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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.

CIGNA client, DHL Express, and its plan administrator, Robert Whitaker have been sued in federal court in Houston, alleging that the giant delivery company teamed up with its insurance company and brazenly engaged in a “scheme to withhold, embezzle, and convert ERISA plan assets through a pattern of fraudulent benefits transactions and prohibited self-dealing misconduct. Under this backdrop, together Defendants and Cigna concocted an intricate scheme to transfer and embezzle plan funds.”

According to the complaint, DHL and their parent company, colluded with CIGNA: “in spite of the glaring conflict of interest and inherent breach of fiduciary duties, Defendants agreed to an unlawful compensation structure that financially rewards Cigna for wrongfully denying and underpaying benefits claims.  Under this backdrop, together Defendants and Cigna concocted an intricate scheme to transfer and embezzle plan funds.”

Additionally, the alleged scheme by DHL and Cigna left patients responsible for more than their designated share of the cost under the terms of the health care plan, “resulting in an arrangement where Cigna, a co-fiduciary, reprehensively competes with the Plan’s own beneficiaries for entitlement to plan funds.”, according to the lawsuit.

Case info: Center for Advanced Surgical Treatment v. DHL Express and Robert Whitaker in the United States District Court for the Southern District of Texas, Houston Division, Case Number: 4:16 cv01919; Filed June 30, 2016.

This latest case seems to be another brick in the wall of ongoing cases, alleging similar violations, against CIGNA administered health plans across multiple sectors of the economy. Among top companies ensnared in litigation by CIGNA’s practices include household names such as Macys, JP Morgan Chase and Chevron. These practices may be endemic to the industry as a whole as evidenced by other large UnitedHealth administered health plans, such as GAP and AT&T that have also faced lawsuits alleging similar violations.

The complaint further alleges that DHL had complete and full knowledge of the possible scheme but not only refused to conduct an investigation, consistent with its fiduciary duty, but actually delegated the investigation to the fiduciary CIGNA, the alleged perpetrator of the embezzlement!

According to court documents:

“Despite actual knowledge of Cigna’s self-dealing misconduct stemming from repeated alerts and warnings from Plaintiff’s official ERISA Appeals, Defendants systematically refused to take corrective action, and instead, DELEGATED INVESTIGATION OF THE SUSPECTED WRONGDOING TO CIGNA [emphasis added]”- the identified perpetrator of the misconduct.”

And, in a particularly reprehensible move, the complaint further alleges that the plans and their co-fiduciary Cigna may have intentionally misrepresented to the patients, through the EOB’s, the actual amount that was covered and paid on the claims.

The complaint alleges: “According to the explanation of benefits that was sent to the Patient, it appeared that all of the charges were denied in error and the total amount of the charges covered was $200,355.00.   However, this amount was never paid to Plaintiff, but was kept by Cigna.”

The latest DHL lawsuit, which was filed on June 30, 2016, comes on the heels other recent lawsuits involving Cigna and Cigna Administered ERISA health plans:

• an unprecedented $13.7M ruling against CIGNA, filed on June 1, 2016, with $11.4M for underpaid claims and an additional $2.3M in statutory penalties. In that case, CIGNA’s fee forgiving protocol and claim for reimbursement of “overpayments” came under fire by the courts, ultimately ruling that CIGNA’s interpretation of plan’s “exclusionary language” provision as the basis for it’s fee forgiving protocol, was “flawed” and “legally incorrect“. The court also ruled that CIGNA’s claim for reimbursement of overpayments “fail as a matter of law” reasoning no lien or constructive trust was created and tracing requirements were not met.
• eight days later, on June 9, 2016 over 100 of CIGNA’s self-insured clients, along with their Plan Administrators were named as defendants in a massive fraud lawsuit, alleging the plans “participated in a conspiracy and pattern of unlawful, reckless, and deceptive conduct to conceal an embezzlement and/or skimming scheme”
• and just twelve days after 100 Cigna client were sued, on June 21, 2016, Macys, another Cigna Administered ERISA Health Plan, was sued for embezzlement, alleging “Cigna issued a payment check to Plaintiff to satisfy a claim filed by Plaintiff for services performed on a patient, who is a Plan Beneficiary of Defendants; however, in addition to issuing a check to Plaintiff, Cigna issued a secret check to itself for the same amount. Cigna then cashed the secret check it issued to itself, and then placed a stop on the check issued to Plaintiff before Plaintiff could receive and cash the check to reimburse itself for services performed on Defendants’ Plan Beneficiary“

As we have mentioned many times before, all ERISA health plans, medical providers and patients must educate themselves in order to understand the facts of these cases. Health plans must be proactive in ensuring benefits are adjudicated and ultimately paid solely based on the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Medical providers must be also proactive and adopt compliant practices and policies. Patients must understand their benefits plans and their rights as allowed under ERISA.

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.

Macys Inc. and Plan administrator, Stephen J. O’Bryan, were sued and named as defendants in federal court for ERISA violations, for allegedly engaging in a “a systematic embezzlement and/or conversion scheme involving the Plan Assets of the Plan“. This is the second lawsuit filed against Cigna Administered ERISA health plan Macy’s in less than a month.

According to the complaint,

“Cigna issued a payment check to Plaintiff to satisfy a claim filed by Plaintiff for services performed on a patient, who is a Plan Beneficiary of Defendants; however, in addition to issuing a check to Plaintiff, Cigna issued a secret check to itself for the same amount. Cigna then cashed the secret check it issued to itself, and then placed a stop on the check issued to Plaintiff before Plaintiff could receive and cash the check to reimburse itself for services performed on Defendants’ Plan Beneficiary“

The complaint further alleges that “Cigna also issued deceptive and inconsistent documents to Plaintiff and the Patient-Plan Beneficiary, specifically the Provider Explanation of Medical Payment, Provider Explanation of Medical Payment Report, Patient Explanation of Benefits, and Cigna Claim Details Sheet.“.

According to the court documents, Macys, through Cigna, sent EOBs telling the hospital that it would not get paid until it provided proof the patient paid their entire out-of-pocket costs, at the same time, according to the complaint, Macys, through Cigna, sent a different EOB to its member patients telling them they owed nothing!

Case info: REDOAK Hospital, LLC v. Macys Inc., Welfare Benefits Plan and Stephen J. O’Bryan Case Number: 4:16-cv-01783 in the United states District Court for the Southern District of Texas, Houston office Court, Filed June 21, 2016.

The Macys lawsuit, which was filed on June 21, 2016, comes on the heels of two other recent lawsuits involving Cigna and Cigna Administered ERISA health plans:

• an unprecedented $13.7M ruling against CIGNA, filed on June 1, 2016, with $11.4M for underpaid claims and an additional $2.3M in statutory penalties. In that case, CIGNA’s fee forgiving protocol and claim for reimbursement of “overpayments” came under fire by the courts, ultimately ruling that CIGNA’s interpretation of plan’s “exclusionary language” provision as the basis for it’s fee forgiving protocol, was “flawed” and “legally incorrect“. The court also ruled that CIGNA’s claim for reimbursement of overpayments “fail as a matter of law” reasoning no lien or constructive trust was created and tracing requirements were not met.
• eight days later, on June 9, 2016 over 100 of CIGNA’s self-insured clients, along with their Plan Administrators were named as defendants in a massive fraud lawsuit, alleging the plans “participated in a conspiracy and pattern of unlawful, reckless, and deceptive conduct to conceal an embezzlement and/or skimming scheme” 

The complaint also alleges that Macys and Cigna engaged in a complicated scheme involving “fabricated” Viant repricing discounts. The complaint alleges:

“In addition to the “fee-forgiveness scheme”, Defendants and Cigna also concocted another intricate scheme to abstract and embezzle Plan Assets. Abstraction of the Plan Assets are concealed by processing Plaintiff’s out-of-network claim under a fabricated Viant Repricing Discount, even though Defendants and Cigna are fully aware of the fact that no such contract exists between Plaintiff and Viant.4 Defendants allowed Cigna to convert the full Viant discounted amount from patient-Plan Beneficiary’s Allowed Amount to Cigna’s own use, all while concealing and intentionally misrepresenting to patient-Plan Beneficiary that is has converted the Viant discounted amount through informing patient-Plan Beneficiary that the Viant Discount is $0.00.”

Also, according to court documents, the member is ultimately left holding the bag:

“As a result of the wrongful claim denial schemes concocted by Defendants and Cigna, all of the transferred Plan Assets are ultimately misappropriated by Cigna to fraudulently pay itself with Defendants’ withdrawn Plan Assets by falsely declaring the converted Plan Assets as compensation for itself generated through managed care and out-of-network cost containment “savings”, when in truth and in fact, the claim was never paid to Plaintiff and the patient-Plan Beneficiary is left exposed to personal liability for the full amount of his unpaid medical bills.”

As we have mentioned many times before, all ERISA health plans, medical providers and patients must educate themselves in order to understand the facts of these cases. The courts have provided clear guidance regarding Cigna’s “fee forgiving protocol” which has 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 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.

 

 

 

Just eight days after a federal court slammed CIGNA with a $13M judgement, 113 of CIGNA’s self-insured clients, along with their Plan Administrators have been named as defendants in a massive fraud lawsuit, alleging the plans “participated in a conspiracy and pattern of unlawful, reckless, and deceptive conduct to conceal an embezzlement and/or skimming scheme”.

According to court documents:

“Defendants never monitored or tracked the specific fees that Cigna was paying to itself and never required Cigna to itemize and account for the financial transactions made by Cigna in sufficient detail. Thus for any given claim, Defendants blindly permitted Cigna to withdraw plan funds for payment of the claims, but failed to track the true, actual amounts Cigna paid to itself.”

This massive lawsuit comes on the heels of an unprecedented $13.7M ruling against CIGNA with $11.4M for underpaid claims and an additional $2.3M in statutory penalties. In that case, CIGNA’s fee forgiving protocol and claim for reimbursement of “overpayments” came under fire by the courts, ultimately ruling that CIGNA’s interpretation of plan’s “exclusionary language” provision as the basis for it’s fee forgiving protocol, was “flawed” and “legally incorrect“. The court also ruled that CIGNA’s claim for reimbursement of overpayments “fail as a matter of law” reasoning no lien or constructive trust was created and tracing requirements were not met.

Case info: True View Surgery Center One LP et. al v. MILA National Health Plan et.al, Case Number: 4:2016 cv01648 in the United states District Court for the Southern District of Texas, Houston office Court, Filed June 9, 2016.

This case is filed against CIGNA administered health plans and names the plan administrators individually. Among the defendants are many large, well known, national companies that reach across different sectors of the economy, from banking to manufacturing to retailers. Household names such as,  JP Morgan Chase, Chevron, Macy’s, Valero, BASF, Waste Management, Stanley Black and Decker and even Teach for America, were named as well as other smaller less recognized organizations. All have one thing in common: all are CIGNA administered self-insured health plans.

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.

The complaint alleges:

“Defendants processed claims and determined that certain claim amounts were allowed under the Plans, yet those allowed claims payments were never made to Plaintiffs and instead [were] withheld by Cigna.”

The complaint further alleges that the plans and their co-fiduciary Cigna advised patients and plaintiff medical providers, through the EOB’s, that if patients failed to pay the full cost-sharing, or out of pocket liabilities, at the time of their admission, the benefit claims payment would be withheld indefinitely by Cigna until medical providers submitted proof of full payment of the patient’s cost-sharing or out of pocket liabilities. And in a particularly nefarious maneuver, the plans and their co-fiduciary Cigna simultaneously advised patients they had no obligation to pay! Consequently, the medical provider plaintiffs would have nothing to forgive upfront or nothing to collect from the patient, according to the complaint.

The medical provider plaintiffs further argue: “In spite of the glaring conflict of interest and inherent breach of fiduciary duties, defendants allowed the wrongful withholding of plan benefit payments from Plaintiffs and agreed to an unlawful compensation structure that financially rewards Cigna.”, according to court records.

Most troubling are accusations that the Plans, even after being alerted to these potentially illegal practices and despite formal complaints being lodged with the DOL, astonishingly continued to delegate and authorize Cigna, to investigate its own alleged wrongdoing!

The complaint also alleges, “When defendants were confronted about this “withholding” of the Entitled Amount, instead of outright refuting the assertion, their co-fiduciary’s counsel stated “Replete throughout your letter is [plaintiff’s] contention that Cigna does not have the legal right or authority to withhold the payment benefits . . . [i]n fact, Cigna has every right to do so.”

The complaint goes on to say, “Defendants allow funds from the Plans to be withdrawn under the guise of a “savings” compensation structure as a means to cloak blatant misappropriation of funds. That is defendants colluded with Cigna to apply a fake 100% “negotiated discount” of Plaintiff’s billed charges. Defendants, through Cigna, applied a fabricated contractual Obligation (“CO”) code.”

All ERISA health plans, medical providers and patients must educate themselves in order to understand the facts of these cases. For years, Cigna’s “fee forgiving protocol” has 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 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.

 

In a monumental decision for Out-Of-Network Providers nationwide, on June 1, 2016, U.S. District Judge Kenneth Hoyt of the Southern District of Texas ruled against Cigna and ordered the insurer to pay $11.4 million to cover underpaid claims and, an additional $2.3 million in ERISA penalties, in perhaps the first instance where a claims administrator was ordered to pay ERISA penalties to a medical provider.

U.S. District Judge Hoyt, after a nine day bench trial, ruled that Cigna’s claims of overpayment and fee forgiveness fraud failed, as did its arguments against Humble Surgical Hospital’s (Humble) ERISA claims. According to court records:

“Based on the analysis and reasoning set forth herein, the Court determines that Cigna’s claim(s) for reimbursement of overpayments made pursuant to ERISA and/or common law fail, as a matter of law;”.

The court goes on to say, “The Court further concludes that Cigna’s defenses to Humble’s ERISA claims fail and Humble is entitled to recover damages under § 502(a)(1)(B)¹ and penalties under § 502(c)(1)(B).”

Case info: Connecticut General Life Insurance Co. et al. v. Humble Surgical Hospital, LLC, (Cigna v. Humble) Case number 4:13-cv-03291, in the U.S. District Court for the Southern District of Texas. Entered June 01, 2016

This decision represents a major paradigm shift in Out-of-Network benefits and claim processing for all health care providers and health plans in the nation and establishes clear guidance on critical issues such as cross-plan offsetting, Cigna’s fee forgiveness protocol, SIU practices and ERISA disclosure requirements. The decision sheds light on the payor initiated “out-of-network fraud” enigma 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.

At its core, this court decision provides the entire managed care and plan benefits industry with basic, yet comprehensive legal reasoning and essentially offers a roadmap to addressing modern-day healthcare litigation.

In his ruling, U.S. District Judge Kenneth Hoyt wrote that the health insurer initiated the litigation seeking $5.2 million in restitution and filed claims against the hospital, alleging it engaged in fraudulent out-of-network billing practices, which resulted in “overpayments”.  

Humble denied the allegations and countersued Cigna for (a) nonpayment of current member/patient’s claims, underpayment of certain claims, and delayed payment of all claims in violation of ERISA § 502(a)(1)(B); (b) failure to provide a full and fair review under ERISA; (c) breach of fiduciary duties of loyalty and care under ERISA; and (d) penalties pursuant to ERISA § 502(c,), according to the court documents.

This landmark decision has the potential to save millions of Americans from medical bankruptcy. Additionally, it illustrates one of the most pressing issues facing out-of-network patients and providers across the nation.  Payor initiated Deductible and Co-Pay waiver claim denials and overpayment recoupments or offsets is the No. 1 out-of-network claim denial, contributing to increases in the number of personal bankruptcies. According to many recent surveys, reports and case studies, one in five American adults will struggle to pay medical bills. In fact, medical bills are the leading cause of personal bankruptcy, affecting even those with health insurance. Subsequently, approximately 76% of Americans paid for out-of-network coverage through their employer-sponsored health plans, according to a December 2013 National Composition Summary from DOL Bureau of Labor Statistics. It’s clear that the epidemic of out-of-network deductible balance billing wrongly imposed by ERISA plans has inevitably contributed significantly to unexpected medical bills and personal bankruptcy.

According to the court records, the evidence clearly demonstrated that Cigna flagged Humble’s claims, for SIU processing, never told the hospital and “did not –and by its conduct—could not provide a reasonable meaningful opportunity for a full and fair review of its decision regarding Humble’s claims.”

“Cigna’s method for processing Humble’s claims was simply disingenuous and arbitrary, as it was focused more on accomplishing a predetermined purpose — denying Humble’s claims,”

Cigna argued that it could assert its claim based on the plans “overpayment” provisions, according to the court documents: “Here, Cigna relies on a provision within many of its plan documents entitled, “Recovery of overpayment,” which provides, “When an overpayment has been made by Cigna, Cigna will have the right at any time to: recover that overpayment from the person to whom or on whose behalf it was made; or offset the amount of that overpayment from a future claim payment.”

However, the court rejected that argument, “However, this provision, standing alone, is insufficient to create a lien or constructive trust as it does not: mention the words “lien” or “trust”; state that any overpayment shall constitute a charge against any particular proceeds; give rise to a security interest in such proceeds; even suggest that a trust is being sought for Cigna’s and/or the plan’s benefit on any particular provider payments; or advise of the need for any particular provider to preserve, segregate or otherwise hold such funds or proceeds in trust…Therefore, the Court determines that Cigna has failed to establish that the “Recovery of Overpayment” provision contained in its plan documents creates a constructive trust or equitable lien by agreement.”

Of critical importance is the court’s analysis and decision on Cigna’s “tracing” arguments as well. According to court records, “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.”

The court also weighed in on Cigna’s “fee forgiving “argument, “The plan language does not support denying Humble’s claims based on waiver, due to Humble’s alleged fee-forgiving policy, or, in Cigna’s own novel view, pursuant to a proportionate share analysis.”

Next, the court weighed in on Cigna’s arguments that Humble’s claims were not covered by the plans based on Exclusionary language in the plan documents: “Cigna has not offered evidence that any of the services billed by Humble were not covered by the plans or that they were improperly billed Therefore, Cigna’s interpretation of the “exclusionary” language as rejecting covered services, was improper and violative of the plans’ terms.” “For these reasons, the court determines that Cigna improperly applied the exclusionary language contained in the plans and, in the process, abused its discretion, especially since Cigna admittedly has never used the exclusionary language to reject covered services before and was relentless in engaging in an arbitrary manner with regard to Humble and its claims.”

“Finally, the evidence suggests that Cigna failed to explain to the plan sponsors and/or members/patients/insureds that it was applying a proportionate share analysis to Humble’s claims. Thus, Cigna breached its fiduciary duty when it strayed from the terms of the plans and interpreted its ASO Agreements with plan sponsors as conferring authority upon it that was not specifically set forth in and/or was contrary to the various plans.”

Essentially, CIGNA was “Checkmated” on all their arguments

Ultimately, the court ruled against Cigna on every major argument and consistent with previous appellate court decisions, provides step by step guidelines on whether Cigna’s “fee forgiveness protocol” and “overpayment offsets” are legally correct,
“Therefore, the Court holds that Cigna’s claims processing procedure and appeals review process violated ERISA and concomitantly, its fiduciary duty of care and loyalty to the members/patients and the plan sponsors. Indeed, Cigna earned handsome returns as a result of its aberrant and arbitrary claims processing methodology. The evidence establishes that it was subject to a double heaping from the plan sponsors’ pockets—first, in receiving a fee for claim processing services–and second, in receiving fees based on “savings,” regardless of how garnered. In the process, however, Cigna forfeited its objectivity and violated its fiduciary duties of care and loyalty by making benefit determinations that did not consider UCR or conform to the plans’ terms in violation of ERISA.”

The court also made an interesting observation regarding Cigna’s third party vendor negotiation and Cigna’s claim that Humble misrepresented the charges: “Cigna’s assessment of Humble’s disclosure duties is fallacious, at best. The fallacy is manifested in several respects. First, Cigna has not publicly disclosed its ASO Agreements with plan providers to any of its members/patients or third-party healthcare providers because it considers such documents to be proprietary as well. To this end, Cigna cannot expect unfettered access to contracts maintained by third-party healthcare providers without permitting them unrestricted access to the same. To require otherwise would be to reward Cigna’s duplicitous conduct.”

Finally, Humble claimed that it was entitled to ERISA penalties, arguing “Cigna’s refusal to provide such plan documents placed it at a serious disadvantage–both in defending against Cigna’s claims for overpayment and in recovering on its own claims for underpayment. “

The court agreed and issued a substantial penalty on Cigna for failing to Disclosure the Plan Terms reasoning: “The Court is of the opinion that, after October 2010, Cigna became more than a third-party “claims administrator” because of the manner in which it processed Humble’s claims. While the evidence establishes that Cigna is not the “designated” or named plan administrator it, nevertheless, became the de facto plan administrator by way of its conduct and admissions under an ERISA-estoppel theory.”

The court concluded:  “Without plan documents, Humble could not know whether Cigna was even processing its claims pursuant to the terms of the plans…In these respects, Cigna interfered with and frustrated the contractual relationship between the plan sponsors and the members/patients by imposing a methodology for claim processing that was not part of any plan.

In essence, Cigna “hijacked” the plan administrator’s role and subverted it for its personal benefit. Indeed, Cigna’s unprecedented claims processing methodology and incessant related acts were extraordinary acts of bad faith.”

All Out-of-Network providers and self-insured health plans must understand this landmark case 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 or abstraction.  Education and understanding of this landmark court decision 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 6 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.

 

 

On May 10, 2016, in the southern district of Texas Federal Court, United HealthCare administered self-insured ERISA plan, GAP Inc. and its Plan Administrators, Cynthia Radovich and Lesley Dale, were sued for alleged ERISA plan assets “self-dealing and embezzlement”, deceptively concealed through an “illegitimate recoupment scheme that financially rewards United for wrongfully recouping valid benefits”.

As we have written about before and as part of a growing trend, another self-insured health plan is being sued for alleged embezzlement and self-dealing. United HealthCare administered self-insured ERISA plan, GAP Inc. and plan administrators, Cynthia Radovich and Lesley Dale, were sued by out-of-network (OON) hospital, Redoak Hospital, LLC, for alleged ERISA plan assets “Self-dealing and embezzlement”, based on its co fiduciary, United HealthCare’s (UHC) alleged cross plan overpayment offset practices, according to court documents.

This extraordinary and multifaceted ERISA lawsuit will impact all ERISA self-insured plans, employer sponsored plan employees, and healthcare providers, resulting in uncertainties for every healthcare claim. Overpayment refund demands and cross-plan offset practices are the nation’s most insidious claim denials and may ultimately determine the fate of the entire U.S. ERISA healthcare system. 

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 Court Case Info: Redoak Hospital, LLC v. Gap Inc., Gap Inc. Health and Life Insurance Plan, Cynthia Radovich, and Lesley Dale,  in the United States District Court for the Southern District of Texas, Houston Division, Case 4:16-cv-01303, Filed on 05/10/16.

According to court documents, Redoak Hospital Plaintiff filed a DOL EBSA Complaint on the alleged overpayment offset by the Defendants Plan, Gap, Inc, and the plan’s co-fiduciary, UHC, prior to filling this ERISA lawsuit, alleging:

 “This dispute arises out of Defendants’ ongoing and systematic ERISA violations consisting of an elaborate scheme to abstract, withhold, embezzle and convert self-insured Plan Assets that were approved and allegedly paid to Plaintiff for Plaintiff’s claim, to purportedly, but impermissibly, satisfy a falsely alleged ―overpayment‖ for another stranger claim, especially when the stranger is a plan beneficiary of a fully-insured plan that is insured by the Plan’s co-fiduciary, United Healthcare (hereinafter, ―United‖). Defendants knew or should have known that the Plan’s overpayment recovery provisions cannot be triggered until there is an allegation of overpayment by the Plan to the Plan Beneficiary subject to this action, and that converting the Plan Assets by a fiduciary or co-fiduciary of the Plan, in this case United, to the use of another and his own use, to ultimately pay to United’s own account is absolutely prohibited under ERISA statutes. Regardless, Defendants and United recklessly conspired, orchestrated and authorized to this kind of self-dealing and embezzlement even while being under active investigation by the Department of Labor and after repeated detailed alerts and notices from Plaintiff regarding the aforementioned.” according to the Court Documents.

In the Compliant, the Plaintiff makes the following:

 “COUNTS AGAINST DEFENDANTS:

The Plaintiff, as a statutory defined Claimant with a valid and unchallenged Assignment of Benefits, is entitled to ERISA rights ―to bring a civil action under section 502(a) of the Act following an adverse benefit determination on review‖ after Plaintiff has legally and administratively exhausted any and all appeal remedies.14 Therefore the Plaintiff is entitled to pursue Benefit claims: (i) to recover benefits due for already approved claims but abstracted and converted by the Defendants’ co-fiduciary, United; (ii) breach of fiduciary duty claims under 29 U.S.C. § 1132(a)(2) in violation of 18 U.S.C. § 664, 29 U.S.C. § §1104, §1105, §1106(b)(1)(d); injunctive relief to enjoin the Defendants from engaging in prohibited transaction 29 U.S.C. § 1132(a)(3); and (iii) injunctive relief to permanently remove the Defendants Cynthia Radovich and Lesley Dale from serving as fiduciaries to the Plan permanently under 29 U.S.C. § 1132(a)(3).” according to the Court Documents.

Avym Corp. announces a timely new ERISA Compliance Forum on May 17, 2016. At this new ERISA Compliance Forum, through Pittsburgh Business Group on Health (PBGH) Legislative Updates Forum, we will brainstorm, assess and demystify the potential impact of this unprecedented ERISA lawsuit for all interested parties.  PBGH is “The only employer-led, non-profit coalition of large, mid-size, and small organization representing various business segments including private and public employers, government and academia.”

According to industry estimates, the total dollar amount at issue nationwide is tremendous. Successful industry overpayment recoveries have reached into the billions of dollars nationwide over the past 5 to 7 years and involve many large carriers.  Thus recoupment through offsetting, when used as an anti-fraud initiative, has become an increasingly popular source of revenue for some insurers. While there is a need for anti-fraud initiatives in healthcare today, it is critical that every health plan comply with all applicable federal laws, ERISA and PPACA claims regulations, as well as statutory fiduciary duties. Insurers and Health Plans must comply with all applicable federal laws, ERISA and PPACA claims regulations, as well as statutory fiduciary duties before recouping one single dollar.

Over the past 6 years, Avym has closely followed decisions from the Supreme Court and federal appeals courts on ERISA prohibited self-dealing against ERISA plan TPA’s for managed care savings.

This latest lawsuit against a self-insured plan and plan administrators, for alleged plan assets embezzlement by the ERISA plan’s third party claim administrator (TPA), comes less than 6 months after a Cigna administered self-insured plan was sued in federal court for similar violations.

The Court Case info: True View Surgery Center One L.P., v.Chicago Bridge And Iron Medical Plan, Chicago Bridge And Iron Company, And Dennis Fox, Case #: 3:15-CV-00310, filed on Oct. 29, 2015, in the United States District Court For The Southern District of Texas.

In the Oct 29, 2015 lawsuit filed by OON provider True View Surgery Center, against the Cigna administered ERISA plan, the Plaintiff alleged in part:

“Specifically, in spite of the glaring conflict of interest and inherent breach of fiduciary duties, Defendants agreed to an unlawful compensation structure that financially rewards Cigna for wrongfully denying and underpaying benefits claims. Under this backdrop, together Defendants and Cigna concocted an intricate scheme to transfer and embezzle plan funds. Transfers are first concealed by processing out-of-network claims under a fabricated Preferred Provider Organization (PPO) “contractual obligation,” even though Defendants and Cigna are fully aware that no such contract exists. Then, Defendants and Cigna knowingly implemented a system to willfully and wrongfully refuse payments to the out-of-network provider under a sham “fee-forgiveness” protocol. As a result of the wrongful claims denials, the transferred plan funds are ultimately misappropriated by Cigna, who then fraudulently pays itself with the plan funds, falsely declaring the embezzled funds as compensation generated through managed care and out-of-network cost containment “savings,” when in truth the claims were never paid and the plan beneficiaries were left exposed to personal liability for their unpaid medical bills.”

On Oct 21, 2015, in a separate but similar lawsuit filed by an ERISA plan against a separate ERISA plan TPA, the Plaintiff alleged in part:

“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 pending ERISA cases 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,

Riverview Health Institute v. UnitedHealth Group Inc. et al, U.S. District Court, U.S. District of Minnesota (DMN), CIVIL DOCKET FOR CASE #: 0:15-cv-03064-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 6 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.

One Texas lawyer is helping companies opt out of workers’ compensation and write their own rules. What does it mean for injured workers?

by Michael Grabell, ProPublica, and Howard Berkes, NPR October 14, 2015

STANDING BEFORE A GIANT MAP in his Dallas office, Bill Minick doesn’t seem like anyone’s idea of a bomb thrower. But backed by some of the biggest names in corporate America, this mild-mannered son of an evangelist is plotting a revolution in how companies take care of injured workers. His idea: Let them opt out of state workers’ compensation laws — and write their own rules.

 

 

ProPublica and NPR obtained the injury benefit plansof nearly 120 companies who have opted out in Texas or Oklahoma — many of them written by Minick’s firm — to conduct the first independent analysis of how these plans compare to state workers’ comp. The investigation found the plans almost universally have lower benefits, more restrictions and virtually no independent oversight.

Already in Texas, plans written by Minick’s firm allow for a hodgepodge of provisions that are far different from workers’ comp. They’re whyMcDonald’s doesn’t cover carpal tunnel syndrome and why Brookdale Senior Living, the nation’s largest chain of assisted living facilities, doesn’t cover most bacterial infections. Why Taco Bell can accompany injured workers to doctors’ appointments and Searscan deny benefits if workers don’t report injuries by the end of their shifts.

And it’s Minick’s handiwork that allows Costco to pay only $15,000 to workers who lose a finger while its rival Walmart pays $25,000.

Unlike traditional workers’ comp, which guarantees lifetime medical care, the Texas plans cut off treatment after about two years. They don’t pay compensation for most permanent disabilities and strictly limit payouts for deaths and catastrophic injuries.

The list of what the plans don’t cover runs for pages. They typically won’t pay for wheelchair vans, exposure to asbestos, silica dust or mold, assaults unless the employee is defending “an employer’s business or property,” chiropractors or any more than 75 home health care visits. Costco won’t cover external hearing aids costing more than $600. The cheapest external hearing aid Costco sells? $900.

The plans in both Texas and Oklahoma give employers almost complete control over the medical and legal process after workers get injured. Employers pick the doctors and can have workers examined — and reexamined — as often as they want. And they can settle claims at any time. Workers must accept whatever is offered or lose all benefits. If they wish to appeal, they can — to a committee set up by their employers.

In many cases, ProPublica and NPR found, the medical director charged with picking doctors and ultimately reviewing whether injuries are work-related is Minick’s wife, Dr. Melissa Tonn, an occupational medicine specialist who often serves as an expert for employers and insurance companies.

Workers’ comp was founded on the premise that employers owed a duty to injured workers and their families. And laws in every state require them to pay workers’ medical bills and some of their lost wages until they recover — or for life if they can’t.

Earlier this year, a ProPublica and NPR investigation detailed how states have chipped away at these guarantees. A series of new laws has cut benefits, given employers and insurers more control over medical care, and made it more difficult for workers to qualify for coverage. But other than Texas and Oklahoma, no state has allowed companies to simply opt out.

Minick, 55, markets his vision as a cure for the endless cycle of cuts.

“It’s not about reducing benefits,” he said. “We can objectively show you that we have saved our clients over a billion dollars against Texas workers’ comp over the past decade. When you’re saving that kind of money, you don’t have to get hung up on squeezing the employee.”

Yet Minick’s push has united an unlikely set of allies — unions, trial lawyers and insurance companies. They say his idea isn’t progress, but a return to the Industrial Age before workers’ comp, when workers and their families had to sue their employers or bear the costs of on-the-job injuries themselves.

“That’s the system we had in place 100 years ago,” said Trey Gillespie, senior workers’ comp director for the Property Casualty Insurers Association of America. “This is not an innovative concept.”

Mike Pinckard, a Fort Worth truck driver for 31 years, remembered when his employer, Martin-Brower, McDonald’s largest distributor, announced last November that it would be switching to an opt-out plan.

“They told us this was going to be the best thing, that this was going to be better than workers’ comp,” he said.

Two months later, Pinckard said, he was pulling a cart loaded with frozen French fries when he slipped on some ice in his trailer and suffered a hernia. He had previously had two hernias on the job that were covered by workers’ comp and figured this time would be no different.

But the denial letter said the plan for Reyes Holdings, which owns Martin-Brower, only covers two types of hernias — not the kind Pinckard suffered.

“The only way it was covered was if it was directly under my belly button,” he said. “Mine was slightly above my belly button.”

In this instance, as in others ProPublica and NPR found, the costs of the injury were shifted to the employee, group health or government programs.

Pinckard, 58, said he’s spent over $10,000 in deductibles and copays after getting the hernia covered by his health plan.

“I gave my body and soul to the company, and they were doing the same back until last year,” he said. “It’s just an easy way for the company to get out of when you get hurt. It’s all it is.”

The Texas Way

Texas has always allowed employers to opt out of workers’ comp. But until insurance premiums started rising rapidly in the late 1980s, most companies considered it foolish because carrying workers’ comp protected them from lawsuits.

Minick was a young lawyer for one of Dallas’ oldest firms in 1989, when some of the firm’s business clients, gambling that the cost of any lawsuits would be cheaper, began dropping workers’ comp. The senior partners assigned Minick and several colleagues to come up with an alternative.

They found it in the Employee Retirement Income Security Act, a federal law passed in the early 1970s to protect workers as employers were shedding their pensions.

ERISA had been applied similarly to other worker benefits, such as health plans and disability policies. Minick and his colleagues decided it could provide a legal framework for plans covering on-the-job injuries.

Texas courts agreed, even though, compared to workers’ comp, the ERISA-based plans gave employers critical advantages. Under ERISA, appeals are heard in federal court, rather than state workers’ comp courts. And in general, judges could rule only on whether a denial was reasonable — not whether it was fair. This gave employers far greater control.

As more and more companies adopted plans, in 1994 Minick struck out on his own. His consulting firm, PartnerSource, soon became a one-stop shop for companies looking to drop workers’ comp. For a flat fee, PartnerSource hooks companies up with insurance carriers, claim administrators, medical networks and defense lawyers. It also serves as the first line of defense, reviewing claims and advising companies how to avoid lawsuits.

Already, such plans cover nearly 1.5 million workers in Texas and Oklahoma — more than are covered under 21 states’ workers’ comp systems. PartnerSource writes about 50 percent of the opt-out plans in Texas and nearly 90 percent in Oklahoma, alone covering more workers than 14 state programs.

PartnerSource’s offices overlook a posh part of Dallas. The firm’s walls are a monument to Minick’s success, decorated with framed thank you letters from companies who’ve hired him. Inside his office, the mementos are different, reflecting his values. There are pictures of Boy Scouts trips he’s led and letters from charities he’s supported. The radiant plumage of a pheasant he shot is stuffed and mounted next to the doorway.

Minick sells his idea earnestly, speaking with a matter-of-fact certainty that disarms skeptics and defies arguments to the contrary.

With practiced ease, he rattled off the common gripes about workers’ comp: Companies dig in their heels at the first sign of a claim and turn workers into adversaries. Insurers don’t communicate about benefits, causing workers to hire lawyers. Doctors are often picked based on discounts rather than quality. And the system, he said, has created a huge bureaucracy in the name of protecting workers’ rights.

As a result, injured workers no longer have any accountability, he said. They can report claims late, skip doctors’ appointments and appeal every perceived wrong to workers’ comp court rather than trying to work it out with their employers.

Under opt-out plans, Minick said, companies must be engaged in the process, educating new workers about their benefit plans and managing their medical care if they get hurt. This control allows employers to better monitor workers’ progress and ensure they return to work as soon as possible, he said.

“This is not the Industrial Age,” he said. “Workers’ compensation systems grew up at a time when employers did not care about their employees. If one got hurt, you cast him aside and brought in the next immigrant to fill that job. Now companies are competing to be a best place to work.”

An analysis by Minick’s firm shows that opt-out plans save companies between 40 and 90 percent because they have lower costs per claim, get injured employees back to work faster and handle fewer disputes. That means greater employee satisfaction, Minick said.

If the analysis is correct, Minick’s plans would herald an important answer to the nation’s eroding workers’ comp systems.

But the only data available to assess his claims comes from his firm. More than 30 companies contacted by ProPublica either wouldn’t discuss their programs in detail or didn’t return calls.

Steve Schaal, associate general counsel of Tyson Foods, said the company opted out in Texas to give it more control over which doctors workers can see and “to try to get our injured employees the best possible medical care.” Schaal said the company hasn’t taken a position on expanding opt out to other states. Tyson wouldn’t provide an updated copy of its plan.

Employers aren’t required to submit any information about their plans with the state, since Texas doesn’t regulate opt-out plans. For several legislative sessions, employers have fought bills that would have required them to share their data.

PartnerSource’s analysis comes with some significant, unstated caveats: Employers with opt-out plans tend to work in safer industries like retail, which typically has less severe, less expensive claims. The plans also don’t offer entire categories of benefits that state laws require and give employers more options to exclude complicated claims.

For example, workers’ comp gives employees 30 days to report an injury in Texas. Under opt-out plans, employees typically must report by the end of the shift or in 24 hours or lose all benefits.

Costco, which saw its costs drop 53 percent after opting out, acknowledged in a 2012industry report that it denied some employees with legitimate work injuries because they reported late. Those workers, the report said, used their denial letters to get treatment under the company health plan.

Minick and other proponents say while plans can make exceptions, such rules ensure workers get medical care as soon as possible, speeding their recovery.

But public health experts say workers might not report minor injuries right away for valid reasons: They fear looking like troublemakers or worry about child care if they need to see a doctor or stay late filling out forms.

Or, like Rebecca Amador, they simply might not realize an injury’s severity. Amador, a nursing assistant, was helping a patient transfer to a wheelchair at a Stephenville, Texas, nursing home in November 2013, when the chair’s brake unlocked, causing her to support the patient’s weight.

“I felt like a pinch in my back and I thought well, it’s been a long day, I’m tired,” said Amador, then 51. “So I paid no mind to it. I figured it would go away. Usually it goes away.”

She took a hot shower and went to bed. By the next morning, she remembers being in so much pain she could hardly breathe.

As soon as she got to work, Amador told her supervisor, who sent her to the hospital. Only 19 hours had passed. But her employer, Fundamental Long Term Care, rejected her claim, saying she had failed to report it by the end of her shift.

The company’s decision left Amador in a Catch-22. Even though her injury happened at work, the company’s Texas plan wouldn’t cover it. But because it was work-related, neither would her health insurance or short-term disability plan. Had she worked for Fundamental in one of the other states where it operates, her injury would have been covered under workers’ comp.

Amador sought help at a publicly funded health clinic, where her doctor recommended a specialist. But she couldn’t afford one. She tried light-duty work until her doctor warned she could do further damage.

Since then, Amador said, she’s been living off her son’s Social Security benefits and borrowing from a lawsuit settlement fund set up for him after his father died of mesothelioma. Her daughters help pay for medications, and she’s applying for Social Security disability.

Sitting in her trailer nearly two years after the incident, she said her back burns like she’s in a fire, and she can’t even carry a two-liter soda bottle.

“I would probably still be working there” if Fundamental had workers’ comp, Amador said. “Maybe I could have gotten better, maybe I could have gotten my therapy done, and I wouldn’t be in the situation I’m in.”

Reading the Fine Print

The fine print of opt-out plans contains dozens of opportunities for companies to deny benefits. Employers can terminate workers’ benefits for being late to doctors’ appointments, failing to check in with the company or even consulting their personal doctors.

One truck driver for a food and beer distributor complained in court documents that his direct supervisor accompanied him to medical appointments for his hernia — a requirement under the plan.

Some plans have restrictions that read like the terms of criminal probation. While they’re healing, injured workers at W. Silver, a steel products manufacturer in El Paso, are prohibited from leaving the area, even temporarily, or engaging in any “pleasure” that may delay recovery.

Sometimes the plans of PartnerSource and others abandon fundamental principles of workers’ comp.

For nearly 40 years, every state has covered occupational diseases and repetitive stress injuries, recognizing medical research that some conditions develop over time. But in Texas, a number of companies, including McDonald’s and the United Regional Health Care System, don’t cover cumulative trauma such as carpal tunnel. U.S. Foods, the country’s second largest food distributor, also doesn’t cover any sickness or disease “regardless of how contracted,” potentially allowing it to dodge work-related conditions such as heat stroke, chemical exposures or even cancer.

Since its beginning, workers’ comp has paid benefits regardless of whether the employer or worker was at fault. But several companies, including Home Depot, Pilot Travel Centers and McDonald’s, exclude injuries caused by safety violations or the failure to obtain assistance with a particular task.

Under workers’ comp, employees can’t be fired in retaliation for a claim. But employers that opted out argued that their workers weren’t entitled to that protection, and in 1998 the Texas Supreme Court agreed.

Gillespie, of the insurance association, said such provisions blatantly shift costs to taxpayers, in the form of Social Security disability, Medicare and Medicaid. Some plans state it explicitly: The plan for Russell Stover Candies said its benefits are secondary to all other sources of benefits. Home Depot requires its employees to “take whatever benefits are available,” including enrolling in Social Security disability.

And as Joe Becker, a truck driver in Abilene, Texas, discovered, workers no longer have the promise of lifetime medical care for on-the-job injuries.

Becker said he herniated several discs in his lower back in June 2012 when he hopped off his flatbed trailer after adjusting a load. His employer, Dent Truck Lines, paid for surgery that put rods and screws in his back. The surgery helped, but the screws dig into his back, occasionally hitting a nerve.

The doctor recommended surgery to remove the screws in 2014, medical records show. But because Dent’s benefit plan provides only two years of medical care, Becker was out of luck.

His boss, Cliff Dent, said he’d go out of business if he had to carry workers’ comp and doesn’t think Becker is “deserving.”

“The whole deal is just kind of silly, like most of these deals are — people looking for free money,” he said.

On the edge of being homeless, Becker, 44, applied and qualified for Social Security disability. He struggles to pay bills. For several weeks this spring, he said, he subsisted on a half a can of ravioli or SpaghettiOs a day.

“Sometimes I have to make a choice,” he said, sitting uncomfortably on his worn sofa. “Do I buy my pain meds or whatever other medicine that I need or do I buy groceries?”

So, Sue Me — Or, Rather, Arbitrate

Under the bargain of workers’ comp, employees gave up their right to sue their employers in return for guaranteed care and wages. The tradeoff in Texas is that injured workers covered by opt-out plans can sue their employers for negligence, potentially winning millions of dollars.

This risk is why many companies cap medical benefits at two years, Minick said. When injuries are severe enough to require lengthy medical care, many companies settle with workers, giving them a lump sum to cover future medical expenses and permanent disabilities.

On a more basic level, the threat of lawsuits, Minick and other proponents assert, creates a healthy incentive for companies to keep their workplaces safe.

But over the years, large companies have found a series of ways to reduce the risk of lawsuits.

Under workers’ comp, employees denied benefits can typically get hearings before administrative law judges. They can appeal further to a workers’ comp commission and even up to the state supreme court.

Under opt-out plans, workers’ only avenue of appeal is a committee set up by their employers for what is largely a paperwork review. Lowe’s hardware and Albertsonssupermarkets have contracted out their appeals to a Pennsylvania company called ELAP Services, which describes its mission as helping employers “control employee health care costs.”

ELAP’s president said the goal is to provide an objective review of the claim outside of the company’s basic business model of reducing medical bills.

But Gillespie said, “It’s potentially still somebody who either has a vested interest or is employed by somebody who has a vested interest.”

If the claim is still denied, workers can file an ERISA lawsuit in federal court. But the judge is typically limited to deciding if the company followed its plan or acted arbitrarily and capriciously — not whether the company was right.

A number of rulings by Texas courts have added to employers’ leverage, creating a higher bar for workers to prove their employers were negligent for common slip-and-fall and lifting injuries.

Many companies have further limited the risk by requiring employees to sign arbitration agreements. Instead of going before a jury, workers’ disputes are handled confidentially, out of court, before an arbitrator, typically a former judge or defense lawyer.

A 2010 survey of large employers with opt-out plans by a Stanford law professor found that 85 percent used arbitration agreements. Arbitration appeared to save companies money. Only a quarter of those companies had paid a claim over $500,000. And only 10 percent had paid more than one claim over $500,000 — compared with 38 percent of companies that didn’t use arbitration.

More strikingly, 81 percent of employers reported having no or hardly any “trouble with litigation.”

For many years, several companies that opted out required new employees to sign pre-injury waivers saying they wouldn’t sue the company if they got hurt. Texas banned that practice in 2001.

But many large meat and poultry companies, such as Tyson Foods, Cargill and Pilgrim’s Pride, continued to use post-injury waivers. After reports of workers signing waivers at hospitals — sometimes while still bleeding — the legislature tried to ban that too.

The debate over waivers presented a turning point for Minick to demonstrate his political savvy.

The largest group for employers that opted out, the Texas Association of Responsible Nonsubscribers, decided to support the ban, considering such practices abusive.

That rankled several members of the state’s business chamber, who had opted out and wanted to preserve their ability to avoid lawsuits.

With Minick’s help, they drafted legislation in 2005 that allowed waivers so long as there was a cooling off period of 10 days after the injury. Following the success of that measure, Minick helped chamber members form a new group for employers with opt-out plans. They called it the Texas Alliance of Nonsubscribers and hired the chamber’s longtime lobbyist, Richard Evans, who had been deputy legislative affairs director for George W. Bush when he was governor.

For the first time, Minick became his clients’ political partner, guiding their ambitions to shape legislation and the future of workplace injury benefits.

Recognizing the growth potential, the global insurance brokerage Arthur J. Gallagher & Co. acquired PartnerSource in 2009 in a deal that left Minick in charge. The financial terms weren’t disclosed, but documents filed with securities regulators in 2012 reveal that Minick and his partners, which included two charities, received $7 million in Gallagher shares as a bonus payment.

Minick would soon begin justifying the investment. Spurred by Texas clients eager to opt out in other states, PartnerSource started looking at opportunities elsewhere.

Their first target was due north: Oklahoma.

Sweepin’ Down the Plain

Year after year, Oklahoma’s legislature had tried to overhaul its workers’ comp system to lower insurance rates, which were higher than those in surrounding states. But the changes only brought modest drops.

In 2011, Minick brought a group of his frustrated clients together in the Oklahoma Injury Benefit Coalition, led by Hobby Lobby and the Unit Corp. drilling company. The group recruited Steve Edwards, the former state Republican Party chairman, as its lobbyist.

“Our claims process in Texas was a lot quicker and resolved a lot faster than anything we ever had in Oklahoma,” said Mark Schell, Unit’s senior vice president and general counsel. “We’ve had claims in other states including Oklahoma that are two to three years old because we can’t get them resolved. You have no control over them and they just drag on and on.” (Unit recently opted back in in Texas after a spate of serious injuries during the oil boom increased their legal costs. But Schell said he still believes in opt out.)

The group’s first effort to pass an opt-out bill was narrowly defeated in 2012. But they returned in 2013 with a new partner, the State Chamber of Oklahoma, and a more ambitious plan — not only to pass an opt-out option, but to rewrite the entire Oklahoma workers’ comp law.

The bill differed from Texas’ version in two ways. Employers would have to provide a minimum level of benefits matching state law. And, unlike Texas, employers would get to keep their immunity from lawsuits.

A chamber lobbyist and a Unit lawyer wrote the bill, incorporating language from various interests, including Minick. “I was one of the primary drafters,” Minick said.

“Is there a potential conflict of interest between our desire to see workers’ comp options adopted in other states and our firm’s revenue model? Yes,” he said. “But the conflicts of interest are only a problem when they’re not disclosed.”

One thing not disclosed: the Oklahoma bill copied language nearly verbatim from PartnerSource plans — making the definition of “accident” more restrictive than it was in traditional workers’ comp.

Walmart’s Texas plan, which Minick wrote the year before, defines “accident” as “an event involving factors external to the participant which was unforeseen, unplanned and unexpected,” that “occurred at a specifically identifiable time and place,” and “occurred by chance or from unknown causes.”

The Oklahoma bill defined it as “an event involving factors external to the employee that was unintended, unanticipated, unforeseen, unplanned and unexpected,” that “occurred at a specifically identifiable time and place,” and “occurred by chance or from unknown causes.”

Gillespie, of the insurance association, said the wording could be used to deny almost any claim because nearly every injury has a cause.

Since the law took effect last year, 59 companies, covering an estimated 22,500 workers, have opted out, ranging from small home health care agencies to national brands likeMacy’s and Swift Transportation. Fifty-three have plans that were written by PartnerSource.

On paper, the benefits look similar to — or even better than — state workers’ comp. Both replace at least 70 percent of workers’ wages. Some plans pay 90 or even 100 percent of wages.

But there’s one big difference. Benefits under opt-out plans are subject to income and payroll taxes; under workers’ comp, they’re not. As a result, 80 percent of the plans actually provide lower benefits, ProPublica and NPR’s analysis found.

Minick said that the analysis missed a key point: Because the plans that offer benefits above the minimum are larger employers, the majority of workers under opt-out plans receive equal or higher benefits. In addition, he said, those companies start benefits on the first day of the injury instead of waiting three days, like workers’ comp does.

And their plans don’t have wage limits. As part of the 2013 law, the Oklahoma legislature capped benefit payments under workers’ comp at $561 a week. In March, ProPublica and NPR profiled an injured Goodyear Tire worker whose family was evicted from their home when his income dropped so much they could no longer afford the rent.

But the Oklahoma plans incorporate many of the rigid rules from Texas. As opt-out got underway, injured workers, lawyers and even the insurance commissioner quickly learned what that meant.

Learning the Hard Way

Last March, Rachel Jenkins was working as a job coach and personal care aide for ResCare, the nation’s largest private provider of services for the physically and mentally disabled, when a man attacked her client at an Oklahoma City facility.

While trying to pull the assailant off her client, she was thrown to the ground, injuring her shoulder. ResCare told her to bring her client home, and after finishing her shift, Jenkins went to the emergency room. The doctor prescribed pain medication, which knocked her out, she said.

The next day, ResCare sent Jenkins to its doctor, where she called the company’s claims hotline. The adjuster told her the injury wouldn’t be covered because she called 27 hours after it happened — instead of the required 24.

“They told me that I should have called the next morning at 10 o’clock. But I was asleep. I was on meds,” said Jenkins, a single mother with four kids, ages 1 through 12.

Jenkins’ supervisor, who witnessed the incident, complained to the corporate office, and a week later, ResCare reversed its decision.

To ResCare and Minick, who wrote the company’s plan, Jenkins’ case illustrates the discretion that companies have, in this case to accept claims even when they’re not reported on time.

“The system worked and took care of her and fully paid her benefits,” Minick said.

Not so, said Jenkins. Her shoulder remains in constant pain, she said, preventing her from returning to work fulltime.

In May, the company sent her for an MRI of her shoulder. Reading it, the doctor ResCare sent her to — an ear-nose-and-throat doctor at an urgent care clinic — noted inflammation and recommended that she see an orthopedic specialist, medical records show.

But ResCare’s adjuster wouldn’t authorize it. Instead, the company scheduled an independent medical exam with a doctor flown in from Arizona to review her case.

That doctor said the MRI didn’t reveal any evidence of an acute injury that could be causing the pain and instead showed a wearing of her rotator cuff caused by aging.

Jenkins is 32.

“What’s age got to do with anything?” she asked. Until the incident, “I didn’t have no problems with my shoulder at work.”

Workers’ lawyers in Oklahoma also noticed that many companies, including ResCare, were using a Dallas physician, Dr. Melissa Tonn, as the medical director responsible for managing workers’ care.

Tonn, they learned, not only once shared an office with PartnerSource, she was Minick’s wife.

The situation had been an open secret in Texas, where lawyers grumbled privately for years. “Melissa Tonn has a vested interest in PartnerSource making more money,” said James Grantham, a Houston lawyer who has handled about 700 opt-out cases in the last few years.

As medical care is often the most expensive part of a claim, Tonn can greatly influence how much claims cost. And that ultimately affects how much money PartnerSource saves employers, allowing it to keep clients happy and recruit more business.

“So if Melissa Tonn says you don’t need back surgery, PartnerSource will profit from that,” Grantham said. “It’s absolutely rigged.”

Tonn insisted her assessments were based on workers’ conditions and were unaffected by the interests of employers or PartnerSource.

“The decisions I make are not based on how much money is going to be saved,” Tonn said.

Minick said his wife stood on her own credentials as the former director of two hospitals’ occupational health programs and as past president of both the Texas College of Occupational and Environmental Medicine and a national organization of physicians who evaluate disabilities.

The couple were already independently successful, Minick said, when they met at a workers’ comp opt-out conference. As their businesses grew and they started having clients in common, they took steps to keep them separate, he said. Tonn moved to an office one floor up in the same building. And Minick discloses the relationship in client contracts.

“They can visit with whatever vendor they want to,” Minick said. And Tonn is “one of them that they should consider.”

While opt-out plans have to be submitted to Oklahoma’s insurance commissioner, there is little review.

ProPublica and NPR obtained more than 2,000 pages of internal emails between the Oklahoma Insurance Department and companies that wanted to opt out.

The emails regarding a chain of long-term care facilities are typical. An insurance department lawyer notes that a paragraph is missing a period, causing a run-on sentence. But he fails to point out that the paragraph promises “no interference” with the doctor-patient relationship while at the same time warning workers that seeing their own doctor “may result in a complete denial” of benefits.

Gordon Amini, the department’s general counsel, said the insurance commissioner doesn’t have the power to question such provisions and can’t reject plans under the law.

“We are supposed to confirm; it never uses the word ‘approve,’ ” he said.

The law also states that settlements must be voluntary. But our review of Oklahoma plans written by PartnerSource showed that nearly every one contains a section titled “Mandatory Final Compromise and Settlement,” which instructs workers that “no further benefits will be payable” if they refuse the company’s offer.

After being made aware of the inconsistency by NPR and ProPublica, Amini said the insurance department “immediately took action” and contacted PartnerSource to revise it.

“The reality is, under the current scheme there is no regulation of these plans,” said Bob Burke, a longtime Oklahoma workers’ comp attorney. He said it’s setting a dangerous precedent. “We can’t as a society say, ‘Okay, employers, write whatever plan you want to write, provide what benefits or lack of benefits you want to, set up whatever scheme you want to award those benefits, and by the way, no one is looking over your shoulder.’ ”

‘Where Else Can We Do It?’

Studying the map in PartnerSource’s office, Minick surveyed the country like a commander strategizing the next offensive.

“Tennessee,” he said. “There’s more dots there than anywhere else. You get all these Tennessee companies that know what it’s like to have better care, lower costs. So then they start saying, ‘Where else can we do it?’ ”

In 2012, Tennessee seemed primed to allow employers to opt out of workers’ comp. For the first time in at least a century, Republicans controlled both legislative chambers and the governor’s office. Employers were already pushing for major changes to the workers’ comp system. And the new governor’s family owned Pilot Travel Centers, which had opted out in Texas.

But after a series of public meetings, the state workers’ comp division hired consultants who produced a scathing report, raising concerns that letting companies opt out would shift costs to government programs.

“Giving firms this option would have potentially significant consequences on some injured workers, other Tennessee employers, and the state taxpayers generally,” the consultants wrote.

The legislature passed an overhaul of workers’ comp in 2013, but it contained nothing about opting out.

Despite the defeat, Minick started pulling together employers and others. In December 2013, they formed a group called the Association for Responsible Alternatives to Workers’ Compensation.

K. Max Koonce, Walmart’s senior director of risk management became chairman. Nordstrom’s vice president of risk management was appointed president, Lowe’s vice president of risk management was vice president, and the chief executive of the Combined Group insurance company was treasurer. Minick became secretary.

The rest of the board was made up of top managers at Kohl’s, J.B. Hunt, Big Lots, Sysco, Safeway, Brookdale Senior Living and others in the insurance industry. Joined by Macy’s, Whole Foods and Brinker International (owner of Chili’s Grill & Bar), they paid as much as $25,000 each to finance ARAWC’s efforts, according to association webpages.

The group planned to go state by state to pass opt-out legislation, starting with the South.

The association’s address was the lobbying firm of Richard Evans, whom Minick had worked with at the Texas alliance. In addition, the group hired Edwards, who ran the successful Oklahoma effort. In each new state, they would team up with connected local lobbyists to navigate the politics.

In February 2015, a bill pushed by ARAWC was introduced in the Tennessee legislature that contained a mix of the Texas and Oklahoma laws. Like Oklahoma, employers had to provide a minimum level of benefits — up to three years of medical care, or $500,000. That was less than the benefits provided by the state’s workers’ comp law, which set no limits on medical care.

But, like Texas, catastrophically injured workers could sue for higher benefits. Their employers would face limited damages and have additional legal defenses that Texas employers don’t.

The bill stalled in April, after it failed to be endorsed by the state’s workers’ comp advisory council. But supporters plan to revive it in the next legislative session.

With the Tennessee push underway, ARAWC settled on its next target: South Carolina.

As lobbyists, it hired former political directors of the national and state GOP.

A bill was introduced in the state assembly in May, with the goal of generating discussion before the legislature reconvenes next year.

Rep. David Hiott, a small business owner frustrated with workers’ comp, said he sponsored it after receiving a synopsis of the bill from another legislator and ARAWC’s lobbyists. “They told me they would tell me more about it this fall,” he said.

The bill represented a new gambit for ARAWC and Minick.

The Tennessee campaign “drew so much criticism from employee advocates saying that we were trying to reduce benefits,” Minick said, “that we said fine, just to prove that’s not the point, the South Carolina bill was introduced to say we’ll pay benefits higher than workers’ comp.”

While workers’ comp replaces 66 percent of wages, South Carolina employers that opt out would have to pay at least 75 percent, albeit taxable. They would not be allowed to cap medical benefits and would have to match the state maximum of 500 weeks of death benefits. Burial benefits are three times as high.

“The intent of this movement is to pay better benefits,” Minick said.

But in Texas, where the movement began, people like Krystle Meloy are hard-pressed to say how it has made things better for injured workers and their families.

Meloy was 23 with a 4-month-old daughter when her husband, Billy Walker, fell 180 feet from a communications tower in 2012.

Under the company’s opt-out plan, she and her daughter, Kaylee, were entitled to $250,000 for his death. She tried to sue after federal investigators found the company had violated safety laws. But the company filed for bankruptcy a few weeks later.

Under workers’ comp, she would have received 75 percent of her husband’s wages until her daughter finished college and until death if she never remarried. Based on his wages in previous years, that would have guaranteed Meloy and her daughter at least as much as the opt-out plan and likely far more — potentially $1 million or more, depending on the circumstances.

On a recent day, Kaylee, now 3, climbed up on a cushy chair and flipped through a small photo album containing pictures of the day she was born.

“See, look, mama’s going to doctor,” she said in a chipmunk voice. Turning to a picture of her father cradling her in his arms, she giggled. “Look at him. Daddy Billy.”

Meloy receives Social Security survivor benefits and is applying for food stamps. She’d like to get a job, she said, but can’t afford daycare.

“I have to go through this for the rest of my life; I’m having to teach our daughter who her daddy is through a picture,” she said. “If other states are considering not having workers’ comp, I mean, look what happened to me.”

Hearing her story, Minick, who climbed radio towers when he was in college, paused reflectively.

“This is a difficult situation, it sounds like,” he said. “There’s no occupational injury system that we’ve found yet that will provide perfect results in a 100 percent of cases.”

What’s more important, he said, was which system would provide the best results in most cases. In an earlier interview, Minick described what drove him to launch his crusade to remake America’s system for caring for injured workers.

“All you can do is pray that the Lord gives you a calling where you can really do good for society,” he said. “That’s what gets me up every day, knowing that I’m getting better employee satisfaction and generating economic development. That’s as good as it gets.”

Update, October 15, 2015: After this article published, the Association for Responsible Alternatives to Workers’ Compensation released this statement.

NPR intern Courtney Mabeus contributed to this report. Produced by Emily Martinez.

This story was co-published with NPR.

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To read article in its original form click HERE

Posted March 21, 2014 by Kevin Knauss

As the ACA open enrollment winds down, attention now turns to helping individuals and families in the new health plans actually get health care from their insurance. While there have been significant challenges just getting people signed up for health insurance, there will surely be additional hurdles as households now try to use the new health plans. For most people, they have no advocate to help them maneuver through the maze set up by health care professionals and insurance plans. Who will be the health insurance advocates for these families?

Health insurance gets more complicated

Regardless of the improvements to the new health plans brought about by the ACA, health insurance is still complicated. As with any insurance policy, many of us quickly forget the details of how the plan works, what is covered and what we have to pay beyond the monthly premium. The nitty-gritty details of deductibles, copayments, coinsurance, networks, and drug formularies become a fog when a family is faced with an accident or illness. If a household enrolled directly online or with the help of Covered California staff or Certified Enrollment Counselor, they will have no one to lean on to sort out the issues of their specific health insurance plan.

Advocates help with insurance problems

It isn’t a complete certainty that delegating a certified insurance agent will provide you with the advocate that you need. But here is the singular difference between a Certified Enrollment Counselor and a Certified Insurance Agent: Agents are appointed by the health plans to represent their plans AND the agent’s clients. Outside of the member of the health plan, only the designated agent can talk to the health plan to handle issues such as billing, charges, appeals, switching plans, adding a dependent, and grievances. To a limited extent, the insurance companies rely on the arduous process of contesting a charge because they understand most people will just give up and never fight.

Agents can be advocates

Unfortunately, not all health plans have made it easy for Certified Insurance Agents to become the broker of record for their members. This was a topic of my recent letter to Peter Lee, Executive Director of Covered California (see entire letter below). In short, without a designated agent or advocate most families will have no one to help them through the insurance maze when they have problem. It is deplorable that health insurance has become so complicated and convoluted that individuals and families need an advocate to fight for health care. But this is the situation we are in.

ACA complicated process

As a nation we need to move to either a simpler health insurance model with more transparency or we need to empower people to assign a health insurance advocate to help them navigate through the system when they are in rough waters. We have already experienced major issues with the open enrollment process where the carriers never received the application from the exchange, they were enrolled in the wrong plan or small application errors resulted in denial of the Advance Premium Tax Credit.

Denial and reimbursement of health care expenses

There are lots of organizations that will advocate for people in the Medi-Cal system but relatively few for people with private health insurance unless they are filing a lawsuit or have a big claim dispute. One company, AVYM, works with doctors and health plan members to get reimbursed for health care that should have been covered. With proper health insurance advocacy we can prevent denied and delayed care by working with the health plan, member and physician.

Fighting against profits before people

I can’t say that I’m overly optimistic that the current system will make room for health insurance advocates. Part of the issue with being appointed with a health plan is to acquire a small commission to compensate for such advocacy work. But the whole health care system is getting squeezed as providers and insurers look for ways to save money and keep premiums low. Ultimately, it is the plan members that suffer from cost cutting as they find themselves without proper representation when fighting the health care machine that puts profits before people.

Letter to Peter Lee of Covered California

March 21, 2014

Peter Lee

Executive Director, Covered California

560 J Street, Suite 270

Sacramento, Ca 95814

Dear Mr. Lee,

As a Certified Insurance Agent for Covered California I have not been able to live up to the agent agreement that I represent all the Qualified Health Plans fairly. My inability to represent many of the health plans beyond just the Covered California summary of benefits and quoted monthly premium results from several of the carriers failing to have any mechanism to properly appoint agents. Through the first three months of open enrollment the health plans of Alameda Alliance, Contra Costa Health Plan, L.A. Care, Molina and Valley Health Plan wouldn’t even return phone calls or emails on how to become appointed.

As an independent agent that is certified to represent Covered California plans through out the state, getting an appointment with these regional health plans shouldn’t be this difficult. A fellow agent was able to get appointed with Contra Costa Health Plan but he had to sign an agreement specifying there would be zero commission paid for his enrollments. L.A. Care is now working with a General Agent to process appointments, but they require attendance for an orientation meeting in Los Angeles. My California Health and Life license and Covered California Certificate should be enough to show that I’m capable to represent their plans. Do Certified Enrollment Counselors and Covered California staff face the same challenges in enrolling people in these plans?

When an individual, family or small business asks me to be their agent they are also asking me to be their advocate on health insurance related matters. If I’m not appointed with the health plan I can’t be of service to the member in matters such as disputing a health care charge, requesting member ID cards or resolving premium issues. Without being appointed I usually don’t have access to the important Evidence of Coverage which spells out how the health plan will be administered and other marketing collateral that might help my clients make an informed decision on which health plan to select.

The issue of appointment is directly tied to Covered California’s mission to “… improve health care quality, lower costs, and reduce health disparities through an innovative, competitive marketplace that empowers consumers to choose the health plan and providers that give them the best value.” I think you would agree that health insurance is not a topic most people want to delve into and become experts about. There are times when the most educated among us need help unraveling the various puzzle pieces of deductibles, copayments, coinsurance and networks when an illness or accident happens.

While I believe the efforts of the Covered California staff and Certified Enrollment Counselors have done an admirable job enrolling Californians in the new health plans, they can’t be advocates for the members when disputes and questions arise. If I’m not appointed with the carrier one of my clients selects, they are essentially on their own if they have to fight the health plan. Even the proposed Certified Application Counselors and Navigators will be little more than enrollment entities with no follow-up responsibilities.

I guarantee you that most people will forget my discussion with them on the differences between PPO, EPO and HMOs, tiered networks, tiered drug formulary, “in” verses “out” of network deductible, copayments, coinsurance, and annual maximum out-of-pocket expense. When a parent or child gets sick the last thing they want to do is hassle with the insurance company. I will happily carry that burden for my clients, but I can only do it if I am appointed by their respective health plan.

I hope Covered California will consider the following suggestions as we move from enrollment to implementing quality health care in California.

1. All carriers offering health plans in Covered California should automatically appoint any licensed and certified insurance agent upon receiving the necessary appointment documents such as a signed agent agreement and E&O insurance verification.

2. No health plan should be able to stipulate a zero commission rate as a condition of appointment.

3. Agents, along with CECs and any other enrollment entity, should be able to demonstrate that they understand the various parts of the health insurance plans including, but not limited to, the differences between a PPO, EPO, and HMO, deductibles, copayments, coinsurance, in-network verses out-of -network, tiered facilities, tiered drug formularies, in-patient verses out-patient designation, and the Evidence of Coverage.

4. No agent should discriminate, with respect to enrollment, between an APTC eligible individual or family and those who may be Medi-Cal eligible.

5. Agents should sign a pledge not to cross-sell any other products while discussing health plans with consumers such as home, auto, life, disability or indemnity insurance.

The easy part is enrolling people in health insurance. The difficult part will be helping these individuals and families make the most of their health plans especially when a health emergency or chronic illness strikes. I understand it is not Covered California’s mission to be a health insurance member advocate. But I would appreciate any consideration you and the Board might be able to give to the agent community to be better advocates for our clients by making the appointment process easier so we can fulfill our responsibilities of representation.

Sincerely,

Kevin Knauss

CL# 0H12644

http://insuremekevin.com/2014/03/21/health-consumer-advocates-beyond-aca-enrollment/

“Frequently Asked Questions” on the Bulletin Entitled the Sale of Individual Market Policies to Medicare Beneficiaries under 65 Losing Coverage Due to High Risk Pool Closures.”

http://www.cms.gov/Medicare/Health-Plans/Medigap/Downloads/High-Risk-Pool-FAQs.pdf

http://www.justice.gov/opa/pr/2013/December/13-civ-1352.html