ERISA And Medical Necessity And Short Term Disability Benefits

ERISA lawyers will fight whether a prescribed treatment is medically necessary on a routine basis.  The courts will interpret the policies in favor of the insurer.  This case is from the Northern District, Dallas Division.  It is styled, Charlize Marie Baker v. Aetna Life Insurance Co., et al.

Baker, who is undergoing the process of gender transition from male to female, sued Aetna to recover short-term disability (STD) benefits following breast augmentation surgery, under the employer’s ERISA plan.  The Court denied Baker’s claim for benefits.

In considering Baker’s claim, Aetna relied on her medical records, including records from her plastic surgeon, Dr. Harris.  The claim documentation forms asked Baker, “What is the primary medical condition that keeps you from working?”  Baker responded, “cosmetic procedure.”  Aetna denied Baker’s claim on the ground that her surgery was not caused by an illness, injury, or pregnancy-related condition, as required under the STD plan.  Baker appealed this decision.

On appeal Baker submitted two letters in support of her appeal.  One from Dr. Harris, stated that “this surgery was for a breast reconstruction for her transgender surgery that she was interested in having done.  Transgender surgery, as you know, has become a functional indication for surgery.”

The second letter was from Baker’s counselor.  It stated that Baker has been going through gender transition.   Therapeutic issues we have addressed include family; self esteem; motivation for physical alterations; and permanent effects of gender transition.  In March of this year my client received her first medically necessary surgery.  Breast augmentation is considered reconstructive and necessary in body feminization.

The appeal was also denied based on the surgery not meeting the plan criteria of being medically necessary and due to an illness, injury, or pregnancy related condition.  Aetna stated that the evidence did not establish that her breast augmentation surgery was medically necessary and due to an illness.

This lawsuit resulted.  The parties agree that the STD plan grants Aetna discretionary authority to construe the plan’s terms.  Accordingly, review of Aetna’s construction of the meaning of the plan terms and plan benefit entitlement provisions is for abuse of discretion.

The STD plan provides, in relevant part: “Short term disability coverage will pay a weekly benefit if you are disabled and unable to work because of; An injury that is a non-occupational illness; An injury that is non-occupational injury; or A disabling pregnancy-related condition.”  The STD plan also defines “illness” to mean “a pathological condition of the body that presents a group of clinical signs and symptoms and laboratory finding particular to it and that sets the condition apart as an abnormal entity differing from other normal or pathological body states.”

The court then got into an analysis to try and determine if this situation was being treated different than other similar situations but neither side presented anything in the administrative record addressing this point.

The court ultimately made it’s decision on the plain language of the STD plan in upholding the ruling in favor of Aetna.