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In 2024, ERISA litigation will witness new battlegrounds emerging across three distinct areas.
Increased disclosure requirements
Courts may apply more stringent ERISA disclosure requirements in the wake of a recent 10th Circuit decisions.
In D.K. v. United Behavioral Health, 67 F.4th 1224 (10th Cir. 2023), the Tenth Circuit adopted a more stringent approach to an administrator’s disclosure requirements under ERISA. The court held that administrators must offer detailed responses in appeal determinations to the medical necessity opinions of the member’s providers to avoid a ruling that their decisions are arbitrary and capricious (when that standard of review applies). Expressed in the context of inpatient behavioral health services, the Tenth Circuit’s opinion relied upon the notion that full and fair review under ERISA requires “meaningful dialogue” between the member and the administrator.
Our colleagues have discussed D.K. in the context of behavioral health in a separate part of this Outlook, but the decision may have important implications for ERISA cases generally. First, we anticipate that the opinion may gain traction in other circuits and in cases involving medical benefits, including for long-term inpatient medical care or complex courses of medical treatment. Because many district courts and several circuit courts have adopted the “meaningful dialogue” framework for understanding full and fair review, we expect that plaintiffs’ attorneys will cite D.K. in ERISA cases in other circuits.
And D.K. may have other implications. Because the Tenth Circuit held it was appropriate to exclude the internal notes of the administrator’s reviewers from the administrative record that the court reviews to make its decision, we anticipate that ERISA plaintiffs will urge the court to ignore internal records of an administrator’s decision-making if the benefit determination letter it sent to the member did not include a fulsome explanation of the denial.
Out-of-network providers find new ways to assert standing
Increasingly, out-of-network providers have been obtaining powers of attorney from patients in lieu of or in addition to assignments of benefits. Out-of-network providers have been using powers of attorney because a valid power of attorney can permit a provider to appeal and sue on behalf of the member and, at least arguably, may not be barred by a plan’s anti-assignment provision. Providers have run into some issues with this new approach, but its use is increasing, and some courts have permitted it. In late October 2023, in Sorotzkin v. Emblemhealth Inc., 2023 U.S. App. LEXIS 28724 (2d Cir. 2023), the Second Circuit Court of Appeals found that an owner of a medical provider had standing when it relied on powers of attorney executed by members, marking an important development in this area. In 2023, we saw an increase in out-of-network providers using powers of attorney as a vehicle to establish standing, especially in the Second, Third and Fifth Circuits, and this trend may spread to other circuits.
- Plans and administrators should expect new battles over ERISA disclosure requirements, greater use of powers of attorney by providers and challenges to plans’ use of AI
- They should implement best practices around a) communication with members; b) provider powers of attorney; and c) implementing stronger protocols around AI-assisted claims determination