Krauss v. Oxford Health Plans, Inc.

Geri and Daniel Krauss (plaintiffs) were enrolled in a healthcare plan regulated by the Employee Retirement Income Security Act of 1974 (ERISA) and administered by Oxford Health Plans, Inc. (Oxford) (defendant). The plan gave Oxford discretion to implement coverage polices. In 2003 Geri had a double mastectomy and bilateral breast-reconstruction surgery. The Krausses sought reimbursement for the surgeries and the private-duty nursing care they had obtained for Geri. Although the Krausses were charged $40,200 for the breast-reconstruction procedure, Oxford only reimbursed them for $30,200. Oxford claimed that the plan had a usual, customary, and reasonable (UCR) fees provision, under which Oxford was only required to reimburse enrollees according to the cost it deemed reasonable. Oxford had determined the reimbursement amount through its bilateral-surgery policy, under which an enrollee was reimbursed for bilateral procedures at one and a half times the rate of a single procedure. The cost of Geri’s breast-reconstruction procedure was higher than typical because she had used an out-of-network surgeon. Oxford also refused to reimburse the Krausses for the private-duty nursing care on the ground that the plan had a provision excluding private-duty coverage. After exhausting Oxford’s appeal process, the Krausses filed an action in federal district court, claiming that Oxford had violated the plan and the Women’s Health and Cancer Rights Act (the women’s health act) and breached its fiduciary duty. The district court returned a verdict for Oxford. The Krausses appealed.