Federal appeals court gives the go-ahead for a hospital payments case
A federal appeals court Thursday cleared the way for eight South Florida hospitals to pursue a lawsuit against a health insurer over payments for emergency-room care.
A federal appeals court Thursday cleared the way for eight South Florida hospitals to pursue a lawsuit against a health insurer in a dispute about payments for emergency-room care.
A three-judge panel of the 11th U.S. Circuit Court of Appeals overturned a district judge’s summary-judgment ruling in favor of Cigna Health and Life Insurance Co. and said a jury should decide whether the insurer shortchanged the hospitals.
The lawsuit, filed in 2020 by North Shore Medical Center, Palmetto General Hospital, Delray Medical Center, Good Samaritan Medical Center, Palm Beach Gardens Medical Center, St. Mary’s Medical Center, West Boca Medical Center and Coral Gables Hospital, deals with emergency care provided to Cigna customers.
The hospitals in Miami-Dade and Palm Beach counties were not part of Cigna’s contracted network of providers. Under state and federal law, the hospitals were required to provide emergency care to the Cigna customers, but the dispute involves how much Cigna should have paid for the out-of-network care.
A key issue focuses on a state law that requires insurers to pay “usual and customary provider charges for similar services in the community where the services were provided.”
The hospitals contended that Cigna in 2020 paid below-market rates. But Cigna argued the hospitals were only basing that on their own prices — and not on amounts charged by hospitals in the broader Miami-Dade and Palm Beach communities.
U.S. District Judge K. Michael Moore granted summary judgment to Cigna in January 2022, prompting the hospitals to go to the Atlanta-based appeals court. In Thursday’s 10-page decision, the appellate panel expressed skepticism about the insurer’s arguments about how to evaluate rates in the communities.
“Contrary to Cigna’s contention, we think that the plaintiff hospitals’ rates alone could be enough to support a fact-finder’s reasonable determination of the ‘usual and customary’ rates in the Palm Beach/Miami-Dade ‘community.’” said the decision, written by Judge Kevin Newsom and joined by Judges Adalberto Jordan and Ed Carnes. “Cigna insists — and we’ll accept for present purposes — that there are ‘over a dozen other providers of ER services’ in the two-county area. But we can see no reason why, as a matter of law, eight good data points — out of, say, 20, or even 30 — can’t support a reasonable inference about the whole set.”
The decision said that even “if the relevant ‘community’ here extends beyond the eight plaintiff hospitals, their receipts alone are enough to create a genuine factual dispute about what the ‘community’ rates are.”
“If it (Cigna) can show there that most other providers in the ‘community’ charge less than the plaintiff hospitals do, then it may well debunk the hospitals’ estimate,” Newsom wrote. “But unless and until that happens, it remains the case that a reasonable jury could conclude that the eight plaintiff hospitals’ rates reflect the prevailing community rate — and thus that Cigna shortchanged them. The district court was wrong to hold that this conclusion would be beyond the pale.”
An expert witness for the hospitals concluded that a “fair market value” was 75 percent of what the hospitals charged for the emergency services, according to a brief filed in June 2022 by the hospitals’ attorneys. The document said Cigna paid 15 percent, a difference of millions of dollars in potential revenue.
But in an August brief, Cigna said paying 75 percent of the charges would lead to a “windfall” for the hospitals.
“In short, billed charges are make-believe prices that providers manipulate to maximize their revenue, and they bear no connection to either the actual cost of health-care services or to what the provider should reasonably expect to receive,” Cigna’s attorneys wrote.
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