ERISA Fiduciary only Needs a Scintilla of Evidence to Support Denial of Health Insurance Claim
Health insurance plans governed by ERISA are not bound by the same rules as insurance claims. They are bound only by the federal statute that created and controls the benefits. It is prudent, therefore, for the patient to consider the terms and conditions of the plan before allowing a voluntary surgery.
In Karen A. Rittinger v. Healthy Alliance Life Insurance Company, doing business as Anthem Blue Cross and Blue Shield; Anthem UM Services, Incorporated, No. 17-20646, United States Court Of Appeals For The Fifth Circuit (January 31, 2019) Karen Rittinger learned the lesson after having a bariatric surgery that went wrong. After the surgery she clashed over insurance coverage. Rittinger was the beneficiary of an ERISA-covered plan. Healthy Alliance Life Insurance Company offered the plan and Anthem Blue Cross Blue Shield (Anthem) administered it.
In October 2014, Rittinger underwent bariatric surgery. Complications arose requiring follow-up surgery and intensive care. Anthem denied preauthorization for both the bariatric surgery and the follow-up surgery, writing, “We cannot approve coverage for weight loss surgery (bariatric surgery) or hospital care after this surgery. Bariatric or weight loss surgery is an exclusion in your health plan contract.”
Paragraph 33 of the Health Certificate of Coverage (Certificate) deals with bariatric surgery:
[The plan does not cover] bariatric surgery, regardless of the purpose it is proposed or performed. This includes but is not limited to Roux-en-Y (RNY), Laparoscopic gastric bypass surgery or other gastric bypass surgery . . . . Complications directly related to bariatric surgery that result in an Inpatient stay or an extended Inpatient stay for the bariatric surgery, as determined by Us, are not covered.
There is an exception at the end of Paragraph 33: “This exclusion does not apply to conditions including but not limited to . . . excessive nausea/vomiting.” Anthem cited Paragraph 33’s exclusion and denied coverage.
For Rittinger to have coverage, Paragraph 33’s “excessive nausea/vomiting” exception must kick in. Davis Clinic’s intake report from September 15—one month before Rittinger’s surgery—notes that Rittinger’s “chief complaint[s]” were “morbid obesity and abdominal pain.” And that same report noted “no vomiting” and “no nausea.” Rittinger’s medical records up to the time of her surgery—records Rittinger herself attached to her preauthorization evaluation—do not reflect treatment for nausea and vomiting. Moreover, Rittinger’s preauthorization documentation requests treatment for “morbid obesity” and was coded for obesity “due to excess calories,” but does not indicate any excessive nausea or vomiting.
After the denial Rittinger’s husband emailed Anthem. He explained that he “would like to file an appeal for her hospitalizations which began on 10/15/2014.” Anthem treated this as an official first-level appeal. After gathering more information from Rittinger and her surgeons and obtaining an independent peer review, Anthem again denied coverage.
In April 2015, Rittinger hired counsel and filed a second-level internal appeal. She submitted materials about her medical history and the surgery. Emphasizing Paragraph 33’s exception for bariatric surgery where there is “excessive nausea/vomiting,” Rittinger provided records showing: (1) she suffered from Gastroesophageal Reflux Disease (GERD) and esophagitis, (2) GERD/esophagitis is linked to nausea and vomiting, and (3) she underwent surgery to address these problems.
Anthem convened a five-person “Grievance Advisory Panel” (GAP) to evaluate Rittinger’s second-level appeal. The GAP quoted Paragraph 33, concluded it excluded Rittinger’s bariatric surgery, and affirmed the denial of coverage.
Having exhausted her internal remedies, Rittinger sued.
The Fifth Circuit reviewed the grant of summary judgment as if it was presented directly to them.
A plan administrator abuses its discretion where the decision is not based on evidence, even if disputable, that clearly supports the basis for its denial. Yet if the plan fiduciary’s decision is supported by substantial evidence and is not arbitrary or capricious, it must prevail. Substantial evidence is evidence that is more than a scintilla, less than a preponderance, and is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
The district court disagreed with Anthem’s interpretation of plan terms and procedures. But the district court also understood Anthem’s need to “respond quickly to a customer’s request,” and not “shut out customers who do not dot every ‘i’ and cross every ‘t’ in a complex submission process.”
The Fifth Circuit questioned whether the GAP’s denial of coverage in the second-level appeal was an abuse of discretion. Rittinger contends it was. She claims the GAP ignored her relevant evidence and failed to analyze Paragraph 33’s “excessive nausea/vomiting” exception. Anthem responded that the administrative record contained more than a scintilla of evidence that Rittinger’s surgery was for weight loss purposes and that she had no vomiting or nausea.
On appeal, Rittinger challenges Anthem’s application of the plan terms, but not Anthem’s interpretation. The district court reasoned that Anthem’s distinction between GERD/esophagitis and nausea/vomiting was “sophistic” and rendered Paragraph 33’s exclusion “meaningless.” And a construction that renders terms superfluous is “contrary to the provision’s plain meaning.”
Paragraph 33 specifically contemplates particular exceptions to its exclusion of bariatric and weight loss surgeries. It is wrong for a court to rewrite Paragraph 33 and insert a new exception for GERD/esophagitis—expressio unius est exclusio alterius. Anthem’s construction makes sense. It fits with the plan’s plain language. We ordinarily think of GERD/esophagitis and nausea/vomiting as two different things. In fairness, the district court had a point too: These could be partially overlapping categories.
Perhaps Paragraph 33 is best interpreted as creating a Venn diagram [overlapping circles or other shapes to illustrate the logical relationships between two or more sets of items] of categories where GERD/esophagitis and excessive nausea/vomiting have some overlap. However, the Fifth Circuit was only required to ask whether Anthem’s construction was so egregiously wrong that it flouts the plan’s plain language and constitutes an abuse of discretion. Since Anthem’s interpretation of Paragraph 33 was not so off-kilter as to be an abuse of discretion.
If “substantial evidence” supports Anthem’s decision, then there was no abuse of discretion. Abuse of discretion review is the functional equivalent of arbitrary and capricious review. A decision is arbitrary if it is made without a rational connection between the known facts and the decision. This review is deferential. The appellate court only needs assurance that the administrator’s decision falls somewhere on a continuum of reasonableness—even if on the low end.
References to nausea and vomiting do not appear in the administrative record until after this coverage dispute began. And even when those terms turn up, two of Rittinger’s prior medical providers do not mention nausea or vomiting per se but rather GERD and esophagitis. In fact, claims that Rittinger has submitted to Anthem since early 2014—part of the GAP’s administrative record—do not reflect treatment for nausea or vomiting.
The district court was only supposed to review for abuse of discretion—i.e., did Anthem have more than a scintilla of evidence to support its decision? The district court was not supposed to weigh and balance the evidence. Anthem did not need to supply original evidence or expert witnesses: It only needed to clear the low, more-than-a-scintilla threshold. The five GAP members reviewed the evidence and determined Rittinger’s initial surgery was “for weight loss and acid reflux,” and not “excessive nausea/vomiting.” As a result the Fifth Circuit concluded that Anthem’s decision is rational and that, therefore, Paragraph 33’s exception did not apply.
Multiple “scintillas” of evidence—Rittinger’s medical record, her preauthorization report, Anthem’s consulting physician’s review, and the coding of Rittinger’s other claims to Anthem—support the GAP’s decision, even if other evidence is stronger or more “persuasive.”
The Fifth Circuit, concluded that Anthem did not abuse its discretion in either the first- or second-level appeal. Although not the paragon of procedural propriety, Anthem satisfied the very low, very deferential abuse-of-discretion standard. Rittinger is not entitled to any damages.
The Fifth Circuit, although it refused Rittinger’s claim, was kind to her since it noted that the only evidence of vomiting came after the claim was refused and even then, it was inadequate. She was fat. She wanted bariatric surgery to lose weight. She had it and it went wrong causing more surgery. Regardless, the plan did not provide coverage for bariatric surgery. Presenting the new information could have been construed as an attempt at fraud but since it was inadequate to get past the exclusion the court simply refused her any of the benefits of the policy and any damages.
© 2019 – Barry Zalma
This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
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