Bogus denials based on non-existent proprietary “pricing” information.
Pacific Shores Hospital v. Janney, Montgomery, Scott, LLC Health And Welfare Plan, CV 09-7887 PA
The patient was admitted to Pacific Shores and received inpatient hospitalization treatment and partial hospitalization treatment. Prior to admission, Pacific Shores called Aetna on two separate occasions for the purpose of verifying benefits available under the plan. All necessary authorizations for admission and treatment were obtained by Pacific Shores. After the patient’s discharge from the hospital, a claim for benefits was submitted to Aetna. Aetna paid less than one-half of the amount that it had verified as payable. This was accomplished by Aetna by sending the claims over to Global Claim Services. Global acted as a "managed care" agent, and/or a "re-pricing" agent for Aetna. Global then erroneously disallowed charges, as exceeding a "reasonable rate".
ERISA and the federal regulations require that adequate notice in writing of claim denial, setting forth the specific reasons for denial and written in a manner calculated to be understood by the participant. At no time did Aetna (or Global) formally issue any written notice, complying with the law.
At the time, Global held itself out to the general public as a provider of "medical cost containment services", which was a euphemism for re-determining "usual, customary & reasonable" (UCR) rates and its "re-pricing" of "Out of Network" (OON) medical benefit claims. Global’s URC re-determination and “re-pricing” scheme was said to be based upon a "proprietary database" of UCR rates maintained by Global. When asked by Pacific Shores to disclose this database, Aetna and Global refused, which is contrary to the requirements of ERISA.
The way in which the Aetna-Global "re-pricing" scheme was carried into effect was as follows. First, Aetna simply withheld proper payments due Out of Network medical providers for services that have already been rendered to Aetna’s insureds. The underpayment and /or withholding of payment by Aetna was based upon a bogus determination by Global as to what a UCR rate actually is. After the medical services were rendered, and after the promised payments were due, Global routinely initiated "negotiations" with the medical providers in an effort to get the providers to accept less than the UCR rates that were promised. However, if the provider refused to negotiate with Global, Aetna simply paid the "re-priced" claim, based on Global’s unilateral re-determination of what a UCR charge is and contrary to the terms of the plan and contrary to the benefit verifications provided to the provider by Aetna. The entire scheme was clearly contrary to the law, as was alleged in the Complaint filed in federal court.
Result: A lawsuit was filed. The case was resolved satisfactorily.