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Does plan participant (fully-insured group medical plan) sue Blue Cro

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An employee has medical coverage under his employer's fully-insured group medical insurance plan (Blue Cross).

I realize that the plan is an ERISA plan, because it covers employees.

Here's my Question:

If Blue Cross informs the employee that it will not pay his entire medical claim for "any" of the following reasons ..... then can the employee sue Blue Cross (for payment of the actual medical charges) in state court -or- "must" he only sue under ERISA in federal court ?

1. Not medically necessary.

2. The medical fees are excessive and far above the usual fees charged by other medical providers.

3. The medical services are for a pre-existing condition, not covered by the employer's policy.

Note: The employee only wants to sue Blue Cross for actual medical charges (not any punitive damages, nor pain & suffering).

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Kip & Jeanine, thanks for the comments ..... but neither answers my question. I'm not looking for general advice on what to do if a medical claim is denied.

Here's a short version of my question:

What court (state or federal ?) has jurisdiction over a breach of policy contract by Blue Cross, regarding a fully insured group medical plan ?

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Jeanine, a dispute between insurance company & insured participant over their conflicting interpretations of a benefit provision (or any other terms) in the policy contract .... is grounds for a breach of contract suit.

For example: The insurance company refuses to cover a medical fee, because it believes that the illness was a pre-existing condition. Both the participant & insurance company realize that the terms of the policy prohibit coverage for a pre-existing condition. The participant believes that his condition was NOT pre-existing ..... and he goes through all the proper administrative steps to convince the insurance company that his condition was not pre-existing. But the insurance company refuses to change its mind.

The participant wants to sue the insurance company in a court of law and have the court order the insurance company to pay the claim. He has a medical expert witness and other proof that he feels will convince a judge or jury that his condition was not pre-existing ?

The fully-insured medical plan is an ERISA plan because it covers employees.


"MUST" he sue in STATE court or FEDERAL court ? (Which court has jurisdiction ?).

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Breach of contract is a state law claim. My argument is that regardless of your framing of this as a breach of contract, you will have to get over the challenge that this is not a breach of contract but a determination of benefits due under a health and welfare plan. I understand the point you are trying to make--I'm not sure I see it as a breach of contract. The contract in this case is between the plan sponsor (employer) and the insurance company.

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Jeanine, OK I see your point. The participant is not a party to the contract, so he cannot sue anyone for breaching the contract.

But, you do admit that he has the right to sue the insurance company to pay the claim ..... right ?

So, rather than calling it a breach .... let's call it a dispute over benefit determination.

What court will preside over the dispute (state or federa) ?

I thought that federal court was only for ERISA violations.

Do you know of any cases or web.sites I can read regarding jurisdiction over group medical plans ?


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This is an ERISA claim, not a state law claim. However, ERISA provides for concurrent jurisdiction in state and federal courts, so you can file in either. If you file in state court, the plan may remove the action to federal court.

The policy is between the plan and BX, not an individual and BX. That means the employee is entitled to PLAN benefits, as a participant in the welfare benefit plan sponsored by the employer. Those benefits may be described in the policy the plan bought from BX. The participant's claim is under 29 USC 1132, not state law breach of contract. See Pilot Life v. Dedeaux and its successors. The participant is not the policy owner, the plan is (or the employer, in a poorly drafted situation) so theparticipant cannot asset a contract claim. The contract is between others, and requires BX to reimburse the plan 100% for any claims brough against the plan.

BX is probably the plan administrator, charged with adjudicating claims under the policy it issued. That creates a conflict of interest that many courts use to apply a higher level of scrutiny to the claims denial. However, the forum for resolving that will be an ERISA action. Where you file is up to you, but its highly unlikely the plan administrator (BX) will let it stay in state court.

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