A federal judge has dismissed Ballad Health's lawsuit alleging UnitedHealth Group improperly denies its Medicare Advantage claims, telling the rural health system that an agreement it signed ahead of its formative merger to hash out such disputes in arbitration still holds.
The judgment handed down Monday by District Judge Clifton Corker is a win for the insurer, which in December moved to compel arbitration while citing contractual agreements between UnitedHealth's affiliates and both Mountain States Health Alliance and Wellmont Health System.
Ballad Health responded that the arbitration clause in those contracts was void because publicly funded Medicare Advantage plans are a matter of important public concern, as well as that the clause was unenforceable due to UnitedHealth's material breach of the agreements.
Corker, in a memorandum opinion, wrote that "Ballad Health has not met its burden of showing a genuine issue of material fact as to the validity of the arbitration agreements. The arbitration agreements are valid."
Ballad Health's lawsuit is the first time the 19-hospital system has sued an insurer. It alleged that UnitedHealth had "systematically denied, delayed or underpaid for care that physicians determined to be medically necessary" while reporting to the feds that patients are sicker than they are to secure additional payouts.
In a statement on this week's judgment, Ballad Health said it was "pleased" with Corker's recognition that its claims against the insurer were serious.
"While the court determined these claims must be heard in arbitration, it did not rule on the merits of the case," Ballad Health told Fierce Healthcare in a statement. "Therefore, Ballad Health shall submit its claims to arbitration and proceed accordingly. We remain fully committed to pursuing these claims in arbitration and holding UnitedHealth accountable for practices we believe have harmed patients, physicians, hospitals and rural communities."
Fierce Healthcare has also reached out to UnitedHealth for a comment on the decision.
October 23
Rural health system Ballad Health sues UnitedHealth over Medicare Advantage claims denials
Tennessee-based health system Ballad Health is suing healthcare giant UnitedHealth Group, alleging the insurer routinely denies or delays care physicians deemed necessary.
The health system said in a press release that the insurer has "systematically denied, delayed or underpaid for care that physicians determined to be medically necessary" while reporting to the feds that patients are sicker than they are to secure additional payouts in Medicare Advantage (MA).
Ballad said it does not intend to renew its MA contract with UnitedHealth, which is set to end June 30, though it will continue to work with the insurer for its commercial, Medicaid and marketplace plans moving forward.
The provider said its patient population is largely rural, with about 55% enrolled in Medicare. About three-quarters of its Medicare patients are enrolled in MA, and most secure coverage through UnitedHealthcare.
This is the first time it's taken legal action against a health insurer, according to the announcement.
“Taking legal action was our last resort,” said Alan Levine, chairman and CEO of Ballad Health, in the announcement. “This is not our first choice; it’s not a choice we’ve had to make before. But we had to take action because we believe UnitedHealth’s behaviors are so harmful to patients, doctors and community hospitals.”
Per the announcement, Ballad said denied claims for post-acute care can lead to longer patient stays, increasing the cost for care as well as the risk for adverse events like hospital-acquired conditions.
A spokesperson for UnitedHealthcare said the insurer is "aware" of the lawsuit but "we have not yet been formally served."
"We believe the allegations are without merit and intend to vigorously defend ourselves against them," the spokesperson said.
In the lawsuit, Ballad Health alleges that UnitedHealth's behavior has caused $65 million in damages to the health system over the past five years, with those impacts growing due to the "ongoing behavior."
“Ballad Health has worked in good faith for years to ensure patients receive the care they need and that providers are treated fairly,” said Anthony Argiropoulos of Baker Donelson, which represents Ballad Health in the lawsuit, in the announcement.
“Unfortunately, UnitedHealth’s practices have made it increasingly difficult to sustain access to care in rural communities, and a safety net system like Ballad Health has no choice but to fight back on behalf of its hospitals," said Argiropoulos.