This case involves a narrow issue - whether overpayments made by Blue Cross and Blue Shield of Texas ("BCBS") to healthcare provider, Quality Infusion Care ("QIC), can be recovered by underpaying on subsequent patients claims regardless of whether the subsequent patient claims were for the same patient or under the same insurance plan.
QIC and its patients entered into an assignment contract in which the patients assigned to QIC their right to reimbursement from BCBS. If BCBS did not reimburse the amount due, or the reimbursement did not cover the full amount, then the patient was responsible to QIC for the remainder of the payment. BCBS made overpayments on several claims. BCBS requested refunds from QIC, but QIC did not provide a refund. To recoup the overpayments, BCBS deducted the overpaid amounts from subsequent payments to QIC, regardless of whether the offsets were from subsequent patients or different health insurance plans. QIC challenged the setoffs because the setoffs did not contain payments related to the same patient or same healthcare plan as those at issue in the requested refund.
Both parties moved for summary judgment. The United States District Court for the Southern District of Texas granted summary judgment in favor of BCBS, and held that although the offsets were from subsequent patients and involved different plans, all of the patients assigned their assignment rights to QIC, and "BCBS and QIC were mutually indebted and those setoffs were allowed by the Texas Insurance Code and the language of the Plans."
QIC appealed to the Fifth Circuit Court of Appeals, and the Fifth Circuit affirmed the District Court's decision. The Fifth Circuit reviewed the setoffs under case law governing assignments, the contract terms of the plans, and the Texas Insurance Code. The Firth Circuit held that when there is an assignment, an assignee takes all of the rights of the assignor, including limitations and setoffs. Therefore, because QIC accepted the patient's assignment of the healthcare plans, QIC became subject to BCBS's setoff rights contained in those plans. Based on the laws of assignment, the Fifth Circuit agreed with the district court that BCBS had a right to setoff overpayments with a subsequent patient or healthcare plan who had assigned their rights to QIC.
The Firth Circuit also held that because BCBS and QIS did not have a separate contractual relationship, BCBS's right to a setoff arose from the assigned contract. Each plan where BCBS made a deduction to setoff the overpayments contained provisions stating BCBS's right to offset subsequent benefit payments, allowing BCBS to deduct overpayments previously paid to QIC. The Fifth Circuit noted that the plans in question never required BCBS to restrict its setoffs from subsequent benefits to the same patient or the under the same plan. The Fifth Circuit held that since there was no statutory or common law against the setoff terms, and such setoffs were permissible under the Texas Insurance Code, BCBS was entitled to deduct the amounts it had previously overpaid QIC from QIC's subsequent claims.
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This opinion is not final. It may be withdrawn from publication, modified on rehearing, or review may be granted by the U.S. Supreme Court. These events would render the opinion unavailable for use as legal authority.
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