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COVID-19 Testing Provider Sues Plans and TPAs for Violating Group Health Plan Coverage Mandate

EBIA  

EBIA  

Diagnostic Affiliates of N.E. Hou, LLC v. United Healthcare Servs., 2022 WL 214101 (S.D. Tex. 2022)

A COVID-19 testing laboratory alleged 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 laboratory’s diagnostic tests at a publicly disclosed price of $900 per test. As background, the laws and related agency guidance require group health plans and insurers to cover COVID-19 diagnostic testing without cost-sharing, prior authorization, or other medical management requirements (see our Checkpoint article). In the absence of a negotiated rate, plans must pay for the testing at the cash rate posted by the provider on its public website.

The court allowed the lawsuit to proceed, finding that the FFCRA and CARES Act include an “implied private right of action” that allows the provider to sue for the required reimbursement. The court further determined that the provider could seek payment of benefits under ERISA on behalf of plan participants because it had obtained assignments of benefits from many of the participants who had received testing. Finally, the court allowed the provider’s claims under the Racketeer Influenced and Corrupt Organizations Act (RICO) alleging that the plans and TPAs had engaged in a “calculated and coordinated effort to delay, deny, or reduce the recovery [the provider] could make for its COVID-19 testing services and to profit by doing so.”

EBIA Comment: Health plans face a conundrum under the COVID-19 diagnostic testing coverage mandate. If plans are unable to reach agreement with a testing provider, they are obligated to pay the provider’s public cash price. It is uncertain, however, what recourse is available when the price (here, $900 per test) seems unreasonable. In a footnote to its opinion, the court acknowledged the plan’s assertion that the price of the testing was too high and noted that its ruling did not foreclose a counterclaim challenging the propriety of the pricing. For more information, see EBIA’s Group Health Plan Mandates manual at Section XVI.C (“COVID-19: Mandated Coverage of Diagnostic and Preventive Services”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.C.11 (“Coverage Mandates Relating to the COVID-19 Pandemic”) and EBIA’s Consumer-Driven Health Care manual at Section X.H (“COVID-19 Testing and Treatment”).

Contributing Editors: EBIA Staff.

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