Eighth Circuit Affirms Plan’s Exclusion of Emergency Services

On June 7, 2023, the Eighth Circuit Court of Appeals affirmed the district court’s denial of a bariatric surgery patient’s claims. The ruling was based upon the plan’s exclusion of claims for weight loss procedures and related complications.

Darin Shafer underwent bariatric surgery in April 2015 and started his job at Zimmerman Transfer, Inc. a few months later. While employed at Zimmerman, Shafer participated in Zimmerman’s group health plan, a self-insured plan for which Benefit Plan Administrators of Eau Claire, LLC (“BPA”) served as the third-party administrator.

In 2017, Shafer began to suffer nausea, vomiting, and abdominal pain, and emergency room doctors determined he had a bowel obstruction caused by his prior bariatric surgery. The doctors admitted Shafer for monitoring after getting his nausea and pain under control. However, Shafer soon began vomiting again, and he was transferred to Nebraska Methodist Hospital, where the same doctor who performed Shafer’s bariatric surgery surgically fixed his bowel obstruction.

BPA had initially precertified the treatment but later denied Shafer’s claim for benefits after having a physician conduct an independent medical review. The plan’s terms excluded bariatric surgery from coverage. Since Shafer’s surgery was due to a complication of bariatric surgery, the reviewing physician concluded that it was not covered since the plan’ also excluded any “treatment, service or supplies due to complications of a non-Covered Expense” from coverage. The hospital and the surgeon each appealed the denial on Shafer’s behalf. After both of these appeals were denied, Shafer requested an external review. The external physician reviewer also recommended the denial of Shafer’s claim.

After exhausting his administrative appeals, Shafer sued Zimmerman and BPA for benefits, after which the defendants moved for summary judgment, which the district court granted. Shafer appealed this decision to the Eighth Circuit, which affirmed the trial court’s ruling.

Because the plan gave the administrator discretionary authority to determine eligibility and construe the terms of the plan, the Eighth Circuit applied an “abuse-of-discretion” standard to its review and would therefore only reverse the administrator’s decision “if it was arbitrary and capricious, meaning it was unreasonable or unsupported by substantial evidence.”

Using this standard, the Eighth Circuit rejected Shafer’s claim that the denial of his claim was contrary to the clear language of the plan providing for the coverage of emergency services without any exclusions since the plan excluded coverage for complications arising from bariatric surgery. The court also rejected Shafer’s claims that the surgery was covered as a “Medically Necessary Covered Expense Incurred” since the plan’s terms included any such expenses only if they were “not excluded under the exceptions provisions of the policy.”

Shafer also argued that Affordable Care Act (ACA) provisions relating to emergency services coverage required coverage for the procedure, but the court disagreed, observing that the ACA’s patient protections do not require a plan to cover all emergency services. Rather, these protections require plans that already cover emergency services to satisfy certain additional requirements (such as covering out-of-network treatments) while also specifically stating that emergency coverage under the plan can be subject to the plan’s exclusions.

Employers should be aware of the Eighth Circuit’s opinion, which highlights that not all emergency services may necessarily be covered by the ACA protections. However, other courts could potentially reach a different conclusion where the denial of emergency services is based on a general plan exclusion that applies to items and services other than emergency services. Particularly with the new surprise billing protections, it will be important to monitor case law developments in this area.

Shafer v. Zimmerman Transfer, Inc. »