Suing too Soon Defeats Claim for Health Insurance Proceeds

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A State Health Benefits Plan (SHBP) created for employees of the state is a creature of statute. When the statute requires that the person seeking benefits must submit every dispute over coverage to arbitration and other administrative remedies before it can sue the insurer acting for the State seeking payment from the state’s treasury.

In Advanced Orthopedics & Sports Medicine Institute, P.C. v. Aetna Life Insurance Company, Civ. No. 20-7693, United States District Court District Of New Jersey (October 27, 2020) the USDC dealt with a state and federal requirement that a SHBP whose funds come from the state’s Treasury will be strictly construed differently than if the benefits were sought from a commercial insurer.

ZALMA OPINION

Considering the fact that the amount in controversy was $268,067.00 it makes no sense why the plaintiff and its counsel did nothing to seek redress from the available administrative remedies.