Insurers Ignore Internal Criteria At Their Peril
An insurer’s failure to follow its own internal guidelines for determining whether inpatient care is medically necessary is arbitrary and capricious. So says Doe v. MAMSI Life and Health Ins. Co, 471 F.Supp.2d 139 (D.D.C. 2007). Doe involves a challenge to a health insurer’s denial of coverage for a young woman’s eating disorder. Doe suffered from bulimia and a number of underlying mental and emotional disorders including anxiety, depression and panic attacks. Her weight was not below an acceptable range for someone of her height but her binging and purging behavior over a long period of time clearly demonstrated a significant problem that needed treatment of some type. She was admitted to an acute inpatient psychiatric hospital for care but MAMSI, the insurer, refused to pay the expenses for that treatment. It contended that the care was not medically necessary, was “non-emergent and elective” and had not been preauthorized as required under the insurance policy. Doe appealed the denial and the insurer sent the claim out for independent review from an external agency. That group, IPRO, looked at the claim on two separate occasions and upheld MAMSI’s denial each time. Doe sued and the trial court reversed the denial. The basis for the court’s ruling was that both the insurer and IPRO had failed to properly measure Doe’s symptoms against the internal criteria MAMSI utilized to evaluate the medical necessity of inpatient treatment for bulimia. Specifically, both MAMSI and IPRO focused on the fact that Doe had not experienced any significant loss of body weight. However, MAMSI’s criteria did not require loss of body weight as a condition for inpatient care being medically necessary so long as other indicia of serious problems such as comorbid psychiatric or biomedical problems existed. Those were present for Doe. The court ruled that once it adopted the internal guidelines for evaluating the medical necessity of inpatient treatment for eating disorders, MAMSI was obligated to “. . . apply them honestly and consistently. To ignore, misapply, or inconsistently apply its own criteria would, almost by definition, be arbitrary and capricious.” My only beef with the decision is that rather than simply order MAMSI to pay the medical expenses, the court remanded the claim to MAMSI for proper application of the criteria. Granted, it’s hard to see how MAMSI can do anything other than just pay Doe's claim given the language in the opinion. But why not simply order payment of the medical expenses? Giving insurers who have demonstrated they are not willing or able to properly adjudicate a claim a second bite at that apple is wrong. Courts rarely demonstrate such mercy when dealing with errant participants and beneficiaries.