Pennsylvania Chiropratic Association v. BCBS Association, et al., Case Number 09 C 5619
United States District Court, Northern District of Illinois
On January 21, 2011, the United States District Court for the Northern District of Illinois dismissed the counterclaims of 23 Blue Cross/Blue Shield entities seeking recoupment of "overpayments" allegedly made to the plaintiff chiropractors. BCBS sought reimbursement under state law theories of unjust enrichment and breach of contract. The District Court noted that ERISA supersedes state law relating to "any employee benefit plan," if it has any connection to the plan, including if the state law provides an alternate method of enforcement. Because BCBS did not specify the contracts under which it was suing and it was likely that some or all of them fell under ERISA, the Court dismissed the complaint but allowed BCBS to re-file an amended complaint by February 11, 2011. The amended complaint was required to specifically reference the contracts at issue so that it might be determined whether ERISA applies and pre-empts a particular claim.
The holding is significant because ERISA claims for reimbursement fall under ERISA section 502, which is equitable in nature and requires an administrative process. More importantly, it also severely limits a fiduciary's right to restitution. Traditionally, insurers sought recoupment of billions of dollars in health care costs already paid from health care providers, citing factors such as improper coding or necessity as the basis for recoupment. The determination that all such claims made pursuant to an employer-sponsored health insurance program are pre-empted by ERISA severely limits insurer's abilities to recoup payments made to providers.