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Update on high-profile California case involving insurance claim denial

A final determination has been made in a recent high profile California insurance law court case. The U.S. Supreme Court has refused to hear a case involving the denial of a peculiar California insurance claim.

The insurance claim

A California resident, an insured, was covered under an ERISA health insurance plan provided by the insurance company Blue Shield of California. (ERISA is known as the Employee Retirement Income Security Act.)

Several years ago, the insured entered a health care facility for medical treatment relating to her eating disorder. Blue Shield paid for the first 11 days of her treatment, however, refused to pay for further coverage. They argued it was because the insured's medical plan did not include coverage for in-patient resident care.

The insured disagreed and thereafter sued Blue Shield in 2008. She argued that Blue Shield was required to cover her treatment for her eating disorder because it is mandated under the California Mental Health Parity Act.

Court rulings

In 2010, the Northern District Court of California, however, sided with Blue Shield and granted their request for summary judgment-an award whereby a court indicates that a particular party's arguments on the law are incorrect or insufficient and that the time and expense of a trial isn't necessary.

The insured appealed the decision to the 9th Circuit Court of Appeals. The Court of Appeals agreed with the plaintiff and overturned the lower court's decision. The appeals court indicated that Blue Shield was in fact required to provide the medical coverage in question to the insured as stipulated under California law.

Blue Shield subsequently petitioned the U.S. Supreme Court for review of the case. The sought review not on whether the medical coverage was mandated under state law, but whether they as an insurance carrier could deny the insured's claim on additional reasons not originally stipulated in the initial denial letter provided to the insured.

Blue Shield requested a definitive high court ruling on the issue because of the discrepancy in rulings within the various circuits of the Court of Appeals. The 5th and 7th Circuits have ruled that an insurance carrier can provide new reasons for an insurance claim denial; the 9th and 10th Circuits, however, say the carrier has waived all rights to assert subsequent arguments if they haven't already done so in the initial denial letter.

"The goal of ERISA was to create a uniform national system of laws governing employee benefit plans. Yet plans around the country are subject to varying sets of rules," the company indicated, the company argued.

U.S. Supreme Court denial

The suspense, however, has come to a close. The U.S. Supreme Court recently rejected the certiorari, or review, request by Blue Shield to hear the case and make a definitive determination.

The 9th Circuit Court of Appeals decision will stand.

Abstract: A final determination has been made in a recent high profile California insurance law court case involving an insurer's denial of coverage for a patient's eating disorder.