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Denial & Appeal Case Study: A Deep Dive (Literally)

By: Jon Jablon, Esq.

Here’s a case study that crossed my desk recently: A self-funded health plan incurred a claim for a member who went scuba diving, against his doctor’s explicit orders. The activity itself is far from hazardous; for many individuals, scuba diving can be a fun and rewarding activity. In this particular instance, however, the member’s physician told the member – and I quote from the medical records – “I highly recommend against it.”

Well, as expected, the member went scuba diving, and incurred the exact injuries his doctor warned him about. The plan incurred the claim, did some investigation, got ahold of that medical record (the “I highly recommend against it” one), and denied the claim on the basis that the member intentionally disobeyed his doctor’s explicit orders.

Why are we here, then? Why is this a case study and not just a lesson in listening to your doctor?

Well, because the plan document contained an exclusion for any services provided “against the advice of a medical processional.” The Plan Administrator relied on that exclusion to exclude the claim. The member’s attorney argued that the plan’s exclusion applied only to medical services rendered against a doctor’s advice – and these services were both advised and medically necessary (which the Plan Administrator did not dispute).

The activity was against a doctor’s orders – but the Plan Document didn’t mention contain an exclusion for that particular situation.

When considering the member’s attorney’s appeal, the Plan Administrator asked The Phia Group for advice, and after reviewing the facts and the Plan Document, we opined that it does not appear that the Plan Administrator may validly deny this claim upon the basis it had chosen.

Accordingly, the Plan Administrator paid the claim. The kicker, however, is that the appeals process took so long that the stop-loss filing deadline had come and gone, and now the health plan was left with no reimbursement for this spec claim.

What are the morals of this story, then?

  1. When you analyze the Plan Document, make sure you think twice, three times, or even more about the words you’re relying on. A doctor’s advice about treatment is not the same as a doctor’s advice about engaging in an activity in the first place!
  2. Make sure stop-loss is on board with respect to appeals received for potential spec claims. Once the stop-loss filing deadline passes, the vast majority of carriers will tell you that you’re out of luck, even if you reverse the claim in good faith, or at the orders of a court or IRO.
  3. If your doctor tells you you’re not healthy enough for a certain activity, feel free to get a second, third, or fourth opinion – but maybe avoid ignoring that advice completely.

Interesting Side Note #1: The Plan Administrator could conceivably have determined that going scuba diving after your doctor specifically tells you not to constitutes a “hazardous activity” pursuant to the Plan Document – but no such argument was made.

Interesting Side Note #2: The member’s attorney raised the argument that HIPAA’s “source of injury” rule prohibited the denial, since the injury was caused by a medical condition the member had. That argument is certainly creative – but when opining, we noted that the member’s medical condition may have been the root cause of the injuries in question, but the member’s choice to go scuba diving against his doctor’s advice broke that “chain of causation” wide open.