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Recent developments point to upcoming trends for out-of-network pricing cases
Recent cases indicate several characteristics about how out-of-network pricing disputes will proceed in 2023. First, insurers and plans should be mindful of appropriately opposing discovery in actions contesting whether insurers or plans satisfied obligations to pay the usual and customary rate (UCR) or another pricing rate. In litigation involving out-of-network reimbursement, insurers/plans and providers often clash over the issue of how deeply providers can investigate reimbursement methodologies and documents potentially relevant to them, particularly in light of legal privileges or the requirements of the Employee Retirement Income Security Act of 1974 (ERISA).
First, in the coming year, plans should be mindful of preserving the defensive privileges surrounding pricing methodology. Some courts will allow invasive discovery into company policies and procedures for reimbursing out-of-network claims, internal communications between in-house counsel and corporate business teams on these issues and other communications mentioning pricing methodology and data. In this context, plans should be particularly aware of recent cases involving the “fiduciary exception” to the attorney-client privilege. Some of these cases somewhat surprisingly place the burden of proof on the plan/administrator to show that it was not acting in its fiduciary capacity at the time of a given communication, rather than requiring providers to show the exception applies. See, for example, L.D. v. United Behav. Health, No. 20-cv-02254-YGR (JCS), 2022 U.S. Dist. LEXIS 139618, at *54 (N.D. Cal. Aug. 5, 2022).
Second, insurers and plans should anticipate that the outcome of many cases in 2023 will be decided on how much evidence providers gain through discovery and how clear (or unclear) plan language on pricing is. Insurers and plans should also be mindful that, in certain jurisdictions, courts may require ERISA fiduciaries to disclose certain information about pricing methodology merely as a part of denials. And some courts may hold ERISA fiduciaries to a higher level of proof than others in showing that they properly calculated reimbursement. Compare In re WellPoint, Inc. Out-Of-Network “UCR” Rates Litig., 903 F. Supp. 2d 880, 921 (C.D. Cal. 2012) (in which UCR methodology was not required to be disclosed by an ERISA fiduciary) (collecting cases) with Zack v. McLaren Health Advantage, Inc., 340 F. Supp. 3d 648, 662 (E.D. Mich. 2018) (in which “ERISA requires disclosure of pricing methodology [concerning the reasonable and customary amount] … as part of benefit and appeals denials.").
Third, plans and insurers can expect more litigation in 2023, focusing on how UCR should be defined. For example, the Texas Supreme Court recently issued a decision in a pair of cases that will change the landscape in Texas and the Fifth Circuit concerning out-of-network reimbursement: Texas Medicine Resources, L.L.P. v. Molina Healthcare of Texas, Inc., No. 21-0291, 2023 Tex. LEXIS 24 (Tex. Jan. 13, 2023) and United Healthcare Ins. Co. v. ACS Primary Care Physicians Sw., P.A., No. 22-0138, 2023 Tex. LEXIS 24 (Tex. Jan. 13, 2023). In these cases, the Court held that there is no private right of action under Texas emergency care UCR statutes for claims arising prior to January 1, 2020. Plans and insurers can anticipate that parties will cite the Court’s recent opinion as precedent in other cases involving out-of-network reimbursement where the parties will argue about the exact scope of the rulings. More broadly, the decision may cast ripples beyond Texas and the Fifth Circuit because cases in other states will question how to determine whether a private cause of action should be implied from a statute and may likewise interpret similar statutory language on out-of-network reimbursement.
- In 2023, many pricing disputes will center on how to confine discovery in the pricing context and how to define or evaluate the usual and customary rate.
- COVID-19 reimbursement cases continue to evolve and point to general principles for defending provider disputes in 2023.
- Plans and insurers should implement best practices.