On January 15, 2019, the U.S. Court of Appeals for the Eighth Circuit issued an order affirming a lower court’s ruling that UnitedHealth’s interpretation of ERISA plan documents to authorize cross-plan offsetting was unreasonable.  The Eighth Circuit’s decision is available here.

The named plaintiffs in the class action lawsuit were out-of-network medical providers. The plaintiffs alleged that UnitedHealth Group (United) – who is responsible for administering thousands of health insurance plans – maintained a practice of recovering overpayments made to “out-of-network” providers from one plan by taking an offset for the overpayment from a different plan. This practice is known within the industry as cross-plan offsetting. The action was brought under the Employee Retirement Income Security Act of 1974 (ERISA), with plaintiffs arguing that the relevant ERISA plan documents did not authorize United to engage in this practice of cross-plan offsetting. 

U.S. District Judge Patrick J. Schiltz for the District of Minnesota, entered partial judgment to the class plaintiffs on the issue of liability, finding that United’s interpretation that the plan documents which allowed for this practice was unreasonable. While the court noted that United had broad authority to interpret and implement the plan, the Eighth Circuit ultimately agreed with plaintiffs that United’s practice of cross-plan offsetting exceeded its discretion to reasonably interpret plan terms as an ERISA administrator. Notably, the Eighth Circuit recognized that none of the plans explicitly authorized cross-plan offsetting. The Eighth Circuit further stated that the practice of cross-plan offsetting implicates United’s separate fiduciary duties to each plan since it arguably amounts to failing to pay benefits owed under one plan in order to recover from another.