In an ERISA benefits dispute involving a coverage denial for bariatric surgery, the Fifth Circuit held that a health plan claims administrator did not abuse its discretion by handling an email sent on a claimant's behalf as a first-level appeal under the plan's claims procedures (Rittinger v. Healthy Alliance Life Ins. Co., (5th Cir. Jan. 31, 2019)). The Fifth Circuit also upheld the claims administrator's decision denying the claim under the plan's exclusion for bariatric surgery.

The claimant in this case, a covered beneficiary under an ERISA health plan, had bariatric surgery that led to complications requiring follow-up surgery and intensive care. The plan's claim administrator denied preauthorization for the initial and follow-up surgeries, citing a plan exclusion for bariatric surgery and inpatient care to address related complications. The exclusion also contained an exception for bariatric surgery to address excessive nausea or vomiting.

In an email to the claims administrator, the claimant's husband, representing that he had medical power of attorney to speak on his wife's behalf, stated that he "would like to file an appeal" of the coverage denial. The claims administrator treated the email as a formal first-level appeal and – after gathering information from the claimant and her surgeons and obtaining an independent peer review – once again denied coverage.

Now represented by counsel, the claimant filed a second-level appeal. At this stage, she submitted records indicating that she underwent bariatric surgery to address Gastroesophageal Reflux Disease (GERD) and esophagitis, which are linked to nausea and vomiting. However, a five-person panel convened by the claims administrator to review the second-level appeal affirmed the denial. Having exhausted the plan's administrative remedies, the claimant sued the claims administrator under ERISA (see Practice Note, Exhaustion of Plan Claims Procedures and ERISA Litigation Toolkit). The district court held that the claims administrator:

( (S.D. Tex. Sept. 14, 2017).)

The claimant timely appealed.

On appeal, the Fifth Circuit rejected the claimant's argument that the claims administrator abused its discretion by treating the husband's email as a formal first-level appeal. The claimant asserted that although the plan contained elaborate procedures addressing how to file a first-level appeal, those procedures did not include an email address to which appeals could be directed. As a result, the claimant maintained, the claims administrator was not authorized to interpret other inquiries – such as the husband's email – as appeals. For its part, the claims administrator argued that:

The Fifth Circuit agreed with the district court, which had acknowledged the claims administrator's need to:

In the Fifth Circuit's view, it was reasonable for the claims administrator to believe that the email was an appeal, because the husband expressly stated he would like to file an appeal. As a result, the claims administrator did not abuse its discretion by treating the email as initiating a formal appeal.

When litigation puts in question whether an appeal has been submitted, a plan is usually well-served to have clear and specific procedures governing how claimants must file their appeals. Here, the claimant's argument was not that the plan lacked procedures for submitting claims – it did, and the claimant even characterized those procedures as elaborate. Rather, the claimant faulted the claims administrator for failing to follow the plan's procedures for determining what types of inquiries constitute formal appeals. Claims administrators may wish to revisit their plan provisions and procedures defining what is (and is not) an appeal, and how lenient the administrator will be in accepting appeals that do not dot every "i" and cross every "t". Plan precedent also plays a role in this determination – the scope of what is an appeal should be consistent over time, so that a well-intentioned exception in one case does not become the general rule going forward.