The plan says the coverage certificate clearly shows the plan had the authority to make benefits decisions. (TS/John Kroetch)

A three-judge panel at the 1st U.S. Circuit Court of Appeals says the language in a health plan coverage certificate is too vague to give the issuer clear-cut discretion over benefits eligibility decisions.

The panel came to that conclusion in a ruling Wednesday on Stephanie C. vs. Blue Cross Blue Shield of Massachusetts HMO Blue Inc. (Case Number 15-1531).

The HMO Blue plan, a Blue Cross and Blue Shield of Massachusetts plan governed by the Employee Retirement Income Security Act (ERISA), declined to cover some charges related to inpatient mental health treatment for Stephanie C.’s son. Stephanie C. sued the plan in a U.S. District Court in Boston in an effort to require the plan to pay the charges. The district court granted a summary motion against Stephanie C., and in favor of the plan.

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In an opinion discussing the case, Judge Bruce Selya says on behalf of the 1st Circuit panel that the HMO Blue plan followed procedural requirements, and that the plan gave Stephanie C. a full and fair internal review of her appeal.

Selya says that, under a 2013 1st Circuit precedent, 1st Circuit courts will defer to an ERISA plan claim administrator’s decisions “where the delegation of discretionary authority is sufficiently clear and notice of it has been appropriately provided,” unless the administrator’s decision is “arbitrary, capricious or an abuse of discretion.”

In the Stephane C. case, the coverage certificate states that the plan “decides which health care services and supplies that you receive (or you are planning to receive) are medically necessary and appropriate for coverage.” 

The plan has argued that the coverage certificate clearly explains that the plan intended to make benefits decisions, and that having the authority to make decisions about benefits implies that a plan has discretionary authority over benefits decisions.

“In our view, the quoted language simply cannot carry the weight that [Blue Cross Blue Shield] and the district court load upon it.” Selya writes. “Clarity of language is crucial to accomplishing a grant of discretionary authority under an ERISA plan, and the certificate lacks that degree of clarity.”

Because the certificate language is unclear, the district court should have reviewed the case “de novo” — from scratch — rather than deferring to the discretionary decision-making authority of the claim administrator, Selya says.

The 1st Circuit returned the case to the district court and told the district court to review the case from scratch.

Representatives for the plan were not immediately available to comment on the case.

Jonathan Feigenbaum, a lawyer in Boston who represents Stephanie C., said in an e-mail interview that the new ruling is in alignment with a 1989 U.S. Supreme Court ruling, on Firestone Tire & Rubber Company v. Bruch. 

“It is amazing that, after more than 25 years, plans still do not have unambiguous language when the plan wants to insulate its decision making from de novo review,” Feigenbaum said.

The case is unlikely to reach the Supreme Court, because most circuits agree on the discretionary clause clarity issue, and the one outlier has been relying on a 1999 interpretation that is likely to be overturned, Feigenbaum said.

See also: 

Court pans group disability plan wording

Judges Clash on Disability Income Calculations

  

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