Oklahoma Hospital Alleges ERISA Violation Against Health Plan After Unexplained Denials

On Friday in the Western District of Oklahoma, OU Medical Center (OUMC) filed a complaint against W.H. Braum Group Health Benefit Plan and sponsoring corporation W.H. Braum Inc., alleging that the defendants have deprived certain patients of benefits, thus denying OUMC compensation to which it claims it is entitled, in violation of the health plan itself and the Employee Retirement Income Security Act (ERISA).

Braum employee and plan participant Joshua Hale and his wife and plan beneficiary, Leah Hale, recently had prematurely born twins who required treatment at the neonatal intensive care unit (NICU) at OUMC, which is the only hospital in the Oklahoma City area with a Level IV NICU, the complaint explained. The twins stayed at OUMC from Aug. 3, 2018, through Nov. 16, 2018, and were treated for various health concerns.

In a “timely” manner, according to the complaint, OUMC submitted the bills for the medical services — totaling more than $4 million — to HealthScope, the third-party administrator of the Braum health plan. However, “without explanation,” HealthScope returned explanations of benefits (EOBs) that said only $300,901.71 would be covered for one of the infants and $301,046.96 would be covered for the other under the plan, and Joshua Hale is responsible for the remainder of the bill, more than $3.5 million.

However, the plaintiff argued that the EOBs issued by HealthScope were in violation of the terms of the plan in that no explanation was given. OUMC appealed the compensation denial on Sept. 19, 2019, which was denied as well.

The complaint noted that “unlike most employee benefit plans, the (Braum 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” through the plan. But OUMC claims “HealthSCOPE and Braum treated the Hale claims in a manner inconsistent with their treatment of claims for other Plan participants” and failed “to create an adequate reference pricing structure for the Plan.”

“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,” the plaintiffs argued.

Among the causes of action brought by the plaintiffs are claims for ERISA benefits and for payment of amounts above the maximum out-of-pocket expense and breach of fiduciary duty.

The plaintiff is represented by Hartzog Conger Cason LLP.