01/05/2024
Health Insurance
Recently, the Administrative Law Court affirmed the South Carolina Public Employee Benefit Authority’s (“PEBA”) decision upholding the State Health Plan’s denial of the final forty-two days of a Plan Member’s one hundred forty-two day stay at a skilled nursing facility (“SNF”) for rehabilitation treatment following a stroke. PEBA agreed with the Plan’s initial determination that the Member’s SNF treatment beyond 100 days was not covered because (1) it had not been pre-certified and, (2) it was not medically necessary.
On appeal, the Member argued that her treatment was medically necessary because there was a theoretical potential for improvement in her condition from continuing with her treatment and because a physician had ordered the treatments. Under the terms of the Plan treatments are not covered unless there is a reasonable expectation they will produce measurable improvement in a patient’s condition in a reasonable and predicable time period. Among other things, the Plan pointed to the fact that the Member’s therapist had indicated in her records that her progress from rehabilitation had ceased fifteen days prior to the 100-day mark. The Court agreed and found the post-100-day treatments were not medically necessary because (1) there was a failure to establish a reasonable expectation that the services would produce measurable improvement in the Member’s condition in a reasonable and predictable time period; (2) there was a failure to show that the services were specific and effective for the Member’s existing condition; and (3) the medical records did not document the Member was making progress. Further, the Court explained that the fact a physician orders a particular treatment is not a sufficient legal basis for overturning a denial of coverage.
In addition to her challenge of the medical necessity finding, the Member also asserted that the tort theory of negligent misrepresentation and the doctrine of estoppel prevented the Plan from denying coverage based upon her failure to obtain pre-certification for treatment in excess of 100 days, because a customer service representative had erroneously informed her during a telephone conversation that those treatments would be covered. However, the telephone conversation in question occurred two months after the Member had completed her treatment, and the Member had been informed that the treatments would not be covered without pre-certification on five separate occasions prior to that call, three of which were provided in writing prior to day 100. Therefore, the Court determined the doctrine of estoppel did provide her with a remedy since she had knowledge of the truth as to the facts regarding coverage and because she could not have prejudicially changed her position in reliance on any incorrect information that was provided after she had already completed treatment. Finally, the Court ruled that the tort of negligent representation was not available to the Member because tort causes of action fall outside the exclusive remedies established by state law for challenging denials of benefits under the State Health Plan.
Theodore D. “Bo” Willard, Jr. of Montgomery Willard, LLC represented the South Carolina Public Employee Benefit Authority.
