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Ambiguous Pre-Approval Terms Can Be Hazardous to Your Case

By Robyn Hagan Cain on June 04, 2012 | Last updated on March 21, 2019

Many health insurance plans require a patient to get pre-approval for services from an out-of-network service provider, except in cases of medical emergency, urgent care, or as otherwise provided under the terms of the plan. Monday, the Fifth Circuit Court of Appeals opened the door for some pre-approval-lacking patients to get coverage when a plan contains ambiguous referral terms.

Plaintiff-Appellant Nancy Koehler challenged a summary judgment ruling dismissing her suit to recover health insurance benefits under an Employee Retirement Income Security (ERISA) employee benefits plan after Aetna refused to reimburse her for care she received from an out-of-network specialist.

Koehler suffered from chronic sleep apnea. In 2007, her primary care physician in the HMO referred her to Dr. Raj Kakar, another doctor in the HMO. After attempting various treatments, Dr. Kakar concluded that Koehler should use a dental device designed to prevent her airway from closing during sleep.

After consulting with her primary care physician, Dr. Kakar referred Koehler to a specialist outside the HMO, Dr. Marcus Whitmore, who fitted Koehler for the dental device. The bill for Dr. Whitmore's services was $2,300. Aetna denied coverage for those charges, and Koehler pursued Aetna's internal appeals process.

Aetna cited the absence of pre-authorization for Dr. Whitmore's services, explaining in its denial letter that services provided by non-participating providers require a referral from an Aetna contracted provider and a prior approval by Aetna Patient Management Department.

Koehler sued Aetna under 29 U.S.C. § 1132, which permits an ERISA plan beneficiary to bring a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." Aetna removed the case to federal court, and moved for summary judgment on the ground that it "correctly denied Koehler's claim for benefits because the plan excludes out-of-network services unless such services are pre-authorized." The district court granted summary judgment for Aetna, and Koehler appealed to the Fifth Circuit Court of Appeals.

Because the plan gave Aetna discretion to interpret the plan's terms, the Fifth Circuit reviewed Aetna's interpretation for abuse of discretion.

Koehler argued that the plan's Certificate of Coverage (COC) required only that a doctor within the HMO send Aetna a request for ad hoc referral to an outside physician, and that the request can be made after the patient receives the services. Aetna claimed that the pre-authorization requirement was unambiguously expressed in the plan.

The Fifth Circuit Court of Appeals sided with Koehler, finding that the certificate of coverage was ambiguous with respect to pre-authorization for outside services rendered on an ad hoc basis. While the COC contemplated that, at some point, a participating provider would submit a request for Aetna to approve the outside referral, it did not state when that request must occur relative to the provision of services, or that failing to submit that request beforehand would irrevocably forfeit coverage.

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