Blue Shield of California v. Harlick
Petition for Writ of Cert from U.S. Ct. Apps. 9th Cir., (filed Oct. 10, 2012)
The Petition for Cert comes after the Ninth Circuits ruling that barred Blue Shield from considering on remand whether the plaintiff’s services were medically necessary. The court held that the ERISA plan had waived its right to conduct an investigation and to potentially make the medically necessary determination because it did not identify those specific grounds in its initial denial. Under this ruling, the plan is deemed to have waived even those defenses that the plan did not have sufficient information to assert at the time of the denial.
Blue Shield argues that the wide ranging circuit conflict across the country subjects ERISA plans to varying sets of rules and obligations when making benefit determinations. Additionally, it argues that plan participants too are impacted when their plans are forced to conduct needless additional investigations to preserve the plan’s rights, which will only increase administration costs and delay benefit determinations.
The certified questions Blue Shield asks the Supreme Court to answer are:
- “Whether the doctrine of waiver applies when an ERISA plan administrator denies a claim for benefits on the ground that the ERISA plan does not provide coverage, and later wants to assert or investigate a ground for denial not stated in the initial denial letter;”
- “If the doctrine of waiver can be applied generally in the above context, does it apply in the specific instance where the ERISA plan did not have sufficient facts to have asserted the additional basis for denial when it denied the claim?”
Blue Shield argues that the threat of waiver,
effectively requires plans to defer decisions until facts relating to all potential grounds can be gathered and evaluated, even when, as here, coverage can be determined expeditiously based on the plain terms of the plan.
Thus, the insurer argues that increased investigation costs and unnecessary delays will result in an increased cost of health coverage.