI-NJ, Anjalee Khemlani
Trenton | Apr 30, 2018 at 6:55 am : https://www.roi-nj.com/2018/04/30/healthcare/sarlo-in-letter-to-muoio-asks-n-j-to-look-into-details-of-health-insurance-contracts/

Budget and appropriations chair has questions about reimbursements, audits. State Sen. Paul Sarlo has asked Treasurer Elizabeth Muoio about the state heath plans’ third-party administrators. Reining In health care costs continues to be a challenge for many corporations and self-funded plans.

The story Isn’t any different for the state of New Jersey, the largest employer In the state. State Sen. Paul Sarlo (D-Wood-Ridge) is trying to find new solutions – and potentially hundreds
of millions of dollars In savings for the state – by addressing the Issue In a different way: Paying closer attention to how the state pays its contracted plan managers.

Last week, in a letter to state Treasurer Elizabeth Muoio, Sarlo asked the Department of the Treasury to determine if the health insurers are keeping any recovered funds, through savings from appeals, and if the plans are charging the state anything additional to what they pay the providers. 

Sarlo Letter to NJ Treasurer re TPA & Response

Sarlo also asked about surcharges related to out-of-state visits by plan members, and whether or not the state can cap those. 

In addition, he asked if the state is auditing Aetna and Horizon Blue Cross Blue Shield of New Jersey, the third-party administrators of the State Health Benefits Plan and School Employers’ Benefits Plan, which together cover more than 600,000 current and retired state employees and cost the state $6 billion in 2016 alone. 

The contract for both is set to expire in June, and a request for proposals with the same rules and requirements as the existing contract is currently out for bid. 

And, while the RFP adds to the timeliness of Sarlo’s request, it was not necessarily the impetus. 

Legislators began looking into the process in January after a New Jersey doctor, Rajnik “Raj” Raab, alerted them to a white paper he paid a California-based health care reimbursement recovery firm, AVYM, to produce. 

In the six-page white paper, the firm said New Jersey could save up to $1 billion annually: AVYM Transparency and Disclosure in Health Care Insurance

AVYM said such huge savings are possible because third-party administrators may not be paying back the state any savings they receive over time from claim appeals. 

Sarlo, the deputy majority leader who serves as the chair of the Senate Budget and Appropriations Committee, told ROI-NJ how such a scenario could play out. 

“Here’s what we think happens,” he said. “A public worker in town XYZ cuts his hand, severs his hand, it’s a serious accident. He incurs $50,000 worth of bills. He petitions the fund representing the town … we pay. Now they (insurers) scrutinize and, over time, after arguing back and forth, reduce it to only $40,000.” And, if the reduced amount comes after the $50,000 has already been paid to the insurers, there is no way to check or prove the extra $10,000 is returned the state. Sarlo said there is no evidence that the state has ever received a refund from the insurers. 

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The contract between the state of New Jersey and Aetna and Horizon, which ROI-NJ obtained through an Open Public Records Act request, shows that the practice in question is prohibited, and that the state can audit the payments at any time. 

Representatives from Horizon and Aetna declined or did not return requests for comment on the issue, pointing instead to the agreements they have with the state.  

The contract with the insurers addresses potential overpayments. 

According to the contract, the state only reimburses the insurer after the payment is made.  

“The (insurer) will be reimbursed for claim checks and electronic fund transfers to providers that have cleared the (insurer’s) bank account by the (insurer) transmitting the total amount cleared via electronic mail or facsimile machine to the Commission by 11:00 a.m., EST daily, to determine the total amount that will be funded by wire transfer to the (insurer)’s designated bank on the same day. The transmission must include a breakdown between state and local amounts,” according to the contract. 

The contract also has a provision about any overpayments or refunds: 

“(Insurer) must disclose, fully account for, and remit, to the Commission any and all funds received by it as the result of a recovery of an overpayment or incorrect payment, prescription drug rebates and other pharmaceutical revenues, or subrogation of a claim or lien. Any discounted or negotiated rates or payment arrangements, any price adjustment, or refunds, and any retroactive or supplemental payments or credits negotiated with regard to covered services received by SHBP members must be remitted to the Commission. (Administrative) fees must take into consideration this provision,” according to the contract. 

And, if the state believes there is a problem with the payments, it can audit at any time. 

“(Insurers) must cooperate in the administration of routine audits performed by the Commission or its designee, on various aspects of the administration of the Plan, including but not limited to claims processing, medical management and enrollment data.  The various audits are designed to ensure (1) contract compliance, (2) that the interface system is working properly, (3) proper payment of claims where the individual should have coverage or (4) proper rejection of claims where the individual’s coverage has terminated, and (5) correct allocation of claims according to SHBP experience groups and (6) efficient and effective medical management,” the contract said. 

“An audit may be conducted if the Commission has a reasonable and good faith belief that a situation exists that will result in harm to the Plan. Audits must encompass records held by any subcontractor or related organization and held by any entity that is a member of the contractor group of companies.” 

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AVYM co-founders Mark Flores and Vincent Flores told ROI-NJ that the organization specializes in helping providers navigate claims and has seen a number of questionable practices since its inception in 1999. 

The white paper looked at claims from a Sparta school employee’s surgery and suggested that the provider was only paid 50 percent of the amount originally claimed, and the remainder was pocketed by the insurer. 

“Based on court cases (cited in the paper), it seems apparent TPAs can and do hide ‘undisclosed’ administrative compensation fees within medical claims payments. These undisclosed fees, which can account for 30 to 60 percent of a plan sponsor’s health claims expenditures, are usually siphoned into the TPA variance account through ‘retention reallocations’ and ‘cross plan overpayment’ offsets, among other techniques. Based on industry estimates and national claims processing standards, we believe the New Jersey State Health Benefits Plan and the School Employees’ Health Benefits Plan can realize a $1 billion (per) year reduction in expenditures by rigorous monitoring of TPA practices,” the AVYM report said. 

Mark Flores said that the actions of the TPA occur in a black box and are not visible to the state. “The big issue is that there’s no way to confirm whether or not the doctor is receiving the amount the (state) is paying the TPA for the claim,” he said. And that could save the state at least 30 percent of its current medical claims expenditures. 

Sarlo said one of the reasons he is pursuing the matter is the insurers’ response to transparency legislation. 

“When I had in my bill, when I had transparency disclosure to follow the money on these claims, which include TPAs out to providers, they opposed that bill,” Sarlo said. “Aetna, Horizon and all the health insurers opposed that bill.” 

Sarlo hopes the answers from Muoio will result in, at the very least, changing language for the new contract with the insurers. 

“Greater transparency on the operations of these third-party administrators will help identify cost savings that should be passed on to the state,” Sarlo said in a statement accompanying the letter. “There needs to be an accounting of the savings that insurance companies retain as fees and commissions.  

“We must ensure that the majority of these savings flow to the state as they should. Every year, doctors and other health care providers complain of decreasing reimbursements. At the same time, health care consumers complain of rising premiums and increasing costs. The obvious question that needs to be asked is: Where is all the money going?” 

Sarlo told ROI-NJ he realizes the answer won’t be a cure-all for the state, but it’s one worth getting. 

“I’m not saying this is going to save the budget at the end of the day,” he said. “But it’s worth a look. 

“This is serious dollars. The state of New Jersey is paying $37,000 per employee. If we can find savings in those health care plans, we must do it.” 

 

In Unprecedented Move, DOL Exercises Authority to Issue Cease and Desist Order Under Section 521 of ERISA, Shut Down Fiduciaries Accused of Misconduct, “Healthcare Madoff” Scheme

The U.S. Department of Labor obtained a Temporary Restraining Order in the U.S. District Court for the Northern District of Illinois against Multiple Employer Welfare Arrangement (MEWA) service providers for allegedly failing to pay more than $26 million in member’s health bills while keeping a substantial amount of money for themselves, then siphoning off those funds to offshore Bermuda accounts. The court also ordered 2 banks to freeze 14 bank accounts that were alleged to have plan assets in them.

The court ordered Black Wolf Consulting, AEU Holdings and one of its subsidiaries removed and barred from serving as fiduciaries or service providers to the individual employer plans that participate in the AEU Holdings LLC Employee Benefit Plan, a Multiple Employer Welfare Arrangement (MEWA) established by the defendants.

The court’s order immediately appointed an independent fiduciary to oversee the MEWA’s operations, marshal and control the assets of the MEWA as it relates to the underlying participant plans, perform an accounting of the MEWA’s financial position, and determine the MEWA’s ability to pay outstanding participant health claims, according to the DOL.

The order comes on the heels of the DOL lawsuit filed on November 2, 2017 seeking declaratory and injunctive relief including a temporary restraining order and preliminary injunction to remove the fiduciaries. The Complaint also alleges multiple violations of ERISA including, using plan assets to pay excessive fees and expenses, assessing undisclosed fees to the contribution amounts, failing or refusing to pay approximately $16 million for member’s medical claims, then transferring unpaid monies to offshore bank accounts in Bermuda.

Black Wolf kept anywhere from 17 to 44 percent of the money employers and employees paid toward premiums, according to the DOL complaint.

At its height, the MEWA covered approximately 14,000 participants and beneficiaries. These participants worked for more than 560 employers in 36 different states. However the increased backlog of unpaid claims created significant problems for many members as doctors refused treatments because of unpaid bills and many members were sent to collections accounts, according to the DOL.  

Additionally, the DOL issued a cease and desist order that prevents sub-brokers and aggregators working on behalf of the MEWA from marketing it to prospective employers or from enrolling new employers. The Secretary has the authority to issue an ex parte cease and desist order pursuant to ERISA § 521(a), 29 U.S.C. § 1151(a), and its implementing regulation, 29 C.F.R. § 2560.521-1. This authority applies only to a MEWA, and the cease and desist order may be issued whenever the Secretary finds reasonable cause to believe, among other things, that the respondent(s) engaged in conduct that creates an immediate danger to public safety or welfare within the meaning of § 2560.521-1(b)(3).  29 C.F.R. § 2560.521-1(c)(1)(i)(B).

According to the DOL Memorandum:

“Over $15 million in processed claims from 2016 and over $11 million in processed claims for 2017 remain unpaid. During the same time period as these claims have gone unpaid, AEU and Black Wolf have enriched themselves substantially by paying themselves and other entities millions of dollars in “fees.” Meanwhile, hundreds of unsuspecting employers have joined the AEU Plan to provide affordable medical benefits for their employees, only to have their employees be saddled with thousands of dollars in unpaid medical claims-some facing escalating collections actions and others unable to obtain life-saving treatment.“

The Memorandum goes on to point out:

“This results in thousands of participants incurring additional medical claims that will never be paid. Current and former participants report being turned away by their doctors because claims have gone unpaid. They have had to forego life-saving treatments for cancer and other illnesses. Parents who have just given birth are saddled with unanticipated medical claims at the same time they are trying to care for their newborn children. Collections agencies are calling and knocking at their doors. Many fear for their family’s future financial security. Despite the over $26 million in current unpaid claims and the harm facing these participants, Defendants continue to seek out new, unsuspecting employers to feed what is to them, a very profitable enterprise.”

Original DOL Press Release

These new ERISA embezzlement cases are part of a growing trend consistent with the court’s Hi-Lex decisions and as well as other cases we have written about before.

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 7 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.