LOS ANGELES (CN) – University of Southern California cannot collect from secondary insurers because of the way Kaiser designed its payment denials, USC claims in Los Angeles County Superior Court.

     University of Southern California, on behalf of Keck Hospital of USC and on behalf of its USC Kenneth Norris Jr. Cancer Hospital, sued Kaiser Foundation Health Plan Inc. (KFHP) and Kaiser Foundation Hospitals for breach of contract, intentional interference with contractual relations, intentional interference with prospective economic relations and negligent interference with prospective economic relations.

     USC contends patients with dual coverage decided to seek treatment from USC’s Keck and Norris hospitals because they fully expected their non-Kaiser insurers to cover their treatments. However, the way Kaiser designs its payment denials impedes USC’s ability to collect from those other insurers, USC says.

     “KFHP and Kaiser Hospitals regularly and knowingly interfere with USC’s ability to obtain payment from Kaiser members’ secondary insurance, such as through Anthem Blue Cross, Blue Shield of California, Health Net and United Healthcare. KFHP and Kaiser Hospitals do so by refusing to issue explanations of benefits (‘EOBs’) that properly identify as patient responsibility the charges for the hospital services Keck and Norris provided, and KFHP and Kaiser Hospitals denied, on the basis that the services were not authorized by Kaiser,” USC’s lawsuit states.

     “KFHP and Kaiser Hospitals take such actions even though Kaiser members intentionally chose to obtain elective or post-stabilization services from Keck and Norris without obtaining authorization from Kaiser to do so,” it continues.

     “It is a widespread industry custom and practice for health care service plans, ERISA plans and other insurers and health care service plans to include in their Member Agreements and Evidences of Coverage (‘EOCs’) a provision excluding from coverage services the insured has no legal obligation to pay for. Thus, when KFHP and Kaiser Hospitals issue denial EOBs that improperly identify their members’ patient responsibility as $0 (zero) and the denied charges as ‘Disallowed,’ KFHP and Kaiser Hospitals prevent USC from obtaining payment from the Kaiser members’ secondary insurance plans, such as Blue Cross, Blue Shield and Health Net,” the complaint states. (Parentheses in original complaint.)

     None of the other insurers named in the complaint are parties to the lawsuit.

     University of Southern California seeks declaratory relief, punitive damages, interest, costs and attorneys’ fees. USC is represented by Carrie McLain and Kim Worobec of the Helton Law Group in Huntington Beach.