The Employee Retirement Income Security Act of 1974 (ERISA) required certain conditions to be met when processing a claim. The Affordable Care Act (ACA) and benefit mandates reinforced these regulations and established new standards for processing claims and appeals.
The new standards were intended to ensure several activities:
- More timely benefit determinations,
- To improve access to information on which a benefit determination is made, and
- To assure that participants and beneficiaries are afforded a full and fair review of denied claims.
ERISA claimants must generally "exhaust" the procedures before bringing a lawsuit against the plan. (Although, under health care reform, a claimant may be deemed to have exhausted a plan's internal claims and appeals procedures, if the plan or insurer does not strictly comply with those procedures).
If a law suit is brought forward, the courts will generally give deference to decisions to those plans who maintain and comply with claims procedures.
Courts will also generally limit their view to the documents that the plan used to make their determination. That means, that a claimant would not be able to introduce other documents such as more "doctors opinion's or records."
The claims procedures do not preclude an authorized representative of a claimant from acting on behalf of such claimant in pursuing a benefit claim or appeal of an adverse benefit determination. Nevertheless, a plan may establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant.
Consequences of Noncompliance for an applicable Group Healthcare Claims
There are several legal consequences for failing to comply with the DOL claims procedure regulations, each of which can affect the outcome of benefit disputes that end up in court. The potential consequences of noncompliance are:
- Claimants not being required to exhaust the plan's claims procedures; and
- Increased scrutiny of benefit denials that end up in court. Moreover, the appeals regulations include a "strict compliance" rule that may result in adverse consequences for even the most minor compliance failures. These factors increase the likelihood that a plan will be found liable for benefits that would not otherwise be payable.
There are six new requirements in addition to those in the Department of Labor (DOL) claims procedure regulations. The new requirements are:
- Expanding the definition of adverse claims to include denial, reduction, or termination of, or a failure to provide or make a payment for a benefit. This includes any such denials based on eligibility, a benefit not covered by the plan, imposing preexisting condition exclusion, and a determination that a benefit is experimental, investigational, or not medically necessary.
- Providing that a plan or issuer notify a claimant of a benefit determination as soon as possible, taking into account medial emergencies which are no later than 24 hours after receipt of the claim.
- Providing additional criteria to ensure the claimant receives a full and fair review.
- Setting new criteria with respect to avoiding conflicts of interest.
- Providing new standards regarding notice to enrollees. Specifically that plan is provide notice in a culturally and linguistically appropriate manner.
- Providing that in the case of a plan failing to strictly adhere to all requirements of the internal claims and appeals process with respect to a claim, the claimant is deemed to have exhausted the internal claims and appeals process. The claimant may initiate an external review. The claimant is also entitled to pursue any available remedies under State law, as applicable, on the basis that the issuer has failed to provide a reasonable internal claims and appeals process that would yield a decision on the merits of the claim.
This content is being provided as an informational tool. It is believed to be accurate at the time of posting and is subject to change. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information, Meritain Health is not exercising discretionary authority or assuming a plan fiduciary role, nor is Meritain Health providing legal advice.