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.
The first portion of this article explores some empirical data attendant to managed care cases filed since January 2014. 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).1<\/sup> The discussed cases are against the five major health insurers: "Aetna," "United Healthcare," "Humana," "CIGNA," and Blue Cross Blue Shield Plans ("BCBS").
<\/sup>The second half of this article discusses noteworthy cases concerning coverage disputes over claims involving the preemption of Patient Protection and Affordable Care Act (PPACA) disputes in state court.
In 2014<\/u>, 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 provider(s).
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<\/u>, 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 provider(s).
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<\/u>, 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<\/u>, 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<\/u>, 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<\/u>, 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 the first half of 2020<\/u>, there were 134 reported cases involving managed care disputes against BCBS (47), Aetna (21), United Healthcare (34), Humana (5), and CIGNA (27). Among them, 59 were filed on behalf of members, 50 were filed on behalf of physicians, 10 were filed on behalf of other service providers, and 12 were filed on behalf of facilities. There was one case filed on behalf of plan sponsor(s), two cases involving a plan's subrogation rights, and zero 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 (33), followed by the U.S. Third Circuit (22) and the U.S. Tenth Circuit (20).
The case volume against the five covered health insurers, from January 2014 to mid-2020, 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.
PPACA's general objective is to provide affordable insurance for underserved citizens, under a uniform (federal) framework. Uniform federal standards are established for Qualified Health Plans (QHPs) that are available on state health insurance exchanges, regardless of the state in which they operate.6<\/sup> PPACA preempts "any state law that does not prevent application of the provisions of this title." So the question is: against the backdrop of an extensive federal regulatory regime and a parallel state regulatory regime, should federal courts have jurisdiction over matters pertaining to contested calculations performed by PPACA health plans? Of the three courts to have directly considered this question to date, only one has answered in the affirmative.
In Morris v. Blue Shield, the plaintiffs filed a putative class action in state court generally alleging Blue Shield of California erred in calculating the medical loss ratio (MLR), such that subscribers received smaller rebates. The plaintiffs sought approximately $35 million, representing the alleged difference between the total amount of MLR rebates that were paid and the amount that should have been paid. The federal court, after removal, denied the plaintiffs' motion to remand to state court, holding "[t]he MLR provisions of the ACA present important questions of federal law whose disposition 'sensibly belongs in a federal court.'"
<\/sup>In contrast, the plaintiff in Lowe v. Scott and White Health Plan alleged the defendant violated the terms of the PPACA plan by wrongfully denying coverage for outpatient cognitive therapy sessions following a stroke. The court granted the plaintiff's motion to remand, holding "the language cited by Defendant in Texas Insurance Code Annotated Section 1352.002(c) does not state that disputes under the Texas Insurance Code should be handled in federal court; rather the language is simply a limitation on payments by the state of Texas equivalent to those that exceed the 'essential health benefits' required under the ACA \u2026 [and] state courts are capable of interpreting federal law, especially where, as here, federal codes act as limitations on state insurance coverage within state regulations and there is no private right of action under the federal statute."
<\/sup>Finally, in Texas Medicine Resources, LLP, et al. v. Molina Healthcare of Texas, Inc., the plaintiffs alleged they provided emergency services to members of the defendant's Health Insurance Exchange plans and "that Texas law requires [HMOs] to reimburse healthcare providers at the usual and customary rate [under Texas statute requiring payment at the usual and customary rate or at an agreed rate]." The court granted the plaintiffs' motion to remand, holding "[a] review of the Texas Insurance Code section at issue indicates that it abides by the requirements of federal law - it simply does not prevent the application of the Affordable Care Act."
As reflected by the empirical data above, litigation over health plan benefits, usually filed by out-of-network providers, <\/sup>continues at a steady pace. As to whether state court will have jurisdiction over claims involving the uniquely federal nature of PPACA, courts will look to whether the calculation implicated in the proceeding is exclusively federal, or whether it can be equally performed by the state court. If the latter, then state courts will be charged with deciding these claims and retain jurisdiction.