Medica Insurance, Mayo Clinic accused of 'deceptive' insurance practices in lawsuit, leaving employees with thousands in medical bills

One of the world's most prestigious healthcare institutions is being sued by an employee who accuses the institution and its health insurance provider of 'deceptive' practices. 

A civil lawsuit brought by an anonymous employee in Arizona is alleging Mayo Clinic and Medica Health Plan Solutions used 'deceptive, misleading, arbitrary, illusory [and] unpredictable' pricing and reimbursement models, which 'constitute criminal activity.'

The lawsuit claims the Mayo Clinic, a top-five global hospital, and Medica, the company that manages its self-insured health plan, purposefully stopped in-network services and providers from showing up in its online search tool.

When no in-network providers were seemingly available, the employee in the lawsuit said they had to use an out-of-network provider, which cost them more than $1,000

Now, the employee is seeking reimbursement for the money they claim to have spent on care that should have been reimbursed. 

Pictured: Saint May's Hospital, part of Mayo Clinic, in Rochester, Minnesota

The Mayo Clinic is widely considered one of the best hospitals in the US and consistently ranks among the top five medical institutions in the world. 

The flagship facility is located in Rochester, Minnesota, but there are several locations throughout the United States, as well as one in London. 

Each year, the hospital serves more than 1.3million patients across its locations in the Midwest, Florida and Arizona and it has 80,200 employees. 

The healthcare behemoth has 16 hospitals and 50 specialty clinics.

According to the hospital's most recent financial reports, in 2023, it had a revenue of $18billion with an income of $1.1billion. The Mayo Clinic is a not-for-profit healthcare institution, meaning its income is invested back into the community, its staff and cutting-edge research and services.

Mayo Clinic offers employees self-insured plans, which means the employer itself collects premiums and fees from enrollees, as opposed to a separate medical insurance company. 

This means the company is responsible for paying employees' and their dependents' medical claims. 

In the class-action lawsuit, filed in US District Court on April 2, the employee said they were looking for a psychiatrist after their son suffered a 'mental health crisis' in 2019.

The employee went to the insurance's website and searched for mental healthcare providers for children within 50 miles of their home in Scottsdale, Arizona.

The search returned no results for in-network doctors that would be covered by insurance.

They decided to see a doctor not covered by Mayo Clinic's health insurance and submitted their bill to Medica to be reimbursed. Their claim was denied, the lawsuit states, due to the fact that multiple in-network providers were available within 25 miles.

Medica did not explain how these providers were found and why they did not show up in the employee's provider portal, the complaint said.

The employee attempted multiple times to appeal Medica's decision to not reimburse them, but they were all denied. 

The suit alleges: 'Mayo and Medica are engaged in an illegal "kick-back" scheme where Mayo and Medica take funds given to them by plan members and retain them illegally for their own benefit, forcing [people] to pay twice for the same services.'

The complaint called the practices 'acts of mail and wire fraud, racketeering,' and alleged violations of the Employee Retirement Income Security Act of 1974 and the Racketeer Influenced and Corrupt Organizations (RICO) Act, which is normally considered in criminal proceedings related to organized crime entities.

The suit requests Medica look again at underpaid claims to the employee, as well as transparency when processing insurance claims.

Medica did not explain why in-network options did not show up in the employee's provider portal

This is not the first time Mayo Clinic and Medica's insurance has been in the spotlight. Current and former employees not involved in the ongoing lawsuit told the Minnesota Reformer in October they have sought out-of-network providers for essential care or avoided medical care altogether out of fear of what it might cost them.

One worker said he has had to cut down on counseling for his daughters' mental health conditions and has avoided seeing a physical therapist for his back pain, despite paying $11,000 a year for health care coverage.

Another employee told the Reformer she was 'terrified' of having to go into the hospital after she paid $1,200 dollars for a routine physical and bloodwork in January 2023, even though she said her benefits state insurance should cover half. 

And one former employee is still paying back $10,000 of medical debt she acquired during her Mayo employment.  

The former employee told the Reformer she switched to her husband's medical plan despite a $7,000 deductible because it had in-network doctors she could access.

She said: 'I was bitter after that experience… You assume the top hospital network in the world, theoretically, would take care of its employees.'

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Another Mayo Clinic employee in Texas told the publication she had to stop seeing a specialist after accepting a job at the institution and now has to drive more than an hour in order to see a doctor covered by Mayo Clinic insurance. 

While yet another said her inadequate coverage led her to receive inferior care at 'super shady' clinic after Medica said the first location she went to was not in network. 

She told the Reformer she still had to pay more than $300 and was left with complications after receiving stitches.

In a statement to DailyMail.com, Medica said: 'As administrator of the Mayo employee health plan, Medica is committed to helping Mayo employees understand their network care options and partnering with Mayo to provide its employees with the tools and resources to help them understand their plan. 

'We will respond to the lawsuit but cannot comment further on the lawsuit at this time.'

In a separate statement to this website, Mayo Clinic said: 'Mayo Clinic is committed to supporting the health and wellness of our employees and their families. Our benefits plan is designed to provide flexibility to help our employees meet their healthcare needs. 

'We are in the process of filing a motion to dismiss the claims against Mayo Clinic. We will not comment further at this time.