7th Circuit Reverses Earlier Panel’s Opinion and Holds Misleading a Health Insurance Participant About Network Providers Was a Breach of Fiduciary Duty

Most employees in Chicago receive health insurance benefits through work. While some elect an HMO, most elect a PPO (Preferred Provider Organization), similar to Medicare’s PPO option. These PPOs have different coinsurance rates based on whether the doctor or hospital you visit is in the insurer’s network, or out of network. It seems easy to select an in-network provider. Before people start seeing a doctor, they look to the Plan booklet for a list of participating doctors, or ask the doctor’s office staff whether they participate in the insurer’s network. When you’re scheduling an office visit, you have time to confirm the provider is in the network.

But what happens when an emergency arises, or doctors tell you surgery must be performed immediately? Participants then consult the booklet to determine if the hospital is in-network, but ironically the booklet often has a disclaimer in it stating the list of network providers can change, and you must call customer service to confirm whether a provider is in network. But what if the customer service agent misrepresents the hospital is in network, when it really is not? The United States Court of Appeals for the Seventh Circuit recently decided this issue conclusively when rehearing Killian v. Concert Health Plan, No. 11-1112 (7th Cir. Nov. 6, 2013). A panel of judges from that court originally ruled against the plan participant, but the court reheard the case en banc (meaning all the judges of the court deliberated), and overturned the panel decision.

The participant in Killian needed to have emergency surgery, and called the customer service telephone number listed on the insurance card while in the hospital. The Killian court determined that the plan booklet listing the providers was misleading, and when the participant called the customer service agent, he was not told that he cannot rely on what the customer service representative told him, or how he can get a conclusive determination of whether the hospital was in network or out of network. The decision is a major victory for employees with employer-provided health insurance, and provides legal rights to what most people would normally expect–the insurer must be fair and honest with them about what the terms of the plan are when they call to inquire.

If you have experienced a claim denied after calling the health insurer to confirm coverage or network status, contact an experienced ERISA lawyer.