N.J. Insurer Prevails in Payment Recoup Lawsuit

An appeals court has sided with insurer Horizon Blue Cross Blue Shield of New Jersey in a lawsuit involving reimbursement it paid to, then recouped from, 4 surgery centers for spinal manipulation under anesthesia.

The court's August 19 decision reversed an earlier ruling that dismissed the centers' lawsuit for failing to state a claim. While the case was sent back for further hearings, the court didn't find much merit in the claims that were stated, rejecting the centers' arguments that the insurer violated state fraud and racketeering laws, and that the center deserved protection against further recoups and research.

The 4 New Jersey-based surgery centers - Prospect Medical, Montvale Surgical Center, North Jersey Surgery and Northeast Spine and Wellness - administered manipulation under anesthesia to patients insured by Horizon between November 2007 and January 2009. Horizon approved and reimbursed the procedures, even though its benefit plans did not expressly cover it due to its investigational nature in treating musculoskeletal pain.

Upon later review, Horizon recouped these reimbursements on grounds that they'd overpaid. In addition, according to court records, the benefits plans through which the payments were made limited reimbursement to out-of-network providers, which the centers were.

The centers filed suit, claiming inequities in Horizon's changing of determination more than 2 years after services were provided and nearly 2 years after payment was made, without notice and without an opportunity for appeal. The lawsuit sought a return of fees plus interest for the insurer's breach of "good faith and fair dealing."

In its ruling, the appeals court noted that healthcare insurers' benefits to providers are not covered by New Jersey's consumer fraud laws, and that Horizon's actions did not rise to the level of criminal activity. Additionally, it said, the centers did not demonstrate sufficient need for protection against further recoups or their objections to Horizon's legal research of their case.

Robert Murphy