The Affiliated Physicians and Employers Master Trust d/b/a Members Health Plan NJ appears to be improperly imposing assessments and fees through a bankruptcy proceeding against current members, and against former members who terminated their relationship with the Trust before the assessment was conducted. In March 2021, the Trust filed for Chapter 11 bankruptcy and in December 2021, the Trust submitted a plan to wind down and repay its creditors, which included an assessment of the amount of healthcare fees from January 1, 2020 through July 31, 2021, requesting approximately 7.5% of the total amount from both current and former members.
The Trust is a self-funded multiple employer welfare arrangement, which is funded by participating employers, or Members, through which the Trust pays medical claims for the Member’s employees and dependents. Part of the Member’s obligations while participating in the Trust is to be responsible for a percentage of the liabilities incurred by the Trust for unpaid medical claims.
However, while it seems that members who were still part of the Trust as of the date of the assessment may have a contractual obligation to cover the assessed debt, the Trust has taken the position that former members who terminated their contracts before the bankruptcy-related assessment should be responsible for the assessed amounts as well. This position does not appear to be legally supportable.
Further, the Trust is now also seeking administrative fees, including, in part, attorneys’ fees. Specifically, on or about March 25, 2022, the Trust issued a notice warning that members who have not yet paid their assessed amounts faced a 10% attorney fee markup to cover the Trust’s collection efforts. The Trust additionally noted that if outstanding assessments were not immediately repaid, the Trust would begin filing lawsuits against delinquent Members for an amount equal to the full assessed amount plus any costs associated with the Trust’s collection efforts, including but not limited to increased attorneys’ fees equal to upward of 30% of the assessed amount.
How Frier Levitt Can Help
If you are a Member or former Member of the Trust who has received a communication from the Trust requesting repayment of the bankruptcy-related assessed amount, contact Frier Levitt for a consultation to discuss your options.