COVID-19 test provider sues plans and TPAs ​​for violation of group health plan’s coverage mandate

Diagnostic Affiliates of NE Hou, LLC v. United Healthcare Servs., 2022 WL 214101 (SD Tex. 2022)

A COVID-19 testing lab claimed that numerous health plans and TPAs ​​violated the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) by failing to cover the lab’s diagnostic tests on a public price of $900 per test. As a background, laws and related agency guidelines require group health plans and insurers to cover COVID-19 diagnostic testing without cost-sharing, prior approval, or other medical management requirements (see our Checkpoint article). If there is no negotiated rate, plans for testing must pay at the cash rate posted by the provider on its public website.

The court allowed the lawsuit, finding that the FFCRA and CARES Act contain an “implicit private right of action” that allows the provider to sue for the required fee. The court further ruled that the provider could request payment of benefits under ERISA on behalf of the plan participants, as it had received benefits from many of the participants who had undergone testing. Finally, the court upheld the provider’s claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), alleging that the plans and TPAs ​​made “a calculated and coordinated effort to delay, deny, or delay recovery.” Reduce”. [the provider] could make for its COVID-19 testing services and make a profit from it.”

EBIA Commentary: Health plans are puzzling under COVID-19 diagnostic testing coverage mandate. If plans cannot reach an agreement with a test provider, they are required to pay the provider’s public cash price. However, it’s uncertain what story there is when the price (here $900 per test) seems unreasonable. In a footnote to its opinion, the court acknowledged the plan’s claim that the price of the tests was too high and noted that its ruling does not rule out a counterclaim disputing the correctness of the pricing. For more information, see EBIA’s Group Health Plan Mandates guide in Section XVI.C (“COVID-19: Mandated Coverage of Diagnostic and Preventive Services”). See also EBIA’s Self-Insured Health Plans manual in Section XIII.C.11 (“Covid-19 Pandemic Coverage Mandates”) and EBIA’s Manual for Consumer-Based Health Care in Section XH (“COVID-19 Testing and Treatment” ).

Contributing Editors: EBIA Staff.

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