B2B Payments

Health Care Association Wins Groundbreaking Case Over Insurer Payment Practices

Members of the Pennsylvania Chiropractic Association (PCA) won a four-year litigation battle against the Pennsylvania-based Independence Blue Cross (IBC). In 2009, several chiropractic associations sued the IBC for alleged violations of ERISA and the Racketeer Influenced and Corrupt Organizations Act (RICO).

A federal court in Chicago recently ruled that IBC must change its payment and recoupment practices for members of the Pennsylvania Chiropractic Association. While the RICO allegations were dismissed and many ERISA claims were settled out of court, the PCA won its fight against the IBC.

PCA alleged that the IBC was using unfair payment recovery practices; specifically in the way IBC determined overpayments to PCA members treating patients covered by ERISA plans, usually for large and self-funded employers.

However, as reported by Healthcare Finance News, IBC claimed that the payments stemmed from computer glitches in 2006 and 2007 and went out to PCA members who weren’t authorized to provide capitated services. IBC then began withholding payments for non-capitalized services in order to account for the overpayments.

The news source cited the ruling by Judge Matthew Kelly, who wrote in March that IBC’s practices came “nowhere near substantial compliance with ERISA’s notice and appeal requirements.” And then just last week, Kelly issued a permanent injunction, mandating that IBC changes it practice for PCA members.

For example, Kelly stated that IBC needs to include the specific reason or reasons for the reduction in benefits for repayment demands from PCA members. Additionally, IBC must also include references to the applicable plan provisions, as well as descriptions of the procedures and time limits for appealing. This would include a statement of the right to bring a civil action under ERISA. Another change put forth by the court is that PCA members will have a 60-day appeal timeline if they are subject to repayment demands under an ERISA.

Kelly explained that going forward, when seeking repayment for previously-issued reimbursements, “IBC shall identify the specific health insurance plans applicable to each claim at issue, and differentiate between those plans which are governed by (ERISA) and those which are not.”

IBC might still consider an appeal of the decision. Karen Godlewski, IBC public relations manager, told Healthcare Finance News that while disagreements might occur between chiropractors and insurers over reimbursement, “there are appropriate avenues and guidelines for resolving such disputes, as outlined in IBC’s provider claim payment manuals.”

She added that if those procedures do not give the desired solution, then a contract suit could be brought under Pennsylvania state law.

Brian Hufford, a Zuckerman Spaeder LLP attorney who represented the Pennsylvania chiropractors, explained to the news source that the decision was not only an important victory for PCA and its members, but is “a significant step toward reforming recoupment practices nationwide.”



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