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The recent ruling by the Fifth Circuit Court of Appeals in Dwyer v. United Healthcare Ins. Co. serves as a reminder for plan sponsors and insurers of the importance of adhering to both substantive and procedural requirements under the Employee Retirement Income Security Act (ERISA). In this case, a participant in an employer-sponsored group health plan challenged the health insurer’s decision to terminate inpatient care benefits for his minor daughter, who was receiving treatment for anorexia nervosa. The court found that the insurer’s denial of benefits was deficient on multiple fronts.
Case Overview
The case involved a 14-year-old dependent admitted to a residential treatment facility in February 2015 to treat her severe anorexia nervosa. Initially, the insurer covered her residential treatment, but by June 2015, the insurer concluded that the patient could transition to partial hospitalization, and it terminated her inpatient care benefits. The dependent’s doctors disagreed, stating that she was “still not at the point of readiness” for outpatient treatment. Nevertheless, the insurer proceeded with the termination of in-patient benefits, leaving the family to continue treatment at their own expense.
The participant then sued in federal district court which ruled in favor of the insurer. The participant appealed to the Fifth Circuit.
The Fifth Circuit’s Ruling
The Fifth Circuit reversed the district court’s decision. The Fifth Circuit recognized that “[p]lans must provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant.” In addition, ERISA requires plans to “afford a reasonable opportunity… for a ‘full and fair review’ of dispositions adverse to the claimant.” The Fifth Circuit highlighted several areas where the insurer’s actions were both substantively and procedurally flawed.
- Substantively deficient denial of benefits: The court determined that the insurer’s rationale for terminating inpatient care was not supported by medical evidence. Specifically, the insurer’s claim that the dependent had achieved 100% of her ideal body weight and no longer needed inpatient care was contradicted by medical records.
- Procedurally deficient claims process
The Fifth Circuit also found that the insurer failed to provide the participant with a full and fair review as required by ERISA. The Court noted that the insurer did not engage in a meaningful dialogue, or any dialogue at all, with the participant. ERISA mandates that adverse determinations be communicated clearly, including the specific plan provisions and clinical judgments that form the basis for the decision. In this case, the insurer’s denial letter lacked such specifics, making it procedurally insufficient.
Implications for Plan Sponsors
The Dwyer ruling underscores that plan sponsors are responsible for ensuring compliance with ERISA’s claims procedures.
- Plan sponsors must ensure that benefits determinations are based on sound medical evidence, especially when it comes to complex cases such as those involving mental health or long-term If medical professionals involved in the case provide opinions that challenge the decision, those opinions must be fully addressed.
- Plan sponsors must ensure that participants are informed of the specific reasons for benefit denials and given a full and fair opportunity to appeal such decisions.
This information has been prepared for UBA by Fisher & Phillips LLP. It is general information and provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.
