The U.S. District Court for the Southern District of New York has ruled, in Doe v. Deloitte, that a group health plan violated ERISA by failing to apply standard ERISA claims requirements to a possible exception to its generally covered benefits.
Law. ERISA requires employee benefit plans to provide adequate written notice to any participant whose claim for benefits has been denied. This notice must: (i) be composed in a manner calculated to be understood by the participant; (ii) set forth the specific reasons for the denial; and (iii) afford a reasonable opportunity to the participant for a full and fair review of the decision denying the claim.
Facts. An employee in a group health plan received treatment from an out-of-network provider. The plan explicitly excludes coverage for care from out-of-network providers. However, the plan document does allow for exceptions to this general rule where the plan’s in-network options are inadequate. Accordingly, the employee claimed this exception applied on the basis that the plan’s in-network services were inadequate for his needs.
Ruling. The court determined the plan’s claim denial letter did not address this request. Rather, the denial letter merely stated that the claim was denied because the services were provided by an out-of-network provider. Even construing the plan’s denial letter to have included a rejection of the exception request, the court ruled that the plan failed to explain the criteria it used in reaching this decision.
The court concluded that the plan, in violation of ERISA, had failed to provide the employee with a “full and fair review” of his claim. A plan administrator’s written notice of denial “must be comprehensible and provide the claimant with the information necessary to perfect h[is] claim.” The ultimate goal is to “facilitate ‘meaningful dialogues between plan administrators and plan members,’ and permit effective review.”
The court ordered the plan to conduct a new claim review which must: (i) specifically address whether the employee should be granted an exception; and (ii) consider the employee’s arguments concerning the adequacy of in-network coverage.