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Nyemaster Goode ERISA Group Obtains Reversal in the Eighth Circuit

March 16, 2011

On February 16, 2011, the U.S. Court of Appeals for the Eighth Circuit reversed the district court's decision granting benefits to a participant of an ERISA plan that was administered by Nyemaster Goode client Coventry Health Care of Iowa.  The participant chose to seek medical treatment at the Mayo Clinic (an out-of-network provider), instead of the University of Iowa Hospitals (an in-network provider).  The Plan provided that charges above the Out-of-Network rate were not covered, and that such charges "do not apply" to the Plan's $8,000  Out-of-Pocket Maximum.  The participant nevertheless sued Coventry, alleging she was entitled to reimbursement for all charges exceeding $8,000—regardless of whether the charges exceeded the Out-of-Network Rate.  The district court agreed, ruling that the phrase "Out-of-Pocket Maximum" has a clear meaning that cannot be altered by the Plan, and that in any event the phrase "do not apply" is ambiguous.

A three-judge panel of the Eighth Circuit unanimously reversed, adopting the arguments pressed by Nyemaster Goode.  The court reaffirmed that ERISA plans must be interpreted as a whole and that courts are not free to "ignore provisions or rewrite the plan documents."  The decision is consistent with the purpose of ERISA—to create predictable, uniform standards that reduce litigation costs and encourage employers to offer benefit plans—and is therefore important for employers and employees alike.

Michael Thrall argued the appeal.  He and Ryan Koopmans prepared the briefs. The Eighth Circuit's decision is available here.

Michael W. Thrall

 
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