NEW YORK, May 23, 2013 (GLOBE NEWSWIRE) -- On May 22, 2013, Senior Judge Ronald R. Lagueux of the U.S. District Court for the District of Rhode Island issued a detailed and comprehensive opinion, following a 19-day bench trial, granting a complete victory to Pomerantz Grossman Hufford Dahlstrom & Gross LLP ("Pomerantz") on behalf of its clients, Jay S. Korsen, D.C., and Ian D. Barlow, against Blue Cross Blue Shield of Rhode Island. In June 2009, Blue Cross sued Korsen and Barlow in state court, seeking over $400,000 in damages. After Pomerantz successfully removed the action to federal court, where Judge Lagueux found the fraud claims to be "completely preempted" by the Employee Retirement Income Security Act of 1974 ("ERISA"), the case proceeded to discovery and a bench trial under ERISA.
In suing the providers, Blue Cross had asserted that they fraudulently billed the use of intersegmental traction devices as "mechanical traction," leading to their overpayment of health care benefits on behalf of BCBS insureds over a six-year period. After an extensive trial, the Court emphatically rejected that contention, however, concluding that the services provided by the providers were properly billed as mechanical traction. The Court further rejected any finding of fraudulent intent by the providers, holding that the "persuasive evidence" presented by Pomerantz "completely rebutted" Blue Cross' allegations.
In reaching its decision, the Court concluded that "the equities weigh heavily in favor" of the providers, "both whom did no wrong," adding that they "were excellent witnesses, who were credible and sincere." As for Blue Cross, the Court held that its fraud allegations were "cursory and unsupported," and that its investigation leading up to its repayment demand was "limited and perfunctory." The Court therefore reversed Blue Cross' repayment demand in its entirety, holding that it "can make no recovery in this case," while finding for the providers were entitled to more than $30,000 which Blue Cross had withheld from new claims in an effort to begin recouping the alleged overpayment, plus prejudgment interest in an amount to be determined. Finally, the Court is allowing Pomerantz to move for an award of attorneys' fees arising from its victory, which will be briefed this summer, with a hearing to be held in September 2013.
"In light of the extensive efforts by insurers to recover alleged overpayments from providers, without offering due process protections under ERISA, this decision is extremely important," says D. Brian Hufford, a Senior Partner at Pomerantz. "It sends a strong message to insurers that they cannot violate the law with impunity." Partner Robert J. Axelrod adds that "Pomerantz remains committed to representing the interests of providers and subscribers in the ongoing battle with managed care." The case was tried by Messrs. Hufford and Axelrod, with the assistance of associate Anthony F. Maul.
Pomerantz is pursuing a number of actions against insurance companies on behalf of providers and subscribers, including similar cases against UnitedHealthcare, Aetna, Inc. and a number of BCBS entities to challenge their post-payment audit and repayment demand practices. The Aetna action is currently before the Third Circuit Court of Appeals, where the Department of Labor, the federal agency responsible for administering ERISA, has filed an amicus brief in support of Pomerantz and its legal theories.
Pomerantz continues to investigate these and related actions. To discuss these actions, contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll free, x237.
The Pomerantz firm, with offices in New York, Chicago, San Diego and Florida, is acknowledged as one of the nation's premier plaintiff class action firms, and, in particular, has been an industry leader in health care class actions on behalf of providers and patients. In 2010, Pomerantz negotiated a $350 million dollar settlement with United for misusing the Ingenix database to set "usual, customary and reasonable" ("UCR") rates for out-of-network health services. Pomerantz was also appointed Chair of the Plaintiffs' Executive Committee in a multidistrict litigation pending against Aetna for similar practices. A $120 million dollar settlement in that action has been submitted to the Court for preliminary approval. In designating Pomerantz as Chair, the Court highlighted Pomerantz's significant role in a $249 million settlement of its UCR class action against Health Net in 2008, stating the Court had "similarly appointed Pomerantz to be Plaintiffs` spokesman to the Court in the Health Net litigation because the Court found D. Brian Hufford, Esq. to be the attorney most capable of presenting Plaintiffs` position in a clear and concise manner." In re Aetna UCR Litig., 2009 Dist. LEXIS 66853, *8 n.4 (D.N.J. July 31, 2009). Recently, Mr. Hufford won an important victory before an en banc panel of the Fifth Circuit, which upheld a provider's misrepresentation and promissory estoppel claims against United. See Access Mediquip, L.L.C. v. UnitedHealthcare Ins. Co., 698 F.3d 229 (5th Cir. 2012) (en banc). The U.S. Supreme Court denied United's writ of certiorari in the case, rendering the precedential Fifth Circuit decision final. See www.pomerantzlaw.com.