United States: Balance Billing Claims Rejected By Federal Court Under No Surprises Act

The Federal District Court of New Jersey recently granted Defendants Cigna Health and Life Insurance Co. and Connecticut General Life Insurance Co.'s (collectively "Cigna" or "Defendants") motion to dismiss the amended complaint of Plaintiffs Hudson Hospital OPCO, LLC; IJKG PROPCO LLC; and HUMC OPCO, LLC's (collectively "Plaintiffs").

In Hudson Hosp. Opco, LLC v. CIGNA Health & Life Ins. Co., The three affiliated New Jersey hospitals operated by Plaintiffs filed a complaint against Defendants for underpayment and/or refusal to pay claims. Notably, prior to June 1, 2021, Plaintiffs did not have contracts with Cigna and were out-of-network providers. Plaintiffs alleged that between March 16, 2016 and May 31, 2021, before they became in-network providers with Defendants, the Defendants "underpaid and/or refused to pay" Plaintiffs for millions of dollars in emergency and elective services claims. The claims for benefits amounted to millions of dollars for thousands of beneficiaries of the insurance plans.

Regarding elective services reimbursement rates, Plaintiffs challenged Cigna's Maximum Reimbursable Charge ("MRC") for out-of-network services and argued under the three MRC plans available, Defendants were required to calculate reimbursement amounts on Plaintiff's normal charges, or data compiled by FAIR Health, Inc, but that the payments Defendants made during this time period fell below that amount. Plaintiffs also challenged Defendants' payments for emergency services and their failure to comply with the Affordable Care Act ("ACA") Greatest of Three regulation and the No Surprises Act limiting out-of-pocket maximums and subscriber cost-sharing.

In granting Defendants' motion to dismiss, without prejudice, the Court emphasized Plaintiffs failed to submit any of the subscriber plans at issue as evidence or identify specific provisions in the plans. As to the claim regarding payments for elective services falling below Defendants' MRC, the Court stated: "Plaintiffs do not point to, describe, or quote any language from the actual Cigna Plans that, they claim, entitle them to reimbursement for elective services on thousands of allegedly underpaid claims."

The Court held Plaintiffs' pleadings were "plainly insufficient," as they must do more than vaguely plead benefits were due under the plan and must tie allegations to specific provisions of the plans. Because only language of the specific plan can create an entitlement to benefits, Plaintiffs failed to state a claim upon which relief could be granted. Regarding emergency services, the Court held that Plaintiffs' claim that Defendants violated the Greatest of Three rule and did not correctly calculate reimbursement for emergency services at the applicable MRC under the plan, failed for the same reasons.

In addition, the Court held Plaintiffs' second ACA argument, that Defendants' violated the No Surprises Act regulations (the "Regulations") because their underpayments for emergency services claims left subscribers with balances due to Plaintiffs far above their out-of-pocket maximum of their plans, is insufficient. The Regulations limit cost-sharing when an amount owed by subscribers exceeds what the services would be if provided in-network, but not the total amount billed by the provider for an out-of-network charge. See 29 CFR § 2590.715-2719A(b)(3)(i). Under a general insurance plan, an insurer is obligated to pay a percentage of the covered amount for the subscriber's out-of-network emergency claim and the subscriber is obligated to pay a percentage via a copayment, coinsurance, or deductible, called a cost-share. But subscribers may also be responsible for the amount billed by the provider above the covered reimbursement rate determined by the plan, i.e., the balance bill. Here, Plaintiffs did not allege subscribers were responsible for the cost-share amount, rather than the balance-bill, above any applicable out-of-pocket maximums under the plans and thus failed to show how Defendants violated the Regulations. In addition, the Court noted that the Regulations do not provide that insurers are responsible for any balance bill.

Lastly, the Court dismissed Plaintiffs' breach of fiduciary duties claims because they all derived from the allegation that Defendants underpaid Plaintiffs in violation of their plans, an allegation that Plaintiffs did not adequately plead under any specific identified provisions of their Cigna plans. Because the Court dismissed all federal claims in the case, it declined to exercise supplemental jurisdiction over the remaining state law claims.

The Court's opinion can be accessed here.