Fifth Circuit Adopts “Meaningful Dialogue” Requirement For Benefits Claim Reviews : PartnerSource

Fifth Circuit Adopts “Meaningful Dialogue” Requirement For Benefits Claim Reviews

In Dwyer v. United Healthcare Insurance Co., the Fifth Circuit Court of Appeals held that United Healthcare (“UHC”) breached its ERISA fiduciary duties by failing to engage in a “meaningful dialogue” with the claimant as part of the benefit plan’s claim review process.

Facts: After covering several months of full hospitalization benefits for a claimant’s eating disorder, UHC reduced coverage for the claimant to partial hospitalization. A month later, UHC further reduced benefits to outpatient only treatment, despite the treating provider’s objections. The plan also denied the claimant’s appeal of the plan’s Adverse Benefit Determination (“ABD”) that reduced coverage.

Court Review: The Court noted that ERISA requires a court to consider both substance (whether the terms of the plan entitled the participant to the claimed benefits) and procedure (whether the plan fiduciary offered a “full and fair review” of the claim).

Substance Review: The Court analyzed each sentence of UHC’s benefits termination letter and determined that UHC’s benefit denial was contradicted by the medical evidence included in the administrative record for the claim.
Procedural Review: The court noted that the ABD letter issued by UHC did not have applicable plan provisions – or a medical explanation of its medical judgment decision. The court also rejected UHC’s efforts to add at trial the explanations that it did not include in its ABD letter.
Holding: The Court held that ERISA section 503(2) and ERISA regulations require plan administrators to base their claim review on a “meaningful dialogue” with the claimant, including:
- An ongoing, good-faith exchange of information to ensure that the plan applies its terms accurately and pays benefits fairly; and
- Having such dialogue included when providing (1) reasons for denial, (2) specific plan provisions on which the denials is based, and (3) explanation of medical judgment for medical necessity decisions.

Impact on Texas Option Plans: In some cases, traditional non-occupational benefit plans will only send claimants an “Explanation of Benefits” form that “checks boxes” for denial reasons and includes boilerplate ERISA rights language on the back of the form. However, PartnerSource helps clients minimize their risk of this case outcome, by:

Ensuring that Texas injury benefit plans include in their ABD letters (1) a detailed analysis explaining the reasons for benefit claim denial, including medical judgment, and (2) specific plan provisions cited directly for the Texas injury plan’s plan documents.
Having PartnerSource consultants provide an external review of each ABD letter to ensure that it complies with ERISA claim regulations.
Including in client service instructions the requirement for claims adjusters to discuss the claim denial with the claimant before the ABD letter is sent.
Including language in Texas injury benefit plan documents that minimizes the risk of courts conducting “de novo” reviews of claims as happened in this case.