Lawsuits Fly as Employers, Providers Sue Health Insurance Companies Over Questionable Practices and Lack of Transparency
Legal actions highlight ongoing concerns about payer behavior and included a record-breaking settlement in antitrust case against Blue Cross and Blue Shield
Several high-profile federal lawsuits filed last year, along with settlements in older cases, demonstrate that providers, patients, and self-insured employers—including hospitals, clinical laboratories, and anatomic pathology groups—continue to have serious concerns about lack of transparency and certain business practices of health plans.
Self-Insured employers are suing because they cannot see their data and discovered their health plans overpaid providers from allowed charges (meaning a self-insured employer has greater health benefit costs).
Providers are suing because they are being paid less than agreed and have claims denied for spurious reasons.
These lawsuits show that there is increasing ill will and concerns by self-insured employers and providers as to how health insurers are properly conducting business.
Below is a rundown of the cases.
“Over the past 12 years we have dedicated an extraordinary amount of time, tireless effort, and resources to this historic outcome for providers,” said Co-Lead Counsel Edith Kallas, JD, of Whatley Kallas, a press release. The Blue Cross and Blue Shield Association settlement with healthcare providers is the largest healthcare-related antitrust settlement in US history, according to plaintiff’s attorney Whatley Kallas, LLP. Clinical laboratories and pathology groups can learn from these lawsuits. (Photo copyright: Whatley Kallas.)
BCBSA Settles Long-Running Antitrust Case
In October, the Blue Cross and Blue Shield Association (BCBSA) and the 33 independent Blue Cross and Blue Shield (BCBS) plans agreed to a $2.8 billion settlement in a 12-year-old federal antitrust lawsuit. Co-counsel for the plaintiffs Whatley Kallas, LLP, described the agreement as the “largest antitrust settlement in the history of the United States healthcare industry.”
Healthcare providers alleged that the BCBS plans had agreed “to allocate markets through the use of exclusive service areas and to fix the prices paid to providers through the BlueCard Program,” according to a news release.
In addition to the cash payment, the health plans also agreed to “invest hundreds of millions of dollars in system improvements for the benefit of providers,” the law firm noted, adding that the settlement would compel changes in how the plans “process claims, communicate with, and make payments to healthcare providers,” helping to “address resource-draining administrative burdens and inefficiencies currently experienced by providers.”
Whatley Kallas said the settlement would ultimately result in injunctive relief amounting to $17.3 billion during its first 10 years.
“Many important issues for providers are finally being addressed,” said Edith Kallas, JD, of Whatley Kallas in the news release. “We’re pleased that we have been able to achieve relief that will create a better system for healthcare providers and that will support the organizations and people we rely on to take care of us and our families every day.”
BCBSA also issued a statement: “This settlement ends a long-running legal challenge to the Blue Cross Blue Shield Association license agreements and related rules. We deny the allegations made in the lawsuit. However, to reach a settlement and put years of litigation behind us, we have agreed to make some operational changes and a monetary payment to the provider class involved in the case.”
Settlement in Billing Lawsuit
In North Carolina, Aetna and Optum agreed to a settlement in a long-running class action lawsuit alleging their billing practices violated the Employee Retirement Income Security Act of 1974 (ERISA).
As explained in court documents, plaintiff Sandra M. Peters was covered by an ERISA plan self-funded by Mars Inc. and administered by Aetna. The latter contracted with Optum to provide access to physical therapy, occupational therapy, and chiropractic services.
Peters alleged that Aetna, in collusion with Optum, fraudulently disguised the latter’s administrative fees as medical costs.
“These misrepresentations serve as the cover that allows Aetna to illegally (i) obtain payment of the Subcontractors’ administrative fees directly from insureds when the insureds’ deductibles have not been reached; (ii) use insureds’ health spending accounts to pay for these fees; (iii) inflate insureds’ co-insurance obligations using administrative fees; (iv) artificially reduce the amount of available coverage for medical services when such coverage is subject to an annual cap; and (v) obtain payment of the administrative fees directly from employers when an insured’s deductible has been exhausted or is inapplicable,” stated her original complaint, filed in 2015 in the US District Court for the Western District of North Carolina.
On Nov. 6, attorneys for Peters notified the court that they had settled the case. A month later, Optum said it had withdrawn from the settlement and was prepared to go to trial. Then, the parties appeared to resolve their remaining differences, and Peters’ attorneys filed notice on Dec. 17 that they had once again settled, Mealey’s reported. Terms of the settlement were not disclosed.
Owens and Minor Alleges Mismanagement of Self-Funded Plan
As reported by The Dark Report and various news outlets, Owens and Minor, a healthcare logistics company, filed a lawsuit in November against Anthem BCBS of Virginia, which had been administering Owens’ self-funded employee health plan since 2017.
The lawsuit, filed in the US District Court for the Eastern District of Virginia, alleged that Anthem “used Plan funds to enrich itself and its affiliated companies and medical providers to the Plan’s detriment,” according to court documents.
The complaint further stated that “Defendant acted contrary to the fiduciary standards imposed by ERISA by, among other things, (i) paying more for healthcare claims than was even billed, (ii) securing kickbacks from providers, (iii) double-paying claims, and (iv) pocketing rebates belonging to Plaintiff.”
Owens initially requested plan data from Anthem in September 2021, but Anthem refused to do so, the complaint stated. “Eventually, Plaintiff had to sue Defendant to obtain its own data. Now that Plaintiff has a portion of that Plan data and has had the opportunity to analyze it, it is clear why Defendant fought so hard to prevent Plaintiff from accessing it.”
Becker’s Payer Issues noted that the lawsuit “reflects a wider legal trend for employers and health plan administrators navigating ERISA requirements. Under the law, plan fiduciaries must act in the best interests of beneficiaries by seeking the lowest reasonable costs for services. Recent amendments, such as the Consolidated Appropriations Act of 2021, have heightened transparency requirements, leaving employers with new tools—and new pressures—to ensure compliance.”
DOJ Alleges Overcharges Related to Military Managed Care
On March 13, the US Department of Justice (DOJ) announced that it had sued six health plans that participate in the Uniformed Services Family Health Plan (USFHP) program, which provides health benefits to military retirees and their families. The government alleged that the plans were aware of calculation errors that had inflated payment rates by more than $300 million between 2008 and 2012.
“The Plans failed to report or return any of those overpayments and, in fact, continued submitting claims to the government at the improperly inflated rates for several more months,” the complaint states.
Named as defendants were:
- Brighton Marine Health Center,
- Christus Health Services,
- Johns Hopkins Medical Services Corp.,
- Martin’s Point Health Care,
- Pacific Medical Centers,
- St. Vincent’s Catholic Medical Centers of New York, and their trade group,
- US Family Health Plan Alliance.
Shortly after filing the lawsuit, US Family Health Plan Alliance issued a statement describing the allegations as “meritless,” Becker’s Payer Issues reported. The group said that the plans and the government had “expressly negotiated [payment rates] in a fixed-rate contract more than 10 years ago.”
These developments are clear signals in the market that self-insured employers, along with providers—including physicians, hospitals, and medical laboratories—have growing evidence that certain health insurance companies are gaming the system and not paying claims according to contractual arrangements. Expect to see more lawsuits against health plans, particularly by self-insured employers because, for them, the sums involved can be in the tens of millions of dollars.
—Stephen Beale
Related Information:
Blue Cross Blue Shield Settles US Health Provider Class Action for $2.8 Billion
Blue Cross Blue Shield to Pay $2.8B to Settle Class Action Provider Antitrust Case
Blue Cross Blue Shield Settles for $2.8 Billion to Providers in Antitrust Class Action
BCBS Reaches Record Antitrust Settlement for $2.8B
Optum, Aetna Agree to Settle ‘Dummy Code’ Lawsuit
North Carolina Court Certifies Nationwide Class in Healthcare Fee Challenge
The ERISA Edit: Health Plan Excessive Fee Litigation Against TPAs Continues
‘A Fox in the Henhouse’: Owens and Minor Sues Anthem in Latest Data Transparency Lawsuit
Owens and Minor Sues Anthem, Accusing Insurer of Mishandling Claims
Owens and Minor Sues Anthem over Mismanaging Health Plan, Lack of Transparency
