`
`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF OKLAHOMA
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`OU MEDICINE, INC, d/b/a OU MEDICAL
`CENTER, an Oklahoma non-profit corporation,
`
`Plaintiff,
`
`v.
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`W.H. BRAUM GROUP HEALTH BENEFIT
`PLAN, a welfare benefit plan; and W.H.
`BRAUM, INC., an Oklahoma corporation, as
`plan sponsor,
`Defendants.
`
`CIV-21-67-D
`Case No: ____________________
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`COMPLAINT
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`Plaintiff, OU Medicine, Inc., d/b/a OU Medical Center (“OUMC”), for its
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`claims against Defendants, W.H Braum Group Health Benefit Plan (“Plan”), and
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`W.H. Braum, Inc. (“Braum”), sponsor of the Plan, alleges and states as follows:
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`Parties, Jurisdiction and Venue
`OUMC is a non-profit Oklahoma corporation that operates OU Medical
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`1.
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`Center located in Oklahoma City, Oklahoma.
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`2.
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`The Plan is a welfare benefit plan pursuant to the Employee Retirement
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`Income Security Act of 1974, as amended, 29 U.S.C. § 1001 et seq.
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`3.
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`Braum is an Oklahoma corporation with its principal place of business
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`located in Oklahoma. Braum is the sponsor of the Plan.
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`4.
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`This Court has subject matter jurisdiction over the claims alleged herein
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`pursuant to 29 U.S.C. § 1132(a)(1)(B) (benefits due under an ERISA plan); 29 U.S.C.
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`1
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 2 of 33
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`§ 1132 (a)(3)(B) (equitable relief); 29 U.S.C. §§ 1332(e)(1) and (f) (exclusive
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`jurisdiction in federal district court), and pursuant to 28 U.S.C. § 1331 (federal
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`question jurisdiction).
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`5.
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`Venue is proper is the United States District Court for the Western
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`District of Oklahoma pursuant to 29 U.S.C. § 1132(e)(2) and 28 U.S.C. § 1391
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`because the events, transactions and occurrences relevant to OUMC’s claims occurred
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`within the Western District of Oklahoma, and Defendants maintain facilities and/or
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`engage in business in the Western District of Oklahoma.
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`Background Facts
`At all times relevant to OUMC’s claims herein, Joshua Hale was an
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`6.
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`employee of Braum and a participant in the Plan and his wife, Leah Hale, was a
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`beneficiary of the Plan.
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`7.
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`On or about August 3, 2018, Leah Hale was transferred, on an
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`emergency basis, to OUMC from St. Anthony’s Hospital while in pre-term labor due
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`to her gestational stage and the fact that she was carrying twins. She gave birth to
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`twin boys, Ln. H. and Lg. H., prematurely (25 weeks gestation) with birth weights of
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`1 lb. 15 oz. each. Leah Hale was transferred to OUMC because it is the only hospital
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`in this region of the State of Oklahoma capable of providing the level of services
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`required by Ln. H. and Lg. H. upon their births.
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`8.
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`Section 3.01 of the Plan provides that it “is structured to provide
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`Participants with access to high quality care at an affordable cost.” It also provides
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`that “the Plan provides open access to any Facility or Hospital of the Participant’s
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`2
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 3 of 33
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`choosing.” See, W.H. Braum, Inc. Group Health Benefit Plan Effective January 1,
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`2018 at p. 5, attached hereto as Exhibit 1. However, unlike most employee benefit
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`plans, the Plan offers employee health plan benefits based on alleged “reference-based
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`pricing” and does not have a contracted network of providers, so there is no “in
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`network” facility option available to a participant or beneficiary of the Plan, leaving
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`the participant or beneficiary potentially liable for any charges not paid by the Plan.
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`In a letter dated July 2, 2018, prior to the time of Leah Hale’s transfer, OUMC
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`notified Braum, as the sponsor of the Plan, that OUMC and its employed physicians
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`do not recognize or participate in health plans without a written agreement signed by
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`an authorized OUMC representative. The letter also notified Braum that OUMC
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`would not recognize or accept any language on claim forms or beneficiary designation
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`cards that purported to condition OUMC’s acceptance of the beneficiary’s assignment
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`of benefits upon OUMC’s acceptance of plan benefits as payment in full for OUMC’s
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`services. See Letter dated July 2, 2018 from Lance Torcom of OUMC to Tomi
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`Osborne of Braum attached hereto as Exhibit 2.
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`9.
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`The Plan expressly provides in Section 5.03(2) that “[i]f a Dependent
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`Child is born after the date the Employee’s coverage for himself or herself under the
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`Plan becomes effective, coverage shall take effect from and after the moment of birth,
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`to the extent of the benefits provided herein, and any limitations of this Plan with
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`respect to congenital defects shall not apply to such Child.” Plan, Exhibit 1 at p. 29.
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`10. At the time of her admission, Leah Hale was a beneficiary of the Plan.
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`As part of the Conditions of Admission and Consent for Outpatient Care (“Consent
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`3
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 4 of 33
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`Form”) she agreed to “irrevocably appoint [OUMC] as my authorized representative
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`to pursue any claims, penalties, and administrative and/or legal remedies on my behalf
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`for collection against any responsible payer, employer-sponsored medical benefit
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`plans, third party liability carrier or, any other responsible third party (“Responsible
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`Party”) for any and all benefits due me for the payment of charges associated with my
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`treatment.” See Consent Form attached hereto as Exhibit 3, ¶ 7. Paragraph 7 of the
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`Consent Form also provides that the Hales agree to take all actions necessary to assist
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`OUMC in collecting payment from the Braum Plan “including allowing [OUMC] to
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`bring suit against [the Braum Plan] in my name.”
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`11. At birth, the APG scores of Ln. and Lg. H. at 1 minute were
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`respectively 2 and 1. Each child required immediate intubation and positive pressure
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`ventilation.
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`12. Due to their extremely low birth weights, Ln. and Lg. H. were
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`immediately placed in OUMC’s Level IV NICU, which is the only Level IV NICU in
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`the Oklahoma City area. The only other Level IV NICU in Oklahoma is located at St.
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`Francis Hospital in Tulsa, Oklahoma, and OUMC was able to provide a higher level
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`of needed services to Ln. and Lg. H. such as Extracorporeal Membrane Oxygenation
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`(EMCO) services and the services necessary to care for cases involving extreme
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`prematurity. Accordingly, OUMC was uniquely positioned to provide the care
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`necessary to Ln. and Lg. H. following their premature births, and OUMC provided
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`services crucial to their survival.
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`4
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 5 of 33
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`13. During their over three-month hospitalization at OUMC both children
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`required Total Parenteral Nutrition multiple times. Lg. H. also suffered from
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`Necrotizing Enterocolitis, and from Osteopenia due to his prematurity, requiring
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`endocrine management care.
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`14. During their hospitalization at OUMC, both Ln. and Lg. H. experienced
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`repeated bouts of feeding intolerance and apneic episodes. Due to their failure to
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`maintain weight, and concern regarding their continued development, both children
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`required multiple formula changes to maintain their caloric intake, and the
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`development of specialized plans to monitor their weight closely upon discharge.
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`15.
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`Ln. and Lg. H. received necessary medical care and treatment from
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`OUMC from August 3, 2018 through November 16, 2018.
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`16.
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`Ln. H.’s hospitalization resulted in medical bills through November 16,
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`2018 for necessary medical care and treatment rendered by OUMC in the amount of
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`$2,131,240.97, and Lg. H.’s hospitalization also resulted in medical bills through
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`November 16, 2018 for necessary medical care and treatment rendered by OUMC in
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`the amount of $1,997,015.09.
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`17.
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`Throughout the hospitalization of Ln. and Lg. H., OUMC provided
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`periodic updates to the Plan through its third-party administrator, HealthSCOPE
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`Benefits, Inc. (“HealthSCOPE”), regarding the level of care being provided, and
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`HealthSCOPE did not dispute the existence of coverage for the care being provided,
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`or dispute the level of care being provided by OUMC.
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`5
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 6 of 33
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`18. OUMC timely submitted its medical bills for the necessary medical care
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`and treatment rendered to Ln. and Lg. H. for payment to the Plan through
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`HealthSCOPE, the third-party administrator of the Plan. In response, HealthSCOPE
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`reviewed the bills, and initially indicated that it was having the bills audited by an
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`independent review company (Zelis), and would negotiate with OUMC regarding a
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`reasonable reimbursement for the services provided. Then, without explanation,
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`HealthSCOPE issued Explanations of Benefits (“EOB”) determining that only
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`$300,901.71 of the medical care and treatment provided to Ln. H., and only
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`$301,046.96 of the medical care and treatment provided to Lg. H. were compensable
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`under the terms of the Plan. This amounts to payment of only 14.12% of the necessary
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`medical care and treatment rendered to Ln. H. and 15.07% of the necessary medical
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`care and treatment rendered to Lg H. See HealthSCOPE EOBs attached hereto as
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`Exhibit 4. The EOBs state that the children’s father, Joshua Hale, is responsible for
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`payment of the remaining over $3.5 million owed to OUMC for the necessary medical
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`care and treatment provided.
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`19.
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`The EOBs constitute an “Adverse Benefit Determination” under the
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`terms of the Plan. See Exhibit 1 at p. 13. The HealthSCOPE Adverse Benefit
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`Determination is in violation of the express terms of the Plan. Section 10.01C of the
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`Plan requires HealthSCOPE to, among other things: (i) reference the specific
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`portion(s) of the Plan upon which the denial is based; (ii) provide the specific
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`reason(s) for denial; (iii) provide the identity of any medical or vocational experts
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`consulted in connection with the claim; and (iv) provide any rule, guideline, protocol
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`6
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 7 of 33
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`or similar criterion relied upon in making the determination. See Exhibit 1, Section
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`10.01C at p. 55.
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`20.
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`Pursuant to the provisions of the Plan, OUMC timely appealed
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`HealthSCOPE’s coverage determinations on September 19, 2019. See OUMC First
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`Appeal attached hereto as Exhibit 5. In the appeal, OUMC noted that the EOBs fail to
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`provide any explanation of why only a small percentage of OUMC’s charges were
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`paid, and OUMC expressly requested a copy of all documentation reviewed or relied
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`upon in making the determinations set forth in the EOBs, including but not limited to
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`any applicable benefit plan provisions, rules, guidelines, protocols, and the scientific
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`or clinical basis used in the determination made in the EOBs. See Exhibit 5.
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`21. As part of the “Full and Fair Review of All Claims” expressly provided
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`in the Plan, in connection with its appeal of the Adverse Benefit Determination,
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`OUMC was entitled to, among other things: (i) an opportunity to review the claim
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`file; (ii) a review that does not afford deference to the previous Adverse Benefit
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`Determination and that is conducted by an appropriate named fiduciary of the Plan,
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`who shall be neither the individual who made the Adverse Benefit Determination that
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`is the subject of the appeal, nor the subordinate of such individual; (iii) the
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`identification of any medical or vocational experts consulted in connection with the
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`claim, even if the Plan did not rely upon their advice; and (iv) reasonable access to,
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`and copies of, all documents, records, and other information relevant to the claim in
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`the possession of the Plan Administrator (Braum) or Third Party Administrator
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`(HealthSCOPE). See Exhibit 1, Section 10.02A at pp. 55-56 (emphasis added).
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`7
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 8 of 33
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`22.
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`In a letter dated November 7, 2019, the Third Party Administrator,
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`HealthSCOPE, denied OUMC’s First Appeal, finding that the claim was processed in
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`accordance with the Plan’s provisions, and that the claim would remain as previously
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`processed. See Letter dated November 7, 2019 from HealthSCOPE attached hereto as
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`Exhibit 6 (excluding the copy of the Plan which is attached hereto as Exhibit 1).
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`23.
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`The only explanation provided by HealthSCOPE of the decision to deny
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`OUMC’s first appeal is that “[t]he Plan reimburses facility claims at the Reasonable
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`and Allowable Amount as defined in the plan document.” The letter from
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`HealthSCOPE included none of the documentation requested by OUMC as part of the
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`First Appeal other than a copy of the Plan, and provided no information regarding the
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`calculation of the Reasonable and Allowable Amount. It did not include the
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`documentation reviewed or relied upon in making the determination, or the rules,
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`guidelines, protocols, or scientific or clinical basis used in making the determination.
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`See Exhibit 6.
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`24. HealthSCOPE’s determination of OUMC’s First Appeal is in violation
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`of the “Full and Fair Review of All Claims” guaranteed by the Plan in Section
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`10.02A. That provision specifically requires that a full and fair review of a claim and
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`Adverse Benefit Determination be made without deference to the previous Adverse
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`Benefit Determination, and that it be made “by an appropriate named fiduciary of the
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`Plan” that was not involved in the Adverse Benefit Determination that is the subject
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`of the appeal. See Exhibit 1, Section 10.02A, pp. 55-56. Despite this Plan provision,
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`HealthSCOPE, the same entity that made the Adverse Benefit Determination, also
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`8
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 9 of 33
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`determined OUMC’s First Appeal, denying OUMC the independent review expressly
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`guaranteed under the Plan.
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`25. More importantly, the determination of OUMC’s First Appeal was not
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`made “by an appropriate named fiduciary of the Plan” as guaranteed by the Plan. In
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`fact, Section 10.01 of the Plan states that “the Third Party Administrator
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`[HealthSCOPE] is not a fiduciary of the Plan and does not have the authority to
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`make decisions involving the use of discretion.” Exhibit 1, Section 10.01 at p. 52.
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`Accordingly, HealthSCOPE is not an appropriate named fiduciary of the Plan, and
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`could not provide a “Full and Fair Review” of OUMC’s First Appeal.
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`26. HealthSCOPE’s denial of OUMC’s First Appeal under the Plan also
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`violated the “Full and Fair” review process in Section 10.02A of the Plan in that it
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`failed to: (i) provide OUMC with an opportunity to review the claim file; (ii) provide
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`the identity of any medical or vocational experts consulted in connection with the
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`claim, even if the Plan did not rely upon their advice; or (iii) provide OUMC with
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`reasonable access to, and copies of, all documents, records, and other information
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`relevant to the claim in the possession of the Plan Administrator (Braum) or Third
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`Party Administrator (HealthSCOPE). See Exhibit 1, Section 10.02A at pp. 55-56.
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`27.
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`The November 7, 2019 letter from HealthSCOPE also violated Section
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`10.01D of the Plan in that it failed to, among other things, provide a specific reason or
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`reasons for the denial of the claims; identify whether any medical or vocational
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`experts were consulted in connection with the claims; include a statement that OUMC
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`was entitled to receive, upon request and free of charge, reasonable access to, and
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`9
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 10 of 33
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`copies of, all documents, records, and other information relevant to the claims; or
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`state whether any internal rule, guideline, protocol, or other similar criterion was
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`relied upon in making the adverse determination. See Exhibit 1, Section 10.02D at p.
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`58.
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`28. By letter dated January 9, 2020, as supplemented by its letter of January
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`14, 2020, OUMC instituted a Second Appeal of its claims for benefits directly to
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`Braum as Plan Administrator pursuant to the procedure at pp. 58-59 of the Plan. See
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`Letters dated January 9 and 14, 2020 to Plan Administrator attached hereto as
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`Exhibits 7 and 8. In addition to providing additional information substantiating the
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`medical necessity of the medical services provided, OUMC pointed out that the
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`reason given by HealthSCOPE for the denial of OUMC’s First Appeal clearly
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`required Braum, as Plan Administrator, to make the determination of OUMC’s appeal
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`and that HealthSCOPE should not have been involved in the determination of
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`OUMC’s appeal because it “is not a fiduciary of the Plan and does not have the
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`authority to make decisions involving the use of discretion.” See Exhibit 1, Section
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`10.01, p. 52.
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`29. HealthSCOPE’s determination of OUMCs First Appeal specifically
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`relies on the definition of “Reasonable and Allowable Amount” under the Plan. See
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`Exhibit 1 at pp. 25-26. Apart from the fact that the definition of “Reasonable and
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`Allowable Amount” includes a provision for a “negotiated amount established by a
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`discounted or negotiated agreement” (which is specifically what OUMC asked the
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`Plan and Braum to do in this instance), the Plan was expressly intended to provide
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`10
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 11 of 33
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`flexibility in situations like these. In fact, the definition of Reasonable and Allowable
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`Amount used in the Plan states that “[d]etermination of the reasonable and customary
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`charge will take into consideration the nature and severity of the condition being
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`treated, medical complications, or unusual circumstances that require more time,
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`skill, or experience, and the cost and quality data for that provider.” See Plan,
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`Exhibit 1, at p. 25-26 (emphasis added). Moreover, the Plan’s definition of
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`“Reasonable and Allowable Amount” goes on to make clear that Braum, as Plan
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`Administrator can determine the Reasonable and Allowable Amount, including
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`establishing the negotiated terms of a Provider agreement as the Reasonable and
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`Allowable Amount even if such negotiated terms do not satisfy the lesser of tests
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`described above.” Id. at p. 26 (bold emphasis added). This language was included in
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`the Plan specifically to address situations like the one presented by OUMC’s claims
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`herein.
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`30. OUMC is an emergency care provider that is obligated under both state
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`and federal law to treat all patients who present themselves on an emergency basis.
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`Thus, OUMC cannot simply refuse to do business with Braum employees and
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`beneficiaries such as Leah Hale, and Ln. and Lg. H., or with the Plan. OUMC was
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`and is required to treat patients transferred to it on an emergency basis.
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`31.
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`The maternity care provided to Leah Hale, and the medical services
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`provided to Ln. and Lg. H. resulting from their premature births, were provided on an
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`emergency basis, and were critically necessary for their healthy survival. In fact, due
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`11
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 12 of 33
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`to the medical services provided by OUMC, Ln. and Lg. H. are happy and healthy
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`infants today.
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`32.
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`In its Supplemental Letter dated January 14, 2020, OUMC pointed out
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`that, in 2018, the Plan was allegedly based on “reference-based pricing,” without a
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`contracted network of providers. OUMC and its employee physicians refused to
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`recognize or participate in health plans without a written agreement signed by
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`authorized hospital representatives. Moreover, HealthSCOPE and Braum treated the
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`Hale claims in a manner inconsistent with their treatment of claims for other Plan
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`participants provided by OUMC in 2018. With respect to OUMC’s claims for medical
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`services provided to other Plan participants, HealthSCOPE and Braum did not insist
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`on the application of the Reasonable and Allowable Amount in the same manner the
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`Plan is attempting to do to the claims at issue in this litigation. Rather, HealthSCOPE
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`and Braum negotiated with OUMC to arrive at a settlement amount for the medical
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`services provided. As part of its appeal of the services provided to the Hales, OUMC
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`provided letters memorializing the settlement of these other benefits claims, and
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`evidence that the resolution of those claims was based on a form provided by
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`HealthSCOPE, reflecting that the Plan regularly engaged in such settlement
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`negotiations regarding amounts to be paid for services provided by non-contracted
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`providers and facilities.
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`33. OUMC reasonably expected that HealthSCOPE and Braum would act in
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`a manner consistent with their prior course of dealing with OUMC regarding the
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`settlement of the amount to be paid for the medical services provided to Ln. and Lg.
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`12
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 13 of 33
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`H. Given the inconsistent treatment of the benefits determinations as to Ln. and Lg.
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`H., and for the other reasons alleged herein, the actions of HealthSCOPE and Braum
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`were arbitrary and capricious, and were motivated by a conflict of interest on the part
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`of Braum which was responsible for the payment of any settlement reached.
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`HealthSCOPE allowed this fact to affect its handling of the benefits determinations
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`and its involvement in the appeals.
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`34.
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`The Plan expressly provides for the independent review of OUMC’s
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`Second Appeal by Braum as Plan Sponsor, and that the Plan will notify OUMC of its
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`Benefit Determination on review within a reasonable period of time, but not later than
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`30 days after receipt of the Second Appeal.
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`35. Despite this provision, Braum failed to timely notify OUMC of its
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`Benefit Determination. As a result, OUMC wrote and emailed Tomi Osborne,
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`Benefits Manager for Braum, to see if it intended to respond to OUMC’s Second
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`Appeal, and to see if there was some way to resolve OUMC’s claims short of
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`litigation. See Letter dated March 27, 2020 to Tomi Osborne attached hereto as
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`Exhibit 9 (without exhibits that are already attached as exhibits hereto) and March 27
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`email to Tomi Osborne attached hereto as Exhibit 10. In response, Ms. Osborne
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`emailed that Braum was interested in discussing the claims with OUMC, and
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`HealthSCOPE confirmed that it would participate, and the parties were set to discuss
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`the claims on Tuesday, April 7, 2020, beginning at 2 p.m. See Email exchanges in
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`Exhibit 10.
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`13
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 14 of 33
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`36. OUMC’s counsel then received an email from Todd Neaves of Plexus
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`Group (who did not identify how or why he was involved with the Plan, Braum,
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`HealthSCOPE or the claims process), who stated, without explanation, that Plexus
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`Group believed it would be best to postpone this call/meeting to another date, and that
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`Plexus Group would be back in touch with OUMC to discuss next steps after Plexus
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`Group had the opportunity to reconvene with Braum and HealthSCOPE. See Email
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`from Todd Neaves dated April 6, 2020 attached hereto as Exhibit 11.
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`37. Braum, HealthSCOPE, and Plexus made no effort to get back in touch
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`with OUMC, or to discuss “next steps;” rather they used the delay to give
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`HealthSCOPE the opportunity to send a letter dated April 13, 2020 denying OUMC’s
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`Second Appeal. See Letter from HealthSCOPE dated April 13, 2020 attached hereto
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`as Exhibit 12. Apart from the fact that it was clearly sent to avoid the previously
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`scheduled conference call, and at the behest of Plexus Group, the letter fails to comply
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`in any manner with the provisions of the Plan. It is untimely, in that it was sent to
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`OUMC well after the 30-day period expressly provided for in the Plan. The letter
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`fails to provide any of the information or documentation requested by OUMC in its
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`Second Appeal, or to explain why OUMC was not provided an opportunity to present
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`evidence or testimony in support of its claims. The letter essentially repeats
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`HealthSCOPE’s improper denial of OUMC’s First Appeal. Most importantly, the
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`letter clearly indicates that it comes from HealthSCOPE and not Braum. The Plan
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`clearly requires Braum to make an independent review of OUMC’s claims, and for it
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`to make the determination of the Second Appeal, not HealthSCOPE.
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`14
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 15 of 33
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`38. Braum intentionally and wrongfully administered the Plan in a manner
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`designed to save Braum as much money as possible, at the expense of OUMC and,
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`ultimately, Braum’s own employees and their families.
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`39.
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`The Plan was also wrongly administered in that OUMC’s services were
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`paid at a fixed amount tied to the reimbursement rates that the federal government
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`pays under the Medicare program. Specifically, Braum and the Plan improperly paid
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`OUMC’s reimbursement claims for the medical services provided to the Hales at
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`140% of Medicare rates, which represented less than a sixth of the necessary medical
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`and professional expenses incurred by the Hales. Braum and the Plan refused to
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`consider any additional amount of payment, denying OUMC’s appeals on the basis
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`that no further payment was necessary. Payment at 140% of Medicare rates is an
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`unusually low level of reimbursement for a commercial (non-governmental) payor.
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`Payment by commercial insurance sources for medical services provided by hospitals
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`such as OUMC in the Oklahoma City area is significantly higher than 140% of
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`Medicare rates. Braum and the Plan are aware that no hospital in Oklahoma City is
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`willing to accept 140% of Medicare’s rates as payment in full; yet, they paid 140% of
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`Medicare rates as their standard “reference price” for all of the medical care and
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`treatment provided by OUMC, regardless of the fact that OUMC did not agree to
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`accept this limitation on the amount it is owed for the services provided, and OUMC
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`was obligated to provide the services to the Hales on an emergency basis.
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`40. Although hospitals typically do accept Medicare rates from the federal
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`government for Medicare beneficiaries, they do this because Medicare is a high-
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`15
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 16 of 33
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`volume payor. Regardless, they often lose money in doing so, and this loss must be
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`made up in the form of higher payments from commercial insurance sources. Without
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`these compensating payments from private sources, most major hospitals would not
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`be able to remain financially solvent in the long-term.
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`41.
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`The structure of the Braum Plan is particularly egregious under the facts
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`and circumstances of this case, because Braum deliberately set the Plan up so that the
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`Plan had no network of hospital facilities to provide acute, inpatient or emergency
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`care at predictable, agreed-upon reimbursement rates.
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`42. Under the framework of modern managed healthcare, payors establish
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`networks of healthcare facilities and providers as a way to manage utilization of
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`healthcare services by their members, and ultimately, control costs and expenses.
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`Payors create networks by contracting with facilities and providers for agreed-upon
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`reimbursement rates for various medical services provided. It is essential for these
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`payors to have adequate networks of facilities and providers who can care for their
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`members and insureds in a given geographic area.
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`43. A network of hospitals is particularly important to ensure that a payor’s
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`members and insureds have reasonable and timely access to emergency services and
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`inpatient care. Such life-saving care can only be provided by a specialized facility
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`such as OUMC, staffed around-the-clock by nurses and doctors who must be
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`available on a moment’s notice.
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`16
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 17 of 33
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`44. However, Braum and the Plan had no network of hospital facilities
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`capable of providing the emergency and inpatient services that the Plan purported to
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`cover.
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`45. Accordingly, it was not possible for the Hales to obtain medical services
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`from an “in-network” hospital, because the Plan made the structural choice not to
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`have any network of hospitals at all. Thus, there were no hospital facility “network
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`providers” and no hospital facility “non-network providers” under the Plan. The
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`distinction between “network” and “non-network” was meaningless with respect to
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`the Plan when the Hales obtained medical services from OUMC in 2018.
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`46.
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`In lieu of a network of hospitals, Braum attempted to impose a
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`“reference pricing” model for the Plan, under which the Plan attempted to limit its
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`liability to pay for the medical services provide by OUMC to 140% of the Medicare
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`rate, regardless of whether the services were provided on an emergency basis.
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`However, Braum’s failure to create an adequate reference pricing structure for the
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`Plan violates the Patient Protection and Affordable Care Act’s maximum out of
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`pocket requirement as explained below. 42 U.S.C. § 18001, et seq. (“ACA”),
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`47.
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`Even if Braum and the Plan could attempt to limit their liability for the
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`services provided to the Hales to 140% of Medicare rates, Braum and the Plan were
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`required, pursuant to the ACA to ensure that beneficiaries and participants of the Plan
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`incurred no more than $7,350 (for individual coverage) or $14,700 (for more than
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`individual coverage) in total out-of-pocket expenses each year (the maximum out of
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`17
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 18 of 33
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`pocket expense or “MOOP”). 1 Braum and the Plan failed to comply with the ACA in
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`their administration and determination of OUMC’s claims by causing the Hales to
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`incur potential liability for medical expenses far in excess of the MOOP.
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`48.
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`Pursuant to the ACA, all of the out-of-pocket medical expenses incurred
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`by the Hales counted toward the satisfaction of their 2018 $14,700 MOOP threshold.
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`Accordingly, the entire unpaid balance of OUMC’s charges – the so-called “balance
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`bill” – counts toward satisfying the Hales’ 2018 MOOP, because the Plan was not a
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`“network plan” for hospital services, and Braum and the Plan deliberately chose not to
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`maintain a network of hospitals who could provide emergency care and related
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`inpatient hospitalization.
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`49. By failing to compensate OUMC for the medical services provided to
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`the Hales above the 140% Medicare rate, Braum and the Plan failed to comply with
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`the ACA once the MOOP threshold was met. Once the Hales met their 2018 MOOP
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`threshold, Braum and the Plan were required to pay 100% of the Hales’ eligible
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`healthcare expenses above the threshold for the remainder of 2018. Yet, Braum and
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`the Plan refused to pay OUMC more than 140% of the Medicare rate for the medical
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`services rendered, even though the 2018 MOOP was met for the Hales.
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`50.
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` When individuals or families like the Hales incur healthcare expenses
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`for covered Essential Health Benefits (“EHBs”) that exceed the MOOP threshold in a
`
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`1 See Patient Protection and Affordable Care Act; HHS Notice of Benefit and
`Payment Parameters for 2018 81 Fed. Reg. 94058 at 94140 (December 12, 2016)
`(2018 MOOP Threshold).
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`
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`18
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`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 19 of 33
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`given calendar year, the ACA mandates that the benefit plan pay 100% of those
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`expenses for the remainder of the year.
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`51.
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`EHBs include items of service in ten general categories. EHBs are
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`defined broadly and specifically include, among other things, emergency services,
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`inpatient hospitalization and maternity and newborn care. 42 U.S.C. § 18022(b).
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`52.
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`The medical care and treatment provided by OUMC clearly fall within
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`the basic EHB categories. In fact, the emergency, in-patient hospitalization and
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`maternity and newborn services provided by OUMC are among the most important
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`categories of EHBs.
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`53. Although self-funded group health plans governed by ERISA are not
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`required to offer any or all of the ten particular categories of EHBs, to the extent a
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`group health plan does offer such EHBs, the MOOP limitation requires the plan to
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`provide substantial coverage for those EHBs, and to limit the plan members’ annual
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`out-of-pocket expenditures for such EHBs.
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`54.
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`The Plan expressly covers emergency, in-patient hospitalization,
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`maternity and newborn health benefits. In fact, the Plan purports to provide
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`substantial coverage for those EHBs.
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`55.
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`The Department of Treasury, along with the Department of Health and
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`Human Services – two of the three key federal agencies tasked with implementing the
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`ACA – recognized that in-patient hospitalization services are “fun