Phia Group Media


Phia Group Media

Anthem Data Breach Implications for Employers
By Chris Rylands & Carrie Byrnes

As has now been widely reported, Anthem, Inc. was the unfortunate target of a cyber-attack potentially impacting 80 million current and former customers. Some reports have indicated that the HIPAA breach notification rules will not apply to this breach. However, the information stolen appears to include individually identifiable information, potentially including health plan enrollment information. Enrollment information, in the hands of a health plan, is protected health information (PHI), so it is possible that the HIPAA data breach notification rules are applicable. As such, both insured and self-funded customers utilizing Anthem as their TPA should review information concerning the Anthem breach carefully before concluding that the HIPAA breach notification rules do not apply.

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IMPLANT WARS: How monitoring provider self-referrals, & negotiating based on actual costs can result in major plan savings!

Those who fail to identify ways to separate themselves from the pack through new, innovative cost containment processes will be left behind. Yet, even the most diligent administrator feels powerless in the face of excessive costs, finding it nearly impossible to negotiate claims with providers, or apply reasonable and appropriate pricing. Thriving requires tackling you plans’ biggest cost drivers; but how can you carve out, monitor, and negotiate “the big claims?” Kick-off the new year by joining The Phia Group’s CEO, Adam V. Russo and his legal team, as they discuss this important topic and introduce you to their newest offering; Implant Cost Pro! This is a webinar not to be missed.

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Federal Court Keeps TPA As Third-Party Defendant in Suit Between Stop Loss Carrier and Group
MyHealthGuide Source: Thomas A. Croft, Esq., 1/10/2015, Article

Case: Unimerica Insurance Company v. GA Food Services, Inc., et al., No. 8:14-cv-2419-T-33TBM, In the United States District Court for the Middle District of Florida, Tampa Division, December 10, 2014) Court Ruling

This case is a federal civil procedure professor’s dream. One can easily imagine it as a part of a first-year law student’s final exam. I discuss it because the backdrop for all the procedural issues is a stop loss dispute between a carrier and a group and its TPA, and it illustrates just how convoluted things can become in such controversies. I will do my best to keep things simple.

Case Background

Our story begins in Minnesota, where the carrier filed suit against the group (“GA Food”) to obtain a refund of a portion of claims paid respecting a Plan beneficiary with end stage renal disease in the amount of $248,887. After paying the claim, it was learned that the individual became eligible for Medicare and lost coverage under the Plan during the time the claims were incurred (according to the carrier), resulting in a refund due for the amount the carrier had paid. After learning of the Medicare issue, the carrier applied an offset to another claim, leaving a net amount of refund alleged to be due of $129,655.

TThe carrier, a Wisconsin corporation, sued in federal court in Minnesota, where it had its principal place of business. There was federal jurisdiction in Minnesota because of “diversity,” in that GA Food was a Florida corporation with its principal place of business in St. Petersburg, Florida.
• [Note: for there to be subject matter jurisdiction in federal court for a case based on state law, the dispute must involve a certain minimum amount and be between citizens of different states. Corporations are deemed to be citizens of both their state of incorporation and the state where their principal place of business exists.]
GA Food filed a motion to transfer the case to federal court in the Middle District of Florida. One federal court may transfer a case to another federal court under a federal statute, 28 U.S. C. §1404, to any other federal district “where it might have been brought” for “the convenience of parties and witnesses,” even over the objection of one the parties. The Minnesota Court found that a transfer to the Middle District of Florida would serve the interests of justice, noting that the case involved a coverage dispute involving a Florida corporation and a Florida employee under a stop loss policy issued under Florida law. The Court also noted that the TPA (not yet a party to the case in any way nor yet asked by either existing party to be added as a party to the case) was BCBSF–a Florida corporation based in Jacksonville, Florida, and that non-party witnesses (presumably from BCBSF) were located there. Finally, the Court noted that the substantive law of Florida would likely apply to the dispute (probably due to a Florida choice of law provision in the stop loss policy).

Accordingly, the Minnesota Court sent the case to the Middle District of Florida, but did not specify to which division of that District it should go.
• [Many federal districts have “divisions” established by statute, which require that cases arising in specified counties be tried in the division encompassing that county].
TPA Added as Third Party Defendant
This case landed in the Jacksonville division. On its own motion, the Jacksonville federal court noted in an order that “no relevant conduct between the two current parties [i.e., Unimerica and GA Foods] is alleged to have occurred in the Jacksonville Division.” The Jacksonville Court noted that GA Food’s principal place of business was in St. Petersburg–a part of the Tampa Division–and that “the only reference made to the Jacksonville Division is in contracts between [GA Foods] and businesses not party to this case [i.e., BCBSF]. Ultimately, the case was transferred to the Tampa Division, but not before GA Foods filed a motion to add BCBSF as a third-party defendant. The motion was not decided before the transfer to the Tampa Division, however.
• The apparent theory of the motion to add BCBSF was that it was liable to GA Foods in the event that GA Foods was ultimately found liable to Unimerica for the refund, allegedly because it either breached its Administrative Agreement with GA Foods in paying the claim in the first place, or negligently did so. The Tampa federal court granted permission for GA Foods to file its third-party complaint, and then BCBSF moved to dismiss it on several grounds.
First, BCBSF contended that it was not properly added under Federal Rule of Civil Procedure 14(a), which governs third-party actions, arguing that this dispute was between a stop loss carrier and an insured under a policy to which BCBSF was not a party, and, accordingly, it could not be liable under that policy for any refunds and was improperly added to the case under Rule 14. Further, BCBSF argued that the Court should not exercise jurisdiction over GA Foods’ claim due to “exceptional circumstances” and “compelling reasons” for declining jurisdiction under 28 U.S.C. § 1367(c)(4).

The nuances of Rule 14(a) and Section 1367 are the subject of a great deal of case law and scholarly jurisprudence, and are well beyond the scope of the instant article. However, in brief, the Tampa Court concluded that, because the stop loss policy and the Administrative Agreement between GA Foods and BCBSF both incorporated the Plan Document, the parties were sufficiently “inextricably intertwined” such that the requisites of Rule 14(a) were satisfied.

Under Section 1367, a federal court can decline to exercise jurisdiction over a third-party claim for a “compelling reason,” as BCBSF argued it should in this case. Here, that reason was that there was a provision in the Administrative Agreement between GA Foods and BCBSF that stated that “all actions or proceedings instituted by [GA Foods] or [BCBSF] hereunder shall be brought in a court of competent jurisdiction in Duval County, Florida.” Ironically, Duval County is the county seat of Jacksonville, Florida, whence this case came.

Here is where the analysis gets somewhat dicey. The Tampa Court concluded that the clause quoted above (“the forum selection clause”) did not apply for three reasons.
• First, the Court observed that the forum selection clause did not literally apply because neither GA Foods nor BCBSF “instituted the action”–Unimerica did.
• Second, the Court noted that GA Foods had in fact filed its motion to add BCBSF while the case was still before the Jacksonville Division of the Court, such that the “third-party proceedings” were initiated there, notwithstanding that GA Foods motion to add BCBSF was not granted until after the case had been transferred to the Tampa Division.
• Third, the Tampa Court concluded that it was not clear that the forum selection clause applied to “third-party actions being brought supplementary to already initiated proceedings,” as here.
Lastly, BCBSF challenged the third-party complaint on the grounds that it failed to state a claim upon which relief could be granted under Federal Rule of Civil Procedure 12(b)(6). In other words, BCBSF argued that an exculpatory provision in the Administrative Agreement operated to relieve it of any possible liability to GA Foods, even if all the other factual allegations in the third-party complaint were true. The Court determined that its interpretation of this exculpatory provision at this stage of the proceedings would be premature, and denied the BCBSF’s Rule 12(b)(6) motion.

So that, boys and girls, is how a Minnesota case ended up in Tampa. And the merits of the case have not yet even begun to be addressed.

About the Author

Thomas A Croft is a magna cum laude graduate of Duke University (1976) and an honors graduate of Duke University School of Law (1979), where he earned membership in the Order of the Coif, reserved for graduates in the top 10% of their class. He returned to Duke Law in 1980 as Lecturer and Assistant Dean (1980-1982) and as Senior Lecturer and Associate Dean for Administration (1982-1984). He also taught at the University of Arkansas-Little Rock law school, where he was an Associate Professor of Law (1990-91), earning teacher of the year honors.

Until 2004, when he specialized in medical stop loss litigation and consulting, Tom practiced general commercial litigation. He was a partner in the litigation section of a major Houston firm in the late 1980s, and moved to the Atlanta area in 1991. He has been honored as a Georgia “Super-Lawyer” by Atlanta Magazine for the last eight years running, and holds an AV® Preeminent rating from Martindale-Hubble®.

Tom currently consults extensively on medical stop loss claims and related issues, as well as with respect to HMO Excess Reinsurance, Medical Excess of Loss Reinsurance, and Provider Excess Loss Insurance. He maintains an extensive website analyzing more than one hundred cases and containing more than fifty articles published in the Self-Insurer Magazine over many years. See He regularly represents and negotiates on behalf of stop loss carriers, MGUs, Brokers, TPAs, and Employer Groups informally, as well as in litigated and arbitrated proceedings, and has mediated as an advocate in many stop-loss related mediations. Tom can be reached at

4th Quarter Newsletter 2014

I’d like to start by thanking all of you that have chosen The Phia Group as your trusted partner. I know very well that other options are available to you, and we are inspired and thankful everyday that you place your trust in us. I have always, and will continue to promise, that our team of recovery specialists, plan drafters, paralegals, lawyers, and support staff will do everything in our power to maximize the benefits while lowering the cost of your health benefit programs!

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4th Quarter 2015 Newsletter – Phia News
New Faces at Phia

• Joseph Huddleston – Claims Support

• Alex Theberge – Office Management Assistant

Movers & Shakers!!!!

• Christopher M. Aguiar – Now licensed to practice law

• Sean N. Donnelly – Now licensed to practice law

• Jen Marsh – Customer Service Manager

• Christine Sands – Team Leader, Claims & Case Support

• Ashley Schramm – Advanced to CRS IV and now handles worker’s compensation cases

• Jason Kemp – Transition to CRS IV handling Bodily Injury Cases

• Danielle Bates – Transitioned from Assistant to Case Investigator

• Amanda Grogan – Advanced to Claims Recovery Specialist II

• Nick Murphy – Advanced to Manager, Claim Analysis

• Mike Mears – Advanced to Senior Claims Analyst

• Jason Thibodeaux – Advanced to Senior Claims Analyst

• Todd Geiger – Joined Claims Analysis as a Senior Claim Auditor

• Lisa Tamulynas – Moved from Recovery Department to Phia Group Consulting

• Tumi Gugushe – Transition to Legal Assistant

Phia Gives Back in 2014

JFS of Metrowest – Christmas came early for this bunch of great kids at JFS, to whom The Phia Group dedicated a year of service and support!!!

The 2015 Charity is …Susan J. Komen of Massachusettes – The Komen Promise

The Komen Promise– To save lives and end breast cancer forever by empowering people, ensuring quality care, and energizing science to find the cures.

For more information visit

Additions to the Phamily

Danasha Reddick’s New Baby … Dariyah
Elizabeth Welcome’s New Baby … Ryliegh

"In Reference To The FAQ"... The DOL FAQ Dissected - Part Deux!

On October 10, 2014, the Department of Labor, in conjunction with other regulatory agencies, released its “FAQ XXI.” In response, during its October Webinar, The Phia Group tore through the FAQ, sharing its concerns regarding the FAQ’s questionable verbiage and provisions. The support shown for The Phia Group’s October Webinar, “Creeping Around Pitfalls on the Way to Scary Savings! – How to Avoid Horror When Implementing Cost Containment Schemes!” was overwhelming! Not only did we enjoy an incredible turnout, but our attendees responded by providing some thought provoking insight to consider. Many of our industry’s greatest minds have since joined The Phia Group in assessing the FAQ’s meaning, impact, and steps we need to take to continue down the path of Reference Based Pricing. In November, we will share these ideas and conclusions with you.

Join The Phia Group’s CEO, Adam V. Russo; Sr. VP & General Counsel, Ron E. Peck; and other members of the legal team as we continue to dissect the FAQ, its key provisions, and how it impacts “RBP Plans .

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Phia Group Consulting Addresses Regulatory Compliance

Braintree, MA – For years, The Phia Group’s team of consultants have been dealing with various regulatory inquiries. In response to the impending influx of regulation bound to follow the recent election and rollout of PPACA’s most complex provisions, The Phia Group announced this week the official formation of its Regulatory Compliance team.

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FAQs about Affordable Care Act Implementation (Part XXII)
United States Department of Labor
Employee Benefits Security Administration

November 6, 2014

Set out below are additional Frequently Asked Questions (FAQs) regarding implementation of the Affordable Care Act. These FAQs have been prepared jointly by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments). Like previously issued FAQs (available at and, these FAQs answer questions from stakeholders to help people understand the new law and benefit from it, as intended.

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Creeping Around Pitfalls on the Way to Scary Savings? - How to Avoid Horror When Implementing Cost Containment Schemes
Creeping Around Pitfalls on the Way to Scary Savings? - How to Avoid Horror When Implementing Cost Containment Schemes

DON’T MISS OUT! Whether you’re embarking on a new cost containment adventure in-house, or with the help of a vendor, most programs are not simple “plug and play” affairs. Those who head into the dark unprepared will undoubtedly find themselves spooked by what hides around the corner.

Are regulatory nightmares keeping you up at night? Just last week the federal government announced some gory changes to their regulations, sure to have a scary impact on reference based pricing. Nervous the path you’re headed down will lead to certain doom? Many are questioning how far they can go with dialysis carve-outs, without running afoul of the Medicare Secondary Payer Act. Are the tricks piling up, but no treats are in sight? The HHS has announced a scheme to crush skinny plans. If that isn’t enough to scare you straight, someone had better check for a heartbeat!

Now is not the time to explore the regulatory wilderness alone! If you are looking to create some sweet savings, join The Phia Group’s own CEO, Adam Russo, Sr. VP & General Counsel, Ron Peck, and other members of the legal team, as they review the hottest topics and biggest news to impact our industry in the recent weeks.
Don’t be left “holding the bag;” add this free webinar to your calendar; October 30 at 1 PM and fear no more!

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The Phia Group, LLC Comments on Recent Industry Developments
October 22, 2014; Braintree, MA

Friends & Colleagues:

These last few weeks have brought with them a whirlwind of controversy and concern.  The Phia Group, LLC is pleased to announce that it will be addressing three of the hottest topics during its monthly webinar.  If you have not yet signed up for our FREE webinar, to be held on Thursday, October 30th, 2014, from 1:00 – 2:00 PM EST, then you will most certainly be missing out!  Hear our assessment of the following major topics:

The Regulatory FAQ Addressing Reference Based Pricing (“RBP”)

Recently, a regulatory FAQ addressing RBP programs was released, regarding “reasonable” access to providers willing to accept the RBP rate, and RBP’s impact on patient out of pockets; (limited by the Patient Protection and Affordable Care Act [“PPACA”]).  Attendees of our October webinar will hear from our legal team, as we discuss the FAQ, what it means for RBP programs, and the steps we believe you can take to protect yourself and your program.

Recent Concerns with the HHS Minimum Value Calculator

As employers are preparing their plans for the upcoming year, some are looking at other plan options that will meet most of the requirements of the Affordable Care Act (ACA) but will perhaps not meet the minimum value requirement of the Employer Shared Responsibility Mandate (Employer Mandate). However, as some employers have discovered, there appears to be a flaw in the Federal Minimum Value (MV) Calculator, a tool used to determine if a plan meets the minimum value requirement of the Employer Mandate. The MV Calculator is indicating, in some cases, that plans that do not offer basic benefits such as hospitalization coverage still meet the minimum value requirement of the ACA but this calculation contradicts the IRS guidance in IRS Notice 2012-31.

Our legal team will discuss the different types of plan designs that employers are looking at for 2015 (i.e. Preventive Only (“Skinny”) Plans and Minimum Value Plans) as well as our considerations when using the MV Calculator for these types of plans.

Pressing Our Luck When Administering Dialysis Carve-Outs In The Face Of The Medicare Secondary Payer Act (“MSPA”)

Dialysis carve-outs are common, and work very well.  Many benefit plans have taken advantage of this excellent process, and are maximizing benefits while minimizing costs.  Unfortunately, the rate of success has been “all over the map,” largely dependent upon vendors and their clientele ensuring that the applicable plan language matches the process, and doesn’t run afoul of applicable law.  Newly brought to the industry’s attention are theories and procedures, reflected in widely adopted plan language, that may come too close to violating the MSPA.  Our team will discuss what some vendors are promoting, and what concerns many have shared in response.

Join us on October 30th at 1PM to discuss these issues!