The United States District Court for the District of Connecticut recently declared, in Connecticut General v. True View Surgery Center One LP, that ERISA prohibited a health insurer’s practice of denying medical claims when the medical providers had failed to collect the entire out-of-pocket cost from the patient at the outset.
Background. An insurance company, which acted as either insurer or TPA for various plans, adopted a rule that denied claims reimbursement when a medical provider failed to enforce a plan’s cost-sharing requirements. Specifically, the insurer would deny claims where the medical provider had failed to collect the entire out-of-pocket cost from the patient at the outset.
The insurer asked the court to: (i) declare its recoupment practice was permitted under ERISA, and (ii) order the providers to only submit claims where they had collected the full out-of-pocket costs from patients. The insurer also asked the court to impose a constructive trust on the monies that the providers had received from it in connection with claims where they had failed to collect the full out-of-pocket cost from patients.
In response, the providers countered that the legal question of whether the insurer’s recoupment practice was permitted under ERISA had already been resolved in a prior case, CIGNA v. Humble Surgical Hospital, LLC. As a result, the providers asked the court to dismiss the case on the basis of judicial estoppel.
District Court. After reviewing the matter, the court agreed with the providers and determined that the issues had already been addressed in Humble.
The Humble court held that the insurer’s interpretation of certain plan terms as allowing the recoupment practice was legally incorrect and that ERISA did not permit the insurer’s interpretation. The court made this determination based on the fact that the average plan participant would not understand from the plans’ terms that his or her coverage was conditioned on whether the medical provider collected the entire out-of-pocket cost at the outset. Therefore, the court ruled that the insurer’s recoupment practice was prohibited.
The court in True View Surgery Center proceeded to determine that the insurer’s contentions in the instant case were premised on its interpretation, which the Humble court had already found legally incorrect, of the plans’ terms. As a result, the court dismissed the case, ruling in favor of the plan participants and the medical providers.