September 23, 2016 9:54 am Published by

“Justice will not be served until those who are unaffected are as outraged as those who are.”

– Benjamin Franklin


The California Public Employee Retirement System (CalPERS) is the nation’s largest public pension fund. CalPERS claims to be “committed to enhanced transparency, accountability, and the highest ethical standards.” However, a recent case our office has encountered has questioned CalPERS integrity and competency in handling their member’s covered services under their participation agreement and as a result has placed the lives of their members in financial turmoil.

Our provider member, East Los Angeles Doctor’s Hospital (ELADH), submitted to our office denied care from a Blue Cross PPO plan selected by a CalPERS member. The member in question was a CalPERS member. He was a professional golden glove boxing champion during his time. On top of being a boxing champion and professional athlete, he spent 30 years of his life guiding children and youth by participating in community service and involvement in civic organizations. Additionally, he was the supervisor of child welfare and attendance for the Montebello Unified School District.

On 12/24/2012, the member, an 80 year old elderly man, presented to the acute care department of East Los Angeles Doctor’s Hospital for respiratory failure along with a number of other diagnosis. After the initial treatment, he was moved to sub-acute skilled nursing care. At age 80, the member had Medicare coverage that only covered part of his stay at the nursing facility, as his Medicare Part A benefits (which covers inpatient subacute services) exhausted. Once this coverage exhausted however, he maintained a Blue Cross PPO plan through CalPERS which authorized 4 additional months of inpatient services at the skilled nursing facility. Unfortunately, the member passed away during care. ELADH prepared claims for the four months of service provided to the member and submitted all charges payable by the patient’s Medicare Part B coverage (which covers non-inpatient services) to Medicare Part B. Upon receiving payment from Medicare Part B, ELADH submitted the claims totaling $2,445,084.44 to Blue Cross for payment on the inpatient services that were not covered by the member’s remaining Medicare Part B coverage and exhausted Medicare Part A coverage. This is where the fight with Blue Cross and CalPERS began.

A recent case our office has encountered has questioned CalPERS integrity and competency in handling their member’s covered services under their participation agreement and as a result has placed the lives of their members in financial turmoil.


Upon ELADH submitting their claim to Blue Cross, Blue Cross denied the claim initially because they wanted proof from ELADH that the patient’s Medicare benefits were completely exhausted. ELADH promptly submitted the letter from Medicare stating that the member’s Part A coverage had exhausted and that no further Medicare Part A (and thus no inpatient coverage) would be covered. Upon review, Blue Cross denied the claims again asserting that ELADH failed to bill Medicare Part B for all the services it should have prior to submitting the claims to Blue Cross. Blue Cross based this denial on the fact that the claims submitted to Blue Cross had different charges and total billed charges than the claims submitted to Medicare Part B.

In response, ELADH submitted to Blue Cross the Medicare guidelines and statutory authority, as well as guidance from billing specialists at Noridian and CMS demonstrating that what ELADH billed to Medicare was correct and that all charges payable by Medicare Part B were submitted to and paid by Medicare Part B. ELADH also explained to Blue Cross that the claims submitted to Blue Cross were different from the claims submitted to Medicare, because not all of the charges on the claims were payable by Medicare Part B and therefore not required (and for certain codes not allowed) to be submitted to Medicare Part B (Blue Cross should be very well versed in what services are billable to Medicare, as they maintain a Medicare program themselves.) However, Blue Cross continued to deny the claims on the basis that all charges (including the charges that are not payable by Medicare Part B) should have been billed to Medicare Part B, without providing any statutory authority, guidance from CMS, or other documentation supporting its position and in contradiction to the provided statutory authority and guidance from CMS demonstrating that ELADH billed Medicare correctly, despite multiple requests for Blue Cross to do so.

Our office made several requests for an administrative review and or administrative law judge hearing that CalPERS has apparently denied because the member died.


After Blue Cross refused to reimburse ELADH’s claim, our office submitted an enforcement letter to the plan fiduciary, CalPERS, informing them of Blue Cross’s wrongful denial. Pursuant to the PERSCare Evidence of Coverage, page 34 Section 4. Request for CalPERS Administrative Review Process:

If a member is not satisfied with Anthem Blue Cross’ FABD, the independent External Review Decision, or the member does not want to pursue the independent External Review process, the Member may request an Administrative Review from CalPERS/Blue Cross

Here, our office made several requests for an administrative review and or administrative law judge hearing that CalPERS has apparently denied because the member died.

Under Government Code Section 11500-11529:

A “Party” includes the agency, the respondent, and any person other than an officer or an employee of the agency in his or her official capacity, who has been allowed to appear or participate in the proceeding.

Further under 11500-11529, the member has the right to an attorney or other authorized representative. CALPERS/Blue Cross had denied that right to the provider with derivative standing.

In Connecticut State Dental Assn v. Anthem Health Plans, Inc., 591 F3d 1337, 1352-53 (11th Cir. 2009), the court held that claim forms subjected by health care providers to administrator demonstrated an assignment of benefits by the patient, thus establishing standing for providers.

Additionally, in Tango Transp. V. Healthcare Fin. Servs., 322 F.3d 888, 893-94 (5th Cir. 2003), the Court of Appeals for the Fifth Circuit held that a third party collection agency possessed derivative standing as an assignee of a healthcare provider, who itself possessed derivative standing as an assignee of the beneficiary of the ERISA plan.

Further, in Tango, the Court of Appeals cited Misic v. Bldg. Serv. Employees Health & Welfare Trust, 789 F.2d 1374, 1378 (9th Cir. 1986), “noting that extending derivative standing to health care providers ‘results in precisely the benefit the trust is designed to provide and the statute is designed to protect,’ while also ‘making it unnecessary for health care providers to evaluate the solvency of patients before commencing medical treatment’ or forcing patients to ‘pay potentially large medical bills and await compensation from the plan.'”

East Los Angeles Doctor’s Hospital is an assignee of the beneficiary of the plan (through an assignment of benefits). ELADH and this office (through a signed statement of representation) asserted derivative standing to appeal the matter and requested an Administrative Review and or Hearing to no avail.

On April 28, 2016, our office wrote to California Governor Jerry Brown in an attempt to escalate this matter and make a FOIA request for CalPERS authority to deny a member the right to be represented in an Administrative Law Judge Hearing, whether the dispute is considered a provider dispute or a member dispute, and authority to deny the member or authorized representative the right to pursue a fair hearing, benefit determination, or an appeal of an adverse benefit determination.

The Office of the Governor responded with a letter dated May 6, 2016. The letter stated that the Governor’s office does not possess any records that are responsive to our requests.


Currently, CalPERS continues to refuse any kind of payment for the services they authorized while the member was still alive. They have become unresponsive to our requests and follow-up refusing to grant any kind of ALJ Hearing. At this point, it seems that CalPERS is only continuing to deny and refusing to properly adjudicate this claim because they do not want to reimburse $2,445,084.44 to ELDAH for a deceased member. This kind of behavior paints a rather ugly picture for not only CalPERS, but other health insurance companies who wrongfully deny medical payment on behalf of its members. CalPERS wrongful denial wreaks of greed and deceit.

It is difficult to imagine the effects Blue Cross/CalPERS’s refusal to reimburse this claim has on both member’s family/estate who are now financially exposed to $2,445,084.44 in medical debt and ELADH who provided the same amount in services and resources.

The member’s family had just suffered an enormous loss of someone who was dedicated to helping the youth through the State of California as a supervisor for child welfare. CalPERS promised medical coverage as a part of being employed with the Montebello School District. CalPERS has failed its member obligations and has violated California State and/or Federal law by refusing to reimburse this members claim and leaving the members family with insurmountable medical debt.

CalPERS has wrongfully denied payment for services that were authorized. ELADH relied on the authorization to provide necessary medical treatment in good faith to the member, expecting CalPERS to properly reimburse ELADH for the services and resources expended to provide care. ELADH relies on CalPERS to provide reimbursement to them. This reimbursement is vital for ELADH to remain open and available to the public for medical treatment and care.

Our contacts with the Governor’s office were met with superficial responses and in the end, the Governor’s office failed to provide aggressive oversight over this matter. Our office also issued a California Public Records Request to CalPERS. This attempt was met with complete silence. CalPERS has been and continues to remain unresponsive to our request for public information. If you are a CalPERS member who has had your claim(s) denied by your Health Insurance Plan, we want to hear from you. Please report your denied claim(s) to the contact below:

Please contact:
ERN/ The Reimbursement Advocacy Firm
Brian Ford, J.D., CCA & Writer
(714) 995-6900 ext. 6920

We strongly urge and advise CalPERS to provide immediate reimbursement of these claims in accordance with the California Prompt Payment Act to prevent further escalation of these matters.

About CalPERS

CalPERS began in 1932 to provide retirement benefits to California State Employees. In 1962, Health insurance was available for CalPERS members as well. Headquartered in Sacramento, California, CalPERS provides health benefits to more than 1.3 million public employees, retirees, and their families though health plans from Preferred Provider Organizations, Health Maintenance Organizations, and Exclusive Provider Organizations.

CalPERS operates in a fiduciary capacity for the health benefits they provide to members through the various health plans such as United Health Care, Cigna, Aetna, Blue Shield and Blue Cross. Health plans such as Blue Cross and the employer organization who provide health benefits to their members are responsible to ensure that they do not bear the heavy burden of financial liability in the event they may require costly medical services.

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This post was written by ernncra