Labs In Court

Out-of-Network Drug Testing Labs Can Sue UnitedHealthcare for Inadequate Reimbursement

 Case: A group of out of network labs and substance abuse clinics sued UnitedHealthcare for reimbursing them only 19.5% of covered charges on 1,306 insureds that had already met their annual out-of-pocket maximum even though plan documents and federal law required payment at 100%. UnitedHealthcare contended the labs’ claims weren’t legally valid and asked the California federal court to dismiss them without a trial. The court rendered a mixed decision, upholding some of the claims while tossing others.

 Significance: Claims about the terms of the actual health plans under the federal Employee Retirement Income Security Act (ERISA) failed because they were based on state insurance laws which ERISA preempts, i.e., supersedes. However, the court went on to find that the labs had valid non-ERISA breach of contract claims and would get the chance to prove them at trial. The breach of good faith and fair dealing claims also ended up on the cutting room floor because they were largely duplicative of the contract claims, the court reasoned [In re Out of Network Substance Use Disorder Claims Against UnitedHealthcare, 2020 U.S. Dist. LEXIS 153773].

 

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