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University of Wisconsin Hospital & Clinics, Inc. v. Aetna Life Insurance

Citations: 24 F. Supp. 3d 808; 2014 WL 2565284; 2014 U.S. Dist. LEXIS 77123Docket: No. 13-cv-197-jdp

Court: District Court, W.D. Wisconsin; June 6, 2014; Federal District Court

Narrative Opinion Summary

The case involves a dispute over the denial of payment for a medical procedure under an employee health care plan governed by ERISA. The plaintiff, a health care provider, sought recovery of benefits for a heart catheterization performed on a plan participant, which was not precertified as required by the plan. The insurance company, serving as the plan administrator, denied the claim based on the lack of precertification. The plaintiff argued that the denial was inconsistent with the plan's terms, which allow for benefit reductions but do not mandate outright denial for lack of precertification. The court ruled in favor of the plaintiff, granting summary judgment after determining that the provider had standing to sue as the participant's assignee, and that the denial was unreasonable under the arbitrary and capricious standard. The court found that the insurance company's failure to justify its denial and its contradictory policy interpretations warranted an award of attorney's fees to the plaintiff. The decision underscores the importance of clear communication of precertification requirements and the rights of health care providers to pursue claims under ERISA.

Legal Issues Addressed

Arbitrary and Capricious Standard in ERISA Cases

Application: Court found Aetna's denial of benefits to be unreasonable under the arbitrary and capricious standard.

Reasoning: Aetna's denial of benefits was deemed unreasonable for several reasons: First, Vana, the individual represented by UW Hospital, was clearly entitled to benefits under the plan, which Aetna ignored.

Attorney's Fees Award in ERISA Litigation

Application: UW Hospital is entitled to attorney's fees under 29 U.S.C. 1132(g)(1) due to achieving success on the merits.

Reasoning: UW Hospital is entitled to reasonable attorney's fees under 29 U.S.C. 1132(g)(1), as the statute permits a court to award fees to either party if the claimant has achieved some success on the merits.

Precertification Requirements in ERISA-Governed Plans

Application: Failure to obtain precertification does not automatically result in denial of coverage; it may lead to a benefit reduction.

Reasoning: Although failing to obtain precertification does not automatically deny coverage, it may lead to a precertification benefit reduction, meaning Aetna could reduce the amount paid towards the participant's expenses, leaving them responsible for any unpaid balances.

Standing under ERISA for Health Care Providers

Application: UW Hospital has standing to sue as Vana's assignee, allowing it to pursue benefits on behalf of Vana under ERISA.

Reasoning: Vana assigned his right to recover benefits to UW Hospital, which subsequently filed a complaint in Dane County Circuit Court for payment from the defendants.