Surgical service sues BlueCross over denial of claims

Michelle Massey, East Texas Bureau Sep. 2, 2010, 4:10am


MARSHALL-Encompass Office Solutions Inc. filed a lawsuit against BlueCross BlueShield of Texas claiming violations of the Employee Retirement Income Security Act.

In a suit filed on Aug. 27 in the Marshall Division of the Eastern District of Texas, Encompass states it received a letter from BlueCross on Aug. 19 that the insurer will not pay anymore claims from Encompass.

"This case centers around the well-known protocol of insurance companies: deny, delay,and deceive," the plaintiff's original complaint states. "What should have been a win-win-win situation for the patient, physician, and insurance company has been mangled by the bureaucratic fumbling that makes the average consumer of medical services in this country, including members of Congress, demonize
insurance companies."

Encompass Office Solutions claims to offer a safe surgical environment at a low cost by providing equipment and personnel that allows a physician to perform procedures in their own offices. The suit states Encompass provides "everything from instruments, video equipment, disposables, anesthesia equipment, and medication to support equipment..."

The services at issue are principally for outpatient gynecological surgeries that require anesthesia.

Patients and their doctors make the decision to use Encompass for surgeries or procedures, the suit states, and patients then assign their insurance rights and benefits to Encompass.

In a similar lawsuit filed in March, an insurance company accused the medical group of representing itself as an ambulatory surgery center.

"Encompass is not an ASC, though it does provide ambulatory care, defined as care provided on an outpatient basis," the suit states.

The plaintiff states it took "painstaking efforts" to ensure all insurance companies knew it was not an ambulatory center. However Encompass did voluntarily request an Ambulatory Care Accreditation Survey by The Joint Commission and successfully passed.

Encompass claims it underwent the Joint Commission Accreditation process in an effort to demonstrate high quality and a dedication to patient safety.

According to the complaint, BlueCross was paying for the services of Encompass as an out-of-network provider.

"Then BlueCross started denying Encompass's claims," the suit states. "The claims, however, should not have been denied as BlueCross's plans provide coverage for the very services Encompass performs. BlueCross breached its ERISA-governed plan language by failing to reimburse Encompass for covered procedures."

"BlueCross talks the talk, but does not walk the walk," the complaint states. "The centerpiece of BlueCross' marketing efforts is: 'Experience. Wellness. Everywhere.' Apparently 'Everywhere' does not include the comfort of the patient's doctor's office in a sterile
and safe environment."

The plaintiff alleges BlueCross also breached its ERISA policy by using "flawed or inadequate data" to determine usual and customary charges for services, which resulted in much lower payments to Encompass.

Encompass accuses BlueCross of refusing to pay, requiring Encompass to have certain licenses, demanding return of monies rightfully paid, stalling meaningful dialogue and threatening Encompass with fraud if Encompass continued to submit claims for reimbursement. The insurer also created new policies solely in an attempt to avoid paying for Encompass' services and has manufactured a position to avoid payment that is "neither logical nor founded in fact."

In the August letter, BlueCross states Encompass claims between Jan. 1, 2007, and June 30 are ineligible for reimbursement due to a policy adopted by BlueCross in July.

"The letter goes on to state that 'The submission of claims in this manner now and has always been inappropriate and is considered a material misrepresentation of services provided.' In a word, this is 'Bull,'" the suit says.

Encompass states it has submitted claims to BlueCross in excess of $22 million, with the amount increasing on a daily basis as more claims occur.

"For reasons yet to be discovered, BlueCross subsequently broke off all communication with Encompass, instigated an investigation into the Encompass claims and now takes the position that Encompass is somehow misrepresenting its services to BlueCross," the plaintiff states. "BlueCross's stated reason is clearly a pretext to the real reason it is refusing to pay."

Encompass is asking the court to declare that it is not required to reimburse BlueCross, that BlueCross is required to reimburse Encompass for all unpaid claims and all benefits that it was improperly underpaid. It also seeks an award of costs, attorneys' fees and interest.

The plaintiff is represented by Dallas attorneys William Banowsky,Greg Curry and Jill Penn of the law firm Thompson and Knight LLP.

U.S. District Judge David Folsom is assigned to the litigation.

Case No. 2:10cv00325

More News