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Koehler v. Aetna Health Inc., No. 11-10458 (5th Cir. May 31, 2012)

In the ERISA field, here's a lifeline to all of those challenging "pre-authorization" denials of benefit claims. The Fifth Circuit re-animates a case challenging an HMO denial of Therapy for sleep apnea, based on a supposed "pre-authorization" requirement that the panel finds at-best ambiguous.

Koehler v. Aetna Health Inc., No. 11-10458 (5th Cir. May 31, 2012): The employee/participant was billed $2300 for a dental device ordered by a doctor outside of her plan, but on referral by her primary care physician in the plan. As the panel summarizes, "Aetna refused to reimburse Koehler for care she received from a specialist outside of the Aetna HMO to whom she had been referred by a physician in the HMO. Aetna denied her claim because the referral was not pre-authorized by Aetna."

Aetna relied on the following language to support the supposed "pre-authorization" requirement, which appeared essentially in the same form in the plan instrument and the summary plan description (SPD) given to participants:

"A number of provisions in the COC address pre-authorization. On the COC's first page are the words 'IN SOME CIRCUMSTANCES, CERTAIN MEDICAL SERVICES ARE NOT COVERED OR MAY REQUIRE PRE-AUTHORIZATION BY HMO.' Subsection J of the 'HMO Procedure' section is titled 'Pre-Authorization.' That subsection states, 'Certain services and supplies under this Certificate may require pre-authorization by HMO to determine if they are Covered Benefits under this Certificate.'"

The court also noted language concerning standing referrals to specialists and obtaining second opinions, both of which required pre-authorizations. Neither of these provisions applied to the participant's claim. There was also language in the plan disclaiming liability for services made without "prior arrangements . . . made by HMO" and excluding services obtained by or on behalf of a Member without a Referral issued by the Member's PCP or pre-authorized by HMO."

While the district court granted summary judgment to the plan based on the above language, the Fifth Circuit reverses. It acknowledges under Firestone Tire  that it reviews Aetna's interpretation for abuse-of-discretion. It also holds that the above language was at-best ambiguous about whether There was a pre-authorization requirement for care sought on a referral by a plan physician.

While the plan was authorized to resolve plan ambiguities, the Fifth Circuit holds that this was not true with respect to the SPD:

"As noted above, the plan gives Aetna discretion to resolve ambiguities in the plan language in its favor. However, Aetna's discretion to resolve ambiguities in the plan does not extend to the plan summary,  notwithstanding that in this instance the summary is a verbatim copy of text in the plan. . . .  Ambiguities in a plan summary are resolved in favor of the beneficiary. . . . That is because ERISA requires that plan summaries be 'written in a manner calculated to be understood by the average plan participant, and . . . sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan.' 29 U.S.C. § 1022(a) . . . . Therefore, when considering the COC as a plan summary we must resolve its ambiguity against requiring pre-authorization of ad hoc outside services."

In so holding, the panel notes that despite the recent decision in CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011), the SPD language was still relevant to the determination of whether the plan's interpretation was unreasonable: "CIGNA changes our case law to the extent that the plan text  ultimately controls the administrator's obligations in a § 1132(a)(1)(B) action, but CIGNA does not disturb our prior holdings that (1) ambiguous plan language be given a meaning as close as possible to what is said in the plan summary, and (2) plan summaries be interpreted in light of the applicable statutes and regulations."

In support, the panel cites 29 C.F.R. § 2520.102-2(b), regarding "restrictive plan provisions," such as pre-authorization requirements, that "need not be disclosed . . . in close conjunction with the description or summary of benefits," but only if "adjacent to the benefit description the page on which the restrictions are described is noted."  The panel notes that the SPD in this case failed to provide such clarity.

The panel also notes some evidence of bad faith in the interpretation, rendering it further unreasonable:

"Here, There is the inadequate summary and evidence that Aetna failed to apprise . . . Koehler's doctors in the HMO . . . that they should not refer patients to outside providers without requesting permission from Aetna beforehand. . . . [T]his does not conclusively establish bad faith. But it suggests a device to cause insureds to inadvertently forfeit coverage through ignorance of the correct procedures. Given Aetna's conflict of interest, it smacks of bad faith to invoke pre-authorization if that requirement is unknown to both doctors and patients in the HMO."

The claim is thus remanded. The panel also noted that, with respect to the plan's exhaustion defense, the p[articipant might not have been required to exhaust internal procedures in this case:

"[U]nder 29 C.F.R. § 2560.503-1(b), an ERISA benefit plan must 'establish and maintain reasonable procedures governing the filing of benefit claims, notification of benefit determinations, and appeal of adverse benefit determinations . . . .' Procedures cannot be considered reasonable unless they 'do not contain any provision, and are not administered in a way, that unduly inhibits or hampers the initiation or processing of claims for benefits.' 29 C.F.R. § 2560.503-1(b)(3). 'In the case of the failure of a plan to establish or follow claims procedures consistent with the requirements of [29 C.F.R. § 2560.503-1] . . . a claimant shall be deemed to have exhausted the administrative remedies available under the plan and shall be entitled to pursue any available remedies under [29 U.S.C. § 1132(a)]. . . .' It is difficult to see how Aetna's leaving both Koehler and her doctors ignorant of the pre-authorization requirement would not 'inhibit or hamper[]' her from initiating the procedures necessary for her to realize her entitlements under the plan."

In a one-paragraph concurring opinion, Judge Haynes would have simply found the plan language unambiguous in favor of the participant.

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