Seventh Circuit: ERISA Plan Can Be Penalized for Failure to Disclose Fee Schedules and Rate Tables used to Determine Usual, Reasonable, and Customary Rate

By: Andrew B. Bryant

How insurance plans determine “usual, reasonable, and customary” pay rates for healthcare claims submitted by out-of-network (“OON”) providers is a frequent bone of contention in medical reimbursement disputes.    In the recent matter of Griffin v. Teamcare, the Seventh Circuit addressed the issue of whether a medical provider who had obtained an assignment of benefits from a patient was entitled to request, and receive, the data underlying the Plan’s decision-making process as to rate of pay for OON services.

In the case, Dr. W.A. Griffin contacted the Plan prior to delivering treatment to the insured patient.  The Plan advised that it would pay the usual, reasonable, and customary rate for the treatment delivered.   Upon receiving the claim, the Plan paid Dr. Griffin approximately $2,900 of the $7,963 charge, stating that this was the appropriate “usual, reasonable, and customary rate.”     Dr. Griffin challenged the benefit determination, and during that challenge she requested a copy of the summary plan description and the documents used to determine her payment, such as rate tables and fee schedules.

Six months after Dr. Griffin’s initial request for documents, the Plan responded and advised the doctor that the Plan had engaged a third-party vendor, Data iSight, that used a “price methodology” to determine the claim payment.   The Plan did not provide the requested fee schedules or rate tables.

Dr. Griffin filed suit alleging various causes of action related to improper claim payment, including statutory penalties under ERISA for the Plan’s failure to timely provide the requested fee schedules and rate tables underlying the Plan’s determination of the usual, reasonable, and customary rate of payment.   The Plan argued that as an assignee of benefits, Dr. Griffin did not step into the beneficiary’s shoes for the purpose of application of these types of statutory penalties.  The Seventh Circuit disagreed, holding that under ERISA’s definition of “beneficiary,” which includes those who received a valid assignment of benefits, Dr. Griffin was clearly a beneficiary with standing to pursue a claim.   Therefore, Dr. Griffin was entitled to the same access to information as the plan participant, and the doctor was entitled to seek statutory penalties if the Plan unlawfully failed to provide requested information under the Plan.

The Plan further argued that even if Dr. Griffin was a beneficiary per the assignment of benefits, ERISA did not require the Plan to provide the fee schedules and rate tables used by third-party vendor Data iSights.   The Seventh Circuit disagreed, finding this argument “meritless” and stating,

Data iSight’s figures used to calculate Dr. Griffin’s payment are part of the pricing methodology that [the Plan] cited in explaining Dr. Griffin’s benefits, and thus they are the bases of its benefits determination.

The Seventh Circuit vacated the district court dismissal in part, and remanded as to the issues of damages for unpaid benefits and ERISA penalties for the Plan’s failure to tender the requested rate tables and fee schedules.