RBP Legal Landscape
Hospitals sometimes sue employers or members to collect the difference between RBP and their billed charges. These lawsuits typically allege breach of contract (the provider's chargemaster rates are the contract) or unjust enrichment (the provider provided services and was not fully compensated). ERISA preemption is a key defense for self-funded plans — state law claims against ERISA plans are preempted.
ERISA Preemption Defense
ERISA preempts state law claims that "relate to" employee benefit plans. Hospital lawsuits against self-funded RBP plans are typically preempted by ERISA — the hospital's state law claims (breach of contract, unjust enrichment) are preempted because they relate to the ERISA plan. ERISA preemption is a powerful defense that has been upheld in multiple federal courts.
Legal Defense in Vendor Contracts
Pro Tip
Require your RBP vendor to provide legal defense as part of their service offering. The vendor should defend both the plan and the member against balance billing lawsuits. Confirm the vendor has experienced ERISA and healthcare litigation counsel. Vendors who do not provide legal defense leave employers and members exposed to significant legal costs.