Without disclosure to Plan Sponsor or the providers – the TPA simply misappropriated the difference between what Plaintiffs paid the TPA and what the TPA negotiated to pay the providers. Working the spread is a lucrative business………………..
On Oct 21, 2015, in a lawsuit filed by an ERISA plan against an ERISA plan TPA, the Plaintiff alleged in part:
“MagnaCare represented to Plaintiffs in a written contract between the parties that providers of diagnostic laboratory and ancillary services had “accepted” a “fee schedule” which included a “management fee” for MagnaCare.
In fact, the providers had never “accepted’ a fee schedule containing a “management foe” for MagnaCare. Rather, the providers had agreed to a fee schedule, which was a fraction of the amounts collected by MagnaCare from Plaintiffs.
MagnaCare – without disclosure to Plaintiffs or the providers – simply misappropriated the difference between what Plaintiffs paid MagnaCare and what MagnaCare negotiated to pay the providers.” according to the court documents.
media.prleap.com/document/41875/United_Teamster_Fund_v_MagnaCare_-_FAC.pdf
