Insurance company CYA after royal run-around
Pacific Shores Hospital vs. Ernst & Young Medical Plan CV 08-5798 DSF (Aetna)
The patient received inpatient treatment for major depression at Pacific Shores. A timely claim for benefits was submitted to Aetna. Aetna initially refused to pay the claim, without any explanation. Pacific Shores was later told, during a telephone conversation, that all of the treatment had been disallowed on grounds that treatment was “no medically necessary” and because there was “no authorization on file”. But Aetna never formally notified Pacific Shores or the patient, in writing, of either the claim denial, or the specific reasons for the denial. Therefore, Pacific Shores had to “fly blind” into a claims appeals process, which it then proceeded to do.
An administrative appeal was submitted, demonstrating the severity of the patient’s medical condition and the need for urgent and effective care. Aetna’s initial response was to refuse to communicate with Pacific Shores. Since Pacific Shores held a valid assignment of benefits from the patient and since benefits under the plan were assignable, that was contrary to law. But then, after telling Pacific Shores that it would only communicate with the patient regarding the appeal, Aetna then failed to communicate with the patient.
Ultimately, I became involved in the case. I sent a letter, which merely demanded payment of the claim, or alternatively requested copies of the claim file and plan documents. Aetna issued a response letter captioned, “Subject: Final Appeal -Level of Care Determination”. The letter referenced my “appeal” and stated that Aetna had used “nationally recognized guidelines and resources” in reaching its prior determination. The letter said that an “Aetna Medical Director, who was not involved in prior determination, has reviewed your final appeal. Based upon our review of the information provided we are upholding the original benefit determination.”
The letter simply dug the hole deeper for Aetna, by underscoring the many procedural irregularities in the case. First of all, I did not submit any appeal. (That had already been done by Pacific Shores). By characterizing my letter as an “appeal” and by further characterizing its letter as a “final” response to that “appeal”, Aetna was attempting to mask over its own inept handling of the claim, while simultaneously trying to load new (and undisclosed) evidence into the administrative record. Aetna’s letter was not accompanied by any copy of the claim file as had been requested. Nor was the hastily concocted “Medical Director” report disclosed. This effectively curtailed any “meaningful dialogue” or any “full and fair” review, as is required by ERISA.
Result: A lawsuit was filed. The case was resolved satisfactorily.