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.