throbber
Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 1 of 33
`
`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF OKLAHOMA
`
`OU MEDICINE, INC, d/b/a OU MEDICAL
`CENTER, an Oklahoma non-profit corporation,
`
`Plaintiff,
`
`v.
`
`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: ____________________
`
`COMPLAINT
`
`Plaintiff, OU Medicine, Inc., d/b/a OU Medical Center (“OUMC”), for its
`
`claims against Defendants, W.H Braum Group Health Benefit Plan (“Plan”), and
`
`W.H. Braum, Inc. (“Braum”), sponsor of the Plan, alleges and states as follows:
`
`Parties, Jurisdiction and Venue
`OUMC is a non-profit Oklahoma corporation that operates OU Medical
`
`1.
`
`Center located in Oklahoma City, Oklahoma.
`
`2.
`
`The Plan is a welfare benefit plan pursuant to the Employee Retirement
`
`Income Security Act of 1974, as amended, 29 U.S.C. § 1001 et seq.
`
`3.
`
`Braum is an Oklahoma corporation with its principal place of business
`
`located in Oklahoma. Braum is the sponsor of the Plan.
`
`4.
`
`This Court has subject matter jurisdiction over the claims alleged herein
`
`pursuant to 29 U.S.C. § 1132(a)(1)(B) (benefits due under an ERISA plan); 29 U.S.C.
`
`1
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 2 of 33
`
`§ 1132 (a)(3)(B) (equitable relief); 29 U.S.C. §§ 1332(e)(1) and (f) (exclusive
`
`jurisdiction in federal district court), and pursuant to 28 U.S.C. § 1331 (federal
`
`question jurisdiction).
`
`5.
`
`Venue is proper is the United States District Court for the Western
`
`District of Oklahoma pursuant to 29 U.S.C. § 1132(e)(2) and 28 U.S.C. § 1391
`
`because the events, transactions and occurrences relevant to OUMC’s claims occurred
`
`within the Western District of Oklahoma, and Defendants maintain facilities and/or
`
`engage in business in the Western District of Oklahoma.
`
`Background Facts
`At all times relevant to OUMC’s claims herein, Joshua Hale was an
`
`6.
`
`employee of Braum and a participant in the Plan and his wife, Leah Hale, was a
`
`beneficiary of the Plan.
`
`7.
`
`On or about August 3, 2018, Leah Hale was transferred, on an
`
`emergency basis, to OUMC from St. Anthony’s Hospital while in pre-term labor due
`
`to her gestational stage and the fact that she was carrying twins. She gave birth to
`
`twin boys, Ln. H. and Lg. H., prematurely (25 weeks gestation) with birth weights of
`
`1 lb. 15 oz. each. Leah Hale was transferred to OUMC because it is the only hospital
`
`in this region of the State of Oklahoma capable of providing the level of services
`
`required by Ln. H. and Lg. H. upon their births.
`
`8.
`
`Section 3.01 of the Plan provides that it “is structured to provide
`
`Participants with access to high quality care at an affordable cost.” It also provides
`
`that “the Plan provides open access to any Facility or Hospital of the Participant’s
`
`
`
`2
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 3 of 33
`
`choosing.” See, W.H. Braum, Inc. Group Health Benefit Plan Effective January 1,
`
`2018 at p. 5, attached hereto as Exhibit 1. However, unlike most employee benefit
`
`plans, the Plan offers employee health plan benefits based on alleged “reference-based
`
`pricing” and does not have a contracted network of providers, so there is no “in
`
`network” facility option available to a participant or beneficiary of the Plan, leaving
`
`the participant or beneficiary potentially liable for any charges not paid by the Plan.
`
`In a letter dated July 2, 2018, prior to the time of Leah Hale’s transfer, OUMC
`
`notified Braum, as the sponsor of the Plan, that OUMC and its employed physicians
`
`do not recognize or participate in health plans without a written agreement signed by
`
`an authorized OUMC representative. The letter also notified Braum that OUMC
`
`would not recognize or accept any language on claim forms or beneficiary designation
`
`cards that purported to condition OUMC’s acceptance of the beneficiary’s assignment
`
`of benefits upon OUMC’s acceptance of plan benefits as payment in full for OUMC’s
`
`services. See Letter dated July 2, 2018 from Lance Torcom of OUMC to Tomi
`
`Osborne of Braum attached hereto as Exhibit 2.
`
`9.
`
`The Plan expressly provides in Section 5.03(2) that “[i]f a Dependent
`
`Child is born after the date the Employee’s coverage for himself or herself under the
`
`Plan becomes effective, coverage shall take effect from and after the moment of birth,
`
`to the extent of the benefits provided herein, and any limitations of this Plan with
`
`respect to congenital defects shall not apply to such Child.” Plan, Exhibit 1 at p. 29.
`
`10. At the time of her admission, Leah Hale was a beneficiary of the Plan.
`
`As part of the Conditions of Admission and Consent for Outpatient Care (“Consent
`
`
`
`3
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 4 of 33
`
`Form”) she agreed to “irrevocably appoint [OUMC] as my authorized representative
`
`to pursue any claims, penalties, and administrative and/or legal remedies on my behalf
`
`for collection against any responsible payer, employer-sponsored medical benefit
`
`plans, third party liability carrier or, any other responsible third party (“Responsible
`
`Party”) for any and all benefits due me for the payment of charges associated with my
`
`treatment.” See Consent Form attached hereto as Exhibit 3, ¶ 7. Paragraph 7 of the
`
`Consent Form also provides that the Hales agree to take all actions necessary to assist
`
`OUMC in collecting payment from the Braum Plan “including allowing [OUMC] to
`
`bring suit against [the Braum Plan] in my name.”
`
`11. At birth, the APG scores of Ln. and Lg. H. at 1 minute were
`
`respectively 2 and 1. Each child required immediate intubation and positive pressure
`
`ventilation.
`
`12. Due to their extremely low birth weights, Ln. and Lg. H. were
`
`immediately placed in OUMC’s Level IV NICU, which is the only Level IV NICU in
`
`the Oklahoma City area. The only other Level IV NICU in Oklahoma is located at St.
`
`Francis Hospital in Tulsa, Oklahoma, and OUMC was able to provide a higher level
`
`of needed services to Ln. and Lg. H. such as Extracorporeal Membrane Oxygenation
`
`(EMCO) services and the services necessary to care for cases involving extreme
`
`prematurity. Accordingly, OUMC was uniquely positioned to provide the care
`
`necessary to Ln. and Lg. H. following their premature births, and OUMC provided
`
`services crucial to their survival.
`
`
`
`4
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 5 of 33
`
`13. During their over three-month hospitalization at OUMC both children
`
`required Total Parenteral Nutrition multiple times. Lg. H. also suffered from
`
`Necrotizing Enterocolitis, and from Osteopenia due to his prematurity, requiring
`
`endocrine management care.
`
`14. During their hospitalization at OUMC, both Ln. and Lg. H. experienced
`
`repeated bouts of feeding intolerance and apneic episodes. Due to their failure to
`
`maintain weight, and concern regarding their continued development, both children
`
`required multiple formula changes to maintain their caloric intake, and the
`
`development of specialized plans to monitor their weight closely upon discharge.
`
`15.
`
`Ln. and Lg. H. received necessary medical care and treatment from
`
`OUMC from August 3, 2018 through November 16, 2018.
`
`16.
`
`Ln. H.’s hospitalization resulted in medical bills through November 16,
`
`2018 for necessary medical care and treatment rendered by OUMC in the amount of
`
`$2,131,240.97, and Lg. H.’s hospitalization also resulted in medical bills through
`
`November 16, 2018 for necessary medical care and treatment rendered by OUMC in
`
`the amount of $1,997,015.09.
`
`17.
`
`Throughout the hospitalization of Ln. and Lg. H., OUMC provided
`
`periodic updates to the Plan through its third-party administrator, HealthSCOPE
`
`Benefits, Inc. (“HealthSCOPE”), regarding the level of care being provided, and
`
`HealthSCOPE did not dispute the existence of coverage for the care being provided,
`
`or dispute the level of care being provided by OUMC.
`
`
`
`5
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 6 of 33
`
`18. OUMC timely submitted its medical bills for the necessary medical care
`
`and treatment rendered to Ln. and Lg. H. for payment to the Plan through
`
`HealthSCOPE, the third-party administrator of the Plan. In response, HealthSCOPE
`
`reviewed the bills, and initially indicated that it was having the bills audited by an
`
`independent review company (Zelis), and would negotiate with OUMC regarding a
`
`reasonable reimbursement for the services provided. Then, without explanation,
`
`HealthSCOPE issued Explanations of Benefits (“EOB”) determining that only
`
`$300,901.71 of the medical care and treatment provided to Ln. H., and only
`
`$301,046.96 of the medical care and treatment provided to Lg. H. were compensable
`
`under the terms of the Plan. This amounts to payment of only 14.12% of the necessary
`
`medical care and treatment rendered to Ln. H. and 15.07% of the necessary medical
`
`care and treatment rendered to Lg H. See HealthSCOPE EOBs attached hereto as
`
`Exhibit 4. The EOBs state that the children’s father, Joshua Hale, is responsible for
`
`payment of the remaining over $3.5 million owed to OUMC for the necessary medical
`
`care and treatment provided.
`
`19.
`
`The EOBs constitute an “Adverse Benefit Determination” under the
`
`terms of the Plan. See Exhibit 1 at p. 13. The HealthSCOPE Adverse Benefit
`
`Determination is in violation of the express terms of the Plan. Section 10.01C of the
`
`Plan requires HealthSCOPE to, among other things: (i) reference the specific
`
`portion(s) of the Plan upon which the denial is based; (ii) provide the specific
`
`reason(s) for denial; (iii) provide the identity of any medical or vocational experts
`
`consulted in connection with the claim; and (iv) provide any rule, guideline, protocol
`
`
`
`6
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 7 of 33
`
`or similar criterion relied upon in making the determination. See Exhibit 1, Section
`
`10.01C at p. 55.
`
`20.
`
`Pursuant to the provisions of the Plan, OUMC timely appealed
`
`HealthSCOPE’s coverage determinations on September 19, 2019. See OUMC First
`
`Appeal attached hereto as Exhibit 5. In the appeal, OUMC noted that the EOBs fail to
`
`provide any explanation of why only a small percentage of OUMC’s charges were
`
`paid, and OUMC expressly requested a copy of all documentation reviewed or relied
`
`upon in making the determinations set forth in the EOBs, including but not limited to
`
`any applicable benefit plan provisions, rules, guidelines, protocols, and the scientific
`
`or clinical basis used in the determination made in the EOBs. See Exhibit 5.
`
`21. As part of the “Full and Fair Review of All Claims” expressly provided
`
`in the Plan, in connection with its appeal of the Adverse Benefit Determination,
`
`OUMC was entitled to, among other things: (i) an opportunity to review the claim
`
`file; (ii) a review that does not afford deference to the previous Adverse Benefit
`
`Determination and that is conducted by an appropriate named fiduciary of the Plan,
`
`who shall be neither the individual who made the Adverse Benefit Determination that
`
`is the subject of the appeal, nor the subordinate of such individual; (iii) the
`
`identification of any medical or vocational experts consulted in connection with the
`
`claim, even if the Plan did not rely upon their advice; and (iv) reasonable access to,
`
`and copies of, all documents, records, and other information relevant to the claim in
`
`the possession of the Plan Administrator (Braum) or Third Party Administrator
`
`(HealthSCOPE). See Exhibit 1, Section 10.02A at pp. 55-56 (emphasis added).
`
`
`
`7
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 8 of 33
`
`22.
`
`In a letter dated November 7, 2019, the Third Party Administrator,
`
`HealthSCOPE, denied OUMC’s First Appeal, finding that the claim was processed in
`
`accordance with the Plan’s provisions, and that the claim would remain as previously
`
`processed. See Letter dated November 7, 2019 from HealthSCOPE attached hereto as
`
`Exhibit 6 (excluding the copy of the Plan which is attached hereto as Exhibit 1).
`
`23.
`
`The only explanation provided by HealthSCOPE of the decision to deny
`
`OUMC’s first appeal is that “[t]he Plan reimburses facility claims at the Reasonable
`
`and Allowable Amount as defined in the plan document.” The letter from
`
`HealthSCOPE included none of the documentation requested by OUMC as part of the
`
`First Appeal other than a copy of the Plan, and provided no information regarding the
`
`calculation of the Reasonable and Allowable Amount. It did not include the
`
`documentation reviewed or relied upon in making the determination, or the rules,
`
`guidelines, protocols, or scientific or clinical basis used in making the determination.
`
`See Exhibit 6.
`
`24. HealthSCOPE’s determination of OUMC’s First Appeal is in violation
`
`of the “Full and Fair Review of All Claims” guaranteed by the Plan in Section
`
`10.02A. That provision specifically requires that a full and fair review of a claim and
`
`Adverse Benefit Determination be made without deference to the previous Adverse
`
`Benefit Determination, and that it be made “by an appropriate named fiduciary of the
`
`Plan” that was not involved in the Adverse Benefit Determination that is the subject
`
`of the appeal. See Exhibit 1, Section 10.02A, pp. 55-56. Despite this Plan provision,
`
`HealthSCOPE, the same entity that made the Adverse Benefit Determination, also
`
`
`
`8
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 9 of 33
`
`determined OUMC’s First Appeal, denying OUMC the independent review expressly
`
`guaranteed under the Plan.
`
`25. More importantly, the determination of OUMC’s First Appeal was not
`
`made “by an appropriate named fiduciary of the Plan” as guaranteed by the Plan. In
`
`fact, Section 10.01 of the Plan states that “the Third Party Administrator
`
`[HealthSCOPE] is not a fiduciary of the Plan and does not have the authority to
`
`make decisions involving the use of discretion.” Exhibit 1, Section 10.01 at p. 52.
`
`Accordingly, HealthSCOPE is not an appropriate named fiduciary of the Plan, and
`
`could not provide a “Full and Fair Review” of OUMC’s First Appeal.
`
`26. HealthSCOPE’s denial of OUMC’s First Appeal under the Plan also
`
`violated the “Full and Fair” review process in Section 10.02A of the Plan in that it
`
`failed to: (i) provide OUMC with an opportunity to review the claim file; (ii) provide
`
`the identity of any medical or vocational experts consulted in connection with the
`
`claim, even if the Plan did not rely upon their advice; or (iii) provide OUMC with
`
`reasonable access to, and copies of, all documents, records, and other information
`
`relevant to the claim in the possession of the Plan Administrator (Braum) or Third
`
`Party Administrator (HealthSCOPE). See Exhibit 1, Section 10.02A at pp. 55-56.
`
`27.
`
`The November 7, 2019 letter from HealthSCOPE also violated Section
`
`10.01D of the Plan in that it failed to, among other things, provide a specific reason or
`
`reasons for the denial of the claims; identify whether any medical or vocational
`
`experts were consulted in connection with the claims; include a statement that OUMC
`
`was entitled to receive, upon request and free of charge, reasonable access to, and
`
`
`
`9
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 10 of 33
`
`copies of, all documents, records, and other information relevant to the claims; or
`
`state whether any internal rule, guideline, protocol, or other similar criterion was
`
`relied upon in making the adverse determination. See Exhibit 1, Section 10.02D at p.
`
`58.
`
`28. By letter dated January 9, 2020, as supplemented by its letter of January
`
`14, 2020, OUMC instituted a Second Appeal of its claims for benefits directly to
`
`Braum as Plan Administrator pursuant to the procedure at pp. 58-59 of the Plan. See
`
`Letters dated January 9 and 14, 2020 to Plan Administrator attached hereto as
`
`Exhibits 7 and 8. In addition to providing additional information substantiating the
`
`medical necessity of the medical services provided, OUMC pointed out that the
`
`reason given by HealthSCOPE for the denial of OUMC’s First Appeal clearly
`
`required Braum, as Plan Administrator, to make the determination of OUMC’s appeal
`
`and that HealthSCOPE should not have been involved in the determination of
`
`OUMC’s appeal because it “is not a fiduciary of the Plan and does not have the
`
`authority to make decisions involving the use of discretion.” See Exhibit 1, Section
`
`10.01, p. 52.
`
`29. HealthSCOPE’s determination of OUMCs First Appeal specifically
`
`relies on the definition of “Reasonable and Allowable Amount” under the Plan. See
`
`Exhibit 1 at pp. 25-26. Apart from the fact that the definition of “Reasonable and
`
`Allowable Amount” includes a provision for a “negotiated amount established by a
`
`discounted or negotiated agreement” (which is specifically what OUMC asked the
`
`Plan and Braum to do in this instance), the Plan was expressly intended to provide
`
`
`
`10
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 11 of 33
`
`flexibility in situations like these. In fact, the definition of Reasonable and Allowable
`
`Amount used in the Plan states that “[d]etermination of the reasonable and customary
`
`charge will take into consideration the nature and severity of the condition being
`
`treated, medical complications, or unusual circumstances that require more time,
`
`skill, or experience, and the cost and quality data for that provider.” See Plan,
`
`Exhibit 1, at p. 25-26 (emphasis added). Moreover, the Plan’s definition of
`
`“Reasonable and Allowable Amount” goes on to make clear that Braum, as Plan
`
`Administrator can determine the Reasonable and Allowable Amount, including
`
`establishing the negotiated terms of a Provider agreement as the Reasonable and
`
`Allowable Amount even if such negotiated terms do not satisfy the lesser of tests
`
`described above.” Id. at p. 26 (bold emphasis added). This language was included in
`
`the Plan specifically to address situations like the one presented by OUMC’s claims
`
`herein.
`
`30. OUMC is an emergency care provider that is obligated under both state
`
`and federal law to treat all patients who present themselves on an emergency basis.
`
`Thus, OUMC cannot simply refuse to do business with Braum employees and
`
`beneficiaries such as Leah Hale, and Ln. and Lg. H., or with the Plan. OUMC was
`
`and is required to treat patients transferred to it on an emergency basis.
`
`31.
`
`The maternity care provided to Leah Hale, and the medical services
`
`provided to Ln. and Lg. H. resulting from their premature births, were provided on an
`
`emergency basis, and were critically necessary for their healthy survival. In fact, due
`
`
`
`11
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 12 of 33
`
`to the medical services provided by OUMC, Ln. and Lg. H. are happy and healthy
`
`infants today.
`
`32.
`
`In its Supplemental Letter dated January 14, 2020, OUMC pointed out
`
`that, in 2018, the Plan was allegedly based on “reference-based pricing,” without a
`
`contracted network of providers. OUMC and its employee physicians refused to
`
`recognize or participate in health plans without a written agreement signed by
`
`authorized hospital representatives. Moreover, HealthSCOPE and Braum treated the
`
`Hale claims in a manner inconsistent with their treatment of claims for other Plan
`
`participants provided by OUMC in 2018. With respect to OUMC’s claims for medical
`
`services provided to other Plan participants, HealthSCOPE and Braum did not insist
`
`on the application of the Reasonable and Allowable Amount in the same manner the
`
`Plan is attempting to do to the claims at issue in this litigation. Rather, HealthSCOPE
`
`and Braum negotiated with OUMC to arrive at a settlement amount for the medical
`
`services provided. As part of its appeal of the services provided to the Hales, OUMC
`
`provided letters memorializing the settlement of these other benefits claims, and
`
`evidence that the resolution of those claims was based on a form provided by
`
`HealthSCOPE, reflecting that the Plan regularly engaged in such settlement
`
`negotiations regarding amounts to be paid for services provided by non-contracted
`
`providers and facilities.
`
`33. OUMC reasonably expected that HealthSCOPE and Braum would act in
`
`a manner consistent with their prior course of dealing with OUMC regarding the
`
`settlement of the amount to be paid for the medical services provided to Ln. and Lg.
`
`
`
`12
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 13 of 33
`
`H. Given the inconsistent treatment of the benefits determinations as to Ln. and Lg.
`
`H., and for the other reasons alleged herein, the actions of HealthSCOPE and Braum
`
`were arbitrary and capricious, and were motivated by a conflict of interest on the part
`
`of Braum which was responsible for the payment of any settlement reached.
`
`HealthSCOPE allowed this fact to affect its handling of the benefits determinations
`
`and its involvement in the appeals.
`
`34.
`
`The Plan expressly provides for the independent review of OUMC’s
`
`Second Appeal by Braum as Plan Sponsor, and that the Plan will notify OUMC of its
`
`Benefit Determination on review within a reasonable period of time, but not later than
`
`30 days after receipt of the Second Appeal.
`
`35. Despite this provision, Braum failed to timely notify OUMC of its
`
`Benefit Determination. As a result, OUMC wrote and emailed Tomi Osborne,
`
`Benefits Manager for Braum, to see if it intended to respond to OUMC’s Second
`
`Appeal, and to see if there was some way to resolve OUMC’s claims short of
`
`litigation. See Letter dated March 27, 2020 to Tomi Osborne attached hereto as
`
`Exhibit 9 (without exhibits that are already attached as exhibits hereto) and March 27
`
`email to Tomi Osborne attached hereto as Exhibit 10. In response, Ms. Osborne
`
`emailed that Braum was interested in discussing the claims with OUMC, and
`
`HealthSCOPE confirmed that it would participate, and the parties were set to discuss
`
`the claims on Tuesday, April 7, 2020, beginning at 2 p.m. See Email exchanges in
`
`Exhibit 10.
`
`
`
`13
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 14 of 33
`
`36. OUMC’s counsel then received an email from Todd Neaves of Plexus
`
`Group (who did not identify how or why he was involved with the Plan, Braum,
`
`HealthSCOPE or the claims process), who stated, without explanation, that Plexus
`
`Group believed it would be best to postpone this call/meeting to another date, and that
`
`Plexus Group would be back in touch with OUMC to discuss next steps after Plexus
`
`Group had the opportunity to reconvene with Braum and HealthSCOPE. See Email
`
`from Todd Neaves dated April 6, 2020 attached hereto as Exhibit 11.
`
`37. Braum, HealthSCOPE, and Plexus made no effort to get back in touch
`
`with OUMC, or to discuss “next steps;” rather they used the delay to give
`
`HealthSCOPE the opportunity to send a letter dated April 13, 2020 denying OUMC’s
`
`Second Appeal. See Letter from HealthSCOPE dated April 13, 2020 attached hereto
`
`as Exhibit 12. Apart from the fact that it was clearly sent to avoid the previously
`
`scheduled conference call, and at the behest of Plexus Group, the letter fails to comply
`
`in any manner with the provisions of the Plan. It is untimely, in that it was sent to
`
`OUMC well after the 30-day period expressly provided for in the Plan. The letter
`
`fails to provide any of the information or documentation requested by OUMC in its
`
`Second Appeal, or to explain why OUMC was not provided an opportunity to present
`
`evidence or testimony in support of its claims. The letter essentially repeats
`
`HealthSCOPE’s improper denial of OUMC’s First Appeal. Most importantly, the
`
`letter clearly indicates that it comes from HealthSCOPE and not Braum. The Plan
`
`clearly requires Braum to make an independent review of OUMC’s claims, and for it
`
`to make the determination of the Second Appeal, not HealthSCOPE.
`
`
`
`14
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 15 of 33
`
`38. Braum intentionally and wrongfully administered the Plan in a manner
`
`designed to save Braum as much money as possible, at the expense of OUMC and,
`
`ultimately, Braum’s own employees and their families.
`
`39.
`
`The Plan was also wrongly administered in that OUMC’s services were
`
`paid at a fixed amount tied to the reimbursement rates that the federal government
`
`pays under the Medicare program. Specifically, Braum and the Plan improperly paid
`
`OUMC’s reimbursement claims for the medical services provided to the Hales at
`
`140% of Medicare rates, which represented less than a sixth of the necessary medical
`
`and professional expenses incurred by the Hales. Braum and the Plan refused to
`
`consider any additional amount of payment, denying OUMC’s appeals on the basis
`
`that no further payment was necessary. Payment at 140% of Medicare rates is an
`
`unusually low level of reimbursement for a commercial (non-governmental) payor.
`
`Payment by commercial insurance sources for medical services provided by hospitals
`
`such as OUMC in the Oklahoma City area is significantly higher than 140% of
`
`Medicare rates. Braum and the Plan are aware that no hospital in Oklahoma City is
`
`willing to accept 140% of Medicare’s rates as payment in full; yet, they paid 140% of
`
`Medicare rates as their standard “reference price” for all of the medical care and
`
`treatment provided by OUMC, regardless of the fact that OUMC did not agree to
`
`accept this limitation on the amount it is owed for the services provided, and OUMC
`
`was obligated to provide the services to the Hales on an emergency basis.
`
`40. Although hospitals typically do accept Medicare rates from the federal
`
`government for Medicare beneficiaries, they do this because Medicare is a high-
`
`
`
`15
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 16 of 33
`
`volume payor. Regardless, they often lose money in doing so, and this loss must be
`
`made up in the form of higher payments from commercial insurance sources. Without
`
`these compensating payments from private sources, most major hospitals would not
`
`be able to remain financially solvent in the long-term.
`
`41.
`
`The structure of the Braum Plan is particularly egregious under the facts
`
`and circumstances of this case, because Braum deliberately set the Plan up so that the
`
`Plan had no network of hospital facilities to provide acute, inpatient or emergency
`
`care at predictable, agreed-upon reimbursement rates.
`
`42. Under the framework of modern managed healthcare, payors establish
`
`networks of healthcare facilities and providers as a way to manage utilization of
`
`healthcare services by their members, and ultimately, control costs and expenses.
`
`Payors create networks by contracting with facilities and providers for agreed-upon
`
`reimbursement rates for various medical services provided. It is essential for these
`
`payors to have adequate networks of facilities and providers who can care for their
`
`members and insureds in a given geographic area.
`
`43. A network of hospitals is particularly important to ensure that a payor’s
`
`members and insureds have reasonable and timely access to emergency services and
`
`inpatient care. Such life-saving care can only be provided by a specialized facility
`
`such as OUMC, staffed around-the-clock by nurses and doctors who must be
`
`available on a moment’s notice.
`
`
`
`16
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 17 of 33
`
`44. However, Braum and the Plan had no network of hospital facilities
`
`capable of providing the emergency and inpatient services that the Plan purported to
`
`cover.
`
`45. Accordingly, it was not possible for the Hales to obtain medical services
`
`from an “in-network” hospital, because the Plan made the structural choice not to
`
`have any network of hospitals at all. Thus, there were no hospital facility “network
`
`providers” and no hospital facility “non-network providers” under the Plan. The
`
`distinction between “network” and “non-network” was meaningless with respect to
`
`the Plan when the Hales obtained medical services from OUMC in 2018.
`
`46.
`
`In lieu of a network of hospitals, Braum attempted to impose a
`
`“reference pricing” model for the Plan, under which the Plan attempted to limit its
`
`liability to pay for the medical services provide by OUMC to 140% of the Medicare
`
`rate, regardless of whether the services were provided on an emergency basis.
`
`However, Braum’s failure to create an adequate reference pricing structure for the
`
`Plan violates the Patient Protection and Affordable Care Act’s maximum out of
`
`pocket requirement as explained below. 42 U.S.C. § 18001, et seq. (“ACA”),
`
`47.
`
`Even if Braum and the Plan could attempt to limit their liability for the
`
`services provided to the Hales to 140% of Medicare rates, Braum and the Plan were
`
`required, pursuant to the ACA to ensure that beneficiaries and participants of the Plan
`
`incurred no more than $7,350 (for individual coverage) or $14,700 (for more than
`
`individual coverage) in total out-of-pocket expenses each year (the maximum out of
`
`
`
`17
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 18 of 33
`
`pocket expense or “MOOP”). 1 Braum and the Plan failed to comply with the ACA in
`
`their administration and determination of OUMC’s claims by causing the Hales to
`
`incur potential liability for medical expenses far in excess of the MOOP.
`
`48.
`
`Pursuant to the ACA, all of the out-of-pocket medical expenses incurred
`
`by the Hales counted toward the satisfaction of their 2018 $14,700 MOOP threshold.
`
`Accordingly, the entire unpaid balance of OUMC’s charges – the so-called “balance
`
`bill” – counts toward satisfying the Hales’ 2018 MOOP, because the Plan was not a
`
`“network plan” for hospital services, and Braum and the Plan deliberately chose not to
`
`maintain a network of hospitals who could provide emergency care and related
`
`inpatient hospitalization.
`
`49. By failing to compensate OUMC for the medical services provided to
`
`the Hales above the 140% Medicare rate, Braum and the Plan failed to comply with
`
`the ACA once the MOOP threshold was met. Once the Hales met their 2018 MOOP
`
`threshold, Braum and the Plan were required to pay 100% of the Hales’ eligible
`
`healthcare expenses above the threshold for the remainder of 2018. Yet, Braum and
`
`the Plan refused to pay OUMC more than 140% of the Medicare rate for the medical
`
`services rendered, even though the 2018 MOOP was met for the Hales.
`
`50.
`
` When individuals or families like the Hales incur healthcare expenses
`
`for covered Essential Health Benefits (“EHBs”) that exceed the MOOP threshold in a
`
`
`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).
`
`
`
`18
`
`

`

`Case 5:21-cv-00067-D Document 1 Filed 01/29/21 Page 19 of 33
`
`given calendar year, the ACA mandates that the benefit plan pay 100% of those
`
`expenses for the remainder of the year.
`
`51.
`
`EHBs include items of service in ten general categories. EHBs are
`
`defined broadly and specifically include, among other things, emergency services,
`
`inpatient hospitalization and maternity and newborn care. 42 U.S.C. § 18022(b).
`
`52.
`
`The medical care and treatment provided by OUMC clearly fall within
`
`the basic EHB categories. In fact, the emergency, in-patient hospitalization and
`
`maternity and newborn services provided by OUMC are among the most important
`
`categories of EHBs.
`
`53. Although self-funded group health plans governed by ERISA are not
`
`required to offer any or all of the ten particular categories of EHBs, to the extent a
`
`group health plan does offer such EHBs, the MOOP limitation requires the plan to
`
`provide substantial coverage for those EHBs, and to limit the plan members’ annual
`
`out-of-pocket expenditures for such EHBs.
`
`54.
`
`The Plan expressly covers emergency, in-patient hospitalization,
`
`maternity and newborn health benefits. In fact, the Plan purports to provide
`
`substantial coverage for those EHBs.
`
`55.
`
`The Department of Treasury, along with the Department of Health and
`
`Human Services – two of the three key federal agencies tasked with implementing the
`
`ACA – recognized that in-patient hospitalization services are “fun

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket