UnitedHealth Settles Out-Of-Network Reimbursement Class Action for $9.5M

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According to court documents filed Thursday in California federal court, United HealthCare has agreed to pay $9.5 million to settle a class action lawsuit alleging it did not reimburse out-of-network ambulatory surgery centers at a reasonable and customary rate, a violation of ERISA.

A “reasonable and customary rate” is determined based on the prevailing fees charged by other healthcare providers in the same geographic area for similar medical services, the UnitedHealth class action lawsuit explains. UnitedHealth allegedly relies on its subsidiary Ingenix (now called Optum) to calculate reimbursement based on a “Highest In-Network Rate Methodology,” under which UnitedHealth pays out-of-network ambulatory surgical centers based on multiple in-network contract rates.

According to the class action lawsuit, the Highest In-Network Rate Methodology does not result in a reasonable and customary reimbursement rate. Further, the plaintiffs allege UnitedHealth continued to use this methodology even though alternatives for calculating a fair reimbursement rate for ambulatory surgical centers were available.

The UnitedHealth reimbursement class action lawsuit was initially filed in July 2009. UnitedHealth reportedly stopped using the Highest In-Network Rate Methodology to reimburse out-of-network, outpatient surgery claims in 2012.

Class Members of the proposed class action settlement include: “all Ambulatory Surgery Centers located in the State of California who provided Covered Out-Of-Network Services or Supplies to any Plan Member during the period from July 27, 2005 through the Final Order and Judgment Date, and who submitted a claim for reimbursement of those Covered Out-Of-Network Services or Supplies that was reimbursed at least in part by the United Defendants using the HZ Methodology, as indicated by the HZ Remark Code.”

On Thursday, the plaintiffs asked the court to grant preliminary approval to the UnitedHealth class action settlement and conditionally certify the Settlement Class. An estimated 250 ambulatory surgery centers may be eligible to participate in the settlement.

“The time and expense of continued litigation could potentially outweigh any additional recovery obtained through successful litigation,” the plaintiffs said in their motion seeking preliminary approval of the UnitedHealth class action settlement. “On the other hand, the settlement provides for the immediate recovery for the class, with each member of the class receiving substantial compensation. Therefore, this factor weighs in favor of approval.”

The plaintiffs are represented by Daron L. Tooch and Eric D. Chan of Hooper Lundy & Bookman PC.

The UnitedHealth Insurance Reimbursement Class Action Lawsuit is Downey Surgical Clinic Inc., et al. v. OmtumInsight Inc., et al., Case No 2:09-cv-05457, in the U.S. District Court for the Central District of California.