Kickapoo Tribe Settles Texas Hospital Co.’s $2M ERISA Suit
Law360, New York (November 18, 2016) — The Kickapoo Traditional Tribe of Texas and its employee health plan have settled a federal court lawsuit accusing them of conspiring to defraud a hospital company and violate the Employee Retirement Income Security Act by refusing to pay more than $2.2 million in medical benefits, according to a Friday order.
The trustee of grantor trusts for Victory Parent Co. LLC, which went bankrupt in June 2015, and two affiliated San Antonio hospitals had alleged that the tribe and its self-insured group health plan for employees refused to repay the companies for medical services they provided to a patient in 2013 by claiming there was no medical necessity for the treatments.
But on Friday, U.S. District Judge Gray H. Miller filed a two-sentence order stating that the parties had reached a settlement and that the case was therefore being dismissed without prejudice. Under the order, the trustee’s claims can be reinstated within the next 30 days, should a settlement not be carried out.
In a complaint filed in early July, Victory Parent and Victory Medical Center Landmark claimed that the defendants violated their obligation to the hospitals by looking out for their own interests instead of their beneficiaries’ interest and refusing to disclose their governing plan for the program.
The complaint has since been amended to substitute Neil Gilmour III as plaintiff in his capacity as the trustee of the Victory Medical Center Landmark Unsecured Creditors’ Grantor Trust, the Victory Medical Center Southcross Unsecured Creditors’ Grantor Trust and the Victory Parent Co. Unsecured Creditors’ Grantor Trust.
In 2013, an unidentified patient was verified to have out-of-network benefits under the Kickapoo plan, according to the complaint. The patient then received health care services at the Victory Medical Center Landmark and Victory Medical Center Southcross in San Antonio, the complaint said.
But the defendants then largely denied those benefits later that year, even though they had earlier precertified the treatments and deemed them medically necessary, according to the complaint.
“[The defendants] precertified each health care service to be performed by the plan beneficiaries on behalf of the patient, and then when the defendants received rightful claims for benefits under the plans, the defendants either paid a small fraction of the claims or paid nothing on the claims,” the complaint said, adding that those “acts and omissions are tantamount to a complete disregard for the defendants’ fiduciary duties.”
The suit accused the tribe and its health plan of colluding to defraud the hospitals of the more than $2.2 million they owed for the services the patient received.
Last month, two tribal health plan administrators who were also named as defendants in a previous version of the complaint, Lucio Garcia-Zuazua and Roberto L. Rodriguez, were freed from the dispute by way of a joint stipulation of dismissal without prejudice.
Representatives for the tribe declined to comment on Friday, while representatives for the trustee did not respond immediately to requests for comment.
The trustee is represented by Jordin Nolan Kruse.
The defendants are represented by W. Fulton Broemer of Broemer & Associates PLLC.
The case is Victory Parent Co. LLC et al v. Kickapoo Traditional Tribe of Texas et al., case number 4:16-cv-02029, in the U.S. District Court for the Southern District of Texas.
–Additional reporting by Andrew Westney. Editing by Catherine Sum.
http://www.law360.com/articles/864372/kickapoo-tribe-settles-texas-hospital-co-s-2m-erisa-suit
