Within days of one another, the U.S. Court of Appeals for the Ninth and Second Circuits ruled—on issues of first impression for both—that ERISA expressly preempts state law breach of contract and promissory estoppel claims asserted by out-of-network providers who allege that preauthorization communications with claim administrators impose reimbursement obligations independent and irrespective of the
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Implementing Regulations for The No Surprises Act: Part I
On July 1, 2021, the Departments of Health and Human Services (HHS), Labor, and Treasury (together, “the Departments”), and the Office of Personnel Management, issued Requirements Related to Surprise Billing; Part I (Interim Final Rules (IFR) with Request for Comments). This is the first set of regulations implementing the federal No Surprises Act (NSA), which was enacted as part of the Consolidated Appropriations Act of 2021.
Medicare and Medicaid already prohibit surprise billing/balance billing, and the NSA extends this protection to patients insured through employer-based and individual health plans. The NSA applies to fully insured and self-insured group health plans, including grandfathered plans, but they do not apply to excepted benefits (such as limited-scope dental and vision plans, and most health flexible spending arrangements), or to health reimbursement arrangements.
To be considered, written comments to the IFR must be received by 5 p.m. on September 7, 2021. If the agency is persuaded by any of the comments and so chooses, the rule can be amended in light of those comments.
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Second Circuit Addresses Limitations Periods Governing Fraudulent Billing Claims Against Non-Participating Providers
In Connecticut General Life Ins. Co. v. BioHealth Labs., Inc., No. 20-2312-CV, — F.3d –, 2021 WL 476111 (2d Cir. Feb. 10, 2021), Cigna, as administrator of employee health plans, sued six out-of-network lab companies for various fraudulent billing schemes, including fee forgiveness (not charging the patient for co-insurance, co-pays, etc.), unnecessary testing, and unbundling (separately billing for services that should be combined at a lower rate). In all, Cigna sought to recover $17 million in fraudulent or improper charges.
Cigna had completed its investigation that uncovered the alleged fraud in 2015, and began to deny payment of claims submitted by the labs. Two of the labs sued Cigna in Florida, but that action was dismissed and closed in 2017 for failure to exhaust administrative remedies. Cigna then sued the labs in Connecticut District Court in 2019, asserting “a variety of Connecticut state-law and federal claims,” all of which, according to Cigna, would have been compulsory counterclaims in the Florida action, had it not been dismissed. The district court dismissed the Connecticut complaint on the ground that all claims were time-barred under Connecticut’s three-year statute of limitations for tort claims.
The Second Circuit affirmed in part and reversed in part.
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Supreme Court Rules that ERISA Does Not Preempt State Law Regulating PBM Reimbursements
In Rutledge v. Pharmaceutical Care Mgt. Assoc., — U.S. –, 2020 WL 7250098 (Dec. 10, 2020), the Supreme Court held that ERISA’s broad express preemption will not reach a state law that focuses on the price of prescription drug benefits that a plan chooses to provide.
The particular question in Rutledge was whether ERISA preempted an Arkansas law regulating the price at which pharmacy benefit managers (PBMs) reimburse pharmacies for the cost of drugs covered by ERISA prescription drug plans. The Court described PBMs as
a little-known but important part of the process by which many Americans get their prescription drugs. Generally speaking, PBMs serve as intermediaries between prescription-drug plans and the pharmacies that beneficiaries use. When a beneficiary of a prescription-drug plan goes to a pharmacy to fill a prescription, the pharmacy checks with a PBM to determine that person’s coverage and copayment information. After the beneficiary leaves with his or her prescription, the PBM reimburses the pharmacy for the prescription, less the amount of the beneficiary’s copayment. The prescription-drug plan, in turn, reimburses the PBM.
Coverage Under Private Group Health and Disability Plans: Implications of COVID-19
Excerpt of a contributed article published by DRI in the August 2020 issue of For The Defense.
As the new coronavirus (COVID-19) spreads within the United States, questions arise over the potential effect that it may have on private group health and disability plans during and after the current pandemic. This article discusses recent federal…
Remand Directing Change in Standard of Judicial Review Is Not Sufficient Success on the Merits to Support Attorneys’ Fee Award
In Ariana M. v. Humana Health Plan of Texas, Inc., No. 18-20700, 2019 WL 5866677 (5th Cir. Nov. 8, 2019), the Fifth Circuit Court of Appeals rejected a plaintiff’s petition for attorneys’ fees under 29 U.S.C. § 1132(g). This case concerns Humana Health Plan of Texas, Inc.’s denial of benefits for hospitalization to treat an eating disorder. On a prior appeal, Ariana M. v. Humana Health Plan of Texas, Inc., 884 F.3d 246 (5th Cir. 2018) (en banc) (“Ariana I”), the Fifth Circuit concluded that the District Court erred by conducting a deferential review of the claim decision, that it remanded the case for a de novo review of Humana’s decision.
On remand and de novo review, the District Court found Humana had not erred and entered summary judgment in Humana’s favor. Nonetheless, Ariana filed a fee petition, asserting that her success in Ariana I in convincing the appellate court to change the standard of review and remand her case entitled her to fees regardless of whether she ultimately won her claim for benefits. The District Court denied her petition.Continue Reading Remand Directing Change in Standard of Judicial Review Is Not Sufficient Success on the Merits to Support Attorneys’ Fee Award
Successful Pleading Challenges to Parity Act Claims Regarding Wilderness Treatment
Wilderness therapy, also referred to as outdoor behavioral healthcare, is a treatment modality that uses expeditions into the wilderness as a means of addressing behavioral and mental health issues. Claims that health plans pay for wilderness therapy have been denied for various reasons, including the lack of accreditation of the program or licensing of the providers, or that the treatment is not medically necessary.
In the majority of recent wilderness therapy coverage suits, plaintiffs allege wilderness program exclusions violate the Mental Health Parity and Addiction Equity Act (“Parity Act”). Several recent district court decisions provide guidance on whether the criteria used to deny coverage of “wilderness programs” may be considered a potential Parity Act violation.
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ERISA Does Not Preempt Third Party Providers’ Unfair And Deceptive Business Practice Claims Against Health Insurer, Rules Ninth Circuit
In Hansen v. Group Health Cooperative, 2018 U.S. App. LEXIS 25033, (9th Cir. Sep. 4, 2018), two psychotherapists (“Providers”) sued Group Health Cooperative (“GHC”) in Washington state court, alleging GHC engaged in unfair and deceptive practices, in violation of Washington’s Consumer Protection Act.
The Providers claimed that GHC engaged in unfair and deceptive business practices by utilizing so-called Milliman Care Guidelines as its primary and exclusive criteria for authorizing mental health treatment. The problem with GHC’s use of these guidelines, according to the Providers, was that they: (1) were intrinsically biased against mental healthcare, (2) were utilized to avoid paying for mental healthcare required by Washington’s Mental Health Parity Act, and (3) enabled GHC to unfairly compete by employing its own psychotherapists and discouraging patients from seeking treatment from rival practitioners.
Continue Reading ERISA Does Not Preempt Third Party Providers’ Unfair And Deceptive Business Practice Claims Against Health Insurer, Rules Ninth Circuit
Ninth Circuit Rejects Arguments Challenging the Enforceability of an ERISA Plan Anti-Assignment Provision
In Eden Surgical Ctr. v. Cognizant Tech. Sols. Corp., No. 16-56422, 2018 U.S. App. LEXIS 10597 (9th Cir., Apr. 26, 2018), the U.S. Court of Appeals for the Ninth Circuit upheld the District Court’s Order dismissing the Complaint of an out-of-network healthcare provider attempting to pursue its patient’s rights under an ERISA plan based on an assignment of benefits. The defendant health plan’s claim administrator, Aetna, determined that benefits were not payable under the plan because the patient had not satisfied the plan’s deductible. Plaintiff brought this action on behalf of its patient challenging that benefit determination. The Ninth Circuit found that the plaintiff’s Complaint was properly dismissed by the district court because the patient’s health benefit plan did not permit assignments.
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IRS Returns 2018 Annual Family Limit for HSAs Back to $6,900
In May 2017, the Internal Revenue Service (“IRS”) issued Revenue Procedure 2017-37, which set the 2018 limit at $6,900 for annual contributions made to a health savings account (“HSA”) by those with eligible family health insurance coverage. In March 2018, the IRS issued Internal Revenue Bulletin No. 2018-10, which lowered the 2018 limit…