Supreme Court Denies Review Of ERISA Administrator’s Benefit Denial

The U.S. Supreme Court has declined an insured’s petition to review an Eleventh Circuit’s ruling that affirmed a denial of benefits based in part on an ERISA plan administrator’s affidavit that proffered a post-hoc rationale for its decision. The case is Fox v. Blue Cross and Blue Shield of Florida Inc. (Dkt. No. 13-342, cert. denied Jan. 13, 2014).

Background. Brian Fox participated in an employee welfare benefit plan, governed by the Employee Retirement Income Security Act, under which Blue Cross Blue Shield of Florida determined benefits eligibility and paid the benefits using Blue Cross’ assets. Cox underwent emergency brain surgery performed by an out-of-network provider.

Blue Cross reimbursed Fox $2,729.48 for the provider’s services, and informed Fox that he was responsible for the balance, which was $26,270.52. Blue Cross denied full payment, asserting that it paid the “allowed amount” pursuant to the terms of the plan and “verified pricing.” Blue Cross denied his appeal. Fox filed in a federal district court, which granted Blue Cross summary judgment, and the Eleventh Circuit affirmed the district court. Fox contested the reasoning by the district court, which based its ruling on an affidavit by Blue Cross’ vice president of delivery systems because the affidavit provided a post-hoc rationale of Blue Cross’ decision.

Policy language. The benefit booklet defined “allowed amount” as the “maximum amount upon which payment will be based for covered services.” Additionally, the booklet explained that “In the case of out-of-network providers… the allowed amount will be the lesser of the provider’s actual charge or an amount established by BCBSF based on several factors….”

Petition. Fox had argued that the situation for ERISA claimants in the courts of the Eleventh Circuit was dire because even under deferential review, the jurisdiction permits plan administrators to offer post-hoc rationales and extra-record evidence that claimants do not have before their suits are filed. This causes claimants in the jurisdiction to “engage in a game of blind man’s bluff, neither being able to count on the claims administrator to disclose the perceived problems with the participant’s claim (so as to enable the claimant to perfect the claim) nor on the court to prohibit the administrator from entering the fray after the suit has been filed with a never before disclosed rationale…”

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