Cautionary tale of National Class Action against Cigna
and what NOT to do.
UCR lawsuit gets thrown out of court- Millions lost! AMA and Multiple Providers file class action lawsuit only to have case dismissed for missing one document.
Franco v. Connecticut General Life Ins. Co.
(Case 2:07-cv-06039-SRC–PS)[ref]FRANCO et al v. CONNECTICUT GENERAL LIFE INSURANCE CO. et al [/ref]was filed in federal court, as one of the largest UCR class actions, by several patients, numerous out-of-network providers, several provider State Associations and the American Medical Association (AMA), alleging violations of ERISA for wrongful UCR denials and reimbursement. UCR denials are the most common denials in the nation. Typically, Usual, Customary and Reasonable (UCR) denials can be seen as “low-payments”, in other words claims that are paid at an exceedingly low rate to out of network providers.
Here is a hypothetical example of this type of denial:
Patient A has first-rate health insurance – with 70% coverage and zero deductible. The doctor bills the insurance company $1000 for the procedure, expecting a payment of $700. The doctor receives payment of $50 from insurance company based on alleged UCR. At this point the doctor can appeal or go after the patient for the balance. Since the doctor does not know how to submit an ERISA compliant appeal, patient A or the doctor will be left holding the bag for the remaining $950.
For many patients these denials lead to huge unpaid medical bills. As a result we see more Americans filing for personal bankruptcies for unpaid medical bills. Additionally, as reported by amednews, a survey by the Texas Medical Assn. said that about 51% of physicians whose practices had cash flow problems drew from their own accounts to keep their practice going.[ref]http://www.ama-assn.org/amednews/2011/03/14/bisc0314.htm[/ref]
The AMA, State Associations, Providers and patients decided to initiate a federal class action lawsuit against the insurer CIGNA for the UCR denials described above.
According to the court documents, the federal Court found that “Provider Plaintiffs have failed to establish that they may stand in the shoes of CIGNA plan participants or beneficiaries as assignees of their patients’ rights.” In other words, provider plaintiffs failed to provide a “complete” ERISA Assignment, which lead the court to dismiss the State Associations & provider plaintiffs and the UCR complaints.
A “complete” ERISA complaint assignment must contain very specific language that “must encompass the patient’s legal claim to benefits under the plan”. A “complete” assignment is required for healthcare providers to appeal or sue on behalf of the patient, whether they are in or out of network. Patients can “properly”, [ref] DOL FAQ B3 http://www.dol.gov/ebsa/faqs/faq_claims_proc_reg.html[/ref] assign a healthcare provider to “stand in their shoes” as an authorized representative.
Most healthcare provider assignments merely allow the provider or hospital to receive payments directly from the patient’s health benefits insurer. What the AMA, State Associations and virtually all healthcare providers currently use are “limited” Assignments, which the court concluded is basically useless. Again, this was the reason the Court dismissed all UCR ERISA claims asserted by all provider plaintiffs, State Associations and the AMA in the Franco v. Connecticut General Life Ins. Co. federal class action case — because they were missing ONE document!
Simply put, without a “complete” assignment most healthcare providers cannot meet their burden of demonstrating that they have derivative standing under ERISA. This is the critical first step in claim reimbursement, appeals, and ultimately lawsuits in federal court. The State Associations and healthcare providers in this lawsuit missed a tremendous opportunity for recovery of lost revenue but hopefully learned a valuable, yet expensive lesson.
If you would like to find out how to secure a valid and “complete” ERISA assignment please contact us for a free webinar. This new webinar will discuss this Court decision in detail and explain why healthcare providers nationwide have failed in ERISA compliance of valid Assignment of Benefits.
The webinar will also cover the following topics in great detail:
- What exactly does an ERISA complete Assignment of Benefits mean.
- Why an ERISA Assignment of Benefits Form is required for both in and out of network providers.
- How to secure a valid and complete ERISA compliant Assignment of Benefits.