Court Reconsiders Arbitration in Aetna Case, Reinstates Chiropractor's Assigned Claims

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Jan. 5 — A chiropractor isn't required to arbitrate his claims that Aetna Inc. violated federal benefits law by denying payment for covered procedures as recoupment for earlier overpayments, a federal judge in New Jersey has ruled.

In a Dec. 31 unpublished opinion, Judge Michael A. Shipp of the U.S. District Court for the District of New Jersey reconsidered his earlier ruling compelling arbitration in the case, relying on intervening precedent from the U.S. Court of Appeals for the Third Circuit in CardioNet, Inc. v. CIGNA Health Corp., 751 F.3d 165, 58 EBC 1001 (3d Cir. 2014), which ruled that derivative claims for benefits under the Employee Retirement Income Security Act obtained through valid assignments from patients weren't subject to an arbitration agreement between the health-care providers and the insurer.

The case is one of several questioning prepayment review procedures of insurers that have withheld payment for covered procedures to cover alleged overages previously paid to the same providers, with two others also proceeding in the District of New Jersey (Tri3 Enters., LLC v. Aetna, Inc., D.N.J., No. 3:11-cv-03921-MAS-TJB, complaint filed, 7/8/11 and Premier Health Ctr., P.C. v. UnitedHealth Grp., D.N.J., No. 2:11-cv-00425-ES-JAD, complaint filed, 1/24/11).

Case History 

In the instant case, groups of chiropractors have challenged Aetna's use of a prepayment review procedure, claiming that the insurer has violated ERISA by withholding payment for ostensibly covered services as a method of recouping benefits that it claimed were paid for earlier uncovered services.

In an unpublished June 2011 opinion, the court had previously granted a motion by Aetna to compel arbitration of derivative claims brought by an individual chiropractor, Dr. Peter Manz, pursuant to valid assignments that he had obtained from his patients, finding that the claims were subject to an arbitration agreement entered into between Manz and Aetna.

In May 2012, while Manz's claims were proceeding in arbitration, the court stayed the remaining issues in the instant case, pending resolution of the Tri3 case, which was before the Third Circuit after the district court had dismissed claims that Aetna's efforts to seek repayment for miscoded amounts violated ERISA.

In August 2013, the Third Circuit issued an unpublished decision vacating the district court's opinion and remanding the Tri3 case to the district court.

Shortly thereafter, in December 2013, the court reopened the instant case pursuant to a stipulation and consent order between the parties.

The reopened case didn't include Manz's claims, which were still progressing through the court-ordered arbitration process.

CardioNet Decision Controls

On May 6, the Third Circuit issued its precedential decision in the CardioNet case, finding that assigned claims for benefits under ERISA didn't fall within the arbitration clause of a provider agreement between the insurer and the provider.

According to the court in the instant case, the Third Circuit's opinion in CardioNet changed the law within the appellate circuit and established that a health-care provider with a properly assigned claim for ERISA benefits from his patient couldn't be required to arbitrate that claim if the patient herself couldn't be compelled to arbitrate the claim.

Finding that the situation in the instant case was “factually indistinguishable” from CardioNet, the court granted the motion to reconsider and vacated its prior order to compel Manz's claims to arbitration.

Manz was represented by Zuckerman Spaeder LLP; Buttaci & Leardi LLC; Carella, Byrne, Cecchi, Olstein, Brody & Agnello PC; and Axelrod & Dean LLP.

Aetna was represented by Connell Foley LLP.

Text of the opinion is at