Indiana surgery centers sue nation's top insurer over payments

May 18, 2016

Several Indiana surgery centers are suing the nation’s largest health insurance company, claiming it violated state and federal law by failing to pay for services the centers’ doctors provided to patients.

The Indiana lawsuits allege UnitedHealthcare identified what it considered past overpayments to outpatient surgery centers—in some cases for services provided years earlier—then deducted those amounts from current patients’ bills.

“There are several legal issues with that, as you can imagine,” said Ian Friedman, general counsel of SurgCenter Development, which sued UnitedHealthcare on behalf of Carmel Specialty Surgery Center, Metro Specialty Surgery Center in Jeffersonville and Riverview Surgery Center in Rockport.

Nearly two dozen suits those centers filed against the insurer were consolidated earlier this month before Judge Jane Magnus-Stinson in the U.S. Court for the Southern District of Indiana. Another suit from a Munster surgery center transferred from the Northern District also may be consolidated into this litigation.

Indianapolis attorney Shannon Melton, associate general counsel for SurgCenter, said the suits allege amounts totaling in the hundreds of thousands of dollars are owed to the centers and their physicians who treated out-of-network patients covered by UnitedHealthcare insurance plans.
Because UnitedHealthcare didn’t pay the current bills, those patients whose claims weren’t paid could be on the hook for the cost of service, he said.

Employer-sponsored UnitedHealthcare plans also are impacted by cost-shifting, the lawsuits contend, because UnitedHealthcare is recouping sums it claims were overpaid from one insurance plan by reducing amounts billed for patients covered by other policies.
“Plans just do not allow this offset,” Friedman said.

Melton refers to the practice as “a cross-plan offsetting scheme.” He and Friedman contend the cost-shifting is barred by state law and the federal Employee Retirement Income Security Act that governs health plans and benefits.

UnitedHealthcare defends the practice it calls “cooperative overpayment recoveries.” Spokeswoman Jessica Kostner said in a statement, “UnitedHealthcare has complied with all appropriate state and ERISA laws and regulations and disputes the plaintiffs’ allegations in this case.”

Faegre Baker Daniels LLP attorneys Stephanie Boxell and Philip Gutwein represent UnitedHealthcare in the case and did not reply to messages seeking comment.

An example of the claims the surgery centers make against UnitedHealthcare is contained in one of the Carmel Specialty Surgery Center suits, Carmel Specialty Surgery Center LLC, et al. v. United Healthcare Services Inc., one of a dozen the center has filed in the pending litigation.

The suit says that in response to a current patient’s bill, UnitedHealthcare claimed it overpaid a total of $39,663.94 for 16 covered patients’ service more than two years ago and has therefore paid nothing on the current patient’s bill

The insurer, the suit says, “has utilized a cross-plan offsetting scheme in an effort to recoup alleged, prior overpayments. As such, (UnitedHealthcare) has paid $0.00 on claims that it verified $39,663.94 was owed on.”

The suit claims “in every instance neither the old claims’, nor the current claim’s insurance contracts authorized such a cross-plan offsetting scheme.” The suit alleges breach of contract on the old and current patient claims, unjust enrichment and violation of Indiana Code 27-8-5.7-10, which limits claims for adjustments for overpayment to two years.

In response, UnitedHealthcare argues it requested return of overpayments from the Carmel Surgery Center but was denied. “United took additional efforts, on behalf of each affected plan, to recoup the payments,” the company said, offsetting some or all of the payments on bills for new patients.

UnitedHealthcare argues, “Surgery Center is challenging the claim determinations and is seeking payments from its patient-participants’ employee benefit plans, but it does not allege that it is a participant or beneficiary of any employee benefit plan at issue.”

Melton said some of the suits allege UnitedHealthcare didn’t comply with appeal rights under state and federal law on its determinations that overpayments were made. “There’s no opportunity to challenge an overpayment that allegedly occurred,” Friedman said.

Similarly, Metro Specialty Surgery Center claims in one complaint that the insurer recouped payments from new bills based on 24 old claims that it says were overpaid by $95,759.11. Riverview claims in a complaint UnitedHealthcare took recoupments on new bills of $66,225.48 for 29 claims it says were overpaid years earlier, court records show.

UnitedHealthcare is facing similar allegations in a suit brought by a New York chiropractor against the insurer in its home state of Minnesota. Lawyers for the Indiana plaintiffs said their clients wished to pursue their claims separately rather than wait for this potential class action that could take years. Nevertheless, the attorneys said they’re watching developments in that case closely as it could determine the ultimate course of the Indiana cases.


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