A recent United States Court of Appeals for the Eighth Circuit decision against UnitedHealth Group (“United”) regarding a health plan overpayment recovery practice known as “cross-plan offsetting” has generated concerns for employers with self-insured group health plans. 

The practice involves a claims administrator recouping an overpayment made by one plan (Plan A) to a provider by withholding payment due to that provider from another plan (Plan B) and paying that amount to Plan A.  This practice is more controversial in the out-of-network provider context, because the provider would be able to bill the participant in Plan B for the amount Plan B paid to Plan A.  (If the provider were in-network, the provider would generally be prohibited by its in-network agreement from billing the patient.)

The United case involved two out-of-network healthcare providers who started separate class action lawsuits against United in 2014 and 2015 on behalf of some of their patients whose claim payments from self-insured health plans had been subject to United’s cross-plan offsetting practice.  The Eighth Circuit Court of Appeals (as well as the District Court below it) expressed serious concerns as to whether cross-plan offsetting could ever be permissible under ERISA.  The Court, however, did not rule on that issue, because it held that the plan documentation did not authorize cross-plan offsetting.  Notably, the Department of Labor took an interest in the United Case, as it authored an amicus (“friend of the court”) brief, arguing that the practice of cross-plan offsetting in the out-of-network provider context violated ERISA.

Employers with self-insured plans should determine whether their claims administrator engages in cross-plan off-setting, and if so, analyze whether the practice is permissible under ERISA.  The analysis is complicated and there may not be a clear answer.  At a minimum, if an employer wants to continue to engage in cross-plan offsetting, it should ensure that its plan documentation specifically authorizes it.

Please click here to read our latest LEGALcurrents® alert for more detailed information about the court decision and additional recommendations.