District Court Permits ERISA Claim For Benefits Of IRO Review, Holding Such Review Is Not An Arbitration

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.

Proskauer's Perspective

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...