Insurance
Home›Insurance›Liability Insurance›Appeals court throws out provider suit over Blue Cross…
Appeals court throws out provider suit over Blue Cross reimbursement promises
The Sixth Circuit said ERISA preempts state-law claims when a provider's case depends on the employer plan’s terms, even if the dispute starts with an administrator’s phone call.
A federal appeals court has dismissed an out-of-network provider lawsuit accusing Blue Cross Blue Shield of Michigan of underpaying reimbursement after oral promises about payment rates, ruling that ERISA blocks the state-law claims, according to Insurance Business.
The case involved La-Z-Boy’s employee health plan, which is governed by the Employee Retirement Income Security Act of 1974. The providers called Blue Cross before treating a patient referred to as “Patient AA” to confirm reimbursement based on a “usual, customary, and reasonable” rate, then billed $342,296 after treatment.
Blue Cross paid $1,598.40, and the providers argued the payment was based on Medicare rather than the UCR rate they expected. They sued for negligent misrepresentation and promissory estoppel seeking reimbursement at the UCR rate, but the trial court dismissed the case and the Sixth Circuit affirmed.
The appeals court focused on preemption, saying ERISA bars state-law claims that relate to an employer health plan and that claims built on an administrator’s oral assurances about plan coverage or reimbursement are preempted where the dispute turns on plan terms. The court said the holding was narrow, leaving open whether ERISA preempts provider claims based on separate rate agreements, and a concurring opinion called the controlling 1991 precedent an outlier.