Premier Health Ctr., P.C. v. UnitedHealth Grp.
| Decision Date | 01 August 2013 |
| Docket Number | Civ. No. 11-425 (ES) |
| Parties | PREMIER HEALTH CENTER, P.C., et al., Plaintiffs, v. UNITEDHEALTH GROUP, et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
FOR PUBLICATION
Appearances by:
POMERANTZ GROSSMAN HUFFORD DAHLSTROM & GROSS LLP
By: D. Brian Hufford, Esq.
Robert J. Axelrod, Esq.
CARELLA BYRNE CECCHI OLSTEIN BRODY & AGNELLO, P.C.
By: James E. Cecchi, Esq.
BUTTACI & LEARDI, LLC
By: Vincent N. Buttaci, Esq.
John W. Leardi, Esq.
Attorneys for Plaintiffs
GRAHAM CURTIN, P.A.
By: Thomas R. Curtin, Esq.
George C. Jones, Esq.
O'MELVENEY & MYERS LLP
By: Henry C. Thumann, Esq.
Brian D. Boyle, Esq.
Stephen D. Brody, Esq.
Attorneys for Defendants UnitedHealth Group, UnitedHealthCare Services, Inc., and
This matter arises out of the methods by which Defendant UnitedHealth Group ("United") (1) monitors and recoups benefit overpayments from a variety of healthcare providers, and (2) regulates reimbursement of services provided by chiropractors. On January 24, 2011, Plaintiffs Premier Health Center, P.C. ("Premier"), Judson G. Sprandel, II, D.C., Brian S. Hicks, D.C., Tri3 Enterprises, LLC ("Tri3"), Beverly Hills Surgical Center ("BHSC"), and Jeremy Rogers, D.C.1 filed a Class Action Complaint against United and several of its subsidiaries, including United HealthCare Services, Inc. ("United Healthcare"), OptumHealth Solutions, Inc. ("Optum"), Health Net of the Northeast, Inc. ("HNNE"), and Health Net of New York, Inc. ("HNNY"), asserting claims for benefits, failure to provide a full and fair review, and equitable relief under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1002 et seq.
On April 22, 2011, Plaintiffs filed an Amended Class Action Complaint ("ACAC")2 with additional factual allegations in support of their claims. The ACAC sets forth two proposed classes: the ERISA Recoupment Class and the ERISA Chiropractor Class. The ERISA Recoupment Class, whose named Plaintiffs are Tri3, BHSC, and Dr. Sprandel, is defined as:
All healthcare providers (such as individual practitioners, durable medical equipment providers or facilities) who, from six years prior to the filing date of this action to its final termination ("ERISA Class Period"), provided healthcare services to patients insured under healthcare plans governed by ERISA and insured or administered by Defendants, and who, after having received payments from Defendants, were subjected to retroactive requests for repayment of all or a portion of such payments and/or to recoupments or coerced repayments of prior benefits.
(ACAC ¶ 135.) The ERISA Recoupment Class asks the Court "(1) to enjoin Defendants from continuing to compel return of prior payments of plan benefits; (2) to order Defendants to return to all Class members all funds, plus interest, that Defendants have withheld to offset the amounts demanded or that have been paid by Class members to Defendants in response to such demands; and (3) to declare that any future efforts to recoup payments for errors or mistakes in prior payments must comply with the specific requirements under ERISA for adverse benefit determinations." (Id. ¶ 137.)
The ERISA Chiropractor Class, whose named Plaintiffs are Dr. Rodgers and Dr. O'Donnell, is defined as:
All chiropractic physicians who, from six years prior to the filing date of this action to its final termination ("ERISA Class Period"), provided healthcare services to patients insured under healthcare plans governed by ERISA and insured or administered by Defendants, and whose claims were subjected to utilization review requirements imposed by United and/or Optum.
(ACAC ¶ 136.) The ERISA Chiropractor Class seeks "to enjoin Defendants from (1) tiering providers based on statistical parameters, (2) denying treatment plans without regard to patients' medical needs, (3) imposing pre-certification requirements on patient care without regard to the terms of the ERISA health care plans, and (4) threatening providers with being placed on a lower tier or potential loss of network participation if they do not defer to Optum's demands by limiting care to patients, and to compel United and Optum to replace them with policies and procedures which comply with ERISA." (Id. ¶ 137.)
On June 21, 2011, Defendants filed a Motion to Dismiss the ACAC. On March 30, 2012, the Court issued an Opinion and Order denying the motion with respect to Plaintiffs' claims against United, UnitedHealthcare, and Optum, but granting the motion with respect to all of Plaintiffs' claims against HNNE and Plaintiffs' claim against HNNY for failure to provide a full and fair review under ERISA. The Court dismissed all of Plaintiffs' claims against HNNE, and their claim against HNNY for failure to provide a full and fair review, without prejudice.
Plaintiffs now move to certify both the ERISA Recoupment Class and the ERISA Chiropractor Class. Defendants move for Summary Judgment against the named plaintiffs of the ERISA Chiropractor Class on all of their claims. For the reasons set forth below, Defendants' Motion for Summary Judgment is GRANTED. Consequently, Plaintiffs' Motion to Certify theERISA Chiropractor Class is DENIED as moot. Plaintiffs' Motion to Certify the ERISA Recoupment Class is also DENIED.
United is a major health insurer that operates nationally through its wholly owned subsidiaries, including UnitedHealthcare, Optum, HNNE, and HNNY. As a national insurer, United processes an enormous number of claims for benefits from a wide variety of healthcare providers on a regular basis.3 These claims are submitted to United in a standardized coding format that describes the services performed. United processes provider claims according to this format because of various state laws that require health insurers to pay claims quickly. Consequently, in initially processing claims, United relies exclusively on the codes submitted by healthcare providers.
To be sure, processing claims in this manner results in erroneous payments to healthcare providers. Therefore, United regularly conducts post-payment audits to ferret out coding errors and improper claims. In doing so, United typically requests a provider's clinical records and compares the services indicated in the records with those noted in the provider's claim for payment.
These post-payment audits are also intended to discern errors on United's part, such as (1) paying the same claim twice; (2) incorrectly coordinating benefits with another insuranceplan; and (3) paying a claim incorrectly under the terms of a provider's contract with United. These audits may result in either a determination of underpayment, in which case United will remit further payment to a provider, or one of overpayment, in which case United will seek remittance from the provider for the amount that was overpaid.4
Three separate divisions within United conduct post-payment audits. Benefits Operations, which processes benefits claims, regularly performs manual quality control audits that incidentally identify both underpayments and overpayments. Audit & Recovery Operations ("ARO") employs algorithms and other auditing techniques, including review of clinical records, to identify overpayments.5 Premium Audit Services ("PAS") uses similar techniques as ARO to identify overpayments made to institutional providers such as hospitals.
United engages in a multistep process to recover benefit overpayments. First, United sends a letter to the provider identifying (1) the specific claim that was overpaid; (2) the amount that United overpaid on that claim; and (3) the reason for overpayment. These letters further (1) request a check from the provider for the amount overpaid; (2) note that the provider may appeal United's assessment6; and (3) state that if the provider does not remit the amount overpaid, United may deduct that amount from future claims submitted by that provider.
United will send follow up letters to providers in an effort to secure voluntary repayment, and those letters will always note that the provider may appeal United's determination. (Price Decl. ¶ 3.) United at times outsources overpayment recovery operations to outside vendors that "employ the same basic process[.]" (Id. ¶ 13.)
To the extent United decides that an overpayment determination changes a member's paid benefits under his or her health insurance policy, United will issue a revised Explanation of Benefits ("EOB") to the member and a similar document known as a Provider Remittance Advice ("PRA") to the provider. The revised EOB notes the member's formal remedies under ERISA to contest United's reassessment. If the overpayment is identified by Benefits Operations, the revised EOB and PRA are sent at the same time as the initial letter seeking reimbursement. If the overpayment is identified by ARO, United issues the revised EOB and PRA at the time the provider makes voluntary repayment or when the time in which to make voluntary repayment expires, whichever occurs first.
In 2011, United recovered approximately $430 million in overpayments to providers. 58% of the $430 million was recovered as a result of providers' voluntarily sending a check to United, while 42% was recovered through offsets.7 (Bescwick Decl. ¶ 10.)
Provider appeals are considered by a group of ten to twelve members of the ARO Appeals Team.8 In addition, an ARO quality team reviews the Appeals Team's determinations for accuracy and seeks to ensure that appeal resolution letters provide sufficient explanatoryinformation. As with the overpayment recovery process, United will at times outsource the appeal process to outside vendors.9 Neither the ARO Appeals Team nor the ARO quality team considers appeals pursuant to ERISA.
If a provider prevails in an appeal, United sends the provider a letter stating that United will no...
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