Opinion
No: 99-3107
August 23, 2000
ORDER AND REASONS
Before the Court is defendants's motion to dismiss, in part, plaintiff's petition pursuant to Federal Rule of Civil Procedure 12(b)(6) or, alternatively, for partial summary judgment pursuant to Rule 56. For the following reasons, defendants's motion is denied.
I. Background
In the spring of 1994, plaintiff Sherry Carthane applied for major medical health insurance through the National Association of Rehabilitation Professionals in the Private Sector ("NARPPS") NARPPS then submitted her application to defendant Maginnis and Associates, an insurance plan administrator. Maginnis, in turn, submitted the application to defendant Contimental Casualty Company. In her application, Carthane disclosed that she previously had been treated for endometriosis.
On May 25, 1994, Maginnis sent Carthane a letter advising her that her application had been approved and that coverage would be effective June 1, 1994 — the date shown on the Certificate of Insurance. Carthane contends that this letter did not indicate that her health insurance coverage would exclude benefits relating to endometriosis. She further asserts that neither the letter nor the Certificate of Insurance included a "waiver of coverage" or "elimination endorsement."
In the spring of 1996, Carthane's endometriosis flared up. Her physician, in an effort to treat her condition, prescribed a regime of Lupron injections, for which Maginnis initially approved payment. After a few injections, however, Maginnis advised Carthane that her policy did not cover the injections for endometriosis, asserting that the policy was subject to a "waiver excluding coverage for the treatment of endometriosis." (Pl.'s Mem. Opp'n Ex. B.)
After objecting to Maginnis's refusal to pay for the Lupron treatments, Carthane filed suit in the Civil District Court for the parish of Orleans, State of Louisiana, seeking damages, penalties, and attorney's fees for defendants's alleged wrongful denial of her benefits. Defendants then removed the case to this Court, urging diversity jurisdiction.
Among plaintiff's theories of liability is that she never agreed to a waiver of coverage or "elimination endorsement" for endometriosis and that the endorsement relied on by defendants is unenforceable as a matter of law. Specifically, she argues that it violates Louisiana Revised Statute § 22:215.12, which sets the maximum time period during which an insurer may avoid coverage of pre-existing conditions. She also argues that the endorsement violates Louisiana public policy. (See Compl. XII, XIII, XXXXIV.)Defendants argue that the policy was subject to an endorsement eliminating coverage for endometriosis and that section 22:215.12 does not govern elimination endorsements.
II. Discussion
A. Procedure
As a threshold matter, plaintiff argues this motion must be analyzed under Rule 56 because defendants submitted matters outside the pleadings for the Court's consideration — to wit, a series of exhibits that include the Certificate of Insurance, the policy provisions, the alleged "elimination endorsement, " and assorted correspondence. (Mem. Opp'n at 6.) The Court agrees. As none of these documents were incorporated or attached to plaintiff's complaint, their consideration precludes analysis under Rule 12(b)(6). See FED. R. Civ. P. 12(b)(6). Accordingly, the Court will analyze defendants's motion under Rule 56.
Plaintiff also argues that defendants have not complied with the provisions of Local Rule 56.1 by failing to submit "a separate, short, and concise statement of the material facts as to which the moving party contends there is no genuine issue to be tried." Id. (quoting LOCAL RULE 56.1). While plaintiff is correct that defendants's motion is technically deficient, the Court will overlook defendants's procedural default in the interests of justice. Moreover, the Court notes its authority to enter summary judgment sua sponte. See Ross v. University of Tex. at San Antonio, 139 F.3d 521, 527 (5th Cir. 1998) ("The district court is empowered to enter summary judgment sua sponte, provided the parties are provided with reasonable notice and an opportunity to present argument opposing the judgment.").
B. Summary Judgment Standard
Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law. See FED. R. CIV. P. 56(c). See also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552 (1986). Accordingly, a court must be satisfied that no reasonable trier of fact could find for the nonmoving party. In other words, "if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the nonmoving party to carry its burden." Beck v. Texas State Bd. of Dental Exam'rs, 204 F.3d 629, 633 (5th Cir. 2000)
Initially, the moving party bears the burden of establishing that there are no genuine issues of material fact. If the dispositive issue is one for which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record contains insufficient proof concerning an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325, 106 S.Ct. at 2554; see also Lavespere, 910 F.2d at 178. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. Summary judgment is mandated if the nonmovant fails to make a showing sufficient to establish the existence of an element essential to her case on which she bears the burden of proof at trial. See Id. at 322, 106 S.Ct. at 2552. The nonmovant may not rest upon the pleadings but must identify specific facts that establish a genuine issue exists for trial. See id. at 325, 106 S.Ct. at 2553-54; Rushing v. Kansas City S. Ry. Co., 185 F.3d 496, 505 (5th Cir. 1999).
C. Elimination Endorsement
Defendants assert that their motion is limited to the validity of the elimination endorsement and that it does not reach plaintiff's claim that she never agreed to the endorsement. The Court is not convinced that these two issues are separable. Nevertheless, the Court finds defendants are not entitled to summary judgment, even focusing solely on the issue of the validity of the alleged endorsement under Section 22:215.12.
Defendants rely on Wynn v. Washington Nat'l Ins. Co., 122 F.3d 266 (5th Cir. 1997), in which the Fifth Circuit analyzed the relationship between elimination endorsements and section 22:215.12. It found that an exception endorsement (also known as an elimination endorsement) is "qualitatively different from a pre-existing conditions limitation." Wynn, 122 F.3d at 269. The Court explained: "The pre-existing conditions limitation operates separately and independently from the exception endorsement because it applies to conditions for which an endorsement has not been written and/or which were not disclosed on the application." Id. The Fifth Circuit further noted, however, that the plaintiffs had not presented any evidence that the insurer had "consistently use[d] similar endorsements to exclude coverage for pre-existing conditions revealed on an application." Id.
Although the Louisiana Legislature repealed section 22:215.12 in 1997, the repeal only effects health insurance coverage issued on or after July 1, 1997. As plaintiff obtained her coverage in 1994, section 22:215.12 applies and provides, in pertinent part:
Any hospital, health, or medical expense insurance policy which is delivered or issued for delivery in this state on or after January 1, 1993, shall not deny, exclude, or limit benefits for a covered individual for losses due to a preexisting condition incurred more than twelve months following the effective date of the individual's coverage.
LA. REV. STAT. § 22:215.12.
Wynn does not stand for defendants's proposition that elimination endorsements are never subject to section 22:215.12. (Mot. Partial Dismissal at 4.) Plaintiff likewise misreads Wynn by arguing that is stands for the proposition that one instance of excluding coverage for a preexisting condition revealed on an application violates section 22:215.12. (Pl.'s Reply Mem. at 1-2.) Rather, Wynn suggests that evidence that an insurer consistently used elimination endorsements to avoid the reach of section 22:215.12 can create a "genuine issue of fact as to whether the endorsement is an "extension' of the pre-existing conditions limitation" in contravention of section 22:215.12 and Louisiana public policy. Id.
Here, Carthane cites deposition testimony in which James Linder, a CNA representative, says CNA used waivers of coverage (also known as elimination endorsements) to exclude coverage for pre-existing conditions. (Mem Opp'n Ex. F.) While it is unclear whether Mr. Linder means CNA "consistently" used these endorsements to extend the pre-existing conditions limitation in contravention of section 22:215.12, his testimony is open to that interpretation. Therefore, based on this record, there is a genuine issue of fact regarding CNA's practices vis-a-vis elimination endorsements. Accordingly, the Court denies defendants's motion for partial summary judgment.
III. Conclusion
For the foregoing reasons, defendants's motion for partial summary judgment is denied.