Kickapoo Traditional Tribe of Texas, its Health Plan, and Two Health Plan Administrators slapped with $2.1 Million ERISA Lawsuit in Federal Court

By: Miguel Munoz, Eagle Pass Business Journal, Inc., Copyright 2016

The Kickapoo Traditional Tribe of Texas (KTTT), Kickapoo Traditional Tribe of Texas Group Health Plan, and the KTTT Group Health Plan Administrators, Lucio Garcia-Zuazua and Roberto L. Rodriguez, were slapped with a $2,113,995.15 lawsuit regarding breach of fiduciary duties of the Employee Retirement Income Security Act of 1974 (ERISA) concerning the administration of its group health plan in the United States District Court for the Southern District of Texas in Houston, Texas on July 8, 2016 by Neil Gilmour, III, in his capacity as Trustee of the Victory Medical Center Landmark Unsecured Creditors’ Grantor Trust and the Victory Parent Company Unsecured Creditors’ Grantor Trust.

Victory Medical Center Landmark, LP (VMCL) is a Texas Limited Partnership which formerly operated a hospital in San Antonio, Texas and is now in bankruptcy proceedings in the United States Bankruptcy Court for the Northern District of Texas in Fort Worth, Texas. Victory Parent Company, LLC, a/k/a Victory Medical Center San Antonio is also a Texas Limited Liability Company, which is the majority owner of VMCL and is in bankruptcy proceedings in Fort Worth, Texas, too. Plaintiff, Neil Gilmour, III, is the Bankruptcy Trustee appointed by the U.S. Bankruptcy Court in Fort Worth, Texas to represent the Victory Medical Center Landmark Unsecured Creditors’ Creditors Grant Trust and the Victory Parent Company Unsecured Creditors’ Grantor Trust. Plaintiff seeks the collection of $2,113,995.15 of medical services provided to a certain member of the Kickapoo Traditional Tribe of Texas Group Health Plan which was later denied payment almost two years due to there being no medical necessity for the medical treatment of the patient.

The Kickapoo Traditional Tribe of Texas is the Kickapoo Traditional Tribe of Texas Group Health Plan sponsor and administrator with Lucio Garcia Zuazua and Roberto L. Rodriguez as the named Group Health Plan Administrators. Roberto L. Rodriguez also serves as the KTTT’s General Counsel.

The federal complaint was amended on July 25, 2016 and alleges that Defendants violated their fiduciary duties under ERISA to Victory Medical Center San Antonio for refusing to pay for medical benefits provided to a certain KTTT Group Health Plan member designated only as “RS” totaling $2,113,995.15 for lumbar spine procedures and 14 days hospitalization and related medical services.

Plaintiff’s amended complaint alleges that Defendants operated an “elaborate scheme to conceal, conspire, collude, and defraud Victory Medical Center Landmark, LP, and Victory Parent Company, LLC, to wrongfully withhold $2,113,99.15 in benefits from Plan Beneficiaries. The Defendants’ acts and omissions are tantamount to a complete disregard for the Defendants’ fiduciary duties as mandated under ERISA and the federal and state regulations promulgated thereunder….Defendants’ course of conduct with the Plan Beneficiaries demonstrates an intentional bad faith, which conduct resulted in devastating injuries to the Plan Beneficiaries.”

Plaintiff’s amended complaint further alleges that Plaintiff provided “healthcare services to a member of the KTTT Group Health Plan for $2,113,995.15 after having obtained from Defendants : I) verification of insurance benefits; II) confirmation of no applicable exclusions to benefits under the Plan; and III) pre-certification of medical necessity of the healthcare treatment. After providing said services and submitting its claim for benefits in the sum of $2,113,995.15, Defendants denied the Plan Beneficiaries’ claims in total on the basis of no medical necessity. As the Plan Beneficiaries appealed the adverse benefit determination, approximately two (2) years later the Defendants for the very first time informed the Plan Beneficiaries that it’s claims were denied due to exclusions in the Plan.”

Plaintiff further alleges that the “original Master Plan (or the 2012 Master Plan) was in effect at the time that Victory Medical Center Landmark rendered its services to the patient….As the claim administrator of the Plan, HSCMS, verified to the Plan Beneficiaries on or about August 19, 2013, there were no exclusions applicable….When the Plan Beneficiaries requested the Plan Administrator, Roberto L. Rodriguez, to provide a complete and duly executed copy of the Master Plan as he is mandated to do under 29 U.S.C. Section 1166, incredulously Mr. Rodriguez patently refused in writing.” Plaintiff contends that Defendant, Roberto L. Rodriguez, was required under federal ERISA law to provide a copy of the Master Plan within 30 days after being requested. Plaintiff alleges that Defendant, Roberto L. Rodriguez, “as the Plan Administrator and as an Attorney, there can be no doubt that Mr. Rodriguez was and is fully aware of his fiduciary and legal obligations to promptly produce a true, correct, and complete copy of the original Master Plan,” thus breaching his fiduciary duties as Plan Administrator under ERISA.

Plaintiff alleges that Defendants violated their fiduciary duties and obligations to Victory Medical Center Landmark by looking out for their own interests instead of the Plan Beneficiaries’ interest and refusing to disclose the governing Master Plan for the KTTT Group Health Plan. Plaintiff alleges that “Defendants’ course of conduct in refusing to produce its governing documents; Mr. Rodriguez’s refusal to produce the original Master Plan; and [their] misrepresentation about paying the Plan Beneficiaries are all factual demonstrations of the orchestrated efforts of the Defendants and their co-fiduciaries to conceal, conspire, collude, and defraud the Plan Beneficiaries out of their rightful claim to receive benefits under the Plan in the sum of $2,113,995.15” and the course of Defendants’ conduct constitutes “bad faith.”

Plaintiff alleges that they relied in good faith upon Defendants’ verification of the KTTT Group Health Plan patient “RS” as having a medical necessity for the lumbar spine procedures and 14 days of healthcare treatment at Victory Medical Center Landmark in providing the patient a total sum of healthcare services for $2,113,995.15, which Defendants’ now refuse to pay under the KTTT Group Health Plan.

Plaintiff seeks a judgment against Defendants for the sum of $2,113,995.15 in payment for the valid healthcare claims submitted relating to patient “RS;” an Administrative Civil Penalty/Sanction against Defendants under ERISA for the sum of $106,150.00; injunctive relief to remove both Lucio Garcia-Zuazua and Roberto L. Rodriguez as Plan Administrators of the KTTT Group Health Plan; reasonable attorney’s fees for trial and appeal purposes; prejudgment and postjudgment interest at the highest rates permitted by law; costs of court; injunctive or equitable relief to correct and prevent acts and omissions by Defendants that violate the Plan and/or ERISA; and such other further relief at law or in equity to which Plaintiff may be entitled to law.

Although the Defendants have not yet filed their Original Answer to Plaintiff’s lawsuit, generally Defendants file an answer denying the claims alleged in the complaint.

The federal lawsuit will be assigned a scheduling order and be litigated in federal district court in Houston, Texas.