Court Dismisses Non-Network Provider’s WHCRA Claim for Under-Reimbursed Reconstructive Surgery Benefits

A medical provider sued an employer-sponsored group health plan and its insurer, alleging that the insurer had under-reimbursed the provider for a participant’s post-mastectomy breast reconstruction surgery in violation of the federal Women’s Health and Cancer Rights Act (WHCRA). As background, WHCRA requires group health plans that provide medical and surgical benefits for mastectomy to also provide certain additional mastectomy-related benefits, including reconstructive surgery. The provider argued that the insurer had violated WHCRA by significantly reducing the amount paid for the participant’s surgery because the provider was not a member of the plan’s network. (The surgery had been performed at an in-network hospital where there were no in-network providers with admitting privileges.) The insurer argued that the provider could not sue on the participant’s behalf because of the plan’s anti-assignment clause and that, in any event, the provider had no valid claim under WHCRA.

The court held that the provider could sue for reimbursement because of a specific exception in the plan’s anti-assignment clause that permitted benefits to be assigned to an out-of-network provider for services provided at an in-network hospital. Nevertheless, the court dismissed the case, concluding that the plan’s reduction of benefits had not violated WHCRA. Relying on a Second Circuit decision (see our Checkpoint article), the court explained that WHCRA “goes no further than to require that insurers cover post-mastectomy breast reconstruction surgery in a manner consistent with the policies established for other benefits under the plan.” Therefore, the court held, nothing in WHCRA bars the application of lower reimbursement rates for out-of-network providers.

EBIA Comment: WHCRA specifically provides that coverage may be subject to a plan’s “annual deductibles and coinsurance provisions as may be deemed appropriate and as are consistent with those established for other benefits under the plan or coverage.” But it is unclear whether the phrase “deductibles and coinsurance” is an exhaustive list of the provisions to which reconstructive benefits may be subject, or merely examples. According to this court (and the Second Circuit decision on which it relied), reconstructive surgery benefits may also be subject to other payment provisions under the plan (such as “reasonable and customary” limitations). While this may indeed have been Congress’s intent, WHCRA’s wording does not expressly support the imposition of limitations beyond deductibles and coinsurance, so plan sponsors may wish to seek the advice of counsel regarding the application of other plan limitations to reconstructive surgery and related services. For more information, see EBIA’s Group Health Plan Mandates manual at Section XI (“Reconstructive Surgery After Mastectomy”) and EBIA’s Self-Insured Health Plans manual at Section XIII.C.3 (“WHCRA: Required Benefits Following Mastectomy”). See also EBIA’s ERISA Compliance manual at Section XI.E (“Assignment of Benefits”).

Contributing Editors: EBIA Staff.