A Win for Out-of-Network Providers

In a major win for healthcare providers, on September 20th a Louisiana state court jury awarded $421 million in favor of an out-of-network provider in its long dispute with Blue Cross Blue Shield of Louisiana (“BCBS of Louisiana”).

BCBS of Louisiana is the largest insurer in the State of Louisiana.

Payors have developed a reputation for underpaying or denying payment to providers altogether. This is especially true for providers who do not have contracts with insurance companies and, as a result, are out-of-network. Meanwhile providers who have contracts with insurance companies, i.e., in-network providers, are subject to preferential contract rates and in exchange are supposed to be paid in a timely manner. However, many providers have learned this is not what happens. Out-of-network providers, in particular, face an uphill battle to get reimbursed for the medically necessary services rendered to patients. The out-of-network provider in this case experienced just that.

Since there is no contract between the provider and payor in an out-of-network context, the provider submits its billed charges to the payor. Many states have balance billing laws that preclude the provider from seeking payment from the insured directly. Knowing that the provider has limited recourse, insurance companies will often either not pay or pay slowly. St. Charles Surgical Hospital and Center for Restorative Breast Surgery (“St. Charles”) is well-known for its treatment of cancer patients. After not being appropriately reimbursed for the services rendered to patients, St. Charles filed its lawsuit in Louisiana state court in 2017. According to St. Charles, BCBS of Louisiana would authorize surgeries, the providers would perform those surgeries pursuant to the authorizations, and then the insurer would not render the appropriate payment. The case involved about 7,000 procedures that were performed on an out-of-network basis. St. Charles claimed that BCBS of Louisiana only paid approximately 9% of the total amount billed for these services. St. Charles’s claims against the insurance company were for fraud and abuse of rights. The insurance company’s defense included arguments that authorizing medical treatment did not guarantee payment at those rates. Rather, BCBS of Louisiana negotiated individual deals for out-of-network reimbursement with brokers or employers.

This award has implications for the entire healthcare industry. It is the most recent example where insurance companies have been found liable for their failure to fairly reimburse providers. Other examples include the $60 million verdict against UnitedHealth in Nevada in 2021, and the $111 million arbitration award (including attorneys’ fees) that the authors secured against UnitedHealth in Florida in 2023. These verdicts show that there is a path forward for providers to be reimbursed for the services they render and the care they give to patients. Meanwhile, for insurance companies it calls into question their tactics, business strategy, and ultimate treatment of out-of-network providers. The threat of large verdicts plus attorneys’ fees, interest, etc., will force insurance companies to decide whether refusing to pay providers is worth the risk.  

BCBS of Louisiana has indicated that it will appeal the decision. However, if the verdict remains in place, insurers will be forced to question their leverage in the out-of-network market.