Commercial Litigation Update

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.

On January 12, 2022, the closely watched Nevada lawsuit filed by emergency medicine providers against one of the largest health insurance companies in the world—UnitedHealthcare Insurance Company—was again the focus of hundreds of thousands of providers throughout the country.

The recent hearing followed a seven-week trial during which the jury found that United and its affiliates deliberately underpaid frontline healthcare workers for emergency medical services. The jury awarded $60 million in punitive damages and $2.65 million in compensatory damages to three Nevada-based emergency physician group affiliates of TeamHealth, a physician services and staffing company.

As the coronavirus spreads throughout the country, hospitals and other health care providers are finding themselves inundated with patients. Those providers who are in-network with payors have and will likely continue to experience difficulty in complying with certain provisions of their contracts. For instance, as payors are also experiencing an unexpected influx of telephone traffic, the wait time for various approvals, including, but not limited to, pre-authorizations are being delayed.

Providers are often contractually obligated to obtain pre-authorizations for certain procedures and services prior to rendering the care. Due to the increased telephone traffic and increased wait times on the payor end, these providers are now faced with a dilemma. A process that as of two weeks ago only took a matter of ten to fifteen minutes now can take up to an hour or more. This creates a serious dilemma for those providers who need to render care to their patients and comply with their contractual obligations to payors.

The Senate has spoken to this issue via the Families First Act which prohibits cost sharing and imposing prior authorizations for COVID-19 related testing under Medicare, CHIP, and individual and small/large self-funded group plans. See Division F-Health Provisions, § 6001, Coverage of Testing for COVID-19. While some payors have recognized and acknowledged the difficulties posed by COVID-19 and have made exceptions to the standard requirements, those exceptions have been limited. For example, the Blue Cross Blue Shield Association has indicated that its network of 36 BCBS companies will waive prior authorizations for diagnostic tests and covered services that are medically necessary for members diagnosed with COVID-19. Similarly, Wellmark and Anthem, Inc., have waived prior authorizations for covered services related to COVID-19. While these limited pre-authorization waivers are a start, they do not resolve the dilemma faced by those providers treating patients who are not suffering from COVID-19.