The other shoe drops on insurer’s attempts to limit payments to providers and discourage patient out-of-network utilization based on patient deductibles and co-pays. 5th Circuit decision signals shift towards providers in out of network reimbursement disputes.
In a much anticipated second case regarding out-of-network provider’s right to sue and whether coverage may be conditioned on collections of patient’s out of pocket costs, the Fifth Circuit Court of Appeals ruled against Cigna in a decision that is consistent with a recent Ninth Circuit judgment against UnitedHealth Care. The ruling against Cigna’s “fee forgiving protocol” allows out-of-network provider’s the right to sue for ERISA violations in federal court and it also allows out-of-network patients the right to both ERISA discounts and PPO discounts.
In an unprecedented turn, the 5th Circuit ruling provides very specific step-by-step ERISA legal guidelines used in determining whether all ERISA plans improperly require collection of full deductible and coinsurance as a pre-condition to complete benefits coverage and whether CIGNA violated federal ERISA law in its inconsistent or discriminative out-of-network practice compared to its in-network practice of ERISA plan claims administration services.
Case Info: North Cypress Medical Center Operating Company, Limited; North Cypress Medical Center Operating Company GP, LLC, v. CIGNA Healthcare; Connecticut General Life Insurance Company; CIGNA Healthcare of Texas, Incorporated, (North Cypress Medical Center v. Cigna)Case No. 12-20695, in the United States Court of Appeals for the 5th Circuit, filed on March 10, 2015.
This landmark decision may potentially save millions of Americans from medical bankruptcy. It also illustrates one of the most pressing issues facing out-of-network patients and providers across the nation. Deductible and Co-Pay waiver claim denial is the No. 1 out-of-network claim denial reason, 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.
In light of other recent court filings this federal court decision, on deductible and co-payment collection practices, paves the way for millions of out-of-network ERISA plan participants and their beneficiaries by ruling out-of-network ERISA discounts must and should be treated consistent to in-network PPO discounts.
Inspired by this and other recent court decision, Avym Corporation announces new ERISA Out-Of-Network Claims Specialist training programs strictly in accordance with this most comprehensive federal appellate court decision:
“There are strong arguments that Cigna’s plan interpretation is not “legally correct,” in which case the inquiry proceeds to determine whether Cigna nonetheless had discretion to interpret the plan as it did. On a finding that the plans, read correctly, do not condition coverage on collection of coinsurance, the question would be whether Cigna nevertheless had discretion to absolve itself of responsibility for payment of the greater part of thousands of claims…”
according to court documents.
In this CIGNA case, the out-of-network hospital provider’s medical claims were denied by CIGNA in whole or in part on the basis that all patient deductible’s and coinsurance amounts were not collected in full or billed for by the hospital. The Fifth Circuit ruled for the hospital’s ERISA right to sue and outlined legal steps under ERISA to determine if an ERISA plan truly requires collection of deductibles and balance billing in full:
“Cigna argues that if we find standing we ought nonetheless to affirm the grant of summary judgment against North Cypress’s benefit underpayment claims on the merits; that its reading of the plan language was “legally correct” or otherwise within its discretion, and that its actions rested on “substantial evidence.”57 …. The “most important factor to consider” in the legal correctness inquiry is whether Cigna’s “interpretation is consistent with a fair reading of the plan[s].”
according to court document.
The court goes on explain whether CIGNA violated ERISA:
“The inquiry is thus whether ordinary plan members who read that “payment for the following is specifically excluded from this plan: . . . charges for which you are not obligated to pay or for which you are not billed,” would understand that they have no insurance coverage if they are not charged for coinsurance. That is, would a plan member understand the language to condition coverage on the collection of coinsurance, rather than simply describing the fact that the insurance does not cover all of a patient’s costs…..There are strong arguments that Cigna’s plan interpretation is not “legally correct,” in which case the inquiry proceeds to determine whether Cigna nonetheless had discretion to interpret the plan as it did.”
according to court document.
Finally, the court rejected CIGNA’s argument regarding collection of deductible and coinsurance and explained that an out-of-network patient has the same ERISA rights as an in-network patient for deductible and coinsurance obligations under ERISA plans:
“Also relevant is whether Cigna denied all coverage to patients who were not charged or “billed” for their copays or coinsurance by in-network providers.”
according to court document.
North Cypress Medical Center Operating Co. DOL Amicus Brief, in support of plaintiffs-appellants, and requesting reversal
Recording of Oral Arguments
Avym is dedicated to empowering providers with ERISA appeal compliance and ERISA litigation support in all cases as well as ERISA class actions. All medical providers and Plans should understand several critical issues regarding the profound impact of this final court decision on the nation’s No. 1 health care claim denial – overpayment demand recoupment and offsetting; including how to correctly appeal every wrongful overpayment demand and subsequent claims offsetting with valid ERISA assignment and the first ERISA permanent injunction. In addition, when faced with pending litigation and or offsets or recoupments, providers should look for proper litigation support against all wrongful overpayment recoupment and offsetting, to seek for enforcement and compliance with ERISA & PPACA claim regulations.
For more information or to contact AVYM