Search results for Offset

BCBSM Slapped With $8.4M Judgement For “Hidden Fees”

Federal Judge rules that Blue Cross Blue Shield Michigan has to repay $8.4 million for violating ERISA and charging “Hidden Fees” to the Saginaw Chippewa Indian Tribe.

On July 14, 2017 U.S. District Judge Thomas L. Ludington ruled Blue Cross Blue Shield of Michigan (BCBSM) had to repay the Tribe $8.4 million for charging “hidden fees” in violation of ERISA. According to court records, the Tribe had two separate plans under BCBSM. The Tribe claimed that BCBSM charged $8,426,278 for Group 1 and $5,035,145 for Group 2. However the court ruled one of the plans was not an ERISA plan, and therefore, BCBSM was not liable for those fees.

 The judge summarized the issues by providing the following backdrop:

“BCBSM had ‘complete discretion to determine the amount of the Disputed Fees, as well as which of its customers paid them.’ As a result of the hidden nature of the fees, the savings from using BCBSM as an administrator appeared greater to customers that they truly were.”

According to the court:

It is undisputed, that, like in the multitude of other similar cases that have been brought against BCBSM, the company included hidden administrative fees in its charges to the Tribe. BCBSM agrees that, between 2004 and 2012, the tribe paid approximately $13 million in hidden administrative fees

Case info: Saginaw Chippewa Indian Tribe of Michigan, et al v. Blue Cross Blue Shield of Michigan, No. 1:16-cv-10317, E.D. Mich., 2017 U.S. Dist. LEXIS 109366 

The “multitude of other similar cases” that have been brought against BCBSM, stem from more than 50 other similar cases in the same court. The decisive point for all these cases was the Hi-Lex case, where the Sixth Circuit Court of Appeals upheld a $6.1 million judgement against BCBSM for, you guessed it, charging clients hidden fees!

The Six Circuit Opinion: “SILER, Circuit Judge. The Hi-Lex corporation, on behalf of itself and the Hi-Lex Health & Welfare Plan, filed suit in 2011 alleging that Blue Cross Blue Shield of Michigan (BCBSM) breached its fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) by inflating hospital claims with hidden surcharges in order to retain additional administrative compensation. The district court granted summary judgment to Hi-Lex on the issue of whether BCBSM functioned as an ERISA fiduciary and whether BCBSM’s actions amounted to self-dealing. A bench trial followed in which the district court found that Hi-Lex’s claims were not time-barred and that BCBSM had violated ERISA’s general fiduciary obligations under 29 U.S.C. § 1104(a). The district court also awarded pre- and post-judgment interest. We AFFIRM.” according to the Sixth Circuit Court document.

“according to BCBSM’s own survey of its self-insured customers, a substantial majority – 83% – did not know the Disputed Fees were being charged.”, according to the Sixth Circuit Court document.

As more and more of these cases make their way through the courts, self-insured health plan administrators charged with properly monitoring and safeguarding plan assets should do so, independent of their TPA’s own reporting. Additionally, as a result of this and other cases, including the Supreme Court’s decision to deny the BCBSM challenge of the Sixth Circuit Court decision, these same self-insured health plan administrators, should seek return of Billions in plan assets.

In the healthcare provider arena the No. 1 health care claim denial in the country today is the overpayment recoupment and claims-offset.  Correspondingly, for self-insured health plans, the No. 1 hidden cost is overpayment recoupment and plan assets embezzlement. The immediate impact of the Supreme Court’s decision could be billions of dollars for all self-insured ERISA health plans nationwide, as a result of the TPA industry’s potential recovery of a billion dollars in overpayment recoupments and anti-fraud campaigns over the past 12 years.

For over 8 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 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.

 

Boomerang Effect Part II-Federal Court “Bars” Cigna From Recouping Self-Insured Plan Assets

Boomerang comes back to hit Cigna

Another Federal Court Rules Against Cigna In Alleged Fee Forgiving/Overpayment Recoupment Dispute With Medical Provider- Court “Bars” Cigna From Relying On “Legally Incorrect” Interpretation of ERISA Plans

On March 10, 2017 in the US District Court of Connecticut, Judge Alfred V. Covello ruled in favor of surgical center defendants and against Cigna, barring Cigna from recouping self-insured plan assets based on alleged “overpayments” which were predicated on Cigna’s “legally incorrect” interpretation of ERISA plans “exclusionary language”.

This decision offers clear guidance on critical issues such as cross-plan offsetting, Cigna’s fee forgiveness protocol, SIU practices and ERISA disclosure requirements, confirming the profound shift in Out-of-Network benefits and claim processing for all health care providers and health plans in the nation.

The decision also further unwinds the payor initiated “out-of-network fraud” enigma as we have written about before, 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.

The case revolves around Cigna’s fee forgiving protocol, whereby Cigna denies medical claims if its members don’t pay their entire out of pocket cost up front. Based on this premise, Cigna is also seeking recovery of approximately $17 million in alleged “overpayments” made to providers that did not collect the full patient out of pocket liability up front.

Court case info: Connecticut General Life Insurance Co. et al. v. True View Surgery Center One, LP et al. Case No.:3:14-cv-01859-AVC; US District Court Connecticut

In what may have been the impetus for a litigation tsunami, where over 100 Cigna administered health plans were sued for various ERISA violations including embezzlement, issuing “secret checks” and self-dealing, Cigna filed suit on 12/11/2014 against True View Surgery Center One and affiliated health care providers seeking declaratory and injunctive relief under ERISA and essentially asking the court to declare that “no coverage is due” where medical providers “do not enforce the plans’ cost-share requirements”. Cigna also asked the court to order defendant medical providers to “submit to Cigna only claims containing charges that Defendants actually charge the plan member as payment in full”. In other words, no medical coverage is available if the member does not pay their entire out of pocket liabilities up front.

Cigna was also seeking the return of any benefit payments, as “overpayments” made to the medical provider where the member did not pay their entire out of pocket liability up front, specifically requesting the court to impose a “constructive trust on monies currently held by Defendants as a result of the overpayments made by Cigna…pursuant to an equitable lien”.

Out of network provider True View Surgery Center One, argued that the issues were already resolved in a previous case litigated in Texas, and that Cigna was attempting to take multiple bites out of the same apple in order to wrongfully deny legitimate medical claims.

The court focused on two main issues: 1) whether Cigna is barred by the doctrine of collateral estoppel from pursuing their claims on behalf of ERISA plans; and 2) whether Cigna has adequately alleged traceability in order to recover alleged “overpayments”

Ultimately, the court agreed with defendant True View Surgery Center One and ruled “Cigna is barred by the doctrine of judicial estoppel” in its attempt to have the courts validate its fee forgiving protocols, and in its attempts to recover alleged “overpayments”

In his decision, Judge Covello cited the Humble case (Connecticut General Life Insurance Co. et al. v. Humble Surgical Hospital, LLC, Case number 4:13-cv-03291) where Cigna was slammed with a $17 million penalty and opined that the district court in Texas had already “addressed the issue” regarding Cigna’s fee forgiving protocols.

In citing the Humble case, the judge said “In Humble, the court held that Cigna’s interpretation of this “exclusionary” language was “legally incorrect,” and that “ERISA does not permit the interpretation embraced by Cigna.”

The judge went on to say that the Texas court found “because ‘[t]he average plan participant would not understand from the exclusionary language…that his/her coverage is expressly conditioned on whether Humble collects upfront, the entirety of his/her deductible, co-pay and co-insurance before Cigna pays,’ Cigna’s “exclusionary” language interpretation does not pass muster under the “average plan participant” test,” which ERISA requires.”.

The judge ultimately holds: “Cigna is relying on the interpretation of its ERISA plans that the United States District Court for the Southern District of Texas held to be ‘legally incorrect’ in order to effectively deny providers’ benefit claims. Therefore, the doctrine of collateral estoppel bars Cigna from relitigating those [issues].”

As part of Judge Covello’s ruling on Cigna’s lack of traceability, in dismissing Cigna’s claim for “overpayments”, we must again look to the Humble case for clarification. According to the Humble court:

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.”

All Out-of-Network providers and self-insured health plans should understand the implications of the court’s rulings 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, abstraction or “hidden fees”.  Education and understanding of these concepts 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 7 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.

DOL-OIG-EBSA SHOWS PATH OUT OF FOREST FOR PATIENTS, PLANS & SERVICE PROVIDERS

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.

Another Cigna Administered ERISA Health Plan, DHL Express, Sued for Embezzlement


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.

Cigna Fraud Lawsuit Against Hospital Backfires- Cigna slammed with $13M Judgement in Medical Claims Dispute

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.”

Fallen black chess king on chess board.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.

 

 

AT&T- Another United HealthCare Administered ERISA Health Plan Sued for Embezzlement

UHC administered self-insured health plan, AT&T, sued in federal court for embezzlement, self-dealing in medical claims overpayment offset dispute.

On June 1, 2016, in the southern district of Texas Federal Court, United HealthCare administered self-insured ERISA plan, AT&T Inc. and its Plan Administrator Larry Ruzicka were sued in federal court. According to the complaint: “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 “.

An almost identical separate suit was filed against another United HealthCare administered health plan, GAP Inc. less than 30 days before this case was filed.  According to industry experts, more and more CEO’s, CFO’s and Plan Administrators are exposed to tremendous liabilities due to poorly managed or “Head in the Sand” monitoring practices. As we have written about and predicted, this is evidence of the growing trend of self-insured health plans being exposed to tremendous liability by TPAs.

One of the serious problems these cases present to the self-insured health plans is inaccuracies on the Form 5500/Tax filings. ERISA requires IRS Form 5500 reporting to be accurate. AT&T, GAP Inc. and others may be reporting incorrect amounts on direct and indirect compensation, for example, based on the alleged facts of these cases.

These cases also illustrate an ironic twist, in many cases, the ASO agreements prohibit the plan from auditing the claims that the TPA’s are paying on behalf of the self-insured plan, which on its face, seems to be a remarkably absurd clause that any plan sponsor would agree to sign.

The Court Case Info: RedOak Hospital, LLC v. AT&T Inc., AT&T Savings and Security Plan and Larry Ruzicka, in the United States District Court for the Southern District of Texas, Houston Division, Case 4:16-cv-01542, Filed on 06/01/16.

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

This dispute arises out of [AT&T’s]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”).[AT&T] 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 ultimately its own use, to pay to its own account is absolutely prohibited under ERISA statutes. [AT&T] and United have conspired and engaged in many other embezzlement schemes, including, but not limited to, making deductions on entitled claim payments through the misrepresentation that a Viant/Multiplan contract is in place with Plaintiff; this action is only challenging the cross-plan offset embezzlement scheme discussed in detail below.”, according to court documents.

According to RedOak attorney Ebadullah Khan, this and the Gap Inc. case represent the first of many more cases the hospital intends to bring for the same alleged violations. Kahn told Law360, Prior to seeking judicial review for this case, RedOak Hospital had exhausted any and all internal/administrative appeal requirements,” Khan went on to say, “The cross-plan offset practice at issue in this case is the most common form of denial for RedOak Hospital, and as a result RedOak Hospital is preparing to file approximately 100 more cases similar to this AT&T complaint.”

As we have accurately predicted, 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 and until the courts offer guidance on the practice of cross plan offsetting, we will continue to see many more cases such as these from providers all across the country. Additionally, should the courts weigh in and bar the practice, will self-insured plan sponsors, like AT&T and Gap Inc. be held liable for these ERISA violations and be removed from serving as fiduciaries.

There are billions of healthcare dollars at stake, according to industry estimates. Overall, overpayment recoveries initiated by the large carriers have reached into the billions of dollars over the past 5 to 7 years. Yet, self-insured health plans have not reaped the benefits of successful overpayment recoupments.  

Consequently, recoupment through offsetting, when used as an anti-fraud initiative, has become an increasingly popular source of revenue for 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.

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.

Supreme Court Montanile Decision Potentially Rewards Trillions to Self-Insured ERISA Health Plans

As One Door Potentially Closes, Another, More Substantial Door Opens For Self-Insured Health Plans

The January 20, 2016 Supreme Court Montanile decision potentially limits ERISA plan rights to subrogation lien recovery, but also potentially rewards trillions of dollars in plan assets recovery for all self-insured ERISA plans nationwide, from cross plan overpayment recoupments and offsets done by plan TPAs.  All self-insured health plans should understand the Montanile decision’s trillion dollar impact.

The Supreme Court Montanile decision on January 20, 2016 limits an ERISA plan rights to subrogation lien recovery, but this decision also ensures potentially trillions of dollars in plan assets recovery for all self-insured ERISA plans nationwide, from all cross plan overpayment recoupments and offsets by plan TPA’s, as the Supreme court ruled: “[t]his rule applied to equitable liens by agreement as well as other types of equitable liens“.

The Supreme Court Montanile decision also limits and prohibits self-insured plan TPA’s from offsetting or converting self-insured plan claims payments into the TPAs own fully-insured account, for any alleged overpayments made from the TPA’s fully-insured plans, by claiming equitable relief under ERISA §502(a)(3);

While the case potentially limits ERISA plan rights to subrogation lien recoveries, the entire auto or personal injury subrogation lien market is relatively insignificant compared to the trillion dollar overpayment recoupment and offset market nationwide that exists within the $3.5 trillion in national healthcare expenditures.

Avym Corporation announces new, 2016 self-insured ERISA plan assets auditing and recovery projects, which are open to all large and medium self-insured ERISA plans, in order to (a) brainstorm, assess and realize the immediate true economic value of the Supreme Court Montanile decision; (b) immediately audit the plan assets for any possible conversion, embezzlement from the plan TPA’s cross plan overpayment recoupment or offset; (c) immediately recover or restore the plan assets under the Supreme Court Montanile decision and as required under ERISA statutory duties.

Supreme Court case info: Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, case #:  14-723, January 20, 2016

Supreme Court link to PDF copy.

Based on federal court documents and leading healthcare experts, billions of self-insured health plan claims assets may have been recouped or offset in order to satisfy alleged overpayments of fully insured plan claims.

Although the Supreme Court’s Montanile decision may have limited a plan’s right in the relatively small PI subrogation lien market, it has fundamentally and profoundly changed the landscape for medical claim overpayment offsets and recoupments, across separate plans and members, by self-insured plan co-fiduciary TPAs, in a practice otherwise known as “embezzlement ATM operations

According to the Court Documents, the Supreme Court ruled:

  • Plan fiduciaries are limited by §502(a)(3) to filing suits “to obtain … equitable relief.
  • [A]s here, an equitable lien by agreement, only against specifically identified funds that remained in the defendant’s possession or against traceable items that the defendant purchased with the funds.
  • If a defendant dissipated the entire fund on items, the lien was eliminated and the plaintiff could not attach the defendant’s general assets instead.
  • The Board’s arguments in favor of the enforcement of an equitable lien against general assets are unsuccessful. does not contain an exception to the general asset-tracing requirement for equitable liens by agreement.
  • In sum, at equity, a plaintiff ordinarily could not enforce any type of equitable lien if the defendant once possessed a separate, identifiable fund to which the lien attached, but then dissipated it all. The plaintiff could not attach the defendant’s general assets instead because those assets were not part of the specific thing to which the lien attached.
  • This rule applied to equitable liens by agreement as well as other types of equitable liens.

The Supreme Court Montanile decision makes it perfectly clear, any alleged overpayment lien of a fully-insured plan cannot attach to a different, self-insured plan fund or claims payment and it’s a basic principle of ERISA that a TPA for a self-insured plan is absolutely barred from converting claims payment of plan assets from the self-insured plan to pay for an alleged overpayment lien and retain all recovery for its own fully-insured account, and can be viewed as self-dealing and embezzlement.

The only question now is whether self-insured plan fiduciaries will take immediate corrective actions to safeguard plan assets or wait till the DOL knocks on their door with an audit alert.

Ironically, the Supreme Court’s Montanile decision also protects the respondent, the Board of Trustees of the National Elevator Industry Health Benefit Plan, from any and all offsets or patient embezzlements based on alleged overpayments to non-National Elevator Industry Health Benefit Plan members.

Over the past 6 years, Avym has closely followed the decisions from the Supreme Court and federal appeals courts on ERISA prohibited self-dealing against ERISA plan TPA’s for managed care savings. These new ERISA embezzlement cases are just the initial impact of the court’s Hi-Lex decisions. This lawsuit in particular should serve as a warning and wake up call for all Plan Administrators to continually monitor their TPAs in accordance with the Plan Administrator’s statutory fiduciary duties and to discharge its duties with respect to a plan solely in the interest of the participants for the exclusive purpose of providing benefits to them.

Avym Corp. has been at the forefront and advocated for ERISA plan assets audit and embezzlement recovery education and consulting. Now with the Supreme Court’s guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs click here.

 

US Supreme Court ERISA Decision Protects Hospitals from “Overpayment Bankruptcies”

On January 20, 2016, Supreme Court ruled that an ERISA plan cannot sue to recover medical expenses paid on the participant’s behalf after the settlement funds have dissipated. This high court decision also protects hospitals from all health plan’s overpayment recoupment.

On January 20, 2016, Supreme Court ruled that an ERISA plan cannot sue to recover medical expenses paid on the participant’s behalf after the settlement funds have dissipated, because “…a plaintiff ordinarily cannot enforce any type of equitable lien if the defendant once possessed a separate, identifiable fund to which the lien attached, but then dissipated it all…. This rule applied to equitable liens by agreement as well as other types of equitable liens.” Op. at 9

Supreme Court case info: Robert Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, case #: 14-723, January 20, 2016

Link to PDF Copy: Montanile v. Board of Trustees of the National Elevator Industry Health Plan.

On January 23, 2016, Avym Corporation announced 2016 hospital ERISA appeal & litigation department support services to demystify why this high court decision also protects hospitals and doctors from any health plan’s overpayment recoupment and to recover all overpayment recoupment unlawfully withheld or embezzled by all payers under any incorrect ERISA equitable lien arguments, because “this rule applied to equitable liens by agreement as well as other types of equitable liens.” Op. at 9

Nationwide, over the past 10 years, overpayment offsets and recoupments have directly resulted in billions of dollars of revenue losses, and even bankruptcies in many cases, for medical providers of all types. These recoupments by payers are done using ERISA equitable lien arguments, both inside and outside the courtrooms. Consequently, this new Supreme Court decision is critical for every healthcare provider’s financial survival.

At minimum, any overpayment offsets or recoupment across separate plans and/or patients are not permissible under ERISA equitable lien law in accordance with the Supreme Court decision on January 20, 2016, because the alleged overpayment equitable lien is attached to another person’s separate fund or property, where no ERISA equitable lien existed, or otherwise is clearly not permitted.

“For all pending overpayment court cases in absence of any fraud claims, this Supreme Court decision could be a rainmaker for all healthcare providers, both in-network and out-of-network”, predicted Dr. Jin Zhou, president of ERISAclaim.com, a national expert on ERISA appeals and compliance, and an ERISA “Special Collection Agent”, as recently ordered by a Federal Bankruptcy Court for a bankrupt hospital system in Texas.

Avym Corporation’s 2016 hospital ERISA appeal & litigation department support services will brainstorm on this Supreme Court order and assist hospital executives and legal departments in assessing and immediately complying with the Supreme Court decision, in advocating for ERISA rights of the plan participants and beneficiaries in the hospital’s financial survival ordeals, or otherwise preventing hospitals and doctors from being bankrupt as a result of the totally out-of-control revenue losses from the endless and relentless overpayment recoupment or offsets under ERISA in absence of any fraud claims.

These new ERISA compliance services include, but are not limited to, executive brainstorming and education, ERISA & PPACA appeal practice, ERISA litigation strategy & support, overpayment prevention through corporate compliance in fraud & abuse prevention.

In a personal injury subrogation overpayment lawsuit, after the District Court and 11th Circuit Court ruled for the health plan, on January 2016, the Supreme Court ruled for the plan participant. In an 8-1 ruling penned by Justice Clarence Thomas, the majority said that the National Elevator Industry Health Benefit Plan couldn’t sue plan beneficiary Robert Montanile under ERISA §502(a)(3) for overpayment reimbursement of about $122,000 from a $500,000 auto accident settlement because the settlement fund had already been dissipated and  therefore, the plan fiduciary may not sue to get at the participant’s additional assets.

According to the Court Documents, the Supreme Court ruled:

  • “Plan fiduciaries are limited by §502(a)(3) to filing suits “to obtain … equitable relief.”
  • “[A]s here, an equitable lien by agreement, only against specifically identified funds that remained in the defendant’s possession or against traceable items that the defendant purchased with the funds.”
  • “If a defendant dissipated the entire fund on nontraceable items, the lien was eliminated and the plaintiff could not attach the defendant’s general assets instead.”
  • “The Board’s arguments in favor of the enforcement of an equitable lien against Montanile’s general assets are unsuccessful. Sereboff does not contain an exception to the general asset-tracing requirement for equitable liens by agreement.”
  • “In sum, at equity, a plaintiff ordinarily could not enforce any type of equitable lien if the defendant once possessed a separate, identifiable fund to which the lien attached, but then dissipated it all. The plaintiff could not attach the defendant’s general assets instead because those assets were not part of the specific thing to which the lien attached.”
  • “This rule applied to equitable liens by agreement as well as other types of equitable liens.”

 

(This article was originally published by Dr. Jin Zhou)

ERISA-The Gift That Keeps On Giving-Part 2: Court Grants Bankrupt Hospitals ERISA “Special Collection Agent” for All Denied Claims

Just in Time for the Holidays, Federal Court Grants Bankrupt Hospitals ERISA “Special Collection Agent” for All Denied Claims

On Dec 03, 2015, a federal Bankruptcy Court approved an application to employ an ERISA “Special Collection Agent” for Debtors filed by Victory Parent Company, LLC in the wake of the Hospital group’s Chapter 11 bankruptcy filings. The approval underscores the profound impact ERISA will have for the entire hospital industry and medical providers, particularly out-of-network, facing economic hardships, including bankruptcy filings. Compliant ERISA and PPACA appeals and litigation are the only way to protect a hospital or healthcare provider from bankruptcy.

The Employment Retirement Income Securities Act (ERISA), enacted in 1974, is the key governing law for all employer sponsored plan’s healthcare claims in the private industry. ERISA is a federal law that sets minimum standards for most voluntarily established health plans in private industry to provide protection for individuals in these plans. In September of 2010, the Patient Protection & Affordable Care Act, (aka Obamacare), adopted ERISA in its entirety, as the governing federal laws, for internal appeals in all group plans and individual policies or PPACA exchange market plans, for both ERISA and non-ERISA plan claims.

The court approval allows the hospitals to immediately start filing ERISA/PPACA compliant appeals on all denied claims as well as the option to pursue judicial reviews in federal court in order to advocate for all patient ERISA/PPACA appeal rights.

This unprecedented approval will also have a profound impact on available collection remedies and affords the hospitals an alternative to, inevitably, dragging patients into medical bankruptcies, the leading cause of personal bankruptcy in the nation today.

 The U.S. Bankruptcy Court for the Northern District of Texas approved the application to employ a “Special Collection Agent” for debtors filed by Victory Parent Company, LLC in the wake of the hospital group’s Chapter 11 bankruptcy filings on June 12, 2015 (Victory Medical Center Mid-Cities, LP et. al., Chapter 11, Case No. 15-42373-Rfn-11). The Court ordered that ERISA godfather Dr. Jin Zhou be employed as a “Special Collection Agent to provide all necessary collection services to the Debtor as described in the Application pursuant to 11 U.S.C. §§ 327(a) and 328(a).

On June 12, 2015, Victory Parent Company, LLC and four Texas medical centers voluntarily filed under Chapter 11 to preserve value, effect asset sales, according to the Victory Parent Company web site.

According to Robert N. Helms, Jr., Chairman, CEO and Manager of Victory, who managed six for-profit Victory Healthcare medical and surgical centers in Texas before the filing for Chapter 11, Victory built an extremely high quality, state-of-the-art group of community-centric medical centers and hospitals. Unfortunately, due to their out-of-network provider business model, they came under attack by large insurance carriers. Even though they were able to secure in-network agreements with three large insurers, sluggish claim processing and lack of payment from the carriers constrained liquidity significantly.

Unfortunately the situation with Victory is becoming all too common. According to a recent Becker’s Hospital Review industry report published on Sep 15, 2015, 10 hospitals had filed for bankruptcy as of Sept 2015. In fact, Hospital bankruptcy filings are headline news every day, mainly due to alleged denied claims and failed claims reimbursement.

In Re: Victory Medical Center Mid-Cities, LP et. al., “The Debtors in these cases, along with the last four digits of their respective taxpayer ID numbers, are Victory Medical Center Mid-Cities, LP (2023) and Victory Medical Center Mid-Cities GP, LLC (4580), Victory Medical Center Plano, LP (4334), Victory Medical Center Plano GP, LLC (3670), Victory Medical Center Craig Ranch, LP (9340), Victory Medical Center Craig Ranch GP, LLC (2223), Victory Medical Center Landmark, LP (9689), Victory Medical Center Landmark GP, LLC (9597), Victory Parent Company, LLC (3191), Victory Medical Center Southcross, LP (8427), and Victory Medical Center Southcross GP, LLC (3460).” according to the Court document.

 According to the court document published on December 3, 2015, the Court ORDERED THAT:

1. Dr. Jin Zhou d/b/a ERISAclaim.com be employed as Special Collection Agent to provide all necessary collection services to the Debtor as described in the Application pursuant to 11 U.S.C. §§ 327(a) and 328(a);

  1. Dr. Zhou is employed, effective November 3, 2015, as Special Collection Agent to provide all necessary collection services to the Movant in this case as set forth in the Application.
  2. Dr. Zhou shall be entitled to compensation as set forth in the Application and in the Claims Recovery Service Agreement attached hereto as Exhibit A without further application or order of this Court.”

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 Health Plans should understand critical issues regarding the profound impact of this and other court decisions on the nation’s medical claim denial epidemic. Providers should also know how to correctly appeal every wrongful claim denial and 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 claim denials and overpayment recoupment and offsetting, to seek for enforcement and compliance with ERISA & PPACA claim regulations.

Federal Court Slams Plan With $61,380 Penalty For Failing to Provide Plan Documents, Rules Plan “Belies Logic”

On September 21, 2015 a Federal Court slammed a Plan Sponsor for not providing Plan Documents, ruling the Plan’s action “belies logic”. The Federal Court hit the Plan Sponsor with a $61,380 penalty on top of the previously awarded $12,760 statutory penalty for not providing insurance policy in a timely manner.

Here is a cautionary tale for all Plan Administrators, Plan Sponsors and Fiduciaries. In this case, the member participant of an ERISA Plan requested all relevant documents from the Plan but the plan did not respond in a timely manner. According to court records, there were two Plan Documents, the insurance policy (SPD) and another Plan Document. The Plan provided the insurance policy (SPD), albeit still too  late, and was initially hit with a $12,760 penalty for its failure to provide that document in a timely manner. However, the Plan did not provide the other additional Plan Document until much later in the process.

The Plan argued that the other Plan Document did not need to be furnished because it did not mention the insurance policy and because there were conflicting terms between it and the SPD. The court disagreed saying the Plan’s argument “belies logic” and found the other Plan Document to be a “controlling ERISA document” and as such, the Plan “was under an obligation to furnish a copy of the Plan Document” at the request of the plan participant. Because the Plan failed to do so, it was hit with an additional $61,380 penalty in spite of the fact there were no inconsistencies between the SPD insurance policy and Plan Document.

According to the court:

“Defendant Board of Trustees argues that its failure to provide Plaintiff with the Plan Document is excused because the Plan Document contains no terms that specifically address the life insurance benefit, and because there are no conflicting terms between the SPD and the Plan Document regarding same. This argument represents two sides of the same coin, and is dispelled with the same reasoning. Even if the parties agree that the SPD is a controlling document for Mr. Harris’ life insurance policy, the terms of the SPD specifically state that in the event of any inconsistency between the SPD and the Plan Document, the Plan Document will control. Ergo, armed only with access to the SPD and not the Plan Document, Plaintiff could not have known the unequivocal terms of the life insurance policy because she did not have the opportunity to discover any inconsistencies, or lack thereof, between the SPD and the Plan Document. In this case, it happens that there are no inconsistencies between the SPD and the Plan Document with regards to the life insurance policy. This, however, was not known by Plaintiff until she received the Plan Document on December 10, 2014, despite multiple requests to Defendant Board of Trustees for copies of all controlling or relevant ERISA documents. In sum, to claim simultaneously, as Defendant Board of Trustees does, that only the SPD (and not the Plan Document) is a controlling ERISA document, but at the same time stating that “[i]f there is any difference between the Plan Document and [the SPD], the Plan Document will control,” (id.), belies logic. Accordingly, the Court finds that the Plan Document is a controlling ERISA document.”

The court goes on to say:

“Having found that Defendant Board of Trustees was under an obligation to furnish a copy of the Plan Document at Plaintiff’s request, the Court now turns to the appropriate time frame for statutory penalties under 29 U.S.C. 1132(c).”

According to the court:

“Given Defendant Board of Trustees’ deliberate choice not to respond to Plaintiff’s unambiguous third request for documents, and Defendants failure to respond at all to either the second or third request for documents, (see Doc. 39 at 15–16), the Court finds that assessing the maximum penalty is appropriate in this case. Accordingly, Defendant Board of Trustees will be assessed a penalty of $61,380.00 for its failure to furnish a copy of the Plan Document, calculated at $110.00 per day for the 558 days between May 31, 2013 and December 10, 2014. This penalty is in addition to the $12,760.00 for Defendant Board of Trustees’ failure to provide a copy of the Policy, discussed supra Section IV.B.”

The case is Harris-Frye v. United of Omaha Life Insurance Company, and Board of Trustees, Mid-South Carpenters Regional Council Health and Welfare Fund, Case No. 1:14-cv-72. United States District Court, E.D. Tennessee, Chattanooga Division

It is clear that Plan Administrators and Fiduciaries should respond to any appeals and document requests in accordance with section 104 (b) (2) and 104 (b) (4) of ERISA, and pursuant to the interpretation of “plan document” from DOL Advisory Opinions, 96-14A, which states:

it is the view of the Department of Labor that, for purposes of section 104 (b) (2) and 104 (b) (4), any document or instrument that specifies procedures, formulas, methodologies, or schedules to be applied in determining or calculating a participant’s or beneficiary’s benefit entitlement under an employee benefit plan would constitute an instrument under which the plan is established or operated, regardless of whether such information is contained in a document designated as the “plan document”. Accordingly, studies, schedules or similar documents that contain information and data, such as information and data relating to standard charges or calculating a participant’s or beneficiary’s benefit entitlements under an employee benefit plan would constitute “instrument under which the plan is… operated.

Plan Administrators and fiduciaries should also look to the DOL for guidance on the matter, specifically, DOL FAQs About The Benefit Claims Procedure Regulation:

FAQ B-5: For purposes of furnishing relevant documents to a claimant, what kind of disclosure is required to demonstrate compliance with the administrative processes and safeguards required to ensure and verify appropriately consistent decision making in making the benefit determination?

What documents will be required to be disclosed will depend on the particular processes and safeguards that a plan has established and maintains to ensure and verify appropriately consistent decision making. See 65 FR at 70252. The department does not anticipate new documents being developed solely to comply with this disclosure requirement. Rather, the department anticipates that claimants who request this disclosure will be provided with what the plan actually used, in the case of the specific claim denial, to satisfy this requirement. The plan could, for example, provide the specific plan rules or guidelines governing the application of specific protocols, criteria, rate tables, fee schedules, etc. to claims like the claim at issue, or the specific checklist or cross-checking document that served to affirm that the plan rules or guidelines were appropriately applied to the claimant’s claim. Plans are not required to disclose other claimants’ individual records or information specific to the resolution of other claims in order to comply with this requirement. See § 2560.503-1(m)(8)(iii). See question D-12.

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 Health Plans should understand critical issues regarding the profound impact of this and other court decisions on the nation’s medical claim denial epidemic. Providers should also know how to correctly appeal every wrongful claim denial and 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 claim denials and overpayment recoupment and offsetting, to seek for enforcement and compliance with ERISA & PPACA claim regulations.