Academic journal article American Journal of Law & Medicine

ERISA: Insurer Not Entitled to Discounted Fees-HCA Health Serv. of Georgia Inc. V. Employers Health Insur. Co

Academic journal article American Journal of Law & Medicine

ERISA: Insurer Not Entitled to Discounted Fees-HCA Health Serv. of Georgia Inc. V. Employers Health Insur. Co

Article excerpt

ERISA: Insurer Not Entitled to Discounted Fees-HCA Health Serv. of Georgia, Inc. v. Employers Health Insur. Co. 1-The Eleventh Circuit held that an insurer was not entitled to a discounted fee based on a series of contracts allegedly extending such benefit from the provider to the insurer.2 The Appellant, a health care provider, brought an action on behalf of a patient under the Employee Retirement Income Security Act of 1974 ("ERISA")3 challenging the discount claimed by Employers Health, Inc. ("EHI") for services provided to the patient. It was determined that the group health insurance policy purchased from EHI by the patient was an employee benefit plan within the meaning of ERISA, since it related to medical benefits.4 EHI appealed from a grant of summary judgment in the district court. The district court held that the provider was not barred from bringing a derivative standing suit based upon an assignment of rights from "a participant or beneficiary of an employee benefit plan" listed within 29 U.S.C. 1132(a).5 On appeal, EHI claimed that appellant failed to exhaust all administrative resources prior to bringing the ERISA suit. The court held that the evidence of communications between the parties indicated that the provider participated with the insurance company in the appeals process after the claim was implicitly denied.6

The patient, Steven Denton ("Denton"), was a member of an employee welfare benefit plan provided by EHI. Denton had surgery performed by Parkway Medical Center ("Parkway"), an EHI out-of-network provider. According to the terms of his plan, Denton expected EHI to pay eighty percent (80%) of the fee, leaving him with an out-of-pocket expense of the remaining twenty percent (20%). If Denton had used an in-plan provider, he would have only been required to pay ten percent (10%) of the fee, and EHI would have paid ninety percent (90%).

Parkway participated in a preferred provider organization ("PPO") with MedView Services, Inc. ("MedView"). The Medview/Parkway agreement allowed Parkway preferred provider status in the MedView PPO network. In return, Parkway agreed to accept seventy-five percent (75%) of their customary charge for services. In addition, MedView formed a leasing agreement with Health Services, Inc. ("HSI") allowing HSI "to perform all repricing functions to adjust fees from charges to contract rates."7 HSI entered into an agreement with EHI, under which HSI agreed to reprice bills that EHI received from HSI's network of providers for services rendered to participants in EHI's health insurance plan. EHI argued that this agreement allowed

HSI to pass on provider discounts obtained from MedView's network of providers to EHI.

When Parkway billed EHI for the surgery, EHI discounted the fee by twentyfive percent (25%) through HSI and paid eighty percent (80%) of the discounted amount. Denton paid the remainder of twenty percent (20%) of the discounted rate. Parkway never received any payment for the difference between the discounted portion and the billed charge and Denton was not billed the balance. At issue was the twentyfive percent (25%) discount taken by EHI for Denton's surgery based on the discount permitted by the MedView/Parkway agreement. EHI and Parkway have no express agreement between them; however, EHI claims that through a series of contracts with other parties, it is entitled to the discounted fee.8

The court applied a heightened arbitrary and capricious standard of review to the issue of the denial of benefits because EHI had discretion to determine the eligibility of the claims, thereby resulting in a conflict of interest.9 Under this standard, the court first looks at the administrator's interpretation to determine whether it was "wrong."10 The court held that the EHI's interpretation was wrong.11

EHI argued that under the schedule of benefits in the participant's certificate of insurance ("COI"), it was required to pay a specified percentage of the expense for covered medical services, and the participant was required to pay the balance of the expense. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.