12.04.09

Remedies Against Health Plans Under the Senate Bill

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Section 2719 of the Senate Patient Protection and Affordable Care Act, HR 3590, provides for appeals of coverage determinations and claims. This section explicitly applies to group health plans and health insurance issuers offering group or individual insurance coverage. Section 1551(a) of the bill incorporates the definitions found in 42 U.S.C. § 300gg-91, which defines “group health plan” to mean an ERISA plan that provides medical care “directly or through insurance, reimbursement, or otherwise.” Section 1562(e) of the Senate bill states that the provisions of Part A of title XXVII of the Public Health Services Act, as amended by the Senate Bill (including section 2719) apply to ERISA plans.

Section 2719 provides:
A group health plan and a health insurance issuer offering group or individual health insurance coverage shall implement an effective appeals process for appeals of coverage determinations and claims, under which the plan or issuer shall, at a minimum—
(1) have in effect an internal claims appeal process;
(2) provide notice to enrollees, in a culturally and linguistically appropriate manner, of available internal and external appeals processes, and the availability of any applicable office of health insurance consumer assistance or ombudsman established under section 2793 to assist such enrollees with the appeals processes;
(3) allow an enrollee to review their[sic.] file, to present evidence and testimony as part of the appeals process, and to receive continued coverage pending the outcome of the appeals process; and
(4) provide an external review process for such plans and issuers that, at a minimum, includes the consumer protections set forth in the Uniform External Review Model Act promulgated by the National Association of Insurance Commissioners and is binding on such plans.

These provisions would offer more generous procedural protections than those now offered by state law in some states to individual insureds. They would also expand on the present protections of ERISA for ERISA plan participants and beneficiaries.

Section 503 of ERISA already provides participants with an opportunity for a “full and fair” review of their claims. Regulations found at 29 C.F.R. § 2560.503-1 flesh out this right. Section 2719 would expand on these rights. First, the ERISA regulations do not require a “culturally and linguistically appropriate” notice, as does § 2719. Second, § 2719 offers the assistance of the state consumer assistance or ombudsman’s office, which is not currently available under ERISA. Third, the current regulations only allow a participant to review “documents, records, or other information relevant to the claimant’s claim for benefits,” which might be less than “the file,” to which § 2719 gives the insured access. Fourth, the current ERISA regulations do not explicitly provide for “continued coverage pending the outcomes of the appeals process,” although they do require that notice of a reduction or a termination of a course of treatment be given with enough time to permit an appeal before actual reduction or termination.

Fifth and finally, the current ERISA regulations provide only for an internal review, not for an external review, although ERISA permits, but does not require, participants to take advantage of state external review procedures if they are available (as they are in most states). See Rush v. Moran, 536 U.S. 355 (2002). Section 2719 not only provides for external review, but also for external review that is binding on the health plan or issuer. The section does not state that the determination binds the plan member. Whether or not the external reviewer would have to afford the ERISA administrator the same deference as the courts do now where discretion is given the administrator under the plan is unclear. See MetLife v. Glenn,128 S.Ct. 2343 (2008) (There is, by the way, apparently no NAIC Uniform External Review Model Act; there is both a 2004 and 2008 Health Carrier External Review Model Act, to which they no doubt refer.)

The Senate bill does not expressly provide for judicial review. The similar provision in the House bill states “nothing in this section shall be construed as affecting the availability of judicial review under State law for adverse determinations [made by health plans].” Presumably, review would continue to be available under the Senate bill using state law to the extent that it is now and section 502 of ERISA would continue to provide review of ERISA claims.

It would be very helpful, however, if the Senate would clarify this as the House has. It is also important that the Senate clarify that the insurance reform provisions of the legislation are incorporated by reference into any insurance contracts governed by the bill, and thus subject to enforcement through contract law if in no other way. It is not otherwise obvious that the provisions are enforceable by insureds at this point.

There is no provision under the law allowing a suit against an ERISA plan administrator or sponsor in tort. There is also no provision prohibiting a tort suit under state law against an insurer or managed care plan that is not an ERISA plan and that insures an individual, and it is difficult to see how a court could construe § 2719 to preempt such a claim. The remaining question, therefore, is whether an individual could sue an insurer or managed care plan in tort if the insurance was purchased through an exchange and financed in part by an employer. The Senate bill does not address this question, which will have to be resolved under existing law.

The law in this area is complicated, and I will not discuss it fully here. For a longer discussion, I direct the reader to my paper on Health Insurance Exchanges published earlier this year by the O’Neill Center, at pages 10 – 12. But to sum this law up, if a “qualified employer” pays part of the premium for a “qualified health plan” for employees through the exchange, the insurance would probably be viewed as part of a plan “established or maintained” by an employer, and thus an ERISA plan. The insurer administering the plan would probably be protected from liability to the extent an insurer administering an ERISA plan is now, although the insurer’s decisions on claims would be reviewable under section 502, as they are now.

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