If a health insurance company believes it overpaid on previous benefits, can it reduce payments for current, unrelated benefits? The complaint for this class action says it can only if its plan authorizes it. The plan for Blue Cross Blue Shield of Minnesota (BCBSM) does not authorize it, the complaint says, and the reduced benefits paid are a violation of the Employee Retirement Income Security Act (ERISA).
The Improper Offset Class for this class action is all persons covered under an ERISA-governed health care plan insured or administered by Blue Cross against whom Blue Cross offset covered charges based on the following language in the plan, certificate of coverage, or summary plan description: “Payments made in error or overpayments may be recovered by the Claims Administrator as provided by law.”
The plaintiff in this case is a minor, referred to only as LP; her father, referred to as JP, worked for an engineering firm that sponsored the health insurance plan in question. LP is covered under her father’s plan.
Plaintiff LP has struggled over the years with depression, thoughts of suicide, and reactive attachment disorder. In June 2016, she was sent to Change Academy at Lake of the Ozarks, Inc., a licensed residential treatment center. LP was treated there from June 30 to November 6, 2016. LP’s father paid just under $190,000 for the treatment, of which BCBSM reimbursed a little over $70,000.
LP has since received other services from other parties. In November 2018, her father, JP, received an “explanation of benefits” statement for these later services that included an “offset amount” of $440. A notation in a box under the amount said, “You have satisfied $440.00 of the $5550.00 amount owed.”
When JP called BCBSM, the complaint says, he was told that the $440 was part of the refund the insurer was owed for its payment of Change Academy charges. In addition, he was told, BCBSM feels it is owed refunds for fourteen previously-paid claims from Change Academy.
LP’s weren’t the only benefits affected. In December 2018, JP received another explanation of benefits statement that noted that BCBSM had reduced payment on services for JP’s wife (LP’s mother) by $176 as part of “the refund requested from you by us.”
The complaint claims that BCBSM is doing this under language in the plan that states, “Payments made in error or overpayments may be recovered by the Claims Administrator as provided by law.” But it also alleges that no legal authority permits BCBSM to offset payments in the way it is doing it: “There is no provision in Blue Cross’s plan that expressly allows Blue Cross to offset any amount of allegedly overpaid or mistakenly paid benefits from future benefits.”
The complaint alleges that the determination that the family owes repayments of benefits is an “adverse benefit determination” under ERISA and must be handled as such. It claims that the company has failed to provide full and fair review of denied claims, as the law requires.