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Judge Sides With Chicago Surgery Center's Counterclaim in Out-of-Network Case

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An Illinois judge has upheld a promissory estoppel counterclaim filed by Grand Avenue Surgical Center in Chicago regarding a legal conflict with Connecticut General Life Insurance Company over out-of-network reimbursement.

U.S. District Judge Elaine Bucklo dismissed Connecticut General's motion to dismiss GASC's counterclaim as pre-empted by the Employee Retirement Income Security Act. The decision is the latest development in a legal battle between the health insurer and provider.

GASC is an out-of-network provider for patients enrolled in Connecticut General health plans, meaning patients that use the facility should face higher rates, according to a court memo. In June of last year, Connecticut General filed a lawsuit against GASC, alleging the provider improperly billed the company due to "fee forgiveness" — the practice of improperly waiving or failing to collect charges such as coinsurance rates and copayments from patients.

According to the insurer, the alleged fee waiving triggers exclusion provisions in patients' health plans. Therefore, Connecticut General claims GASC isn't entitled to any reimbursement for 24 claims that were paid in part between June 2008 and June 2010 and 49 claims the insurer denied payment for entirely between June 2010 and August 2012. The insurer is also seeking to recover what it has already paid on the 24 partially reimbursed claims.

In response, GASC filed a counterclaim alleging Connecticut General confirmed patients' eligibility, coverage and benefits before scheduled procedures and didn't mention any coverage restrictions, according to the court memo. The coverage verifications would create legal obligations independent of the terms of the patients' health plans.

The insurer has stated an automatic disclaimer before each verification, making everything said during the verification calls unenforceable. Furthermore, Connecticut General — which administers various ERISA-governed health plans — sought dismissal of the promissory estoppel counterclaim on the grounds that ERISA pre-empts the GASC's claims about patients whose health plans are governed by ERISA. The insurer also claims the surgery center failed to state a plausible claim that the insurer made an unambiguous promise.

However, the judge has decided to let the counterclaim stand. Ms. Bucklo wrote that " GASC's counterclaim is not premised on the existence of an ERISA-regulated healthcare plan or an asserted entitlement to benefits under any such plan," and therefore the claim doesn't relate to any ERISA plan in the way required for conflict preemption.

She also dismissed Connecticut General's claim the surgery center didn't adequately show the insurer made an unambiguous promise to pay. "The Illinois Appellate Court has held that a health insurer’s verbal representation to a third-party provider that a patient is covered constitutes an unambiguous promise to pay at the pleading stage," she wrote.

Thomas Pliura, MD, JD, says this is one of several recent decisions in cases that involve surgery centers fighting back against insurance companies seeking to avoid paying out-of-network providers.

"While the legal rationale is a bit complicated, the message is clear," he says. "This is a victory for surgery centers and a victory for all out-of-network healthcare providers."

More Articles on Surgery Center Reimbursement:
Understanding the Difference Between In-Network and Out-of-Network ASC Transactions
Dealing With the Decline of Fee-for-Service Reimbursement: 4 Strategies
ASC vs. HOPD Reimbursement: 2014 Outlook & Trends 

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