Justia Insurance Law Opinion Summaries

Sports Medicine performed shoulder surgery on “Joshua,” who was covered by a health insurance plan, and charged Joshua for the procedure. Because it did not participate in the insurers’ network, Sports Medicine was not limited to the insurer’s fee schedule and charged Joshua $58,400, submitting a claim in that amount to the insurers on Joshua’s behalf. The claim form indicated that Joshua had “authorize[d] payment of medical benefits.” The insurer processed Joshua’s claim according to its out-of-network cap of $2,633, applying his deductible of $2,000 and his 50% coinsurance of $316, issuing him a reimbursement check for the remaining $316, and informing him that he would still owe Sports Medicine the remaining $58,083. Sports Medicine appealed through the insurers’ internal administrative process and had Joshua sign an “Assignment of Benefits & Ltd. Power of Attorney.” Sports Medicine later sued for violations of the Employee Retirement Income Security Act (ERISA), and breach of contract, citing public policy. The district court dismissed for lack of standing because Joshua’s insurance plan included an anti-assignment clause. The Third Circuit affirmed, holding that the anti-assignment clause is not inconsistent with ERISA and is enforceable. View "American Orthopedic & Sports Medicine v. Independence Blue Cross Blue Shield" on Justia Law

To seek redress for an opioid epidemic, characterized by the Court of Appeal as having placed a financial strain on state and local governments dealing with the epidemic’s health and safety consequences, two California counties sued (the California Action) various pharmaceutical manufacturers and distributors, including the appellants in this matter, Actavis, Inc., Actavis LLC, Actavis Pharma, Inc., Watson Pharmaceuticals, Inc., Watson Laboratories, Inc., and Watson Pharma, Inc. (collectively, “Watson”). The California Action alleged Watson engaged in a “common, sophisticated, and highly deceptive marketing campaign” designed to expand the market and increase sales of opioid products by promoting them for treating long-term chronic, nonacute, and noncancer pain - a purpose for which Watson allegedly knew its opioid products were not suited. The City of Chicago brought a lawsuit in Illinois (the Chicago Action) making essentially the same allegations. The issue presented by this appeal was whether there was insurance coverage for Watson based on the allegations made in the California Action and the Chicago Action. Specifically, the issue was whether the Travelers Property Casualty Company of America (Travelers Insurance) and St. Paul Fire and Marine Insurance Company (St. Paul) owe Watson a duty to defend those lawsuits pursuant to commercial general liability (CGL) insurance policies issued to Watson. Travelers denied Watson’s demand for a defense and brought this lawsuit to obtain a declaration that Travelers had no duty to defend or indemnify. The trial court, following a bench trial based on stipulated facts, found that Travelers had no duty to defend because the injuries alleged were not the result of an accident within the meaning of the insurance policies and the claims alleged fell within a policy exclusion for the insured’s products and for warranties and representations made about those products. The California Court of Appeal concluded Travelers had no duty to defend Watson under the policies and affirmed. View "The Traveler's Property Casualty Company of America v. Actavis, Inc." on Justia Law

Defendant Horizon Healthcare Services, Inc., New Jersey’s largest health insurer, maintained a two-tiered provider-hospital system. Plaintiff Saint Peter’s University Hospital, Inc., and plaintiff Capital Health System, Inc. and others, commenced separate lawsuits claiming Horizon treated them unfairly and in a manner that contravened their agreements when they were placed in the less advantageous Tier 2. Plaintiffs assert Horizon’s tiering procedures were pre-fitted or wrongfully adjusted to guarantee selection of certain larger hospitals for the preferential Tier 1. The New Jersey Supreme Court was asked, by way of interlocutory appeal, to settle multiple discovery disputes that arose in the course of the litigation. The Supreme Court concluded the Appellate Division exceeded the limits imposed by the standard of appellate review both by assessing the disputed information’s relevance against the panel’s own disapproving view of the merits and by giving no apparent weight or consideration to the protections afforded by confidentiality orders. Having closely examined the record, the Supreme Court rejected the Appellate Division’s determination that the chancery judges encharged with these matters abused their discretion. It was not an abuse of discretion for the chancery judges to find the information sought was relevant to plaintiffs’ claims that Horizon violated either the network hospital agreements’ contractual terms, or the overarching implied covenant of good faith and fair dealing, when they were relegated to the less desirable Tier 2. View "Capital Health System, Inc. v. Horizon Healthcare Services, Inc." on Justia Law

KESA, the Kentucky Workers’ Compensation Fund, on behalf of its insureds, filed five separate medical fee disputes against the Injured Workers’ Pharmacy (IWP) and the insureds’ employees and former employees, all of whom had their prescriptions filled by IWP. The chief administrative law judge (CALJ) found (1) a pharmacy/pharmacist is a medical provider, which entitles an injured worker to choose where to have his or her prescriptions filled; (2) the pharmacy fee schedule is based on the amount a pharmacist pays a wholesaler for medication, and IWP is entitled to interest on any underpayment by KESA; and (3) because KESA brought its medical fee disputes without reasonable ground and without reasonable medical or factual foundation, KESA was required to pay the cost of the proceedings. The Workers’ Compensation Board reversed the award of costs but otherwise affirmed. The court of appeals affirmed. The Supreme Court affirmed in part, vacated in part, and remanded, holding (1) the court of appeals did not err regarding the assessment of interest and sanctions or in concluding that a pharmacy is a medical provider; but (2) the remainder of the court of appeals opinion is vacated and remanded because the CALJ did not make a determination regarding the actual average wholesale price paid by IWP. View "Steel Creations by and through KESA, the Kentucky Workers’ Compensation Fund v. Injured Workers’ Pharmacy" on Justia Law

Prime Hospitals provide inpatient services under the Medicare program, submitting payment claims to private contractors, who make initial reimbursement determinations. Prime alleged that many short-stay claims were subject to post-payment review and denied. Prime appealed through the Medicare appeal process. Prime alleged short-stay claims audits were part of a larger initiative that substantially increased claim denials and that the Center for Medicare & Medicaid Services (CMS) was overwhelmed by the number of appeals. CMS began offering partial payment (68 percent) in exchange for dismissal of appeals. Prime alleged that it executed CMS's administrative settlement agreement so that CMS was contractually required to pay their 5,079 Medicare appeals ($23,205,245). CMS ultimately refused to allow the Prime to participate because it was aware of ongoing False Claims Act cases or investigations involving the facilities. Prime alleged that the settlement agreement did not authorize that exclusion. The district court denied a motion to dismiss Prime’s suit but transferred it to the Court of Federal Claims. The Federal Circuit affirmed in part. The breach of contract claim is fundamentally a suit to enforce a contract and does not arise under the Medicare Act, so the Claims Court has exclusive jurisdiction under the Tucker Act, 28 U.S.C. 1491. That court does not have jurisdiction, however, over Prime’s alternative claims seeking declaratory, injunctive, and mandamus relief from an alleged secret and illegal policy to prevent and delay Prime from exhausting administrative remedies. View "Alvarado Hospital, LLC v. Cochran" on Justia Law

In this declaratory judgment proceeding, petitioner Exeter Hospital, Inc. (Exeter) appealed a superior court order denying its motion for partial summary judgment as to the amount at which coverage was triggered under an umbrella policy (the policy) issued to Exeter by respondent Steadfast Insurance Company (Steadfast). In the spring of 2012, an outbreak of Hepatitis C infections among patients serviced by Exeter’s cardiac catheterization lab led investigators to discover that a technician had spread the virus to patients “through a clandestine drug diversion scheme.” The technician allegedly injected certain drugs into his body by way of intravenous needles, then reused the needles on patients, thereby infecting them with the virus. Numerous lawsuits were lodged against Exeter by affected patients. Exeter was primarily insured through a Self-Insurance Trust Agreement (SIT), which provided professional liability coverage in the amount of $1 million per medical incident, with a $4 million annual aggregate cap. Exeter also maintained the policy with Steadfast, which provided excess health care professional liability coverage. Steadfast maintained that it would pay damages only in excess of the $100,000 retained limit for each medical incident. Exeter filed this proceeding, seeking a declaration that it was not required to pay $100,000 retained limit per claim. The trial court interpreted the term “applicable underlying limit” as being a variable amount “dependent on the actual coverage remaining under [the] other [limits of] insurance,” here, the limits of the SIT. Because Exeter had paid out the limits of the SIT, the court found that the “applicable underlying limit” was zero, thereby rendering the $100,000 retained limit greater than the “applicable underlying limit.” Thus, the court determined that, pursuant to “Coverage A,” Steadfast was required “to pay damages in excess of $100,000 for each medical incident.” Exeter sought reconsideration of the court’s order, which the court denied. Although the New Hampshire Supreme Court did not agree with every underlying argument pressed by Exeter, it concluded that its overall argument regarding the interpretation of Coverage A was reasonable, and the trial court therefore erred in granting partial summary judgment as to the terms of Coverage A. View "Exeter Hospital, Inc. v. Steadfast Insurance Company" on Justia Law

Plaintiff-appellee Elizabeth Cates filed on her behalf and a putative class asserting claims against the defendant-appellee INTEGRIS Health, Inc. for breach of contract, violation of the Oklahoma Consumer Protection Act, deceit, specific performance, and punitive damages. INTEGRIS successfully moved to dismiss the claims based on the ground that they are all preempted by the Employee Retirement Income Security Act. Cates appealed. Because the trial court in this matter did not take into consideration the federal Tenth Circuit Court of Appeals’ decision in Salzer v. SSM Health Care of Oklahoma Inc., 762 F.3d 1130 (10th Cir. 2014), which was factually similar to the facts of this case and found that the plaintiff’s claims were not preempted, the Oklahoma Supreme Court reversed and remanded the trial court in this matter for reconsideration in light of Salzer. View "Cates v. Integris Health, Inc." on Justia Law

Raymond, injured in a slip-and-fall accident, received medical treatment at Mercy Health Anderson Hospital. Strunk, injured in a car accident, received medical treatment at Mercy Health Clermont Hospital. Both have health insurance. Each of their insurers has an agreement with Mercy for the provision of services. Raymond and Strunk provided all information necessary for the hospital to submit claims. Mercy did not submit claims to the insurers. Instead, Avectus, on behalf of Mercy, sent letters to Raymond’s and Strunk’s attorneys stating the balance due for medical services and requesting that, to prevent collection efforts against their respective clients, the attorneys sign a “letter of protection” against any settlement or judgment, agreeing “to withhold and pay directly to Mercy Health the balance of any unpaid charges ... should my firm obtain any settlement or judgment for this patient." Raymond and Strunk claimed that Mercy and Avectus sought compensation from them for their medical expenses, in violation of Ohio Revised Code 1751.60. The district court dismissed. The Sixth Circuit reversed. The defendants sought payment “from a health-insuring corporation’s insured” while in a healthcare services contract with their health-insurance providers. The court rejected a claim that the defendants effectively sought compensation from a third party. View "Raymond v. Avectus Healthcare Solutions, LLC" on Justia Law

Methodist and Saint Francis are the two largest hospitals in Peoria, Illinois. Saint Francis is considerably larger and more profitable. Methodist filed suit, charging Saint Francis with violating the Sherman Act by entering into exclusive contracts with insurance companies, covering more than half of all commercially-insured patients in the area. Methodist argued that it could not obtain a sufficiently high volume of patients to enable it to invest in improvements. The Seventh Circuit affirmed summary judgment in favor of Saint Francis, noting that health insurers regard Saint Francis as a “must have” hospital, because it provides certain services that the other hospitals in the area do not provide, such as solid-organ transplants, neonatal intensive care, and a Level 1 trauma center. The contracts are a form of requirements contract; an insurance company may get better rates from a hospital by agreeing to an exclusive contract, which will drive more business to the hospital. The contracts are of fixed duration; when they terminate, the insurance companies are free to contract with other hospitals. Competition-for-the-contract is protected by the antitrust laws and is common. The court noted that none of the other four area hospitals had joined the case and the Department of Justice declined to file a case. View "Methodist Health Services Corp v. OSF Healthcare System" on Justia Law

Pacific Bay treated an individual who was a subscriber to a Blue Shield health plan. It submitted invoices to Blue Shield for payment for the services rendered to the subscriber. Pacific Bay contends it was underpaid and brought suit against Blue Shield to recover the additional amount it claimed to be owed. The court sustained Blue Shield's demurrer to the first amended complaint (FAC) without leave to amend, finding that Pacific Bay had not shown that it was entitled to any payment from Blue Shield. As an out-of-network, nonemergency service provider, Pacific Bay was entitled to payment for treating Blue Shield's subscriber under the terms of the applicable evidence of coverage (EOC). Pacific Bay did not allege Blue Shield paid it improperly under the EOC, nor did it argue that it could allege additional facts to support such a claim. Pacific Bay claimed it was underpaid. Against this backdrop, Pacific Bay's other allegations did not give rise to any valid cause of action. View "Pacific Bay Recovery v. Cal. Physicians' Services" on Justia Law