MedARC, LLC v. Aetna Health, Inc.

• Decision Date: 22 June 2021
• Docket Number: Civil Action 3:20-CV-3646-N-BH
• Parties: MEDARC, LLC, as Collection Agent for Jeffrey H. Mims, Trustee of the Liquidating Trust of Revolution Monitoring, LLC, Revolution Monitoring Management, LLC, and Revolution Neuromonitoring, LLC, Plaintiff, v. AETNA HEALTH INC., Defendant.
• Court: U.S. District Court — Northern District of Texas

MEDARC, LLC, as Collection Agent for Jeffrey H. Mims, Trustee of the Liquidating Trust of Revolution Monitoring, LLC, Revolution Monitoring Management, LLC, and Revolution Neuromonitoring, LLC, Plaintiff, v. AETNA HEALTH INC., Defendant.

Civil Action No. 3:20-CV-3646-N-BH

United States District Court, N.D. Texas, Dallas Division

June 22, 2021

Referred to U.S. Magistrate Judge ^[1]

IRMA CARRILLO RAMIREZ UNITED STATES MAGISTRATE JUDGE

FINDINGS, CONCLUSIONS, AND RECOMMENDATION

Before the Court are Defendant Aetna Health Inc.'s Motion to Dismiss Plaintiff's First Amended Complaint and Brief in Support, filed January 29, 2021 (doc. 8), and Plaintiff's Motion for Leave to File a Surreply filed March 12, 2021 (doc. 18). Based upon the relevant filings and applicable law, the motion to dismiss should be DENIED. The motion for leave to file a surreply is DENIED AS MOOT.

I. BACKGROUND

MedARC LLC, as Collection Agent for Jeffrey H. Mims, Trustee of the Liquidating Trust of Revolution Monitoring, LLC, Revolution Monitoring Management, LLC, and Revolution Neuromonitoring, LLC (Plaintiff), brings this action against Aetna Health Inc. (Defendant) to recover payments for out-of-network medical services rendered to patients covered by health insurance plans. (See doc. 2-3.)^[2]

Prior to bankruptcy, Revolution Monitoring, LLC, Revolution Monitoring Management, LLC, and Revolution Neuromonitoring, LLC (collectively Revolution) were medical providers of intraoperative neurophysiological monitoring (IONM) medical services for operations around delicate parts of the nervous system. (Id. at 5-6.) IONM technology provides “real-time” monitoring of the state of the nervous system during surgery, which alerts surgeons of potential evolving neurologic injury in order to allow for corrective actions to avoid permanent injury or death. (Id. at 6.) These medical services are primarily utilized in spinal, cranial, facial, throat, and peripheral surgeries. (Id.)

Defendant is a business that provides, underwrites, and administers health insurance benefits of Texas residents, including patients who received Revolution's IONM medical services (Insureds). (Id. at 7.) Most of the Insureds are covered by private employee welfare benefit plans governed by the Employee Retirement Income Security Act of 1974 (ERISA), but some of them are covered by non-ERISA health benefit plans.^[3] (Id. at 7-8.) These plans are either fully-insured plans, which means an insurance company assumes financial responsibility for paying medical claims and administrative costs, or self-insured plans, which means an employer acts as the insurer and assumes financial responsibility for payment of medical claims. (Id. at 7.) Generally, insurance companies like Defendant are retained to administer self-insured plans and are provided “discretionary authority over the management of the plans, the disposition of the plan assets, and the adjudication of claims.” (Id.) The plans obligate Defendant to pay in accordance with the Insured's right to receive reimbursement for out-of-network care, and they establish an allowable amount to be paid for medical services provided by out-of-network providers like Revolution. (Id. at 13.) As an out-of-network provider, Revolution does not have pre-determined rates under the plans. (Id. at 6.)

From between June 2014 and July 2017, Revolution provided out-of-network medical services to Insureds and followed the same process. (Id. at 9.) It received orders from physicians to schedule its IONM medical services in connection with Insureds' medical procedures to be performed at physicians' surgical facilities. (Id.) After receiving orders and before rendering medical services, Revolution obtained verification from Defendant that “each patient was covered by a health benefit plan that provided out-of-network benefits, ” that “the particular procedures were covered by the relevant health benefit plan, ” and that it “would be paid in accordance with the health benefit plan.” (Id.) During the verification process, Defendant did not identify or rely on any exclusions, conditions, or other prerequisites within the relevant health benefit plans, including any anti-assignment provisions. (Id.) Plaintiff alleges that “Revolution would not have provided these services to these patients without first obtaining this verification from Defendant.” (Id.)

Each Insured also executed an “assignment of benefits” form (AOB), assigning Revolution in relevant part, “(1) the rights and interest to collect and be reimbursed for the medical service(s) performed for the patient; (2) the rights and interest to obtain plan documents and other related documentation and information by both provider and its attorney; (3) the rights and interest to any legal or administrative claims and causes of action; (4) the right to bring legal action, if needed, against the insurer or health benefits plan to recover costs or enforce coverage; and (5) the reasonable assistance of the patient in pursuing third-party payments.” (Id. at 7.) Specifically, the AOB provides in relevant part:

Signature below also consents to request Revolution Monitoring, LLC to submit all invoices associated with the professional services performed during my surgery to my designated insurer or health benefits plan, on my behalf. I consent to and request that my insurance company reimburse Revolution Monitoring, LLC directly for any invoices submitted on my behalf for professional services rendered by the above named company. If for any reason my health benefits plan or insurance company does not reimburse Revolution Monitoring, LLC directly for services rendered on my behalf and reimburses me, I agree to send all payments by my insurer for IntraOperative Neurophysiologic Monitoring and all explanation of benefits to Revolution Monitoring immediately. Failure to remit such payment would make me legally responsible for the reimbursement of Revolution Monitoring, LLC the full amount of their professional fees, co-payments, co-insurance, or deductible amounts for which I am responsible, for delivery of IntraOperative Neurophysiologic Monitoring performed during my surgery. I am also aware that I am legally held responsible for the costs of the IntraOperative Neurophysiologic Monitoring services in my health benefits plan or insurance company fails or refuses to remit the costs for such services.

I authorize Revolution Monitoring, LLC and/or its attorneys to file any necessary claims, demands, or appeals with my insurer or health benefits plan from a denial of reimbursement or coverage for IntraOperative Neurophysiologic Monitoring services provided on my behalf. I also assign Revolution Monitoring, LLC my rights to bring legal action, if needed, against my insurer or health benefits plan to recover the costs of or enforce my rights to coverage of IntraOperative Neurophysiologic Monitoring services under my insurance or health benefits plan under applicable law, including without limitation under the Employee Retirement Income Security Act of 1974.

I understand that Revolution Monitoring, LLC may disclose personal health information (PHI) related to receipt of professional services for the purpose of enacting such as actions as defined above. I agree to provide the necessary information to and reasonably cooperate with and assist Revolution Monitoring to pursue third party payments of my claims for IntraOperative Neurophysiologic Monitoring services.

(Id. at 10-11, 27 (emphasis added).)

After medical services were performed, Plaintiff or Revolution submitted claims through Defendant's designated claims-handling channels, but the claims were either denied or drastically underpaid. (Id. at 11.) Their appeals of the non-payment or underpayment of the claims via Defendant's designated appeals channels were also denied. (Id.) “Defendant failed to provide a specific reason or reasons for the adverse determination, failed to reference the specific plan provisions on which the determination was based, failed to identify, allege, assert, or rely on any exclusions, conditions, or other prerequisites within the health benefit plans, including but not limited to any anti-assignment provisions, and failed to identify and provide a copy of the internal rule, guideline, protocol or other similar criterion that was relied upon in making the adverse determination.” (Id. at 11-12.) It maintained that “(1) the claim was paid in accordance with the Allowable Amount; (2) the administrator maintained the prior decision; or (3) the claim was processed correctly.” (Id. at 12.) Revolution billed Defendant more than $40, 000, 000 for services rendered to Insureds but was paid less than $750, 000, or less than 2% of the amount billed. (Id. at 12-13.)

In November 2016, Revolution entered into a Healthcare Receivables Master Purchase and Sales Agreement with Xynergy Healthcare Capital II LLC (Xynergy), providing its accounts receivable as security. See In re Revolution Monitoring, LLC, et al., No. 18-33730-hdh-11 (N.D. Tex. Bank.) (Revolution Bankr., doc. 139 at 27). Xynergy later sued in the Southern District of Florida to enforce the agreement, and on May 18, 2018, it obtained a favorable judgment against Revolution in the principal amount of $1, 681, 767.57 (Judgment). (Id.)

Shortly thereafter, between September 27, 2018 and October 5, 2018 Revolution filed for Chapter 11 bankruptcy in the Northern District of Texas. (doc. 2-3 at 18.) On July 23, 2019, the bankruptcy court entered an order confirming the Debtors' Second Joint Plan of Reorganization (Bankruptcy Plan), which among other things, provided for the creation of a Liquidating Trust, the appointment of Jeffrey H. Mims as Liquidating Trustee, and the appointment of Plaintiff to serve as...