A California appellate court has declared physician Visha Dev the loser in his dating contest with Blue Shield Life and Blue Shield California. The contest arose when the Blues moved for summary judgment in Dev’s action against them for denying three reimbursement claims. The Blues argued that the date when the two-year statute began was the day Dev received a written Explanation of Benefits (EOB) denying his claim. Dev argued that the date was the day the Blues’ internal appeals process ended.
The second of Dev’s three claims is representative of all three. On June 22, 2012, Dev received an EOB denying all but $2,300 of his $44,000 claim. On Aug. 21, 2012, he initiated the insurer’s internal process. On Oct. 2, 2012, the insurer denied the appeal. On Jan. 15, 2013, he filed a second appeal. On Mar. 26, 2013, the insurer denied that appeal as too late: more than 65 days after the first denial. On Aug. 14, 2013, he filed a third appeal. On Aug. 20, 2013, the insurer sent a form letter acknowledging receipt of the third appeal. On Oct. 10, 2013, the third appeal was denied.
Dev sued on Oct. 7, 2014, asserting breach of contract and quantum meruit in connection with his three claims. The trial court granted the defendants summary judgment based on the statute of limitations. Dev appealed the judgment as to his quantum meruit claim. The issue before the court was, when did the statute begin to run? The insurer said it was June 22, 2012, the day Dev received the first EOB. Dev argued that it was Aug. 20, 2013, the date of the letter acknowledging his third appeal.
The court drew on cases involving homeowner’s insurance. Those cases hold that the start date occurs when the insured knows or should have known the facts essential to the quantum meruit claim. For Dev, that was the day he received “an unequivocal denial of payment in writing” in the form of the June 22, 2012, EOB.
The court was persuaded not only by case law but also by the practicality that under Dev’s theory “any party engaging in an insurance company’s optional appeal process could continuously toll the statute of limitations, thereby rendering it a nullity.” In other words, Dev’s argument proved too much.
The lesson for health care providers in California is clear: in the absence of an explicit contract provision to the contrary, the start date for the statute of limitations is receipt of the first formal denial of all or part of a claim; internal appeals have no effect. Other jurisdictions may well have the same rule.
The case is Visha Dev, M.D., Inc. v. Blue Shield of California Life & Health, B270094 (Cal. App., Aug. 31, 2016).
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