Running an employee benefit claims operation is a complex undertaking, which requires continual training and oversight. A robust quality assurance organization can play an important part in the overall management mix. Curran v. Aetna Life Ins. Co., 13-cv-289, 2016 WL 3843085 (S.D.N.Y. July 11, 2016), gives a concrete example of a quality assurance review catching a significant error that would have resulted in an incorrect six-figure payment, and documenting the correction of the problem in a responsible, non-biased way. I always think that an organization’s strength is best revealed by how it responds to a problem, so Aetna deserves a gold star for this case.

Though all ends well, the facts in Curran start out like a case that could be problematic. The plaintiff’s son was insured under a health plan insured by Aetna. The son was pre-certified for scoliosis surgery by an out-of-network surgeon. The Plan provides that the insured is responsible for any charges greater than those Aetna considers appropriate for the services rendered by an out-of-network provider.

Following the surgery, the surgeon submitted a claim to Aetna, on which Aetna paid what it considered appropriate – about $3,000. The surgeon then billed plaintiff an additional $167,000. Plaintiff appealed Aetna’s determination, and Aetna’s Complaint and Appeals Tracking System (“CATS”) indicated that the initial decision on plaintiff’s claim was overturned and it would be processed under a more-lenient “balance billing” procedure, under which, apparently, Aetna would pay at least $100,000 more. An Appeal Analyst drafted a letter to plaintiff outlining the reversal, but apparently it was never sent. Three days after that letter was drafted, a Benefit Specialist clarified that the surgeon was out-of-network and was to be paid at the original, lower benefit level.

Later that month, a Claims Quality Analyst submitted a question to Aetna’s internal resolution center, noting that the claims processing center ordinary would pay the claim as instructed by CATS, but asking whether the processors could refer the claim back to CATS “to question handling a decision if it’s directly in conflict with a known policy.” The resolution center confirmed that CATS decisions normally are not questioned, but that, after reviewing this particular case, it was appropriate to discuss it with Appeals: “I doubt that we can rescind an appeal decision once it has been rendered, but it could be of benefit to discuss this case with Appeals. At the least, it could be an education opportunity.” The Claims Quality Analyst contacted the Appeal Analyst and stated, among other things, that “this claim never should have been overturned. … [N]ormally we don’t question a CATS appeal, but they don’t normally contradict policy.” The Claims Quality Analyst also apparently confirmed that the error would result in an overpayment of more than $100,000. Ultimately, Aetna told plaintiff saying that an error was made in the initial appeal, and said that the case was being reviewed again; Aetna subsequently told plaintiff that the original claim determination had been correct, and that Aetna did not owe anything more than the $3,000 that it initially paid for the surgery.

Plaintiff then submitted a second-level appeal, and included a screen shot of her online claims summary (which post-dated the final letter on the first appeal) showing the surgeon’s claim and listing the amount of $119,000 as “Paid by Plan” and the claim status as “In Progress.” Aetna upheld its determination, and the lawsuit followed.

On summary judgment, the court first noted that the parties agreed that the Plan gave discretion to Aetna. Plaintiff argued that Aetna’s determination was influenced by a conflict of interest, citing the fact that Aetna, and particularly the Claims Quality Analyst, was concerned about the money Aetna had agreed to pay for the surgery, which led her to violate the “rule” that CATS determinations normally were not questioned. The court noted Aetna’s arguments that it had assigned separate people to process each level of appeal, which signals an effort to reduce bias, that there was no evidence that Aetna ignored any relevant information submitted to it, or that its determination “was in any way irrational. In fact, Defendants have provided evidence that conclusively demonstrates that Aetna’s decision was in accordance with the explicit plan terms, and its explanation is neither unreasonable nor deceptive.”

Then the court gave an important caveat that distinguishes this case from others where a consideration of the monetary value of the claim could be viewed with greater concern:

Finally, this case does not present a determination based on a factual dispute, such as whether a procedure was medically necessary or whether a person qualifies as totally disabled. See, e.g., S.M. v. Oxford Health Plans (N.Y.), Inc., 94 F. Supp. 3d at 481; Durakovic, 609 F.3d at 133. Instead, Plaintiff questions the determination that the balance billing policy does not apply to her claim. The balance billing policy only applies to providers that are authorized as in-network for a particular service or procedure, and it is clear that Dr. Taddonio was not authorized as in-network for the January 7, 2011 surgery. (Exhibit M; Exhibit 7.) In other words, whether Dr. Taddonio was authorized as in-network is not a question open to interpretation but is specifically documented in Aetna’s records, in contrast to the question of whether a procedure is medically necessary. Accordingly, there is little room for the conflict to affect the benefits decision.

After determining that the conflict of interest factor deserved little weight, the court found that plaintiff’s argument on the merits made little sense, because it was premised on the notion that the first CATS determination – that the claim should be paid under the balance billing policy – was correct. The court found that this position was meritless, because “the record makes clear that the additional benefits were not authorized per Aetna’s balance billing policy,” because that policy applies only to in-network providers. It was the initial CATS determination that plainly was incorrect.

Certainly insurers should not routinely begin considering the cost of benefit determinations in the evaluation of claims. And most ERISA practitioners probably can name at least one judge who might have decided this case very differently. But let’s be positive. Aetna had an internal process that recognized a problem, handled it in a reasonable manner, and documented what was done.

Though obviously it makes sense to have an internal procedure to prohibit internal reversals of appeals analysts, it also makes sense to try to catch mistakes and instruct employees. But it is important that a mistake in the file, and the correction, is well-documented in the administrative record. In Curran, for example, if the initial CATS determination had been reversed without explanation or supporting documentation, the plaintiff might have had an easier time convincing the Court that the reason for the change was money. The documentation showed the truth, and confirmed that Aetna was interested in getting the decision right.