Appeals Court Affirms Ruling in Zuckerman Spaeder Lawsuit Challenging a Major UnitedHealth Billing Practice


The U.S. Eighth Circuit Court of Appeals yesterday upheld a District Court ruling that UnitedHealth Group (UHG), which describes itself as “the nation’s leading health and well-being company,” has unlawfully withheld payments to health care providers. The decision in Peterson vs. UnitedHealth Group Inc. and Riverview Health Institute v. UnitedHealth Group Inc. addresses UHG’s use of cross-plan offsetting, where the company withholds payments to an out-of-network provider in order to offset overpayments it claims to have made to the provider for treatment of different patients enrolled in different plans.

“Cross-plan offsetting is an all-too-common strategy that insurers use to hold onto money that is rightfully owed to doctors and other providers for services they have performed on behalf of insured patients,” said Zuckerman Spaeder partner D. Brian Hufford, lead counsel for the plaintiffs. “This ruling alone won’t eliminate the insurance industry’s abusive repayment demand practices, but it’s an important blow against one that has hurt many of our nation’s health providers and the patients they serve.”

UHG had argued that cross-plan offsetting is allowable based on its interpretation of the documents governing the health plans it administers. However, both the District and Appeals courts scoffed at that claim, with the 8th Circuit ruling that such an interpretation “is not reasonable” and “has virtually no basis in the text of the plan documents.” In his March 2017 decision granting partial summary judgment in the cases, U.S. District Judge Patrick Schiltz said UHG’s interpretation was “inherently unreasonable” and “subject to gross conflicts of interest.” 

Today’s decision also stated that UHG’s argument “would be akin to adopting a rule that anything not forbidden by the plan is permissible. Such an approach would undermine plan participants’ and beneficiaries’ ability to rely on plan documents to know what authority administrators do and do not have. It would also conflict with ERISA’s requirement that ‘[e]very employee benefit plan shall be established and maintained pursuant to a written instrument.’”

On behalf of its medical provider clients, Zuckerman Spaeder sued UHG in 2014, alleging that cross-plan offsetting is illegal under the Employee Retirement Income Security Act (ERISA).  Plaintiffs alleged that UHG wrongfully failed to pay them for providing covered health services to patients enrolled in UHG-administered plans, and that UHG then compounded its misconduct by using the money it saved to repay itself for alleged overpayments that different UHG-administered plans made to plaintiffs. 

“The next step following this decision,” Zuckerman partner Jason Cowart adds, “is to return to the district court where we will seek class certification so that we can pursue a remedy on behalf of all those adversely impacted by United’s conduct.” 

Messrs. Hufford and Cowart were joined by partner Andrew Goldfarb in arguing the case. The attorneys have a similar case pending against Aetna, in New Jersey, as well as another case against UHG in New Jersey which challenges its practices when making repayment demands against providers. 

Led by Mr. Hufford and Mr. Cowart, Zuckerman Spaeder’s health care practice is systematically challenging for-profit insurance companies for abusive practices aimed at both providers and patients. The two attorneys have pioneered unique applications of ERISA to hold the companies accountable for the internal rules and procedures that drive so many decisions affecting patient health and provider reimbursements. 

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Katie Munroe
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