Claims administrator believed ERISA gave it discretion to dishonor medical necessity certifications

Rader Programs, Inc. vs. Honda of America Mfg., Inc. (Aetna) CV 00-00041 AHM

The Patient was a 55 year old male from Ohio, who suffered major depression and morbid obesity, having gained over 100 lbs. to a weight upon admission of 320 lbs. He had health insurance coverage provided by his employer’s self-funded plan, administered by Aetna. The plan provided coverage for treatment of mental health treatment, payable at 100% of “usual, reasonable & customary” (URC) charges, limited to 100 days per calendar year. of "Out of Area" providers, such as Rader, were payable at 100% URC up to the first 25 days per calendar year and then at 80% limited to the next 75 days per calendar year; however, the plan further provided that notwithstanding these percentages, there was an "Out of Pocket Expense" limit of $1,500. The plan provided "Inpatient Hospital" coverage as follows: "The plan covers semi-private room and board, surgery and other services and supplies for full-time inpatient hospital care. Private room and board is covered if Aetna determines it is medically necessary. "

The plan further stated, under the heading "Medical Care": "If you need hospitalization . . . non-preferred / Out of Network Care: Call Aetna at the number on your medical ID card to certify your hospital admission and length of stay." Under the heading "Inpatient Hospital", it said: "For all other admissions you are responsible for making sure care is certified with Aetna. Benefits will be reduced for admissions that aren't certified." However, for mental health care hospitalizations, it said, "To certify this type of care . . . Call . . . Human Affairs International (HAI) number listed on your medical ID Card 1-800-424-4355."

HAI meticulously case managed the patient’s inpatient hospital stay from the date of admission through the date of discharge, approving the entire 29-day course of treatment, step by step, as treatment progressed. This was done by an HAI Case Manager, who acted under the direct supervision and/or direction of HAI's reviewing physician. These approvals were communicated verbally by the HAI Case Manager to the hospital's Clinical Director, during twelve separate telephone conversations between the two of them, which were documented by the Clinical Director’s utilization review notes. In addition there were two telephonic “doctor to doctor” reviews by the treating physician and HAI’s reviewing physician. In addition, HAI issued two written "Notices of Certification", which taken together confirmed certification of the entire 29 days inpatient treatment. Although these notices were apparently issued by HAI, the forms actually appeared to originate directly from Aetna, as both forms prominently bore the "Aetna" logo.

Total charges exceeded $39,000.00. A timely claim for benefits was submitted by the hospital. Aetna paid slightly less than $11,000. Aetna stated in a letter that it was "continuing the review" of the claim. The letter further stated that, "The fact that HAI certified the necessity of the care, based on the verbal information provided at the time, is not a guarantee that the claim will be paid. Aetna has the right to validate the verbal information by reviewing the actual medical records and determining what benefits are payable under the contract. Furthermore, we are entitled to have the file examined again after one consultant has given their opinion and we feel there is a need for additional review."

The hospital directed a letter to Aetna, pointing out that not only did HAI certify all of the treatment rendered, but an HAI representative had made a direct request of Aetna that it pay the claim. Aetna's response was that, "As stated in (the plan) Aetna has the discretion to determine all questions arising in the administration, interpretation, and application of the medical plan." This was the notorious "Firestone Exception", which some insurers feel insulates them from civil liability. A second letter from Aetna communicated a denial of the claim, stating: "Aetna . . . not HAI, has the sole responsibility to determine benefits. That determination process includes review for medical necessity . . . Our pre-certifications are not a guarantee to provide benefits. . . . " "HAI, although previously associated with Aetna, was not a subsidiary, nor Aetna's wholly owned medical review company, . . . Their review findings do not dictate the final determination. . . .” "It is our determination . . . inpatient confinement was not medically necessary (except for four days)”

Plan benefits were described in the plan booklet called the "Summary Plan Description" (SPD). The SPD set forth clear procedures and standards for determining "medical necessity" of proposed treatment. Aetna’s denial of the claim was based on criteria not found in the plan, which it applied retroactively in contravention of the plan's own certification procedures.

This case, like all of the other retroactive, post certification denials, boiled down to the question of "Do words have meaning?" The applicable dictionary definition of the word "Certify" is as follows: "1. to attest authoritatively: as (a): confirm; (b) to present in formal communication; (c) : to attest as being true or as represented or as meeting a standard . . .; 2. to inform with certainty. assure; 3. to guarantee . . .4 to recognize as having met special qualifications . . ."

For Aetna (by and through its agent HAI) to have "certified" the medical necessity of treatment, while it was being rendered, only to come back after the rendition of treatment and say "certification" is no "guarantee" of payment, and then dishonor the certifications, is to indeed say words have no meaning. Of course, any insurer can verify or "validate" the information given to it during the certification process and no insurer would be bound by certifications, if false information was used to obtain them. But that wasn’t the case here. There was no allegation that any information provided by the hospital to HAI was incorrect.

As is required by ERISA, an administrative appeal was submitted that was specifically directed at the reasons stated for the initial denial of the claim as were set forth in the denial letter. Neither Aetna, nor Honda ever responded to it. Two follow-up letters were sent to both Honda and Aetna calling attention to the failure to respond to the appeal. Each was ignored.

Result: A lawsuit was filed. The case was resolved satisfactorily.

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