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

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.



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