Eleventh Circuit: “Manipulations Under Anesthesia” Not Medically Necessary

Sanctuary Surgical Centre Inc. v. Aetna Inc. U.S. Ct. Apps., 11th Cir., November 5, 2013; cert. denied U.S. Sup. Ct., March 24, 2014

On March 24, 2014, the U.S. Supreme Court denied review of the Eleventh Circuit’s decision that dismissed claims by medical providers for reimbursement of “manipulations under anesthesia” under ERISA Plans.

In this action, health care providers filed lawsuits against the plan administrators for their failure to pay benefits according to the terms of ERISA plans. The providers alleged claims under ERISA for benefits, breach of fiduciary duty, failure to provide plan documents, and equitable estoppel. The providers claimed that they had performed over a thousand “manipulations under anesthesia.” Such largely controversial procedures are performed by chiropractors and orthopedic surgeons on a sedated patient to treat neck and back problems.

The providers asserted that these claims were originally reimbursed by the plan administrators, but that the plan administrators began denying these types of claims in 2006. The defendant administrators asserted that payment for the procedures was denied on the grounds that they were excluded from coverage under the terms of the ERISA plans because the procedures are experimental and thus, not medically necessary

The Florida district court dismissed the lawsuits, finding that the providers failed to state claims under ERISA. The plaintiffs appealed and the Eleventh Circuit affirmed the dismissals. The Eleventh Circuit rejected the providers’ claims for benefits because the providers had not sufficiently alleged medical necessity of the procedures. The primary factual support put forth for the allegation that the procedures were medically necessary was their inclusion in the AMA Codebook of Reimbursable Procedures. The court held that while the codebook provides evidence that the procedures are generally accepted, “general acceptance is not the same thing as medical necessity for a particular patient.”

Additionally, the court found that the providers lacked derivative standing to assert the breach of fiduciary duty claims based on alleged assignments from the plan participants. Finally, the court rejected the providers’ claim for equitable estoppel because it found that the plans unambiguously defined the terms “medical necessity” and “covered service.”