Every day in America, a patient seeks treatment from an out of network doctor whose office then contacts an administrator of a health insurance plan to receive authorization to perform the medical procedure for a set amount.  Often, after performing the medical procedure and presenting the health insurance claim form to the third party payor’s representative, who is generally not the administrator who approved the procedure, the doctor is advised by the third party payor’s representative that the procedure is not covered or that the payment anticipated by the doctor will be reduced because certain CPT Codes have not been approved for payment or that the charges approved for the procedure are less than the usual, customary, and reasonable amount that the doctor charges for the procedure.  Traditionally, doctors would then battle with the insurance company or medical plan administrator to decipher the Byzantine provisions of the health insurance policy or private medical plan to scrape for additional payment.  Doctors’ options are not longer so limited.

In The Plastic Surgery Center, P.A. v. Aetna Life Insurance, 967 F. 3d 218 (3d Cir. 2020), a federal appeals court decided that a doctor has a remedy other than deciphering the employee benefits plan and may sue the insurer or administrator for reneging on the promise.  In the case, The Plastic Surgery Center (“TPSC”), an out of network provider, sought to recover payments from Aetna for medical procedures performed on two patients.  TPSC sought payment equal to the reasonable and customary amount for multi-stage breast reconstruction surgery on a patient and payment equal to the highest in network level for facial reanimation surgery on another patient.  Aetna did not honor their promises of payment.  TPSC sued Aetna directly and did not seek to recover from the patients’ respective medical plans.  Aetna argued that under the Employee Retirement Income Security Act (“ERISA”), TPSC could only proceed to enforce the terms of the medical plans.  The Court disagreed and held that the relationship between Aetna and TPSC created through the communications between them may give rise to claims by TPSC directly against Aetna for breach of the promise to pay.  The Court further determined that TPSC’s rights were not controlled by the terms of the plans.

The holding which the Court characterized as one “of great importance to the healthcare industry,” clarifies that doctors have the legal right to hold an insurer or plan administrator to their promise of payment.  Doctors are not limited to payment under the plan or insurance policy, but can now seek to enforce the promises made by the plan administrator or insurance company to pay at the negotiated rate.

If a third party payor has promised to pay a doctor at a certain rate outside of the medical benefits plan or health insurance policy, but has reneged on the promise, Maggs McDermott & DiCicco may be able to help you recover the amount of the payment promised.  We have successfully sued insurance and plan administrators to live up to their promises to doctors and obtained payment for doctors based on those promises.  Please contact us at [email protected] or 732-359-2551 for a free consultation.  For information on the other physician services we provide, click here.

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