- Batas v. Prudential Ins.
- Black & Decker v. Nord
- Doe v. Blue Cross/Blue Shield of Maryland, Inc.
- Pennsylvania Psychiatric Society v. Green Spring Health Services
Batas v. Prudential Ins. (N.Y. S.Ct., App. Div. 2001)
Issue
The issue in this case was whether a health insurer’s promise in its policy to provide medical benefits consistent with prevailing medical opinion legally obliged it to do so, rather than instead relying on other guidelines published by a third party.
AMA interest
The AMA supports the full and appropriate provision of health care services, and in connection with that, the AMA supports third party payors’ approval of payment for those services.
Case summary
The class action complaint charged that Prudential Insurance, through its PruCare policy, promised to provide insurance benefits for medical care that were consistent with “prevailing [medical] opinion.” Rather than providing such benefits, however, PruCare relied on guidelines created by Milliman & Robertson (M & R). The M&R guidelines allegedly were not based on proper clinical standards and did not reflect the generally accepted standard of care in the medical community. By relying on these and other guidelines not supported by good medical practice, insurers denied needed treatment as not “medically necessary.”
The complaint alleged a variety of legal theories, including breach of contract, breach of fiduciary duty, fraud, and improper interference with contractual relationships. It also alleged a violation of the New York consumer fraud statutes.
The trial court upheld the principal claims of the complaint against Prudential Insurance’s motion to dismiss. Prudential Insurance appealed that ruling. The Appellate Division held that the complaint alleged a valid claim, affirming the trial court.
Litigation Center involvement
The Litigation Center submitted an amicus curiae brief in the Appellate Division to support the trial court decision.
Black & Decker v. Nord, 538 U.S. 822 (2003)
Issue
The issue in this case was whether the administrator of an employee benefit plan, operating under a conflict of its own interests with the interests of the plan beneficiaries, must give a reason if it is to overrule the medical evaluation of a treating physician.
AMA interest
The AMA believes that employee benefit plans should be administered for the benefit of the employees in the plan. Therefore, a plan administrator that is operating under a conflict of interests should be required to justify its decision to overrule the medical evaluation of a treating physician.
Case summary
Kenneth Nord had degenerative disc disease. As a result, his primary treating physician determined that he was incapable of performing his job duties. Nord applied for disability benefits under the Black & Decker Disability Plan, which Black & Decker both funded and administered. Metropolitan Life Insurance Company (MetLife) helped Black & Decker evaluate claims.
Black & Decker initially denied Nord's disability claim, and Nord appealed. In conjunction with the appeal, MetLife had an independent neurologist review Nord's claims. The neurologist agreed with the diagnosis of Nord's disease but found that Nord could perform his job, provided that he took pain reduction medication. After the review, MetLife recommended denial of Nord's claim, and the plan manager accepted that recommendation. Neither MetLife nor the plan manager gave a reason for following the evaluation of the neurologist, rather than that of Nord's treating physician.
Nord brought suit in the United States District Court for the Central District of California, claiming that the denial of disability benefits violated ERISA §404, which requires that "a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries." Nord contended that, because the plan administrator was conflicted and, without explanation, disregarded the recommendation of Nord's treating physician, it had violated this statute. The district court granted summary judgment in favor of the disability plan, holding that it was within its discretion to deny the disability benefits. Nord appealed to the Ninth Circuit Court of Appeals.
The Ninth Circuit reversed the district court and ordered the disability payments. The Ninth Circuit noted that Black & Decker was operating under a conflict of interests, in that it was both the funding source and, through its employee, the plan administrator. Consequently, it said, the administrator must defer to the claimant's treating physician unless it gives "specific, legitimate reasons for doing so that are based on substantial evidence in the record."
Black & Decker appealed to the Supreme Court of the United States, which reversed the Ninth Circuit. The Court held that neither the ERISA statute nor its regulations required the treating physician rule, as articulated by the Ninth Circuit. Further, the Court stated that the establishment of such a rule should be within the prerogative of the United States Department of Labor, rather than the courts.
Litigation Center involvement
The Litigation Center filed an amicus curiae brief in the Supreme Court, arguing that under accepted principles of law and of medical practice, the plan administrator should, in this situation, have been required to justify his decision to overrule the treating physician.
View the brief (PDF, 204KB).
Doe v. Blue Cross/Blue Shield of Maryland, Inc., 173 F.Supp.2d 398(D. Md. 2001)
This case challenged the use of internal guidelines by a managed care organization to determine the “medical necessity” of mental health benefits.
The plaintiffs were beneficiaries under the standard Blue Cross/Blue Shield of Maryland, Inc. (“Maryland Blue”) health insurance policies who, sought mental health or substance abuse benefits pursuant to the policy terms. Maryland Blue denied these claims, contending that the treatment sought was not medically necessary. The lawsuit alleged that Maryland Blue applied a different definition, in practice, for medical necessity than that set forth in its policies.
The court determined that the plaintiffs lacked standing to maintain their lawsuit, and it dismissed the case in its entirety. The Litigation Center contributed to the plaintiff’s legal expenses.
Pennsylvania Psychiatric Society v. Green Spring Health Services
2000 U.S. Dist. LEXIS 7953 & 8017 (W.D. Pa. 2000)
280 F.3d 278 (3d Cir. 2002)and American Arbitration Association
Issue
The issue in this case was the scope of responsibility of certain managed care organizations and general health insurers to cover payment of patients’ behavioral health care.
AMA interest
The AMA supports the full and appropriate provision of health care services, including mental/behavioral health care services, and in connection with that, the AMA supports third party payors’ approval of payment for those services.
Case summary
This case, filed against Green Spring Health Services, Magellan Health Services, and four insurance companies, alleged that the defendants systematically refused to authorize and otherwise restricted the provision of medically necessary behavioral health care, in violation of the Pennsylvania Quality Health Care Accountability and Protection Act, the physicians’ provider contracts, the insurance policies themselves, and various non-contractual obligations.
The trial court dismissed the case, holding that the Pennsylvania Psychiatric Society (“PPS”) lacked associational standing to file the suit and that an arbitration clause in the provider contract precluded a lawsuit in court. PPS appealed.
The United States Court of Appeals for the Third Circuit, 280 F.3d 278, reversed the dismissal, holding that PPS was potentially entitled, based on the pleadings, to sue on behalf of its members and their patients. The court remanded the case to the trial court for consideration of the remaining issues, including the arbitration clause. The defendants petitioned for rehearing by all the appellate court judges, but the court denied that motion. The defendants then petitioned the United States Supreme Court for certiorari, but the Court denied their petition.
Following remand to the trial court, PPS filed an arbitration demand for certain claims with the American Arbitration Association. Some of the defendants asked the federal court to dismiss the arbitration, claiming that the matter should be tried in court, notwithstanding that these defendants previously had persuaded the court that the claims against them should be arbitrated.
Pursuant to PPS’s motion, the court ultimately dismissed this lawsuit.
Litigation Center involvement
The Litigation Center and the Pennsylvania Medical Society filed an amicus brief to support PPS in its appeal.
To view the brief (PDF, 975KB).
Content provided by: Office of the General Counsel