Dismissal of Class Action for Lack of Private Right of Action in ACA
The Patient Protection and Affordable Care Act (“the ACA”) includes a mandate that group health plans and health insurers “provide coverage” and “not impose any cost sharing requirements for” certain types of preventive health services, including comprehensive lactation support and counseling services (“CLS”). The ACA defines cost sharing as “deductibles, coinsurance, copayments” and other expenditures required of an insured with respect to essential health benefits covered under a group health plan. Jillian York and Jody Bailey, members of group health plans subject to the mandate, submitted claims to be reimbursed for CLS provided by out-of-network providers. Wellmark Health Plan of Iowa, Inc., and Wellmark Blue Cross and Blue Shield of Iowa (collectively, “Wellmark”) refused to cover these costs.
In Jillian York; Jody Bailey, on behalf of themselves and all others similarly situated v. Wellmark, Inc., d/b/a Wellmark Blue Cross and Blue Shield of Iowa; et al., No. 19-1705, United States Court of Appeals For the Eighth Circuit (July 13, 2020) York and Bailey commenced a putative class action, asserting breach of contract claims under Iowa law and breach of fiduciary duty claims under the Employee Retirement Income Security Act (“ERISA”), based on allegations that Wellmark violated the mandate’s cost-sharing and “information and disclosure” requirements. The district court ruled in favor of the insurers.
Jillian York joined the UIChoice group health plan through her job at the University of Iowa. The plan’s coverage manual explains listed a network of providers specified in the manual. All other medical providers are considered “Out-of-Network” providers.
In early 2016, York chose to deliver her baby at UIHC, which she knew was a UIChoice network facility. While pregnant, she received a prenatal lactation consultation with Deborah Hubbard, a registered nurse and International Board Certified Lactation Consultant (“IBCLC”) who operates UIHC’s breastfeeding clinic. When problems arose in early March, York consulted Mary Johnson, an IBCLC at UIHC, who created a personalized care plan. Johnson posited that York’s son was not transferring milk due to a tongue tie and told York to “seek help elsewhere” as Johnson “had very little experience” with this issue. York was not charged for these services and consultations.
A pediatric dentist then performed a frenectomy to correct her son’s tongue tie, encouraged York to “follow up with a knowledgeable IBCLC,” and referred her to Jen Pitkin. A representative confirmed the plan covered lactation services but could not identify a CLS provider in Wellmark’s network. The representative noted that Pitkin was affiliated with a facility in the network and advised York to ask whether Pitkin could bill through that facility so York could obtain in-network benefits. York instead met with Pitkin, incurred a $65 charge, and sought reimbursement from the UIChoice plan for that charge. Wellmark denied the claim.
DISMISSAL ORDER ISSUES
Plaintiffs appeal the dismissal of claims that Wellmark violated cost-sharing and information and disclosure requirements of the ACA mandate. As York was a member of a UIChoice group health plan not governed by ERISA, her breach of contract claim is governed by and construed in accordance with the laws of the State of Iowa, as the coverage manual expressly stated.
Because they could not get a referral to the needed experts the plaintiffs argued there was a facially plausible violation of the ACA’s preventive health services mandate.
In dismissing these claims, the district court accurately noted that neither the statutory mandate nor its implementing regulations requires the disclosure of information — including a list of providers — or prohibits “administrative barriers” or “inconsistent guidance.” The mandate’s implementing regulations do not include information and disclosure requirements.
Bailey seeks relief under a group health plan governed by ERISA, which preempts state law remedies. Although the ACA does not impose “information and disclosure requirements,” ERISA provides a private right of action for an alleged breach of a plan administrator’s duty to distribute written notices that are sufficiently accurate and comprehensive to reasonably apprise plan participants and beneficiaries of their rights and obligations under the plan. But Bailey did not assert a breach of that duty. Rather, her claim is that the ACA mandate and its implementing regulations impose a categorical fiduciary duty on the administrators of group health plans governed by ERISA to publish a “separate list” of lactation counseling providers. She was wrong, the health plan need only provide a list of network providers and describe when out-of-network services are covered.
Summary Judgment Issues.
The ACA mandate’s implementing regulations provide that a group health plan or issuer may deny coverage or impose cost sharing for items and services “performed by an out-of-network provider” if the plan or issuer “ha[s] in its network a provider who can provide an item or service.”
The ACA does not use the term “network of providers.” An implementing regulation provides that a plan or issuer may deny coverage or impose cost sharing for items and services “performed by an out-of-network provider” if the plan or issuer “ha[s] in its network a provider who can provide an item or service.”
To adopt Plaintiffs’ interpretation would require the court to change the contracts that state-regulated group health insurers negotiate with medical providers.
The undisputed facts show York and Bailey could receive (and in fact received) lactation support and counseling services at all relevant points during their pregnancies, during their inpatient stays, and after their discharge from the hospital. They received those services without charge from Certified Lactation Consultants at UIHC, an in-network facility seven miles from York’s home and ten to fifteen minutes from Bailey’s. . . . Wellmark’s decision not to credential lactation consultants, without more, does not prove Wellmark lacked in-network providers capable of providing comprehensive lactation services.
Difficulty in scheduling an appointment with a provider does not establish an insurer’s noncompliance with the requirements. Moreover, the summary judgment record established that Wellmark provided York and Bailey qualified, available in-network providers of CLS.
The Eighth Circuit concluded that the district court did not err in granting summary judgment dismissing Plaintiffs’ cost-sharing claims.
It seems the public, like the two ladies who tried to create a class action suit because of refusal to pay a $65 claim simply think the ACA guaranteed all medical services would be free. Clearly, that was not the case. The ladies received the services promised to them and even the ACA did not require that the health insurer provide free services for every possible situation. Insurance policies and statutes must be read in full and applied as written. Courts can’t change contracts nor can they even consider changing a clear and unambiguous statute.
© 2020 – Barry Zalma
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 52 years in the insurance business. He is available at http://www.zalma.com and email@example.com.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
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