Filed

January 30, 2013, in the Boston federal court.

Plaintiff

Richard Feingold

Defendant

John Hancock Financial Services

Case Number

1:2013cv10185

Details:

Richard Feingold filed a class action suit against John Hancock Financial Services on the grounds that the life insurance company doesn’t work hard enough to pay out life insurance benefits. According to the lawsuit, the life insurance company regularly used the Social Security Administration’s master death list to check whether annuity holders had died in order to halt insurance payments. However, the company failed to routinely use the list to see if policy holders had died in order to promptly pay beneficiaries.

According to Feingold, his mother had purchased a life insurance policy in 1945 and died in 2006. However, Feingold, who was the beneficiary of the policy, didn’t receive the benefits until 2010 when he discovered them on the Illinois Treasurer’s unclaimed property website. Feingold filed the suit on behalf of himself and others whom Hancock had failed to notify of life insurance benefits.

This lawsuit follows a recent settlement by John Hancock and other major insurers on a lawsuit filed by the government for similar allegations. Hancock agreed to pay a settlement of $13 million dollars and to use the Social Security database more frequently to search for unpaid beneficiaries.

Congress has the right to pass a law that actually wipes out all other laws that could come into conflict with the new federal law.  That’s what Congress did with ERISA, and the supremacy of the federal law is called “pre-emption.”

ERISA’s broad pre-emption arises in a number of different situations.   For example, if a person suffers injury (or even dies) from a denial of medical care because an HMO or health insurer denies claims, any legal claims that could be made under State law are wiped out.  The injured person (or their estate, if deceased) is limited to only the remedies that can be found in ERISA, if any.

But there are positive aspects to preemption.  For example, we are pressing the case that ERISA preempts many of the rules and laws that health insurers and health plans seek to use against medical providers, arguing that the rules and laws are preempted.

The U.S. Supreme court has written much on the subject, and federal appeals courts have followed the principles laid down by the Supreme Court in a number of cases.

Stay tuned to this blog for further updates as to how these principles come into play to aid medical providers in their disputes with health insurers and health plans.

Many health insurers who have conducted post-payment audits of medical providers and decided that money is due to repaid to the health insurer have unilaterally decided to stop all payments to the provider.  This “hijacking” of current claims is nothing more than an effort to extort a repayment from the medical provider for alleged “overpayments”.

The hijacking causes even more legal problems for the health insurer.  In the first instance, the post-payment audits in the commercial insurance arena are typically prohibited. Demands for repayment due to alleged “overpayments” are usually not authorized under ERISA governed health plans.  Thus, the demands for repayment are unlawful.  By stopping all claims payments after an audit, the health insurers are merely compounding their legal troubles and subjecting themselves to various remedies.

Medical providers who have the proper ERISA counsel can stop this unlawful activity by the health insurers.  ERISA provides for an injunction to be issued by a federal judge to stop practices and acts that are unlawful under ERISA.  A federal court can also direct that all unpaid claims be paid immediately.

For more information, contact Richard J. Quadrino of Quadrino Schwartz at rjq@quadrinoschwartz.com or by calling him at 1-800-745-1755.

A California appeals court decided to take a second look at its opinion in a case against health insurer Blue Cross Blue Shield.  The insurance company had asked the entire group of appeals court judges in California to review the case.  That request was denied, but it prompted the second review.  In the Court’s prior decision, the Court ruled in favor of a woman suffering from anorexia nervosa by ruling that Blue Cross had to pay for her inpatient treatment.

One key part of the prior decision was the Court’s conclusion that Blue Cross could not raise a defense of medical necessity in court because it failed to raise it during the claims process. While the Court revised its analysis on another, unrelated point, it left unchanged the key ruling as to the forfeiture of untimely asserted defenses.

Quadrino Schwartz is pressing this issue and others in the health insurance arena on behalf of medical providers and hospitals on their denied health insurance claims.

For more information contact Richard J. Quadrino at rjq@quadrinoschwartz.com or call 1-800-745-1755.

The United States Court of Appeals for the 5th Circuit ruled in favor of a health plan’s HMO member and against Aetna regarding a claim for out of network benefits.  In an extensive opinion, the court ruled against Aetna on various legal issues that could set a precedent for the benefit of health plan members under HMOs and other plans nationwide.

The Court, in Koehler v. Aetna, first ruled that Aetna’s summary of the health plan violated ERISA, the federal law that governs most group health insurance in the United States. The language was difficult, vague, and confusing, so the court ruled that any benefit of the doubt when interpreting the summary should go to the plan member and not Aetna, the drafter of the unlawful summary. The Court then ruled that pre-approval for certain medical services was not required because the pre-approval terms in the plan’s summary were not clear and understandable, in violation of the ERISA regulations.

The Court also barred Aetna from raising late defenses and indicated that the plan member did not have to appeal Aetna’s denial because of the regulatory violations.

Quadrino Schwartz is in the forefront in representing medical providers and hospitals in pursuing denied health plan claims and addressing “audits” on closed and paid claims.  For more information, please contact Richard J. Quadrino at 1-800-745-1755 or at rjq@quadrinoschwartz.com.

Effective January 1, 2007, New York passed a law entitled: “Rules relating to the processing of health claims and overpayments to physicians”.   At first blush, the new law appears to give a free 2-year look back period to the insurance companies in which they can freely request what they believe to be “overpayments”, without a need for establishing fraud.  On closer examination, however, the law appears to only set standards for when the insurance company can begin an audit process and it contains some of the standards and situations in which the insurance companies can “initiate overpayment recovery efforts.”

The law states that the insurance company or health plan cannot initiate an overpayment recovery effort more than 2 years after the doctor received the original payment from the insurer or health plan. The exception to the 2 year rule is when the insurer or health plan has a reasonable belief of fraud, intentional misconduct, or abusive billing or when the request for an audit is made by a self insured plan or there is a state or federal government program requiring the audit. The law defines “abusive billing” as billing practices that result in the submission of claims that are not consistent with sound fiscal, business, or medical practices and are engaged in at such frequency and for such a period of time as to reflect a consistent course of conduct.

Rather than answering questions and setting real standards, this new law actually raises a number of issues. The law only determines when an insurer or health plan can “initiate” an overpayment “recovery effort.” It does not state that after an audit is initiated and an effort has been made, that a refund must be paid by the doctor just because the insurance company has requested the refund. In short, while the insurance companies appear to be using the existence of the new law to accelerate their conduct of audits,  the law has not given the insurers or the health plans additional legal rights.  The law has not overruled the court decisions requiring proof of actual fraud in order for a refund to be due.

The law only addresses, in this writer’s view, the timing for the initiation of an audit or overpayment recovery request, not whether the doctor will indeed owe a repayment under any particular circumstance. For those doctors who are participating in a number of plans, there should be a review of the contract the doctor entered into with the insurer or health plan to see whether there are specific audit procedures and a delineation of significant rights granted to the insurer or the health plan. If the doctor has agreed in a contract to make a repayment under defined circumstances, the written agreement would supersede the fraud court decisions and control the relationship between the doctor and the insurer or health plan. The language in these contracts needs to be reviewed carefully, and qualified legal counsel may indeed identify numerous barriers that would prevent the insurer or health plan from obtaining a repayment from the doctor. Out-of-network plans present an entirely different legal situation, since the doctor has not entered into a contract with the insurer or health plan. There is no right to an “audit” in such cases and the doctor is in a stronger position when dealing with an audit request from an out-of-network insurer or health plan.

There are many additional legal issues involved and thus medical providers should seek highly qualified counsel when dealing with requests for medical records by insurers, health plans, or their affiliates on claims that have already been paid.

In the ongoing battle between auto insurers and medical providers in the no-fault system, the insurance companies have started to up the ante by bringing racketeering (“RICO”) lawsuits against medical providers.

RICO provides for “treble damages”, meaning that the loser could be required to pay triple the amount of any judgment obtained in court.  In the ongoing effort to intimidate medical providers, the auto insurers have been trying to use RICO as a weapon.

In one such recent case,  Quadrino Schwartz obtained a dismissal of a RICO lawsuit brought by a major insurer.  The Court ruled in GEICO v. Hollis Medical Care, No. 103431 (EDNY) that GEICO did not allege and cannot prove the existence of a racketeering “enterprise” and thus that portion of GEICO’s case was dismissed.

In a case involving “residential care” for anorexia nervosa, Blue Shield of California had refused to pay claims for an extended stay in a mental health facility.  The Plaintiff, Ms. Harlick, needed extensive treatment that she could not obtain in an outpatient setting.

The sole legal basis for Blue Shield’s denial was that “residential care” was not covered under the Blue Shield health insurance policy issued to Ms. Harlick.  In the claims and ERISA appeals process, Blue Shield did not assert that the mental health care was not “medically necessary”.   In its denial, it had relied solely upon its legal position as to care rendered in a “residential facility”.

A federal judge in California initially ruled against Ms. Harlick and dismissed her case.  On appeal, however, the 9th Circuit Court of Appeals reversed the decision and dealt a blow to Blue Shield.  See Harlick, V. Blue Shield of California,2011 Wl 3796177 (9th Cir, 2011). After finding that the residential care was covered due to California’s Parity law, the Court ruled that Blue Shield could not assert a medical necessity defense in the lawsuit because it did not do so earlier, in the claims process.  Blue Shield was thus ordered to pay in full for the many months of treatment provided to Ms. Harlick.

An insurance company’s late assertion of a defense to a health care claim is a violation of the ERISA regulations that govern health insurance claims under group insurance plans.  The health insurance lawyers at Quadrino Schwartz frequently use these regulations as weapons in the settlement and litigation of health care claims on behalf of medical providers and patients.

A federal judge in the State of Washington has ruled against a group of insurers in refusing to dismiss bad faith claims against them for their refusal to defend and indemnify a construction contractor faced with defect claims in a casino project.

In Aecon Buildings, Inc. v. Zurich of North America et al. No. CO7-832MJP (WD Wash, 2008), Aecon was faced with a number of construction defect claims from an Indian reservation upon which it was building the casino. It sued its subcontractors, seeking recovery from them, and the subcontractors tendered those legal claims to their insurers. Those insurers refused to defend and indemnify the subcontractors.

After a mediation in which Aecon settled the dispute with the owner for $3.75 million, it pursued the insurers for the subcontractors for reimbursement, alleging a bad faith investigation and an unreasonable coverage determination under the insurance policies in question. The claims were asserted under Washington’s Consumer Protection Act and under the common law duty of good faith and fair dealing under the insurance contracts.

The court found that even if it is ultimately found that coverage does not exist and there was never a duty to defend, Aecon can still proceed against the insurers for its bad faith and improper investigation and that due to their bad faith they are estopped from denying coverage.