Robbing Peter To Pay Paul

The majority of recoupments are taken at the expense of self-insured plans to the benefit of fully-insured plans………………..

DOL Opposes UnitedHealth’s Cross-Plan Offsetting Practice

By Jacklyn Wille

UnitedHealth Group Inc.’s way of reimbursing medical providers violates federal employee benefits law, the Labor Department told a federal appeals court ( Louis J. Peterson, D.C. v. UnitedHealth Grp., Inc. , 8th Cir., No. 17-1744, amicus brief filed 9/5/17 ).

The Labor Department opposes a health insurance practice called “cross-plan offsetting,” in which insurers like UnitedHealth reduce payments owed to medical providers for services rendered to specific patients. The reductions are meant to offset overpayments the providers previously received on account of different patients who participate in other plans insured by the same company. This practice violates the Employee Retirement Income Security Act, the DOL said in a brief filed Sept. 5 in the U.S. Court of Appeals for the Eighth Circuit.

This case could have big implications for the health insurance industry, because cross-plan offsetting is a common practice that’s driven litigation against insurers like Aetna and several Blue Cross-connected entities. Another lawsuit raising similar claims against UnitedHealth has been put on hold while the parties attempt mediation.

In this case, a federal judge in Minnesota ruled earlier this year that cross-plan offsetting wasn’t authorized by the terms of UnitedHealth’s plans. The judge didn’t address whether the practice is permissible under ERISA, instead allowing UnitedHealth to file an immediate appeal with the Eighth Circuit. The judge called this an “exceptional case,” given UnitedHealth’s status as the country’s largest health insurer. If the offsetting practices are ultimately blocked by the courts, UnitedHealth will have to undertake an “extremely expensive and disruptive process” to unwind this practice, the judge said.

The DOL weighed in on the appeal, saying that in the agency’s view, cross-plan offsetting violates ERISA because it enriches insurers at the expense of plan participants.

“When United refused to pay legitimate claims on behalf of the participants in one plan (“Plan B”) in order to recoup overpayments on behalf of different participants in a separate plan (“Plan A”), United burdened the participants in Plan B with the obligation to pay for services that should have been covered by their plan,” the DOL said.

Moreover, this practice frequently puts money in UnitedHealth’s pockets, the DOL said. That’s because all of the alleged overpayments at issue were made to fully insured plans, which are plans where UnitedHealth is the party responsible for paying claims. The majority of recoupments were taken from self-insured plans, which are plans where UnitedHealth administered claims but another party, like an employer, is responsible for payment.

“In other words, every one of the cross-plan offsets at issue in this litigation put money in United’s pocket, and most of that money came out of the pockets of the sponsors of self-insured plans,” the DOL said, quoting the district judge’s opinion.

Because UnitedHealth is acting in its own self-interest, and not for the exclusive benefit of the participants in the self-funded plans it administers, the insurer is breaching its ERISA fiduciary duties, the DOL argued.

The brief was filed by DOL attorneys Nicholas C. Geale, G. William Scott, Thomas Tso, and Susanna Benson.

To contact the reporter on this story: Jacklyn Wille in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

For More Information

Text of the brief is at