Managed Care Lawsuit Watch

In what appears to be one of the largest class action settlement in the history of ERISA litigation in New Jersey, a federal judge approved $33 million settlement, including $11 million in attorneys’ fees, between Horizon Healthcare Services, Inc. (“Horizon”) and plaintiff chiropractors.

The underlying lawsuit stemmed from allegations that Horizon made “across-the-board” denials of certain types of claims that were submitted by chiropractic physicians.  Plaintiff’s complaint followed an October 7, 2009 cease and desist order by the New Jersey Department of Banking and Insurance.  In a subsequent class action complaint filed in New Jersey federal court against Horizon, plaintiff asserted that the Horizon Blue Cross Blue Shield of New Jersey improperly and systematically bundled various Current Procedural Terminology (“CPT”) codes that contracted and non-contracted chiropractic physicians billed to Horizon.  Plaintiff claimed that Horizon summarily denied reimbursement for non-CMT (chiropratic maniupulative therapy) services and unilaterally determined that the non-CMT services were bundled with Horizon’s payment for CMT services.  Thus, Plaintiff asserted that Horizon failed to determine whether the non-CMT billed services were separate and distinct from the CMT services.  On behalf of the all chiropractic physicians that submitted claims under ERISA plans that Horizon administers, Plaintiff’s complaint sought benefits due to the chiropractor physicians from plan member’s assignment under 29 U.S.C. § 1132(a)(1)(B), and also alleged that Horizon’s conduct constituted a failure to provide full and fair review pursuant to ERISA, 29 U.S.C. § 1133.  The remaining counts for non-ERISA plans alleged violation of New Jersey law, breach of contract and breach of covenant of good faith and fair dealings.  On or about June 1, 2015, the federal court certified two classes, including an ERISA class.

On October 13, 2016, Judge William Martini approved the settlement agreement and granted the Plaintiff’s Motion for Award of Attorneys’ Fees.   The court agreed to require Horizon to deposit $33 million for the settlement fund and awarded $11 million of the settlement fund as attorneys’ fees to class counsel.  Among other things, the Court noted that Plaintiff’s counsel conducted significant research and discovery, including review of 200,000 pages of documents, number of depositions and analyzed claims data for more than 19 million records.

This case highlights the significant exposure under ERISA that may result from improper billings and reimbursements for health plan administrators, insurers and providers.

California recently enacted Assembly Bill 72 (“AB 72”) to target surprise medical bills from out-of-network professionals.  The new law applies to commercial plans licensed by the Department of Managed Health Care and the Department of Insurance.  AB 72 sets reimbursement rates for out-of-network professionals at in-network facilities at either the average contracted rate, or 125 percent of the Medicare Fee-for-Service reimbursement for the same or similar services.  The constitutionality of these provisions has been challenged in federal court by the Association of American Physicians and Surgeons.  AB 72 also implements a new dispute resolution process to resolve reimbursement disputes between commercial health plans/insurers and non-contracting health professionals that provide services at a contracted facility.  Read the full client alert titled “New California Law to Curb Surprise Medical Bills Will Impact Relationships Between Health Plans and Non-Contracted Professionals,” here.

Managed Care Lawsuit Watch is Crowell & Moring’s summary of key litigation affecting managed care. If you have questions or need assistance on managed care law matters, please contact any member of the Health Care Group. Cases in this issue include:

  • Helfrich v. Blue Cross & Blue Shield Ass’n
  • King v. CompPartners, Inc.
  • Unilab Corp. v. Angeles-IPA
  • Kaiser Found. Health Plan, Inc. v. Burwell
  • Smilow and Katz v. Anthem Life & Disability Ins. Co.
  • Aetna Life Ins. Co. v. Huntingdon Valley Surgery Ctr.
  • Baptist Hosp. of Miami, Inc. v. Humana Health Ins. Co. of Florida, Inc.
  • Rose v. Healthcomp, Inc.

Managed Care Lawsuit Watch is Crowell & Moring’s summary of key litigation affecting managed care. If you have questions or need assistance on managed care law matters, please contact any member of the Health Care Group. Cases in this issue include:

  • Armstrong v. Exceptional Child Ctr, Inc
  • Golden v. Cal. Emergency Physicians Med. Grp.
  • Johnson v. U.S. Office of Pers. Mgmt.
  • U.S. ex. rel. Whipple v. Chattanooga-Hamilton Cnty. Hosp. Auth.
  • U.S. ex rel. Oughatiyan v. IPC The Hospitalist Co., Inc.
  • Rumble v. Fairview Health Servs.
  • MHA, LLC v. Healthfirst, Inc.
  • State Dep’t of Pub. Health v. Superior Court of Sacramento Cnty.
  • Commonwealth of Massachusetts v. Partners Healthcare System, Inc. et. al.

On February 17, 2015, the largest health care provider in Massachusetts, the non-profit Partners Healthcare System, Inc. (Partners), dropped its bid to acquire South Shore Hospital based in South Weymouth, and the Commonwealth of Massachusetts dropped its antitrust suit that had challenged the acquisition.[1] Whether state or federal regulators will permit Partners’s proposed acquisition of Hallmark Health Corp. (Hallmark)’s two acute care hospital remains to be seen.

The decision by Partners comes a month after a Judge rejected a consent judgment that Partners and former Attorney General of Massachusetts Martha Coakley proposed regarding Partners’s agreement to acquire three acute care hospitals in the greater Boston area.[2] Less than a year ago, on June 24, 2014, the Attorney General of Massachusetts had simultaneously filed a complaint and a proposed consent judgment with Partners regarding Partners’s acquisition of South Shore and two hospitals operated by Hallmark.

Continue Reading Partners Halt Acquisition of Boston Area Hospital After Court’s Rejection of Consent Judgment

Managed Care Lawsuit Watch is Crowell & Moring’s summary of key litigation affecting managed care. The latest issue covers a broad range of lawsuits, including: Medicare’s preemption of state common law negligence claims; arbitration clauses in provider agreements; the right of a Medicare Advantage plan to assert a lien on a deceased beneficiary’s negligence settlement; preemption under the Federal Employees Health Benefits Program; and mental health parity. For a full summary of the cases in this issue, please click here.