United HealthCare Can't Duck Hospital's$104M Lawsuit

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jacklyn Wille

June 29 — A Dallas-area hospital that sued United HealthCare Services Inc. for more than $104 million in unpaid and underpaid medical bills stated viable claims against the insurer, a federal judge ruled ( Tex. Gen. Hosp., LP v. United Healthcare Servs., Inc. , 2016 BL 208258, N.D. Tex., No. 3:15-CV-02096-M, 6/28/16 ).

Texas General Hospital, an acute care facility outside United's provider network, accused the insurer of “drastically underpaying” and refusing to pay for medical care provided to United-insured patients. A federal judge on June 28 largely denied the insurer's motion to dismiss the lawsuit, allowing Texas General to move forward with claims for benefits and other relief under the Employee Retirement Income Security Act.

In particular, Chief Judge Barbara M.G. Lynn of the U.S. District Court for the Northern District of Texas allowed the hospital to sue United in federal court without first exhausting the insurer's internal appeals procedures for all 1,969 patients in question.

That's because the hospital sufficiently showed that United failed to provide “meaningful access” to its appeals procedures and that further efforts would be futile, Lynn said.

Lynn also allowed the hospital to move forward with certain state law claims related to non-ERISA plans, along with claims that United violated ERISA by failing to fully and fairly review the hospital's claims.

However, Lynn dismissed Texas General's claim for alleged breach of ERISA's fiduciary duties. She explained that the benefit assignment forms Texas General received from its United-insured patients didn't give the hospital standing to pursue this claim.

K&L Gates LLP represents the hospital. Figari & Davenport LLP and O'Melveny & Myers represents United HealthCare.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

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