Court Rules against BCBS in Landmark Provider Overpayment ERISA Class Action

Court Rules against BCBS in Landmark Provider Overpayment ERISA Class Action

On November 7, 2013, the United States District Court for the Northern District of Illinois granted in Summary Judgment against BCBS in an overpayment ERISA class action for certain plaintiff providers. The court clarified among other issues that:

  • Providers are entitled to sue under ERISA;
  • Certain BCBS entities completely violated ERISA;
  • These providers are not liable to BCBS overpayment claims;

The federal court summary judgment decisions were made in the wake of the court’s prior decision on October 12, 2012, denying BCBS motion to dismiss and in favoring of the provider ERISA arguments.  The suit dates to 2009.

In response to this landmark court decision, Avym Corporation announces new webinars and advanced ERISA claim specialist programs to demystify this federal court decision on the nation’s No. 1 health care claim denial issue: overpayment demand recoupments and offsetting.  This training will also examine how to correctly appeal every overpayment demand with a valid ERISA assignment and in complete compliance with ERISA & PPACA claim regulations.

Provider overpayment recoupment demands or offsets have become the number one claim denial in the nation.  Industry estimates put the offset amounts in the hundreds of millions annually.  This court case provides clarity with respect to the overpayment recoupment practices engaged in by many of the nation’s biggest insurance carriers.  The court has effectively answered the central question of whether insured’s overpayment demands trigger ERISA appeal rights with a resounding yes as insurers and Health Plans will be forced to comply with all applicable federal laws, ERISA and PPACA claims regulations, as well as statutory fiduciary duties before recouping one single dollar. Providers that face BCBS or any payor recoupments or offsets would do well to understand the implications of this court ruling as well as their rights under ERISA.

According to providers complaints BCBS insurers made reimbursement payments for medical services rendered.  A short time after BCBS came back to those providers and said the payments were made in error for uncovered services. If the providers failed to submit to the demands and the money wasn’t returned, BCBS allegedly withheld funds for services rendered to other BCBS members that hadn’t yet been reimbursed:

“Plaintiffs allege that defendants improperly took money belonging to plaintiffs. They allege that they provided medical services to BCBS insureds. Defendants would initially reimburse plaintiffs for these services. Sometime afterward, plaintiffs allege, defendants would make a false or fraudulent determination that the payments had been made in error. Defendants then would demand that plaintiffs repay the supposedly overpaid amounts immediately. If plaintiffs refused to do so, defendants would forcibly recoup the amounts they sought by withholding payment on other, unrelated claims for services plaintiffs provided to other BCBS insureds.”

All of this was allegedly done without any explanation as to why or how BCBS determined the errors:

Plaintiffs allege further that when defendants made these repayment demands, they typically did not provide adequate information regarding the reason for the demands or procedures for challenging the demands. Plaintiffs allege that defendants sometimes failed to offer any appeal process at all. When an appeal process was available, plaintiffs allege, defendants refused to provide details about which patients, claims, and plans were claimed to be the subject of overpayment or “effectively ignored” Case: 1:09-cv-05619 Document #: 846 Filed: 11/07/13 Page 2 of 40 PageID #:368953 plaintiffs’ appeals. Fourth Am. Compl. ¶ 18. Plaintiffs contend that this conduct deprived them of their right to a “full and fair review” under ERISA. 29 U.S.C. § 1133.”

“This federal court decision doesn’t mean that no insurance company can ask any providers for any money back as overpayment, it simply means that no insurance company can do so without complying with ERISA, which governs and regulates medical claim disputes for all private healthcare plans,” cautions by Dr. Jin Zhou, a national expert in ERISA & PPACA compliance and appeals.

Plaintiffs’ attorney D. Brian Hufford of Pomerantz Grossman Hufford Dahlstrom & Gross LLP praised the ruling: “The decision found for us on the merits of our claim that an insurer must comply with ERISA when seeking to recover from providers previously paid health care benefits,” he said. “Given the hundreds of millions of dollars recouped by insurers every year, this decision could have widespread implications.”

In denying motion for summary judgment for BCBS entities and granting motion for summary judgment for certain plaintiff providers, among other things, the federal court makes the following conclusion:

Conclusion:    For the foregoing reasons, the Court grants plaintiff Reno’s motion for summary judgment [docket no. 793] on the question of liability as to defendant Anthem Health Plans of Virginia, Inc. but denies the motion with regard to defendant WellPoint, Inc. The Court grants plaintiffs Barnard & Wahner’s motion for summary judgment [docket no. 795] as to liability on their claim against defendant Independence Blue Cross for improper denial of benefits but denies in part plaintiffs’ motion on their claim that Independence denied them the appropriate notice and appeal rights, while making findings in plaintiffs’ favor on certain points pursuant to Rule 56(g). At tomorrow’s status hearing, counsel should be prepared to discuss what further proceedings are required on the claims of these plaintiffs.” according to court records

In particular, the court makes the following legal reasoning and discussion in part:

Reno’s summary judgment motion against Anthem and WellPoint:

“1. Standing: ……The Court concludes that Reno is a beneficiary for purposes of ERISA and thus has standing, conferred on him by section 1132, to bring his claims.” according to the court records.

“2. Denial of notice and appeal rights: ……The Court therefore concludes that Reno is entitled to summary judgment as to liability on his claim that Anthem denied him the notice and appeal rights to which he was entitled under ERISA. The only matter that remains for determination on that claim is the appropriate relief.” according to the court records.

“3. Denial of benefits: …… The Court therefore grants summary judgment to Reno against Anthem as to liability on this claim as well.” according to the court records.

Case Info: Pennsylvania Chiropractic Association, et al. vs Blue Cross Blue Shield Association, et al., Case No.: 1:09-cv-05619, Document #: 846, Filed: 11/07/13, in the United States District Court for the Northern District of Illinois Eastern Division

As part of best practices for reimbursement purposes, we further advocate for ERISA compliance by every healthcare provider to appeal every overpayment denial or offset, regardless whether a plan or provider may be right or wrong on its overpayment determination, as specifically advised by DOL, federal agency in charge of ERISA interpretation and enforcement:

DOL Tri3 Enterprises Amicus Brief, supporting plaintiff-appellant, No. 12-2308, File on 11/30/2012, In the United States Court of Appeals for the Third Circuit

The crux of the question at issue here is not whether the plaintiff or the defendant is correct in their views of the plan terms, but whether Aetna must comply with the procedures mandated by ERISA section 503 and its accompanying regulations in rendering a determination based on a plan interpretation that is adverse to the plan participants and beneficiaries. Under the statute and regulations, the beneficiary or participant is entitled to a claims procedure that “afford[s] a reasonable opportunity . . . for a full and fair review by the appropriate named fiduciary of [a] decision denying [a] claim,” …… In either event, Tri3 is entitled to insist upon its assigned right to challenge the allegedly wrongful decision to deny benefits through a process that complies with the claims regulation.”



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Does ERISA also govern recoupment appeals for Medicare and Medicaid replace plans? If so, where would I find that documented?

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