New 9th Circuit Case Highlights Importance for Healthcare Providers Knowing How To Get Legal Standing

A new 9th Circuit Court of Appeals case, DB Healthcare, LLC et al v. Blue Cross Blue Shield of Arizona, Inc. and Advanced Women’s Health Center, Inc. v. Anthem Blue Cross Life and Health Ins. Co., handed down March 22, 2017 highlights the importance for healthcare providers of knowing how to get legal standing to sue under ERISA, and how to fight health plan actions to recoup overpayments. A copy of the case is attached.

Two providers sued to obtain an order that the health plans’ payment denials of certain blood tests and related services, and actions to recoup payments made, were unlawful. They also sued for monetary damages. The providers disputed the overpayments and refused to repay Blue Cross $237,000 and Anthem $295,913, respectively. Blue Cross threatened to withhold re-credentialing and threatened to terminate relevant provider agreements. Anthem went further and withheld reimbursement for unrelated claims.

The district courts dismissed the providers ERISA claims for lack of standing because 1) the operating plan documents prohibited assignment and 2) even where the plan documents did allow assignment, the assignment form was not broad enough to cover the relief the provider wanted, namely the injunctive and declaratory relief to stop Anthem from withholding reimbursement of unrelated claims. The 9th Circuit Court upheld the dismissals and held that the providers could not sue under ERISA.

The Court, however, left open the door for providers to fight overpayment and recoupment actions under State law where ERISA does not apply stating:

“ We caution that our conclusions regarding the reach of ERISA’s statutory remedies do not necessarily preclude Providers from contesting the recoupment and offsetting actions they dispute….Any state law claims for breach of the provider agreements could not have been brought under ERISA and would have an independent legal basis. Such claims would not be preempted by ERISA.” (emphasis supplied)

Lessons from this case for providers:

  1. Review patient assignment forms to make sure the language is broad enough to include all forms of legal actions, such as “all legal and equitable causes of action and relief, under federal and/or state law”. The Court found that the parties intended to assign only the right to payment. It should be broader than that.
  2. Fight overpayment and recoupment actions under state law, not ERISA. For example, in California use the law of mistake and regulation Title 28 1300.71 which can prevents offsets.
  3. It is preferable to fight overpayments and recoupments under state law, not ERISA. The law is clear from this decision and precedent that the existence of a contract, express or implied, takes your claims out of ERISA, and therefore your claims cannot be preempted and can go forward in court under state law.

Robert Amador, Amador Law Corporation, Torrance, California. 4.5.16