The United States District Court for the District of Minnesota this week granted partial summary judgment to plaintiffs in a set of groundbreaking cases against UnitedHealth Group Inc. (UHG). In Peterson vs. UnitedHealth Group Inc. and Riverview Health Institute v. UnitedHealth Group Inc., the medical provider plaintiffs allege that UHG wrongfully failed to pay them for providing covered health services to patients enrolled in UHG-administered plans, and that UHG then compounded its misconduct by using the money it saved to repay itself for alleged overpayments that different UHG-administered plans made to plaintiffs. Plaintiffs allege that this type of “cross-plan offsetting” violates ERISA.
“We are extremely pleased that the judge confirmed our argument that United’s behavior is improper under ERISA,” said Zuckerman Spaeder partner D. Brian Hufford, lead counsel for the plaintiffs. “An insurer cannot take the assets from one plan and use it to cover the alleged overpayment of a second plan, but that’s exactly what our evidence shows United has done. This ruling is a large step forward for our clients, and for our fight to end the insurance industry’s pervasive and abusive repayment demand practices.”
The Zuckerman Spaeder clients allege that UHG regularly engages in “cross-plan offsetting,” a practice by which the company withholds some or all of their payments to a provider in order to offset overpayments that UHG claims to have made to the providers in connection with their treatment of different patients enrolled in different plans.
U.S. District Judge Patrick Schiltz ruled that the plaintiff’s allegations were legitimate, finding that UHG’s interpretation of the plans to allow cross-plan offsets was “inherently unreasonable” and “subject to gross conflicts of interest.” He further called the practice used by UHG “troubling” and questioned its legitimacy under federal law.
Lead attorneys for the case, D. Brian Hufford and Jason Cowart, have a similar case pending against Aetna, in New Jersey, as well as another case against UHG in New Jersey in which plaintiffs allege that when UHG issues a repayment demand against a provider, it must comply with ERISA’s notice and appeal rights. In that case, Zuckerman Spaeder represents a certified nationwide class of all out-of-network providers subject to outstanding repayment demands by United.
Hufford and Cowart have pioneered unique applications of ERISA to hold insurance companies accountable for the internal rules and procedures that drive so many decisions affecting patient health and provider reimbursements. This work has led to precedent-setting wins for health providers and two of the largest settlements of ERISA benefit class actions in history. Their work on behalf of mental health patients has gained high-profile support, including from the Department of Labor and former U.S. Rep. Patrick Kennedy.