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

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)

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