UnitedHealthcare has won dismissal of a putative class action alleging its handling of secondary-coverage claims by Medicare enrollees resulted in underpayment for a large number of insureds.
U.S. District Judge Jerome Simandle sitting in Camden, N.J., denied class certification on Thursday in Lipstein v. UnitedHealth Group, finding the plaintiffs failed to prove commonality and predominance of claims or that a single remedy could provide classwide relief.
Simandle then granted summary judgment for the defense, finding United gave a reasonable interpretation to ambiguous language that required estimating the amount Medicare would have paid for services rendered by providers who opt out of Medicare or who fail to submit Medicare claims.
The named plaintiffs, spouses Mark and Anita Lipstein, were members of a health-care plan at Bristol-Myers Squibb that United administered. Anita underwent therapy with a doctor who had opted out of Medicare and who billed $130 a session. The plan instructs United to reduce the coverage payable by estimating what Medicare would have paid to a participating therapist.
United’s estimation method was based on the percentage of the allowable expense that Medicare would pay. The plaintiffs claimed United should have used the published Medicare fee schedule. United’s estimation method came out to be $23.92 per session lower.
Much of Simandle’s opinion was devoted to the issue of class certification, applying the U.S. Supreme Court’s recent decisions in Wal-Mart Stores Inc. v. Dukes, 131 S.Ct. 2541 (2011), and Comcast v. Behrend, 133 S.Ct. 1426 (2013). Those decisions put heavier burdens on plaintiffs by requiring them to prove the suitability of a classwide proceeding to resolution of the claims.
Though the plaintiffs argued that United uses the same Medicare estimation uniformly in all plans it administers, Simandle said that to determine that, he “would need to make at least as many individual determinations as there are plans at issue across the broad class.” Since plans may vary in the amount of discretion they give United and in the amount of clarity with which they set out the formula for calculating benefits, so different class members could have claims analyzed under different standards of review. Thus, the plaintiffs failed to establish commonality.
Simandle also found that a single injunction or declaratory judgment would not provide relief to the class, and that individual claims would overwhelm the proceedings — both grounds for defeating class-action eligibility.
In ruling on summary judgment, Simandle used the arbitrary-and-capricious standard applied by the U.S. Court of Appeals for the Third Circuit in reviewing administrators’ interpretations of ERISA-governed plans.
United argued that making an estimate of what Medicare would have paid for a given medical service entails using a percentage. The Medicare fee schedule is not determinative since opted-out care providers do not always use Medicare coding in their bills, United said.
Simandle wrote that although the plaintiffs’ reading of the plan as requiring use of the fee schedule is “perhaps the most natural” interpretation, “it is not the only permissible reading.” Since the summary plan description is silent on the estimation method, United’s interpretation was entitled to deference.
The plaintiffs’ lawyers, John Leardi of Buttaci & Leardi in Princeton, and James Cecchi of Carella, Byrne, Cecchi, Olstein, Brody & Agnello in Roseland, did not return calls.
United’s lawyer, George Jones of Graham Curtin in Morristown, also did not return a call.
Eric Katz, a lawyer who represents plaintiffs in suits against health-care insurers, calls the ruling “a total loss to all healthcare patients impacted by these significant coverage issues.”
He says it shows judges are subject to “overreaching standards” governing the interpretation of an administrator’s benefit determination under ERISA. In light of discretion afforded United, notwithstanding ambiguity of the plan’s terms, Simandle was compelled to give it deference, says Katz, of Mazie, Slater, Katz & Freeman in Roseland.
Bonny Rafel, a Florham Park attorney who represents claimants in benefits disputes, says discretionary clauses like the one in the United policy permit “total abuse of the system” by insurance companies. Such clauses were envisioned as a way to let insurance companies self-regulate and to give courts limited review of policy decisions, but are increasingly seen by courts as “letting the fox guard the henhouse,” she says.