Health Insurance: Review Agents May Not Make Delayed Coverage Decisions under Vermont Insurance Law
Marinelli, Erica, American Journal of Law & Medicine
Health Insurance: Review Agents May Not Make Delayed Coverage Decisions Under Vermont Insurance Law-Merit Behavioral Care Corporation and Magellan HRSC, Inc. v. State of Vermont Independent Panel of Mental Health Providers, Austen Riggs Center and Jane Doe1-The Supreme Court of Vermont held that "[section] 4089a(c)(5) [of the state insurance code] obligates 'review agents' to conduct their mental health coverage reviews in accordance with the prospective/concurrent requirement, regardless of whether the legislature anticipated regulations elaborating on such requirements."2 Merit Behavioral Care Corporation ("Merit") has a contract with the State of Vermont to manage the mental healthcare of state employees who are under the State's medical benefit plan. Merit contracted Austen Riggs, a private healthcare facility, to serve as one of its mental healthcare providers. Jane Doe, a state employee, was referred to Austen Riggs for treatment of a long-term mental disorder. Austen Riggs' policy required appropriate candidates to be admitted to the hospital for a minimum of thirty days. Merit, however, had a policy requiring daily review in order to ensure that continued inpatient mental healthcare services were medically necessary. In the early phases of Jane Doe's treatment, Merit elected to delay a determination of coverage and appropriateness of her care, and articulated to Austen Riggs that such a decision was "pending." After several months had passed, and Jane Doe was discharged, Merit decided that the treatment she received at Austen Riggs was not medically necessary or reimbursable under the terms of its contract with the State. This decision was overturned by an independent review panel, which prompted Merit to file suit.
Merit sought review of the independent panel's decision in superior court, and added breach of contract and indemnity claims against Austen Riggs. That court concluded that as a review agent, Merit was "obligated to engage in 'service review,' which must be prospective or concurrent with the [patient's] treatment."3 The superior court analogized this case to insurance law "because the statute does not provide a specific remedy for a review agent's failure to conduct a concurrent or prospective review."4 Under this analogy, the superior court found that Merit had a statutory duty to speak and make a coverage decision prospectively or concurrently with Doe's treatments. In failing to make a coverage decision at the proper time, Merit waived any objections to Doe's request for coverage. Accordingly, the court granted summary judgment to Austen Riggs.5
On appeal to the Supreme Court of Vermont, Merit argued that the superior court erroneously concluded that it had a statutory obligation to conduct service reviews prospectively or concurrently. Merit denied such an obligation and asserted that the statutory provision that mandated prospective or concurrent review was not self-implementing. Rather, Merit argued, it required the Commissioner of the Vermont Department of Banking, Insurance, Securities and Health Care Administration to promulgate a rule establishing this requirement. Because the regulation that was adopted does not reiterate the prospective-or-concurrent review requirement, Merit argued, such review was not required. Under the statute, as a "review agent," Merit must perform "service review" activities, which include "reviewing the appropriate and efficient allocation of mental health care services" for the purpose of recommending or determining whether such services should be provided, reimbursed, or covered. …