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Federal District Court Rules that Cross-Plan Offsetting Violates ERISA

Cross-plan offsetting is a practice that is used by third-party administrators (“TPAs”) of employer-sponsored group health plans as a means of recouping a benefit payment that was purportedly overpaid to an out-of-network health care provider under one plan by reducing the benefit payment owed to the same provider under another entirely separate plan. This practice has raised fiduciary compliance issues under ERISA and has frequently been the subject of litigation. Recently, in Lutz Surgical Partners, PLLC, et al. v. Aetna, Inc., et al.¸ a federal district court in New Jersey held that Aetna’s use of cross-plan offsetting violated ERISA. Under ERISA, a plan fiduciary may not, “in his individual or in any other capacity act in any transaction involving the plan on behalf of a party (or represent a party) whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries.” In addition, ERISA… Continue Reading

Does Your TPA Use Cross-Plan Off-Setting? Eighth Circuit Questions Its Compliance with ERISA

The third-party administrator (?Ç£TPA?Ç¥) in this case, UnitedHealth Group and its related entities (?Ç£UnitedHealth?Ç¥), engaged in ?Ç£cross-plan offsetting?Ç¥, which involves not paying a claim under Employer A?ÇÖs group health plan in order to recover an overpayment made by Employer B?ÇÖs group health plan to the same healthcare service provider. For example, assume UnitedHealth overpaid a provider by $200 on behalf of Employer B?ÇÖs group health plan, and a participant in Employer A?ÇÖs group health plan incurred a $250 claim with that same provider. UnitedHealth would only pay the provider $50 on behalf of the participant in Employer A?ÇÖs group health plan. The U.S. Court of Appeals for the Eighth Circuit agreed with the federal district court that UnitedHealth?ÇÖs interpretation of the plans was unreasonable and cross-plan offsetting was not permitted under the plans because (i) interpretations that authorize practices that push the boundaries of what ERISA permits should be viewed… Continue Reading

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