Types of claims determinations that require notice under ERISA Section 503

ERISA Section 503 does not require that a participant or beneficiary be provided notice of every determination made by the plan administrator regarding benefits. Rather ERISA Section 503 and the DOL regulations only regulate certain types of benefit determinations, as more fully discussed below.

1. Adverse Benefit Determinations
Any time there is an adverse benefit determination, a participant must be given notice of the claim denial in accordance with DOL regulations. For this purpose, the term “adverse benefit determination” means a denial, reduction or termination, or a failure to provide or make payment (in whole or in part) for, a benefit. Examples of adverse benefit determinations include:

a. Denial of a participant’s eligibility for a benefit;
b. Failure to pay any part of a claim for medical benefits as a result of the application of a plan’s utilization review procedures;
c. Failure to cover an item or service for which benefits are otherwise provided because it is determined to be experimental or investigational or not medically necessary.

2. Benefit Determinations With Respect To Urgent Care and Pre-Service Claims
Some claims are deemed to be so sensitive that a plan administrator is required to provide notice of a benefit determination even if it is not adverse. This is true of urgent care and pre-service claims.

(a) Urgent Care Claims
A plan administrator must notify a participant of any benefit determination regarding an urgent care claim (whether adverse or not). A claim involving urgent care is any claim for medical care or treatment with respect to which the application of the time periods for making non-urgent care determinations –

1. Could seriously jeopardize the life or health of the claimant, or the ability of the claimant to regain maximum function; or

2.In the opinion of the physician with knowledge of the claimant’s medical condition, would subject the claimant to severe pain that cannot be adequately managed without the care or treatment that is the subject of the claim.

Whether a delay in a claim determination could seriously jeopardize the life or health of the claimant, or the ability of the claimant to regain maximum function, may generally be determined by any individual acting on behalf of the plan applying the judgment of a prudent layperson with an average knowledge of health and medicine. However, if a physician with knowledge of the claimant’s medical condition determines that the claim involves urgent care, the plan administrator must treat the claim accordingly.

(b) Pre-service Claims
A plan administrator must also notify a participant of any benefit determination regarding a pre-service claim (whether adverse or not). The term “pre-service claim” means any claim for a benefit under a group health plan, with respect to which the terms of the plan condition receipt of the benefit, in whole or in part, on approval of the benefit in advance of obtaining medical care.