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A three-judge panel at the 9th U.S. Circuit Court of Appeals has issued a ruling that could help employer health plan administrators understand how the federal courts will see their claim denials.
The panel was reviewing a case, Solis et al. v. T-Mobile USA et al., that involved billing for a surgeon who performed a hiatal hernia repair and a gastric sleeve procedure, or weight-control procedure, during the same operation.
T-Mobile US covered the patient, Jannet Solis, through a self-insured plan. UnitedHealthcare, a subsidiary of UnitedHealth Group, administered the plan.
The plan approved the claim for the gastric sleeve procedure, but it denied the claim for the hiatal hernia repair, saying the hernia repair claim should have been included in the bill for the gastric sleeve procedure, according to a panel memorandum issued by the panel that was posted July 15.
A judge at the U.S. District Court for the Central District of California ruled in favor of the plan and UnitedHealthcare, saying that UnitedHealthcare's explanations appeared to be deficient but that, under the Employee Retirement Income Security Act of 1974, it had to rule for the plan administrator unless the administrator had abused its discretion.
The appeals court panel found that the record at the district court level gave too little information to determine if it was possible that the administrator had abused its discretion.
The district court "committed legal error by not allowing for augmentation of the administrative record despite finding United's initial claims denial explanations deficient under ERISA," according to the 9th Circuit panel's memorandum.
The panel reversed the district court decision. It told the district court to ask UnitedHealthcare to reevaluate the plaintiffs' claims or get more information about the administrative record and retry the case.
The panel issued the memorandum without recommending it for publication, indicating that it should not be used as a precedent in other cases.
Representatives for T-Mobile and UnitedHealthcare indicated that they disagree with the 9th Circuit ruling.
"We don't agree with the court's decision," T-Mobile said. "We are looking to next steps where we will continue to defend our position."
"We are requesting a panel rehearing of the court's decision in this case," UnitedHealthcare said. "UnitedHealthcare remains committed to serving our members and helping people live healthier lives."
Representatives for the plaintiffs could not immediately be reached for comment.
The 9th Circuit has tended to side with plans and plan administrators in other ERISA claim determination cases.
Related: Federal appeals court protects Cigna from California state-law suit
For health plans and doctors, how plans should handle claims for hernia repairs made during abdominal operations linked to other procedures has been a source of disagreement.
Many surgeons say they should be able to bill separately for the hernia repairs and the other procedures.
Some health plans see bills for hiatal hernia repairs made during operations for other matters as possible examples of surgeons billing separately for two related procedures that should, instead, be billed together under the code for just one of the procedures.
The 9th Circuit's new memorandum may show how much information a plan administrator has to show a federal district court to substantiate the reasoning behind a hiatal hernia repair claim denial.
One question for the future is whether the U.S. Labor Department and its Employee Benefits Security Administration will develop regulations or support bills that will affect the rules that govern self-insured health plan claim determinations and determination documentation rules.
Daniel Aronowitz, the nominee to be the assistant Labor secretary in charge of EBSA, is an ERISA fiduciary responsibility law expert who might have ideas for updating the rules.
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