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UnitedHealth Beats Class Suit Over Office Surgery Facility Fees

Sept. 15, 2022, 2:09 PM

UnitedHealth Group. Inc. defeated a class action by more than 200 doctors who say they weren’t paid facility fees for office-based surgeries, when a New York federal judge ruled that the insurer used reasonable payment systems and followed ERISA plan terms.

UnitedHealth conducted an appropriate review of its health plan terms and reasonably determined that it wasn’t required to pay these additional fees to physicians performing in-office surgeries, Judge J. Paul Oetken of the US District Court for the Southern District of New York held Wednesday. None of the health plan documents in the record had language “plainly requiring” United to pay these fees, and many plans “clearly precluded such payments,” he said.

Oetken’s ruling, issued after a five-day nonjury trial, also blessed UnitedHealth’s “C Flag process,” which internally flags physician offices submitting claims for facility fees and sends these offices a letter inviting them to submit proof of facility licensure. This was a “reasonable way to ensure that benefits are administered consistent with plan terms,” he said.

The physicians accused UnitedHealth and related companies of violating the Employee Retirement Income Security Act and breaching the terms of various health plans by failing to pay “facility fees” that out-of-network surgeons charge for office-based surgeries. Oetken certified portions of the case as a class action in 2019, and in 2020 he allowed some of the case’s ERISA claims to go to trial.

Zuckerman Spaeder LLP and Buttaci Leardi & Werner LLC represent the plaintiffs. O’Melveny & Myers LLP represents the insurers.

The case is Med. Soc’y of N.Y. v. UnitedHealth Grp., Inc., 2022 BL 323869, S.D.N.Y., No. 1:16-cv-05265, 9/14/22.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com