By: Jon Braunstein and Mark Casciari

On March 24, 2014, the U.S. Supreme Court announced that it will not review an appellate court decision that dismissed claims by medical providers for reimbursement of “manipulations under anesthesia” from ERISA Plans administered by Aetna, UnitedHealth, Cigna, and Blue Cross and Blue Shield of Florida.

The providers had filed separate lawsuits against the plan administrators for failure to pay benefits according to the terms of ERISA plans.  The providers alleged claims under ERISA for benefits, breach of fiduciary duty, failure to provide plan documents and equitable estoppel.  The providers alleged that they performed over a thousand manipulations under anesthesia, which are controversial procedures performed by chiropractors and orthopedic surgeons on sedated patients to treat neck and back problems dating back to 2004. The providers alleged that they were originally reimbursed by the plan administrators, and that the plan administrators began denying the claims in 2006.  The defendant administrators denied payment for the procedures on the grounds that they were excluded from coverage under the terms of the plans because the procedures are experimental and not medically necessary.

A Florida district court dismissed the lawsuits because they failed to state claims under ERISA.  The plaintiffs appealed.  The U.S. Court of Appeals for the Eleventh Circuit affirmed the dismissals.  The appellate court rejected the providers’ claims for benefits because the providers had not sufficiently alleged medical necessity.  The court also found that the providers lacked derivative standing to assert fiduciary breach claims based on assignments from plan participants. The court rejected the providers’ claim for estoppel because the plans unambiguously defined the terms “medical necessity” and “covered service.”

The case is captioned Sanctuary Surgical Centre Inc. v. Aetna Health Inc., — Fed.Appx. —, 2013 WL 5969636 (11th. Cir. 2013), cert. denied. — S.Ct. —, 2014 WL 469635 (U.S.).

Health care reimbursement litigation is on the rise, especially involving out of network providers. We expect to see many more lawsuits against providers who charge ERISA health plans for services that plan administrators find to be experimental or medically unnecessary.

At times, excessive charges can be part of larger, more elaborate schemes to defraud ERISA plans and health insurers.  This is particularly concerning given that fraudulent health care claims have been estimated at $80 billion per year. See generally http://www.fbi.gov/about-us/investigate/white_collar/health-care-fraud.