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Seventh Circuit Affirms ERISA Fund’s Denial of Out-of-Network Medical Treatment

In Est. of Gifford v. Operating Eng’rs 139 Health Benefit Fund, No. 23-3356, __F.4th__, 2025 WL 79102 (7th Cir. Jan. 13, 2025), the Seventh Circuit Court of Appeals affirmed the district court’s decision to uphold the denial of insurance benefits for medical treatment received by a beneficiary of the Operating Engineers 139 Health Benefit Fund. The Fund denied coverage for out-of-network medical services deemed not medically necessary under the terms of the Fund. The Court’s decision affirms the discretion afforded to plan administrators under ERISA, particularly when the plan’s language grants such authority.

Gifford suffered a stroke and was diagnosed with a brain aneurysm. After initial treatment at an in-network hospital, he was referred to Dr. Arvind Ahuja, an out-of-network neurosurgeon. Dr. Ahuja recommended and performed surgery to clip the aneurysm, but tragically, Gifford did not recover and passed away. The Fund denied coverage for the surgery, stating that it was not an emergency and thus not medically necessary under the plan’s terms. Gifford’s estate, represented by his wife Suzanne Gifford, appealed the denial, arguing that the surgical procedure was performed under emergency conditions and was medically necessary. However, the Fund’s decision was supported by two independent medical reviewers who concluded that the surgery was neither an emergency nor medically necessary.

The Seventh Circuit employed the “arbitrary and capricious” standard of review because the health benefit plan explicitly granted the Board of Trustees discretionary authority to interpret the plan terms and determine eligibility for benefits. The court highlighted that the Summary Plan Description (SPD) endowed the Trustees with broad discretion to decide medical necessity and emergency conditions. The SPD stated that trustees; decisions are final and binding, provided they fall within a range of reasonable interpretations. The Fund’s decision was bolstered by the opinions of two independent neurosurgeons who reviewed Gifford’s medical records and concluded that the surgery was neither an emergency nor medically necessary. These independent reviews provided a rational basis for the trustees’ decision and further supported the court’s finding that the denial of benefits was not arbitrary. The court reiterated that under ERISA, plan administrators are not required to give special deference to the opinions of treating physicians over independent medical reviewers. This aligns with the Supreme Court’s stance that treating physicians’ opinions do not automatically trump other evidence in benefits determinations.

The estate also sought equitable relief, arguing that the SPD inadequately defined “emergency” and cost-sharing provisions for out-of-network services. The court dismissed these claims, noting that the Plan’s discretionary terms were clear and that the trustees’ interpretation was within the realm of reasonable interpretations. Additionally, since the denial of benefits was upheld, the issue of cost-sharing became moot.

The estate argued for additional discovery, suggesting potential conflicts of interest. However, the court found no evidence of a conflict sufficient to warrant discovery beyond the administrative record, particularly given the Fund’s structure as a multi-employer plan with an equal number of union and management trustees. The use of independent medical reviewers further mitigated potential biases.

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*Please note that this blog is a summary of a reported legal decision and does not constitute legal advice. This blog has not been updated to note any subsequent change in status, including whether a decision is reconsidered or vacated. The case above was handled by other law firms, but if you have questions about how the developing law impacts your ERISA benefit claim, the attorneys at Roberts Disability Law, P.C. may be able to advise you so please contact us.

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