UnitedHealth Wins Summary Judgment in ERISA Beneficiary Case Against Labs

Western District Court of Texas, San Antonio Division, Judge Jason Pulliam granted Wednesday United Healthcare’s motion for summary judgment on a claim by the plaintiffs, Mission Toxicology LLC and Sun Clinical Laboratory LLC, seeking to “recover benefits due to the assignee of the participants or beneficiaries of (Employee Retirement Income Security Act) ERISA plans.”

There are both disputed and undisputed facts of the case between the parties. The two parties agree that the plaintiffs are out-of-network health care providers that have arrangements with Newman Memorial Hospital and Community Memorial Hospital that both had in-network contracts with the defendant; that the plaintiffs, or third-party laboratories, performed most of the lab testing rather than the hospitals; claims for the alleged lab services would be submitted to beneficiaries of ERISA plans, which United administered or insured after the alleged lab testing, by Integrity Ancillary Management, an entity formed by the owners of Sun Clinical and Mission. However, the submitted claim forms list the names and credentials of the hospitals, not the labs’ names, despite declarations by the plaintiffs that Integrity submitted the claims on the labs’ behalf — United disputes this.

United offers “administrative remedies” for plan members who have had a claim denied, including submitting an appeal within 180 days of the denial. The defendant argued it is entitled to summary judgment because the plaintiffs “have not exhausted their administrative remedies,” the court explained, although the plaintiffs argued that their numerous claims and appeals should not be deemed a failure of exhaustion — the defendant maintained that the plaintiffs themselves were not the ones to submit the claims, and it was rather the hospitals submitting the claims. The defendant also claimed that the plaintiffs did not submit any appeals for any adverse benefit decision by United.

The plaintiffs claimed that Integrity submitted these claims through a “Lab Outreach Program,” making Integrity the submitter of the claims — the defendants claimed such a program is “made-up and fraudulent,” the court explained.

The court granted United the summary judgment because “although the parties hotly contest whether Integrity submitted any claims or appeals on behalf of the Labs, that dispute is immaterial unless Integrity submitted claims or appeals on behalf of the Labs through the ERISA plans and the patients’ assignments of claims,” the court said, and “there is no reasonable basis to infer that the Hospitals presented their claims on behalf of the patients or that the Hospitals presented their claims and appeals through any administrative process set out in an ERISA plan. Without that reasonable inference, the Court similarly cannot reasonably infer that the same claims and appeals made by Integrity for the Labs were in accordance with any ERISA plan of any patient through any assignment.”

The court also explained that “the Labs want to piggyback on the claims submitted on behalf of the Hospital,” saying that piggybacking “does not work here, even assuming without deciding that the Hospital claims and appeals submitted by Integrity can also be attributed to the Labs.” This fails, the court continued, because the hospitals are seeking the claim payments on their own behalf, not of the patients or labs.

The court also denied a motion by United to strike down declarations by Mission and Integrity employee Randy Dittmar and CEO of Integrity Lynn Murphy that attempt to prove the submission of claims by Integrity and not just the named hospitals. United attempted to strike down these declarations based on claims that the plaintiffs failed to provide the proper disclosure of the declarations, but the court found that United did not show a failure by the plaintiffs to disclose.

United was represented by Robins Kaplan, Figari & Davenport, and Weinberg Wheeler Hudgins Gunn & Dial. The labs were represented by Markham & Read, Hornberger Fuller & Garza, and Joseph Aheem & Slowik.