If your claim doesn’t show up in our “system”, it doesn’t exist and we don’t have to pay it.

Robin H. [Confidentiality provision of a settlement agreement prohibits disclosure of identity of parties].

This case involved the claim of a “Member” of a hospital service plans. The hospital was an “in-network” contract provider. Accordingly, the dispute was to be resolved by arbitration in accordance with the American Arbitration Association Commercial Rules.

The claim arose shortly after the effective date of the provider contract. There was absolutely no dispute that hospital provided quality treatment for Robin H., as was required by the provider contract. Nor is there any dispute as to the accuracy, substance or merit of the claim. The insurers contended that it was excused from any obligation to pay for any of the treatment services performed because it said that the hospital had to “prove” not only that it submitted a bill, but that the insurer received the bill within 120 days of service. And not just any “proof” would do. It had to be “proof” that was subjectively satisfactory to the insurer, according to its own internally-created “timely filing guidelines”.

The hospital did in fact comply with the terms of the contract and it did in fact submit the bill on multiple occasions within the 120-day period. But for some reason the claims didn’t promptly show up the insurer’s computerized “system”.

On several occasions, immediately after mailing in a bill, the hospital contacted the insurer only to be told again and again that the claims still did not show up in its “system”. When the hospital called the insurer’s contract manager to try to resolve these problems, she explained that the claims just inexplicably “dropped” off of the “system”.

Even if there were some legitimate issue as to the hospital’s actual performance under the provider contract (which there wasn’t), it was clear that the hospital had substantially performed all services required of it, in good faith pursuant to the contract and thus it deserved to be paid. Moreover, the insurer had received the benefit of the agreement and it has been in no way prejudiced by any late submission of a bill. So the insurer would have been unjustly enriched at the hospital’s expense if it could invoke minor technicalities to avoid payment. This was especially true in that the insurer had itself violated the “prompt payment” and “dispute resolution” provisions of the agreement (and the law) with impunity.

Result: A demand for arbitration was file. The case was resolved satisfactorily.

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