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)

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

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.)

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.)"

Kalish v. Liberty Mutual

6th. Cir. 2005/08/18

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

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 <