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ERISA Court Watch

 

    Unless Congress Rewrites ERISA, Federal Court Ruling Is the Only and Ultimate Answer to Interpretation of Mysterious ERISA Statutes and Regulations for Our Managed Care Claim Denials and Disputes. Case Law in ERISA Develops Every Day. Without Understanding of ERISA Case Law, One Will Never Truly Understand What ERISA Really Means in  Dollars and Sense of Health-care Benefits Dispute in 80% of health-care claims or 60% of health expenditures in the U. S..

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US Supreme Court Visits ERISAclaim.com
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Staff Attorney Offices Help Manage Rising Caseloads (02/17/04)

 

 

 

RUSH PRUDENTIAL HMO, INC. v. MORAN [00-1021]
 

(Rush) "It is, in fact, the Plan Administrator" (footnote 3)

 

As lower federal courts have erroneously interpreted ERISA preemption for decades, Supreme Court clarifies ERISA preemption for the first time, at the same time, Supreme Court clarifies and interprets ERISA as to how to identify and determine the plan administrator status, as most lower courts have erroneously interpreted ERISA for decades to consider the plan sponsor as the plan administrator when the plan administrator has granted the discretion to another party and has never exercised such discretionary authority.

ERISAClaim.com Comment: (click here for details)

 

 

 

ERISA Shield Explosion?

Dx from U.S. Supreme Court?

 

(Copyright © 2004 by Jin Zhou,  ERISAclaim.com)

PEGRAM et al. v. HERDRICH

Decided 06/12/2000

Healthcare Quality by State Laws or ERISA?

RUSH PRUDENTIAL HMO, INC. v. MORAN

Decided June 20, 2002

Medical Necessity by State Laws or ERISA?

Kentucky Assn. of Health Plans, Inc. v. Miller

Decided: April 2, 2003

Managed Care Networks by State Laws or ERISA?

AETNA HEALTH INC. v. DAVILA

Decided June 21, 2004

Health Care Quality & Cost Control by State Laws or ERISA?

ERISA Shield Explosion!!!

ERISA Patient's Bill of Right from Supreme Court

(Copyright © 2004 by Jin Zhou,  ERISAclaim.com)

04/28/2004

This will change entire health care and litigation landscape.

 

Click here for more details

 

06/21/04 02-1845 Aetna Health Inc. v. Davila

 

Breaking News:

 

Supreme Court Ruling today will change entire health care system. This ruling was correctly predicted by the publisher and editor of ERISAclaim.com, Dr. Jin Zhou, on 04/28/2004.

 

 

Supreme Court Collection home

Supreme Court ERISA Watch

click here to Special coverage

 

 

Hahnemann Univ Hosp v. All Shore Inc

3rd Cir., 01/29/2008

  1. Silent / Passive PPO's, No good!

  2. No Attorney’s fees during the pre-litigation administrative process under ERISA

 

"Upon receiving Hahnemann’s claim for benefits, BCI sought to determine whether a preferred provider organization (“PPO”) option applied to the claim. As a third-party claims administrator, BCI entered into contracts with various PPOs which allowed a health benefit plan access to the PPOs’ price discounts, even though there might not have been an agreement between the health benefit plan and the PPO itself. These are called passive PPOs. Upon analyzing Hahnemann’s claim for benefits, BCI determined that a 10 % discount might apply to Hahnemann’s claim based upon a PPO established by MultiPlan, Inc. (“MultiPlan”).

 

Hahnemann did not receive a check for the amount it requested, or even an amount applying a 10 % discount. Instead,the managing general underwriter concluded that a 40 % discount was applicable to Hahnemann’s charges through a different PPO. Specifically, the underwriter determined that the National Preferred Provider Network (“NPPN”) PPO applied. Thus, Hahnemann only received 60 % (or approximately $150,000) of the charges it originally submitted. Hahnemann received this payment in September 1999."

 

IV. CONCLUSION

 

In conclusion, we affirm the grant of summary judgment in favor of Hahnemann. However, because the District Court improperly included the amount of time spent by Hahnemann’s counsel during the pre-litigation administrative process, we vacate and remand the award of attorney’s fees for further proceedings  consistent with this opinion. The award of travel and expense costs is also vacated and remanded for further proceedings because the District Court awarded travel and related expenses to Hahnemann for its counsel located outside of the forum, even though there was no finding that forum counsel would have been unwilling or unable to represent Hahnemann. Finally, because the District Court separately awarded Court costs, as well as and travel and expense costs in its judgment, and the Appellants did not object on appeal to any part of the award of Court costs, we will not disturb the District Court’s award of Court costs.

 

 

 

 

 

 

Northeast Hospital Authority v Aetna Health Inc

S.D.Tex., October 17, 2007

 

PPO or ERISA???

Even for true PPO, Aetna asserted ERISA defense

 

"As in Pascack Valley Hospital and Anesthesia Care Associates, the crux of the parties’ dispute in this case arises from the terms of a contract-the Hospital Agreement-that is independent of the ERISA patients’ plans; the ERISA patients are not parties to the Hospital Agreement; and parties dispute the level, rate, or amount of payment, not the right to payment. Northeast does not challenge Aetna’s benefits determinations under the patients’ ERISA plans. Nor does Northeast challenge the scope of the plans’ coverage"

 

"Courts applying Davila have found that no there is no ERISA preemption when a health-care provider sues an insurance company to assert contract claims that exist independently of ERISA. The Third Circuit, for example, found no preemption in Pascack Valley Hospital, Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393 (3d Cir.2004)."

 

 

SMS Fresno Community Hospital and Medical Center v. John Souza

EASTERN DISTRICT OF CALIFORNIA

July 3, 2007

 

ERISA Pre-emption v. State Laws

"The Ninth Circuit has explained that common law claims do not “relate to” an ERISA plan when the “adjudication of the claim required no interpretation of the plan, no distribution of benefits, and no dispute regarding any benefits previously paid. ....In contrast, where a claim requires interpretation of an ERISA plan or law, ERISA preemption exists.”

 

"Here, then, UMC can only escape ERISA preemption if it can either identify a separate contract between the parties, or allege a specific misrepresentation that would not require interpreting Teamster’s ERISA plan and would not affect the relationships between ERISA participants."

 

ERISA v. PPO

 

"Section 6.14 of the Blue Cross Contract provides as follows:

 

BLUE CROSS agrees to verify to HOSPITAL a person's BLUE CROSS  membership and to identify for HOSPITAL, based upon information provided by HOSPITAL, waivered conditions, current balance of lifetime maximum and any dollar limits applicable under the relevant Benefit Agreement. . . . A guarantee of eligibility is not a guarantee of payment. If HOSPITAL is notified that the member is eligible, HOSPITAL is entitled to payments for services rendered, covered under, and subject to the exclusions and limitations of the relevant Benefit Agreement."

 

This specific reference requires an examination and interpretation of the underlying Teamsters’ Plan and therefore distinguishes this case from those cited by UMC that found state law causes of action not preempted."

What to do

"The Court is also cognizant of UMC’s concern that, by denying payment based on an enrollee’s failure to follow procedures under their health plan, the risk of non-payment will be transferred to the hospital. Yet this argument assumes that UMC will be left with no recourse. To the contrary, UMC can step into the shoes of the patient/enrollees and sue under an assignment of benefits. Such a suit would, without question, be preempted by ERISA, and for this reason, UMC argues that it would be an enormous business burden to require it to seek payment in this way. This Court, though, is bound by the laws enacted by Congress and while it can interpret these laws, it cannot displace them.


For the reasons stated above, the Court finds that UMC’s First, Second and Third Causes of Action are preempted by ERISA."

 

 

 

ABATIE V ALTA HEALTH & LIFE

9th Cir. 08/15/2006

 

"In addition, this case requires us to consider how a court is to review an ERISA plan administrator’s decision when the procedure that produced the decision did not follow all statutory requirements. For the reasons that we will develop, we conclude that when a decision by an administrator utterly fails to follow applicable procedures, the administrator is not, in fact, exercising discretionary powers under the plan, and its decision should be subject to de novo review. Lesser irregularities, like the one in this case, do not remove the decision from abuse of discretion review, but rather should be factored into the calculus of whether the administrator abused its discretion.

 

.....We have held that an insurer that acts as both the plan administrator and the funding source for benefits operates under what may be termed a structural conflict of interest......."

ERISAclaim.com Comment:

For a healthcare provider  in appealing of denied medical benefits claims, he/she must be able to prove through the appeal that  "an administrator utterly fails to follow applicable procedures" in initial denial and subsequent appeal or reviews, among other things in a successful appeal practice. This is more important than arguing emotionally on medical merits of the claims, which most providers have been doing.

 

 

La. Health Serv. & Indem. Co. v. Rapides Healthcare Sys

 

FIFTH CIRCUIT REJECTS BCBS ERISA PREEMPTION CHALLENGE TO STATE ASSIGNMENT OF BENEFITS LAW REGARDLESS OF PPO PARTICIPATION BY PROVIDERS

 

 

00-MD-1334-MORENO - In Re Managed Care Litigation


Order granting summary judgment in favor of remaining defendants United and Coventry on all claims* (06/19/2006)
Final Judgment* (09/26/2005)
Order approving settlement among Prudential and physicians, physician groups & organizations, certifying class & directing entry of Final Judgment* (09/26/2005)
Final Judgment* (09/26/2005)
Order approving settlement among Health Net and physicians, physician groups & organizations, certifying class & directing entry of Final Judgment* (09/26/2005)
Final Judgment* (07/20/2004)
Order approving settlement, certifying class & directing entry of Final Judgment* (07/20/2004)
Omnibus Order granting in part and denying in part joint motion to dismiss the second amended consolidated class action complaint* (12/08/2003)

 

 

Semien, Kathleen v. Life Insur Co

7th Cir., 02/06/2006

 

Page 12:

"The reports by the physicians LINA hired to review Semien’s claim demonstrate a thorough consideration of the available information. These physicians found Semien capable of activities that would disqualify her from longterm disability coverage. Although Semien’s treating physicians reached different conclusions as to her abilities, under an arbitrary and capricious review, neither this Court, nor the district court, will attempt to make a determination between competing expert opinions. Instead, an “insurer’s decision prevails if it has rational support in the record.” Leipzig v. AIG Ins. Co., 362 F.3d 406, 409 (7th Cir. 2004). 


The two physician reports prepared for LINA, coupled with the Transferable Skills Analysis prepared based upon those reports, provide a sufficient basis and rational support for the conclusion that Semien was ineligible for long-term disability benefits. While the conclusions in the medical reports submitted by Semien are also rational, “[r]aising debatable points does not entitle [the claimant] to a reversal under the arbitrary-and-capricious standard.” Sisto v. Ameritech Sickness and Accident Disability Benefit Plan, 429 F.3d 698, 701 (7th Cir. 2005). 


No evidence in the record
demonstrates bias by the physicians LINA consulted. Nor has any evidence been presented to convince this Court that the appraisals by LINA’s physicians were so inherently flawed as to be rendered arbitrary and capricious. The confines of the ERISA statute and the constraints of judicial resources do not permit this Court, nor the district courts, to engage in the complex weighing of expert testimony when a plan administrator has been granted discretionary authority. Where an insurance plan gives discretionary authority to a plan administrator, ERISA provides a limited Article III review. Engaging in the type of in-depth review Semien advocates not only runs contrary to statutory intent, but..."

ERISAclaim.com Comment:

This court analysis of ERISA review standards indicates how claimant should appeal denials, not only on medical merits but also proof of "demonstrated bias" and "so inherently flawed" medical reviews.

 

The following case, although unpublished opinion, made the same ruling on this issue of trial discovery or appeal disclosure:

 

Donnell v. Metropolitan Life

4th Cir. 02/08/06
 

 

 

 

PRIMAX RECOVERIES v. GUNTER

[6th Cir.,  01/12/2006]

 

ERISA, Overpayment

 

 

 

Dunlap, Donald E. v. Nestle Incorpo

 

Opinion

12/12/2005, 7th Cir.

 

 

Krodel v. Bayer Corporation

(10/12/2005, D. Mass.)

 

Page 17 of 20

"Here, the Court holds only that where 1) a participant applies for coverage of a benefit which 2) is apparently covered under the language of an SPD and 3) the plan administrator thereafter re-interprets it in a more restrictive fashion and denies coverage 4) in contravention of the conclusions of all of the medical experts involved, that decision is arbitrary and capricious. The decision of the Plan Administrator will be reversed."

 

 

 

 

Krodel v. Bayer Corporation

(11/19/2004, D. Mass.)

 

Self-Insured Employer Simply Rubber Stamped the Decision of CIGNA and Violated New ERISA Claim Regulations

 

Bayer’s Denial of Dr. Krodel’s Claim

 

"1. Bayer violated ERISA by failing to "afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim." 29 U.S.C. §1133(2); 29 C.F.R. § 2560.503-1(h)(1). Under that provision, a plan administrator is required to provide a review that "does not afford deference to the initial adverse benefit determination".29 C.F.R. § 2560.503-1(h)(3)(ii)."

 

"2. Bayer also violated 29 C.F.R. § 2560.503-1(h)(3)(iii) which provides that:

In deciding an appeal of any adverse benefit determination that is based in whole or in part on a medical judgment, including determinations with regard to whether a particular treatment, drug, or other item is . . . medically necessary or appropriate, the appropriate named fiduciary shall consult with a health care professional who has appropriate training and experience in the field of medicine involved the medical judgment. Id. § 2560.503-1(h)(3)(iii) (emphasis added).

As far as the record shows, Defendants failed to seek any medical advice in making their determination with respect to Dr. Krodel’s claim. Thus, a clear violation of the regulation occurred.

 

"3. Upon notifying Dr. Krodel of the denial of his claim, Bayer violated 29 C.F.R. § 2560.503-1(g)(1)(v)(A) which provides that, if a specific internal rule is relied on in making a determination, that rule must be provided or a statement made that it will be made available to the claimant free of charge. Id. § 2560.503-1(g)(1)(v)(A)."

 

"4. Bayer also violated 29 C.F.R. § 2560.503-1(g)(1)(v)(B), which states that:

If the adverse benefit determination is based on a medical necessity . . . either an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the claimant’s medical circumstances, or a statement that such explanation will be provided free of charge upon request [will be provided to the claimant]. Id. § 2560.503-1(g)(1)(v)(B).

 

"5. Finally, Bayer violated its own internal rule by failing to inform Dr. Krodel that he might qualify for a different prosthesis."

 

"Second, Plaintiff contends that he is entitled to statutory penalties of approximately $40,000 (i.e. up to $100 per day for 400 days) based upon Defendants’ alleged failure to provide information to Dr. Krodel as required by ERISA. See 29 U.S.C. §1132(c). Specifically, Dr. Krodel alleges that the non-provision of the SOP constituted such a failure. His argument has merit because the SOP contained the underlying basis for his exclusion from coverage."

 

 

 

Buffonge v. Prudential Ins. Co.
1st Cr. 10-14-2005

"We have not previously addressed the issue raised in this ERISA appeal, which comes to us from the district court's entry of summary judgment concluding that a claims administrator's denial of long-term disability benefits was not arbitrary and capricious. The plaintiff appeals and asserts that his ERISA rights were violated because the administrator relied on material mischaracterizations of the medical record.......

 

We conclude that the process used was materially tainted, and the taint was sufficiently prejudicial, so as to render the process arbitrary. We remand to the district court to remand to the claims administrator for a new review of Buffonge's claim. We emphasize that we do not reach the issue of whether Buffonge was disabled."

 

 

 

 

McDonald, James v. Household Int'l

Seventh Circuit Court of Appeals

09/29/2005

 

Opinion

Oral Argument

Oral Argument

 

"‘make-whole’ relief"?

 

"It will be up to the McDonalds on remand to decide whether they wish to proceed with their case or to abandon it. In that connection, they may wish to take note of Justice Ginsburg’s comment in her concurring opinion in Davila, in which she drew attention to the Government’s suggestion that ERISA “as currently written and interpreted, may allo[w] at least some forms of ‘make-whole’ relief against a breaching fiduciary in light of the general availability of such relief in equity at the time of the divided bench.” Id. at 2504 (internal quotations omitted). (We note that in Davila, as here, the respondents had declined the opportunity to amend their state-law complaints to add ERISA claims, id. at 2502-03 n.7, but it appears that no one argued to the Court that this step was unnecessary, and it thus had no occasion to reach the point we have discussed in this opinion.)"

 

 

ERISA Patient's Bill of Right from Supreme Court

(Copyright © 2004-5 by Jin Zhou,  ERISAclaim.com)

 

 

Aetna Health Inc. v. Davila

06/21/04

Opinion of the Court

 

"Held: Respondents’ state causes of action fall within ERISA§502(a)(1)(B), and are therefore completely pre-empted by ERISA §502 and removable to federal court. Pp. 4–20."

 

"We hold that respondents’ causes of action, brought to remedy only the denial of benefits under ERISA-regulated benefit plans, fall within the scope of, and are completely pre-empted by, ERISA §502(a)(1)(B), and thus removable to federal district court. The judgment of the Court of Appeals is reversed, and the cases are remanded for fur-ther proceedings consistent with this opinion.7 It is so ordered."

"7  The United States, as amicus, suggests that some individuals in respondents’ positions could possibly receive some form of “make-whole” relief under ERISA §502(a)(3). Brief for United States as Amicus Curiae 27, n. 13. However, after their respective District Courts denied their motions for remand, respondents had the opportu-nity to amend their complaints to bring expressly a claim under ERISA §502(a). Respondents declined to do so; the District Courts therefore dismissed their complaints with prejudice. See App. 147–148; id., at 298; App. B to Pet. for Cert. in No. 02–1845, pp. 34a–35a; App. B to Pet. for Cert. in No. 03–83, p. 40a. Respondents have thus chosen not to pursue any ERISA claim, including any claim arising under ERISA §502(a)(3). The scope of this provision, then, is not before us, and we do not address it."

GINSBURG, J., concurring

"The Government notes a potential amelioration. Recog-nizing that “this Court has construed Section 502(a)(3) not to authorize an award of money damages against a non-fiduciary,” the Government suggests that the Act, as currently written and interpreted, may “allo[w] at least some forms of ‘make-whole’ relief against a breaching fiduciary in light of the general availability of such relief in equity at the time of the divided bench.” Brief for United States as Amicus Curiae 27–28, n. 13 (emphases added); cf. ante, at 19 (“entity with discretionary authority over benefits determinations” is a “plan fiduciary”); Tr. of Oral Arg. 13 (“Aetna is [a fiduciary]—and CIGNA is for purposes of claims processing.”). As the Court points out, respondents here declined the opportunity to amend their complaints to state claims for relief under §502(a); the District Court, therefore, properly dismissed their suits with prejudice. See ante, at 20, n. 7. But the Govern-ment’s suggestion may indicate an effective remedy others similarly circumstanced might fruitfully pursue.

Congress . . . intended ERISA to replicate the core principles of trust remedy law, including the make-whole standard of relief.” Langbein 1319. I anticipate that Congress, or this Court, will one day so confirm."

ORAL ARGUMENT TRANSCRIPTS

 

"QUESTION: Yes. And so, as a fiduciary they're -- they are analogous to a trustee, at least, the government said, if I read their footnote 13 right, that back in the old days when there was -- was a division of the bench, that one of the remedies available against a trustee would be in the nature of make whole relief that would put the beneficiary in the position he would have been in if the trustee had not committed the breach of trust." (page 13)

 

"QUESTION: No, but the whole thing would work if we could do that, wouldn't it? I mean, if we could get Mertens consistent with what Justice Ginsberg just read, then you would provide people who are hurt, in the way these plaintiffs were hurt, with a remedy. It wouldn't be punitive damages, but they would be made whole. So, if you are right in that this is basically a -- this is basically a claims decision and you shouldn't give punitives and others for the incorrect making of a claims decision. But the hole in this is that then the woman gets nothing or virtually nothing and, if we could reconsider that part, it would all work, wouldn't it?" (page 13)

 

"QUESTION: Lest we be too sanguine about the application of that law in this context, I don't know any equitable cases that would consider make whole relief to be giving -- where what is at issue is merely the payment -- the failure to pay money, refusal to pay money. Make whole relief would give you what you would have done with that money if you had gotten it. That's very strange." (page 15)

 

"QUESTION: But it would all work, you see, if I have a trust, the trust is supposed to buy me an insurance policy, and through total fault of the trust it doesn't, and the house burns down, the equitable relief appropriate would be consequential damages of the value of the house. Now, if that were an appropriate case, other equitable relief, this whole thing would work and you wouldn't be having to fill a vacuum." (page 25)

 

 

 

 

 

 

 

Kalish v. Liberty Mutual

6th. Cir. 2005/08/18

"Even so, the Supreme Court has acknowledged “that physicians repeatedly retained by benefits plans may have an incentive to make a finding of ‘not disabled’ in order to save their employers[’] money and preserve their own consulting arrangements.” Black & Decker Disability Plan v. Nord, 538 U.S. 822, 832 (2003) (citation and quotation marks omitted). This court has similarly observed that a plan administrator, in choosing the independent experts who are paid to assess a claim, is operating under a conflict of interest that provides it with a “clear incentive to contract with individuals who were inclined to find in its favor that [a claimant] was not entitled to continued [disability] benefits.” Calvert v. Firstar Fin., Inc., 409 F.3d 286, 292 (6th Cir. 2005) (noting that the “possible conflict of interest inherent in this situation should be taken into account as a factor in determining whether [a plan administrator’s] decision was arbitrary and capricious”) (quotation marks omitted). Thus, although “routine deference to the opinion of a claimant’s treating physician” is not warranted, we may consider whether “a consultant engaged by a plan may have an ‘incentive’ to make a finding of ‘not disabled’” as a factor in determining whether the plan administrator acted arbitrarily and capriciously in deciding to credit the opinion of its paid, consulting physician. See Nord, 538 U.S. at 832.....

 

The fact that Dr. Rasak had the opportunity to physically examine Kalish on numerous occasions, while Dr. Conrad relied exclusively on a file review, makes Dr. Conrad’s failure to discuss the findings of Dr. Rasak all the more troublesome. See id. at 295 (concluding that the plan administrator’s reliance on a “‘pure paper’ review” was “just one more factor” that supported the court’s ruling that a denial of benefits was arbitrary and capricious); see also McDonald, 347 F.3d at 170 (“The evidence presented in the administrative record did not support the denial of benefits when only [the administrator]’s physicians, who had not examined [the claimant], disagreed with the treating physicians.”)."

 

 

 

 

 

 

 

JAMES M. MCGOWAN, SR.  v. NJR SERVICE CORPORATION; NEW JERSEY NATURAL GAS COMPANY

 

 

"1. ERISA’s Requirement that Plans Be Administered in Accordance with the Plan Documents

ERISA imposes a fiduciary duty on plan administrators to discharge their duties “in accordance with the documents and instruments governing the plan. . . .” 29 U.S.C. § 1104(a)(1)(D). As such, the statute dictates that it is the documents on file with the Plan, and not outside private agreements between beneficiaries and participants, that determine the rights of the parties. McMillan, 913 F.2d at 311-12 (“This clear statutory command, together with the plan provisions, answer the question; the documents control. . . .”); cf. Egelhoff v. Egelhoff, 532 U.S. 141, 150 (2001) (noting “ERISA’s requirements that plans be administered, and benefits be paid, in accordance with plan documents.”)."

 

ERISAclaim.com Comment: "ERISA’s Requirement that Plans Be Administered in Accordance with the Plan Documents" also regulates healthcare benefits disputes in managed care plans, such as PPO, HMO and POS or P4P networks, if <