Franco v. Connecticut General Life Ins. Co.

Case 2:07-cv-06039-SRC–PS
Court Ruled Against CIGNA & UHC UCR Class Actions by Out-of-Network Providers On Poor ERISA Assignment.
Franco v. Connecticut General Life Ins. Co.PDF file
Ramifications of Court Decision:

  1. The court concluded that standard industry provider assignment of benefits are only limited assignment under ERISA and legally useless, but a complete ERISA assignment of benefits is required for all ERISA appeals and lawsuits by third-party providers.
  2. What exactly does an ERISA complete Assignment of Benefits mean?
  3. How to secure a valid and complete ERISA compliant Assignment of Benefits?
  4. Why is ERISA Assignment of Benefits Form required for both in and out of network providers?

“At best, the allegations provide only the most ambiguous and conclusory information about what the purported assignments entail. At worst for Provider Plaintiffs, they indicate that the assignments were limited to a patient’s assigning his or her right to receive reimbursement from CIGNA for the covered portion of the service bill, which in no way can be construed as tantamount to assigning the right enforce his or her rights under the plan. The Court cannot conclude, based on the information supplied in the Complaints, that the assignments encompass a CIGNA-insured’s claim to benefits, such that any of the Provider Plaintiffs can legally be deemed a “participant or beneficiary” of his or her patient’s ERISA health plan. Simply put, Provider Plaintiffs have not met their burden of demonstrating that they have derivative standing to sue under ERISA.”

Merigan v. Liberty Life Assurance Company of Boston

Case 1:09-cv-11087-RBC Document 47
Filed 11/30/11 United States District Court Massachusetts
Merigan v. Liberty Life Assurance Company of Boston PDF file
Ramifications of Court Decision:

Claim Appeal 2½ Years After Denial Not Untimely Because of Amara.

“Further, we cannot agree that the terms of statutorily required plan summaries (or summaries of plan modifications) necessarily may be enforced (under § 502(a)(1)(B)) as the terms of the plan itself. For one thing, it is difficult to square the Solicitor General’s reading of the statute with ERISA § 102(a), the provision that obliges plan administrators to furnish summary plan descriptions. The syntax of that provision, requiring that participants and beneficiaries be advised of their rights and obligations ‘under the plan,’ suggests that the information about the plan provided by those disclosures is not itself part of the plan. See 29 U.S.C. § 1022(a). Nothing in § 502(a)(1)(B) (or, as far as we can tell, anywhere else) suggests the contrary.”

[W]e conclude that the summary documents, important as they are, provide communication with beneficiaries about the plan, but that their statements do not themselves constitute the terms of the plan for purposes of § 502(a)(1)(B).

Samano v. Kaiser Foundation Health Plan, Inc

Case No. 10-55696;
D.C. No. 2:07-cv-05512-GAF-CW, unpublished,
filed January 12, 2012, United States Court of Appeals for the Ninth Circuit.
Samano v. Kaiser Foundation Health Plan PDF file
Consequences of Court Decision:

  1. The most popular “Prompt Pay Discount” practices may not be ERISA compliant.
  2. Difference between PPO discount and ERISA OON Discount.
  3. Increasing payer health care fraud allegations against all OON discount practices in federal and state court.
  4. Feds: About 77% insured Americans in employer sponsored health plans have out-of-network coverage, and may be in need of ERISA OON discount: (BLS, NBS 2010, page 11 of 167)
  5. ERISA compliant OON discount, for preventing and defending against the fraud allegations and ERISA challenges.

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“1. The district court properly awarded summary judgment in favor of Kaiser on Samano’s claims for ERISA benefits. Once Providence applies the discounted rate to a patient’s bill, that sum is the maximum amount the patient owes Providence. Thus, the district court correctly concluded that Samano has received all the benefits owed under his ERISA plan and is not entitled to reimbursement for the original, nonbilled, amount of benefits that Kaiser might have owed Providence had it originally recognized that Samano was entitled to coverage. Under the circumstances, such an award of benefits to Samano would be a windfall, not permitted under ERISA, 29 U.S.C. § 1132(a)(1)(B). Under ERISA, a beneficiary may not recover “extracontractual, compensatory [or] punitive damages.” Bast v. Prudential Ins. Co. of Am., 150 F.3d 1003, 1009 (9th Cir. 1998). Moreover, the district court properly ordered that if Providence makes any further claim arising from the emergency medical services rendered in August and September, 2006, Kaiser will be required to reimburse Samano for such a claim.”

Eugene S. v. Horizon Blue Cross Blue Shield of New Jersey

No. 10-4225. United States Court of Appeals, Tenth Circuit.
November 15, 2011.
Ramifications of Court Decision:

SPD With Discretionary Language Must Be Incorporated Into Plan Document To Be Effective. When an anti-assignment clause in SPD is not found in the final or master copy of the plan, word by word, we shall be able defeat all anti-assignment in SPD’s under Amara.
“Mr. S. argues that he does not have access to the governing plan documents and cannot determine if such governing documents conflict with any grant of authority present in the SPD, Aplee. Br. 37-38, he did not request a copy of any such documents during the administrative appeal process or in discovery. Nor did he ask the district court to delay ruling on cross-motions for summary judgment so that he could seek out any such documents. Meanwhile, at oral argument, Horizon’s counsel maintained that the only plan document not in evidence has no bearing on the discretion afforded to Horizon and is irrelevant to the present case. Thus, the SPD—which contains the language of the Plan—is sufficient for our review.”

Do you have UCR Denials?

Cautionary tale of National Class Action against Cigna
and what NOT to do.

UCR lawsuit gets thrown out of court- Millions lost! AMA and Multiple Providers file class action lawsuit only to have case dismissed for missing one document.

Franco v. Connecticut General Life Ins. Co.
(Case 2:07-cv-06039-SRC–PS)[ref]FRANCO et al v. CONNECTICUT GENERAL LIFE INSURANCE CO. et al [/ref]was filed in federal court, as one of the largest UCR class actions, by several patients, numerous out-of-network providers, several provider State Associations and the American Medical Association (AMA), alleging violations of ERISA for wrongful UCR denials and reimbursement. UCR denials are the most common denials in the nation. Typically, Usual, Customary and Reasonable (UCR) denials can be seen as “low-payments”, in other words claims that are paid at an exceedingly low rate to out of network providers.

Here is a hypothetical example of this type of denial:
Patient A has first-rate health insurance – with 70% coverage and zero deductible. The doctor bills the insurance company $1000 for the procedure, expecting a payment of $700. The doctor receives payment of $50 from insurance company based on alleged UCR. At this point the doctor can appeal or go after the patient for the balance. Since the doctor does not know how to submit an ERISA compliant appeal, patient A or the doctor will be left holding the bag for the remaining $950.

For many patients these denials lead to huge unpaid medical bills. As a result we see more Americans filing for personal bankruptcies for unpaid medical bills. Additionally, as reported by amednews, a survey by the Texas Medical Assn. said that about 51% of physicians whose practices had cash flow problems drew from their own accounts to keep their practice going.[ref][/ref]

The AMA, State Associations, Providers and patients decided to initiate a federal class action lawsuit against the insurer CIGNA for the UCR denials described above.

According to the court documents, the federal Court found that “Provider Plaintiffs have failed to establish that they may stand in the shoes of CIGNA plan participants or beneficiaries as assignees of their patients’ rights.” In other words, provider plaintiffs failed to provide a “complete” ERISA Assignment, which lead the court to dismiss the State Associations & provider plaintiffs and the UCR complaints.

A “complete” ERISA complaint assignment must contain very specific language that “must encompass the patient’s legal claim to benefits under the plan”. A “complete” assignment is required for healthcare providers to appeal or sue on behalf of the patient, whether they are in or out of network. Patients can “properly”, [ref] DOL FAQ B3[/ref] assign a healthcare provider to “stand in their shoes” as an authorized representative.

Most healthcare provider assignments merely allow the provider or hospital to receive payments directly from the patient’s health benefits insurer. What the AMA, State Associations and virtually all healthcare providers currently use are “limited” Assignments, which the court concluded is basically useless. Again, this was the reason the Court dismissed all UCR ERISA claims asserted by all provider plaintiffs, State Associations and the AMA in the Franco v. Connecticut General Life Ins. Co. federal class action case — because they were missing ONE document!

Simply put, without a “complete” assignment most healthcare providers cannot meet their burden of demonstrating that they have derivative standing under ERISA. This is the critical first step in claim reimbursement, appeals, and ultimately lawsuits in federal court. The State Associations and healthcare providers in this lawsuit missed a tremendous opportunity for recovery of lost revenue but hopefully learned a valuable, yet expensive lesson.

If you would like to find out how to secure a valid and “complete” ERISA assignment please contact us for a free webinar. This new webinar will discuss this Court decision in detail and explain why healthcare providers nationwide have failed in ERISA compliance of valid Assignment of Benefits.

The webinar will also cover the following topics in great detail:

  • What exactly does an ERISA complete Assignment of Benefits mean.
  • Why an ERISA Assignment of Benefits Form is required for both in and out of network providers.
  • How to secure a valid and complete ERISA compliant Assignment of Benefits.

Montefiore Medical Center v. Teamsters Local 272

642 F.3d 321 (2d Cir. 2011)
Ramification of Court Decision:

  1. It is 100% ERISA, even for in-network providers.
  2. In-Network Provider Has Standing to Pursue ERISA Remedies, But State Law Reimbursement Claim Completely Preempted by ERISA
  3. In Montefiore Medical Center v. Teamsters Local 272, 642 F.3d 321 (2d Cir. 2011), the U.S. Court of Appeals for the Second Circuit held that an in-network provider’s state law based reimbursement claim is completely preempted by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §1001, et seq. (ERISA), and rejected the provider’s argument that an otherwise valid assignment of benefits is a “nullity” whenever care is provided in-network.
  4. Significantly, the Second Circuit found that Montefiore’s actual claims could be classified as claims for benefits because they involve the “right to payment,” as distinguished from the “amount of payment,” and therefore, implicate coverage decisions under the plan, such as pre-certification requirements, covered services under the plan and membership eligibility.


GAO-11-268 March 16, 2011
Ramifications of Report:

When denied reimbursement by an insurance company, one of the biggest mistakes made is not appealing the decision. When denied reimbursement for services you have the right to appeal and the Insurance Company/Plan Administrator is required to explain why they denied the claim. Doing so often pays off, with an estimated 59 percent of appeals being decided in favor of the claimant.

Data on Application and Coverage Denials

“Further, the data GAO reviewed indicated that coverage denials, if appealed, were frequently reversed in the consumer’s favor. For example, data from four of the six states on the outcomes of appeals filed with insurers indicated that 39 percent to 59 percent of appeals resulted in the insurer reversing its original coverage denial……Ohio data indicated that 0.5 percent of claim denials were internally appealed.”