UnitedHealthcare Insurance Co. Self-Insured Employee Health Plan Arbitration
We represented a healthcare insurer against an arbitration demand filed by a petitioner hospital requesting payment of amounts allegedly owed under an in-network provider contract with our client. The demand arises out of a self-insured employee health plan for which our client administered claims on behalf of a major corporation. A plan member’s newborn triplets who spent several months in the hospital had primary insurance through their father’s health plan. Our client’s plan provided secondary coverage. Both the primary insurer and our client had in-network contracts with the hospital limiting the maximum charges. The primary insurer’s contract rate was lower than our client’s contract rate. Following its normal nationwide practice, our client processed the triplets’ claim using the primary plan’s negotiated rate as the allowable charges, based on the hospital having written off any charges in excess of that rate. This payment method ensures that the health insurance covers only those costs actually charged to the patient, fully covering the patient’s liability but preventing the hospital from charging the secondary insurer more than it charged the patient herself. While a state regulation arguably would require a fully-insured insurance plan to pay the higher of the two contracted rates, ERISA preempts the state regulation as to this self-funded plan. On our motion for summary judgment, the arbitration panel agreed that our client properly calculated the health plan payments, the plan did not cover charges written off by the hospital under its agreement with the primary insurer, and nothing in our client’s contract with the hospital required additional payments. Partial summary judgment was granted in September, dismissing all but approximately $1,500 of petitioner’s claims. Settlement discussions on the remaining issue are ongoing.