In a detailed opinion grounded in the text of ERISA and its implementing regulations, the Fifth Circuit held that UnitedHealthcare improperly denied mental health benefits for the insured’s minor child’s eating disorder treatment and that it failed to apply the correct reimbursement rate for the portion of the child’s treatment that it did cover.
The plaintiff was a participant in an employer-sponsored group health plan administered by United, whose daughter required inpatient treatment for anorexia. Initially, United provided benefits for this treatment. Thereafter, contrary to the child’s treating physicians’ recommendations, United determined that she could be treated in a less intensive setting, and it denied benefits for further inpatient treatment. As a result, the plaintiff paid for treatment out of his own pocket.
The question posed by the Court was whether United improperly withheld benefits owed its beneficiary. In answering this question, the Court first turned to Congress’s intent in enacting ERISA, which was “to promote the interests of employees and their beneficiaries in employee benefit plans.” In conducting its review, the Court looked both at the substance – whether the beneficiary was entitled to the claimed benefits under the plan – and at procedure – whether the ERISA fiduciary employed “full and fair review” of the claim. The Court found that United failed in both respects.
The Court stated that “[w]hen making a substantive benefits determination, the text of the plan is the alpha and the omega” and that “[a]n ERISA plan must explain its decision to deny benefits, and its denial must be based on concrete evidence.” In concluding that United improperly denied benefits, the Court carefully parsed both the plan language and United’s stated reasons for denying coverage in conjunction with the administrative record. For example, the Court stated: “Notwithstanding the contrary reporting of E.D.’s doctors. United simply said the opposite when it terminated her benefits.” And, with respect to United’s statement in one letter that “You are better,” the Court simply said: “This one is a doozy.”
In analyzing procedure, the Court stated: “Under ERISA, when health benefits are terminated, the beneficiary is entitled to the procedural right of a ‘full and fair’ review by the appropriate named fiduciary.’ To comply with the statute, this review must be based on a ‘meaningful dialogue between the beneficiary and administrator.” Quoting ERISA regulations, the Court stated that “when benefits are first denied, the plan administrator must provide ‘[t]he specific reason or reasons for the adverse determination’ and the specific plan provision on which the determination is based.’” (internal citations omitted). The Court found that United failed to provide the required meaningful dialogue because it “engaged in no dialogue at all.”
Likewise, when the insured asked for “explicit written support” with “specific references” in his plan for United’s application of the out-of-network payment rate rather than the MultiPlan rate for the portion of his child’s treatment that it covered, United never responded. As a result, the Court held that United forfeited its right to contest payment at the MultiPlan rate.
In appealing payer denials and underpayments, providers should consider using similar language asking for specific reasons for the denials and reimbursement rates applied and for references to specific plan language.
The Court remanded the case to the District Court to calculate compensatory damages, statutory penalties and attorneys’ fees.
The attorneys at Whatley Kallas, LLP have similarly found that health insurers frequently ignore plan language and ERISA requirements to deny benefits and to underpay providers who have provided medically necessary treatment to their insureds and beneficiaries.
The case, Dwyer v. UnitedHealthcare Insurance Company, is linked here.