© 2014 by Michael A. McKuin

Attorney at Law

Post Office Box 10577

Palm Desert, CA 92255

(California State Bar No. 103328)

 

The information provided at this website is intended for educational and promotional purposes only. It is strictly general in nature and under no circumstance should it be considered legal advice.  Every case is unique and a competent, qualified lawyer must be consulted for legal advice regarding any specific case. 

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Arbitration award for all health benefits due plus attorney fees.

September 21, 2015

Oasis Treatment Center, Inc. vs. Brown & Root, Inc. (Self-funded health plan).  (Binding Arbitration – Private)

  

 

 

Oasis is a residential treatment facility, licensed by the State of California and accredited by the Joint Commission on Accreditation of Healthcare Organizations ("JCAHO").  It provided treatment for alcohol and drug dependency to a patient, covered under the self-funded Brown & Root health plan.   This case involved extended treatment for 90 days inpatient, which resulted in total charges exceeding $44,000. 

 

The patient was a 56 year-old chronic alcoholic, who had a 25-year history of drinking.  She had undergone treatment for alcoholism unsuccessfully, on two prior occasions – once in a hospital setting for 30 days and once before at Oasis, the previous year for 60 days.   Her third course of treatment was apparently successful, as she remained sober after that.  She credited Oasis with her success in overcoming her addiction.

 

This case presented an unusual complication.  Because of marital problems, the patient was not able to produce any proof of health coverage when admitted to Oasis.  But rather than turn her away, Oasis admitted her in hopes of verifying coverage later.  

 

Twenty-six days after admission, Oasis finally obtained a copy of her employee benefits verification card, which read:  "Pre-notification of hospital admission is mandatory".  The card then provided a couple of toll free phone numbers to call Health Economics Corporation (HEC) for pre-notification.   An Oasis representative immediately called one of the numbers on the card and verified the patient's coverage.   She was told that inpatient benefits for treatment of alcoholism were payable at 80% of first $3,000.00 and at 100% thereafter, subject to a $1,000 deductible, no calendar year maximum, and a lifetime maximum of $50,000.00.  (A later review of the plan documents confirmed these statements to be true).  The Oasis representative was instructed to provide a clinical assessment and obtain formal "pre-certification". 

 

Later that day a treatment supervisor for Oasis, contacted HEC, presented a clinical assessment and obtained "(pre)-certification", as it was instructed.  The supervisor was given a "(pre)-certification reference number"and  was told that the only consequence of the late notification would be a $300.00 penalty.

 

The very next day, a letter was sent by HEC to Oasis, stating that HEC was "unable to certify this admit/extension/service", followed by the handwritten  words: "Request Medical Record".   Since HEC had already pre-certified the admission, presumably the effect of the letter was merely to request medical records, as a prerequisite to approving continued inpatient care.  Five days later another letter emerged from HEC, which stated, "We are unable to certify

. . . based upon the information we have received to date".  Again, the thrust of the second letter was that HEC needed additional information to approve continued inpatient care. In response to these two letters, Oasis forwarded all of the patient’s medical records to HEC.

 

Thereafter, HEC never corresponded again with Oasis, until after the patient’s treatment was over.  Two days before the patient’s discharge, the Executive Director of Oasis contacted HEC to inquire about the status of the claim and was advised that the matter was in a supervisor's office "for review".

 

Six weeks later, (more than a month after the patient’s discharge), the Executive Director contacted HEC again and was told that the claim was "still in review" and that she should contact "Pre-Cert." That same day, the Executive Director contacted the precertification department and was again advised that the claim was "still in review".  She was told that Oasis should "have an answer by the first part of the following week".   

 

The next week, (six weeks after discharge) HEC sent another form letter to Oasis, which stated that only 8 days of treatment were certified.   Approximately one month later (i.e. five months after the Plan was first notified of the claim and two and a half months after the patient’s discharge), five EOB forms were received by Oasis from HEC, which stated that all but $3,610.40 in inpatient charges were denied. The only reasons stated for this denial were: "hospital stay exceeds pre-authorized days"; and "length of stay greater than time approved."  A payment in the amount of $3,610.40 accompanied one of EOB forms.

 

Oasis sent a formal letter of appeal to HEC clearly setting forth the objective diagnostic criteria, establishing the medical necessity for the inpatient treatment rendered.  HEC did not respond to the appeal.   At that point, I became involved in the case.  I directed a request for administrative review to the Plan Administrator, a Mr. Stevens, of Brown & Root, which stated, "If the claim is denied, I request that you provide me with a detailed statement of the specific reasons, why the claim has been denied, pursuant to ERISA .  . . ."

 

I received a letter from Mr. Stevens, advising that a Dr. Doten, of HEC, was in the process of "investigating" the matter and that a response to the appeal request would be forthcoming from HEC or its legal counsel.  Thus, Mr. Stevens, simply delegated the responsibility for conducting a final review back to HEC, the entity responsible for denying the claim in the first place.

 

No further response to my appeal request was ever received from either Mr. Stevens or HEC.  The next item of correspondence from the Plan was a letter to me from a Ms. Arnett, legal counsel for Equifax (HEC’s parent company).  The Arnett letter upheld HEC’s initial denial of the claim, stating: "A review of those medical records was conducted and only eight days of inpatient care was certified as medically necessary."  This conclusion was apparently based on a review of the medical records by Dr. Doten, Dr. Beavers and a Nurse Johnson.   

 

After receipt of Ms. Arnett’s letter, I again contacted Mr. Stevens, who explained that such appeals were routinely sent by Brown & Root to HEC for "adjudication". He advised that if a claimant should not be satisfied with HEC’s decision, the matter would then go back to him for a "final adjudication". Therefore, I followed up that phone conversation with another letter to Mr. Stevens, which set forth, once again, a detailed discussion of the factual and legal basis of Oasis' claim, as well as an analysis of pertinent plan provisions.  The letter concluded: "I, therefore, once again urge that you, as the Plan Administrator, reconsider the denial by your claims administrator, HEC, and that you pay this claim."      

 

Despite the assurance to the contrary, I received no "final adjudication" of the claim denial nor was any other response received from either Mr. Stevens or from any other plan representative regarding the appeal. Therefore, at that point, the Arnett letter stood as the final written word of the Plan, regarding the claim.

 

The need for inpatient care in this case was clear and it was not even in dispute.  What was in dispute was the appropriate duration of inpatient care.  That was a judgment call that has to be made by the healthcare provider in each case.  Throughout the duration of treatment, the attending physician and treatment supervisor were physically there, observing the patient on a continuing basis.  Because of the patient’s unique circumstances and history of failed treatment, they concluded that she was in need of prolonged inpatient care.   During that entire time, HEC’s reviewing medical personnel, Drs. Doten and Beavers and Nurse Johnson were a thousand miles away in Dallas, Texas.  None of them ever once saw or spoke to the patient.  Nevertheless, Mr. Johnson, a registered nurse, who had no demonstrated expertise in the treatment of alcoholism or drug dependency, purported to know -- based upon a telephone conversation he had with Dr. Beavers or Beavers’ nurse, -- what was in the patient’s best interest and what the proper course of treatment should have been.  Despite a 25-year history of drinking, and history of prior treatment and relapse, it is Mr. Johnson’s "expert" opinion that the patient "should have been discharged within two (2) days"

 

The parties agreed to submit the matter to binding arbitration, for a prompt (and relatively inexpensive) resolution. 

 

Result:  Arbitration award for Oasis for the full amount due, plus an award of attorney fees.

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