Category Blog

Avym, along with the State of New Jersey, acting through the New Jersey Attorney General Matthew J. Platkin, announced today that Horizon Healthcare Services, Inc. has agreed to pay $100 million to settle a lawsuit McKool Smith filed in 2021 on behalf of several whistleblowers, including Avym principals and founders Mark Flores, and Vince Flores.

The suit, brought under the qui tam provisions of the Federal False Claims Act (FCA) and the New Jersey False Claims Act, alleges that Horizon defrauded the New Jersey State Health Benefits Program and the State Employee Health Benefit Plan (“State Benefit Plans”).

The allegations relate to Horizon’s role administering the medical benefits of hundreds of thousands of New Jersey government employees. Horizon submitted false funding claims to the State for years, costing taxpayers hundreds of millions of dollars. 

This case involved allegations of a multi-year scheme by Horizon to take New Jersey taxpayer money from State employee and school health benefit plans.

Mark Flores, a nationally recognized health benefits consultant, expressed his thanks to the Office of the Attorney General.  “We would like to thank Attorney General Platkin and the devoted lawyers in the Government and Healthcare Fraud Unit for paying attention to this important issue, for investigating our allegations, and pursuing the claims to protect State Health Plan members and New Jersey taxpayers.”  Vince Flores, a health benefits consultant, followed, “We hope this settlement will cause Horizon and other health insurers to examine how they administer self-funded plans.”

All “Relators” include Mark Flores, Vince Flores, Chris Deacon, Kevin Lyons, Pat Colligan & Marc Kovar

Link to Complaint: https://www.njoag.gov/wp-content/uploads/2025/11/2025-1114_NJ-US-ex-rel-Lyon-v-Horizon_Complaint-in-Intervention.pdf

Link to Settlement Agreement: https://www.njoag.gov/wp-content/uploads/2025/11/2025-1114_NJ-ex-rel-Lyons-v-Horizon_Executed-Settlement-Agreement.pdf

Uncovering the Contract Clauses, Repricing Rules, and Shared-Savings Schemes That Inflate Costs and Hide True Liability

In its 2025 report to Congress, the Department of Labor (DOL) revealed a staggering fact: self-insured group health plans, as reported through 2022 Form 5500 filings, cover nearly 39 million Americans and hold close to $120 billion in assets. That’s not just an accounting statistic, it’s a reminder that employers shoulder enormous fiduciary responsibilities, and employees’ health and financial security depend on how well those obligations are met. Employer surveys and national benefits data show broader employer‑sponsored coverage trends that put the total population affected by self‑funding arrangements, when accounting for plans that do not file Form 5500, large public‑sector plans, in a higher range.

Two primary reasons employers shift to self-funding plans are to reduce administrative fees and increase transparency. However recent court cases have shown that is not always the case. Unfortunately, self‑insured employer health plans shift financial risk from insurers to employers and place contract language at the center of cost, control, and liability. Plan documents and vendor agreements determine how claims are priced, how administrative fees are calculated, and who ultimately bears disputed costs. What looks like routine boilerplate often contains repricing rules, benchmark definitions, and shared‑savings formulas that can drastically inflate employer costs.

This article explains a particular process that matters for plan sponsors and highlights the common clauses that may create hidden liabilities, and offers practical steps employers can take to identify, negotiate, and remediate costly terms before they become real expenses.

to identify, negotiate, and remediate costly terms before they become real expenses.

The Blue Cross Blue Shield Association (BCBSA) offers one such program. Blue Cross Blue Shield Inter-Plan Programs (IPP), including the BlueCard Program, govern how claims are processed when a member receives services outside their home BCBS licensee’s network. These rules apply to private and public employers whose coverage is administered by any independently owned Blue Cross Blue Shield licensee.

The BlueCard Program is the primary IPP for accessing care outside of a member’s local plan area. It establishes consistent rules for providers and members, making it easier for people to get health services while traveling.

Key aspects include Host and Home Plans.

The Home Plan is the member’s BCBS plan, which issued their policy or contracts with the member’s employer sponsored group. Local Home Plan service areas can overlap in some states, which can affect network determinations and claim handling.

Conversely, the Host Plan, acts as the local BCBS plan in the geographic area where the member is receiving care (e.g., a traveler or out-of-area enrollee gets treatment in the Host’s region). The Host Plan is responsible for contracting with local providers, that are outside the area of the Home Plan and must validate the provider information and applies its own Host Plan pricing (confused yet?).

When a Home Plan member receives care in a Host Plan’s territory, the local provider submits the claim to the Host Plan, which processes it using its own contracts and rates only for in-network providers. The claim is then electronically routed to the Home Plan via the national BCBS Inter-Plan Programs, where it is adjudicated based on the member’s eligibility, coverage, and benefit terms.

A key illustration is the case Tiara Yachts v. BCBS Michigan. While much has been written about this decision, it is important to note that the dispute involves “out-of-state” claims, precisely the type of claims processed through the IPP/BlueCard framework.

Under program rules, it appears that out-of-network claims processed through the IPP/BlueCard framework were allegedly priced at, no less than, the provider’s billed charges.

In practice, this means:

Even if no negotiated discount applies, the claim cannot be repriced below the provider’s full billed amount. This requirement can also result in higher plan costs, as employers are effectively locked into paying the provider’s billed charges for out-of-network services processed through the program.

There is also an important risk consideration. Employers should be aware that this policy may not only limit their ability to control or negotiate down out-of-network costs, but may also create conflicts with plan terms, since reimbursing claims at the billed charge rate could violate stated plan provisions on out-of-network benefits and reimbursement methodologies;

Key Takeaway

While this article examines Blue Card programs, all national carrier TPAs employ similar national pricing programs and cost containment services. For employer-sponsored and self-funded health plans, it’s critical to understand how your third-party administrator handles out-of-network claims pricing and shared savings provisions, especially for out-of-area services. These claims, often triggered when members receive care outside their home region, can expose plans to inconsistent pricing practices and opaque savings arrangements, as highlighted in the Tiara Yachts case.

These rules can significantly affect plan spend and expose plans to inflated billed charges without room for repricing or discounting, and may also place plan administrators at risk of being out of compliance with their own plan terms.

Knowing how your TPA adjudicates and negotiates these claims is essential for fiduciary oversight and cost control.

Action Checklist for Employers

1. Review Plan Documents – Confirm that Plan document out-of-network reimbursement terms are being followed by IPP/BlueCard pricing rules.
2. Examine Out-of-State Claims – Identify where billed charges were applied and quantify the cost impact.
3. Engage Your TPA – Clarify how IPP/BlueCard claims are repriced and challenge any practices inconsistent with plan terms.
4. Monitor Legal Developments – Stay alert to cases like Tiara Yachts, which could signal broader enforcement or litigation risks.
5. Hire Independent Non-Conflicted Partners – Don’t rely on the TPA’s reports, commission outside claim assessments with independent, non-conflicted vendors;

Whether you’re preparing for regulatory review, onboarding vendors, or rebuilding stakeholder trust, we’re ready to help you lead with precision, transparency, and strategic control.

Let’s talk. Your next move sets the standard.

When Dummy Codes Cost Real Money: Lessons from the Peters v. Aetna Settlement

In September 2025, the long-running ERISA class action Sandra Peters et al. v. Aetna and Optum reached a settlement, which was approved for over $8 million, closing a case that began in 2015. The lawsuit, which we wrote about before, revealed how fee-shifting and opaque subcontractor arrangements can quietly erode fiduciary trust. For employer plan sponsors, the case is more than a headline, it’s a blueprint for strengthening oversight and restoring confidence.

⚖️ The Allegations

Aetna allegedly disguised administrative fees as medical expenses, misrepresenting costs on member Explanation of Benefits (EOBs) and inflating member cost-sharing. Optum, (a subsidiary of UnitedHealth Group) acting as Aetna’s subcontractor, facilitated the practice. The result? Systemic overcharges and fiduciary breaches.

Mislabeling Fees: Aetna allegedly disguised administrative charges as medical expenses on member EOBs. Optum (a UnitedHealth subsidiary) facilitated the practice. Ultimately, Members faced inflated cost-sharing, and fiduciary duties were compromised.

According to court records, after treating a patient, the health care provider submitted its claim to Optum for the services rendered. Optum then added a “dummy” CPT code to the claim to reflect a bundled rate fee, consisting of Optum’s administrative fee and the cost of the health care provider’s services. Optum would then forward the bundled rate fee claim to Aetna for its approval. In turn, this bundled rate fee would be paid based on the Plan’s responsibility framework.

In other words, Aetna and Optum allegedly colluded to hide administrative fees by disguising them as Medical Services fees

The Peters v. Aetna case delivered a sharp reminder that fiduciary accountability doesn’t hinge on contractual language, it hinges on control, conduct, and candor. Below are key takeaways from the court’s findings and the broader implications for executives overseeing health plan operations:

• Functional Fiduciary Status – Aetna was held to ERISA fiduciary standards based on its control over claims and appeals, even without explicit contractual language;
• Fee Shifting and Misrepresentation – Labeling administrative fees as clinical costs violated duties of loyalty and transparency;
• Equitable Remedies Apply – The court affirmed that surcharge and disgorgement are valid remedies, even without individualized proof of financial harm.

🚨 Fiduciary Risks for Executives

Even well-intentioned executives can face fiduciary exposure when oversight mechanisms lag behind operational complexity. As recent cases have shown, relying solely on contractual language or vendor assurances isn’t enough.

• Hidden Fee Structures – Subcontractor charges disguised as clinical costs can inflate member liability.
• Passive Oversight Exposure – Sponsors who rely on contracts alone face reputational, financial, and legal risk.
• Documentation Gaps – Weak delegation protocols and oversight records undermine fiduciary defenses.

📊 Strategic Takeaways for Plan Sponsors

Fiduciary risk isn’t just about what’s written in the contract, it’s about what sponsors can prove they actively oversaw. As recent litigation has shown, passive reliance and thin documentation can leave even well-structured plans exposed.

1. Audit Subcontractor Relationships – Confirm fees aren’t disguised as clinical claims charges.
2. Scrutinize EOB Language – Misleading formats can trigger fiduciary liability.
3. Clarify Delegation Boundaries – Contracts must reflect actual decision-making authority.
4. Document Oversight Protocols – Courts expect proof of active monitoring.

💼 Why It Matters

This case reaffirms that fiduciary duty isn’t just a legal checkbox, it’s about leadership. Executives who act decisively can: Prevent litigation and regulatory scrutiny; Reinforce member and stakeholder trust; Position their organization as a fiduciary standard-bearer

💡 Lead with Fiduciary Clarity

Your health plan deserves more than compliance, it deserves confidence. In the wake of Peters v. Aetna, fiduciary oversight isn’t optional. It’s strategic. Our team partners with executive leadership to transform risk into resilience and ambiguity into alignment.

Here’s how we help sponsors lead from the front:

• Validate Claims & Find Hidden Fee Flows – Trace every dollar to ensure accuracy and defensibility
• Review Delegation Protocols – Align contracts and operations with fiduciary accountability
• Reinforce Governance Frameworks – Build systems that document oversight, escalation, and board visibility

💼 Let’s Make Fiduciary Leadership Your Competitive Advantage

Whether you’re preparing for regulatory review, onboarding vendors, or rebuilding stakeholder trust, we’re ready to help you lead with precision, transparency, and strategic control.

Let’s talk. Your next move sets the standard.

Class Action alleging that a “Dummy Code” is used to “Bury” fees may result in BURIED TREA$URE for Self-insured employer sponsored group health plan clients of Aetna & OptumHealth.

On June 22, 2021, the 4th U.S. Circuit Court of Appeals reversed a ruling for Aetna and OptumHealth Care Solutions, resuscitating a potential class-action lawsuit alleging that they agreed to use a “dummy code” to bury unbillable administrative fees as billable medical treatment.

This case should serve as an alarm to all Self-insured group health plans, particularly those that give their TPA or carrier authority to pay claims benefits on their behalf because the alleged outrageous behavior by Aetna and OptumHealth raise questions as to whether all their self-insured plan clients may have unknowingly overpaid for certain claims and thus be entitled to significant recovery of Plan Assets.

According to court records:

The record on summary judgment is sufficient to sustain a finding that Aetna circumvented the Plan terms by “burying” the administrative fee it owed Optum in the dummy CPT code claims process.

Allegedly, after treating a patient, the health care provider submitted its claim to Optum for the services rendered. Optum then added a “dummy” CPT code to the claim to reflect a bundled rate fee, consisting of Optum’s administrative fee and the cost of the health care provider’s services. Optum would then forward the bundled rate fee claim to Aetna for its approval. In turn, this bundled rate fee would be paid based on the Plan’s responsibility framework.

In other words, Aetna and Optum allegedly colluded to hide administration fees by disguising them as Medical Service fees.

The court laid the groundwork for employer plan sponsors by opining, “Peters therefore withstood summary judgment on her claims for surcharge, disgorgement, and declaratory and injunctive relief under § 502(a)(1) and (3),

and for her claims on behalf of the Plan for surcharge, disgorgement, and declaratory and injunctive relief—as well as possibly restitution—under § 502(a)(2).”

Case info: Sandra M. Peters v. Aetna Inc., et al Case No.19-2085, US District Court of Appeals Fourth Circuit

The court goes on to say, “A reasonable factfinder could conclude that such action contradicted the obligations Aetna had contracted to fulfill under the terms of the Plan and the MSA,  effectively changing the terms of both without formal amendment of either….[and] that Optum was acting as a party in interest engaged in prohibited transactions” 

The judge went on to determine that “a reasonable factfinder could conclude that Aetna breached its duties based on the following four actions regarding the EOBs: (1) referring to Optum, and not the actual health care provider, as the “provider” of the medical services; (2) using “dummy codes” that did not represent actual medical services; (3)  misrepresenting the “amount billed” as including Optum’s administrative fee; and (4) describing the Optum rate, which included its administrative fee, as the amount that the Plan and its participants…owed for their claim.”

For over a decade, Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. Now with this case and 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.

On June 21, 2021, in an unpublished decision, the United States District Court for the District of NJ rules “Aetna’s Cross-Plan Offsetting Is Unlawful.” Court also concludes Aetna’s state-law-based justifications for its cross-plan offsetting are preempted by ERISA.

This watershed case is the culmination of many cases we have written about over the years, in regards to “Cross-Plan Offsets”. United States District Judge, Brian R. Martinotti, put the final nail in the coffin with respect to the health insurance industry practice of cross plan offsetting with his extraordinary ruling:

“Aetna’s Cross Plan Offsetting violates ERISA”

Cross-plan offsetting is a method insurers use to pull back alleged overpayments related to patients from one plan by reducing or eliminating payments related to patients from a different self-insured plan. Alleged overpayment recoupments and offsets (post payment adverse benefit determinations) are the nation’s No.1 medical claim denial, as insurers and TPA’s increasingly use post-payment audits as a means to recover what they allege to be prior overpayments of health care benefits, particularly when other self-insured health plan assets are involved. According to industry estimates and court records from a different case, national insurance carriers collect Billion$$ a year in offset activity.

As we have written about before, the No. 1 health care claims denial in the country is “overpayment” recoupments through “Cross-Plan Offsets”; in the same way,

The No.1 hidden cost for Self-Insured health plans, is “Overpayment” recoupment through “Cross-Plan Offsets” and subsequent embezzlement of plan assets. 

Accordingly, all self-insured health plans nationwide should look to recover Billion$$ in refunds from the past decade of successful plan assets TPA/ASO anti-fraud recoupments and managed care savings in the private sector.

“It can be argued that the failure to safeguard plan assets is definitely a breach of fiduciary duty, under ERISA, and now the courts have provided a legal formula for plan assets recovery” says Mark Flores, Vice President of Avym Corp. and national healthcare claims expert.

As the DOL ramps up audits and enforcement actions against health plan claims and appeals, every ERISA self-insured health plan sponsor or fiduciary should keep in mind that they are required to monitor TPA/ASOs successful overpayment recoveries and managed care savings, in order to determine whether:

• any of the billions of dollars of successful TPA/ASO overpayment recoupments and offsets nationwide each year are ERISA plan assets;
• all TPA/ASOs must refund all ERISA plan assets as ERISA prohibits all self-dealings;
• all self-insured plan administrators are liable for fiduciary breach in failing to safeguard or recover plan assets.

Case Info: Lutz Surgical Partners, PLLC, et al. vs Aetna, Inc., et al., Case No.: 3:15-cv-02595, (BRM) (TJB) Document #: 202, Filed: 06/21/21, in the United States District Court for the District of New Jersey.

This landmark case, in conjunction with the relevant US Supreme Court Montanile decision, potentially rewards trillions of dollars in plan assets recovery for all self-insured ERISA plans nationwide, from cross plan overpayment recoupments and offsets done by plan TPAs. 

Aetna Conducted Cross-Plan Offsetting

Cross-plan offsetting refers to “the practice of not paying a benefit due under one plan in order to recover an amount believed to be owed to another plan because of that other plan’s overpayment.”

According to the court records, “A typical cross-plan offsetting proceeds as follows. “[O]ut-of-network providers . . . provided services to . . . a patient who was insured under a Plan A administered by” a plan administrator…The “providers submitted claims to” the plan administrator and “received payment for those claims from the Plan A.”…The providers “were later informed by [the plan administrator] that they had been paid too much,” but the providers “refused to return the alleged overpayment.”…The plan administrator “responded by recouping the disputed overpayment through cross-plan offsetting.”…“In other words, when [the plan administrator] learned that [the providers] had submitted a subsequent claim regarding . . . a different patient who was insured under . . . a Plan B,” the plan administrator “did not pay for those claims by transferring money to” the providers….“Instead, [the plan administrator] purported to pay for those claims by cancelling debt that [the providers] allegedly owed to the Plan A.”

Aetna’s Cross-Plan Offsetting Is Unlawful

According to the decision, “Finally, even if Plan A, Plan B, the PGA, and the NRA permit cross-plan offsetting, they cannot circumvent ERISA requirements. Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409, 422 (2014)) (quoting Cent. States, Se. & Sw. Areas Pension Fund, 472 U.S. 559, 568 (1985)) (“[T]rust documents cannot excuse trustees from their duties under ERISA.”); see also In re SunTrust Banks, Inc. ERISA Litig., 749 F. Supp. 2d 1365, 1374 n.11 (N.D. Ga. 2010) (quoting Kuper v. Iovenko, 66 F.3d 1447, 1457 (6th Cir. 1995)) (“[A] fiduciary may only follow plan terms to the extent that the terms are consistent with ERISA.”); Williams v. Rohm & Haas Pension Plan, 497 F.3d 710, 714 (7th Cir. 2007) (“The [p]lan cannot avoid that which is dictated by the terms of ERISA.”); La Barbera v. J.D. Collyer Equip. Corp., 337 F.3d 132, 136 (2d Cir. 2003) (“ERISA of course trumps the collective bargaining and [t]rust agreements in the case of a conflict.”). In conclusion, Aetna’s cross-plan offsetting is prohibited by ERISA.”

ERISA Overrides Aetna’s State Law Justifications for its Cross-Plan Offsetting

The court also ruled that ERISA overrides Aetna’s state law justifications for its cross-plan offsetting. According to the court records, Aetna’s state law counterclaims were also pre-empted by ERISA. Aetna requested a motion to set-off, which allows entities that owe each other money to apply their mutual debts against each other. However the court denied Aetna’s request reasoning “Aetna has not yet established the existence of mutual debts between the parties, which precludes granting a motion to setoff at this stage.”

Finally, the court declined Aetna’s request to construe Aetna’s counterclaims as ERISA claims, reasoning, “Although legal claims can be pled in the alternative, a party cannot use summary judgment briefing as a way to inject new legal theories into a case…Here, Aetna’s proposal to recast its state law counterclaims as ERISA ones is essentially a request to introduce new legal theories or claims, which is improper at this stage.”

Over the past decade, Avym has closely followed decisions from the Supreme Court as well as federal appeals courts on ERISA prohibited self-dealing against ERISA plan TPA’s for managed care savings. These new ERISA embezzlement cases are just the initial impact of 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.

This monitoring should be done 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.

Avym Corp. has been at the forefront and 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 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.

Aetna Fined $500,000 After Denying 93% of ER Claims in 2019

Aetna has been in the news quite a bit lately and it seems the insurance giant can’t get out of its own way. On August 25, 2020, the California Department of Managed Health Care (DMHC) ordered Aetna to stop improperly denying emergency claims and fined Aetna $500,000 for repeatedly failing to correct the problem after a sampling of claims from 2019 found it had denied 93% that it deemed unnecessary.

According to the DMHC’s recent press release:

This is not the first time Aetna has run into problems for questionable practices. In 2018, then Aetna Medical Director, Iinuma Jay Ken MD, admitted under oath, he never looked at patients’ records when deciding whether to approve or deny care. This revelation prompted then California Insurance Commissioner Dave Jones, to launch an investigation into Aetna’s practices.

During his videotaped deposition in October 2016, Iinuma — who signed the pre-authorization denial — said he never read Washington’s medical records and knew next to nothing about his disorder. He further said he’s not sure what the symptoms are for the disorder or what might happen if treatment is suddenly stopped for a patient. “Do I know what happens?” the doctor said. “Again, I’m not sure. … I don’t treat it.”

Just months after Aetna’s then medical director admitted he denied coverage for treatments without ever bothering to look at the patients’ medical records, an Oklahoma jury slammed Aetna with a stunning $25.5 Million verdict for recklessly denying medical coverage for proton beam therapy. The jury awarded the family of the deceased patient $15.5 million in emotional distress and another $10 million in punitive damages after denying proton beam therapy to Aetna policyholder Orrana Cunningham as being “investigational” or “experimental,” despite years of research and hundreds of medical experts who say otherwise.

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,…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.”

Aetna was acquired by CVS Health in 2018.  The subsequent jump in CVS Health’s profits of more than 50% has been partly attributed to the fact that elective procedures Aetna health plan pays for were postponed or delayed amid the spread of the Coronavirus strain Covid-19. CVS Health’s net income soared 54% to $2.9 billion in the second quarter compared to $1.9 billion in the year-ago period, the company said in its earnings report issued Wednesday. It is not immediately clear if the emergency room denials have significantly contributed to earnings.

Avym has helped Self-Insured Health Plans recover millions from TPAs that engage in questionable practices. Avym advocates 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’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs contact us.

Medical Providers Fire Back At Cigna’s Motion, Telling The Judge That “Cigna Does Not Follow The Law, And It Misrepresents How It Actually Administers The Plans.”

In the Reply Brief of Plaintiffs Advanced Gynecology and Laparoscopy of North Jersey, et al v. Cigna Health and Life Insurance, Medical Providers allege that Cigna appears to not only ignore Plan and legal requirements of the Self-Insured Health Plans which it administers but also employs multiple schemes to pay substantially less for covered charges already acknowledged as accepted and processed under the Plan terms, ultimately improperly shifting the financial burden to the patients, according to court records.

“Cigna shifts financial responsibility for covered expenses onto the backs of patients, their employers, and Plaintiffs, while Cigna’s profits grow.”

In this case, which we have written about before, a group of out-of-network Medical Providers sued Cigna for RICO and ERISA violations, alleging CIGNA accepts the out-of-network provider claims at the full billed charges and requests the same amount from the corresponding Self-Insured Health Plans. However, instead of paying the Provider or member, CIGNA hires a Repricing Company to try and negotiate a reduction.

The Providers further allege that if they refuse 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 Providers. In an attempt to conceal this from both patients and Self-Insured Health Plans, CIGNA issues Electronic Remittance Advice (ERA) or paper Explanation of Benefits forms (EOB) misrepresenting the claim balance, or the difference between what was removed from the Plan and paid to the Providers, as a “Discount” to the members. The Subscriber EOBs certify the member is not responsible for the claim balance, simultaneously; the Provider ERAs represent the claim balance to the Providers, as a member liability or “Amount Not Covered”. The suit 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”.

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.

Cigna filed a Motion to Dismiss on May 06, 2020. The Medical Providers filed this reply to Cigna’s motion on July, 24, 2020: Reply brief of Plaintiffs Advanced Gynecology and Laparoscopy of North Jersey, et al v. Cigna Health and Life Insurance; 2:19-cv-22234; Doc 54, filed 7/24/2020.

The “Fictitious Contracting Scheme”: According to the Providers, Cigna Administered Health Plans and Subscribers are misled into believing that Cigna’s underpayments of out-of-network claims are legitimate because of an in-network contract or negotiated agreement with a third-party “Repricing Company”. The Providers allege Cigna falsely represents to patients that Cigna negotiated “discounts” with the out-of-network Medical Providers and that “Cigna negotiates discounts with health care professionals and facilities to help you save money.” Moreover, on the Provider ERA forms for the same transactions, Cigna uses the so-called “CO-45” code combination, with “CO” signifying “Contractual Obligation” and “-45” signifying “Charge exceeds fee schedule/maximum allowable or contracted legislated fee arrangement.” Cigna argues that this code combination is properly used when the medical provider’s “charge exceeds either the contracted in-network rate or the out-of-network maximum allowable rate like the MRC or R&C.”

“But when Cigna applies the “CO-45” coding combinations to amounts described as “discounts” on the patient EOBs, Cigna is falsely representing that Cigna “contracted” for the reduction.“

The “Repricing Reduction Scheme”: The Providers also allege that Cigna misleads its own clients (Cigna Administered Self-Insured Health Plans) into paying “cost-containment” fees to Cigna and Repricing Companies calculated as a percentage of the underpayment in relation to the value of the Providers’ claims. Yet, while Cigna represents that “applying these discounts avoids balance billing and substantially reduces the patient’s out-of-pocket cost,” Cigna pays itself and the Repricing Companies cost-containment fees whether or not the cost-containment process saves the Self-Insured Health Plan money. Ironically, Cigna has been at the forefront of initiating litigation against out-of-network providers for not collecting patient liabilities in full. Interestingly, this case alleges that Cigna misrepresents the balance of unpaid claims as “Discounts” to its members.

The “Contradictory EOB Scheme”: Here the Providers allege that Cigna has tried to confuse and mislead them as well as patients, through false and inconsistent statements on Cigna-issued EOB forms issued to patients and ERA forms issued to the Providers. Cigna tells the Providers on the ERA forms that the amounts Cigna has held back are “not covered” by the Plans or are subject to “adjustments,” and the patient owes the balance. However, Cigna’s EOB forms issued to the patients for the same claim, report that Providers agreed to a “discount” and the patient has “saved” the rest.

According to court records, “it is impossible to reconcile Cigna’s statements on the patient EOBs—that a “discount” was applied to their claim and the patient “saved” the amount of the discount—with Cigna’s statements on the provider ERAs for the same claims, that make clear that the patient has not “saved” anything because they show that the patient owes a huge balance bill.”

The “Forced Negotiations Scheme”: The fourth Scheme alleges that Cigna forces out-of-network Medical Providers to enter into negotiations for payment of valid claims, with the goal of either coercing or wearing down the Providers to accept drastic underpayments. Allegedly, Cigna conspires with repricing companies to misrepresent deep discounts, saying in some instances that the services are not covered. According to the Providers, Cigna’s processing system is set up to automatically send all out-of-network claims to the Repricing Companies. The repricing companies, in turn, send the Providers letters threatening that the services will not be covered at all, or that the Providers will be reimbursed at a percentage of the Medicare rate. Even worse, if the settlement offers are rejected, Cigna falsely declares large portions of the claim “not covered.”

All ERISA health plans, medical providers and patients must educate themselves in order to understand the facts of these cases.

For years large insurers’ controversial processes have been an issue for out-of-network providers across the nation. Now, self-insured plans are starting to feel the pain of these same, potentially illegal practices.

Health plans must be proactive in validating that plan assets are used to pay for their member’s medical expenses or otherwise get returned to their plan.

Avym has helped Self-Insured Health Plans recover millions from TPAs that engage in questionable practices. Avym advocates 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’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs contact us.

Over the years healthcare in the US has evolved into an extremely complex, non-transparent and convoluted process. For even the most informed, understanding this baffling process is nearly impossible. Avym’s mission is to help demystify the US healthcare industry. As consultants in the healthcare sector, we advocate for education, transparency and compliance.

As such, we advise – and count among our clients – all parties that interact within the healthcare industry and include both medical providers and self-insured employer health plans. We even advise patients. Truthfully, we are happy to help anyone that reaches out to us.

On occasion, we write and share opinion pieces discussing industry trends and issues. Our goal is to provide an open transparent dialogue on these issues and trends, and we encourage all perspectives in order to assist everyone in search of information on related topics.

Sometimes we write about issues presented in legal cases, and while we offer our opinion of the issues to the best of our ability, we neither endorse nor disparage the practices of any parties to the suit. Inevitably, however, some entities may not agree with our opinions. In these situations, we strive to create an environment where a transparent and open dialogue can occur, welcoming insights and perspectives that differ from ours.

Recently, we wrote an opinion article describing a particular court case in an attempt to offer insight and educate industry professionals on the many issues that concern them on a daily basis. The original opinion article, titled “Don’t Leave Fox Guarding Employer Plan” which can be found here, and here.

Unfortunately, and in spite of our best efforts, an entity who was never named in our article but who was a party to the lawsuit referenced in our article, chose to send us a letter threatening legal action. Consistent with our core values of transparency and in an effort to correct any mischaracterization of our article from factual inaccuracies in said letter, we have decided to share the letter in order to help clarify and resolve any confusion.

Here is a copy of the letter:

Our article never suggested AMPS or any other party to this particular lawsuit is, or was, acting in an unscrupulous manner. Curiously, AMPS views the article as defamatory, in-spite of the fact the article never mentions AMPS (or any of the defendants) by name.

Additionally, as mentioned before, we advise medical providers as well as self-insured employer health plans. We strive to empower self-insured health plans by espousing the importance of education on federal and state rules & regulations, trends, risks, and other valuable information in order to reduce wasteful spending while at the same time, allowing all Americans access to affordable, timely medical care.

Lastly, an important point to consider is our opinion piece does indeed make clear the final disposition of the case, where the courts ruled in favor of the defendants and against the self-insured employer plan plaintiffs.

During this historically critical time in American healthcare, where there is a lack of transparent information, we advocate for transparency to include dissemination of important information and open discourse. We are under the impression this is a mutual goal of all industry professionals and were confused as to why AMPS would choose to send a threatening letter, mischaracterizing our opinions and intent, instead of choosing to engage in a transparent, productive discussion.

Avym will continue to advocate 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.

Self-insured health plans nationwide should look to recover $30 to $45 billion in Plan Asset refunds from the past 10 years of successful plan assets TPA/ASO anti-fraud recoupments and managed care savings in both the public and private sector

As we have written before, ERISA as well as other federal and state regulations have continued to pave the way for providers and patients, however, these same regulations can also pave the way for self-insured employer plans as well.

As more and more industry experts and watchdogs begin to see the light, it is extremely critical for all self-insured health plans and TPAs to understand the multi-billion dollar impact TPA/ASO recoveries can have on all self-insured health plans, including state health plans.

Plans should seek to identify and recover any plan assets that have been removed from the plan trust account to pay benefits, but instead have been retained by the TPA as “hidden fees”

This includes alleged overpayments that have been recouped by the TPAs –and have not been disclosed, restored or refunded to the self-insured plan assets as required under federal statutes and fiduciary responsibilities.

On February 20, 2020, Highmark Inc. announced its Financial Investigations and Provider Review (FIPR) Department realized over $260 million in savings and recoveries related to fraud, waste and abuse in 2019. Additionally, Highmark has saved and recovered over $850 million over the past five years. Highmark Health, the parent company of Highmark Inc., recently reported $629 million in consolidated earnings through just the first two quarters of 2019.

The Highmark announcement comes a little over a month after the United States Department of Justice issued a press release announcing it had recovered $2.6 Billion from fraud and false claims in matters related to healthcare for fiscal year 2019.

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 immediate impact of the recent Highmark and Department of Justice announcements, coupled with a 2016 Supreme Court decision could be billions of dollars for self-insured health plans nationwide, as a result of the TPA industry’s potential recovery of billions of dollars in overpayment recoupments and anti-fraud campaigns over the past 10 years.

All self-insured health plans and TPAs should monitor claims data in light of these recent announcements, 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 recovery and offset industry.

Failure to safeguard plan assets is definitely a fiduciary breach under ERISA, and now the Supreme Court, the United States Department of Justice and Highmark Inc. have given us a legal and practical formula for plan assets recovery, an accessible and legitimate resolution to today’s U.S. healthcare crisis.

As the DOL ramps up audits and enforcement actions in health plan claims and appeals, every self-insured health plan sponsor or fiduciary should keep in mind that they are required to monitor TPA/ASOs successful overpayment recoveries and managed care savings, in order to determine whether:

any of the billions of dollars of successful TPA/ASO overpayment recoupments and offsets nationwide each year are ERISA plan assets

all TPA/ASOs must refund all ERISA plan assets as ERISA prohibits all self-dealing

all self-insured plan administrators are liable for fiduciary breach in failing to safeguard or recover plan assets

The 2016 Supreme Court Montanile decision makes it perfectly clear, any alleged overpayment/lien for a claim in a fully-insured plan cannot attach to a different, self-insured plan fund or claims payment. It’s a basic principle of ERISA that a TPA for a self-insured plan is absolutely barred from converting claims payment/plan assets from the self-insured plan to pay for an alleged overpayment/lien and retain all recovery, for the TPAs own fully-insured account. As alleged in other federal courts, this can be viewed as self-dealing/embezzlement.

The only question now is whether self-insured plan fiduciaries will take immediate corrective actions to safeguard plan assets or wait till the DOL knocks on their door with an audit alert.

In combination with Highmark’s announcement, Avym Corporation offers advanced ERISA Embezzlement Recovery Programs in preparation of the forth-coming multi-billion dollar impact on self-insured health plans nationwide.  Specifically the advanced programs will examine the following issues: (1) determine if any TPA overpayment recoupments and offsets, which are in the billions of dollars nationwide, are ERISA plan assets, (2) ensure all TPA’s properly refunded ERISA plan assets as ERISA prohibits all self-dealings, (3) communicate and clarify self-insured plan administrator’s potential liability for fiduciary breach in failing to safeguard or recover plan assets.

These 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 any plan assets that have been removed from the plan trust account to pay benefits, but instead have been retained by the TPA as “hidden fees”, including alleged overpayments that have been recouped by the TPAs –and have not been disclosed, restored or refunded to the ERISA self-insured plan assets as required under federal statutes and fiduciary responsibilities.

To learn more about Avym’s ERISA Fiduciary TPA Auditing & Plan Assets Recovery Programs or to contact us about educational programs please click HERE.

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.