Koenig v. Aetna Life Ins. Co. — Oct. 2015 (Summary)

ERISA

Koenig v. Aetna Life Ins. Co.
No. 4:13-CV-0359 (S.D. Tex. Oct. 29, 2015)

The United States District Court, Southern District of Texas granted a health insurer’s motion for summary judgment in a suit brought against it by a physician-owned hospital asserting violations of the Employee Retirement Income Security Act (“ERISA”). The hospital was an out-of-network provider for the insurer and offered a “prompt pay discount,” through which out-of-network patients could receive a reduction in their coinsurance payment by either paying up front or within a limited time after admission. After several years of processing claims through a subsidiary or a third-party vendor, the health insurer began processing the hospital’s claims in-house. The hospital alleged its claims for healthcare services were “significantly reduced” after the switch, and sued arguing that these substantial underpayments were a violation of ERISA.

As a preliminary matter, the court concluded that the hospital’s prompt pay discount (which closely followed the Office of Inspector General’s Advisory Opinion No. 08-03) did not violate Texas state law. The court indicated that nothing in the law prohibited the hospital from discounting the patient’s bill, and the hospital presented patients with all of the information necessary to acquire properly executed assignments under ERISA. However, the court rejected the hospital’s assertion that the insurer underpaid its claims by inconsistently reimbursing the same or similar services, noting the plans at issue vested the discretionary authority to determine eligibility and construe plan benefits solely with the insurer.