The Wagner Law Group
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in 1996, The Wagner Law Group has 27 attorneys engaged
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in the country. Our practice is national in scope, with clients in
more than 40 states and several foreign countries.
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April 6, 2017
Health and Welfare Law
Federal Court Says Insurer's Recoupment Practice is Illegal
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.
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.
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.
Court. After reviewing the
matter, the court agreed with the providers and determined that the
issues had already been addressed in 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.
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
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