Category In The News

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.

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.

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.

This extraordinary lawsuit comes on the heels of a massive settlement, where CIGNA and American Specialty Health agreed to pay $20M after they were accused of misrepresenting medical expenses by concealing material information.

CIGNA Health and Life Insurance Company is one of the “big five” which represents the five largest health insurers in the United States. Prior to acquiring Express Scripts in 2018, Cigna relied heavily on its Third Party Administrator platform, providing services to health plans of all sizes for private commercial health plans as well as state and local government plans.

Among CIGNA’s customers are many large, well known, national companies that reach across different sectors of the economy, from banking to manufacturing to retailers.

According to the 150 page complaint: “Plaintiffs bring this lawsuit to expose Cigna’s brazen embezzlement and conversion schemes, through which it maximizes profits by defrauding patients, healthcare providers, and health plans of insurance out of tens of millions of dollars every year… The result is that Cigna succeeds in shifting financial responsibility for covered expenses onto the backs of patients, their employers, and Plaintiffs, while Cigna gets rich.”

This latest case seems to be the culmination of a spate of recent cases alleging similar violations. This troubling pattern may be an indication that no employer sector is immune to possibly fraudulent claims processing practices. All of this seems to provide more evidence of increased scrutiny for self-insured health benefits that has long been commonplace for retirement benefits.

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.

In summary, the lawsuit alleges that CIGNA accepts the out-of-network provider’s claims at the full billed charges and requests the same amount from the self-insured health plan. However, instead of paying the medical provider or member, CIGNA hires a Repricing Company to try and negotiate a reduction. If the provider refuses 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 medical providers. In an attempt to conceal this from the patient and self-insured health plan, CIGNA issued Electronic Remittance Advice or paper Explanation of Benefits forms (collectively, the “EOB”) misrepresent the balance as “Discount” to the members, certifying the member is not responsible for the balance, while simultaneously representing the balance to the Plaintiffs as member liability or “Amount Not Covered”.

Astonishingly, the complaint alleges that CIGNA, after being advised of these anomalies, not only refused to correct the issues but instructed the medical provider plaintiffs to sue to rectify the situation! According to the court documents:

“After numerous detailed communications with Cigna management in which Plaintiffs protested Cigna’s unlawful processes and procedures, Cigna informed Plaintiffs that it has no compliance department capable of addressing these issues, and encouraged Plaintiffs to initiate legal action in order to prompt Cigna to act. Plaintiffs have decided to follow Cigna’s suggestion.”

The complaint further alleges that CIGNA has violated the Racketeer Influenced and Corrupt Organizations Act, (RICO) through four distinct schemes:

1. misrepresenting that a contract or agreement exists between the Plaintiffs and CIGNA or its vendor “Repricing Company”;
2. conspiring with its vendor “Repricing Companies” to submit fraudulent “Savings Fees” to the self-insured health plan;
3. attempting to conceal the scheme by altering the Explanation of Benefits (EOB), sent to the medical provider and to the patient for the same claims, where the patient’s EOB represents the outstanding balance as a negotiated “Discount”, however the medical provider’s EOB shows the outstanding balance as the “Amount Not Covered”;
4. again conspiring with its vendor “Repricing Company” by coercing the Plaintiffs to accept exorbitantly low reimbursements;

Ironically, CIGNA has been at the forefront of initiating litigation against out-of-network providers for not collecting patient liabilities in full. Yet, this suit alleges CIGNA misrepresents the balance of unpaid claims as “Discounts” to its members.

This case 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”. The complaint also alleges CIGNA has violated the “uniform operating rules for the exchange of Automated Clearing House (“ACH”) electronic fund transfer payments among financial institutions that are used in accordance with Federal Reserve regulations and maintained by the Federal Reserve and the Electronic Payments Associations, known as the National Automated Clearing House Association or “NACHA.”

The first scheme allegedly involves CIGNA’s use of the “mails or wires to misrepresent to Plaintiffs, Cigna Subscribers, and the Cigna Plans, that Cigna underpaid Plaintiffs’ claims either because of a contract between an individual Plaintiff and Cigna as an in-network provider or with a third-party leasing contractor or negotiator couched as a repricing company (“Repricing Company”) to accept discounted rates (the “Fictitious Contracting Scheme”).”

The Plaintiffs allege they are not in-network nor have they agreed to any reductions with the “Repricing Company”. According to court records, “While repricing of in-network claims is permissible when there is an existing contract between a provider and Cigna, Plaintiffs are out-of-network providers who have not contracted with Cigna or any Repricing Company. Cigna profits from improperly withholding these payments from Plaintiffs by transferring ERISA Cigna Plan trust assets to a Cigna controlled bank account (which it otherwise is entitled to do under contracts between the ERISA Cigna Plans and Cigna) and earning interest off of funds that are rightfully Plaintiffs’ under the ERISA Cigna Plans. Cigna also embezzles or converts ERISA Cigna Plan trust assets by charging the ERISA Cigna Plans improper “cost-containment” fees.”

The complaint goes on to allege that CIGNA’s second scheme to defraud involves its conspiring with the Repricing Companies to “underpay Plaintiffs’ Cigna Claims via a euphemistically named “cost-containment process” that it misrepresents to the Cigna ERISA Plans as a cost-savings mechanism to save the Cigna ERISA Plans money on out-of-network claims administration (the “Repricing Reduction Scheme”).”

Plaintiffs allege that through this scheme, every out-of-network claim is sent through the wires to a Repricing Company where the Repricing Company recommends to CIGNA that CIGNA pay a deeply slashed reimbursement rate. CIGNA invariably adopts that recommendation and processes the claim for (under)payment. Additionally, the complaint alleges that “Cigna’s contracts with the Cigna ERISA Plans falsely state that this process is only applied to claims for which the Repricing Company has an existing contract with an out-of-network provider. Cigna uses these gross misrepresentations as cover for its embezzlement or conversion of ERISA Cigna Plan trust assets in the guise of cost-containment fees based on a percentage of the “savings.” Cigna then pays a commission to the Repricing Companies that is similarly based on a percentage of “savings.”

According to Plaintiff’s allegations, CIGNA’s third scheme to defraud involves its false and inconsistent statements on CIGNA-issued EOBs and is referred to as the “Contradictory EOB Scheme”. When processing a claim by an out-of-network provider, the suit alleges, “Cigna will state on an ERA or EOB issued to a healthcare provider (a “Provider EOB”) that the amounts wrongfully retained by Cigna are not covered under the terms of the pertinent Cigna ERISA Plan or are subject to certain “adjustments” that are inconsistent with the terms of the Cigna ERISA Plans. But on the EOBs issued to the Cigna Subscribers for the same claims (the “Patient EOB”), Cigna will report completely different information. Cigna may falsely state that Plaintiffs are either contracted with Cigna to accept certain rates, or have agreed with Cigna or a Repricing Company to accept a “discount;” both complete fabrications.”

By way of the example provided in the complaint, it appears CIGNA has told the provider:

“the unlucky Cigna Subscriber owes it $60,316.07 as the amount not covered under the Subscriber’s Plan, but has told the Subscriber that he/she owes the provider only $895.25 because Cigna negotiated a 98% discount with the provider. In doing this, Cigna misrepresents to Cigna Subscribers that the amounts improperly adjusted by Cigna are “discounts.” This misrepresentation appears on most Cigna Claim Patient EOBs.”

The suit alleges CIGNA’s fourth scheme to defraud involves its conspiracy with the Repricing Companies to force out-of-network providers like Plaintiffs to enter into negotiations for payment of valid claims, with the goal of either coercing or wearing down the providers so they accept drastic underpayments for the claims (the “Forced Negotiations Scheme”). In conspiracy with CIGNA, the Repricing Companies, such as Zelis or Medical Audit & Review Solutions (MARS), send offer letters through the mails designed to intimidate and coerce out-of-network providers such as Plaintiffs to accept the settlement offers. In some instances, the Repricing Companies will threaten that the services provided to the Cigna Subscriber will not be covered at all, or that they will be reimbursed at a percentage of the Medicare rate. And, as expected, the Pricing Companies will reimburse the providers even grossly insufficient amounts only if the provider waives all rights to additional payment.

According to the complaint, “the following is an example of Cigna’s Forced Negotiations Scheme, “whereby a provider Plaintiff rejected an offer of payment for $30,550 of total incurred charges of $41,680 from MARS, a Repricing Company contracted by Cigna. Once the provider refused the settlement offer, Cigna processed the claim, improperly misstated that the Cigna Plan covering the Cigna Subscriber only paid a percentage of Medicare, and reimbursed only $1,858.55, or 4.5% of the total incurred charges for the services rendered by the provider Plaintiff.”

“Through these four schemes, Cigna improperly deprives Plaintiffs and the Cigna ERISA Plans of funds and profits by engaging in any or all of the following conduct, among others: (1) embezzling and/or converting the amount characterized as a “discount” on the Patient EOB that is rightfully due and owing to the Plaintiffs under the terms of the Cigna ERISA Plans; (2) earning interest on these amounts, and (3) wrongfully profiting through embezzlement and/or conversion of ERISA Cigna Plan trust assets based on cost containment fees calculated as a percentage of the “discounted” amount.”

-According to court records

All ERISA health plans, medical providers and patients must educate themselves in order to understand the facts of these cases. For years, Cigna’s processes have been a thorny issue for out-of-network providers across the nation and now, self-insured plans are starting to feel the pain of these potentially illegal practices.

Medical providers must be proactive and adopt compliant practices and policies. Health plans must also be proactive in validating that plan assets are used to pay for their member’s medical expenses or otherwise 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.

Originally Published by By ROI-NJ, By Anjalee Khemlani; Trenton | Jul 1, 2019 at 10:00 am : http://www.roi-nj.com/2019/07/01/healthcare/third-party-auditor-bill-signed-into-law-despite-insurers-opposition/

Third-party auditor bill signed into law

A bill that some insurers lobbied quietly to quash made its way through the Legislature and was signed by Gov. Phil Murphy on Sunday.

The bill calls for a third-party auditor to real-time audit the State Health Benefits Plan and School Employees Health Benefits Plan.

It was first introduced in October 2018 by state Sen. Paul Sarlo (D-Wood-Ridge), and came from a report commissioned by a New Jersey doctor that alleged

health insurers were skimming off the top of claims payments for the SHBP and SEHBP.

The report was published by California-based AVYM.

ROI-NJ previously reported that the state’s contracts with Aetna and Horizon Blue Cross Blue Shield of New Jersey are set to expire this year, allowing a revamp of the Request for Proposal process and changing the type of contracts the state has with insurers who administer the state plans.

The Office of Legislative Services said in its fiscal analysis of the bill that it could not put a specific savings amount from the audited claims, even though

the AVYM report alleges savings of more than $1 million to the state.

“Hiring a third-party medical claims reviewer to provide regular, frequent and ongoing review and oversight of the claims process, which process includes, but is not limited to, the receipt, management, adjudication and payment of claims, serves the best interests of the state, participating employers and the thousands of employees and their dependents covered under the (SHBP and SEHBP),” according to the legislation.

The goal is to have a medical claims reviewer hired in time to review claims from plans that will be in effect in January 2020.

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“

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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” 

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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.

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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.