The Employee Retirement Income Security Act of 1974, (ERISA) applies to a majority of employer provided insurance plans. These plans include, life, disability, and health. What is important to understand about ERISA plans is that it is rare in the extreme that a court will over-turn a decision by an ERISA plan administrator. This is seen again in a 2021 opinion from the Western District of Texas, Austin Division, styled, Marc Worob, individually and as next friend of M.W. v. Blue Cross And Blue Shield Of Texas, A Division Of Health Care Service Corporation.
This case is decided in favor of the insurance company plan administrator on competing motions for summary judgment.
The Plan provides coverage for five categories of Eligible Expenses: (1) Inpatient Hospital Expenses; (2) Medical–Surgical Expenses; (3) Extended Care Expenses; (4) special provisions expenses; and (5) pharmacy expenses. The first category, Inpatient Hospital Expenses, includes “Medically Necessary services for Serious Mental Illness in a Psychiatric Day Treatment Facility, a Crisis Stabilization Unit or Facility, a Residential Treatment Center for Children and Adolescents, or a Residential Treatment Center in lieu of hospitalization.” The Plan defines a Residential Treatment Center as a:
facility setting (including a Residential Treatment Center for Children and Adolescents) offering a defined course of therapeutic intervention and special programming in a controlled environment which also offers a degree of security, supervision, structure and is licensed by the appropriate state and local authority to provide such service. It does not include half–way houses, wilderness programs, supervised living, group homes, boarding houses or other facilities that provide primarily a supportive environment and address long–term social needs, even if counseling is provided in such facilities. Patients are medically monitored with 24 hour medical availability and 24 hour onsite nursing service for Mental Health care and/or for treatment of Chemical Dependency.
The second category, Medical-Surgical Expenses, is defined as the:
Allowable Amount for those charges incurred for the Medically Necessary items of service or supply listed below for the care of a Participant, provided such items are:
1. Furnished by or at the direction or prescription of a Physician, Behavioral Health Practitioner or Professional Other Provider; and
2. Not included as an item of Inpatient Hospital Expense or Extended Care Expense in the Plan.
The Plan also specifies that benefits will not be provided for “any services or supplies not specifically defined as Eligible Expense in this Plan.”
M.W.’s diagnoses include autism spectrum and depressive disorders. M.W. was admitted to Outback, an outdoor behavioral health facility, from February 26, 2018 through May 10, 2018. While at Outback, he received medical and psychological evaluations; addictions education; individual, group and family therapy; and case management.
BCBS initially paid M.W.’s claims for treatment at Outback, which were submitted under the revenue code 1001 for Residential Treatment. On October 30, 2018, BCBS denied benefits for Outback. The Explanation of Benefits stated that BCBS denied reimbursement because “this service is excluded under your Health Care Plan.” Worob appealed the denial. On May 15, 2019, BCBS upheld its denial of M.W.’s claims, stating that “the policy does not have benefits for half–way houses, wilderness programs, supervised living, group homes, boarding houses or other facilities that provide primarily a supportive environment and address long–term social needs, even if counseling is provided in such facilities.”
After his stay at Outback, M.W.moved to the Residential Treatment Program at Daniels where he remained through June 30, 2019. While at Daniels, M.W. received 24–hour supervised care in a structured setting,psychiatric evaluations, individual therapy, family therapy, group therapy, milieu therapy, and substance abuse treatment.
Daniels contacted BCBS regarding coverage for M.W.’s treatment when he was admitted. BCBS informed Daniels that it had not been “established that the services outlined on the claim were medically necessary,” and that “Outdoor Therapy/Wilderness Treatment is a contract exclusion and is not covered for any diagnoses” under the Plan. Daniels subsequently submitted claims to BCBS for reimbursement using the revenue code 1001 for Residential Treatment, which were denied.
Worob appealed BCBS’s denial. Worob asserted that M.W.’s treatment qualified as an Eligible Expense because Daniels is a licensed residential treatment center regulated by the state of Utah and met the Plan’s definition of an “Other Provider.” BCBS upheld its denial,stating that the Plan “does not have benefits for half–way houses, wilderness programs, supervised living, group homes, or boarding houses.” BCBS also stated that the Plan’s definition of “Residential Treatment Center” specifically excludes facilities that do not provide 24–hour medical availability or 24–hour onsite nursing service.
In deciding on the case, the court stated some of the rules that apply to ERISA cases.
District courts review an ERISA plan administrator’s denial of benefits under a de novo standard unless the benefits plan gives the administrator discretionary authority to determine eligibility. Under a de novo standard, a district court interprets the Plan’s language “in an ordinary and popular sense” and gives the language “its generally accepted meaning if there is one.”
As noted above, “half–way houses, wilderness programs, supervised living, group homes, boarding houses or other facilities that provide primarily a supportive environment and address long–term social needs, even if counseling is provided in such facilities,” are excluded from the Plan’s definition of Residential Treatment Centers. BCBS contends that the Plan thus clearly excludes Outback and Daniels from the definition of Residential Treatment Centers, making their services ineligible for reimbursement as Inpatient Hospital Expenses.
Worob eventually conceded the argument of BCBS.
Worob next argues that the treatments provided by Outback and Daniels are Medical–Surgical Expenses. To qualify as a Medical–Surgical Expense under the Plan, a service or supply must be (1) Medically Necessary, and (2) furnished by or at the direction or prescription of a Physician, Behavioral Health Practitioner, or Professional Other Provider. Worob contends that M.W.’s treatments at Outback and Daniels were Medically Necessary and furnished at the direction of Behavioral Health Practitioners. BCBS contends that there has been no determination of Medical Necessity and that M.W.’s treatment at Outback and Daniels was not “furnished” by physicians or providers.
For the first element, the Plan defines Medically Necessary as “those services or supplies covered under the plan which are. . . essential to, consistent with, and provided for the diagnosis or direct care and treatment of the condition, sickness, disease, injury or bodily malfunction.” BCBS makes an independent determination of Medical Necessity under the Plan, even for treatment prescribed for the Plan participant.
Worob contends that “there is no dispute that the services provided to [M.W.] at both Outback and Daniels were Medically Necessary.” BCBS states that it never conducted a Medical Necessity review for M.W.’s treatment because it determined that neither facility qualified as a Residential Treatment Center. The issue of Medical Necessity need not be decided, however, because Worob’s claim fails on the second element.
To satisfy the second element for a Medical–Surgical Expense under the Plan, a service must be (1) provided by the Physician, Behavioral Health Practitioner, Professional Other Provider,or their employee, (2) at their usual place of business, and (3) billed to the patient directly. Worob submitted evidence that physicians or behavioral health practitioners provided or directed M.W.’s treatment at Outback and Daniels. Therefore, he argues, the treatment was a Medical–Surgical Expense.
Medical records show that Outback Medical Director Dale Christensen, M.D., and Outback Clinical Director Greg Burnham, MS, LMFT, provided M.W.’s treatment. The records also show that Poonam Soni, M.D., Kelly Shaheen, LCSW, and Chris Brown, LMFT, provided M.W.’s treatment at Daniels. There is no evidence, however, that any of those professionals billed M.W. directly for their services; to the contrary, BCBS offers evidence that Outback and Daniels billed BCBS directly for their services. Without evidence of direct billing to the patient, Outback and Daniels did not “furnish, direct or prescribe” services to M.W. as required under the Plan. Therefore, there is no genuine issue of material fact that M.W.’s treatment at Outback and Daniels was not an eligible Medical–Surgical Expense, and BCBS is entitled to summary judgment that it properly denied coverage for Outback and Daniels as Medical–Surgical Expenses.