A Medical Device Daily

The Blue Cross Blue Shield Association (BCBSA; Chicago) is being sued for alleged abusive practices in using post-payment audits and reviews, and improper repayment demands, to pressure providers to repay substantial sums that have previously properly been paid as health insurance benefits for services provided to BCBS subscribers.

Pomerantz Haudek Grossman & Gross reported that it and co-counsel Buttaci & Leardi filed a class action lawsuit against the BCBSA and 22 leading BCBS insurers across the country on behalf of a putative nationwide class of healthcare providers, as well as the Pennsylvania Chiropractic Association (PCA; Harrisburg, Pennsylvania), the New York Chiropractic Council (New York), and the Association of New Jersey Chiropractors (ANJC; Branchburg, New Jersey).

The suit alleges that the post-payment audit and review process as applied by the various named BCBS entities violates the Employee Retirement Income Security Act of 1974, in that its repayment demands are retroactive determinations that particular services are not covered under the terms of the BCBS healthcare plans, but without proper appeal or other protections otherwise available under ERISA for both self-funded and fully insured healthcare plans offered through private employers. The complaint also alleges that the post-payment audit and review process, as well as the forced withholding of unrelated benefit payments to offset alleged prior overpayments, violate the Racketeer Influenced and Corrupt Organizations Act.

The PCA, the New York Chiropractic Council and the ANJC are participating in the action in an associational capacity on behalf of their members, while fourteen individual chiropractors and one occupational therapist, located around the country, have sued as the class representatives of the putative class.

"We met on numerous occasions with Blues senior management in an effort to establish a fair and balanced approach to conducting post-payment reviews, but to no avail," said Gene Veno, executive director of the PCA. As a result, he added, "the PCA elected to join this action to ensure that the rights of our members are protected." Four of the 15 named individual plaintiffs are Pennsylvania chiropractors. The New York Chiropractic Council and the ANJC had previously joined in a class action recently filed against Aetna (Hartford, Connecticut) for similar post-payment audit practices.

In the complaint, plaintiffs allege that, as a means to maximize its profits, the BCBS entities use their post-payment audit and review process to make retroactive adverse benefit determinations whereby they demand that providers repay funds they had previously received for providing services to BCBS subscribers. Moreover, the BCBS entities frequently withhold new benefit payments for unrelated services to apply toward the alleged overpayments, even where there has been no valid appeal process or validation that any sums are in fact owed by the providers.

"In essence," says Plaintiffs' counsel Brian Hufford of Pomerantz Haudek, "the BCBS entities simply state there are overpayments and then just take the money from providers, without valid due process protections. We believe this is a blatant violation of law."

The lawsuit further alleges that the BCBSA is coordinating the recoupment efforts with its state BCBS licensees on a nationwide basis. Plaintiffs seek to enjoin the BCBS entities from continuing to engage in impermissible audit and recovery practices and to compel them to return the funds they have improperly withheld.

According to the lawsuit, on June 30, the BCBSA reported that its National Anti-Fraud Department had "recovered nearly $350 million as a result of the anti-fraud investigations in 2008." Plaintiffs' co-counsel Vincent Buttaci of Buttaci & Leardi states that "we believe a substantial portion of this 'recovery' falls within the improper practices we are challenging in this action."