Phia Group Media


Phia Group Media

Don’t Confuse Appeals with Balance-Billing!

On August 6, 2019

By: Jon Jablon, Esq.

If you draft, administer, or otherwise manage self-funded health plans, you are likely very familiar with the appeals submission timeframe requirements within the SPD. The relevant regulations prescribe certain timeframes within which a health plan must allow an appeal, and a health plan is certainly free to allow longer periods of time, but abiding by the legal minimums tends to be the common practice.

That’s all well and good, and relatively simple to administer, but they tend to fall flat when applied to balance-billing. Let me explain:

I received an email the other day from a very angry medical provider with whom I had been attempting to resolve a balance-billing scenario, in which the attorney explained that the TPA said to him (and I quote): “On page 83 the plan document says that all payment appeals must be submitted within twelve months of the date of the adverse benefit determination. You have billed the patient seventeen months following the determination. Therefore you are prohibited from billing the patient for the balance.”

A provider’s appeal is to the Plan itself, saying, essentially, “you have underpaid this claim,” whereas balance-billing is to the member, saying “you are responsible for the balance that your health plan has not paid.” While it is certainly possible for a provider to simultaneously appeal to the Plan and balance-bill the member, they constitute two very different demands, and only one – the appeal to the Plan – falls under the purview and limitations of the Plan Document.

I want to do my part to dispel the popular misconception that balance-billing can be eradicated with the right plan language in place. Balance-billing, by definition, is outside the terms of the Plan, and therefore nothing written in the Plan Document can change a provider’s rights. The Plan Document’s terms can and should be used as arguments against balance-billing, of course, and the Plan needs strong language to defend itself – but even the strongest Plan Document language cannot legally prohibit a provider from balance-billing.

Feel free to contact, and we’ll do our best to answer all your appeal and balance-billing questions!

One Shot at This

On May 14, 2018

By: Ron E. Peck, Esq.

Twelve years ago, I was dragged out of the comfort of my office and taken to East Texas, to present before a Third Party Administrator client of ours.  After Adam Russo (our CEO) spoke about the cost savings achieved by our best-in-class subrogation services, and Michael Branco (Principal and CFO) explained how our cutting edge software allows us to identify more opportunities than anyone else, it was my turn to talk.  I was assigned the simple responsibility of discussing how our subrogation clients receive our innovative SPD/Plan Document language (at the time, focused solely on subrogation) free-of-charge.  I wasn’t then the show-stopping public speaker I am today, and Adam felt the need to jump in with, “It’s not just the language.  Ron’s an attorney, and he’ll personally look over your plan documents.  He’s working day and night; weekdays and weekends.”  In response, a well-meaning woman in the audience remarked: “Oh dear! Ron… What do your friends think of that?”  In response I announced, “Plan Docs are my friends…” and the legend was born.

In that time I’ve managed to regret that statement (more times than once), but the foundation remains.  Plan documents were, and continue to be, the bedrock.  Any and all rights our plans seek to assert must first find footing in the SPD.  Moreover, inconsistencies, weaknesses, and shortcomings also find their roots grounded in the plan document.  For good and for bad, the SPD is all, and all is in the SPD.  For this reason, I and my team constantly scream at the top of our lungs: “Update the SPD!  Review and revise now, before it’s too late…”  Yet, here (as in so many other things), it is too easy to beg forgiveness, and inconvenient to ask permission.

Are there scenarios where a plan document can be revised, and the new terms applied “retroactively?”  Can language adopted in March of 2018 reach back and apply to claims received in January of 2018?  Certainly.  But only in limited situations, and only when it will not have a negative impact upon beneficiaries; only when the language (or lack thereof) had no impact between then and now.  Yet, too often, issues pop up … mistakes, errors, shortcomings… either failures to abide by the law, or oversight that leads to costly obligations.  These problems come to our attention BECAUSE someone has already relied upon the plan document they received; the issue is rooted in the plan document, and as such, we can’t ask for a “do-over.”

Look at it this way.  If you were an inventor, and you invented a time machine for no reason other than to invent a time machine, you could go back in time and change things.  As long as the change you make doesn’t impact the “future” you (so that you will still invent the time machine), the change will be allowed.  If, however, you invent a time machine specifically with the intent to change a specific event that happened in the past, even if you do invent the time machine, you won’t be able to change that “one thing” in the past that inspired you to invent the time machine.  Why?  Because if the thing that happened in the past, which inspired you to invent the time machine, is changed – then you won’t be inspired to invent the time machine, won’t go back in time, and won’t change the event.  It’s a paradox, and nature abhors a paradox.

The same thing applies here.  If some event causes you to reevaluate your plan document, identify an issue, and fix the problem – then you can’t go back and apply the language retroactively, since the triggering event (that caused you to make the change) also, by its nature, means that the change can’t be made retroactively without impacting someone or something.

For instance: if you wanted to exclude cosmetic surgery, mistakenly issue a plan document in January of 2018 that covers cosmetic surgery, and in March of 2018 realize the plan document actually covers cosmetic surgery, you can fix that mistake in March, and have the “new” language apply both in the future, and retroactively, as long as no one is impacted.  If, however, the only reason you discovered the mistake (in March of 2018) is because a plan member received cosmetic surgery in February of 2018 (thinking it was a covered service, in reliance upon the language they received in January), then you are stuck covering those claims.

What really burns me, is that (often) we identified and notified the client about the issue, but (at the time) the “fix” was too much of a burden.  Now, with that crack in the foundation leading to a collapse of the home, our clients ask for a solution.  Certainly, we can (and do) identify and resolve the issue, so that – moving forward – the problem will not be a problem again.  Yet, then the inevitable query pops up: “Can we apply the new language retroactively.”  For the reasons shared above, too often the answer is, “No.”

If the “problem” is on my desk, chances are it’s NOT because someone just happened to notice an issue in the plan document, it hasn’t impacted anyone or anything yet, and there is a desire to fix the language (and apply the fix retroactively) before the issue actually causes any confusion.  No, no, no…  If the “problem” is on my desk, it’s because a patient or provider has already sought to enforce the language as written, and a gap or legal violation was discovered after the fact.  Cost containment measures the plan “meant” to apply were not set forth in the SPD.  Stop loss won’t cover something.  The law voids something else.  Regardless, even if we can “fix” the problem now, the damage that was done, is done.

So… I say this:  You have one shot at this.  You must make sure the SPD is perfect, BEFORE it’s handed to participants.  BEFORE they seek care in reliance upon its terms.  BEFORE providers provide care in reliance upon those terms.  This document is written in ink, not pencil, and once it’s signed and dispersed, assume it’s a one way road.  With that in mind, respect my friends – the plan documents – and get it right the first time.

Pin the Tail on the Donkey & Other Blindfolded Games of Placement

On December 27, 2017

By: Ron E. Peck, Esq.

Our industry (that being the self funded health benefits industry) is primarily a web-work of relationships.  Unlike a large, traditional health insurance carrier, where all functions are located under one roof, in our industry key pieces of the greater whole are comprised of various independent entities.

The funding comes from a sponsor – usually an employer.  Sometimes, these employer “groups” gather to form a captive, MEWA, association health plan, or other collective funding mechanism.  Next, they select someone to process claims and perform other administrative tasks.  Usually this is a carrier providing administrative services only (ASO) or a third party administrator (TPA).  Next, these plans – more often than not – require some sort of financial insurance to protect them from catastrophic claims, securing for themselves a specific type of reinsurance customized to fit this role, a.k.a. stop-loss.  Add to this list of entities a broker/advisor, who helps the sponsor “check all the boxes,” as well as ensure a complete and successful implementation (as well as plan management), vendors (who offer any number of cost containment services and other plan necessities), networks with providers (from direct contracts to PPOs), and a pharmacy benefit manager (PBM).  I’m sure I’ve missed a few other players, but – hopefully – you start to see how a so called “plan” is not a single being, but rather, a collection of beings coordinating with each other.  If one player drops the ball, the whole thing unravels.

I recently posted on LinkedIn a hypothetical, wherein a CEO loves the idea of medical tourism, railroads it through and has it added to their self-funded health plan; their broker and TPA pick a medical tourism vendor, and a few weeks later, a plan member is in Costa Rica for a costly procedure.  The total cost of the procedure hits (and exceeds) the benefit plan's stop loss insurance specific deductible.  Despite that, the total cost is still way less than if the procedure had taken place domestically (even after applying the plan's network discount).  Yet, stop loss denies the claim for reimbursement, citing the fact that the plan document excludes coverage for treatment received outside the United States.  Now the plan (through its TPA) has paid the vendor's fees, paid for claims that are technically excluded by the plan document, and is without stop-loss reimbursement.

The responses have been many, various, and generally spot-on (as well as – in some cases – entertaining).  Yet, it exposes a few issues and “gaps” in the web-work I described above.  The employer, TPA, and broker are excited to adopt a program that will save them money.  By extension, the stop loss carrier will save money.  In my example, the stop loss carrier did indeed save money, compared to what it would have cost (and they would have paid) domestically.  Yet, because the plan document wasn’t updated and the carrier wasn’t informed, the stop loss carrier isn’t “required” to reimburse.  Today, few carriers will reimburse when not required to do so.  There are some that, in recognition of the plan’s efforts to contain costs, would cover the loss – but most would not.

This is just one example of the issues we’re seeing today due to the “web-work” nature of our industry.  Like organs in a human body, all the pieces need to communicate and coordinate.  

It has also come to our attention that there is a growing trend whereby brokers and plan sponsors seek to use their own stop-loss rather than a “preferred” carrier selected by the TPA.  TPA’s, in turn, are worried that if the plan utilizes a carrier the TPA has not vetted, and something goes wrong, that TPA may be blamed for a conflict they had no hand in creating.  Rather than push back against this trend, however, and thusly lose business opportunities, we believe – AGAIN – the key to success is communication and preemptive coordination.  Explain the concerns, put them in writing, and have the party placing the insurance agree not to hold the TPA at fault for issues they had no hand in creating.  This will then allow a trend – that frankly can be quite good for the industry (that is, allowing plan sponsors to customize their plan to meet their needs, including who provides the stop-loss) – to thrive without threatening the TPA.

These are only two examples, but hopefully it’s now clearer to you why we must discuss these issues ahead of time, ensure all written documents align, and we coordinate before an issue arises.

TPA of Self-Insured Health Plan Not Subject to Texas Prompt-Pay Law

On February 24, 2016
From the February 18, 2016 EBIA Weekly

[Health Care Serv. Corp. v. Methodist Hosps. of Dallas, 2016 WL 530680 (5th Cir. 2016)]

Available at

The Fifth Circuit has ruled that a third-party administrator (TPA) of employer-sponsored self-insured health plans is not an insurer subject to the Texas Prompt Payment Act. A hospital sued the TPA for over $31 million under the state law, which generally requires insurers to pay benefit claims within 30 or 45 days (depending on the claim’s format), or face penalties. The TPA argued to the trial court that the Texas law does not apply because the TPA is not an “insurer” providing coverage through a “health insurance policy,” as required by the law. It also contended that ERISA preempts the application of the state law to claims arising under self-insured health plans. The trial court ruled that the state law by its terms does not apply to the TPA’s administration of self-insured plans; because of this conclusion, it did not address ERISA preemption.


Federal Court Keeps TPA As Third-Party Defendant in Suit Between Stop Loss Carrier and Group

On January 14, 2015
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