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CCH® BENEFITS — 3/7/08

Health Care Plan Did Not Violate Women’s Cancer Rights Act By Limiting Payment For Surgery

From Spencer's Benefits Reports: A health insurance plan did not violate the Women’s Health and Cancer Rights Act (WHCRA) when it refused to reimburse a participant for more than $30,000 of the participant’s $40,000 bill for bilateral breast reconstruction surgery or for private-duty nursing. This was the ruling of the Second Circuit U.S. Court of Appeals in Krauss v. Oxford Health Plans, Inc., et al. (No. 06-0343).

Geri S. Krauss and Daniel J. Krauss are covered under an employer-provided health care plan administered by Oxford Health Plans, Inc. As specified by the terms of the plan, a participant utilizing an out-of-network provider must pay a higher portion of medical expenses out-of-pocket than must a participant receiving care from in-network providers. Oxford further limits plan costs for medical services by paying medical expenses in accordance with a schedule of usual, customary, and reasonable (UCR) fees for various medical services. The plan also specifically excludes coverage of private-duty nursing.

In April 2003, Ms. Krauss was diagnosed with breast cancer, and her physicians—who were not members of Oxford’s provider network—recommended that she undergo a double mastectomy and bilateral breast reconstruction, to be performed in a single surgical session. On May 5, 2003, Oxford precertified the breast-reconstruction portion of the surgery pursuant to its bilateral surgery policy. Eight days later, Ms. Krauss underwent bilateral mastectomy and reconstruction surgery. Following the surgery, Ms. Krauss’ physicians suggested that private-duty nurses oversee Ms. Krauss’ recovery.

Ms. Krauss experienced two postoperative complications, one of which required emergency surgery nine days after the initial May 13, 2003, operation. Ms. Krauss was charged $40,000 for her breast reconstruction procedure and $200 for a preoperation consultation. The private-duty nurses charged a total of Ms. Krauss $8,300 for her postoperative care. The Krausses timely filed for reimbursement for both sets of services from Oxford. In response, on June 13, 2003, Oxford sent the Krausses a check in the amount of $30,200 $30,000 for the double-breast reconstruction and the $200 consultation fee. Then, on Nov. 10, 2003, the Krausses filed a grievance with Oxford seeking the remaining $10,000 of the surgeon’s fee and the $8,300 cost for private-duty nursing. However, in a letter dated Dec. 1, 2003, Oxford denied the Krausses’ grievance on the grounds that the bilateral reconstruction surgery was paid at the UCR rate and that private-duty nursing was not covered by the plan.

After Oxford denied their appeals, the Krausses filed suit against the plan in the U.S. District Court for the Southern District of New York, seeking recovery of unpaid benefits on the grounds that Oxford’s denial of benefits violated the WHCRA (see Report 501.-67) and the terms of the plan. However, the district court granted summary judgment in favor of Oxford, concluding that the plan’s payment policy did not violate either the WHCRA or the terms of the plan, and that the costs of private-duty nursing were expressly excluded from plan coverage. The Krausses appealed, but the Second Circuit affirmed the district court’s ruling.

Second Circuit’s Analysis

In rendering its decision, the Second Circuit initially explained, “The Krausses contend that under the WHCRA, the plan was obligated to provide full reimbursement to them for [the surgeon’s] fee for Mrs. Krauss’ bilateral reconstructive surgery. They also argue that the WHCRA requires reimbursement of the costs associated with the private-duty nursing care provided to her because it was pursuant to a medical decision made by her physician regarding the manner in which her breast reconstruction surgery would be carried out. We agree with Oxford, however, that the WHCRA requires only that insurers cover such surgeries in a manner consistent with the policies established for other benefits under the plan. Oxford’s application of UCR limits and, specifically, the bilateral surgery policy, to Mrs. Krauss’ surgery therefore did not violate the WHCRA.”

With respect to the private-duty nursing expenses, the Second Circuit stated, “Parallel reasoning applies to the Krausses’ claim under the WHCRA for reimbursement for private-duty nursing care. We see nothing in the statute to support a reading that requires an insurer to pay for private-duty nurses where such services are not otherwise covered and where postoperative care in a different form could have satisfied the patient’s medical needs as identified by her doctor. That the WHCRA requires coverage for ‘all stages of reconstruction of the breast on which the mastectomy has been performed in a manner determined in consultation with the attending physician and the patient’ does not, we think, categorically override every plan’s specific exclusion of private-duty nursing care in these circumstances. We cannot reconcile such an interpretation with the WHCRA’s focus upon ensuring that breast reconstruction surgeries are covered coextensively with other surgeries under a beneficiary’s plan.”

Turning to the Krausses’ argument that Oxford’s payment policy violated the terms of the plan, the Second Circuit concluded, “We find the Krausses’ assertion that the bilateral surgery policy violates the plan’s terms to be meritless. There is also an insufficient basis for questioning Oxford’s determination of what specific reimbursement rate applied to the Krausses’ claim under the bilateral surgery policy. Oxford’s decision not to reimburse the Krausses for the costs of private-duty nursing care following the reconstruction surgery also did not violate the plan. We agree with the district court that the plan’s explicit and unambiguous exclusion of ‘private-duty nursing’ from coverage controls. Oxford precertified Mrs. Krauss’ surgery knowing that it would require postoperative care, or that it characterized the WHCRA as requiring it to cover reconstructive surgery or related services following a mastectomy, does not obligate Oxford, contractually or otherwise, to pay for postoperative care or services ‘related’ to Mrs. Krauss’ operation by any and all means—certainly not by a method of care expressly excluded from coverage under the plan.”

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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