In Yox v. Providence Health Plan, No. 12–cv–01348, 2013 WL 865968 (D. Or. Mar. 8, 2013), a federal district court held that the review of benefit denials by an independent review organization (IRO) is not akin to an arbitration proceeding, and thus did not preclude a plan participant from seeking judicial review under ERISA of an adverse benefit determination. The plaintiff sued in federal court under ERISA § 502(a)(1)(B) following denial of health coverage for injuries caused by a seizure and fall. Under the insured health plan terms, the plaintiff exhausted the internal claims procedures and then pursued external review by an IRO (which appeared to be mandated by state insurance law). The IRO upheld the initial denial of benefits. In response to the plaintiff’s suit, the plan argued that IRO determinations are similar to arbitration proceedings and, therefore, judicial review of these determinations should be precluded or greatly limited as would be the case for arbitration procedures governed by the Federal Arbitration Act. The court rejected this argument on the basis of the U.S. Supreme Court’s ruling in Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355 (2002). In Rush, the Supreme Court specifically concluded that independent medical reviews were not arbitration proceedings.
Although the Yox decision did not specifically address the external review and IRO rules as enacted by the Affordable Care Act (ACA), it is still a helpful reminder of the interplay between IRO decisions and judicial review. Under the ACA guidance, non-grandfathered group health plans must offer a final and binding level of external review by IROs. See 29 C.F.R. § 2590.715-2719. The current regulations and other guidance provide, without explanation, that IRO determinations are “binding except to the extent that other remedies may be available under State or Federal law to either the group health plan or to the claimant.” DOL Technical Release 2010-01. ERISA’s enforcement mechanism under ERISA § 502(a)(1)(B) is such a federal law and continue to apply after the ACA rules are implemented. Exactly how the new ACA rules and the existing ERISA claims rules with judicial review under ERISA § 502 will interact remains to be seen and likely will be the subject of future litigation.