Trends and Developments In Health Plan Coverage Disputes, Noteworthy Cases Involving Contested Emergent Care Claims

Put another way, a provider’s successful claim for reimbursement could find precedent-setting coverage for a pool of claims never intended by the actuaries, with significant economic impact on whether the payor sustains an underwriting profit or loss.  At the same time, a payor’s successful claim against coverage validates policy language or claim review procedures, ensuring use of the decision in subsequent claims.

The first portion of this article explores some empirical data attendant to managed care cases filed since January 2014. The data are derived from cases filed in the U.S. District Courts, whether filed as original proceedings or removed from state court.  Insofar as the health plans at issue are invariably provided as employer group health benefits, the predicate for removal is usually the Employee Retirement Income Security Act of 1974 (ERISA).¹ The discussed cases are against the five major health insurers: “Aetna,” “United Healthcare,” “Humana,” “CIGNA,” and Blue Cross Blue Shield Plans (“BCBS”).²

The second half of this article discusses noteworthy cases concerning coverage disputes over claims involving emergent care.³

Case Statistics: 2014 Through The First Half of 2019

In 2014, there were 463 cases involving managed care disputes against BCBS (165), Aetna (110), United Healthcare (81), Humana (49), and CIGNA (58).  Among them, 145 were filed on behalf of members, 81 were filed on behalf of physicians, 135 were filed on behalf of other service providers, and 64 were filed on behalf of facilities.  There were 21 cases on behalf of plan sponsors, 11 cases involving a plan’s subrogation rights, and six cases filed by health insurers seeking repayment from providers.

During this period, the greatest concentration of cases was filed in the U.S. Eleventh Circuit (134), followed by the U.S. Ninth Circuit (68) and the U.S. Fifth Circuit (64).

In 2015, there were 498 cases involving managed care disputes against BCBS (234), Aetna (112), United Healthcare (70), Humana (21), and CIGNA (61).  Among them, 200 were filed on behalf of members, 42 were filed on behalf of physicians, 38 were filed on behalf of other service providers, and 114 were filed on behalf of facilities. There were 79 cases on behalf of plan sponsors, 17 cases involving a plan’s subrogation rights, and eight cases filed by health insurers seeking repayment from providers.

During this period, the greatest concentration of cases was filed in the U.S. Sixth Circuit (113), followed by the U.S. Ninth Circuit (84) and the U.S. Fifth Circuit (59).

In 2016, there were 499 cases involving managed care disputes against BCBS (216), Aetna (94), United Healthcare (108), Humana (28), and CIGNA (53).  Among them, 218 were filed on behalf of members, 61 were filed on behalf of physicians, 62 were filed on behalf of other service providers, and 91 were filed on behalf of facilities. There were 35 cases on behalf of plan sponsors, 20 cases involving a plan’s subrogation rights, and 12 cases filed by health insurers seeking repayment from providers.

During this period, the greatest concentration of cases was filed in the U.S. Ninth Circuit (108), followed by the U.S. Tenth Circuit (65) and the U.S. Fifth and Sixth Circuits (58 each).

In 2017, there were 646 cases involving managed care disputes against BCBS (348), Aetna (104), United Healthcare (103), Humana (18), and CIGNA (73).  Among them, 228 were filed on behalf of members, 196 were filed on behalf of physicians, 50 were filed on behalf of other service providers, and 99 were filed on behalf of facilities.  There were 41 cases on behalf of plan sponsors, 19 cases involving a plan’s subrogation rights, and 13 cases filed by health insurers seeking repayment from providers.

During this period, the greatest concentration of cases was filed in the U.S. Third Circuit (197), followed by the U.S. Tenth Circuit (98) and the U.S. Ninth Circuit (88).

In 2018, there were 597 reported cases involving managed care disputes against BCBS (265), Aetna (132), United Healthcare (121), Humana (25), and CIGNA (54).  Among them, 253 were filed on behalf of members, 166 were filed on behalf of physicians, 79 were filed on behalf of other service providers, and 69 were filed on behalf of facilities. There were two cases filed on behalf of plan sponsors, 13 cases involving a plan’s subrogation rights, and 15 cases filed by health insurers seeking repayment from providers.

During this period, the greatest concentration of cases was filed in the U.S. Third Circuit (143), followed by the U.S. Ninth Circuit (113) and the U.S. Tenth Circuit (92).

The case volume against the five covered health insurers, from January 2014 to mid-2019, is best represented by the following chart.
Source: Managed Care Litigation Update (R) (www.managedcarelitigationupdate.com)

In the first half of 2019, there were 165 reported cases involving managed care disputes against BCBS (71), Aetna (30), United Healthcare (48), Humana (two), and CIGNA (14).  Among them, 73 were filed on behalf of members, 71 were filed on behalf of physicians, 11 were filed on behalf of other service providers, and six were filed on behalf of facilities.  There were four cases filed on behalf of plan sponsors, zero cases involving a plan’s subrogation rights, and zero cases filed by health insurers seeking repayment from providers.

During this period, the greatest concentration of cases was filed in the U.S. Ninth Circuit (33), followed by the U.S. Eleventh Circuit (30) and the U.S. Third Circuit (24).

While the case volume as to each insurer is fairly constant, the mix of cases tends to change.  Past articles have discussed increasing numbers of cases asserting claims for mental health benefits and claims involving emergent care.⁴ Mental health benefit cases are most frequently filed in the U.S. Tenth Circuit, which encompasses the state of Utah where many residential treatment centers and wilderness programs are located.   The U.S. Third Circuit, encompassing the state of New Jersey, saw a large increase in filings in the third quarter of 2017, largely comprised of out-of-network physicians seeking payment for orthopedic claims.  The U.S. Sixth Circuit, encompassing the state of Michigan, saw a large number of Plan Sponsor claims in 2016 against a major insurer in that state, but those claims have diminished.


Noteworthy Cases: Emergent Care

One of the fastest growing trends in managed care litigation is an increasing number of cases  seeking coverage for emergent care.  Statistics from 2016, 2017, and 2018 are reflected in the attached chart.
Source: Managed Care Litigation Update (R) (www.managedcarelitigationupdate.com)

These cases, which are generally predicated on statutes⁵ that permit billing of the Usual and Customary Rate (UCR) in the absence of an in-network agreement, present thorny issues.  Patients needing such care are typically not in a position to seek out an in-network provider, and emergency room facilities, which may be in-network, sometimes contract with out-of-network providers such as physician groups.⁶  Furthermore, the cost of emergent claims (and concomitant reimbursement rate) frequently well exceed the cost of non-emergent claims, appropriately justified by the high cost of labor and equipment to maintain emergent facilities.  Overlaying the entire landscape is the Patient Protection and Affordable Care Act, which generally provides that emergency services must be covered without regard to whether the provider is in-network or out-of-network and cannot impose any copayment or coinsurance that is greater than what would be imposed if the provider were in-network.⁷ 

Notwithstanding the number of filed cases, they have not fully advanced beyond the initial pleading stage, so decisions have been few to date. In one case filed by a provider seeking $332,300.00 for emergency brain surgery, the court found the insurer’s payment of $6,893.20 was not arbitrary and capricious. The court granted the insurer’s motion for summary judgment, finding “defendants’ decision not to pay 100% of the billed medical expenses cannot be considered an abuse of discretion.”⁸

In another case, Namdy Consulting, Inc. v. UnitedHealthcare Ins. Co.,⁹ the “Plaintiff claims that Defendant was legally required to compensate the Physicians at the usual, customary, and reasonable (‘UCR’) rates, since Physicians rendered services that were emergent or authorized.”  The court held, inter alia, “Plaintiff fails to adequately allege that the parties, even if through their conduct and not their words, reached an agreement that Defendant would pay the UCR rate” (previously citing California Insurance Code Sec. 10112.7(a) (“[u]npaid out-of-network providers may recover UCR for their [emergent] services from health plans and health insurers.”)).


Finally, a Magistrate Judge recommended, inter alia, that an air ambulance provider’s claim under Texas’ Emergency Care Statutes¹⁰ not be dismissed under Fed. R. Civ. Pro. 12(b)(6).  “[T]he undersigned recommends that BlueCross’ motion to dismiss Apollo’s claims under the Emergency Care Statutes on the ground that the statutes do not create a private right of action be denied.”¹¹

Conclusion

As reflected by the empirical data above, litigation over health plan benefits, usually filed by out-of-network providers,¹² continues at a steady pace.  Furthermore, statutes permitting charging of UCR in emergent settings seem to be prompting an increasing number of cases filed by out-of-network providers desirous of the higher UCR rates and higher emergent care reimbursement levels.

1. 29 U.S.C. § 1001, et seq.  The ERISA provisions relating to a participant or beneficiary’s enforcement of rights may be found at 29 U.S.C. § 1132 et seq.
2. The terms “Aetna,” “United Healthcare,” “Humana,” and “CIGNA” are intended to be generic terms which identify with the four major health insurers. The term “Blue Cross Blue Shield Plans” is intended to be a generic term that collectively represents the 36 independently operated Blue Cross and Blue Shield member companies.  While these are not the only health insurers, these entities collectively comprise the largest percentage of  health insurance plans (self-funded, fully funded, or administrated plans) and, concomitantly, represent the greatest collective percentage of disputes.
3. See also Trends and Developments in Managed Care Litigation, published in the American Bar Association Health Law Section’s ABA Health eSource, Vol. 12, No. 2, October  2015 (https://www.americanbar.org/publications/aba_health_esource/2015-2016/october/litigation.html); Trends and Developments in Coverage Disputes Over Mental Health Benefits, published in the American Bar Association Health Law Section’s ABA Health eSource, Vol. 13, No. 2, October  2016 (https://www.americanbar.org/publications/aba_health_esource/2016-2017/October2016/mentalhealth.html);   Trends and Developments in Health Plan Coverage Disputes, Emerging Litigation in Payment over Urgent Care, published in the American Bar Association Health Law Section’s ABA Health eSource, Vol. 14, No. 2, October 2017 (https://www.americanbar.org/groups/health_law/publications/aba_health_esource/2016-2017/october2017/coveragedispute.html); and Trends and Developments in Health Plan Coverage Disputes, Noteworthy Cases on Anti-Assignment Clauses, published in the American Bar Association Health Law Section’s ABA Health eSource, Vol. 15, No. 2, October, 2018 (https://www.americanbar.org/groups/health_law/publications/aba_health_esource/2018-2019/october-2018/trends/). This article builds on the statistics covered in those prior articles and specifically examines recent, notable cases involving contested benefits for emergent care. 
4. See n. 3, supra.
5. See n. 7, infra.
6. See e.g. Angelina Emergency Medicine Associates, P.A., et al. v. Blue Cross Blue Shield of Texas, U.S.D.C. N.D. TX, Doc. No. 3:18-cv-00425-K, (filed Feb. 20, 2018) (49 out-of-network physician groups "that provide emergency healthcare services at hospitals across … Texas", and alleged assignees, contend they have received underpayments for 250,000 claims for emergency services rendered to BCBSTX members. Citing the Patient Protection and Affordable Care Act, 42 U.S.C. § 300gg-19a(b)(1)(C)(ii), Plaintiffs allege the patient's cost sharing obligation for emergency services must be the same for out-of-network services as in-network and that "the prevailing practice in Texas is for out-of-network health plans or insurers to pay the provider’s billed charges or [UCR]."); American College of Emergency Physicians, et al. v. Blue Cross and Blue Shield of Georgia, Inc., et al., U.S.D.C. N.D. GA, Doc. No. 1:18-cv-03414-MLB, (filed July 17, 2018) (Emergency physicians and their association members seek "Declaratory Judgement that the Defendants' ER policy violates the prudent layperson standard set forth in the Patient Protection and Affordable Care Act, 42 U.S.C. § 18116 et seq."  The emergency room policy at issue is predicated on the Defendants' correspondence to their insureds generally informing them that they will be responsible for ER costs when it is not an emergency and "reclassifying emergency department encounters as 'non-emergent.'"  Plaintiffs allege the Defendants' position "is contradictory to the "prudent layperson" standard found in 45 C.F.R. § 147.138(b)(4)(i).").
7. 29 C.F.R. 2590.715-2719A. See also Florida Statutes, Sections 627.428, 641.28, 641.513(5); N.J.A.C. 11:4-37.3; California Health and Safety Code § 1371.4(b); Tex. Ins. Code § 1301.155.
8. Jeffrey Farkas, M.D., LLC v. Cigna Health & Life Ins. Co., 386 F. Supp. 3d 238 (E.D.N.Y. 2019) (judgment entered Aug. 13, 2019, appeal period pending as of this date).
9. Namdy Consulting, Inc. v. UnitedHealthcare Ins. Co., CV 18-01283-RSWL-KS, 2019 WL 1470849, at *5 (C.D. Cal. Apr. 3, 2019).
10. Texas Ins. Code §§ 1271.155 (HMO Plans), 1301.0053 (EPO plans), and 1301.155 (PPO plans) (collectively the “Emergency Care Statutes”).
11. Apollo MedFlight, LLC v. BlueCross BlueShield of Texas, 2:18-CV-0166-D-BR, 2019 WL 2539272, at *10 (N.D. Tex. Apr. 12, 2019) (objection to Mag. Judge’s Order filed and pending before the district court).
12. In-network providers typically have their disputes governed by mandatory arbitrary or mediation clauses within the provider agreements.

About the Author

Jonathan M. Herman is the founding member of Herman Law Firm, with offices in Dallas, Texas (principal office), New Orleans, Louisiana, Boston, Massachusetts, and Ridgeland, Mississippi, where he defends large health insurers, plan administrators, and self-funded employer health plans (i.e. “payors”) against underpayment or no payment claims by medical service providers.  Mr. Herman also publishes The Managed Care Litigation Update^â (MCLU), a bi-weekly electronic publication, reporting on cases filed in the prior two-week period, followed by payor specific analysis at the close of each calendar quarter.  The MCLU database serves as a ready practice resource by tracking emergent issues, significant cases, and other client-specific requests.  See www.managedcarelitigationupdate.com.

Mr. Herman is on the Roster of Arbitrators for the American Arbitration Association (Healthcare and Commercial Matters) and is a Neutral for the American Health Lawyers Association.  He can be reached at (214) 624-9805 and [email protected].