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Court rules UnitedHealthcare can be sued for millions in unpaid bills

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A federal court has ruled that an out-of-network Texas hospital system can sue UnitedHealthcare Inc. for $104 million in unpaid hospital bills.

In an opinion filed Tuesday, the U.S. District Court in Dallas said Texas General Hospital can bring multiple claims under federal and state law to recover reimbursements that UnitedHealthcare failed to make over a three-year period.

Texas General Hospital, based in Grand Prairie, Texas, provided health care services to nearly 2,000 UnitedHealthcare plan members between February 2012 and June 2015, for which the hospital billed the insurer $139.2 million, according to Texas General Hospital L.P. and Texas General GP L.L.C. v. UnitedHealthcare Services Inc. and UnitedHelathcare Insurance Co.

Texas General is not included in UnitedHeathcare's provider network, so patients were required to assign their benefits to Texas General prior to getting treated. The hospital also received coverage verification and pre-certification from UnitedHealthcare before services were rendered.

But UnitedHealthcare never fully paid up. The health insurer to date has only reimbursed Texas General for $30.1 million of the total amount billed, according to court documents.

With patient co-pays, co-insurance and deductibles factored in, Texas General was paid only $35.1 million total for its services, according to the documents.

Texas General filed its original suit on June 19, 2015, under the Employee Retirement Income Security Act of 1974, alleging that UnitedHealthcare led the hospital to believe the provided health care services would be covered, then wrongfully denied or reduced coverage and significantly underpaid the hospital.

The insurer filed a motion to dismiss the case, but the District Court's chief judge, Barbara M. G. Lynn, said Texas General has made several “plausible” claims to recover benefits.

While UnitedHealthcare argued the hospital did not exhaust all administrative remedies, the court said the insurer failed to “provide meaningful access to administrative remedies” and further efforts by the hospital would be futile.

The court also found that Texas General can sue for breach of contract, breach of duty of good faith and fair dealing, and promissory estoppel.

However, it dismissed the claim that UnitedHealthcare breached fiduciary duty under ERISA, finding that the benefits assignment Texas General received from UnitedHealthcare plan members did not give the hospital standing to sue.