In October 2022, the Tenth Circuit heard oral argument in D.K. et al. v. United Behavioral Health et al., a case that could significantly impact what health plans must include in any notification to claimants of an adverse benefit determination, i.e. benefit denial letters.

Under ERISA’s claims procedure regulations, there is an express list of information that must be included in any denial of benefits. While there is overlap, this list differs for health plans and disability plans. Importantly, disability plans, but not health plans, must include “[a] discussion of the decision,” including an explanation for disagreeing with the claimant’s reviewing healthcare or vocational professional’s opinion.

In recent decisions in the district courts of Utah, including D.K. now pending before the Tenth Circuit, courts have applied the disability plan requirements to health plans, creating tension and conflict in the content of denial letters. Specifically, courts have deemed health plan denial letters “conclusory” — in violation of claims procedure regulations — when the letters fail to include an explanation for disagreeing with a treating health care provider, “citations to the medical record,” or a response to “diagnoses and reports” provided by a claimant. This type of lengthy analysis is typically absent in health plan denial letters.

These recent district court cases rely on the Tenth Circuit’s decisions in McMillan v. AT&T Umbrella Benefit Plan No. 1, Gaither v. Aetna Life Ins. Co., and Gilbertson v. Allied Signal, Inc., cases involving benefits under disability plans, not group health plans. Reliance on these disability cases has the effect of creating requirements for health plan denial letters that are not included in the regulations. These additional requirements would be a significant departure from current standard language in health plan denial letters.

Further complicating matters, the Department of Labor filed an amicus brief in the D.K. appeal, siding with the plaintiffs advocating for these extra-textual requirements. During oral argument, the Department of Labor took the position that when it amended the claims regulations in 2016 for disability claims, it intended that these changes apply equally to disability and health plans based on pre-amendment case law (the Tenth Circuit case law cited above based on disability plans). In other words, while the Department of Labor recognized the language in the regulations was different regarding requirements for health plans and disability plans, it asked the court to apply the amendment to health plans despite the plain language of the regulations.

Troutman Pepper will continue to monitor developments in the area of health care denial letters and provide further updates.