Compliance November 20, 2024

Owens & Minor Sues Anthem Over Mismanaging Health Plan, Lack of Transparency

The health care and logistics supply chain company alleges that Anthem Blue Cross and Blue Shield refused to provide important health claims data, as well as overpaying certain claims.

Reported by

Owens & Minor Inc., a health care logistics company, filed a complaint against Anthem Blue Cross and Blue Shield on Monday, claiming that the third-party administrator refused to provide necessary claims data and overpaid certain claims on behalf of the plan sponsor, resulting in unnecessary costs.

The case, Owens & Minor Inc. et al v. Anthem Health Plans of Virginia Inc., is yet another example of the increased scrutiny fiduciaries have been facing over their management of health plans—though two separate complaints filed earlier this year were filed against the plan sponsors, not third-party administrators. Under the Consolidated Appropriations Act of 2021, plan sponsors are required to attest that their fees for health care plans are fair and reasonable for the services provided. The CAA also includes regulation about transparency and the removal of gag clauses on data sharing with plan sponsors, among other things.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

According to an earlier lawsuit, filed in U.S. District Court for the Eastern District of Virginia in September 2021, Richmond, Virginia-based Owens & Minor—the plan sponsor and named fiduciary and administrator of the plan—requested that Anthem provide its plan data so that Owens could ensure the insurance company was “faithfully administering the plan’s assets.” Owens hired Anthem in 2017 as its third-party administrator to help administer its self-funded plan and to manage health care claims.

As the plan’s TPA, the lawsuit argues that the plan entrusted Anthem with its plan assets with the level of care and loyalty required under the Employee Retirement Income Security Act.

2-Year Game of ‘Hide the Ball’

According to Monday’s complaint, following Owens’ request for data, Anthem engaged in a nearly two-year game of “hide the ball,” as it first claimed it could not provide the data and then said it would not.

After months of requesting the information, Anthem informed Owens that Anthem would not release the data, because it might expose confidential discounts and payment contracts aligned with each provider, according to an email screenshot included in the legal filing.

Owens then engaged outside counsel to take steps to obtain the data, and in August 2022, Anthem agreed to provide the requested data, subject to the execution of a confidentiality agreement.

“[Anthem’s] actions hindered [Owens’] ability to carry out its own fiduciary duties to the plan, plan participants, and beneficiaries as they relate to monitoring and assessing [Anthem’s] claims management practices and performance of its fiduciary duties,” the complaint states. “In other words, only [Anthem] itself had the capability to determine whether it was meeting ERISA’s standards.”

In December 2023, Owens sued Anthem to obtain access to its plan’s claims data. Owens now has a portion of that data and, according to the latest allegations, an analysis of the data revealed that Anthem used plan assets for its own purposes and used funds to “enrich itself and its affiliated companies and medical providers.”

Anthem is accused of paying more for health care claims than was billed, securing kickbacks from providers, double-paying claims and pocketing rebates belonging to Owens.

Issues With BlueCard Program

In addition, the complaint points out issues with the BlueCard program, a national program that enables members of one Blue Cross and Blue Shield plan to obtain health care services while traveling or living in another BCBS plan’s service area. Owens argued in the lawsuit that the Blue Cross Blue Shield Association devised this program to increase Blue Cross and Blue Shield revenue in part through “hidden fees” that would be retained, distributed among Blue Cross and Blue Shield affiliates, and paid to the association.

Owens alleges the BlueCard program led to inflated costs and a lack of transparency, keeping the plan sponsor in the dark about the true cost structure of the plan.

The current lawsuit is intended to recover its losses and “claw back” Anthem’s “ill-gotten” gains, according to the filing. Owens is represented by Commonwealth Law Group, and representation for Anthem has not yet been named. A spokesperson at Anthem said they will not comment on active litigation. 

With a plan sponsor suing its third-party administrator, this case differs from previous health benefits-related lawsuits filed by participants against plan sponsors, including against Wells Fargo & Co. and Johnson & Johnson.

The Federal Trade Commission has also been focused on issues of pricing and transparency in health care benefits. It conducted an investigation into the big three pharmacy benefit managers, criticizing them for opaque practices and inflating the prices of prescription drugs. The FTC sued Optum Rx (UnitedHealth Group), Caremark (CVS Health) and Express Scripts (Cigna Group) in September.

Compliance November 19, 2024

Federal Court Orders Health Plan to Distribute $12M in Assets to Participants, Providers

The distribution is the result of a Department of Labor investigation into the AEU Holdings LLC Benefit Plan, which was charged with causing $83 million of health claims to be wrongly billed to its participants.

Reported by

The U.S. District Court for the Northern District of Illinois is requiring a health plan in Madison, Tennessee, to distribute $12 million in assets to health plan participants and medical providers.

This distribution arises from an investigation conducted by the Department of Labor, which found that former fiduciaries of the AEU Holdings LLC Employee Benefit Plan—a multiple employer welfare arrangement, or MEWA—caused about $83 million in health claims to be wrongly billed to participants.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

A MEWA is a health and welfare plan that allows multiple employers to pool resources to offer better health insurance options to their employees. Receivership Management Inc., a court-appointed independent fiduciary, currently operates the plan.

In 2017, the DOL’s Office of the Solicitor sued AEU Benefits LLC, AEU Holdings LLC and Black Wolf Consulting Inc. after investigators in the Employee Benefits Security Administration discovered the companies breached their fiduciary duties, leading to the mismanagement and severe underfunding of the MEWA.

According to the DOL, the breaches caused participants in 36 states to be billed approximately $83 million in health claims, with the plan responsible for paying $54 million. To date, more than $17 million has been recovered to fund the unpaid claims.

At its height, the AEU Holdings MEWA covered approximately 14,000 participants and beneficiaries. These participants worked for more than 560 employers across 36 states. Numerous participant complaints had alerted EBSA to the existence of systemic failure by the MEWA to pay medical claims. The EBSA investigation ultimately found that contributions from employers and employees—intended to pay for the health coverage—were pooled and transmitted to offshore Bermuda accounts, established in connection with a purported insurance arrangement.

In November 2017, the DOL obtained a temporary restraining order against the fiduciaries, removing and barring them from serving as fiduciaries or service providers to the individual employer plans that participate in the AEU Holdings LLC Benefit Plan. The Illinois court also ordered two banks to freeze 14 bank accounts that were alleged to have plan assets in them.

Since September 2021, Receivership Management has recovered some funds through separate litigation on behalf of the MEWA. The court previously barred the 16 defendants from serving as fiduciaries or service providers to ERISA-covered plans in the future.

“The final distribution plan approved by the court brings long-awaited financial relief to beneficiaries and medical providers and shows we will take all actions needed to prevent employers, participants and beneficiaries from being bilked out of their healthcare benefits,” said Solicitor of Labor Seema Nanda in a statement.

In March 2023, the court approved the independent fiduciary’s plan to distribute $6.3 million in interim payments to medical providers. The medical providers accepted $5.3 million in interim payments; those who accepted the interim payments have agreed not to pursue additional amounts from plan participants.

The independent fiduciary’s plan for final distribution, which the court officially approved on October 29, will be implemented after a 30-day period during which the court order may be appealed. The plan also requires the independent fiduciary to distribute an additional $9.4 million to medical providers who accepted an interim payment and distribute $2.7 million directly to plan participants whose medical providers refused to accept the interim payment.

According to the DOL, participants can use these amounts toward satisfying unpaid claims for medical providers who did not accept the interim payments. The court will continue to oversee the final distribution process until its completion.

“The egregious violations of the Employee Retirement Income Security Act by AEU Holdings, Black Wolf Consulting and Veritas PEO left plan participants with unpaid claims and jeopardized their access to healthcare, causing great harm,” said Assistant Secretary of Labor for Employee Benefits Security Lisa Gomez in a statement. “The Employee Benefits Security Administration is committed to ensuring plan participants and beneficiaries receive the benefits they have earned.”

Meanwhile, fiduciaries have faced increased scrutiny over the management of their health plans. Under the Consolidated Appropriations Act of 2021, employers are required to audit vendors and their partners and make sure their prices are reasonable, so plan participants are paying a fair market price. Wells Fargo & Co. and Johnson & Johnson are two examples of companies that were sued this year for alleged mismanagement of their health care plans.

«