INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Issue of standing debated
In this case before the Supreme Court of the state of Delaware, First State Orthopaedics, P.A. (FSO), sought a declaration that a billing code used by a group of insurance companies operating under the Liberty Mutual Group, including Employers Insurance Company of Wausau, to deny insurance coverage violated Delaware’s workers compensation law.
In 2017 and 2018, Liberty routinely issued explanation of benefits (EOB) forms to FSO using a certain code. Those forms purported to deny coverage of workers compensation bills for procedures that FSO performed. The explanation of benefits generated by this code stated:
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The centerpiece of FSO’s claim is a section of the workers compensation statute that specifies that “[d]enial of payment for health care services provided pursuant to this chapter, whether in whole or in part, shall be accompanied with written explanation of reason for denial.” FSO contended that this section requires an insurer that denies coverage to set forth its reasons for doing so.
The defendant companies had stopped using the challenged code six months before FSO filed its complaint, and none of the codes in their new billing system contained the same challenged language.
The superior court held that discontinuation of the code did not remove FSO’s standing to bring the case because the defendants might resume using the code in the future and because they had not “corrected” their response to 19 invoices for which they had previously denied coverage using the challenged code. Employers appealed.
On appeal, the Supreme Court of Delaware overturned the lower court’s decision, ruling that FSO lacked standing to bring the case because the defendants had stopped using the challenged code before FSO filed its complaint and, therefore, FSO’s request for a declaration that the code violated workers compensation law did not seek to address an actual or imminent injury.
The court also ruled that the defendants’ alleged failure to correct their responses to 19 invoices could not confer standing because the prospective relief that a declaratory judgment affords would not redress the injury caused by the statements already issued to FSO’s patients.
Employers Insurance Company of Wausau et al. v. First State Orthopaedics, P.A.—Supreme Court of the State of Delaware—No. 27, 2023D—January 8, 2024.
