Health Plan Investigations: Cautious Layman’s Rule | Groom Law Group, Chartered


There has been a significant increase in Department of Labor (“DOL”) surveys of group health plans and health insurers in recent years. These investigations typically focus on compliance with a multitude of laws, and particular emphasis has been placed on the “prudent layman” standard under the Affordable Care Act (the “ACA”).

The ACA generally requires that, if a group health insurance plan or health insurance issuer provides or covers benefits with respect to services in a hospital emergency department, the sharing requirements costs imposed for off-grid emergency services cannot exceed costs. sharing requirements imposed for networked emergency services. This requirement is triggered by a “prudent layman” standard. In other words, an emergency medical condition is evidenced by acute symptoms of sufficient severity that a “prudent layman” with an average knowledge of health and medicine can reasonably expect. that the absence of immediate medical attention puts the health of the individual in serious danger, or seriously impair the functions, organs or parts of the body.

In a complaint and subsequent consent order in Perez v. MagnaCare Admin. Svs., LLC, et al. (the “MagnaCare Consent Order”), DOL claimed that a third-party administrator’s use of an internal “True ER List” to adjudicate emergency service claims violated layman’s prudent standard of emergency services rule, as such a list could not explain a layman’s view of whether he or she was experiencing a medical emergency. The DOL relied on its result in the MagnaCare Consent Order to cite group health plans and health insurance issuers that use a True ER List to judge emergency services despite the previous lack of regulations or d ‘binding guidelines in this area.

Recently, in the preamble of the interim final rule “Surprise billing requirements; Part I, ”DOL, Health and Human Services (“ HHS ”), and Treasury explained that refusals for emergency services cannot be based solely on the diagnostic code and instead should be assessed against the conservative standard of profane. This conclusion is also included in the regulatory text. The practical effect is that the agencies codified the DOL execution position under the ACA Emergency Services Rule that the use of a true emergency list is prohibited as the sole basis for refuse complaints.

Given the codification, we will likely see continued investigative activity in this area as well as an increased focus on participant disclosures regarding emergency services, plan or issuer policies and procedures in adjudicating claims relating to emergency services in light of the expanded definition of emergency services, and a review of claims involving emergency services to confirm that they have been addressed in accordance with the requirements of the Consolidated Appropriations Act of 2021 and the regulations implemented thereunder.

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