• Paul M. Sullivan, Jr.

Doctors Accuse Health Insurer of Rigged Reimbursement Rates

In what apparently is a reminder to a defendant attempting to remove a case to federal court based on federal question jurisdiction of the difference between a dispute about reimbursement rates, e.g., under a provider contract and rights of ERISA beneficiaries to payment under their ERISA plan, the Middle District of Florida rebuffed an attempt by the defendants to remove their case to federal court.

The Florida case itself, as described by the federal court, however, involves state law accusations against MultiPlan, the nation's largest independent PPO (recently acquired by the Carlysle Group, a global private equity firm with $39 billion under management). MultiPlan which reportedly "serves as a single gateway to a host of . . . out-of-network strategies for managing the financial risks associated with healthcare claims." MultiPlan is described by the federal court -- apparently quoting the state court complaint-- as "a cost management company that promotes to insurers its Data iSight program as a way to value medical claims and contain costs."

This is now not a case that will be heard in federal court, because it does not fall under the scope of ERISA's civil enforcement provision.

However, the Florida state court case is one worth noting. In it a practice group of anesthesiologists and registered nurse anesthetists who are the exclusive providers of anesthesia and pain management care at 23 hospitals in central Florida, have filed a five-count complaint against three United Healthcare entities and MultiPlan accusing them of violating the Florida Racketeer Influenced and Corruption Act, conspiracy to violate Florida RICO, violating the Civil Remedies for Corrupt Practices Act, conspiracy to violate that Act, and violating the Florida Deceptive and Unfair Trade Practices Act.

MultiPlan with United's consent removed the case to federal court, claiming federal question jurisdiction under ERISA and FEHBA. No luck. FEHBA is not a removal-statute. No "complete preemption" there. ERISA is a removal statute, but MultiPlan had to prove its case fell under the scope of ERISA's remedial provision, which it does not.

(The court noted the same plaintiff sued the same defendants on the same claims but for the immediately preceding time period and the court found no federal question jurisdiction then either. This is now the second time federal question jurisdiction was found not present. For all that the federal court writes here, it is a wonder MultiPlan even tried.)

The Florida state case is not an isolated instance of doctors' suing United and MultiPlan over the issue of alleged underpayment of reimbursement rates. Apparently according to published reports, two Pennsylvania hospital-based emergency physician groups have accused United of hiring a data analysis firm to develop market-based reimbursement rates. The tool used to come up with the rates, Data iSight, allegedly did not use information about services or rates in local markets. The Pennsylvania physicians allege United paid them 75% to 90% of billed value for out-of-network claims for years. After using Data iSight the reimbursement rates dropped to between 15% and 20%.

In New York five emergency room physician groups have sued United Health and MultiPlan for underpaying them for out-of-network services as well. The New York groups allege that United worked with MultiPlan to create a database of fake reimbursement rates for out-of-network providers.

How all this will end is unknown, but where it will not end is clear. It will not end in the U.S. District Court for the Middle District of Florida, based on ERISA complete preemption.

See Gulf-to-Bay Anesthesiology Assocs., LLC v. United Healthcare of Florida, Inc., Case No. 8:20-cv-2964-CEH-SPF (M.D. Fla., April 30. 2021).

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