Category Health Care Court Cases

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“

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” 

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.

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.

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.

Third Party Administrator, MagnaCare to return $14.5 million to Health Plan Clients after getting sued in federal court, alleging “MagnaCare breached its fiduciary duties and committed prohibited transactions, including dealing with plan assets in its own interest.”

In a case we have written about before and as part of a greater, ongoing slew of self-insured health plans suing their third party administrators, MagnaCare, agreed to return $14.5 million to its health plan clients, as part of a settlement agreement with the US Department of Labor (DOL) – with possible additional payments of $4.5 million based upon business volume through 2019.  This agreement comes on the heels of the DOL lawsuit, filed in 2016, alleging multiple violations of ERISA, including committing prohibited transactions and acting in its own interest with plan assets, among other violations.

According to the DOL and court records:

“MagnaCare charged fees that were not disclosed to its ERISA plan clients…The plans paid MagnaCare the full amount, yet MagnaCare remitted the lower charges to the providers and retained the undisclosed markup”

This case is just the tip of the national healthcare crisis iceberg. Recent reports have indicated most employers, particularly large employers will continue to offer health insurance as a benefit, in spite of the fact self-insured health plans are spending more on health benefits. Additionally, while self-insuring is common among large employers, an increasing number of smaller employers are self-insuring as well. Based on these facts, and with an increasing number of patients forced into bankruptcy due to unpaid medical bills, employer plans, medical providers and patients need to understand the implication of this case and others like it.

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.

DOL Case info and copy of “Complaint”: Acosta v. MagnaCare Administrative Services, LLC and MagnaCare LLC Civil Action No.:  1:16-cv-07695-DAB

Copy of “Consent Order”: United States DOL v. Magnacare Administrative Servcies, LLC and Magnacare, LLC-Consent Order

The court documents also contain allegations that MagnaCare actually siphoned off money that was supposed to go towards the payment for medical claims:

“At times relevant to this Complaint, MagnaCare acted in own interest when it kept the difference between the Plan Charges and the Provider Rates as additional compensation without disclosing the amounts to the Plans.”

According to court records, MagnaCare LLC, and MagnaCare Administrative Services, LLC (MagnaCare) is a third party administrator of health plans or TPA, and provides administrative and claim adjudication services as well as “Network Access” services which purportedly enables its clients to obtain healthcare from providers at discounted rates.  

This case was undoubtedly spurred on by a previous lawsuit against MagnaCare, by its own self-insured plan client. In that case, the plaintiff alleged:

“MagnaCare represented to Plaintiffs in a written contract between the parties that providers of diagnostic laboratory and ancillary services had “accepted” a “fee schedule” which included a “management fee” for MagnaCare. In fact, the providers had never “accepted’ a fee schedule containing a “management foe” for MagnaCare. Rather, the providers had agreed to a fee schedule, which was a fraction of the amounts collected by MagnaCare from Plaintiffs. MagnaCare – without disclosure to Plaintiffs or the providers – simply misappropriated the difference between what Plaintiffs paid MagnaCare and what MagnaCare negotiated to pay the providers.” 

Court case info: UNITED TEAMSTER FUND, et al v. Magnacare Administrative Services, LLC et al, Case 1:13-CV-06062-WHP-FM, First Amended Complaint (FAC), filed on Oct. 29, 2015, original Complaint, filed on august 27, 2013,  in United States District Court Southern District Of New York.

These lawsuits come on the heels of the Oct. 20, 2014 U.S. Supreme Court decision to deny all appeals on a BCBSM’s $6.1 million fraud judgment for a self-insured ERISA plan by the U.S. Court of Appeals for the Six Circuit, upholding the decision by the District Court for the Eastern District of Michigan. On May 14, 2014, the federal appeals court (Sixth Cir. 2014) upheld the district court’s $6.1 million decision for Hi-Lex, a self-insured ERISA plan, against BCBSM for violating ERISA in prohibited transactions and fiduciary fraud, according to court documents.

Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Michigan, (SC Case #. 14-168, 6th Cir. Case #: 13-1773, 13-1859).

These cases together with the ERISA case listed below, offer insight into the healthcare industry’s prevalent overpayment offset wars:  

Peterson, D.C. et al v. UnitedHealth Group Inc. et al, U.S. District Court, U.S. District of Minnesota (DMN) CIVIL DOCKET FOR CASE #: 0:14-cv-02101-PJS-BRT

These new ERISA embezzlement cases are part of a growing trend consistent with 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 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.

**UPDATE**

On August 1, 2017 US District Judge Michael W. Fitzgerald issued an order granting class certification against ILWU-PMA Welfare Plan and its third party administrator, Zenith American Solutions, for breach of fiduciary duty.

According to court records;

“Plaintiffs’ claims seeking removal of the Plan’s fiduciaries raise issues that apply generally to the class, and thus a class can be certified under Rule 23(b)(1).’

As part of his rationale for certifying class, the judge explained, “Because the underlying issue does not turn on the approval or denial of any given claim for benefits, but rather on Defendants’ course of conduct as a whole, the issues discussed above do not preclude class certification on the fiduciary claims.”

ILWU-PMA and Zenith argued class should be denied because the plaintiffs failed to exhaust the administrative remedy, but the court disagreed, “Defendants contend that typicality and adequacy of representation are not met because Lead Plaintiffs have failed to exhaust their administrative remedies. But exhaustion is not required for claims alleging a breach of fiduciary duty. Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc., 770 F.3d1282, 1294 (9th Cir. 2014). Accordingly, exhaustion is no bar to certifying the class, and the requirements of Rule 23(a) are met.“

ILWU-PMA and Zenith next argued class should be denied because the proposed class is not “cohesive” and therefore presents very little risk of “inconsistent judgments” going forward. However the court again disagreed, “The relief requested, however, would benefit all Plan members in the same way, and thus the class is sufficiently cohesive.”

“Moreover, the risk of inconsistent judgments is apparent from the face of the claim: If each of the four Lead Plaintiffs brought individual actions seeking removal of Zenith and the PMA Trustees in four separate courts, and half were granted the requested injunctive relief while the other half were not, the Plan would be required both to remove and not to remove Zenith and the PMA Trustees.

Ultimately, this ruling should serve as a wake-up call to all Plan Administrators and Fiduciaries, to ensure any and all TPAs are acting in the best interest of the members and their beneficiaries. Thus avoiding costly litigation and possible penalties.

In the case, which we have written about before, plaintiffs sued the International Longshore Workers Union-Pacific Maritime Association Welfare Plan, (ILWU-PMA) and its third party administrator, Zenith American Solutions (Zenith) for failing to properly administer and pay benefit entitlements to the employees of ILWU and their beneficiaries. The suit also named Pacific Maritime Association trustees, who manage the plan, individually, saying that they were not acting in the best interest of employees.

Case Info: Amijo et al v. ILWU-PMA Coastwise et al U.S. District Court for the Central District of CA (Western Division- Los Angeles) Civil Docket for Case #: 2:15-cv-1403, Filed 02/26/2015.

The original complaint alleged Zenith, and its agent TC3, failed to properly process member medical claims leading to many claims going unpaid, and members having to foot the medical bills out of pocket. According to the complaint: 

“the backlog of unpaid medical bills increased dramatically in early 2013. According to the Interim Report, by the summer of 2013, there were 286,000 unprocessed claims from the Cigna era, and there were also growing numbers of unprocessed claims from the Zenith era.’

After an arbitrators hearing, Zenith assured the ILWU employees their claims would be processed and paid in a timely manner, but that did not happen, and in fact the backlog grew even worse, according to court records,

“Although Zenith promised [it] would, put in place mechanisms to address the backlog of unpaid medical bills, in the latter half of 2013 the backlog became worse, with about 90,000 new claims each month.”

Ultimately, the members sued the plan in a class action, seeking benefits and the removal of the fiduciaries for failing to monitor administration of the Plan. The suit also alleged Zenith and the PMA Trustees’ breach of their fiduciary duty harmed the Plan as a whole by, among other things, causing doctors to stop providing services the the employees and their beneficiaries.

Federal Judge rules that Blue Cross Blue Shield Michigan has to repay $8.4 million for violating ERISA and charging “Hidden Fees” to the Saginaw Chippewa Indian Tribe.

On July 14, 2017 U.S. District Judge Thomas L. Ludington ruled Blue Cross Blue Shield of Michigan (BCBSM) had to repay the Tribe $8.4 million for charging “hidden fees” in violation of ERISA. According to court records, the Tribe had two separate plans under BCBSM. The Tribe claimed that BCBSM charged $8,426,278 for Group 1 and $5,035,145 for Group 2. However the court ruled one of the plans was not an ERISA plan, and therefore, BCBSM was not liable for those fees.

 The judge summarized the issues by providing the following backdrop:

“BCBSM had ‘complete discretion to determine the amount of the Disputed Fees, as well as which of its customers paid them.’ As a result of the hidden nature of the fees, the savings from using BCBSM as an administrator appeared greater to customers that they truly were.”

According to the court:

It is undisputed, that, like in the multitude of other similar cases that have been brought against BCBSM, the company included hidden administrative fees in its charges to the Tribe. BCBSM agrees that, between 2004 and 2012, the tribe paid approximately $13 million in hidden administrative fees

Case info: Saginaw Chippewa Indian Tribe of Michigan, et al v. Blue Cross Blue Shield of Michigan, No. 1:16-cv-10317, E.D. Mich., 2017 U.S. Dist. LEXIS 109366 

The “multitude of other similar cases” that have been brought against BCBSM, stem from more than 50 other similar cases in the same court. The decisive point for all these cases was the Hi-Lex case, where the Sixth Circuit Court of Appeals upheld a $6.1 million judgement against BCBSM for, you guessed it, charging clients hidden fees!

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.

“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.

As more and more of these cases make their way through the courts, self-insured health plan administrators charged with properly monitoring and safeguarding plan assets should do so, independent of their TPA’s own reporting. Additionally, 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, should seek return of Billions in plan assets.

In Landmark Class Action Case, a Federal Judge would shut down United HealthCare’s “cross-plan offsetting” practice as a “troubling use of plan assets”, ruling the industry standard practice of “Cross‐plan offsetting creates a substantial and ongoing conflict of interest” for all claims administrators who “simultaneously administer both self‐insured and fully insured plans.” The court also called into question United’s practice of reaching “into the pockets of the sponsors of self‐insured plans” and putting that money “in United’s pocket”.

In an extraordinary decision, US District Judge Patrick J. Schultz has effectively barred cross-plan offsets. The judge weighed in on two very important questions: First, whether UHC acted “reasonably” in interpreting its client’s plans to permit cross‐plan offsetting; and whether the practice complies with the “fiduciary duties imposed by ERISA”. The court offered an answer to both issues while providing very clear guidance for Plans, claims administrators, medical providers and patients.

As we have written about many times 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. With the new legal guidance this landmark case provides, will self-insured plan sponsors, like AT&T and Gap Inc. be held accountable to allowing United to engage in such ERISA violations such as embezzlement, self-dealing and breach of fiduciary duty?  

The court case info: Peterson DC et al v. UnitedHealth Group Inc. et al, U.S. District Court U.S. District of Minnesota (DMN), Civil Docket For Case #: 0:14-cv-02101-PJS-BRT, Filed 06/23/14

In this class-action, originally filed in 2014, healthcare providers alleged ERISA violations by UnitedHealthcare Group for withholding and offsetting newly adjudicated claim payments from one patient to satisfy an alleged overpayment in the past, from separate, unidentified patients in complete violation of ERISA, and even worse, by misrepresenting to the patients and the plan sponsors on patient EOB’s “payment made to provider”, when in truth and in fact no such payment was ever made to the providers, according to the Court Complaint.

In answering the first question, Judge Schultz considered whether the language in UHC’s client health plans at issue in the case, identified as 46 Plan Bs, authorized UHC to engage in the offsetting practice known as “Cross-Plan Offsets”. According to the court they did not: “the Court finds that United’s interpretation is unreasonable. The plans themselves do not authorize cross‐plan offsetting. To the contrary, most of the plans contain specific overpayment and recovery language that would be rendered meaningless if United was authorized by the generic clauses that it relies upon to engage in cross‐plan offsetting.”

The court went on to clarify: “Every one of the overpayment provisions is triggered only when the plan itself makes an overpayment…In other words, each Plan B authorizes the recovery of overpayments made by the Plan B.

“None of the overpayment…provisions contain any language allowing other plans to recover their overpayments from the plan. “In other words, not one Plan B authorizes recovery of an overpayment made by a Plan A.”, according to the court order.

Remarkably, the judge chided UHC for or creating its cross-plan offsetting process for its own benefit and without examining the language of the plans. The judge specifically drew attention to this point, according to the court order: “It should be noted, that in looking carefully at the language of the plans…the Court is doing something that United itself did not do before implementing cross-plan offsetting…”

“Only after getting sued did United hunt through the plans for any language that might provide a post hoc justification for its conduct…United admits that it was not able to find a single provision of a single plan that explicitly authorizes cross-plan offsetting.”, according to court records.

The judge also questioned whether UHC ever disclosed their intention to engage in “cross-plan offsets” or the likely conflict of interest to its plan clients: “It appears, however, that disclosures concerning United’s system of cross-plan offsetting are mostly or entirely handled by United’s banking team during what appear to be fairly technical explanations for banking, account-setup and account-funding processes. It also appears that such disclosures mostly occur orally and on a somewhat ad hoc basis”.

UHC argued that it did disclose its cross-plan offset provisions to its clients’ “benefits and finance and treasury folks”, to which the court responded “it is not clear whether those individuals have authority to make plan-wide fiduciary decisions, nor is it clear whether these disclosures are made before or after a plan sponsor decides to become a United Client.”

Regarding the second question, whether the practice of cross-plan offsetting violates ERISA, the judge, while weighing possible conflicts of interest in violation of ERISA, went so far as to mention the fact that UHC lined its own pockets with self-insured plan assets: “the money that reimburses United for its alleged overpayment comes out of the plan sponsors’ pockets. Several internal United documents emphasize this point and gush about how cross-plan offsetting will allow United to take money for itself out of the pockets of the self-insured plans…”

“In other words, every one of the cross‐plan offsets at issue in this litigation put money in United’s pocket, and most of that money came out of the pockets of the sponsors of self‐insured plans.” according to the court records.

The court went into great detail regarding UHC’s conflict and possible prohibited transaction and breach of fiduciary duty: “In light of this case law and the strict fiduciary duties imposed by ERISA, cross-plan offsetting is, to put it mildly, a troubling use of plan assets—one that is plainly in tension with “the substantive or procedural requirements of the ERISA statute . . . In stark terms, cross‐plan offsetting involves using assets from one plan to satisfy debt allegedly owed to a separate plan—a practice that raises obvious concerns under §§ 1104 and 1106. These concerns are particularly acute in this case, in which every offset that United orchestrated did not just benefit a different, unrelated plan, but benefited United itself.”

“Cross‐plan offsetting creates a substantial and ongoing conflict of interest for claims administrators who, like United, simultaneously administer both self‐insured and fully insured plans…”, according to court records.

The judge, after examining the facts of the case, shed light on an enormous incentive for UHC: “As the single biggest payor of claims, United’s personal stake in cross‐plan offsetting dwarfs that of any self‐insured plan. [United] in this circumstance has every incentive to be aggressive about looking for overpayments from its own fully insured plans (which overpayments can be recovered from self‐insured plans) and less aggressive about looking for overpayments from self‐insured plans (which overpayments might be recovered from fully insured plans).”

“And indeed, this incentive is reflected in United’s internal documents, which enthusiastically describe how cross‐plan offsetting will permit United to reach into the pockets of the sponsors of self‐insured plans to recover the overpayments that United makes in connection with fully insured plans.” (emphasis added) 

The court further clarifies its reasoning and confirms: “It is also undoubtedly true, as United is reluctant to acknowledge, that cross-pan offsetting can harm plan participants” and “It is not fairly debatable, however, that the type of cross‐plan offsetting challenged in this case—that is, cross-plan offsetting engaged in by an administrator who insures some (but not all) of the plans—presents a grave conflict of interest.”

Ultimately, the court concludes, “United labors under a continuing conflict of interest in administering the cross‐plan offset system because United fully insures some but not all of the plans. More importantly, the fact remains that cross‐plan offsetting is in tension with ERISA’s fiduciary rules, is not provided for in the plans, and is at odds with the specific offset language contained in most of the plans. As a result, United did not act reasonably in interpreting the Plan [documents] that are at issue in this case to permit cross‐plan offsetting. The Court therefore grants plaintiffs’ motions for partial summary judgment and denies United’s motions for full summary judgment.”

In ruling against UHC on almost every argument, the judge certified the case for immediate appeal, acknowledging that this was a landscape changing and “exceptional case,” and taking into consideration that United, as the nation’s largest insurer will have to “undertake the extremely expensive and disruptive process if unwinding its cross-plan offsetting practice.”

“This order resolves a controlling and dispositive question of law: whether United acted reasonably in interpreting the plans to permit cross‐plan offsetting.”

“IT IS HEREBY ORDERED THAT:

1. Defendants’ motions for summary judgment are DENIED.
2. Plaintiffs’ motions for summary judgment on Phase I issues are GRANTED.”

Based on the fact that ‘cross-plan offsetting” is pervasive throughout the health care industry, this legal guidance will undoubtedly have tremendous ramifications on all Plans, TPAs, medical providers and patients. Medical providers must be proactive and adopt compliant practices and policies. Health plans must also be proactive in validating that plan assets 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.

Another Federal Court Rules Against Cigna In Alleged Fee Forgiving/Overpayment Recoupment Dispute With Medical Provider- Court “Bars” Cigna From Relying On “Legally Incorrect” Interpretation of ERISA Plans

On March 10, 2017 in the US District Court of Connecticut, Judge Alfred V. Covello ruled in favor of surgical center defendants and against Cigna, barring Cigna from recouping self-insured plan assets based on alleged “overpayments” which were predicated on Cigna’s “legally incorrect” interpretation of ERISA plans “exclusionary language”.

This decision offers clear guidance on critical issues such as cross-plan offsetting, Cigna’s fee forgiveness protocol, SIU practices and ERISA disclosure requirements, confirming the profound shift in Out-of-Network benefits and claim processing for all health care providers and health plans in the nation.

The decision also further unwinds the payor initiated “out-of-network fraud” enigma as we have written about before, and is one of a series of critical court decisions which address the typical scenario for out-of-network providers: payors refusal to pay claims which leads to “catch-all” out-of-network lawsuits seeking total overpayment refunds of claims previously paid to providers, all based on broad and vague allegations of fraud.

The case revolves around Cigna’s fee forgiving protocol, whereby Cigna denies medical claims if its members don’t pay their entire out of pocket cost up front. Based on this premise, Cigna is also seeking recovery of approximately $17 million in alleged “overpayments” made to providers that did not collect the full patient out of pocket liability up front.

Court case info: Connecticut General Life Insurance Co. et al. v. True View Surgery Center One, LP et al. Case No.:3:14-cv-01859-AVC; US District Court Connecticut

In what may have been the impetus for a litigation tsunami, where over 100 Cigna administered health plans were sued for various ERISA violations including embezzlement, issuing “secret checks” and self-dealing, Cigna filed suit on 12/11/2014 against True View Surgery Center One and affiliated health care providers seeking declaratory and injunctive relief under ERISA and essentially asking the court to declare that “no coverage is due” where medical providers “do not enforce the plans’ cost-share requirements”. Cigna also asked the court to order defendant medical providers to “submit to Cigna only claims containing charges that Defendants actually charge the plan member as payment in full”. In other words, no medical coverage is available if the member does not pay their entire out of pocket liabilities up front.

Cigna was also seeking the return of any benefit payments, as “overpayments” made to the medical provider where the member did not pay their entire out of pocket liability up front, specifically requesting the court to impose a “constructive trust on monies currently held by Defendants as a result of the overpayments made by Cigna…pursuant to an equitable lien”.

Out of network provider True View Surgery Center One, argued that the issues were already resolved in a previous case litigated in Texas, and that Cigna was attempting to take multiple bites out of the same apple in order to wrongfully deny legitimate medical claims.

The court focused on two main issues: 1) whether Cigna is barred by the doctrine of collateral estoppel from pursuing their claims on behalf of ERISA plans; and 2) whether Cigna has adequately alleged traceability in order to recover alleged “overpayments”

Ultimately, the court agreed with defendant True View Surgery Center One and ruled “Cigna is barred by the doctrine of judicial estoppel” in its attempt to have the courts validate its fee forgiving protocols, and in its attempts to recover alleged “overpayments”

In his decision, Judge Covello cited the Humble case (Connecticut General Life Insurance Co. et al. v. Humble Surgical Hospital, LLC, Case number 4:13-cv-03291) where Cigna was slammed with a $17 million penalty and opined that the district court in Texas had already “addressed the issue” regarding Cigna’s fee forgiving protocols.

In citing the Humble case, the judge said “In Humble, the court held that Cigna’s interpretation of this “exclusionary” language was “legally incorrect,” and that “ERISA does not permit the interpretation embraced by Cigna.”

The judge went on to say that the Texas court found “because ‘[t]he average plan participant would not understand from the exclusionary language…that his/her coverage is expressly conditioned on whether Humble collects upfront, the entirety of his/her deductible, co-pay and co-insurance before Cigna pays,’ Cigna’s “exclusionary” language interpretation does not pass muster under the “average plan participant” test,” which ERISA requires.”.

The judge ultimately holds: “Cigna is relying on the interpretation of its ERISA plans that the United States District Court for the Southern District of Texas held to be ‘legally incorrect’ in order to effectively deny providers’ benefit claims. Therefore, the doctrine of collateral estoppel bars Cigna from relitigating those [issues].”

As part of Judge Covello’s ruling on Cigna’s lack of traceability, in dismissing Cigna’s claim for “overpayments”, we must again look to the Humble case for clarification. According to the Humble court:

“Cigna is not entitled to equitable restitution of any alleged overpayments based on the “tracing” method, as it cannot identify any specific res separate and apart from Humble’s general assets. See Health Special Risk, 756 F.3d at 366 (reasoning that “Sereboff did not move away from any tracing requirement; it distinguished between equitable liens by agreement—which do not require tracing—and equitable liens by restitution—which do.”). As the Court explained in Knudson, the basis for petitioners’ claim is “that petitioners are contractually entitled to some funds for benefits that they conferred. The kind of restitution that petitioners seek, therefore, is not equitable…but legal—the imposition of personal liability for the benefits that they conferred upon respondents.”Knudson, 534 U.S. at 214.”

All Out-of-Network providers and self-insured health plans should understand the implications of the court’s rulings in order to protect members and beneficiaries from inappropriate medical debt and bankruptcy and to safeguard and protect self-insured health plan assets from possible conversion, abstraction or “hidden fees”.  Education and understanding of these concepts will bring peace, harmony and compliance to the healthcare industry, especially when health plans are determined to contain healthcare costs and healthcare providers are dedicated to providing all patients with high quality, affordable healthcare when exercising their freedom of choice and right to seek out-of-network care.

For over 7 years, 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.

EBSA Offers Guidance For Denied Health Care Benefit Claims After OIG Reports EBSA Did Not Have the Ability to Protect the Estimated 79 Million Plan Participants in Self-Insured Health Plans from Improper Denials of Health Claims

On November 18, 2016 the Labor Department’s Office of the Inspector General (OIG) Office released an audit conducted in order to assess the Employee Benefits Security Administration’s (EBSA) ability to protect the estimated 79 million plan participants of self-insured health benefits from improper claim denials, concluding that the EBSA did not have the ability to protect plan participants from improper health care claim denials.

As we have written about many times in the past, improper denials of health benefit claims can have catastrophic effects on the health and financial security of all health plan participants and their families.  Improper or wrongful health claims denials not only impact plan participants directly but also adversely affect health plan and their plan administrators. As more and more health plans are caught up defending questionable claims processing tactics, resulting in costly litigation expenses.

According to the OIG audit, the EBSA is charged with regulating all Employee Retirement Income Security Act (ERISA) self-insured health plans and is therefore responsible for protecting the estimated 79 million members in those plans against improper health claims denials.  

The EBSA issued clear guidance to patients, self-insured health plan and service providers through its comprehensive response to the September 1, 2016 OIG draft audit report. The EBSA reiterated its obligation to administer and enforce fiduciary, reporting and disclosure provisions of Title I of the Employee Income Retirement Security Act, of 1974 (ERISA), through its own enforcement program and education and outreach programs.

The EBSA enforcement program seeks to detect and correct violations that result in monetary recoveries for employee benefits plans, participants and beneficiaries, and to obtain corrective remedies, including but not limited to, broad-based reforms for large plans or common service providers (i.e. TPA’s). The EBSA also works to inform the public with regard to benefits issues so plan participants have access to information about their rights and responsibilities under their respective plans. This allows plan participants and their beneficiaries the chance to obtain any necessary plan corrections before serious financial damage is done. The EBSA’s education programs also target plan sponsors and other plan officials, service providers and plan participants to inform them of their rights and responsibilities under ERISA.  

The EBSA response outlines the steps it has taken in the past and also offers guidance to all stakeholders when confronted with possible improper health claim denials. According to the EBSA, a substantial portion of the benefits advisors work involves assisting individuals with wrongfully denied health plan claims. Accordingly, of particular concern in most investigations is whether fiduciaries are carrying out their fiduciary duties appropriately, especially with regard to monitoring service providers; the appropriate payment of plan expenses; the avoidance of self-dealing and prohibited transactions and adherence to required claims procedures and prudent claims administration, among other issues.

The EBSA also confirmed that its Health benefits Security Project (HBSP) would continue. The HBSP is a comprehensive national health enforcement project, combining EBSA’s established health plan enforcement initiatives with new protections afforded by the Patient Protection and Affordable Care Act of 2010 (ACA). The HBSP involves a broader range of health care investigations, including compliance with ERISA, investigations of plan service providers to ensure their claims processes are providing benefits as promised and that fee arrangements are transparent, among other things. The EBSA further noted that it actively seeks input from the public as a compliment to its enforcement program.

Specifically, the EBSA has declared the participant assistance program as a source of some of its best investigative leads, and producing hundreds of cases per year-cases that, in the absence of this program, might not have been discovered. In fact, the EBSA espouses the position that the most effective approach is to focus on targeted areas of need based on leads EBSA receives from participant complaints, recommendations from outside experts such as advocacy groups, private litigation, states and other federal agencies.

In addition to this work, the EBSA also offers guidance on implementing and adhering to internal claims and appeals provisions under the ACA.

With respect to the OIG Audit recommendations, the EBSA is advocating for new 5500 Schedule J reporting requirements to include a range of claims payment data, including information on how many post services benefit claims (Claims) were submitted during the plan year, how many Claims were approved during the plan year, how many Claims were denied during the plan year, how many Claim denials were appealed during the plan year, how may appeals were upheld as denials, how many were payable after appeal and whether there were any Claims that were not adjudicated within the required timeframes. Plans would also be asked to report the total dollar amount of claims paid during the plan year.

While these are recommendations, it appears the EBSA is providing guidelines or possible “Red Flags” for possible investigations into violations. With respect to the OIG recommendation that the EBSA begin reviewing claims information it already collects, the EBSA has made it clear that it is committed to conducting focused yet robust health investigations that seek global corrections of violations in order to restore losses to participants who were harmed. Finally, consistent with EBSA’s HBSP, current and future investigations will generally include an operational review to determine health plan compliance (e.g. by conducting claims analysis to identify improper claims processing or improper benefit denials).

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.