Your Rights to Appeal and Litigate Benefit Denials Under ERISA
This section provides an overview of what your rights and remedies are under ERISA, "Employee Retirement Income Security Act of 1974," the federal law that governs most group health plans provided through private employers. Because some of your rights under state law could be superseded, or "preempted" by ERISA, you will need to understand how to bring an action for denials of coverage under ERISA. This should be considered in addition to any remedies through your plan, external review processes and state law as discussed in other sections of this guide.
Only those patients who are in "self-funded" ERISA plans - where their employer funds the cost of health coverage without using an HMO or insurer to finance the treatment - are fully restricted from utilizing California law, and are limited to ERISA's remedies. Large national companies traditionally self-fund their health plans. Other patients with employer-paid health coverage (from smaller employers) can avail themselves of at least some of California's consumer protection laws. Using California law may be easier and preferable to seeking relief under ERISA, which allows only for recovery of the cost of benefits denied you.
NOTE: At the time of publication, Congress was poised to expand remedies under ERISA, so please check with your Congressperson about such changes. The following is only a general guide for pursuing claims under ERISA.
DOES ERISA APPLY TO MY HEALTH PLAN?
Almost all health benefits plans offered through private employers are governed by ERISA. This law restricts your ability to challenge a denial of benefits by your health plan under state law, and requires instead that you bring a legal claim under the procedures and remedies established by ERISA. However, California's appeal and liability laws (see section VII of this guide) should still be applicable to all patients, except those in self-funded ERISA plans.
A health or disability benefit plan that meets the following four criteria will be governed by ERISA, 29 U.S.C. §1001, et seq.:
HOW LONG DOES MY HEALTH PLAN HAVE TO MAKE A DECISION ON MY INITIAL CLAIM FOR BENEFITS?
Currently, your health plan must make a decision on your initial request for a plan benefit within 90 days (or 180 days if your plan notifies you in writing of special circumstances that require an extension of time for processing your claim).6
Under new federal rules that will apply to claims filed on or after January 1, 2002, the 90-day deadline will be replaced by a new set of standards:
WHAT ARE MY RIGHTS UNDER ERISA PERTAINING TO REVIEW OF BENEFIT DENIALS?
ERISA requires that your health plan provide you with the specific reasons for a denial of benefits and that you be given the opportunity for "full and fair review" of the denial by your plan's administrator.7 The denial notice must include: 1) the specific reason(s) for the denial, 2) specific reference to pertinent plan provisions on which a denial is based, 3) a description of any additional material or information necessary for you to make your claim, and an explanation of why such material or information is necessary, and 4) information on the steps to be taken if you wish to submit your claim for review.8
You have at least 60 days (your plan may provide a longer time) to submit your claim for review (called an "appeal"). If you haven't received a decision from your plan within 60 days, the plan must notify you in writing of the reason for the delay. Under new rules effective January 1, 2002, you will have 180 days to file your appeal. For more information on how to file an appeal under ERISA, consult with your employer's benefits manager, the U.S. Department of Labor (contact information provided below), or visit the Patient Advocate Foundation's website at http://www.patientadvocate.org/appeals.
In most cases, a decision on your appeal must be made within 60 days "unless special circumstances (such as the need to hold a hearing, if the plan procedure provides for a hearing) require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than 120 days after receipt of a request for review."9 Under new rules effective January 1, 2002, the deadline will be 72 hours for "urgent care," 30 days for claims seeking advance approval of care, and 60 days for claims seeking payment after care is provided.
WHAT CAN I DO IF MY APPEAL IS DENIED?
If your appeal is denied, you may have a right to file a lawsuit under ERISA. ERISA provides for the right to bring a civil action against your plan "to recover benefits due to [you] under the terms of [your] plan, to enforce [your] rights under the terms of the plan, or to clarify [your] rights to future benefits under the terms of the plan."10
You may find that by enlisting the support of others who have some technical expertise on the administration of health plans, you are able to obtain the care you need without resorting to legal action. Following are some of the sources you may want to consult:
WHAT SHOULD I DO BEFORE PREPARING A LAWSUIT?
1. Consult with an attorney.
Bringing a case under ERISA for denial of benefits by your health plan can be a complex and lengthy endeavor. This type of case is generally not the kind that one should undertake without legal representation. If you do decide to represent yourself, you should obtain an attorney as your legal "coach." There are many useful legal reference sources available in your local law library and on the Internet to help you understand the litigation process. Here are some Internet Web sites you may wish to consult:
Representing Yourself in Court:
ERISA Litigation, Statutes and Regulations:
Rules of Procedure, Court Rules and Evidence:
2. Exhaust Internal Plan Remedies.
Before filing a lawsuit under ERISA, you must first participate in, or "exhaust," any internal review or administrative appeal remedies offered by the plan, as outlined above. If you fail to exhaust your administrative remedies, the court may not consider the merits of your claim. However, if treatment is needed before the plan remedies can be exhausted, you may file suit to seek emergency relief pending exhaustion of plan remedies. First, you will want to request that your plan speed up its review process, if possible. (See the sample letter to request expedited review from your health plan included as Appendix C at the end of this guide.)
3. Obtain copies of all relevant documents from the Plan Administrator.
The administrator must furnish copies of plan documents and relevant claims information requested by you within thirty (30) days of your request.11 If he or she doesn't produce the records, that in itself is evidence of an unfair claims review process.12 You will want to keep copies of all correspondence between you and your plan concerning your request(s) to obtain documents from your plan. Even if the judge decides you have no valid claim for benefits, you may nevertheless be entitled to penalties for the plan's failure to give you the documents.13
4. Communicate with your treating physician.
Your treating physician's opinion is often the key to coverage. Your treating physician often will be your strongest ally. Many courts put great stock in the treating physician's definition of medical necessity or give great deference to the treating physician's opinion.14
When reviewing ERISA benefits claims, the court is supposed to limit review to the administrative record, giving deference to the decision-maker in the administrative proceeding.
Often the administrator or a reviewing doctor has contradicted the findings of the treating doctor. In other sorts of cases, such as Social Security claims, the court is guided by the well-established "treating physician rule," whereby the opinions of treating physicians must be given great weight.15 For the same practical reasons found in social security cases, the treating physician rule can be advanced in appropriate ERISA cases. Of course, where the treating physician has a financial interest in the outcome, his opinions may not be entitled to as much weight.16 In other cases, however, the court should give substantial weight to the opinions of the treating physician.
5. Communicate with the treating institution.
You may have been referred by your doctor to another treating institution, such as a regional cancer treatment center or teaching hospital. The physicians at these centers tend to be nationally-recognized experts in their fields. Like the treating physicians, they will usually be your allies. They usually have admissions coordinators who are accustomed to dealing with insurance carriers. It can help tremendously to develop a close, working relationship with these admissions personnel.
6. Survey the medical literature and find out how many times the medical procedure has been done in the past.
The medical center furnishing treatment, or perhaps the treating physicians, usually will be able to refer you to medical literature and unpublished studies supporting the efficacy of the treatment at issue which should be available at a public library or on the internet. Copies of any relevant studies or literature should be submitted as part of the record.
Following are some useful internet Web sites to consult for medical literature:
National Medical Guidelines:
7. Find out what other health plans offer coverage for the procedure.
Health plans do not make coverage decisions uniformly. It often helps to furnish a list of other insurance carriers that have allowed coverage for the procedure. The medical center furnishing treatment to your client often can help with this.
8. Find out if the procedure is done at other notable institutions.
Your own doctor may know doctors at other reputable medical centers that have performed the procedure. Ask him for referrals, or contact the other medical centers directly through their general information phone lines to inquire as to whether records are kept of the number of times the procedure has been performed there.
9. "Humanize" the record.
Never underestimate the importance of the administrative record. Courts have said that, in many cases, the only evidence that a court can review is the "administrative record" which includes all documents such as your case file, letters between you and your plan, and any other information that was before the plan administrator at the time the decision to deny benefits was made. If the court decides this in your case, you cannot present new evidence or cross-examine adverse witnesses once you file suit. Therefore, it is important to maintain a record with any information that might be helpful to your case before suit is filed. Submit photographs of you and your family. Include statements from friends, neighbors, pastors and children.
If the administrative record at the time of the benefit denial contained insufficient evidence to allow the court to adequately review your claim, the court may send it back to the plan administrator for reconsideration after getting more evidence.17