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WC Recovery in a Post COVID World!

On May 6, 2020

By: Chris Aguiar, Esq.

There are so many fascinating things to debate in what can only be described as perhaps the strangest times we as a society have collectively endured. Should we open the economy at the expense of American lives? Does the data even support this notion that social distancing makes a difference? How could the models have been so far off their original projections? How did the current administration do with respect to its response? It would be disingenuous to say that these are not topics in which I am interested, but in terms of the day to day business of a subrogation professional (and in the context of this blog), I’m thinking much more in the weeds.

The immediate question a lot of our subrogation clients are asking is quite simply, what is the rule regarding workers' compensation claims with respect to this pandemic? Will medical professionals, first responders, and even essential employees be able to make claims for workers' comp? One’s gut reaction might be to say, “of course they can!” – But deeper analysis requires a bit more nuanced thinking.

The success of every injury claim, be it an auto accident, a work injury, or medical malpractice, rests on a critical element of proving negligence – causation! How does one prove that they contracted the virus as a result of working with a person infected with COVID-19, rather than when they stopped at the grocery store on the way home from their shift? With a virus that the media would lead you to believe is so potent that the mere act of stepping outside your door will leave you at significant risk, how are we to know what actually “caused” that person to contract the virus? It would be virtually impossible to tie the contracting of the virus to one single event – accordingly, the theoretical answer lies in the concept of “presumptive illness”. The practical answer, as is so often the case with legal discussion, is, well, “it depends.”

Every state has different definitions of “presumptive illness” - a presumption that one who works closely with those who are ill, such as medical personnel and first responders, contracted the illness within the scope of their employment. Furthermore, every state defines the class of employees who are eligible for the presumption differently (e.g. which “essential employees” are eligible for the presumption?). Additionally, many states are currently reviewing their laws and determining whether to make a change to specifically address the current pandemic and what employees on the front lines are able to claim. Needless to say, as with everything related to COVID-19, it is a quickly developing situation. At this time, whether a plan participant is eligible for worker’s compensation benefits depends on the type of work they do, and whether that state already provides for this presumption. If it doesn’t, states will need to add this presumption in order to allow workers to access these benefits.

Anyone who has questions can feel free to reach out to our team for more information at info@phiagroup.com.

Bouncing Through Quarantine

On May 4, 2020

By: Nick Bonds, Esq.
 

While some of the United States is tentatively beginning to reopen, much of the country remains firmly under social distancing orders. The ripple effects of keeping people cooped up with their families vary wildly, but many are reveling in the extra time spent together, and are finding numerous ways to stay sane and entertained in the face of the Covid-19 pandemic.
 

Some of this has led to fairly predictable shortages, but there are reasons for hope. Aside from the struggle of grocery stores (and even a few global online retail-giants-who-shall-not-be-named) to keep toilet paper, disinfectant wipes, and hand sanitizer in stock, the fact that our stores’ shelves have been rendered entirely barren should be seen as a testament to the resilience of our modern supply chain.
 

Nonetheless, there are a number of things you just can’t find right now. Toilet paper remains scarcer than I’d like it to. The meat case at my local store has been pretty sparse of late. You probably can’t buy a Nintendo Switch from a traditional retail outlet at MSRP to save your life right now. And, spurred by the hordes of energetic youths with no safe outlet for their boundless energy, trampolines are flying off of shelves.
 

This got me thinking… plenty of people find perfectly mundane ways of injuring themselves in the home. Sure, social distancing keeps us safe from the coronavirus, and protects us in plenty of other ways. Fewer drivers on the roads means fewer car accidents. Fewer kids playing peewee football means fewer broken collarbones. But as a former kid myself, I can tell you: we will find a way to injure ourselves, trampoline or no. And fear of the coronavirus may well make people wary of visiting an emergency room (preferably an urgent care clinic), even when truly necessary, exacerbating injuries and prolonging the healing process. This will almost certainly lead to higher claims costs for plans down the line.
 

All this to say, it is imperative that we all keep up with our personal well-being in this time of social distancing. If anything, this pandemic may help all of us maintain a greater awareness of our personal health. Companies that encourage telemedicine can help their employees build a rapport with their healthcare providers, leading to better health outcomes and ultimately saving plans money. Keeping ourselves and our families mentally and physically engaged throughout this time will keep us all healthier and saner until we can finally go to our offices again. If it takes a videoconference with your doctor (or a trampoline/black-market videogame console) to make that happen, maybe it’s worth it.

The Silent Impact of COVID-19: The Rise in Mental Health & Substance Abuse Disorders

On April 27, 2020

By: Philip Qualo, J.D.

Before COVID-19 became a common household name, the United States was already in the midst of a mental health crisis. Rates of suicides and drug overdoses have been climbing in recent years; for example, in 2017, 17.3 million adults in the U.S. had at least one major depressive episode. This staggering figure is likely not even a true reflection, as studies show many people don’t seek treatment at all finding that stigma and shame keep 80% of people out of treatment. As the COVID-19 pandemic has consumed the nation, and the world, many of us are learning the hard way that life during a pandemic has even the most resilient of us drowning in unprecedented levels of stress. School and work closures, as well as stay-at-home orders, feel like they might stretch on for months. The volatile economy and sudden job losses have added a layer of financial insecurity that wasn’t a factor in people’s lives just a few weeks ago. Meanwhile, the rates of COVID-19 infections are rising exponentially, creating intense anxiety about what day-to-day activities are even safe. For those at highest risk of developing complications or already ill, there’s the fear of getting sick, or sicker. In the worst cases, there’s the grief of losing loved ones. The combination of these stressors are common triggers for mental health disturbances and substance abuse disorders. 

 

COVID-19 hasn’t just disrupted our daily lives; it has also disrupted how our minds work. As stay-at-home orders remain in effect, people aren’t only isolated from care, but from each other. In the U.S., more than 25% of people live alone, and studies have linked loneliness to substance abuse and mood disorders. Others are stuck inside with abusive partners or are living in already strained relationships. Those managing addiction risk a potential relapse without access to in-person meetings or substance abuse rehabilitation services. Some will likely bounce back when life returns to normal, but for others, unmanaged stresses could lead to bigger problems down the line.

On the brighter side, the American Psychiatric Association finds video-based sessions “equivalent” to in-person care for diagnosis, treatment, quality, and patient satisfaction. Demand for telehealth mental services has already spiked. Talkspace, a text and video chat therapy service, has seen a 65% increase in customers since mid-February. Winsberg’s Brightside, an app that offers treatment and medication for anxiety and depression, has seen a 50% bump in new users since the start of the quarter. More than 50 companies have signed up or expanded their use of telehealth mental services, including big employers such as Nike and Target.

The federal government has also relaxed some of its previously restrictive privacy standards. In March, the Department of Health and Human Services issued guidance that it would not impose penalties for providers unable to comply with HIPAA privacy rules during the COVID-19 nationwide public-health emergency. That means, for the time being, therapists can conduct sessions using free and widely available services including FaceTime, Google Hangouts, or Skype, making those services much easier to access for those with the greatest need for it.

Much like we’ve seen elsewhere in the U.S. health-care system, the sudden and growing need for care has left mental health providers overwhelmed. The root of this problem is that there aren’t enough therapists to go around. Historically, practitioners could only serve patients in states where they were licensed, but states are rapidly working to relax those requirements to accommodate the influx of need. Each locality has its own licensing permissions, though, leaving telehealth mental service providers having to wade through a patchwork of regulations.

Even with the recent expansion of coverage for telehealth services, it is important to keep in mind that not all behavioral health issues can be addressed from afar, and people who need more hands-on treatment could fall through the cracks. Employers, however, can help to bridge this gap. One of the most important things employers can do is provide an employee assistance program (EAP) or ensure their employer-sponsored health plans offer mental health coverage. If an EAP is part of the benefits package, now is a good time to remind employees of the availability of such services. Companies should also consider compiling and distributing lists of available local mental health resources like therapists, psychiatrists, suicide hotlines, and even online meditation and yoga classes.

For businesses that are operating completely remote, regularly scheduled video meetings and virtual social events can also help to defray the mental challenges that accompany long periods of isolation.  Even simply allowing employees the opportunity to talk about their concerns and emotions can help. As the nation comes together to contain the spread of COVID-19 and protect our physical health, it is equally as important we be cognizant of our mental health as well as support our peers who may be experiencing emotional and challenges with substance abuse in these challenging times.

If you or someone you know is struggling, contact the National Suicide Prevention Lifeline at 800 273-8255.

COVID-19… And What it Means to Work From Home with Small Children

On April 13, 2020

By: Jen McCormick, Esq.

COVID-19 has impacted most aspects of our lives, and the lives of our families.  From a healthcare perspective, we want to do all we can to protect our families from the virus.  In most cases this means that households where both parents work outside the home and children attend school or daycare are now all confined to their homes… every day. We do this in hopes of keeping the children and ourselves safe.  Being confined to our homes, however, can be challenging in many ways.

For families where being home is the exception over the rule this has been an adjustment.  We are forced to redefine our roles as co-workers, parents, and spouses to find the perfect work-home balance, all while at home.  Dealing with this new normal is hard, and certainly pays a toll on our mental health. Mindful of this extra stress for many, plans and employers should consider additional ways to help.

Consider ways the parent can use their health plan, for example, does the employer health plan cover telehealth? Is this available for mental health as well?  The option to contact a doctor over the phone would make receiving care easier for many. A waiver of the copay or deductible would make this even more attractive, and likely provide many benefits for the individual, their family, and work productivity.

Another consideration would be how employers are actively trying to stay engaged by using video chat features, hosting virtual happy hours, or playing virtual games.  By setting up meetups it’s a way to remain connected while still maintaining distance. No effort is unnoticed in this particularly challenging time and even a ‘how are you doing’ could make a big difference for a struggling parent.

Waiving Copays and Deductibles for Testing Isn’t Enough – The Impact of COVID-19 on the Patient’s Pocket

On March 20, 2020

By: Kevin Brady, Esq.

In response to the mounting need to flatten the curve and slow the spread of COVID-19, the federal government has taken overt action in the passing of the Families First Coronavirus Response Act. The act effectively removes the financial barriers and facilitates access to testing, by requiring group health plans of all shapes and sizes to waive cost-sharing for expenses related to COVID-19 testing.

The federal mandate to waive all cost-sharing on testing is significant, but may not be enough to address the potential costs that patients may ultimately bear. The testing was free, but those who test positive now need care; and that care may be significantly costlier than one may think.

According to a brief prepared by the Kaiser Family Foundation (KFF), even those patients with health insurance could face significant financial pressure following the treatment of COVID-19. For purposes of the study, KFF did a deep dive on the potential costs of treatment for COVID-19 by researching data on the treatment of pneumonia, and the out-of-pocket costs that individuals with health coverage may expect.

For those patients with serious cases, extended inpatient hospitalization will likely be necessary. According to KFF’s analysis, the average cost of care (split between the health plan and the patient) for cases with major complications or comorbidities was $20,292. A patient with no complications can expect to pay around $1,300 (in cost-sharing alone) for treatment.

Another concern for patients is that we are still early in the year and most plan participants have not even come close to reaching their deductibles or out-of-pocket maximums. This fact alone may drive the average cost to patients even higher. Even those who may not owe a significant amount in cost-sharing may still be burdened by balance bills on out-of-network claims or even surprise bills on in-network claims. Needless to say, the potential cost of care for the treatment will likely be significant on health plans and patients alike. It will be interesting to see if further guidance from the federal government or major carrier will address this issue.

While most of us are impacted in some way- social distancing, work from home, restrictions on travel- it is important that we do not lose sight of those individuals who will require significant care as a result of COVID-19 and ensure that the potential costs associated with that care are addressed in kind.

How Flexible Can Your Plan Be?

On March 17, 2020

By: Kelly Dempsey, Esq.

Many federal regulations are set up to be a floor and not a ceiling – meaning employers and plans are permitted to be more generous than the federal regulation requires. This concept is important as we wade into unknown territories with the constant changes associated with coronavirus and the relevant employer and plan considerations. Two of the more common exceptions here are (1) permitted election changes for cafeteria plans under Code Section 125 and (2) requirements under HSA-qualified high deductible health plans (HDHPs), so we’ll review those quickly.

Section 125 contains specific events that qualify as permitted election changes – meaning if a specific event occurs, a participant may opt to modify their elections in the cafeteria plan (for example, stop paying premiums for medical coverage on a pre-tax basis or change how much is being contributed to an FSA or DCAP during the plan year). The rules indicate that an employer may include any of the permitted election changes in the cafeteria plan, but the employer is not permitted to provide options in addition to what the rules provide. Employers also do not have to include every permitted election change in their cafeteria plan, although most do choose to do so.

Our other example, IRS rules for HSA-qualified HDHPs, also have certain parameters for HDHPs where employers and plans are not allowed to be more generous (specifically, the minimum HDHP deductible and the maximum contribution to HSAs). Each year the IRS reviews these figures to determine if they should be modified based on cost of living changes.

In the absence of any federal or state law, employers with self-funded ERISA plans are generally permitted to expand continuations of coverage associated with leaves of absence or layoffs/furloughs (i.e., leaves and continuations not associated with FMLA or COBRA) for a timeframe that aligns with the employer’s business practices. In this time of great uncertainty with the spread of COVID-19, we understand many employers are in the process of laying off or furloughing employees due to financial strain or simply a stoppage or suspension of business operations. It’s highly likely that the federal government will issue additional guidelines related to leaves of absences and continuations of coverage in the near future, but until then, employers have broad discretion to amend their plans as they see fit. The key word here is “amend” – employers must go through the formal process of amending their SPD/PD if it does not align with the policy the employer is creating. Updating the SPD/PD to addressed modified continuations of coverage is crucial to ensure compliance with ERISA requirements and minimize the potential for creating a coverage gap with stop-loss. It’s still a bit unclear how stop-loss carriers will modify their processes (if at all) to accept changes to SPD/PDs in light of COVID-19 (i.e., if they will accept changes with less notice or if they’ll waive their right to modify premiums). The answers will likely reveal themselves soon.

“Incur”-aging a Review of the Term “Incurred”

On March 12, 2020

By: Kevin Brady, Esq.

The first time I read a Plan Document at The Phia Group, I saw a word that I am ashamed to admit, I did not quite understand. A short word, an odd word, but an important one nonetheless. The term “Incurred” can be found over and over in most Plan Documents and stop-loss policies. Little did I know, this term would come up, over and over again as I continued to review these documents.

With some variation in the language, the typical definition of the term establishes that claims are incurred on the date with which a service, supply, or treatment is rendered to a participant. Although this seems to be the standard, some Plans and policies provide that a claim is not incurred until it is submitted to the Plan or sometimes a claim may not be considered incurred until the Plan has issued payment on the claim.

An important consideration for Plan Administrators is that the Plan’s definition of this term should not conflict with the stop loss policy. When the Plan and the policy have conflicting definitions, it may give rise to a number of reimbursement issues. For example, a conflicting definition could implicate issues with stop loss notice requirements; if the Plan is confused about when the clock starts for timely notice of a claim, the Plan may inadvertently fail to provide notice of an otherwise reimbursable claim. Further, confusion on the date with which a claim was incurred could cause a claim to fall completely outside of the policy period unbeknownst to the Plan Administrator.

Another common issue arises when the definition fails to describe how the Plan will treat ongoing courses of treatment. Will the claim be considered incurred on the date when the participant initially sought treatment? Or will each individual treatment or service be considered separately? The Plan should clearly outline these issues to avoid confusion when administering claims. Even if a Plan does describe the impact of ongoing treatment, it must also consult with the carrier to determine if their application is consistent with the carrier’s and make the necessary modifications to ensure there are no gaps between the two documents.

While it may seem very simple, failing to recognize this language gap could ultimately be the difference between reimbursement and denial on an otherwise reimbursable claim.

Plan Administrators should review the definitions in both the Plan and their policy to ensure that a gap such as this one does not preclude the Plan from reimbursement. Even better, send your Plan Document and stop-loss policy to PgcReferral@phiagroup.com and we will perform a detailed analysis of the gaps between the Plan and the Policy.

Special Rules Apply for Military Treatment Facilities

On February 27, 2020

By: Nick Bonds, Esq.

Any time a group health plan has to deal with a unique type of provider, they start playing by a different set of rules. Today we focus on one provider in particular: the Military Treatment Facility (“MTF”), and the powerful tools they have at their disposal to seek payments from plans.

Modern efforts by the U.S. government to recoup military spending on medical care date back at least to World War II. At that time, the U.S. Department of Defense (“DoD”) (then the War Office) was primarily focused on recovering money spent caring for servicemembers injured by the tortious acts of third parties – essentially subrogating against private parties that injured their soldiers. Over time, federal courts determined that the DoD did not have the authority to pursue this type of recovery without legislation sanctioning a cause of action. Eventually, Congress obliged, creating the Federal Medical Care Recovery Act (“FMCRA”), which created a federal reimbursement and subrogation right against liable third parties.

This legislation evolved as military health care programs grew more complex. With the development of programs like the Civilian Health and Medical Program of the Uniformed Services (“CHAMPUS”) and then Tricare, as well as the introduction of the U.S. Department of Veterans Affairs (“VA”), and of course the expansion of the Military Health System (“MHS”) itself, a need became apparent for a mechanism by which these programs could recover medical care costs from workers’ compensation plans, automobile insurance coverage, and eventually private health insurers and self-funded health plans.

10 U.S.C. § 1095, which established the Third Party Collection Program and allows the DoD to collect from health insurance plans the health care costs incurred on behalf of insured military retirees and their dependents. The statute allows MTFs to collect from third-party payers (e.g., insurance carriers, medical services, or health plans the reasonable costs of care incurred at a medical treatment facility to the extent the insurer would pay if the services were provided at a civilian hospital.  This means that a third-party payer (e.g., a self-funded plan) could not deny claims from a MTF simply based on a “Government Facilities” exclusion.

Most importantly however, as mentioned above, an MTF would not be bound by a self-funded health plan’s timely filing deadlines. Claims brought by a provider under 10 U.S.C. § 1095 are consider considered indebtedness to the United States government; which are only time-barred after six years (see 28 U.S. Code § 2415). This means that an MTF can bring a claim past not only the self-funded plan’s filing deadline, but well beyond the deadline for the plan’s stop-loss policy. This could easily lead to a situation where a Plan Sponsor finds themselves obligated to pay claims to a military hospital with little to no hope of being reimbursed by their carrier.

This fact pattern may sound familiar to plans that have had their claim denial overturned by an independent review organization (“IRO”). Under the Affordable Care Act (“ACA”), self-funded plans must cover these overturned claims, but the process of appealing and overturning these claims pushes them well beyond the incurral or payment period mandated by the applicable stop-loss policy. Similar to the situation with MTFs, plans find themselves statutorily obligated to pay claims that would typically be denied by the stop-loss carrier. Thankfully, a number of stop-loss carriers provider riders their policies allowing such overturned claim denials to be considered “covered,” and therefore reimbursable. This type of rider may come at a premium, but it can be invaluable to a plan that finds itself saddled with exception high, exceptionally tardy claims by an IRO.

Plans that know they have a participant population that is likely to seek treatment from a military hospital need to be aware of 10 U.S.C. § 1095 and the difficult position it can put them in. Any time a plan is dealing with unique providers (e.g., MTFs, VA providers, critical access hospitals) special rules may come in to play that can shake up the standard playing field. The Phia Group is here to help plans understand which rules they need to play by.

New Insight on Provider Surprise Billing

On February 17, 2020

By: Andrew Silverio, Esq.

Anyone who works in health benefits is familiar with surprise billing – the specific kind of balance billing which occurs when a patient visits an in-network physician or hospital, and receives an unexpected balance bill from an out-of-network provider that they didn’t have an opportunity to select, and in many cases, didn’t even know they had utilized.  Common culprits are anesthesiologists, assistant surgeons, and outside lab work.

We often think of this as primarily a problem for emergency claims.  This makes a great deal of sense, since when someone presents at an ER or is brought there via ambulance, they likely won’t have an opportunity to ask questions about network participation or request specific providers.  However, according to surprising data released in the Journal of the American Medical Association on February 11, 2020 entitled “Out-of-Network Bills for Privately Insured Patients Undergoing Elective Surgery With In-Network Primary Surgeons and Facilities (available at jamanetwork.com/journals/jama/fullarticle/2760735?guestAccessKey=9774a0bf-c1e7-45a4-b2a0-32f41c6fde66&utm_source=For_The_Media&utm_medium=referral&utm_campaign=ftm_links&utm_content=tfl&utm_term=021120), these bills don’t actually seem to be more likely to arise from emergencies or other hospital stays where patients have less of an opportunity to “shop around.” 

The study looked at 347,356 patients undergoing elective surgeries, at in-network facilities with in-network surgeons.  These are patients who had ample opportunity to select their providers, and indeed did select in-network providers for both the surgeon performing their procedure and the facility in which it would occur. Shockingly, over 20% of these encounters resulted in a surprise out of network bill (“Among 347 356 patients who had undergone elective surgery with in-network primary surgeons at in-network facilities . . . an out-of-network bill was present in 20.5% of episodes...”) The instances that involved surprise bills also corresponded to higher total charges - $48,383.00 in surprise billing situations versus $34,300.00 in non-surprise billing situations.

The most common culprits were surgical assistants, with an average surprise bill of $3,633.00, and anesthesiologists, with an average bill of $1,219.00.  In the context of previous research indicating that “20 percent of hospital admissions that originated in the emergency department . . . likely led to a surprise medical bill,” it seems that even when patients are able to do their homework and select in-network facilities and surgeons, they are just as susceptible to surprise billing. (See Garmon C, Chartock B., One In Five Inpatient Emergency Department Cases May Lead To Surprise Bills. Health Affairs, available at healthaffairs.org/doi/10.1377/hlthaff.2016.0970.)

Many states have enacted protections against balance billing and surprise billing, with Washington and Texas both recently enacting comprehensive legislation.  However, these state-based laws have limited applicability, and there are to date no meaningful federal protections for patients in these situations.  Until such protections are enacted, patients are left vulnerable to sometimes predatory billing practices, and plans are left to choose between absorbing that financial blow or leaving patients out in the cold.

More Thoughts on The Cigna Racketeering Case

On January 28, 2020

By: Jon Jablon, Esq.

You may have read the blog post that my colleague Andrew Silverio wrote about this case just a few days ago. (If you haven’t, check it out!)

After doing a deep dive into this case, there are a few specific things I want to bring up – and to do so, I’ll do some quoting from the complaint. The plaintiffs – certain medical providers that feel they have been victimized by Cigna – have made many allegations, some very specific, and some more sweeping in nature. While we have no basis to question the facts presented by the plaintiffs, it does seem that the logic employed in the arguments leaves something to be desired. Here are a few paragraphs from the complaint that I find most noteworthy from a self-funding point of view:

13. Plaintiffs’ incurred charges for the Cigna Claims total approximately $72,757,456.28, reflecting Plaintiffs’ usual and customary rates for the particular medical services provided. But Cigna has paid only a small fraction of this amount,—$16,937,637.50, which represents only 23% of its legal responsibility.

The plaintiffs are alleging that the 23% of the total billed charges paid to them by Cigna was “only 23% of [Cigna]’s legal responsibility.”

I’ll pause to let that ridiculousness set in.

These plaintiffs are actually alleging that Cigna’s legal responsibility is to pay 100% of billed charges, across numerous claims. Not surprisingly, the complaint doesn’t support that assertion with any plan language, law, or logic, and I can’t help but wonder what the drafter of this complaint was thinking.

20. In this example, Cigna has told the provider that the unlucky Cigna Subscriber owes it $60,316.07 as the amount not covered under the Subscriber’s Plan, but has told the Subscriber that he/she owes the provider only $895.25 because Cigna negotiated a 98% discount with the provider. In doing this, Cigna misrepresents to Cigna Subscribers that the amounts improperly adjusted by Cigna are “discounts.” This misrepresentation appears on most Cigna Claim Patient EOBs.

Here, the plaintiffs allege that the EOBs provided to them identify that the amount Cigna claims to be above its allowable amount is a discount. This is a common folly and one we strongly caution against making! RBP plans often fall into this trap, since their payments are always at an allowable amount lower than the provider’s billed charges; characterizing the disallowed or excess amount as a “discount,” when it is not, is misleading to providers (causing confusion and frustration, and ultimately hurting outcomes when combating balance-billing) and a misrepresentation to members.

121& 122. For emergency services, the ACA Greatest of Three regulation and New Jersey law require Cigna to reimburse Plaintiffs at least at the in-network rate at which Cigna would reimburse contracted providers for the same services. … Plaintiffs are therefore entitled to the total incurred charges for the elective and emergency claims at issue, less Patient Responsibility Amounts not waived by Cigna.

This is not quite accurate for two reasons. First, the plaintiffs misquote the “Greatest of Three” rule; the amount that must be paid is at least the median in-network rate that each individual plan would pay for the same services, rather than the blundering mischaracterization of “the in-network rate at which Cigna would reimburse contracted providers.” Those are important differences, and, frankly, the attorney should have known better.

Second, even if this premise were accurate as written, the conclusion drawn is still nonsensical. The plaintiffs have indicated that since the payment must be at least the in-network rate paid to the same provider, then the payment must be “total incurred charges” minus patient responsibility. In other words, these providers are suggesting that the in-network rate, across thousands of claims with multiple providers, is 100%. It’s true that 0% discounts exist, but they’re somewhat rare, and it is certainly not the case here that every single relevant discount, accessed by any of the relevant health plans, is 0%.

155. Exhaustion is therefore deemed futile pursuant to 29 C.F.R. § 2560.503-1(l) because Cigna failed to provide a clear basis for its denials and has refused to produce the requested documents necessary for Plaintiffs to evaluate the Cigna Claims denials. Cigna thus offered no meaningful administrative process for challenging its denials of the Cigna Claims.

This last example is another one where many self-funded plans run into unexpected issues. Called “futility,” this doctrine holds that appeals are not necessary, and a claimant can jump straight to a civil suit, if the plan renders appeals futile in any of various ways.

Here, if Cigna has truly issued insufficient EOBs, refused to provide substantiating documentation, and generally didn’t follow the applicable regulations, the providers have a very good argument that appeals are futile. What’s more, though, is that these actions constitute a breach of the Plan Administrator’s fiduciary duties to abide by applicable law and the terms of the Plan Document, which could subject the Plan Administrator to penalties as well as work against the payor in court.

We’re excited to see how this suit unfolds, and we’ll give you more updates when we can!