## Facts

- Geri Krauss, covered under an employer-sponsored ERISA health plan administered by Oxford, was diagnosed with breast cancer in 2003.
- Her non-network physicians recommended and performed a double mastectomy and bilateral breast reconstruction in a single operative session.
- Two unaffiliated, out-of-network surgeons performed the procedures.
- After surgery, Mrs. Krauss received private-duty nursing care.
- The Krausses paid for the surgery and postoperative care and sought reimbursement from Oxford.
- Oxford reimbursed most expenses but declined to pay one-quarter of the reconstruction surgery cost and denied all private-duty nursing expenses.
- After exhausting internal appeals, the Krausses sued alleging WHCRA and ERISA violations, including improper benefit denials and failures in ERISA-required disclosures and claim procedures.
- The district court granted summary judgment to Oxford on all claims, and the Krausses appealed.

## Issues

1. Whether Oxford’s partial reimbursement for out-of-network reconstruction surgery and denial of private-duty nursing violated WHCRA (as enforced through ERISA) or otherwise breached ERISA benefit obligations.
2. Whether alleged ERISA procedural and disclosure violations entitled the Krausses to additional benefits or other substantive relief.

## Decision

- The Second Circuit affirmed summary judgment for Oxford.
- WHCRA was treated as requiring coverage for specified post-mastectomy services, but not as requiring a particular reimbursement level or overriding plan limits applicable to out-of-network services.
- Oxford’s reimbursement methodology for out-of-network reconstruction, applied under plan terms, did not violate WHCRA or ERISA.
- Oxford’s denial of private-duty nursing benefits was upheld because the services were not covered or medically necessary under the plan as determined by Oxford.
- Any claim-processing or disclosure shortcomings did not justify awarding additional benefits absent a showing that the defects likely prejudiced the Krausses or affected the benefit outcome.

## Legal Principles

- WHCRA mandates coverage for specified post-mastectomy reconstructive services when mastectomy coverage is provided, but it does not require a plan to disregard otherwise applicable, nondiscriminatory plan terms governing payment levels, out-of-network reimbursement, or medical-necessity limits.
- ERISA benefit disputes are governed primarily by the written plan terms; statutory mandates generally operate through, rather than replace, the plan’s benefit structure unless the statute clearly requires otherwise.
- ERISA procedural or disclosure violations do not automatically convert into substantive entitlement to additional benefits; participants ordinarily must show prejudice or a material connection between the procedural defect and the denial of benefits.

## Conclusion

The Second Circuit held that Oxford’s partial payment for out-of-network breast reconstruction and its denial of private-duty nursing did not violate WHCRA or ERISA where the plan provided the mandated categories of coverage and applied its ordinary reimbursement and medical-necessity rules, and where asserted procedural defects did not warrant additional benefits without a showing of likely prejudice.


Krauss v. Oxford Health Plans, Inc., 517 F.3d 614 (2d Cir. 2008)