Labs in Court

Texas Court Nixes Toxicology Labs’ ERISA Beneficiary Unpaid Claims Lawsuit against United Healthcare

Case: After United Healthcare denied their claims, plan members assigned their benefits to a pair of toxicology labs who then filed a lawsuit to against United under the federal Employee Benefits Retirement Security Act (ERISA) to recover the benefits. In addition to contending that the benefits arrangement was a sham, United moved to have the case dismissed on a procedural ground. And that’s just what the Texas federal court decided to do.

Significance: ERISA allows beneficiaries sue their health plans for unpaid benefits, provided that they first “exhaust their administrative remedies” before going to court. Although the sides clashed on whether the labs actually submitted the claims to United, the labs admitted that they didn’t bother to appeal the denials. There were literally thousands of claims and the labs contended that going through the cumbersome six-month appeals process would be futile. But the court disagreed, noting that the “futility” exception to the exhaustion of remedies requirement applies “only in the most exceptional circumstances.” Showing that resorting to the appeals process would be a pain in the behind wasn’t enough; to prove futility, labs had to show that denial of the appeals would be a certainty.

[Mission Toxicology, LLC v. Unitedhealthcare Ins. Co., 2020 U.S. Dist. LEXIS 205919, 2020 WL 6491662]

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