Reproduced with permission from Pension & Benefits Daily, 207 PBD, 10/27/14. Copyright 姝2014 by The Bureau
of National Affairs, Inc. (800-372-1033) http://www.bna.com
View From McDermott: A New Type of ERISA-Based Hold-Up—The Rise of
Out-of-Network Provider Suits Against Self-Funded Health Care Plans
BYMICHAEL T. GRAHAM AND AMY GORDON
Over the past decade, there has been a significant
increase in the number of physicians who have
dropped out of Preferred Provider Organization
(‘‘PPO’’) and Health Maintenance Organization
(‘‘HMO’’) networks and attempted to negotiate their
own financial reimbursement with insurance compa-
nies and self-funded health care plans related to medi-
cal treatment provided to participants whose plan are
governed by the Employee Retirement Income Security
Act of 1974, as amended (‘‘ERISA’’)
1
.
These moves have led to a corresponding increase in
the number of health care benefit suits brought by out-
of-network physicians and treatment centers seeking to
gain through litigation that which they could not get
through direct negotiations with insurers and plan
administrators—higher reimbursement amounts for
health care treatment from ERISA-governed medical
plans.
Many of these suits first centered on the transpar-
ency provided by insurance companies and ERISA
plans in determining the Usual, Customary and Reason-
able benefit rate (‘‘UCR’’) for which out-of-network
physicians would be reimbursed. The physicians ar-
gued that the insurance companies and plan adminis-
trators were hiding the true basis for how they would
determine the objective reimbursement rates for the
physician’s out-of-network services, while the insur-
ance companies and plans argued that the physicians
unreasonably inflated their treatment fees in an effort
to receive increased out-of-network reimbursement.
From these larger theoretical fights, individual physi-
cians and treatment centers have entered the fray—with
the individual physicians or groups looking to recover
for allegedly undervalued UCR determinations on a
participant-by-participant basis.
These relatively new out-of-network provider suits
are now filling the federal district courts and ERISA
plan administrative claim dockets with cookie-cutter
lawsuits seeking to re-write the rules by which out-of-
network treatment is reimbursed. This article will ad-
dress the background of this growing ERISA issue, ana-
1
See 29 U.S.C. § 1001, et seq.
Michael T. Graham (mgraham@mwe.com) is
a partner in the law firm of McDermott Will
& Emery LLP and is based in the firm’s
Chicago office. His practice specializes in
employee benefits litigation and controversy
matters, advising plan administrators and
fiduciaries on proper compliance with ERISA’s
claims and appeals procedures and litigating
benefit matters in state and federal courts
around the country.
Amy Gordon (agordon@mwe.com) is a part-
ner in the law firm of McDermott Will &
Emery LLP and is based in the firm’s Chicago
office. Her practice focuses on welfare ben-
efits compliance; specifically, she advises cli-
ents on issues related to the Health Insurance
Portability and Accountability Act (HIPAA),
the Public Health Service Act, the Affordable
Care Act (ACA), ERISA, and the Code.
COPYRIGHT 姝2014 BY THE BUREAU OF NATIONAL AFFAIRS, INC. ISSN
Pension & Benefi ts Daily ™
