medical service provider benefit claims (slides) - · pdf file · 2018-01-19an...

www.americanbar.org/jceb

Setting the Stage: An Overview of Medical Service Provider Claims

Joseph Creitz, Creitz & Serebin LLP, San Francisco, CA

D. Ward Kallstrom, Seyfarth Shaw, San Francisco, CA

Suzanne Metzger, 1199 SEIU National Benefit Fund, New York, NY

February 9, 2016Sponsored by the ABA Section of Labor and Employment Law

Employee Benefits Committee

www.americanbar.org/jceb2

The ActorsProviding for Medical Services

Health and Welfare PlansTrustees InsurersClaims Administrators and TPAsProfessionals (auditors, actuaries, lawyers)

Patients/ParticipantsAuthorized Representatives

Medical Service ProvidersMedical Coders/BillingCounsel/ Collection agenciesProfessional Associations


Preview: Recurring Themes in Medical Service Provider Claims

Standing Assignments Authorizations Exhaustion ERISA Claims Notice & Disclosure Plan Interpretation Fraud Preemption Penalties Overpayments


The GenreProvider Lawsuits

State law causes of action in provider litigation may include:

Breach of contract (oral, express, and/or implied)Misrepresentation (intentional or negligent)Quantum meruit (i.e., value of services rendered) Promissory estoppel Equitable estoppel Intentional interference with economic relations Intentional interference with prospective economic

advantage Statutory violations (e.g., violation of state unfair

competition laws)


The GenreProvider Lawsuits

Federal law causes of action in provider litigation may include:

ERISA § 502 (29 U.S.C. § 1132)§ 502(a)(1)(B) claim for benefits

§ 502(a)(3) claim for breach of fiduciary duty, reformation, declaratory judgment

§ 502(c) claim for statutory penalties

MHPAEA ACA Lanham Act


The PremiseAssignments

ERISA § 502(a) causes of action:

A civil action may be brought to recover benefits due under the plan, to enforce rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan only by a participant or beneficiary

BUT Courts recognize a narrow exception for medical providers with valid assignments of a patient’s §502(a) right to sue for benefits, obtained in exchange for services

Tango Transp. Healthcare Fin. Servs. LLC, 322 F.3d 888, 891 (5th Cir. 2003)- collecting Circuit cases



A traditional assignment of a patient’s right to payment/benefits is typically required by providers in order for patients to get treatment.

Allows the provider to bill the plan on behalf of the patient

Misic v. Building Serv. Employees Health & Welfare Trust, 789 F.2d 1376 (9th Cir. 1986)

Does/does not give provider independent beneficiary status

DOES NOT: Rojas v. Cigna Health and Life Ins. Co., 793 F.3d 253 (2nd Cir. July 15, 2015)

DOES: Metcalf v. Blue Cross Blue Shield of Michigan, ---F. Supp. 3d---, 2014 WL 5776160 (D. Or. Nov. 5, 2014).

Does not automatically assign the right to sue to collect benefits

Advanced Women’s Health Center, Inc. v. Anthem Blue Cross Life and Health Insurance Company, 2014 WL 3689284 (E.D. Cal. July 23, 2014)



A traditional assignment of a patient’s right to payment/benefits doesautomatically assign the right to sue to collect benefits:

North Jersey Brain & Spine Center v. Aetna, 801 F.3d 369 (3rd Cir. Sept. 11, 2015)

Griffin v. Health Systems Management, Inc., ---Fed. Appx.---, 2015 WL 9466968 (11th Cir. Dec. 29, 2015)

American Chiropractic Ass’n v. American Specialty Health Inc., 625 Fed.Appx. 169 (3rd. Cir. 2015)

North Jersey Brain & Spine Center v. Aetna, Inc., 801 F.3d 369, 60 Employee Benefits Cas. 1253 (3rd Cir. 2015); American Chiropractic Ass’n v. American Specialty Health Inc., 2015 WL 5313631 (3rd Cir. Sept. 11, 2015).

Conn. State Dental Ass’n. v. Anthem Health Plans, Inc. 591 F.3d 1337, 1352 (11th

Cir. 2009)

Zamorano, M.D., P.C. v. Roofers Local 149—Security Benefit Trust Fund, 2015 WL 9478024 (E.D. Mich. Dec. 29, 2015)


Character ExpositionAssignee Article III Standing

Providers also must have Article III standing:• Injury-in-fact, traceable to challenged action of defendant,

likely be redressed by a favorable decision• Provider-assignees have injury-in-fact if patient-assignors

have a statutory cause of action, regardless of whether they pursue the patients for bills– Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc.,

770 F.3d 1282 (9th Cir. 2014)– Wisconsin Hospital and Clinics, Inc. v. Kraft Foods Global, Inc. Group

Benefits Plan, ---F. Supp. 2d---, 2014 WL 2860916, 58 EB Cases 2109 (W.D. Wis. June 23, 2014)

– Sidlo v. Kaiser Permanente Insurance Company, --- F. Supp. 3d ----, 2016 WL 6469259 (October 31, 2016)


Character ExpositionAssignee Article III Standing

• Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016)– Plaintiff does not automatically have an injury-in-fact for a

statutory violation– there must also be a concrete injury

• Soehnlen v. Fleet Owners Insurance Fund, 844 F.3d 576 (6th Cir. 2016)– The purported injuries alleged – potential liability to fund non-

compliant ACA plans- were too conjectural

• Lee v. Verizon Comm’ns, Inc., (5th Cir. 2016)– Court rejected argument that defendants’ violation of their

statutory duties under ERISA is in and of itself an injury in fact to plaintiff


Character ExpositionAssignee “Statutory Standing”

Validity of Assignments frequent source of contention Formerly argued as establishing “statutory standing”

Actually a question of whether the assignment allows Provider to state a cause of action under the statute American Psychiatric Ass’n v. Anthem Health Plans, Inc., 821 F.3d 352, 61

Employee Benefits Cas. 2637 (2nd Cir. 2016), citing Lexmark Int’l Inc. v. Static Control Components, Inc., 134 S.Ct. 1377 (2014)



Validity of Assignments frequent source of contention Courts routinely hold that medical providers who have

unenforceable assignments cannot pursue ERISA Section 502(a) claims Univ. of Wisconsin Hosp. & Clinics Authority v. Aetna Health

& Life Ins. Co, 144 F. Supp. 3d 1048 (W.D. Wis. 2015)

Absent a viable federal claim by a provider, district courts may decline to exercise supplemental jurisdiction over state-law claims. 28 U.S.C. § 1367(c)(3).



Validity of Assignments TIMING• Plans that do not raise lack of assignment during claims or appeals do not waive the

defense. Mbody Minimally Invasive Surgery v. Empire Healthchoice HMO, Inc., et al., 2016 WL 2939164 (S.D.N.Y. May 19, 2016).

• Providers can still get valid assignments after the appeal process. Shah v. Horizon Blue Cross Blue Shield New Jersey, No. 15-8560 (D.N.J. Aug. 25, 2016)

• Assignments signed after the complaint was filed are not valid. Mid-Town Surgical Center, L.L.P. v. Humana Health Plan of Texas, Inc., 16 F. Supp. 3d 767, 58 EB Cases 1120 (S.D. Tex. Apr. 23, 2014)

• Assignments executed more than three weeks before the participant was provided coverage not valid. Angel Jet Services, LLC v. Cleveland Clinic Employee Health Plan Total Care, ---F. Supp. 2d---, 2014 WL 3615798 (N.D. Ohio July 21, 2014).

• Assignments of due process rights must be executed and furnished before the claim’s explanation of benefits is sent. Children’s Hosp. Med. Ctr. of Akron v. Youngstown Assocs. in Radiology, Inc., Welfare Plan, No. 4:11cv506, 2014 U.S. Dist. LEXIS 44903, 57 EBC 2657 (N.D. Ohio Mar. 31, 2014), reversed on other grounds at 612 Fed. Appx. 836 (6th Cir. Aug. 17, 2015



Validity of Assignments NAMES• Assignments that name a different medical entity not valid.

– Peacock Medical Lab, LLC v. UnitedHealth Group, Inc, 60 EBC 1122, 2015 WL 2198470 (S.D. Fla. May 11, 2015); Advanced Women’s Health Center, Inc. v. Anthem Blue Cross Life and Health Insurance Company, 2014 WL 3689284 (E.D. Cal. July 23, 2014)

• Assignments that name a different plan not valid.– Angel Jet Services, LLC v. Cleveland Clinic Employee Health Plan Total Care, ---

F. Supp. 2d---, 2014 WL 3615798 (N.D. Ohio July 21, 2014)

• Assignments that name a medical entity that assigns its right to a recovery/collection agency are valid

– Gables Ins. Recovery v. Blue Cross and Blue Shield of Florida, Inc., ---Fed. Appx.---, 2015 WL 7729474 (11th Cir. Dec. 1, 2015).

– La Ley Recovery Systems – OB, Inc. v. Aetna Health Ins. Co., 2014 WL 5523128 (S.D. Fla. Oct. 31, 2014)



Provider Association with assignments may lack constitutional standing if its members lack standing, i.e, if the interest doesn’t align with the ass’n purpose, or if participation by individual members is required No standing:

– American Psychiatric Ass’n v. Anthem Health Plans, Inc., 821 F.3d 352, (2nd Cir. 2016)

– American Chiropractic Ass’n v. American Specialty Health Inc., 625 Fed.Appx. 169 (3rd Cir. 2015)

Yes standing:– New York State Psych. Assoc. Inc. v. United, 798 F.3d 125 (2d Cir. 2015)– Pennsylvania Psych. Soc’y v. Green Spring Health Servs, , Inc., 280 F.3d

278 (3d Cir. 2002)


The BackstoryBenefit Appeals and Authorizations

Provider-assignees generally must exhaust the ERISA § 503 plan’s appeal procedures before suing under §502(a)(1)(B) • Plans must allow a claimant to designate an authorized

representative to act on his/her behalf with respect to a benefit claim or appeal of an adverse benefit determination.

• Plans may establish reasonable procedures for determining whether an individual has been authorized to act on behalf of the claimant, such as completion of a form by the claimant

See § 2560.503-1(b)(4) and U.S. DOL FAQs (Q B-1, available at http://www.dol.gov/ebsa/faqs/faq_claims_proc_reg.html)



Cases may be dismissed where the provider failed to exhaust the appeal procedures North Cypress Med/ Ctr. Operating, Co. Ltd, et al. v. CIGNA, et al., CA No

4:09-cv-2556 (S.D. Tex. Sept. 28, 2016)

Professional Orthopaedic Assocs. v. 1199 National Benefit Fund, 16-cv-4838 (S.D.N.Y. Nov. 22, 2016)

Exceptions to exhaustion requirement where: Plaintiff pleads facts that exhaustion would be futile

Bourgeois v. Pension Plan for Employees of Santa Fe Int’l Corps., 215 F.3d 475, 479 (5th Cir. 2000)

Plan violates DOL claims procedures. Medina-Diaz v. Triple-S Vida Inc., No. 15-1347-GAG, 2016 U.S. Dist. LEXIS 111050 (D.P.R. Aug. 19, 2016). See 29 C.F.R. § 2560.503-1(l).



For in-network providers, the DOL claims regulations:

• Are not applicable to contractual disputes between in-network providers and healthcare payors

• Are applicable to requests for plan payments by in-network providers on behalf of claimants (where the provider has recourse against the claimants)

U.S. DOL FAQs (Q A-8, available at http://www.dol.gov/ebsa/faqs/faq_claims_proc_reg.html)


The Plot§ 502(a)(3) Equitable Relief Claims

Possible § 502(a)(3) provider claims:

• Breach of fiduciary duty• Surcharge• Reformation• Declaratory judgment• Injunction• MHPAEA• ACA



Can § 502(a)(3) claims be assigned? • Yes, if assignment explicitly assigns § 502(a)(3) rights

(assignment of “rights and benefits” not sufficient) – Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 59

Employee Benefits Cas. 1001 (9th Cir. 2014); Almont Ambulatory Surgery Center, LLC v. UnitedHealth Group, Inc., 99 F.Supp.3d 110 (C.D. Cal. Apr. 10, 2015)

– Griffin v. Lockheed Martin Corp., 647 Fed.Appx. 920 (11th Cir. 2016)– Brown v. Blue Cross Blue Shield of Tennessee, Inc., 2015 WL 3622338 (E.D. Tenn. June 9,

2015)– Children’s Hosp. Med. Ctr. of Akron v. Youngstown Assocs. in Radiology, Inc., Welfare Plan,

No. 4:11cv506, 2014 U.S. Dist. LEXIS 44903, 57 EBC 2657 (N.D. Ohio Mar. 31, 2014), rev’don other grounds at 612 Fed. Appx. 836 (6th Cir. Aug. 17, 2015)

– Sleep Lab at West Houston v. Texas Children’s Hospital, 2015 WL 3507894 (S.D. Tex. June 2, 2015); Mid-Town Surgical Center, L.L.P. v. Humana Health Plan of Texas, Inc., 16 F. Supp. 3d 767, 58 EB Cases 1120 (S.D. Tex. Apr. 23, 2014); Romano Woods Dialysis Center v. Admiral Linen Service, Inc., 2014 WL 3533479 (S.D. Tex. July 15, 2014);



Can § 502(a)(3) claims be assigned (cont.)?

• An assigned § 502(a)(3) claim fails if the assignment ties the right to denied claims but the lawsuit does not seek review of denied claims– Eden Surgical Ctr, v. B. Braun Med., Inc., 420 Fed.Appx. 696 (9th Cir.

2011)

• Assignments are a narrow exception granting ‘standing’ only for providers to whom a beneficiary has assigned his claim in exchange for healthcare benefits– Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d. 321, 329

(2d. Cir. 2011); American Psychiatric Ass’n v. Anthem Health Plans, Inc., 821 F.3d 352, (2nd Cir. 2016)



• If § 502(a)(1)(B) provides adequate relief, courts will dismiss § 502(a)(3) claim• American Psychiatric Ass’n v. Anthem Health Plans, Inc., 821 F.3d 352, (2nd

Cir. 2016)

• But do Courts permit plaintiffs to plead both §502(a)(1)(B) and § 502(a)(3) claims as "alternative--rather than duplicative--theories of liability“?– Mostly yes after Amara

• Silva v. Metro. Life Ins. Co., 762 F.3d 711, 726 (8th Cir. 2014)• N.Y. State Psychiatric Ass'n v. UnitedHealth Grp., 798 F.3d 125,

134 (2d Cir. 2015)• Moyle v. Liberty Mut. Ret. Ben. Plan, 823 F.3d 948 (9th Cir. 2016)


The Plot Thickens§ 502(c) Claims for Failure to Disclose

ERISA § 502(c)(1) -- $110/day penalty if plan administrator does not provide statutorily required documents promptly after a member’s request

ERISA § 104(b)(4) duty to disclose the latest updated SPD, annual report, etc

29 C.F.R. § 2560.503-1 -- claimant has the right to documents and information “relevant” to his claim or appeal.



Can § 502(a)(1) claims be assigned?• Yes, if the assignment explicitly includes it

– Care First Surgical Ctr. v. ILWU-PMA Welfare Plan, No. CV 14-01480 MMM AGRX, 2014 WL 6603761, at *11 (C.D. Cal. July 28, 2014)

Can rights under 29 U.S.C. § 1133 or 29 C.F.R. § 2560.503-1(h) be assigned?• Yes, if assignment explicitly includes it

– Children’s Hosp. Med. Ctr. of Akron v. Youngstown Assocs. in Radiology, Inc., Welfare Plan, No. 4:11cv506, 2014 U.S. Dist. LEXIS 44903, 57 Empl. Benefits Cas. (BNA) 2657 (N.D. Ohio Mar. 31, 2014), reversed on other grounds at 612 Fed. Appx. 836 (6th Cir. Aug. 17, 2015)



Can § 502(c) claims be assigned?• Yes

– St. Alexius Medical Center v. Roofers’ Unions Welfare Trust, 2015 WL 5123602 (N.D. Ill. Aug. 28, 2015)

• Yes, if assignment explicitly includes it– Almont Ambulatory Surgery Center, LLC v. UnitedHealth Group, Inc., 99

F.Supp.3d 110 (C.D. Cal. Apr. 10, 2015)

• No- nothing in ERISA authorizes participants or beneficiaries to assign away their rights to pursue statutory penalties. 502(a) claims only.

– Elite Center for Minimally Invasive Surgery, LLC v. Health Care Service Corp., No. 4:15-cv-00954, 2016 WL 6236328 (SD Tex. October 24, 2016)

– American Psych. Ass’n v. Anthem Health Plans, Inc., 821 F.3d 352, (2nd Cir. 2016)



Violations of 29 U.S.C. 1133 do not give rise to claims under 502(a)(1)(A):

• Benschoter v. Bd. of Trustees, Iron Workers Pension Plan, Local No. 55, No. 3:13-CV-02698, 2014 WL 3101325, at *3 (N.D. Ohio July 7, 2014)

• Levi v. RSM McGladrey, Inc., No. 12-CV-8787 ER, 2014 WL 4809942 (SDNY Sept. 24, 2014) (citing Krauss v. Oxford Health Plans, Inc., 418 F.Supp.2d 416, 435 (SDNY 2005))

• Wilczynski v. Lumbermens Mut. Cas. Co., 93 F.3d 397, 407 (7th Cir.1996).



Violations of duty to provide documents under §2560.503-1 do not give rise to claims for $110/day available under § 502(c):

– Elite Center for Minimally Invasive Surgery, LLC v. Health Care Serv. Corp., No. 4:15-cv-00954, 2016 WL 6236328 (S.D. Tex. October 24, 2016)

– Drzala v. Horizon Blue Cross Blue Shield, No. 15-8392, 2016 WL 2932545 (D.N.J. May 18, 2016)

– Varney v. Verizon Comm’ns, Inc., No. 07-695, 2013 WL 1345211 (EDNY Mar. 1, 2013)

– Ranke v. Sanofi-Synthelabo, Inc. No. 04-1618, 2004 WL 2473282 (E.D. Pa. Nov. 2, 2004)


Plot Twist Mistaken Identity

Professional Orthopaedic Assocs. v. 1199 Nat’l Benefit Fund, 16-cv-4838 (S.D.N.Y. Nov. 22, 2016)

Facts: Plaintiff Providers sued Plan under ERISA, as assignees, andPlaintiff Patient sued in her own name, pleading a § 502(a)(1)(B) claim for benefits, a sort of § 502(a)(3) claim for breach of fiduciary duty, and a §502(c) claim for penalties

Holding:

Dismissed as to Plaintiff Providers for failure to state a claim due to lack of a valid assignment

Dismissed as to Plaintiff Patient for failure to state a claim under Iqbal/Twombly and failure to exhaust administrative remedies.


The PlotDefending § 502 Claims for Benefits

Plan can defend Provider § 502 Claims if the Complaint fails to state a claim under Iqbal/Twombly:• Complaint must identify the plan provision implicated• Courts can consider the plan document• Complaint must name proper defendant

– Griffin v. Lockheed Martin Corporation, 647 Fed. Appx. 920 (11th Cir. April 11, 2016)

• Disputes regarding rate of payment may not be ERISA claims

– Professional Orthopaedic Assocs. v. 1199 Nat’ lBenefit Fund, 16-cv-4838 (S.D.N.Y. Nov. 22, 2016)


The PlotDefending § 502 Claims for Benefits

Failure to state a claim under Iqbal/Twombly(cont.), complaint must plead facts to show:• That assignment was made in exchange for medical

treatment• American Chiropractic Ass’n v. American Specialty Health Inc., 625 Fed.Appx. 169 (3rd. Cir.

2015)

• That assignment explicitly covered claims• That anti-assignment provision not applicable• That appeals were exhausted or exhaustion futile• That injury was real and “concrete”

– Soehnlen v. Fleet Owners Insurance Fund, 844 F.3d 576 (6th Cir. 2016)

• If in-network provider, that provider can pursue patient


Plot TwistPlan Exclusions for “Fee-Forgiving”

Insurers that have a “fee forgiving protocol” exclude coverage of benefits for patients whose out-of-pocket contribution was waived• Hospital sued insurer seeking declaratory judgment, Court found it

had standing– North Cypress Medical Center Operating Company, Ltd v. Cigna Healthcare, 781

F.3d 183, 59 EBC 1905 (5th Cir. March 10, 2015)

• Insurer sued hospital for underpayment, court found it had standing– Connecticut General Life Ins. Co. and Cigna Health and Life Ins. Co. v.

Southwest Surgery Center, LLC d/b/a Center for Minimally Invasive Surgery, 2015 WL 6560536 (N.D. Ill. Oct. 29, 2015)


The Plot ResolutionAnti-Assignment Plan Provisions

Medical providers still face dismissal if a plan includes a valid and enforceable anti-assignment provision See, e.g., Griffin v. Health Systems Management, Inc., ---Fed. Appx.---, 2015 WL

9466968 (11th Cir. Dec. 29, 2015); Physical Therapy USA Inc., v. United Healthcare of Ariz., Inc., 770 F.3d 1282 (9th Cir. 2014); Merrick v. UnitedHealth Group Inc., 175 F. Supp. 3d 110, 61 EBC 1662 (S.D.N.Y. 2016)

Anti-assignment provisions may not be enforceable if ambiguous, untimely enforced, or selectively enforced (i.e.,waived), or the authenticity of the plan documents is disputed See, e.g., Lutheran Med. Ctr. of Omaha v. Contractors Health & Welfare Plan, 25

F.3d 616 (8th Cir. 1994); Shelby County Health Care Corp. v. Genesis Furniture Industries, Inc., 100 F.Supp.3d 577 (N.D. Miss. March 30, 2015); Bloom v. Independence Blue Cross, 2015 WL 4598016 (E.D. Penn. July 31,2015); Riverview Health Institute v. UnitedHealth Group Inc., 2015 WL 9581807 (D.Minn. Dec. 30, 2015); Semente v. Empire Healthchoice Assurance, Inc., ---F.Supp.3d---, 2015 WL 7953939 (E.D.N.Y. Dec. 4, 2015); Trueview Surgery v. Onesubsea LLC, 2015 WL 4431408 (S.D. Tex. July 17, 2015)


The Subplot ResolutionState Law Preemption

Plans may assert ERISA preemption as a defense or jurisdictional bar to state law claims:

Section 514 (“Conflict” or “Express”) preemption of state law causes of action that relate to plan administration

“Complete” preemption of state law causes of action that are duplicative of an ERISA Section 502(a) cause of action

Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936 (2016) –ERISA preempts two types of state laws:

A law that acts “immediately and exclusively” on ERISA plans (i.e., “where the existence of ERISA plan is essential to [its] operation”)

A law that governs “a central matter of plan administration” or “interferes with nationally uniform plan administration”



Out-of-network Provider’s state law claims are pre-empted by ERISA where it had valid assignment, so could have brought a ERISA § 502(a) claim: United Surgical Assistants, LLC v. Aetna Life Insurance Co., 2014 WL 4059889

(M.D. Fla. Aug. 14, 2014) Innova Hospital San Antonio, L.P. v. Humana Insurance Co., ---F. Supp. 2d---,

2014 WL 2611828 (W.D. Tex. June 11, 2014) Emerus Hospital Partners, LLC v. Health Care Service Co., ---F. Supp. 2d---,

2014 WL 1715516, 58 EB Cases 1991 (N.D. Ill. Apr. 29, 2014) Star Multi Care Services, Inc. v. Empire Blue Cross Blue Shield, 6 F. Supp. 3d,

275 (E.D.N.Y. March 19, 2014) University of Wisconsin Hospital and Clinics, Inc. v. Aetna Life Insurance Co., ---

F. Supp. 2d ---, 2014 WL 2565284 (W.D. Wis. June 6, 2014) Lodi Memorial Hospital Association v. Tiger Lines, LLC, 2015 WL 5009093 (E.D.

Cal. Aug. 20, 2015)



In-network Provider’s state law claims are pre-empted by ERISA where it had valid assignment, and still had recourse against patient, so could have brought a ERISA § 502(a) claim:• Montefiore Medical Center v. Teamsters Local 272, 642 F.3d 321, 50 Employee

Benefits Cas. 2496 (2nd Cir. 2011)• Advanced Women’s Health Center, Inc. v. Anthem Blue Cross Life and Health

Insurance Company, 2014 WL 3689284 (E.D. Cal. July 23, 2014)• South Broward Hospital District v. Coventry Health and Life Insurance Company,

2014 WL 6387264 (S.D. Fla. Nov. 14, 2014)• McCulloch Orthopaedic Surgical Services, PLLC v. Aetna U.S. Healthcare, 2015

WL 2183900 (S.D.N.Y. May 11, 2015)

In-network Providers state law claims not pre-empted by ERISA:• Pennsylvania Chiropractic Association v. Independence Hospital Indemnity Plan,

Inc., 802 F.3d 926 (7th Cir. Oct. 1, 2015)• Cardionet, Inc. v. Cigna Health Corporation, 751 F.3d 165, 58 EB Cases 1001

(3d Cir. May 6, 2014)


Plot TwistRecoupment of Plan Overpayments

Claw back actions- Plans can sue providers to “claw back” payments Two cases involving Humble Surgical Hospital, LLC in the

Southern District of Texas, with two different judges, illustrate potential outcomes for claw back actions

Some such attempts under ERISA have failed, unless the payments were based on fraudulent invoices, or on plan language or a contract provision authorizing the claim. See generally Kolbe & Kolbe Health & Welfare Plan v. Medical College of Wis., Inc., 742 F.3d 751 (7th Cir. 2014)

Some claw-back attempts under ERISA have been permitted and are proceeding. See, e.g., Almont Ambulatory Surgery Center v. UnitedHealth Group, Inc., 99 F. Supp. 3d 1110 (C.D. Cal. 2014)


Plot TwistPlan Counterclaim for Fraudulent Billing

Aetna Life Ins. Co. v. Humble Surgical Hosp., LLC, CA No: 4:12-cv-01206, 2016 BL 436734 (S.D. Tex. December 31, 2016)

Facts: Aetna sued Humble, a physician-owned hospital, to recover alleged overpayments made due to alleged fraudulent billing practices in violation of both ERISA and state common law

Conclusion: Describing Humble as “filthy up to the elbows from lies and corrupt bargains,” the court allowed Aetna to choose between three different remedies:

$41M - recoup all the money it paid Humble over a three-year period;

$20M - recoup the difference between what Aetna paid versus what it would have paid if Humble were an in-network provider; or

$12M - recoup the kickbacks Humble paid physicians, totaling approximately 30% of all money Humble paid over three years


Surprise Endingcounter counter claim

Connecticut Gen. Life Ins. Co. v. Humble Surgical Hosp., LLC, CA No. 4:13-cv-03291 (S.D. Tex. June 1, 2016)

Facts: Cigna sued Humble to recover alleged overpayments made to Humble due to alleged fraudulent billing practices in violation of both ERISA and state common law

Conclusion: After a nine-day bench trial, the Court:

(1) Denied Cigna’s request for reimbursement for alleged overpayments; and

(2) Awarded Humble more than $13 million to cover certain alleged underpaid claims and ERISA penalties


End Scene

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medical service provider benefit claims (slides) - · pdf file · 2018-01-19an...

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