Opinion
3:00cv1284-AH.
March 1, 2001.
MEMORANDUM OPINION AND ORDER
Pursuant to the written consents of the parties to proceed before a United States Magistrate Judge, and the District Court's Order of Transfer in accordance with 28 U.S.C. § 636(c) filed on July 19, 2000, and, came on this day to be considered Defendant Aetna Health Plans of North Texas, Inc. d/b/a/ Aetna U.S. Healthcare ("Aetna")'s' Motion for Summary Judgment filed on January 17, 2001, and Plaintiff Dana Morgan ("Morgan")'s Response thereto filed on February 14, 2001, and Aetna's reply filed on February 26, 2001, and the court finds and orders as follows:
Statement of the Case: This lawsuit stems from Aetna's decision to deny Plaintiff coverage for reduction mammoplasty surgery under the group insurance agreement between Aetna and the Better Business Bureau of Dallas. Plaintiff's health insurance coverage was provided by this plan. Coverage for Morgan's surgery was denied under Section 15 of the Plan, which specifically excludes coverage for "reduction mammoplasty."
The facts of this case are not in dispute. On December 15, 1997, Plaintiff's physician, Dr. Gregg M. Anigian ("Dr. Anigian"), wrote a letter to Aetna seeking precertification for reduction mammoplasty. The letter did not explain why Morgan needed the surgery, but merely recited Dr. Anigian's diagnoses, his recommendations of surgery, and the costs associated with surgery. See Defendant's Exhibit ("Def. Exh.") B-1, Defendant's Appendix ("App.") at 53. On February 23, 1998, Aetna denied the request, citing to Section 15 of the Policy, "Exclusions from Coverage" which specifically listed "reduction mammoplasty" as being a service excluded from coverage. Def. Exh. B-2, App. at 54. The denial was signed by Louis Dickey, M.D., the Patient Management Medical Director for Aetna. In the letter, Morgan was informed of the appeals process.
Morgan appealed the denial of precertification. On March 20, 1998, another of her physician's, Dr. Radie F. Perry, wrote to Aetna explaining that the surgery was not for cosmetic purposes but to correct back pain resulting from a car accident and that this pain was causing a functional impairment. Def. Exh. B-3, App. at 55. Aetna replied on May 13, 1998, once again denying precertification due to the Section 15 exclusion. Def. Exh. B-4, App. at 57. Ms. Morgan's appeal was reviewed by James Buckman, M.D., the Healthcare Medical Director, Patient Management Department West Central Region.
Standard of Review: Summary judgment is proper when pleadings and the evidence on file, along with any affidavits, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law. FED. R. CIV. PROC. 56(c). The party moving for summary judgment bears the burden of producing evidence to establish that there is no genuine issue of material fact with regard to an essential element of the nonmovant's case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986). Once the movant produces such evidence, the burden shifts to the nonmovant to produce evidence establishing each of the challenged elements of his case for which he will have the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552 (1986). In responding, the nonmovant must set forth specific facts which demonstrate that there is a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87, 106 S.Ct. 1348, 1355-56 (1986). Otherwise, summary judgment in favor of the movant is appropriate. Topalian v. Ehrman, 954 F.2d 1125, 1132 (5th Cir.), cert denied, 506 U.S. 825, 113 S.Ct. 82 (1992).
Discussion: 1. State Law Breach of Duty and DTPA Claims
Morgan has alleged state law claims against Aetna asserting breach of duty of good faith and fair dealing and claims under the Texas Deceptive Trade Practices Act ("DTPA"). Aetna argues that these claims are preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"). Plaintiff agrees that to the extent ERISA applies to this action, these claims are preempted.
The plan at issue clearly meets the test for an "employee welfare plan" governed by ERISA. There is also no real dispute that Morgan's efforts to recover medical benefits from Aetna "relate to an employee benefit plan" and "thus comes within the scope of ERISA's express preemption provision § 514(a) [ 29 U.S.C. § 1144(a)], which declares that ERISA "`supersedes any and all state laws insofar as they may now or hereafter relate to any employee benefit plan. . . .'" Ramirez v. Inter-Continental Hotels, 890 F.2d 760, 762-63 (5th Cir. 1989). Thus, Morgan's state law breach of duty and DTPA claims are preempted.
The test for determining whether a benefit plan established by an employer qualifies as an "employee welfare plan" under ERISA involves three factors: (1) whether a "plan" exists; (2) whether the plan falls within the safe harbor provision established by the Department of Labor; (3) when the plan satisfies the primary elements of an ERISA "employee benefit plan" — establishment or maintenance by an employer intending to benefit employees. Meredith v. Time Ins. Co., 980 F.2d 352, 354 (5th Cir. 1993).
2. Breach of Contract/ERISA Claim
In her original petition brought in state court, Morgan also brought a claim for breach of contract, asserting that Aetna was obligated to provide coverage for her reduction mammoplasty and in failing to do so, breached its contract with her. Morgan's claim, notwithstanding the state law label, is essentially one to recover benefits from an ERISA plan. Thus, it falls under ERISA's civil enforcement provision, § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), which provides in pertinent part:
A civil action may be brought —
(1) by a participant or beneficiary —
(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.
ERISA's "civil enforcement provisions operate to `recharacterize' . . . [state law claims for ERISA benefits] into actions arising under federal law." Degan v. Ford Motor Co., 869 F.2d 889, 893 (5th Cir. 1989); see also Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 67, 107 S.Ct. 1542, 1548 (1987); Ramirez v. Inter-Continental Hotels, 890 F.2d 760, 762 (5th Cir. 1989).
Aetna argues that the Policy granted it "full discretionary authority to make benefit and claim determinations" and it did not abuse its discretion in denying coverage to Morgan. A denial of ERISA benefits by a plan administrator is reviewed by courts under a de novo standard unless the plan gives the administrator "discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Meditrust Financial Services Corp. v. The Sterling Chemicals, Inc., 168 F.3d 211, 213 (5th Cir. 1999) (quoting Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948 (1989). When a plan grants such authority, a decision to deny coverage is reviewed under an abuse of discretion standard. Schadler v. Anthem Life Ins. Co., 147 F.3d 388, 394 (5th Cir. 1998). In determining whether there was an abuse of discretion, "`we analyze whether the plan administrator acted arbitrarily or capriciously.'" Sweatman v. Commercial Union Ins. Co., 39 F.3d 594, 600 (5th Cir. 1994) (quoting Salley v. E.I. DuPont de Nemours Co., 966 F.2d 1011, 1014 (5th Cir. 1992)). A "decision is arbitrary only if `made without a rational connection between the known facts and the decision or between the found facts and the evidence.'" Id. (quoting Bellaire General Hospital v. Blue Cross Blue Shield, 97 F.3d 822, 828 (5th Cir. 1996)). Under the "arbitrary and capricious" analysis, an administrator's decision that is supported by substantial evidence must be affirmed. Meditrust, 168 F.3d at 215. In conducting this review, the court is limited to the administrative record, except under limited exceptions. Vega v. National Life Insurance Services, Inc., 188 F.3d 287, 299 (5th Cir. 1999) (en banc).
The policy at issue grants such discretionary authority to the plan administrator: "Health Plan shall have full discretionary authority to make benefit and claim determinations pursuant to this agreement." Def. Exh. A-1, App. at 5. Thus, Aetna's decision to deny coverage is reviewed under an abuse of discretion standard.
Plaintiff asserts in her response brief to the summary judgment motion that Aetna failed to allege the plan gave it discretionary authority and thus review is under the de novo standard. Morgan is mistaken-Aetna did make such an allegation and the Policy's language supports its position.
Aetna argues that it did not abuse its discretion in denying coverage because the unambiguous terms of the policy provisions excluded coverage without exception for reduction mammoplasty. Morgan argues that although the contemplated surgery was cosmetic in nature, it was for medical reasons, rather than for solely cosmetic purposes, bringing it within coverage.
Where, as in the present case, the policy grants to the ERISA plan administrator "full discretionary authority to make benefit and claim determinations," the abuse of discretion standard pertains not only to factual determinations made, but to the administrator's interpretation of the contract provisions as well. See e.g., Wildbur v. Arco Chemical Co., 974 F.2d 631, 637-638 (5th Cir.), modified, 979 F.2d 1013 (5th Cir. 1992).
In determining whether the administrator's construction of the policy was legally correct the court is to consider: (1) whether the administrator has given the plan a uniform construction; (2) whether the interpretation is consistent with a fair reading of the plan; and (3) any unanticipated costs resulting from different interpretations of the plan. Id. (citing Jordan v. Cameron Iron Works, Inc., 900 F.2d 53, 56 (5th Cir.), cert. denied, 498 U.S. 939, 111 S.Ct. 344 (1990)). There is no evidence in the summary judgment record suggesting any lack of uniformity in the administrator's application of the policy provisions, nor is there any evidence relating to unanticipated costs.
In support of its argument, Aetna points to Section 15, which lists the excluded services, including reduction mammoplasty, without any exception of any kind. Since Morgan's surgery was reduction mammoplasty, it was therefore not a covered procedure.
Morgan argues that the Section 15 exclusion of reduction mammoplasty cannot be read in isolation from the rest of the Policy, and that Section 15 must be read in conjunction with Section 14 in order to give the true meaning to the contract's terms.
Section 14 lists and explains which services are covered under the Policy and Section 14(8) specifically deals with cosmetic surgery:
8. Cosmetic, Plastic and Reconstructive Surgery — Cosmetic, plastic, and reconstructive, surgery for the correction of congenital birth defects, and effects of disease or injury, either of which cause anatomical functional impairment when such surgery is reasonably expected to correct the condition, as determined by the Health Plan; breast reconstruction and surgically implanted breast prostheses subsequent to a masectomy.
Defendant's Exhibit A-2, Policy, App. at 41. However, reduction mammoplasty is not listed in Section 14(8).
The preamble to Section 15 reads as follows:
Coverage is not provided for any of the following. Any exclusion will not apply to the extent that Coverage is specifically provided in Section 14 of this Certificate or in any supplemental benefit Rider attached to the Agreement, or Coverage is required under applicable state or federal law.Id. at 45.
Section 15 also contains language excluding from coverage "Cosmetic, Plastic or Reconstructive Surgery", but goes on to explain that certain services are covered using language that mirrors that which is contained in Section 14(8). Since there is no exception to the exclusion from coverage for reduction mammoplasty, Aetna did not abuse its discretion in denying coverage for the anticipated surgery.
Absent a showing that the administrator's interpretation of the plan was incorrect, the inquiry ends because no abuse of discretion could have occurred. Spacek v. Maritime Ass'n, 134 F.3d 283, 292 (5th Cir. 1998).
Alternatively, even were it found that the administrator incorrectly interpreted the contract, such a finding would not per se warrant a finding of abuse of discretion. Id. Rather, the court must determine whether the incorrect interpretation constituted an abuse of discretion. In this second step, three factors are considered: (1) the internal consistency of the plan under the administrator's interpretation; (2) any relevant regulations formulated by appropriate administrative agencies; and (3) the factual background of the determination and any inferences of lack of good faith. Wildbur v. Arco Chemical Co., 974 F.2d at 638 (citing Batchelor v. Institutional Brotherhood of Electrical Workers Local 861 Pension Retirement Fund, 877 F.2d 441, 445-48 (5th Cir. 1989). For the reasons stated above, at pp. 5-6, there is no internal inconsistency in the administration's interpretation of the plan. Further, there are no pertinent administrative regulations to apply.
With respect to the third factor, Ms. Morgan relies on the letters sent to the plan administrator by her doctors. See Defendant's Exhs. B-1, App. 53 and B-3, App. 55-56. As to the former-Dr. Anigian's letter-there is nothing to indicate a medical need for the reduction mammoplasty. As to the latter-Dr. Perry's letter-although it opines that the procedure is medically appropriate and not strictly for cosmetic purposes, the letter neither cites any professional experience of the writer in which reduction mammoplasty has had an ameliorative effect on back pain nor any medical literature which describes such a procedure as constituting an accepted treatment to reduce or alleviate lower back pain. The conclusory nature of Dr. Perry's letter does not support any inference of lack of good faith on the part of the administrator's representative to establish a genuine issue of fact as to whether the denial of coverage constituted an abuse of discretion.
For the foregoing reasons, it is ORDERED that Defendants' Motion for Summary Judgment is GRANTED.
A copy of this order will be transmitted to counsel for the parties.