Category: ERISA

How to Fight A Health Insurance Denial

Many Americans increasingly find themselves dealing with huge medical bills after medical procedures their health insurers should have covered.  All too often, the insurance company says “it’s not our problem, talk to the hospital;” the hospital says “it’s not our problem, talk to your insurer;” and the insured is left holding the bag, often at a time they’re already dealing with the stress of major surgery or illness.

The good news is Washington insureds have specific rights they can enforce to hold their health insurer accountable.  Insurers must follow the specific terms of the policy contract and cannot deny coverage for medical bills without a reasonable basis.  If insurers fail to live up to their obligations, the insurer has legal rights under Washington’s Consumer Protection Act and Insurance Fair Conduct Act, or the federal Employee Retirement Income Security Act, to seek a court order requiring coverage and requiring the insurer to pay the insured’s attorney’s fees.

Unfortunately, fighting a health insurance denial takes significant time and effort, which can be hard when you’re already recovering from surgery or illness.  This is why many health carriers have been criticized for making the process difficult and confusing in the hope that insureds will simply give up without fighting the denial.

There are three common reasons why health insurance claims are denied:

  1. The insurer determines the procedure, treatment or medicine was not “medically necessary.”  The definition of “medically necessary” depends on the specific policy, but, generally, when the insurer says the procedure wasn’t medically necessary they basically mean “we don’t believe you really needed it.”  Sometimes the insurer uses the same rationale to deny coverage on the basis the treatment is supposedly “experimental.”
  2. The hospital or doctor who provided the treatment was out-of-network, meaning the provider didn’t have a contract with the insurance company.  Most health insurance severely limits or eliminates coverage for out-of-network providers.
  3. The doctor or hospital who provided the care used improper billing and coding, causing the insurer to reject coverage because the hospital didn’t properly detail what care was performed.

The good news is many people successfully fight their health insurer’s denial of coverage.  Each of the three common reasons health claims are denied can be subject to attack:

  1. Denials on the basis treatment was not medically necessary can often be fought with the support of the doctors who prescribed the treatment or care at issue.  Too often, health insurers misread, gloss over, or outright ignore a physician’s rationale for prescribing treatment.  Especially where treatment is expensive or time consuming, insurers have a powerful temptation to “miss” the medical records demonstrating the patient needs the treatment in order to justify denying coverage for treatments that will cost the insurer a lot of money.
  2. Denials for out-of-network treatment can be fought by insisting the insurer follow the policy contract and the federal Affordable Care Act (a/k/a Obamacare).  Often, the policy contract requires the insurer to provide at least some degree of coverage even where the treatment is out-of-network.  Furthermore, if the insured was treated by an out-of-network provider for emergency care, the Affordable Care Act requires the insurer to treat the care as though it was provided in-network.
  3. Improper billing and coding by the hospital can often be challenged by a thorough review of the medical records, procedure codes and billing codes.

Importantly, your insurer cannot deny health care coverage without a reasonable explanation.  This means you have the right to know specifically why coverage was denied and to get the information you need in order to fight the denial.  Most health insurers are required to allow you to “appeal” the denial before filing a lawsuit.

Lastly, in fighting a health insurance denial, be mindful of the applicable deadlines.  All health insurance disputes are subject to deadlines that will cause the insured to lose their right to challenge the health coverage denial if the insured fails to act within a certain time period.  The specific deadline varies, so it is critical to be diligent and stay aware of any applicable deadlines when fighting a health coverage denial.

ERISA Plan Administrator Cannot Unilaterally Ignore Treating Physicians, Appeals Court Confirms

A recent appeals court ruling emphasizes that ERISA plan administrators cannot ignore the opinions of a claimant’s treating physicians absent tangible evidence those opinions are wrong.  In Hennen v. Metropolitan Life Insurance Company, the appellate court ruled the plan administrator acted arbitrarily in discounting the opinions of the claimant’s treating physicians and remanded the claim for a full and fair review.

After a back injury, Hennen applied for long-term disability (“LTD”) benefits with her employer’s group policy insured by MetLife.  MetLife agreed that Hennen was disabled and paid benefits for two years.  But after two years, MetLife terminated Hennen’s benefits, finding that the Plan’s limitation for neuromusculoskeletal disorders cut off Hennen’s benefits after two years of payments.   Hennen sued under ERISA, arguing she fell within an exception to the two-year cutoff because she had radiculopathy.

The U.S. Court of Appeals for the Seventh Circuit ruled for Hennen.  Although the court acknowledge ERISA required deference to MetLife’s decision because the plan contained discretionary language, the court noted discretionary authority did not permit MetLife to act arbitrarily in deciding Hennen’s entitlement to benefits.  The court determined MetLife acted arbitrarily when it discounted the opinions of four doctors who diagnosed Hennen with radiculopathy in favor of the opinion of one physician who ultimately disagreed, but only while recommending additional testing that MetLife declined to pursue.

The court noted that even though a plan administrator is typically permitted to chose which medical opinions to rely on, its decision must still have a rational explanation.  Every physician who examined Hennen since 2012 concluded she had radiculopathy.  These doctors’ opinions had substantial medical support.  While MetLife chose to ignore these doctors’ opinions in favor of its own employee Dr. McPhee, that decision was arbitrary.  Dr. McPhee recommended Hennen undergo further testing and an independent medical examination in order to determine whether Hennen’s radiculopathy diagnosis was correct, but MetLife ignored that suggestion.  The court emphasized:

Here, MetLife took an extra step for its own benefit when it referred Hennen’s file to Dr. McPhee for review. But when Dr. McPhee recommended that MetLife take an additional step for Hennen’s benefit — to confirm whether his lone opinion that she did not suffer from radiculopathy was accurate—MetLife declined to take that step.That was arbitrary and capricious.

The court also emphasized “Although it is reasonable for MetLife to require objective support for a diagnosis of radiculopathy, it would be unreasonable to discount clinical observations of Hennen’s treating physicians in favor of testing that is inconclusive for the condition.”

The court ordered Hennen’s claims be remanded to MetLife for the full and fair evaluation ERISA mandates.

The Hennen decisions represents an important enforcement of ERISA’s requirement that insureds and claimants be afforded a fair and objective determination of their entitlement to benefits, even where the Plan affords the plan administrator discretionary authority.

Medical Proof Required to Deny ERISA Claims Based on Intoxication Exclusion Says Fifth Circuit

Many ERISA plans and insurance policies contain provisions excluding coverage for losses caused by the insured’s intoxication.  In cases where the plan or insurer asserts such an exclusion, the question becomes what evidence must the insurer put forward in order to prove the insured was intoxicated and the exclusion applies?

The U.S. Court of Appeals for the Fifth Circuit recently answered that question in White v. Life Insurance Company of North America.  Life Insurance Company of North America (“LINA”) issued an ERISA-governed life insurance policy insuring Mr. White with Mrs. White as the beneficiary.  Mr. White was killed in a horrible car crash in which his vehicle crossed the center line and struck an oncoming 18-wheeler head-on.

LINA denied coverage asserting the policy’s intoxication exclusion precluded coverage because Mr. White was drunk at the time of the crash.  Weather and road conditions were clear at the time of the crash, Mr. White’s vehicle appeared to function properly, and paramedics reported smelling alcohol on Mr. White’s breath.  Hospital staff took blood and  urine samples from Mr. White that tested negative for alcohol but contained undefined amounts of amphetamines, cocaine, opiates, benzodiazepine, and cannabinoids.  The tests were preliminary and only indicated the presence, not the amount, of controlled substances.

The Court agreed with Mrs. White.  The LINA life insurance policies excluded coverage for death “caused” by Mr. White’s intoxication.  The policy (borrowing from Arkansas law) defined intoxication to mean “influenced or affected by the ingestion of alcohol [or] a controlled substance…to such a degree that the driver’s reactions, motor skills, and judgment are substantially altered and the driver, therefore, constitutes a clear and substantial danger or physical injury to himself or herself or another person.”

The Court found LINA’s evidence failed to meet the policy definition of intoxication.  LINA relied on the opinion of a toxicologist who opined it was impossible to estimate the level of Mr. White’s impairment at the time of the crash based on the preliminary test results.  The toxicologist opined only that “in the absence of any other cause of the collision, the drugs in [Mr. White’s] system could explain his level of impairment that resulted in his crash.”

Accordingly, the Court entered judgment in favor of Mrs. White.  The White case is an important reminder that ERISA plans and insurers cannot deny claims by asserting exclusions that lack tangible factual support.

ERISA Plan Cannot Recover Overpayments Resulting From The Plan’s Own Mistake

Most employee benefit plans (e.g., employer-sponsored health or disability insurance) allow the plan to recover excess overpayments it provides the insured.  This typically occurs where the plan provides benefits that are duplicated by another source of funding.  For instance, most long-term disability plans provide that benefit payments are offset by amounts the insured receives from a Social Security Disability claim.  These provisions are generally enforceable.

The Ninth Circuit Court of Appeals recently refused to uphold the plan’s right to repayment where the overpayment was due to the plan’s own error.  In its unpublished decision in Mrkonjic v. Delta Family-Care and Survivorship Plan, the court held Delta’s employee benefit plan could not recover overpayments from Myrkonjic caused by Delta’s improper denial of Myrkonjic’s initial claim for benefits.

Myrkonjic became disabled following a work injury and applied for long-term disability (“LTD”) benefits from his employer Delta’s employee benefit plan.  Delta denied Myrkonjic’s claim.  During the ensuing thirteen-year lawsuit over Myrkonjic’s right to LTD benefits, Myrkonjic took early retirement under Delta’s retirement plan in order to provide a source of income during the period he could not work and was not receiving LTD payments.

After years of litigation, Delta agreed Myrkonjic was entitled to LTD benefits.  But Delta subtracted from Myrkonjic’s LTD payments amounts Delta had paid him in early retirement benefits, relying on language in the governing plan documents permitting Delta to make an offset accounting for duplicative benefits.  Delta’s calculation of Myrkonjic’s offsets differed from the manner in which Delta typically calculated offsets: “Normally…If the offsets exceed the benefit, the claimant receives nothing but does not owe excess offsets back to the Plans.  The Plans concede that they calculated Myrkonjic’s LTD benefits inconsistently with their normal method.”

The Ninth Circuit determined Delta’s offset calculation was improper.  Noting “Myrkonjic would up in federal court in the first place” and “was forced to elect early retirement” “because the Plans improperly refused to approve his LED application”, the court ruled the Plans should have resolved the offset “so as to leave Myrkonjic no worse off from their mistakes.”

 

ERISA Appeal FAQs

ERISA, the federal law governing most employer-sponsored benefits (e.g., health, disability or life insurance, or pension or retirement benefits) gives participants the right to appeal the Plan or insurer’s denial of payment or benefits (in legalese, an “adverse benefit determination”).  Plans and insurers are required to be transparent about participants’ appeal rights.  Unfortunately, adverse benefit determination notices often fail to adequately explain participants’ appeal rights and important deadlines.

Below is a “cheat sheet” listing some of the issues relevant to participants’ rights to appeal an adverse benefit determination under ERISA:

  • You must appeal before filing suit.  ERISA generally requires participants to exhaust their administrative remedies before filing suit.  This requires going through the Plan or insurer’s internal appeal process before bring a lawsuit.  If you sue before exhausting the appeal process, the court will likely dismiss the lawsuit and your claim could be barred.  Note that ERISA typically requires only one appeal – while Plans often provide for multiple levels of appeal, participants are generally free to file suit after the first appeal is denied.  Indeed, in most cases, successive rounds of appeal serve no purpose other than to permit the Plan or insurer to bolster its position with several rounds of supposedly “independent” review that typically rubber-stamp the original adverse benefit determination.
  • You must appeal within the deadline.  Once the Plan or insurer renders an adverse benefit determination, the deadline starts running in which to appeal the decision.  The deadline is often short, depending on the details of the Plan documents.  Failure to timely appeal will often irrevocably destroy your right to dispute the adverse benefit determination or file a lawsuit.
  • Your appeal must contain all relevant information.  If the appeal is denied and the participant files a lawsuit, the evidence that can be presented in the lawsuit is often limited to the information submitted to the Plan or insurer during the appeal process.  Thus, it is critical to submit all potentially relevant information during the appeal process.  Even information that might seem irrelevant at first could potentially become relevant in a lawsuit.
  • Your appeal must account for the Plan documents and the Plan or insurer’s investigation.  Despite federal regulations requiring transparency in ERISA claims, adverse benefit determination notices often fail to contain important information relevant to the dispute.  This includes the full Plan documents setting forth participants’ rights under the Plan.  It also includes the Plan’s or insurer’s claim file, which often contains internal notes or other evidence reflecting the true basis for the adverse benefit determination.  Acquiring this information and addressing it with rebuttal evidence is critical to prevailing in any appeal or lawsuit challenging the denial of payment or benefits.

ERISA appeals can be complex, and failure to follow the appropriate procedures can be fatal to participants’ rights to coverage or benefits.  It is critical to carefully scrutinize all correspondence with the Plan or insurer, the governing Plan documents, and the applicable evidence before submitting an appeal.