Premier Health Center v. UnitedHealth Group, No. 11-425; U.S. District Court (DNJ): opinion by Debevoise, S.U.S.D.J.; filed August 1, 2013. DDS No. 22-7-xxxx [45 pp.]

This matter arises out of the methods by which defendant UnitedHealth Group monitors and recoups benefit overpayments from a variety of health-care providers, and regulates reimbursement of services provided by chiropractors.

Plaintiffs Premier Health Center, Judson Sprandel II, D.C., Brian Hicks, D.C., Tri3 Enterprises, Beverly Hills Surgical Center (BHSC) and Jeremy Rogers, D.C., filed a class-action complaint against United and several of its subsidiaries, including United HealthCare Services Inc., OptumHealth Solutions Inc., Health Net of the Northeast Inc. (HNNE), and Health Net of New York Inc. (HNNY), asserting claims for benefits, failure to provide a full and fair review and equitable relief under the Employee Retirement Income Security Act (ERISA). Plaintiffs' amended class-action complaint sets forth two proposed classes: the ERISA recoupment class and the ERISA chiropractor class.

The ERISA recoupment class asks the court "(1) to enjoin Defendants from continuing to compel return of prior payments of plan benefits; (2) to order Defendants to return to all Class members all funds, plus interest, that Defendants have withheld to offset the amounts demanded or that have been paid by Class members to Defendants in response to such demands; and (3) to declare that any future efforts to recoup payments for errors or mistakes in prior payments must comply with the specific requirements under ERISA for adverse benefit determinations."

The ERISA chiropractor class seeks "to enjoin Defendants from (1) tiering providers based on statistical parameters, (2) denying treatment plans without regard to patients' medical needs, (3) imposing pre-certification requirements on patient care without regard to the terms of the ERISA health care plans, and (4) threatening providers with being placed on a lower tier or potential loss of network participation if they do not defer to Optum's demands by limiting care to patients, and to compel United and Optum to replace them with policies and procedures which comply with ERISA."

Plaintiffs now move to certify both the ERISA recoupment class and the ERISA chiropractor class pursuant to Federal Rule of Civil Procedure 23. Defendants move for summary judgment against the named plaintiffs of the ERISA chiropractor class on all of their claims.

Held: Defendants' motion for summary judgment is granted against the named plaintiffs of the ERISA chiropractor class based on lack of standing. Consequently, plaintiffs' motion to certify the ERISA chiropractor class is denied as moot. Plaintiffs' motion to certify the ERISA recoupment class is also denied where it fails to meet the requirements of Rule 23.

Defendants move for summary judgment against the named plaintiffs of the ERISA chiropractor class (Dr. Rodgers and Dr. O'Donnell) on all of their claims. The court finds that the patient assignments produced by Dr. Rodgers assigning to him "all insurance benefits … otherwise payable to [the patient] for the services rendered" are insufficient to provide standing to assert ERISA claims to enjoin United's future application of its UR procedures, as those claims far exceed the scope of the assignments. Consequently, United's motion for summary judgment against Dr. Rodgers as a named plaintiff of the ERISA chiropractor class is granted. Similarly, as to Dr. O'Donnell, an assignment of the right to receive reimbursement for treatment rendered by a particular health-care provider cannot give that provider standing to seek injunctive relief relating to treatment that the patient would receive in the future from other providers. Consequently, defendants' motion for summary judgment against Dr. O'Donnell as a named plaintiff of the ERISA chiropractor class is granted.

Because the court dismissed the named plaintiffs of the ERISA chiropractor class, the court will only consider plaintiffs' motion to certify the ERISA recoupment class. Under Rule 23(a), plaintiffs satisfied the numerosity requirement but failed to show the commonality, typicality and adequacy requirements. Plaintiffs also failed to meet the requirements of Rule 23(b).

The ERISA recoupment class seeks injunctive relief based on inadequate notice of and opportunity to appeal United's overpayment determinations under ERISA, not a finding that United's overpayment determinations were themselves arbitrary and capricious. Notwithstanding the claim for reinstatement of benefits, a single injunction would not provide appropriate relief to each member of the ERISA recoupment class. Even an injunction allowing class members to appeal United's overpayment determinations will not provide relief to those class members that received insufficient notice of the basis of a given overpayment determination.

The key question in this litigation is whether United's recoupment procedures substantially comply with ERISA, and there are too many individuating factors with respect to how those recoupment procedures were applied across the class to merit certification under Rule 23(b)(3). United's recoupment procedures violate three specific ERISA regulations across the class. However, the widely varying level of detail across United's overpayment notification letters regarding both the basis of an overpayment determination and the provider's ability to appeal and how to do so, in addition to the significant disparity regarding (1) whether class members received revised PRAs notifying them of an overpayment and stating the right to appeal in accordance with the ERISA plan procedures; and (2) how long United waited after sending an overpayment notification letter before offsetting the overpaid amount from future benefits, renders the nature of United's compliance with ERISA's notice and appeal regulations a predominantly individual inquiry. Assessing United's overpayment recoupment procedures across the class would indicate varying levels of compliance with ERISA.

In addition to the individuating factors regarding United's overpayment recoupment procedures, that certain class members would be subject to the defense of voluntary payment would make the class more difficult to manage, particularly since the elements of the voluntary payment doctrine vary across states. Moreover, the injunctive relief sought in form of reinstatement of benefits can only be granted on an individual basis by assessing the merits of each and every overpayment determination. Consequently, the varying circumstances surrounding the ERISA recoupment class' claims render them ill-suited for classwide adjudication.

Plaintiffs' motion to certify the ERISA recoupment class is denied.

For plaintiffs — D. Brian Hufford and Robert J. Axelrod (Pomerantz, Grossman, Hufford, Dahlstrom & Gross); James E. Cecchi (Carella, Byrne, Cecchi, Olstein, Brody & Agnello); and Vincent N. Buttaci and John W. Leardi (Buttaci & Leardi). For defendants UnitedHealth Group et al. — Thomas R. Curtin and George C. Jones (Graham Curtin); and Henry C. Thumann, Brian D. Boyle and Stephen D. Brody (O'Melveney & Myers).