Blue Cross Blue Shield’s Case For Recoupment of Funds From A Medical Provider Is Dismissed By A Federal Court
A federal judge in Rhode Island has dismissed a case brought by Blue Cross Blue Shield against a chiropractor that had sought over $400,000 in monies that Blue Cross had previously paid on a series of claims over a six year period. In reaching its decision, the Court applied the very same ERISA principles that Quadrino Schwartz has been citing in its representation of medical providers throughout the country.
Blue Cross originally sued in state court, but the case was removed to federal court, with the chiropractor’s counsel arguing that ERISA applied and that it preempts (supersedes or wipes out) all other law (including portions of the provider agreement). A Magistrate Judge assigned to the case initially ruled against the chiropractor, but after appealing the decision the judge disagreed and ruled that ERISA applied, that it preempted Blue Cross’ claims under the provider agreement, and that the case would stay in federal court.
After an extensive trial, the court ruled that Blue Cross could not recover any money from the chiropractor whatsoever, because ERISA only permits a health insurer to potentially seek funds that are segregated and traceable. Because the funds paid on claims over the years were obviously spent on routine expenses, Blue Cross’ case was dismissed.
In addition to the dismissal, the Court ordered Blue Cross to repay — back to the chiropractor — money it had taken from him on other unrelated claims via offsetting of those benefits with the alleged recoupment debt.
The Court was also very critical of the entire recoupment concept, calling Blue Cross’ conduct hasty, ill advised, and an “ambush”.
If you need assistance with regard to any audit or recoupment claim by any health insurer, please contact us for a free consultation.