Blindsided by Bills: Mayo Clinic Staff Sue Over Deceptive Health Insurance Practices

When you work for one of the biggest nonprofit health care providers in the country, you might assume you would get good access to health care. But that doesn’t seem to be the case with Mayo Clinic, with a new lawsuit accusing the company of charging employees soaring insurance costs and allegedly not covering what they advertise they will.

The lawsuit accuses the company, along with provider portal Medica, of systemically underpaying health care bills and leaving employees saddled with enormous costs, the Minnesota Reformer reported.

Out-of-network, out of luck

The proposed class action lawsuit was filed by a worker at Mayo Clinic’s Arizona location, who said staff were burdened with more than $10,000 in health care costs each year, and some chose not to go to the doctor at all out of fear, due to the allegedly unlawful behavior of Mayo Clinic and Medica. 

The employee said when they used the Medica portal they found no in-network providers and were led to believe they could use out-of-network health care, however their insurance only ended up covering a fraction of the bill. 

To dupe employees, Mayo and Medica allegedly used “deceptive, misleading, arbitrary” pricing methods, didn’t explain reimbursement rates, and provided false information about providers in the member portal, the lawsuit alleges. Medica also fails to clearly explain employee benefits, even when asked to provide that information.

What is Mayo Clinic?

At more than 150 years old, Mayo Clinic is one of the country’s largest nonprofit academic medical centers. It serves more than 1.3 million patients every year and has more than 76,000 employees spread mostly across its clinics in Minnesota, Arizona, Florida, Iowa, and Wisconsin.

The clinic has built up a reputation as one the world's leading health research institutes and people — both providers and patients — visit it from all over the world. According to the lawsuit, the employees who are able to receive in-network health treatment where they live say the quality is great, the issues arise with the “phantom network”  of out-of-network providers many remote workers have to use.

Employer health insurance 

More than 57 percent of Americans under 65 get their health insurance through their workplaces, according to Vox, a system that is in place largely because the government doesn’t provide health insurance to working Americans. While it’s been that like for many decades, the last two have seen workers pay increasing amounts to keep up with the costs of care both in their paychecks and out of pocket.

Workplaces offer benefits based on a number of factors including legal requirements, industry standards, company size, budget consideration, and more. Some key considerations when looking into employee provided health insurance are:

• What your coverage needs are
• What benefits are offered. Be sure to compare deductibles, copayments, coinsurance, and coverage limits, as well as add ons like dental, vision, and prescription drug coverage 
• Compare employer plans with those available on the marketplace or a spouse's plan
• Check the plan’s network of healthcare providers, hospitals, and specialists
• Take into account any contributions your employer makes towards health insurance premiums

Companies under the spotlight for health insurance

This isn’t the first time Mayo Clinic has been in the spotlight for its high insurance costs, with employees alleging similar issues last fall, as the Reformer reported. But Mayo Clinic is not alone in facing legal action over health insurance issues. Blue Cross Blue Shield paid $2.67 billion to settle a proposed class action lawsuit with plaintiffs who accused the provider of limiting competition in the health care marketplace, leading to higher costs. 

Meanwhile, the Federal Trade Commission got a $195 million judgment against Simple Health Plans LLC and its CEO Steven J. Dorfman over charges they tricked consumers into signing up for bogus health care plans that didn’t give the coverage or benefits promised. New York Governor Kathy Hochul also recently secured $2.6 million in penalties against five Medicaid managed care health plans after the providers “repeatedly and inappropriately denied claims or failed to pay for specialty behavioral health services at the rates required by law.”

According to Politico, a number of law firms are planning to file class action suits against major American companies, including Lockheed Martin, Target, T-Mobile, PetSmart, and other large businesses, for failing to comply with a 2021 law that requires them to find cost-effective plans for employees. 

In the Mayo Clinic proposed class action lawsuit, the employee is seeking reimbursement for themselves and thousands of other Mayo Clinic employees. 

The plaintiff and proposed class is represented by Joseph A. Larson of Joseph A. Larson Law Firm, PLLC; and Dana R. Vogel and Christopher M. Sloot of McCune Law Group, McCune Wright Arevalo, Vercoski Kuselweck Brandt, APC.

The Mayo Clinic high health insurance costs proposed class action lawsuit is S.M.O. et al. v. Mayo Clinic et al., Case No. 0:24-cv-01124-JMB-JFD in the U.S. District Court of Minnesota.