ERISA Preemption And Bad Insurance Verifications
I’ve blogged before about a healthcare provider's rights when payers give faulty information during the insurance verification process. Judge J. Thomas Greene issued an opinion earlier this week in one of my cases confirming that ERISA doesn’t prevent healthcare providers from bringing state law claims against insurers who misquote the scope of coverage when providers ask about it. You can find Judge Greene’s opinion in the library of this website by clicking here.
The case arises out of this common fact situation. Patient needs medical services and tells the provider he has insurance through a group plan from his employer. Healthcare provider gets the insurance information from the patient and calls the insurer to verify coverage exists. If the provider confirms that benefits are available, the treatment proceeds and all is well. If the payer states that no coverage is available, the patient must either go somewhere else to get the medical services or make satisfactory arrangements to pay using his own or other resources. In short, the provider is relying on the payer to give accurate information during this insurance verification process.
However, sometimes the insurer misquotes the benefits or neglects to disclose a material limitation or exclusion to coverage. That is what happened in the Northern Utah Healthcare case. We brought suit arguing that the party misquoting the benefits should be prevented from going back on its word and that it is obligated to pay for the services. BC Life & Health, the company that misquoted the benefits, removed the case to federal court and argued that ERISA preempted our state court claims. If it was correct, the hospital had no remedy. Just another way in which ERISA provides terrible remedies as I’ve blogged about before. We argued that ERISA did not preempt the claims and the case needed to be sent back to state court to allow the provider to present its theory to a jury. Judge Greene ruled in our favor in an opinion that has an interesting discussion of some details of ERISA preemption.
The takeaway is that when healthcare providers have erroneous information given to them during the insurance verification process, they will probably have the ability to to pursue a meaningful remedy in state court unfettered by ERISA’s remedial straitjacket.