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CCH® BENEFITS — 8/21/09

Health Care Plan Properly Denied Coverage Of Drug Treatment At Noncontracted Provider

from Spencer’s Benefits Reports: A health care plan unambiguously excluded coverage of a beneficiary’s stay at a residential treatment center (RTC) because the plan specifically covered only behavioral health care services provided by a contracted provider. This was the decision of the Ninth Circuit U.S. Court of Appeals in Dupree v. Holman Professional Counseling, et al. (No. 07-55617).

Timothy Dupree was an employee of the Beverly Hills Hotel, which contracted with Holman Professional Counseling for behavioral health insurance coverage. According to the contract, Holman agreed to provide behavioral health care services “through providers pursuant to the schedule of benefits.” The plan specified that, if a participant chose instead to use noncontracted providers, the participant would be liable for the cost of nonemergency services provided by such noncontracted providers. The plan’s “exclusions” section contained similar language, stating that coverage would be denied for services performed by noncontracted providers except in emergency cases or as “otherwise authorized by the plan.” Furthermore, the plan defines a “subacute care facility” as any RTC that “has entered into a provider agreement with Holman.”

In the fall of 2005, Mr. Dupree’s stepdaughter, Alexandra, who then was age 15, needed help with alcohol and drug addiction. One year earlier, Alexandra had been diagnosed with diabetes and was prescribed insulin, but she failed to follow through with the treatment. Alexandra already had blacked out from drinking on multiple occasions and had been using illegal drugs for two years.

Between Aug. 26 and Sept. 6, 2005, Alexandra’s mother spoke with Holman representatives about finding an RTC for Alexandra. After being apprised of Alexandra’s substance abuse and diabetes, Holman provided Ms. Dupree with contact information for two contracted RTCs. Instead, Ms. Dupree chose a third option, Visions Adolescent Treatment Program, an RTC that provided onsite diabetes care. Holman cautioned Ms. Dupree that Visions was not an in-network provider. Nevertheless, Alexandra was admitted to Visions on Sept. 7, 2005, for alcohol poisoning following a blackout, and she stayed there until Oct. 29, 2005.

In November 2005, Mr. Dupree submitted a claim to Holman requesting reimbursement for Alexandra’s treatment at Visions, but Holman denied the claim as an uncovered out-of-plan benefit. After Holman denied his appeals, Mr. Dupree filed suit in the U.S. District Court for the Central District of California, but both the district court and the Ninth Circuit ruled in favor of Holman.

In a succinct opinion, the Ninth Circuit stated, “The question before us is a narrow one: does Dupree’s plan cover nonemergency treatment at a noncontracted RTC? We find that it unambiguously does not. First, the policy’s repeated assertion that noncontracted provider services are not generally covered establishes a default presumption of no coverage that must then be overcome by a showing of emergency (not at issue here) or some statement in the plan granting coverage. The policy’s ‘exclusions’section reinforces this presumption, denying coverage for any benefit ‘not specifically listed as a covered benefit.’ Several noncontracted provider services are specifically listed as covered. Noncontracted RTC services, however, are not. We decline to find this contract ambiguous. Dupree’s employer chose to provide its employees with a behavioral health insurance plan that only covered stays at contracted RTCs, such as the two that were suggested to, but declined by Ms. Dupree.” (Emphasis in original.)

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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