Minnesota Federal Court Says Cross-Plan Offsets Are Unlawful; Certifies Case for Immediate Appeal

Posted by and on March 23, 2017

gavel and bookThe U.S. District of Minnesota has ruled in Peterson v. Unitedhealth Grp. Inc., No. 14-CV-2101 (PJS/BRT), 2017 WL 991043 (D. Minn. Mar. 14, 2017) that ERISA does not permit United Healthcare (“United”) to claw back alleged overpayments related to patients from one plan by reducing or eliminating payments related to patients from different self-insured plans, dealing a potential blow to the use of an effective tool that health insurers have used to recoup alleged overpayments from providers.

In Peterson, the Plaintiffs were healthcare providers who brought suit against United as assignees of patients who were enrolled in United-administered plans. United had allegedly overpaid Plaintiffs for services provided to certain patients, and offset these alleged overpayments by reducing or eliminating payments for services that Plaintiffs provided to other patients, who were members of different United-administered self-insured ERISA plans. This practice is known as cross-plan offsetting.

The District Court granted Plaintiffs’ Motion for Summary Judgment, finding that the relevant plans do not authorize cross-plan offsetting, and that United violated its fiduciary duty as an administrator of self-insured ERISA plans by not obtaining the plan sponsors’ express consent to reduce or eliminate payments from the plans to offset alleged overpayments made by other plans administered or insured by United.

The District Court then took the unusual step of certifying the decision for immediate appeal, recognizing a split with the 5th Circuit on the issue. In so doing, the District Court noted that, “if, as plaintiffs contend and as the Court has found, the plans do not authorize cross-plan offsetting, then the parties and the Court will face years of extraordinarily complex and expensive discovery, non-dispositive motion practice, litigation over class certification, dispositive-motion practice, trial, and litigation over remedies,” and that “[i]f United is ultimately enjoined from engaging in the practice, United will have to undertake the extremely expensive and disruptive process of unwinding its cross-plan offsetting practice.” Peterson, 2017 WL 991043, at *12.

This case was brought by providers as assignees of ERISA beneficiaries, and the decision on summary judgment (without injunctive relief) calls into question as to what the available relief for the providers may be. The decision raises as many questions as it provides answers and will be worth following.

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