BulletProofBlog the blog on crisis communications

In this regular feature, Bulletproof interviews top plaintiffs' attorneys for their perspective on the crises likely to affect businesses in the near future. Today we talk to D. Brian Hufford, partner in the Columbus, Ohio office of the pioneering class action firm Pomerantz Haudek Grossman & Gross LLP. Mr. Hufford has just filed a class action against the Blue Cross Blue Shield Association and 22 BCBS insurers across the country on behalf of providers and professional chiropractic associations in Pennsylvania, New York, and New Jersey.

The suit alleges abusive and illegal post-payment audits and forced repayment - without opportunity for proper appeals - of prior reimbursements. The suit, brought with co-counsel Buttaci & Leardi, further charges that these repayments were frequently obtained by withholding new payments for unrelated services. Mr. Hufford filed a similar case against Aetna.

Is it correct to assume that this case represents a new species of litigation?

D. Brian Hufford: That seems to be a pretty fair assumption, at least on a class-wide level. We certainly never went looking for cases based on health insurers' post-payment review practices. Individuals who were adversely affected approached us, based on our healthcare track record in unrelated cases.

Some practitioners have actually been put out of business as a result of non-recourse, unilateral reviews, but there' s a significant reason why there were few complaints. Medical and other practitioners were informed that they were being investigated, in BCBSA' s case by its National Anti-Fraud Department. So there was confusion and anxiety: Providers subjected to such audits were concerned that they may have unwittingly done something wrong, and no one wants to publicize that they' re being investigated in any event.

But the significant healthcare insurance issue remains the use of fraud detection as a way to recoup money in cases that have absolutely nothing to do with fraud, and that may only be improper retroactive adverse benefit determinations based on flawed insurance policies.

How would you characterize the healthcare industry' s potential exposure in these cases?

D. Brian Hufford: According to its own figures, BCBSA' s National Anti-Fraud Department, recovered nearly $350 million in 2008 alone. We' re certainly not saying that that doesn' t include substantial legitimate fraud recovery. But if the abuses are as widespread as I expect, you can imagine what a serious problem the industry has on its hands. Not just dollar amounts; the integrity of the industry' s anti-fraud mechanism has been compromised.

More and more potential claimants are stepping forward. We' ve been contacted by numerous individuals as a result of our cases against Aetna and now BCBS. It' s a new frontier for healthcare plaintiffs, and insurers can no longer rely on fear to deter legal actions. 

You are also charging RICO violations. Is that actually a substantive legal position or a litigation strategy on your end?

D. Brian Hufford: Both. On the one hand, we' re charging that these insurers violated ERISA because their review process does not provide proper appeal or other protections spelled out by ERISA.

On the other hand, we believe that forced withholding of unrelated benefits is simply illegal. Moreover, the withholdings were made across the board rather than on a case-by-case basis, so that many self-funded plans are directly affected - and we do not believe that money is being returned to those employers. If, as it appears, the insurance companies are just keeping the money they have withheld, without returning it to the self-funded plans that paid the benefits in the first place, it' s theft.  When such a scheme is organized and systemic, RICO is certainly an appropriate legal vehicle.

I want to add a final point relevant to the inclusion of three professional organizations in our suit. They add credibility to our case, of course. But they have also been an important part of the history here. One association met often with senior BCBS managers to discuss fair post-payment review. To no avail; the insurers showed no real inclination to educate insureds about their reimbursement process and criteria.

By being non-responsive, simply claiming that money is owed and then taking it, the insurers did themselves as well as their customers a real disservice.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation' s top crisis communications firm, and a contributing author to Bulletproof Blog.