By Donielle Tigay Stutland, J.D.
Eleventh Circuit reverses dismissal of case brought by physician trade groups in Georgia challenging BCBS’ ER payment policy as a violation of the prudent layperson standard, as it allows denial of payment for emergency room visits the insurance company determines were not emergencies.
The Eleventh Circuit reversed a lower court decision of the dismissal of a case brought by the American College of Emergency Physicians (ACEP) and the Medical Association of Georgia (MAG) under the Employee Retirement Income Security Act (ERISA) and the Patient Protection and Affordable Care Act (ACA) against Blue Cross and Blue Shield of Georgia, Inc., Blue Cross Blue Shield Healthcare Plan of Georgia, Inc., and Anthem Insurance Companies, Inc. (collectively, BCBS) pertaining to the BCBS emergency department review policy, which, as of 2017, allowed denials of clams BCBS deemed to be non-emergent. The Plaintiffs’ allege that the emergency review policy violates the "prudent layperson" standard when determining if services involved an "emergency medical condition." The Eleventh Circuit found the district court’s determination that the physician groups’ failed to state a claim was erroneous because they did not need to allege specific instances in which the policy improperly applied the prudent layperson standard, as the Plaintiffs brought a challenge to the policy as a whole. Additionally, the Eleventh Circuit found the physician groups had standing to bring the claims (American College of Emergency Physicians v. Blue Cross Blue Shield of Georgia, October 22, 2020, per curiam).
Background. MAG and ACEP allege that BCBS violated the prudent layperson standard with its emergency department (ED) review policy, which was implemented in 2017. Following the policy being implemented, BCBS sent letters to its clients specifying that they should only go to the emergency room for emergencies, otherwise visits would not be covered. BCBS then began retroactively denying payments to visits that were deemed "non-emergent."
In October 2018, MAG and ACEP filed suit against BCBS alleging that the ED review process violated the prudent layperson standard under ACA and ERISA and the physician groups sought declaratory and injunctive relief. The district court sided with BCBS and dismissed the case, because MAG and ACEP failed to provide a specific instance where the ED review process improperly applied the prudent layperson standard, and also found the members of MAG and ACEP lacked standing.
Discussion. The circuit court disagreed with the lower court’s analysis. First, the appellate court noted that because the physician groups are not challenging the denial of individual claims, they did not need to allege specific instances for which the prudent layperson standard was improperly applied. Rather, the Plaintiffs were challenging the policy at large. Further, the court noted, "ACEP and MAG have thus alleged facts about the ED review process as a whole that allow a court to ‘draw the reasonable inference’ that Defendants violated the standard."
The appellate court found the acknowledgment from BCBS that it was complying with the prudent layperson standard to be "conclusory statements about their legal compliance," and not relevant to whether the Plaintiffs met their burden of alleging that the insurer has violated the law.
The court also found that the Plaintiffs had standing to bring the claims. First, the court indicated that under Fla. State Conference of N.A.A.C.P. v. Browning, individual participation by members is not normally necessary when an organization brings suit for injunctive relief. Additionally, the court found that the district court erred in its conclusion that the assignment to the right to payment and appeal denials from members did not include equitable relief. The court pointed to precedent that has allowed professional organizations to sue for declaratory and injunctive relief on the basis of derivative standing under ERISA. Additionally, the Eleventh Circuit disagreed with the district court’s finding that ACEP and MAG failed to allege that their members were harmed by the ED policy. The court noted that that the doctors were harmed because they are not being paid and would otherwise have standing to sue in their own right. Further, again the court noted that it is irrelevant to determine standing based on each individual claim and member, as MAG and ACEP are challenging the policy as a whole, which does not require individual determinations.
The case is No. 20-11511.
Attorneys: Howard Watson Reese, III (Hall Booth Smith, PC) for American College of Emergency Physicians and Medical Association of Georgia. Martin J. Bishop (Reed Smith, LLP) and James Lynn Hollis (Balch & Bingham, LLP) for Blue Cross and Blue Shield of Georgia, Blue Cross Blue Shield Healthcare Plan of Georgia, Inc. and Anthem Insurance Companies, Inc.
Companies: American College of Emergency Physicians and Medical Association of Georgia; Blue Cross and Blue Shield of Georgia; Blue Cross Blue Shield Healthcare Plan of Georgia, Inc.; Anthem Insurance Companies, Inc.
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