The Medical Society of the State of New York v. UnitedHealth Group Inc.

Background

The Medical Society of the State of New York, the Society of Office Based Surgery Facilities, and Columbia East Side Surgery, P.C. brought a class action under the Employee Retirement Income Security Act of 1974, or ERISA, against UnitedHealth Group Inc. and the other defendants collectively called “United.” The plaintiffs sought injunctive relief and damages for unpaid benefits involving facility fees for office-based surgery providers.

United processes most health-benefit claims through an automatic adjudication system. United maintained that it generally followed Medicare billing practices and treated office-based surgery providers as offices rather than facilities unless plan language clearly provided otherwise. United denied Columbia’s facility-fee claims in notices stating that office-based surgery providers were not facilities under New York law. The plaintiffs disputed whether United’s system properly applied the governing plan terms and whether Columbia’s billing forms and codes were improper.

Motion to Strike the Expert Report

United moved to strike the report of Michael Miscoe, a medical-billing expert retained by the plaintiffs. Miscoe addressed whether an accredited office-based surgical facility could report facility expenses on a UB-04 form, whether Columbia’s claims accurately identified the facility where services were provided, and whether physicians could use facility-based place-of-service codes for procedures performed at an office-based surgical facility.

The court applied Federal Rule of Evidence 702 and the expert-testimony standards from Daubert. It found that Miscoe had sufficient qualifications based on his experience and certifications in medical coding, publications, and prior expert testimony. The court also found that his report was not so speculative or unreliable that it had to be excluded. United’s criticisms of the sources Miscoe considered and of some of his conclusions went to the weight of the testimony rather than its admissibility. The court therefore denied United’s motion to strike.

Summary Judgment on Injunctive Claims

United sought summary judgment on all claims. Regarding the plaintiffs’ claims for injunctive relief, United argued that it did not have a uniform refusal-to-pay policy, but instead used default interpretations and standard procedures. United asserted that office-based surgery providers did not qualify as facilities because they were not certified ambulatory surgical centers under Article 28 of New York law.

The court held that genuine disputes of material fact prevented summary judgment for United. One dispute concerned whether United had actually considered the relevant plan language, particularly because many plans were onboarded before New York’s office-based surgery law was enacted in 2007. Another concerned whether the denial notices complied with ERISA’s requirement that benefit denials explain the basis for the decision and identify the specific plan provisions relied on. The court denied summary judgment on the injunctive claims.

Summary Judgment on Benefits Claims

United sought summary judgment on 17 of Columbia’s benefits claims, identified as the claims for Patients E, J, N, V, W, X, Z, AB, AF, AN, AO, AQ, AV, BA, BC, and BJ. United argued that anti-assignment clauses in the relevant plans prevented Columbia from bringing those claims on its patients’ behalf. Because the plaintiffs conceded that the enforceability issue had already been decided and did not dispute the existence of the clauses, the court granted summary judgment on those claims and dismissed them.

United also argued that Columbia used claim forms and billing codes that misrepresented it as a facility, and that this independently justified denying most of the remaining benefits claims. The plaintiffs disputed that their coding was a misrepresentation. The court found a genuine factual dispute about whether an industry standard excluded office-based surgery providers from the term “facility” and whether Columbia’s bills were inaccurate under the plans. The court therefore denied summary judgment on the misrepresentation theory.

Finally, United argued that its interpretations of the plans were reasonable and should receive deferential abuse-of-discretion review. The court found a factual dispute about whether United had interpreted the plan terms at the time it denied Columbia’s claims. That dispute also affected whether the plan terms were part of the administrative record and whether the denials could be reviewed deferentially or instead required a different standard. The court denied summary judgment on this ground as well.

Disposition

Judge J. Paul Oetken ordered that United’s motion to strike was DENIED and that United’s motion for summary judgment was GRANTED in part and DENIED in part. The court directed the parties to file a status letter addressing the case and possible mediation before a bench trial was scheduled.