Common fact pattern

Out-of-network health care providers place pre-service VOB calls to insurers to confirm out-of-network benefits. During these calls, providers typically seek to confirm whether payment will be based on the usual, customary and reasonable rate, maximum non-network reimbursement rate, Medicare rate or other allowed amounts. Then, when claims are paid pursuant to applicable plan benefits, a provider may sue, claiming, inter alia, a breach of oral and implied contract based on the VOB calls.

Preparing for summary judgment

With VOB calls playing an increasing role at summary judgment, insurers may take certain steps to bolster their chances of winning summary judgment motions. Case law places importance on the use of phrases such as “will pay” or “would pay” during VOB calls as indicating an offer. See, e.g., Bristol SL Holdings, Inc. v. Cigna Health Life Ins. Co., No. SACV 19-00709 AG (ADSx). To guard against creating implied promises to pay, Customer service representatives (CSRs) should confirm benefits coverage but avoid advising that claims will pay at any specific rate or pursuant to any methodology; instead, they should emphasize that any information provided is for informational purposes only and that actual reimbursement is subject to plan benefits and limitations determined after claim submission.

To increase the chances of success, insurers should also underscore that CSRs lack contracting authority during VOB calls. This can be supported with written policies, job aids/descriptions and guidance demonstrating that CSRs lack contracting authority. Consider also automated disclaimers preceding VOB calls explaining that CSRs are not authorized to enter into contracts and train CSRs to obtain confirmation during the call that the provider representative understood the disclaimer.

Assuming CSRs avoid language denoting a promise to pay, recording VOB calls and maintaining the recordings for at least five years can serve as powerful evidence against a meeting of the minds necessary for oral or implied contract formation. Such recordings will likely carry more weight than a provider representative’s affidavit or even the representative’s contemporaneous notes and documentation. Further, such recordings may be used in pre-litigation discussions or in early litigation strategies (e.g., exchanging with a provider’s counsel early to request dismissal or, where possible, attaching recording transcripts as part of early pleading challenges to educate the court).

Conclusion

Insurers can develop a comprehensive strategy to defend against allegations of an implied contract arising during VOB calls. As VOB calls are central to summary judgment in these cases, insurers should take stock of the importance of clear communication and documentation supporting a lack of intent to enter into any binding agreement. By continued training of CSRs, adhering to best practices, and understanding and communicating the limitations of VOB calls to providers, insurers can navigate these complex disputes more effectively and build a strong record to defend against these claims.