chevron-down Created with Sketch Beta.
    August 30, 2021

    Trends and Developments in Health Plan Coverage Disputes

    By Jonathan M. Herman, Esq., Herman Law Firm, Dallas, TX

    Introduction

    Managed care litigation is generally described as the tug-of-war among payors (insurers and self-funded plans), providers (physicians, hospitals, and other medical service providers), and patients (members or beneficiaries of health plans).  Payors strive to adhere to their committed risk under their health plans, providers demand fair payment for services rendered, and patients simply want coverage for their medical expenses.

    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.

    This article explores certain empirical data attendant to managed care cases filed from the five and one-half year period beginning January 1, 2016 through June 30, 2021.  The data is 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).  The discussed cases are against the five major health insurers: “Aetna,” “United Healthcare,” “Humana,” “CIGNA,” and Blue Cross Blue Shield Plans (“BCBS”).

    Case Statistics: 2016 Through The First Half of 2021

    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 provider(s).

    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 provider(s).

    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 sponsor(s), 13 cases involving a plan’s subrogation rights, and 15 cases filed by health insurers seeking repayment from provider(s).

    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).

    In 2019, there were 566 reported cases involving managed care disputes against BCBS (234), Aetna (109), United Healthcare (148), Humana (17), and CIGNA (58).  Among them, 263 were filed on behalf of members, 167 were filed on behalf of physicians, 78 were filed on behalf of other service providers, and 31 were filed on behalf of facilities.  There were nine cases filed on behalf of plan sponsor(s), eight cases involving a plan’s subrogation rights, and 10 cases filed by health insurers seeking repayment from provider(s).

    During this period, the greatest concentration of cases was filed in the U.S. Ninth Circuit (112), followed by the U.S. Tenth Circuit (84) and the U.S. Eleventh Circuit (77).

    In 2020, there were 569 reported cases involving managed care disputes against BCBS (231), Aetna (88), United Healthcare (137), Humana (17), and CIGNA (96).  Among them, 235 were filed on behalf of members, 171 were filed on behalf of physicians, 84 were filed on behalf of other service providers, and 62 were filed on behalf of facilities.  There was one case filed on behalf of plan sponsor(s), 10 cases involving a plan’s subrogation rights, and six cases filed by health insurers seeking repayment from provider(s).

    During this period, the greatest concentration of cases was filed in the U.S. Ninth Circuit (159), followed by the U.S. Third Circuit (85) and the U.S. Tenth Circuit (72).

    In the first six months of 2021, there were 212 reported cases involving managed care disputes against BCBS (86), Aetna (31), United Healthcare (57), Humana (6), and CIGNA (32).  Among them, 109 were filed on behalf of members, 52 were filed on behalf of physicians, 25 were filed on behalf of other service providers, and 17 were filed on behalf of facilities.  There were three cases filed on behalf of plan sponsor(s), six cases involving a plan’s subrogation rights, and no cases filed by health insurers seeking repayment from provider(s).

    During this period, the greatest concentration of cases was filed in the U.S. Tenth Circuit (61), followed by the U.S. Third Circuit (34) and the U.S. Eleventh Circuit (31).

    The case volume against the five covered health insurers, from January 2016 to mid-2021, is best represented by the following chart:

    Source: Managed Care Litigation Update  (www.managedcarelitigationupdate.com)

    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. 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.

    Conclusion

    As reflected by the empirical data above, litigation over health plan benefits, usually filed by out-of-network providers, continues unabated.  Prior articles have explored notable cases involving the preemption of Patient Protection and Affordable Care Act disputes in state court, coverage disputes over claims involving emergency care, cases involving anti-assignment clauses, and cases involving mental health coverage disputes.  A follow-up article to be published in October 2021 will drill down on a particular topic that is seeing litigation growth, surprise billing, and trends in that sub-set. 

      Entity:
      Topic:
      The material in all ABA publications is copyrighted and may be reprinted by permission only. Request reprint permission here.

      Jonathan M. Herman

      -------------------

      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® (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 Law Association.  He can be reached at (214) 624-9805 and [email protected].