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Benjamin v. Oxford Health Insurance, Inc.

United States District Court, D. Connecticut

July 19, 2018

AMY BENJAMIN, Plaintiff,



         In this action, Plaintiff Amy Benjamin ("Benjamin") brings suit against her insurer for denying coverage of residential treatment for a mental and/or behavioral health disorder. Plaintiff asserts that the denial was wrongful because Plaintiff was entitled to coverage for the care received, under the terms of her insurance policy, which is governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), and because Defendant insurance company failed to make a full and fair evaluation of her claims, or notify her of how to obtain such an evaluation, either at the time of her initial claim or at the time of her two administrative appeals.

         Plaintiff's Motion for Summary Judgment [Doc. 64] asks this Court to find that Defendant Oxford Health Insurance, Inc. ("Oxford") violated ERISA by its denial of her claim, and to award Plaintiff reimbursement of her claimed medical expenses. Defendant has filed its own Motion for Partial Summary Judgment [Doc. 61], requesting this Court to remand the disputed claim back to Defendant Oxford, for an evaluation of medical necessity and subsequent reimbursement of Plaintiff's covered medical expenses (if any). This Ruling resolves these fully briefed cross-motions.

         I. Factual Background

         The uncontested facts summarized below are taken from the Rule 56(a)(1) and Rule 56(a)(2) statements filed by Plaintiff and Defendant in support of and opposition to the pending cross motions. See Docs. 62, 64-5, 67, 70.

         During the relevant time period, July 24 to October 14, 2014, Plaintiff was enrolled as a beneficiary in the Techstyle Contract Fabrics Freedom PPO Plan, "the Plan," an employee benefit welfare plan. The Plan was fully insured by Defendant Oxford, which was authorized by the Plan to administer benefits and render claim determinations, pursuant to the Plan.

         A. The Plan

         The Plan provides coverage for "Outpatient and Professional Services for Mental Health Care," including "inpatient mental health care services relating to the diagnosis and treatment of mental, nervous, and emotional disorders."

         The Plan specifically excludes any care that is not Medically Necessary. Under the Plan, services are Medically Necessary only when:

• They are clinically appropriate in terms of type, frequency, extent, site, and duration, and considered effective for Your illness, injury, or disease;
• They are required for the direct care and treatment or management of that condition;
• Your condition would be adversely affected if the services were not provided;
• They are provided in accordance with generally-accepted standards of medical practice;
• They are not primarily for the convenience of You, Your family, or Your Provider;
• They are not more costly than an alternative service or sequence of services, that is they are at least as likely to produce equivalent therapeutic or diagnostic results;
• When setting or place of service is part of the review, services that can be safely provided to You in a lower cost setting will not be Medically Necessary if they are performed in a higher cost setting. For example we will not provide coverage for an inpatient admission for surgery if the surgery could have been performed on an outpatient basis.

Benjamin 43.[1]

         A determination of Medical Necessity is made by the "Utilization Review" process. Benjamin 94. The Plan's subsection on Utilization Review provides procedures by which health services are reviewed for Medical Necessity before, during, or after the provision of those services. Id. at 94-96. These three procedures are called, respectively, the Preauthorization, Concurrent, and Retrospective Reviews. Id. The Plan also provides an appeals structure for covered Plan members who wish to contest an adverse benefits determination. Id. at 96-102. This structure includes first-and second-level internal appeals. Id.

         The Plan provides that, to obtain full reimbursement for certain identified services, covered individuals must obtain "preauthorization." Preauthorization is defined, by the Plan, as "[a] decision by Us prior to Your receipt of a Covered Service . . . that the Covered Service . . . is Medically Necessary." Benjamin 39.

         The Plan contains an Out-of-Network Benefits Rider which explains the details of obtaining preauthorization. Under the heading "Failure to Seek Preauthorization," that Rider provides that:

If You fail to seek Our Preauthorization for benefits subject to this section, We will pay an amount $500 less than We would otherwise have paid for the care, or We will pay only 50% of the amount We would otherwise have paid for the care, whichever results in a greater benefit for You. You must pay the remaining charges. We will pay the amount specified above only if We determine the care was Medically Necessary even though You did not seek Our Preauthorization. If We determine that the services were not Medically Necessary, You will be responsible for paying the entire charge for the service.

Benjamin 124. Hereinafter, this opinion will refer to this provision as the "Penalty Clause." The preauthorization requirement, and the Penalty Clause, apply to mental health services.

         B. Plaintiff 's Treatment at Caron

         On July 11, 2014, Plaintiff called Oxford, and was provided with information regarding benefits and Preauthorization under the Plan.

         On July 24, 2014, Plaintiff presented at Caron Renaissance ("Caron"), a facility that treats behavioral and mental health disorders, for treatment, and was admitted on an inpatient basis, for mental health treatment. She did not request Preauthorization prior to her admission.

         On or about July 29, 2014, Defendant received a call from an individual who identified himself as "John" from Caron. Defendant provided John with information about coverage under the Plan.

         On October 2, 2014, Plaintiff was discharged from Caron. Neither any application for Preauthorization nor any claim for coverage of the services she received from Caron between July 29 and October 2 was made during her inpatient stay.

         C. Plaintiff's Claim for Reimbursement

         On October 31, 2014, Plaintiff submitted a post-care claim to Oxford for the care she received from Caron between July 29 and October 2, 2014. No clinical records were submitted with this claim.

Oxford denied Plaintiff's claim, citing to claim code D2, which provides, "claim was denied because these services were not authorized in advance. Please refer to your Certificate of Coverage for more information."

         By letter dated January 6, 2015, Plaintiff provided Oxford with medical records for the treatment she received at Caron between July 24 and October 2, 2014. By letter dated January 14, 2015, Plaintiff appealed Oxford's initial denial of her claim for that care. That letter read, in relevant part,

on July 11, 2014, I had a phone conversation discussing what my coverage is for an in patent [sic] facility. The information provided to be [sic] is that I am responsible for $500 and am covered for my stay based on what United Healthcare[2] has deemed an appropriate day rate. It was clear that I was asking detailed questions because I needed this treatment.
On July 29th John from Caron Renaissance called to discuss my ...

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