Dallas Fort Worth Insurance Lawyer Blog
Quick time limitations in ERISA policies are not unusual. Failure to follow the limitations can be fatal to a claim. This is illustrated in a Houston Division, Southern District opinion styled, RedOak Hospital LLC, v. GAP Inc., and GAP Health and Life Insurance Plan.
RedOak sued GAP under ERISA, Section 502(a). GAP filed a motion for summary judgment which was granted by the court.
RedOak treated patient, SK, as an out-of-network provider. Before treatment, RedOak verified SK had out-of-network benefits under the ERISA Plan. SK signed an assignment of benefits plan. RedOak submitted billing of $68,517.00 and GAP eventually paid $0.
RedOak began the administrative process required by the Plan before a lawsuit can be brought. A denial must be appealed within 180 days of the claim decision. If the member disagrees with this first-level appeal decision, a second and final appeal must be filed within 60 days “after receipt of the notice of adverse appeal decision. The Plan bars a legal action brought more than “90 days after the date the claims administrator renders its final decision upon appeal.
RedOak filed a first-level appeal on July 14, 2014. GAP notified SK on August 21, 2014 that the original claim decision had been upheld. The letter showed a “cc” to RedOak, but RedOak claims that it never received a copy of this notice. RedOak sent further letters notifying GAP of its intent to start another appeal. These letters are dated October 23, 2015 and April 25, 2016. RedOak filed this lawsuit on May 10, 2016. RedOak’s unilateral attempt to add years to the appeal process and circumvent the Plan’s limitations provisions is the basis of the summary judgment motion.
RedOak’s asserted the claim that the Plan failed to provide a “full and fair review,” and claims for breach of fiduciary duty.
GAP responded saying RedOak failed to exhaust the internal appeals process and comply with the time limits under the Plan. The Plan requires both.
RedOak argues that it should be excused from its failure to exhaust administrative remedies because GAP made the appeals process futile. RedOak’s argument is based on the claim that it never received GAP’s response to the first letter. Even assuming that RedOak did not receive the letter and that it is excused from completing the administrative process in a timely manner, RedOak is not excused from the Plan requirement that any lawsuit challenging a claim denial must be filed within 90 days of the final decision denying the claim.
RedOak offers affidavit evidence that it did not receive the August 21, 2014 letter denying its first-level appeal. Even so, RedOak waited until October 23, 2015 to file a second appeal letter. In that letter, RedOak confirmed it had already completed all the appellate process the Plan provided and allowed, stating “we have officially exhausted any and all administrative remedies ….” At the latest, RedOak understood that it had exhausted the Plan’s administrative process — futile or not — by October 23, 2015. The 90 day deadline expired on January 21, 2016. RedOak did not file this lawsuit until May 10, 2016, more than four months late.
RedOak argues that a 90 day period for plaintiff to file suit is unreasonably short. The Fifth Circuit has indicated that a 90 day limit is reasonable. And RedOak took over 180 days, more than twice as long as the Plan allowed. Even if the Plan allowed 120 or 150 days, RedOak’s suit would be more than three months late. RedOak blew the deadlines and cannot proceed.