In the matter styled The Plastic Surgery Center, P.A., v. Cigna Health and Life Insurance, et al., (3d Cir. No. 23-1096), the Third Circuit Court of Appeals affirmed the District of New Jersey's decision that the plaintiff provider, TPSC, could not recover against Multiplan for Cigna's underpayment for breast reconstruction surgery under the commercial contract between TPSC and Multiplan.
Under that contract, TPSC agreed to become a member of
Multiplan's network of healthcare providers, and Multiplan
agreed to use reasonable efforts to market to TPSC to payors who,
like Cigna, contract with Multiplan to pay for services provided to
Cigna's insured's by providers in Multiplan's network.
Under the TPSC/Multiplan contract, Multiplan agrees that provider
will be paid 85% of charges, less deductibles, co-payments, and
co-insurance. Cigna reimbursed TPSC approximately $2000 for a
procedure for which TPSC charged approximately $158,000, and TPSC
sued Cigna and Multiplan for the difference claiming Multiplan
promised TPSC would be paid 85% of charges. In affirming the
dismissal of that claim under basic principles of contract law, the
Third Circuit determined that nothing in the TPSC/Multiplan
contract guaranteed TPSC would be paid 85% of charges. The claims
against Cigna had been dismissed by the trial court without appeal
on the basis that the denial of any additional reimbursement was
not arbitrary or capricious.
This may be an important to decision for the thousands of providers
who have similar contracts with Multiplan, as payors may use it as
a backstop for underpaying. This decision may be used to argue that
a contract between the provider and Multiplan does not give a
provider recourse to the payor for any underpayments or obligate
Multiplan for them. However, the Third Circuit noted that TPSC did
not claim the Multiplan contract was illusory.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.