July 16, 2019

Tenth Circuit: Review of Health Insurance Coverage Denial Was Insufficient as it Did Not Review Evidence of Whether the Plan Allowance Was Correctly Calculated

The Tenth Circuit Court of Appeals issued its opinion in Weight Loss Healthcare Centers of America, Inc. v. Office of Personnel Management on Tuesday, August 23, 2011.

The Tenth Circuit reversed and remanded the district court’s decision. Petitioner performed surgery for a federal employee who was covered by a Standard Option health insurance plan administered by Blue Cross Blue Shield of Kansas City. Petitioner had no contractual arrangement with Blue Cross as either a preferred provider or a participating provider. Nevertheless, the patient had outpatient laparoscopic surgery at Petitioner’s office to insert an adjustable gastric band that would help him better control his weight. Although the patient obtained preauthorization from Blue Cross for the surgery, there is no indication in the record that he requested or received information about his out-of-pocket costs. Blue Cross only covered $1,610 for the procedure, and billed the patient the remainder of the $56,000 bill. Petitioner acted on behalf of the patient throughout the resulting dispute over coverage and payment.

When the matter was appealed, Respondent determined that Blue Cross’s interpretation of the patient’s plan was correct and that the insurance company had paid the proper amount. The Tenth Circuit agreed that Respondent’s interpretation of the insurance plan is entitled to deference because of its intimate and extensive involvement in the negotiation and interpretation of federal health insurance plans. Also, the Court determine that Respondent reasonably interpreted the plan language. However, the Court found that Respondent’s decision was arbitrary and capricious for failing to explain why it accepted Blue Cross’s allowance figure as correct; Respondent neither reviewed the evidence that would show whether Blue Cross had correctly calculated the plan allowance, nor explained why such review was unnecessary. The decision was therefore reversed and remanded for further proceedings to allow for additional investigation and explanation.

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