Fisher v. Aetna Life Insurance Company

Background

Jacqueline Fisher received health coverage through a small-business group policy obtained by Dunnegan & Scileppi LLC, where her husband, William Dunnegan, was a named partner. Fisher used brand-name Effexor XR, although a generic equivalent, venlafaxine, was available. The policy required a participant generally to try the generic drug before Aetna would cover the brand-name version, unless the participant obtained a medical-necessity exception.

D&S selected Aetna’s 2014 New York Silver Plan. On January 9, 2014, Dunnegan signed and returned a five-page document called “Final Rates.” It listed high-level information about the plan, including prescription-drug cost information, but stated that it should be read with more detailed benefit descriptions, exclusions, and limitations. The complete Group Policy was mailed to Dunnegan on February 19, 2014. It contained a “Choose Generic” provision requiring an additional charge when a participant chose a higher-tier brand-name drug while a chemically equivalent lower-tier drug was available, unless Aetna approved coverage at the higher tier.

Fisher filled brand-name Effexor XR prescriptions throughout 2014 and paid the full brand-name price. Her doctor submitted a request that Aetna cover Effexor XR, but the request did not state that Effexor XR was medically necessary compared with venlafaxine and did not request a waiver of the generic-drug requirement. Aetna approved coverage of the drug but did not approve reimbursement at the higher tier. Aetna later told Dunnegan that Fisher could seek a medical-necessity waiver, but he did not complete that process. Fisher then sued Aetna, asserting claims based on both the Final Rates document and the full Group Policy.

Court’s Analysis

The court found that the material terms of the Aetna plan, including the Choose Generic provision, had already been approved by New York regulators when Dunnegan signed the Final Rates document. The court also found that the document made clear that it was not the entire policy and that D&S could have obtained the material terms from Aetna representatives. Because Dunnegan was therefore on “inquiry notice”—meaning he had reason to investigate additional terms—his signing of the document showed agreement to the terms of the full Group Policy.

The court concluded that the Choose Generic provision bound D&S and Fisher. It therefore ruled that Aetna was entitled to judgment on Fisher’s claim that Aetna breached the Final Rates document.

For Fisher’s claim based on the full Group Policy, the court applied the deferential “arbitrary and capricious” standard required by the policy’s grant of discretionary authority to Aetna. Under that standard, the court would not overturn Aetna’s interpretation if it was reasonable. The court found Aetna’s interpretation reasonable because the doctor’s request did not establish that Effexor XR was medically necessary compared with venlafaxine, and because Fisher did not seek the available waiver. The court also found reasonable Aetna’s interpretation that the brand-generic price difference was an uncovered additional charge and therefore was not subject to the policy’s annual out-of-pocket limit.

Disposition

The court entered judgment for Aetna on Fisher’s first breach-of-contract claim, which was based on the Final Rates document. It denied Fisher’s motion for summary judgment on her remaining breach-of-contract claim based on the Group Policy. Because Aetna had not moved for judgment on that remaining claim, the court did not enter judgment for Aetna on it. The parties were directed to submit a joint letter proposing how to litigate the remaining claim.