Council seeks review of insurance appeals

Last month, Chuck Lesniak retired from the city of Austin after 28 years, most recently as the city’s environmental officer. However, his involvement with the city is continuing as he urges City Council to establish a third-party appeals process that might help city employees whose health insurance claims have been denied.

This week’s Council agenda includes an item from Mayor Pro Tem Kathie Tovo, Mayor Steve Adler, and Council members Ora Houston, Ann Kitchen and Delia Garza, directing the city manager to research how other cities handle health insurance claims when the insurer has declined payment and report the findings back to Council in November.

The resolution includes the statement that Texas courts have ruled that an employee “health benefit is a governmental function subject to governmental immunity,” and that “policy limits municipal employees’ ability to initiate an independent appeal outside of the insurance company’s established appeal processes.”

Lesniak is something of an expert on the subject after arguing with the city and UnitedHealthcare over his daughter’s health care bills for several years.

In a letter to Council, Lesniak wrote, “I am writing to ask you to support item 60 on the 8/9/18 agenda regarding an appeal process when a City employee has a health insurance claim denied.”

Lesniak’s letter points out that because of the city’s actions in a lawsuit he filed against the city and UnitedHealthcare, the Texas Supreme Court issued a ruling that means “municipal employees in the state of Texas may not go to the courts to appeal denial of a health insurance claim, placing ALL the power in the hands of the insurance company representing the municipality. To fix this problem that the City itself created, I am asking you to create an independent, 3rd party appeal process for City employees so they are treated fairly and their health and rights are protected.”

Lesniak’s claim and his problems with the city and United go back to 2013, when his teenage daughter was diagnosed with a dangerous case of anorexia. As directed by her doctor, Lesniak and his wife took their child to the Avalon Hills eating disorder treatment center in Utah, where she made progress in overcoming the disease. The problem was that United wanted the daughter to be discharged as soon as she reached a certain weight, but not before she recovered from the disease, he said. Her doctors advised against the discharge, and the Lesniaks followed their advice.

Since the insurance company refused to pay, Lesniak was stuck with a $145,000 bill. He filed suit against the city and its insurer in January 2015. When they got to court, the city and United asserted that the city, and by extension its health insurance company, had governmental immunity. The district judge in Travis County didn’t buy that argument, but the defendants appealed to the 3rd Court of Appeals, which overturned the district judge’s decision, ruling that Lesniak and other city employees could not file suit over failure to honor insurance claims.

In 2017, the Texas Supreme Court declined to hear the case, and as a result, the decision of the appeals court is now the last word on whether government employees can appeal when their employers and health insurers deny their claims.

Following that decision, Austin Sen. Kirk Watson filed legislation to change the law so that governmental employees could sue when their claims are denied. However, Watson’s bill never even got a hearing.

Last summer, Watson told the Austin American-Statesman, “As a result of this failure, public employees around the state are at the complete mercy of their employer and the private insurance companies they hired to provide employee benefits. The state’s failure to protect those benefits will negatively impact our communities for years to come.”

The city opposed Watson’s bill, and Lesniak wants Council to direct its legislative team to support such legislation in 2019.

However, Adler told the Austin Monitor he is not ready to take that step until after City Manager Spencer Cronk comes back with a recommendation to Council in November.

As for Lesniak’s case, Adler said, “It was a tragic situation, and I have children too, and I’m just so thankful (Lesniak’s daughter) seems to be OK now – but it was a difficult path for her and her family. The gravity, the impact, all indicate that we should be taking a closer look at whether there’s a better way to be looking at this kind of thing.”

Coincidentally, also on Thursday’s agenda is an item to authorize negotiation and execution of a contract with Blue Cross Blue Shield of Texas for employee health insurance. That means United will not be part of the equation soon anyway.

Lesniak will be honored with a Distinguished Service Award at today’s City Council meeting.

Photo by John Flynn.

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