Delayed & Denied: Toward an Effective ERISA Remedy for Improper Processing of Healthcare Claims

Abstract

Healthcare reform has focused to date on the plight of the uninsured. Reform efforts focus less often, however, on threats to the healthcare benefits of those people who do have health insurance. When individuals do obtain insurance and suffer illness, does the insurance live up to its promise? One overlooked threat concerns the administration of employer-sponsored health insurance plans. Specifically, participants’ benefits are threatened by the current lack of consequences when administrators of such plans improperly process claims for healthcare benefits, by delaying the decision, failing to conduct a complete review, or simply denying the claim improperly.

This article advocates a shift in thinking in the enforcement of claims processing regulations. ERISA’s goal of ensuring contracted benefits would be better served if enforcement moved to a presumed-harm approach, similar to that of the consumer finance laws. This article makes the case for the presumed-harm approach and suggests two specific remedies: First, non-compliance with claims processing regulations should be penalized through an expanded view of attorney’s fee awards. Second, ERISA could adopt the presumed-harm approach of the Truth-in-Lending Act, thereby lending predictability, efficiency, and equity to the enforcement of ERISA’s claims processing regulations.

Keywords: ERISA, healthcare claims, claims processing