Time Limits For Erisa Benefit Appeals, and The Affordable Care Act

Connecticut Employment Lawyers Association
November 12, 2013

The Affordable Care Act:  Provisions regarding Processing and Appeals of Medical Benefit Denials

President Obama’s health care law, the Patient Protection and Affordable Care Act (“PPACA”) instituted new rules for processing and appeal of health benefit claims under group health insurance policies.  An explanation of the final rules can be found at http://webapps.dol.gov/FederalRegister/HtmlDisplay.aspx?DocId=25131&AgencyId=8&DocumentType=2 The PPACA provides the following, in summary:

  • If the insurer does not strictly adhere to all the regulation’s requirements, administrative appeals are deemed exhausted, allowing the claimant to proceed to federal court without pursuing further administrative remedies.  Importantly, any review of the decision in any subsequent litigation will be de novo rather than under an arbitrary and capricious standard. There is an exception for “minor compliance errors,” which will not result in deemed exhaustion if the error is: de minimis; non-prejudicial to the claimant; beyond the insurer’s control or is the result of good cause; was made as part of an ongoing, good faith exchange of information; and is not reflective of a pattern or practice of noncompliance. If the plan asserts an exception to the deemed exhaustion provision, the claimant has the right to request that the plan state in writing its basis for asserting that it is entitled to the exception.
  • Plans must offer an external review process for denials. Fully insured and self-insured plans must both comply. Plans must use an available state external review process. The decision of the external review is binding on the plan. If no state external review if available, then plans can use the review process currently administered by HHS, or a Federal external review process supervised by the U.S. Departments of Labor and Treasury. After January 1, 2014, a state external review procedure can only be used if it complies with certain provisions of the National Association of Insurance Commissioners Uniform Model Act. Connecticut’s external review program, administered by the Insurance Department, complies with the requirement, so all plans should be using the state process after January 1, 2012. Self-insured plans not subject to a state review process or the HHS-supervised process have a safe harbor to comply with the external review requirement if they contract with at least three independent review organization and rotate claims among them by July 1, 2012
  • Response to an “urgent care claim” is still 72 hours, as under the prior regulations, but a plan cannot contest a physician’s determination that a claim is “urgent.”
  • To reduce conflicts of interest, decisions on hiring, compensation, termination and promotion of plan administration employees cannot be based denying claims. For instance, a plan could not offer a bonus based on how many denials an administrator made.
  • The denial letter must include the date of service, identify the health care provider, the claim amount, and any denial codes and their meaning. The letter must notify the claimant of the claimant’s right to request diagnosis and treatment codes and their meaning.
  • The letter must describe any standard used to deny the claim, and how it was applied. For instance, if medical necessity is the basis for the denial, the notice must include a description of the medical necessity standard.
  • The plan must describe the process for internal appeals and the external review process, including how to initiate an appeal.
  • The plan must provide information on how to contact any consumer assistance program established under the Public Health Service Act to assist individuals with the claims process.
  • A rescission of coverage, for reasons other than non-payment of premium, is an “adverse determination” that requires a denial letter in compliance with the regulations. Rescission of coverage occurs, for instance, when a plan claims a participant was not truthful in completing a medical certification.
  • If more than 10% of the population in the claimant’s county of residence speaks the same non-English language, the plan must provide notices in a “culturally and linguistically appropriate” manner. There are no counties in Connecticut that would be included, so these materials do not describe this process in detail. If you have a case that might be subject to these requirements, a description of the process and the counties that are included are listed in DOL’s Final rule, the cite for which is above.

Most of these regulations only came into effect this year, and no cases construing the regulations have been decided yet.  We therefore don’t know yet what the practical consequences of the new rules will be.

Chart for Deadlines for Administrative Appeals

Time Limits Governing Appeals

The chart below sets forth the deadlines for filing appeals for different types of medical claims, and the time period within which the plans must respond.

With respect to all these time limitations, the regulations require that the notification be within a reasonable time, but no more time than provided in the regulations.  If you have a claim that needs to be decided in less time than provided in the regulations, you can argue that quicker notification is required.  The time limits start when the claim is submitted, not when all the information in support of the claim is received.  The citations below are to 29 C.F.R. § 2560.503-1.

Inform of Failure to Follow Procedures

To Issue a Decision

To File Initial Appeal Deadline

To Issue Decision After Appeal

Pre-Service Health Claims

5 days ((c)(1)(i))

15  days, with 15 extension ((f)(2)(iii)(A)

180 Days after denial (h)(3)(i)

30 days, unless 2 levels of appeal req’d, then 15 days for each. (i)(2)(ii)

Urgent Care Health Claims

24 Hours ((c)(1)(i))

72 hours, or 48 hours if the plan requested more information ((f)(2)(i)).

180 Days after denial  (h)(3)(i)

72 hours (i)(2(i)

Post-Service Health Claims

30 days ((f)(2)(iii)(B))

180 Days after denial  (h)(3)(i)

60 days, unless 2 levels of appeal req’d, then 30 days for each. (i)(2)(iii)*

Disability Claims

45 days, with two 30 day extension

180 Days after denial  (h)(4)

45 days, with one 45 day extension (i)(3)

All Other Claims

90 days, with one 90 day extension ((f)(1))

60 days (h)(2)(i)

60 days, with one 60 day extension ((i)(1)*

* Special rules are set forth in subsection (i) apply if the reviewing body is a committee or board of trustee with regularly scheduled meetings.

If a plan reduces or terminates a continuing course of treatment, the plan must give the participant sufficient notice to appeal the denial and obtain a determination before the benefit is reduced or terminated.

Limitations Period to Bring Suit

ERISA does not contain a statute of limitations for benefit claims.  Rather, the applicable state statute applies, or any limitations period contained in the plan that is reasonable.   Burke v. PriceWaterHouseCoopers LLP Long Term Disability Plan ,  572 F.3d 76, 78 (2d Cir. 2009).  For benefit claims, the usual three and six year contract limitations periods would apply in the absence of a plan provision governing this.

Many plans provide that any suit for benefits must be brought within three years of when a proof of claim was required to be filed, which is usually required within 60 to 90 days after the disability.  This is only an issue if the claim involves an initial benefit denial, rather than a decision to discontinue benefits, since there is no way to require suit while the claimant is still receiving benefits!

The Supreme Court recently decided in the case of Heimeshoff v. Hartford Life & Accident Ins. Co. , 187 L. Ed. 2d 529 (U.S. 2013) that plan-imposed statutes of limitation are enforceable.  The plan at issue required any suit to be filed within three years of when the proof of claim was required to be filed.  In the case, the claimant had about a year to file suit under the plan’s limitations period, but she waited until almost three years after she exhausted administrative remedies.  The Court enforced the plan’s limitations period, and dismissed the claim.

The case should have limited applicability.  Most claimants will have ample time after conclusion of the administrative process to file suit with a three-year limitations period.  Also, made plans do not have limitations periods.  And, the rule shouldn’t apply when the company discontinues paying benefits, rather than an initial denial.

If you are running against the deadline and your appeal isn’t done, you should either get the plan to enter into a tolling agreement, or go ahead and file suit, and request that the suit be stayed pending completion of the administrative appeal.

ERISA benefit denials are reviewed under either an arbitrary and capricious standard of review that is deferential of the plan’s decision, or a de novo standard of review, in which the court acts as the claims administrator and does not defer to the plan’s decision.

Urgent care claims must be made as soon as possible, and must be made sooner consistent with medical exigencies.  The plan must defer to the physician’s determination of what are urgent medical claims.