Pomerantz Haudek Grossman & Gross LLP Announces That Court Permits Provider ERISA Class Action to Proceed Against Blue Cross Blue Shield Companies for Improper Overpayment Demands and Forced Recoupment

NEW YORK, May 25, 2010 (GLOBE NEWSWIRE) -- Pomerantz Haudek Grossman & Gross LLP (the "Pomerantz Firm") today announced that the United States District Court for the Northern District of Illinois upheld claims filed under the Employee Retirement Income Security Act of 1974 ("ERISA") against 22 leading Blue Cross Blue Shield ("BCBS") insurers across the country. The action was filed on behalf of a putative nationwide class of health care providers, as well as the Pennsylvania Chiropractic Association ("PCA"), the New York Chiropractic Council (the "Council"), the Association of New Jersey Chiropractors ("ANJC"), the Florida Chiropractic Association ("FCA"), and the California Chiropractic Association ("CCA"). The suit challenges the Defendants' abusive practices in using post-payment audits and reviews, and improper repayment demands, to pressure providers to repay substantial sums that have previously properly been paid as health insurance benefits for services provided to BCBS subscribers.

The action alleges that BCBS' post-payment audit and review process violates ERISA. Plaintiffs allege that BCBS' repayment demands are retroactive determinations that particular services are not covered under the terms of the BCBS health care plans, but without proper appeal or other protections otherwise available under ERISA for both self-funded and fully insured health care plans offered through private employers. According to Plaintiffs' counsel D. Brian Hufford of the Pomerantz Firm, "This decision is a critical first step in this litigation, as it recognizes the validity of our underlying claims under ERISA and now allows us to proceed to the real work of the case – to obtain the discovery necessary to prove our contention that the various BCBS entities have improperly taken millions of dollars from providers nationwide."

The Court also upheld association plaintiffs' right to pursue injunctive remedies in a representational capacity on behalf of their members. The Court permitted the individual plaintiffs' claims to go forward even though some had settled with BCBS, noting that these plaintiffs had alleged "that they did so under duress because they were not able to effectively appeal due to defendants' improper actions." 

Although the court dismissed the claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), plaintiffs intend to serve an amended complaint. Co-counsel Vincent Buttaci of Buttaci & Leardi LLC states: "We currently intend to seek leave to replead the RICO allegations. We strongly believe that we have the necessary facts to satisfy the RICO pleading requirements as outlined by the Court."

In another ruling, the Court found that six of the 18 individual plaintiffs had arbitration clauses in their in-network provider agreements, which required them to arbitrate their claims rather than pursue relief through the courts. Similarly, the Court found that that California Chiropractic Association should pursue claims through arbitration, since defendants showed that their standard practice was to use arbitration clauses in California. Significantly, however, the Court concluded that the litigation should not be stayed.

The amount at issue in the lawsuit is substantial. On June 30, 2009, the Blue Cross Blue Shield Association, "a national federation of . . . Blue Cross and Blue Shield companies," announced that its National Anti-Fraud Department had "recovered nearly $350 million as a result of the anti-fraud investigations in 2008." Plaintiffs believe that a significant portion of this "recovery" falls within the improper practices that are being challenged in the lawsuit, and should be repaid to providers. Pomerantz Haudek and Buttaci & Leardi have brought a similar class action challenging improper post-payment audits and repayment demands against Aetna, and are investigating comparable claims against other insurers.

"This is a landmark decision, with widespread implications for the health care industry," says Jin Zhou, D.C. "Providers finally have a means to fight back against insurance companies for making invalid overpayment demands." Dr. Zhou is a national ERISA consultant who, through his website, www.ERISAclaim.com, and consulting services he offers to providers and plan sponsors, has long advocated the use of ERISA to combat improper post-payment audit activities.

The Pomerantz Firm, with offices in New York, Chicago, Washington, D.C., Columbus, Ohio and the San Francisco Bay area, is acknowledged as one of the premier plaintiff class action firms, and, in particular, has been a leader in the industry in health care class actions on behalf of providers and patients. Recently, the Pomerantz Firm was designated to be Chair of the Plaintiffs' Executive Committee in a multidistrict litigation pending against Aetna in the District of New Jersey on behalf of both providers and subscribers, challenging how Aetna determines usual, customary and reasonable ("UCR") rates for out-of-network health care services. In making the appointment, the Court stressed the significant role Pomerantz Haudek had played in a $249 million settlement of its UCR class action against Health Net, stating that the Court had "similarly appointed Pomerantz to be Plaintiffs' spokesman to the Court in the Health Net litigation because the Court found Mr. Hufford to be the attorney most capable of presenting Plaintiffs' position in a clear and concise manner." The Pomerantz Firm has also obtained preliminary approval of a $350 million settlement with United Health Group on similar UCR issues.

Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of victims of fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.

Buttaci & Leardi, based in Princeton, New Jersey, has a dynamic national health care practice, representing licensed health care providers, group practices and other provider-related entities throughout the country. It has extensive experience representing providers in challenging post-payment audits and retroactive recoupments, including those pursued by numerous Blue Cross Blue Shield licensees, and has obtained tremendous success on behalf of its clients.

Counsel for plaintiffs are continuing to investigate these claims, and other related claims that may be added to the litigation. If you have any questions, please contact D. Brian Hufford, Esq. of Pomerantz Haudek Grossman & Gross LLP, by phone (212-661-1100) or email ([email protected]), or Vincent N. Buttaci, Esq., of Buttaci & Leardi, LLC, by phone (609-799-5150) or email ([email protected]).

CONTACT:  Pomerantz Haudek Grossman & Gross LLP           D. Brian Hufford           (888) 476.6529           (888) 4.POMLAW           [email protected]