NJPA Legal Update
In Re Horizon UCR Litigation
On July 9, 2014, Judge Chesler granted final approval of the settlement between the
subscribers, providers, and NJPA and Horizon Blue Cross Blue Shield of New Jersey
(“Horizon”). The settlement provides that Horizon will cease using the Ingenix Database and its
homegrown Top of Range (“TOR”) database to determine reimbursement for out-of-network
services. The settlement also provides that Horizon will revise is plan language, handbooks,
website and other applicable marketing materials to clarify how reimbursement for out-ofnetwork services is calculated.
A group of objectors appealed the district court’s order granting final approval of the
settlement claiming that the settlement did not provide any meaningful relief since Horizon had
already decided to cease using the Ingenix and TOR databases prior to entering into the
settlement with Plaintiffs. The appeal has been fully briefed and has been calendared for
submission on September 17, 2015. The Court of Appeals has not yet determined whether it will
hear argument on the appeal.
In Re Aetna UCR Litigation
Following Aetna’s election to terminate the proposed settlement due to the number of
requests for exclusions, the parties resumed active litigation of the action before Judge Katharine
Hayden. In July 2014, Plaintiffs’ filed a motion for leave to file their third amended consolidated
complaint. Similar to the prior complaints, the third amended complaint alleged ERISA and
RICO violations on behalf of the Provider class and Provider Associations and alleged ERISA,
RICO, antitrust, and certain state law violations on behalf of the subscriber class. In response,
Defendants opposed the motion to leave and filed cross-motions to dismiss Plaintiffs’ second and
third amended complaints.
On June 30, 2015, Judge Hayden issued an order granting Plaintiffs’ motion for leave to
file their third amended consolidated complaint and granting in part and denying in Defendants’
motions to dismiss. Unfortunately, the Court’s ruling was unfavorable for the Provider class and
Associations. The Court found that the named Provider Plaintiff lacked standing to bring claims
under ERISA because the assignment of benefit was in favor of limited liability company of
which he was an owner and not the provider himself. Accordingly, the Court found that the
provider had no ownership in the right to payment and no standing under ERISA. The Court did
not rule on the issue of whether an assignment of the right to payment alone is sufficient to
confer standing under ERISA.
With respect to the Provider’s ERISA claims, the Court further ruled that the claims for
failure to provide an accurate explanation of coverage and summary plan description, breach of
fiduciary duties, and failure to conduct a full and fair review of denied claims were dismissed on
the merits. The Court rejected the Plaintiffs’ contention that the disclosure requirements under
ERISA relating to the evidence of coverage and summary plan description obligate the insurer to
disclosure its methodology for calculating UCR payments. The Court also found that the duty to
conduct a full and fair review of denied claims under ERISA does not include the requirement
that insurers to explain their UCR claim reimbursement methodology. In addressing Plaintiffs’
claims for breach of fiduciary duty, the Court held that this claim was duplicative of the claim for
benefits under ERISA and must be dismissed.
The Court also dismissed the Association Plaintiffs’ ERISA claims, which were brought
in a representative capacity. Because the Court found that the Provider Plaintiff lacked standing,
the Association Plaintiffs could not show that their members would otherwise have standing to
sue in their own right. In addition, because the Provider Plaintiffs’ right to sue under ERISA are
based on valid assignments of benefits, the Court concluded that the Association Plaintiffs also
lacked standing because the alleged claims would require participation of the Associations’
members in order to demonstrate each member had obtained a valid assignment of benefit.
The Court dismissed the Provider and Association Plaintiffs’ RICO claims on the merits
finding that the allegations surrounding the Defendants submission of flawed data to Ingenix did
not sufficiently demonstrate that Defendants knowingly conducted and participated in the affairs
of the alleged RICO. The Court further held that Plaintiffs failed to demonstrate that the alleged
fraudulent scheme proximately caused their injuries. According to the Court, the fact that the
Defendants used methods other than the Ingenix Database to reimburse out-of-network claims
and that Plaintiffs failed to adequately allege that out-of-network providers balance billed
patients for their services in all cases prevented a finding of proximate cause to support their
RICO claims.
In sum, the Court left open the possibility that the Provider Plaintiffs may be able to join
another Provider who possesses a valid assignment of benefits. If this occurs, the only remaining
claim under ERISA is a claim for benefits. Even if the Court were to find that a new Provider
Plaintiff possessed standing to bring a claim for ERISA benefits, it is unlikely that this would
resurrect the Association Plaintiffs’ ERISA claim brought in their representative capacity based
on the Court’s finding that any claim by the Associations under ERISA would require proof by
each member of the Associations that they possessed a valid assignment of benefits.
Franco v. Cigna
The case is on appeal to the United States Third Circuit Court of Appeals. The parties
have fully briefed the appeal. On May 14, 2015, the Court informed the parties that the case
would be submitted to the Court on the parties’ briefs on June 4, 2015, and that no oral argument
would be heard. It is likely that an opinion will be issued within the next 90 days.