‘Narrow decision’ leads justices to reverse in health care payment dispute

A dialysis provider will have another chance to claim the money it believes it is owed after the Indiana Supreme Court pointed to its own precedent and found the trial court erred by entering summary judgment for the defendants.

FMS Nephrology Partners North Central Indiana Dialysis Centers, LLC sued, claiming it did not receive proper payment for dialysis-related treatments it provided to five patients who were covered under employee health insurance plans from the University of Notre Dame and Beacon Health. The plans are governed by the Employee Retirement Income Security Act of 1974 and are administered by Meritain Health.

Notre Dame and Beacon Health countered FMS’s claims were prevented under the principles of “complete” and “conflict” ERISA preemption. The St. Joseph Superior Court agreed and entered partial summary judgment in favor of the defendants.

Pointing to precedent, the Indiana Court of Appeals affirmed. In particular, the appellate panel pointed to Midwest Security Life Insurance Co. v. Stroup, 730 N.E. 2d 163 (Ind. 2000),  finding the ruling in that case established FMS’s claims were preempted.

However, the Supreme Court reversed and remanded after it determined the Court of Appeals misconstrued Stroup. The justices held the appellate court mistakenly believed Stroup preempts claims against ERISA plans to enforce state-law-based obligations arising independent of the plans. But the Supreme Court offered that its ruling in that case is a “narrow decision” holding that ERISA preemption occurs when the “essence of the claims is a failure to supply benefits under the plan.”

“Our holding in Stroup is consistent with other courts concluding that ERISA expressly preempts claims about the scope of a plan’s coverage,” Justice Geoffrey Slaughter wrote. “But neither Stroup nor (Ray Klein, Inc. v. Bd. Of Trs. Of the Alaska Elec. Health & Welfare Fund, 307 F. Supp. 3d 984, 991 (D. Alaska 2018)) purports to preempt the species of claim that FMS is asserting here, which is about neither a beneficiary’s right to coverage under an ERISA plan nor a health-care provider’s right to payment under a plan, but about a provider’s rate of payment under a separate contract with a plan.”

The complaint from FMS centers on five patients who were covered under Notre Dame’s plans and two under Beacon Health’s plans. Meritain issued an explanation of benefits for claims submitted but FMS alleged that it received an amount less than the agreed rates for some of the services it provided.

In its ruling, the Supreme Court held summary judgment was erroneous.

“The record does not establish why the Notre Dame and Beacon Health plans did not pay FMS’s disputed claims,” Slaughter wrote. “If the reason is that there is no right to payment under the plans, then the claims are expressly preempted. But to the extent a court must determine not whether a claim for services was covered but whether the plan paid less than the agreed provider rate for covered services based on an agreement separate from the plan, then the claim is not preempted.

“Based on our review of the EOBs and the other evidence designated on summary judgment, we cannot tell how these disputed claims were adjudicated under the plans.”

The case is FMS Nephrology Partners North Central Indiana Dialysis Centers, LLC v. Meritain Health, Inc., el al., 20S-PL-302. Chief Justice Loretta Rush along with justices Christopher Goff and Mark Massa concurred. Justice Steven David concurred in result.