20th Apr 2013
CalPers is both a plan administrator and insurer of a self-funded health plan known as PERS Choice. PERS Choice is a health insurance plan issued and funded by CalPers.
Blue Cross of California as plan administrator
CalPers has retained Blue Cross of California through a third-party administrator contract. [Mintz v. Blue Cross (2009) 172 Cal.App.4th 1594, 1599]
Blue Cross is compensated by CalPers on a per capita basis for each plan member, and also receives some type of direct or indirect financial incentives from CalPers to reduce the Plan costs. Blue Cross can achieve these incentives, in part, by limiting the cost of coverage it agrees to allow the Plan to provide to Plan members. [Mintz v. Blue Cross (2009) 172 Cal.App.4th 1594, 1602]
Blue Cross acts as agent
Blue Cross acts as an agent for CalPers in administering a contract of insurance. [Mintz v. Blue Cross (2009) 172 Cal.App.4th 1594, 1603]
Review of denial of benefits available to members
When a claim for benefits is denied, a member has various appeal rights in varying circumstances including an objection in writing to Blue Cross, a request for reconsideration, a “second-level review” by another physician adviser. If the member is not satisfied with Blue Cross’s response, the member may appeal to CalPers, and various administrative procedures, including an administrative hearing, may occur. A member dissatisfied with the outcome may appeal to the courts, but not until the member has exhausted the appeal process. [Mintz v. Blue Cross (2009) 172 Cal.App.4th 1594, 1599]
Experimental or investigational treatments
The Plan, as required by statute [Health & Safety Code § 1370.4], has provisions covering experimental or investigational treatments. It provides that “any issue as to whether a protocol, procedure, practice, medical theory, or treatment is experimental or investigational will be resolved by Blue Cross, which will have full discretion to make such determinations on behalf of the Plan and its participants”.
If services are denied because Blue Cross determines they are experimental or investigational, an “independent external review” may be requested. This independent review may be requested if:
1. the member has a terminal condition,
2. his or her physician certifies that standard therapies have been ineffective or would be inappropriate; and
3. either the member’s physician certifies in writing that the denied therapy is likely to be more beneficial than standard therapies, or the member or his or her physician has requested a therapy that, based on documented medical and scientific evidence, is likely to be more beneficial than standard therapies.
This independent external review of coverage decisions for experimental or investigational therapies is mandated by Health & Safety Code § 1370.4. [Mintz v. Blue Cross (2009) 172 Cal.App.4th 1594, 1599]
Blue Cross liability to Plan members; tort theories
The administrator of a health care plan owes a duty to Plan members to exercise due care to protect them from physical injury caused by its negligence in making benefit determinations under the Plan. [Mintz v. Blue Cross (2009) 172 Cal.App.4th 1594, 1611] See § M12 MANAGING GENERAL AGENT.
A Plan administrator may not be sued under the theory of interference with contract rights [Mintz v. Blue Cross (2009) 172 Cal.App.4th 1594, 1603] See § I61 INTENTIONAL & NEGLIGENT INTERFERENCE WITH ECONOMIC INTEREST OF OTHERS.
Intentional infliction of emotional distress
Under some circumstances, a health care plan’s conduct in handling a claim may result in liability for intentional infliction of emotional distress. [Mintz v. Blue Cross (2009) 172 Cal.App.4th 1594, 1608, citing Hailey v. California Physicians Service (2007) 158 Cal.App.4th 452, 473-474 and Fletcher v. Western National Life (1970) 10 Cal.App.3d 376] Appellate decisions have pointed out however that misleading an insured regarding the statute of limitations, advising plaintiffs not to obtain services of an attorney, insurer’s refusal to properly investigate a claim are not “outrageous” conduct so as to permit this tort theory to apply. [Mintz v. Blue Cross (2009) 172 Cal.App.4th 1594, 1608-1609] See § I63 INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS.