In recent years, UnitedHealth Group has ramped up its practice of recovering supposed overpayments to medical providers on claims of plan participants in one healthcare plan by offsetting these “overpayments” against (and therefore often totally disallowing) payments on the claims of participants in an unrelated plan. Keep in mind that the participants in the plans normally are still on the hook for any medical bills that the United refuses to pay. I like to refer to this practice of cross-plan offsetting as robbing Peter to pay Paul’s plan. Or perhaps given the petition for certiorari filed last week by United in a case brought as a class action by Dr. Louis Peterson seeking to end this practice, I should say robbing Peterson (and his patients) to pay Paul.
In the Peterson case, the Eighth Circuit Court of Appeals issued a decision earlier this year agreeing with a trial court that this practice was not allowed under the terms of the governing plans, which expressly allowed such offsetting for provider claims based on patients within the same plan, but said nothing about cross-plan offsets. Without deciding whether the practice necessarily violates ERISA, as the Department of Labor argued it does in a brief it filed as amicus curiae in the case, the Eighth Circuit noted that, at a minimum, the practice was “in some tension with the requirements of ERISA,” and “pushed the boundaries of what ERISA permits.” Accordingly, the court concluded that, despite the broad grant of interpretive authority granted to United in the plans, its interpretation of the plan as allowing cross-plan offsets was unreasonable.
United has asked the Supreme Court to review (and reverse) the decision. In its cert. petition, United asks the Court to resolve two issues (1) whether the Eighth Circuit incorrectly held that its interpretation was “necessarily unreasonable merely because the plan is silent on the matter”; and (2) whether a court is required by established ERISA case law to defer to “an otherwise reasonable plan construction that is lawful under ERISA but, in the court’s view, pushes ERISA’s boundaries.”