ERISA-The Gift That Keeps On Giving

Federal Judge Rules Out-Of-Network Provider Has Standing Under ERISA-Rules Anti-Assignment Provision Not Enforceable

On July 17, 2015 US District Judge, Melinda Harmon, upheld an out-of-network healthcare provider’s right to sue and denied the Health Plan’s motion to dismiss, despite the Plan’s anti-assignment provision.

In a victory for out-of-network providers, a federal judge gives legal guidance and a roadmap for medical providers seeking to overturn improper claims denials, finding that the language in the plan’s anti-assignment provision “does not prohibit assignments to medical service providers such as TrueView.”

According to the court order, the out-of-network provider’s right to sue was upheld and the health plan’s anti assignment provision was unenforceable, with the court concluding, “For the foregoing reasons, it is hereby ORDERED that Defendant’s Motion to Dismiss (Doc. 5) is DENIED.”

Court case info: TrueView Surgery Center One L.P. v. OneSubsea LLC Comprehensive Self-Insured Welfare Benefits Plan et al, No. 4:2014cv02577 – Document 16 (S.D. Tex. 2015)

The case fact pattern is a very familiar scenario in out-of-network claims and benefits for plan participants and beneficiaries. TrueView Surgery Center One L.P. (TrueView), a non-contracted surgery center performed services for a member of a self –insured health plan. According to court documents, the claim was submitted to the claims administrator, CIGNA, along with an “Assignment of Benefits and Designation of Authorized Representative” form executed by the plan participant giving the provider “the right to pursue the Plan directly for any “insurance benefits otherwise payable to [the Patient].” The claim was subsequently denied by CIGNA.

After filing “ERISA & PPACA Appeal” letters and exhausting the administrative remedy, the provider initiated a lawsuit against the plan. The provider asserted various ERISA violations, including (1) Breach of fiduciary duty,( 2) failure to provide full and fair review, (3) failure to provide requested documentation (4) unpaid plan benefits and (5) violations of claims procedure.

The plan, was seeking dismissal on two grounds. First, the provider failed to allege in injury-in-fact and second, because “the assignment of benefits by the plan participant was void because of an anti-assignment clause in the Plan”, according to the court order.

The plan’s first argument was declared moot based on the recent Fifth Circuit ruling, (North Cypress Medical Center v.CIGNA) which held that “a medical service provider “has statutory standing under ERISA for the benefit claims at issue because of assignments from plan beneficiaries,” even if the patient was “not billed for the amount allegedly due from the insurance plans.”

Next the court turned to the plan’s second argument regarding the plan’s anti-assignment provision. The court upheld the provider’s assignment and consistent with the Fifth Circuit ruling, found that language in the plan’s anti-assignment provision “does not prohibit assignments to medical service providers such as TrueView.

The court agreed with the provider’s argument and ruled that language in the plan’s anti-assignment provision only applied to non-healthcare providers. The court explained that the plans’ anti-assignment provision should not be enforceable because “it was not intended to preclude assignments to medical service providers such as TrueView. In Hermann Hospital v. MEBA, the Fifth Circuit held the following anti-assignment clause did not apply to medical service providers but applied only to “unrelated, third-party assignees . . . such as creditors”. The court further clarified, “Here, the anti-assignment clause in the Policy is almost identical to the language in Hermann II and therefore does not prohibit assignments to medical service providers such as TrueView.”

According to the court order, “The Plan seeks to distinguish its anti-assignment clause from the one in Hermann II by arguing its clause was more “direct,” because it provides that all assignments are “void and of no effect” and separates the garnishment and attachment section by a semicolon. Doc. 9 at 8. The Fifth Circuit, however, rejected a clause with these exact elements in Abilene Reg’l Med. Ctr. v. United Indus. Workers Health & Benefits Plan, No. 06-10151, 2007 WL 715247, at *4 (5th Cir.Mar. 6, 2007). The Abilene court reaffirmed Hermann II, distinguishing LeTourneau on the grounds that the relevant clause “did not resemble a spendthrift provision and unambiguously stated that the plan would not be ‘liable to any third-party to whom a participant may be liable for medical care, treatment, or services.’”

The court further clarified, “(“[I]n LeTourneau, neither party contested the fact that the plan beneficiary’s hospital entrance form constituted a valid assignment of her rights under ERISA to the plan provider despite an anti-assignment clause in the plan documents; the dispute was over that plan’s coverage of the services rendered. Because the services rendered in that case were not covered by the plan in the first place, the provider lacked standing.”). The Court is compelled by Hermann II to hold the anti-assignment clause in the Policy does not prohibit the Patient’s assignment to TrueView of his rights to pursue benefits.

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 with approximately 76% of those insured Americans paying 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 wrongfully or improperly denied of out-of-network claims imposed by ERISA plans has inevitably contributed significantly to unexpected medical bills and personal bankruptcy.

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, including 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.

Court Dismisses Aetna “$99,750 Ear Wax Fraud” Lawsuit Against Hospital and Doctors

Court Dismisses Aetna’s Landmark “$99,750 Ear Wax Fraud” Lawsuit Against Out Of Network (OON) Hospital And Two Surgeons In Hospital’s Patient Discount Practice. Avym Corporation Offers Webinars To Examine Impact On Patient’s Right To Choose And New Wave Of Litigation By Payors.

On 04-13-2012, a Texas Court dismissed Aetna’s landmark “$99,750 Ear Wax Fraud” case against an out of network (OON) hospital and two surgeons, Aetna’s lawsuit alleged that the hospital charged $99,750 for ear wax removal.  Aetna was seeking temporary injunction to stop the hospital’s patient discount practice of not collecting full deductible and co-insurance from all patients. The Court dismissed the entire Aetna lawsuit after Aetna voluntarily filed a Notice of “Plaintiff’s non-suit without prejudice”. As a result of the dramatic court proceedings for the defendant hospital and two surgeons Avym announces new Webinars to examine this breaking development.

According to the Court document filed on 04-13-2012, Aetna “announced to the Court that they no longer wish to pursue any of the claims asserted by them against Defendants Ifeolumipo O. Sofola, M.D., Navin Subramanian, M.D. and Humble Surgical Hospital, LLC. This non-suit terminates the case upon filing”.

The Court Case info: AETNA HEALTH INC vs. SOFOLA, IFEOLUMIPO O (MD) (Case #: 2011-73949 / Court 152)

Avym Corporation offers webinars to examine the impact of this landmark 2012 healthcare case.  The core issue of these lawsuits is the patient’s rights to choose.  Recently there has been a wave of payor litigation nationwide over provider’s patient discount practice.  According to Govt. statistics more than 77% of insured Americans in the private sector pay for the right to receive care from out-of-network providers and facilities.  This Court decision, along with all other pending Aetna cases across the nation, is very important for the 77% of insured Americans in the private sector with out-of-network coverage.

On Dec 7, 2011, Aetna filed this lawsuit in the District Court, Harris County, Texas. Aetna lawsuit seeks for temporary injunction to stop the hospital’s patient discount practice and PPO surgeon’s OON referrals, alleging breach of contract, conspiracy to overcharge, tortious interference, and common law fraud, including “a bill for $99,750 for the removal of ear wax”.

On Feb. 02, 2012, Aetna filed a “$66,100 bunion surgery” lawsuit in California against seven California surgery centers, seeking to stop the alleged UCR billing without collecting full deductible and co-insurance from all patients. The court case info: Aetna Life Insurance Co. v. Bay Area Surgical Management LLC, File 02/02/2012, Case #: 112CV217943, The Superior Court of California, County of Santa Clara.

According to the Crain’s New York Business on Feb. 07, 2012, Aetna also quietly filed similar lawsuits last year in the State of New Jersey and New York against several out-of-network doctors for allegedly aggressive collections from out of network patients.(http://www.crainsnewyork.com/article/20120207/HEALTH_CARE/120209916)

According to a Bloomberg Businessweek article: “Harvard researchers say 62% of all personal bankruptcies in the U.S. in 2007 were caused by health problems—and 78% of those filers had insurance”.
(http://www.businessweek.com/bwdaily/dnflash/content/jun2009/db2009064_666715.htm)

In addition, on March 7, 2012, NY State Governor Andrew M. Cuomo announced that the Department of Financial Services (DFS) is investigating unexpected out-of-network medical costs affecting New Yorkers across the state, many of whom cannot afford to pay out-of-pocket expenses. DFS released a report finding that insurance companies share the burden of responsibility with healthcare providers for unexpected out-of-pocket expenses driving so many patients into bankruptcy. “The report finds an overwhelming need for increased transparency from insurers and medical service providers, and improved consumer protection measures to ensure that New Yorkers stop receiving unexpected bills.” (http://www.dfs.ny.gov/about/press/pr1203071.htm)

According to the Press release on 03/07/2012 from NY State Governor Andrew M. Cuomo:

“Insurers are paying less of the cost of out-of-network care: The investigation found that insurers are moving to a system that greatly increases how much it costs consumers when they are treated out-of-network. To determine what they would pay for out-of-network care, most insurers used to use what is known as the usual and customary rate (UCR), which is supposed to be an average of actual bills for a procedure in that region. But now most are using the Medicare rate, which decreases how much insurers pay by as much as half or more in some cases. Insurers make this change hard for consumers to understand, because some are told they are going from 80% of the usual and customary rate to 140% of Medicare, which sounds like an improvement, but is not.”

Avym Corporation Webinars will cover Aetna’s legal arguments of fraud allegations and compliant patient discount practices.  Avym will also discuss out of network referral practices in relation to patient’s ability to exercise informed choices.

To find out more about PPACA Claims and Appeals Compliance Services from AVYM please click here.

Located in Los Angeles, CA, AVYM is a leading provider of services focusing entirely on the resolution of denied or disputed medical insurance claims by participating in the nation’s first ERISA PPACA Claims Appeals Certification program.  AVYM also offers free Webinars, basic and advanced educational seminars and on-site claims specialist certification programs for doctors, hospitals and commercial companies, as well as numerous pending national ERISA class action litigation support.

Court Rules Against Provider for Faulty Assignment, Even With PPO Contract

Court Rules Against Provider for Faulty Assignment, Even With PPO Contract

Federal Court Decision on March 02, 2012 Rules Against PPO Hospital for Faulty ERISA Assignment: BCBS PPO Contract Is Not an ERISA Assignment, However Court Denies Plan’s Anti-Assignment Argument.

This case illustrates three issues of significant importance to all ASC providers.   First, the courts have again addressed the matter of standing and the importance of a complete, ERISA/PPACA compliant assignment for all ASC providers seeking ERISA/PPACA appeals and litigation.  Second, PPO contracted ASC providers are not granted automatic standing for appeal and litigation purposes.  Third, the court rejected the Plan’s anti assignment argument; anti assignment clauses are not enforceable with a complete valid ERISA assignment.

Every ASC in the country has had a claim denied.  If an ASC attempts to appeal any kind of denial such as UCR, medical necessity, policy exclusion or even overpayment request, that ASC will need a complete assignment.  If a claim denial is not resolved, and a court action is necessary, ASC’s will absolutely need a complete assignment.  ASC’s cannot sue in court, or even appeal denied claims, unless they have a complete assignment.  Unfortunately, the assignment most ASC’s, and physicians use is NOT a complete assignment.  This court case highlights the necessity for ASC owners, managers and consulting companies to review current patient assignments, as well as obtain complete assignments regardless of whether the ASC is in or out of network.

The court case info: Medical University Hospital v. Oceana Resorts, United States District Court, D. South Carolina, Charleston Division, March 2, 2012.

According to the Court document, the plaintiff  PPO hospital “Medical University Hospital Authority /Medical Center (MUSC) argued that as a PPO provider they are not required to obtain an ERISA assignment or otherwise has automatically obtained an ERISA Assignment from its PPO contracting or participation:

“First, MUSC argues that the Plan implicitly assigned benefits to all network providers based on the payment structure laid out in the Plan, and therefore, MUSC did not even need the Consent Form to obtain derivative standing. Under the terms of the Plan, a participant need only pay the deductible to a network provider from whom he or she obtains medical services. The network provider is then required to file its claim for those services with the TPA. The Plan states that the network provider will receive the scheduled amount as payment in full for the medical services. The terms of the Plan indicate that generally some party other than the participant will reimburse the Plan for the claims. Defendants agree that MUSC is a network or preferred provider.”

The Court rejected plaintiff’s PPO ERISA Assignment argument and stated that ERISA assignment has to come from a patient, not Plan or PPO network:

“MUSC did not claim that it had standing as a third-party beneficiary of the Plan; nor could it have successfully pursued this argument. The only Circuit to squarely address this issue held that “ERISA does not countenance third-party beneficiary claims,” and found, therefore, that a hospital could not have independent standing without an enforceable assignment from the participant. Dallas Cnty. Hosp. Dist. v. Assoc.’s Health & Welfare Plan, 293 F.3d 282, 289 (5th Cir. 2002). Thus, without a valid assignment from a beneficiary or a participant, MUSC could not have obtained derivative or direct standing.”

The Court also ruled for the self-insured ERISA plan because the plaintiff’s alleged ERISA assignment only covers an insurance policy not self-insured ERISA plan:

“Additionally, the Consent Form, which was prepared by MUSC, does not cover assignments to self-funded employee benefits plans. The Consent Form assigns benefits due under “any insurance policy.” The assignment provides examples of types of coverage which would be assigned, all of which are types of insurance. Section 1144(b)(2)(B) of ERISA forbids states from deeming an employee benefits plan “to be an insurance company or other insurer . . . or to be engaged in the business of insurance.” See also Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 372 (2002) (“ERISA’s `deemer’ clause provides an exception to its saving clause that prohibits States from regulating self-funded plans as insurers.”). The Fourth Circuit, therefore, has held that “[t]hird-party administrator[s], [are] not . . . insured[s].” Sheppard & Enoch Pratt Hosp., 32 F.3d at 123 n.1; but see Wheeler, 62 F.3d at 638 (discussing self-funded “ERISA health insurance plan” and applying principles of insurance law).”

Interestingly, for some unknown or perhaps strategic reason, the Complaint did not include the language of the alleged assignment or attach the Consent Form.  The Complaint also did not include information regarding any anti-assignment provision in the Plan document.  However, the Court rejected ERISA plan’s anti-assignment argument:

“Because it is possible for a medical provider to acquire derivative standing through an assignment of benefits by a plan participant, MUSC’s Complaint states a plausible claim for relief, and therefore, defendants’ motion to dismiss is denied”.

Due to the lack of or faulty ERISA Assignment, the Court finally ruled for the self-insured ERISA plan:

“For the foregoing reasons, the court DENIES defendants’ motion to dismiss, but GRANTS their motion for summary judgment.”

This court decision provides a clear roadmap for all PPO and Non-PPO ASC providers on the requirements of valid, complete assignments.  Longstanding traditional limited assignments are insufficient for ERISA appeals and litigations.  ASC’s must follow this roadmap through innovative and practical solutions with proactive ERISA compliant assignments and appeals in accordance with applicable federal ERISA and PPACA laws.

Many ASC’s are under the misconception that: (1) joining a PPO or HMO network contract automatically grants providers ERISA rights and federal regulations law governing most commercial health claims; (2) Federal ERISA regulations don’t regulate or are not relevant to PPO or HMO network providers.  Nothing could be further from the truth.  This court decision is a wakeup call for all contracted and non-contracted ASC providers.

 

AVYM advocates for education and understanding and provides in-depth analysis of this new in-network litigation as well as other issues affecting health care professionals with ongoing webinars.

To find out more about PPACA Claims and Appeals Compliance Services from AVYM please contact us at info@avym.com