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Paul Zimmerman
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On the Clock: Physician’s Voluntary Engagement in Insurer's Internal Appeals Process Does Not Toll Statute of Limitations

An insurer’s optional appeals process does not toll the statute of limitations following unequivocal written denial of a claim. In Dev v. Blue Shield of California, a California appeals court held that the two-year statute of limitations applicable to claims for quantum meruit began to run when a health care provider received the “Explanation of Benefits” (EOBs), which constituted an unequivocal denial of payment. Out-of-network providers often appeal denied claims through an insurer’s internal appeals process. However, as laid out in the Dev decision, such appeals (and related correspondence) do not delay or otherwise suspend the statute of limitations – meaning that non-contracted physicians must be diligent in exploring and preserving their legal claims for fear of being time-barred at the conclusion of the optional appeals process. 

Vishva Dev, M.D., Inc. (Dev) provided emergency medical services to three patients who had health coverage through Blue Shield. Dev did not have a contract with Blue Shield, but billed the insurer over $80,000 for emergency services rendered to the three patients. Blue Shield refused to pay or agreed to pay only a small fraction of the amount billed by Dr. Dev, issuing Explanation of Benefits (EOB) letters detailing its reimbursement decisions. For instance, with respect to one of the patients, Dev billed $24,610 for services and Blue Shield responded that the allowed amount was $1,775.90, which was applied to the patient’s deductible with no remainder left to be paid to Dev

Dev appealed, securing a small additional payment for services to one patient.  Dev then filed a quantum meruit action against Blue Shield. The action was filed more than two years after Blue Shield issued its EOB letters, but less than two years after the internal appeals process was completed. The trial court granted summary judgment to Blue Shield on the ground that Dev’s lawsuit was time-barred. The statute of limitations on a claim for quantum meruit is two years (Code Civ. Proc., § 339), and in each case the original EOB explaining the benefits allowed had been issued more than two years prior to Dev’s suit

The Court of Appeals rejected Dr. Dev’s argument that the statute of limitations began running not when he received the EOBs, but rather when he completed Blue Shield’s appeal process. Because Blue Shield’s EOB letters unequivocally refused to pay the amount Dev billed, those letters were adjudged by the Court to have triggered the two-year statute. The Court ruled that the limitations period was not legally suspended by Blue Shield’s willingness to consider additional information, or by Dev’s entry into Blue Shield’s voluntary appellate process.

The Court reasoned that “Dev had knowledge of the facts giving rise to its claim of quantum meruit when it received the EOBs, with their unequivocal denial of its bills, more than two years prior to filing this lawsuit. Dev engaged in a voluntary appeals process with Blue Shield ... which did not change or undercut the EOBs’ denials of Dev’s claims. Accordingly, Dev’s quantum meruit claims are time-barred, and the trial court correctly entered judgment on that basis.”

This decision makes very clear that when providers receive unequivocal denials of their claims, the clock begins ticking with respect to their right to file a lawsuit demanding payment. While it is usually advisable to file an appeal via an insurer’s optional appellate process, that does not mean that you should wait for the traditionally long, drawn-out appeals process to take its course before evaluating the merits of a lawsuit. While you are appealing the insurer’s payment decision, you should confer with experienced health care litigation counsel to explore all available remedies.

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.