Opinion
CIVIL ACTION NO. 01-1244, SECTION "A" (1)
October 25, 2002
MINUTE ENTRY
Before the Court is a Motion for Summary Judgment on Plaintiff's Claim for Benefits (Rec. Doc. 73) filed by defendants La Madeleine, Inc. La Madeleine Associate Medical Benefit Plan ("the La Madeleine Parties" or "Defendants"). Plaintiff Leigh Ann Combe opposes the motion. The motion, set for hearing on September 11, 2002, is before the Court on briefs without oral argument. For the reasons that follow, the motion is DENIED.
Background
Plaintiff filed suit against Defendants after she was denied medical benefits under her employer's benefit plan. The plan at issue was an employee welfare benefit plan governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA"). Defendant La Madeleine, Inc. was Plaintiff's employer.
Plaintiff became employed by La Madeleine in April 1998 as a manager and was promoted to general manager a year later. Plaintiff enrolled for health benefits under the La Madeleine plan ("the Plan") effective January 1, 1999.
Long before Plaintiffs' employment with La Madeleine, in the late 1980's, plaintiff received a traumatic injury to her jaw. For nearly 10 years following this injury, plaintiff underwent various procedures intended to correct manifestations of the lasting effects of the injury.
In November 1999, Dr. John N. Kent, Plaintiff's oral surgeon, sent a letter to UICIA recommending that plaintiff undergo surgery because she had presented to him with "total ankylosis of mandible" and she was unable to move her jaw. Combe Exh. 1. In his letter, Dr. Kent explained that nine years earlier Plaintiff had undergone a procedure in which rib grafts from her chest were excised to replace her "mandibular condyles" but in 1993-94 a fusion developed between the heads of the rib graft necessitating further treatment at that time Id. Dr. Kent explained that Plaintiff had "gradually developed a reankylosis again between the rib grafts and muscle flaps over her mandible to the skull base" necessitating the surgery he was currently recommending. Id.
UICIA processes all medical claims on behalf of the ERISA plan.
In a letter to Dr. Kent dated November 15, 1999, UICIA pre-certified the recommended surgery as medically necessary. Combe Exh. 3. That same letter stated, however, that
[This letter does not guarantee claim payment. Actual benefits are determined once the claim is received in our office and are based on all plan provisions and maximums and on eligibility at the time services are rendered.
Thereafter, Plaintiff underwent surgeries on December 8, 1999, and April 5, 2000, pursuant to Dr. Kent's recommendation. Plaintiff submitted claims to UICIA and the Plan for benefits approximately totaling $119,626.90. However, the Plan paid only $8,158.05 and in an explanation of benefits dated May 17, 2000, informed Plaintiff that the "lifetime maximum benefit for this service has been reached." Combe Exh. 5. The La Madeleine parties later clarified their position that plaintiff's charges were TMJ (Temporomandibular Joint Syndrome) -related, and that the Plan dictates a maximum lifetime benefit for TMJ of $1,000.00. Combe Exh. 10. Defendants therefore concluded that Plaintiff had actually been overpaid by approximately $7500.00. On May 10, 2002, the Plan issued a formal letter of denial to plaintiff again asserting that her treatment was TMJ-related, and further asserting that she had not timely requested review of her claims. Combe Exh. 11.
This clarification was made by way of an April 19, 2001, letter from La Madeleine's general counsel and Plan administrator Harry J. Martin, Jr., to Jack E. Morris, counsel for Plaintiff. Combe Exh. 10. On March 19, 2001, plaintiff's counsel sent a letter to La Madeleine asking for inter alia written notice of denial of the claim along with reasons, review of the claim, and copies of all documents used in evaluating the claim. Combe Exh. 9. Mr. Morris threatened litigation if no response was received within thirty days. Mr. Morris had first written to La Madeleine on November 16, 2000, Combe Exh. 7, and on December 11, 2000, Mr. Martin promptly replied that a claims review was underway, Combe Exh. 8. Plaintiff heard nothing from Defendants until Mr. Morris wrote the second letter on March 19, 2001, threatening legal action. Suit was filed on April 24, 2001. La Madeleine then counterclaimed against Plaintiff for the $7500.00 that it claims it overpaid.
The La Madeleine Parties' Motion
The La Madeleine Parties' first argument in support of summary judgment is that Plaintiff failed to timely appeal the denial of benefits within the 60-day time limit specified in the Plan. The La Madeleine Parties point out that the Fifth Circuit consistently requires that ERISA claimants exhaust administrative remedies before filing suit to recover benefits. Plaintiff received notice On May 7, 2000, and June 7, 2000, that her claims were denied, and the Plan designates a 60-day period for filing of an administrative appeal, making the November 16, 2001, letter from Plaintiff's counsel untimely.
Defendants also point out that on April 15, 2002, Mr. Morris sent another letter to the Plan asserting additional claims for $20,375.00 in conjunction with the two 1999 surgeries. Those charges were not included in Mr. Morris' November 16, 2000, request for review and therefore Defendants argue that no administrative action was taken with respect to those charges.
The La Madeleine Parties argue that even if the appeal was timely, Plaintiff is still not entitled to benefits because the Plan Adminsitrator correctly determined that the surgeries were for TMJ-related treatment as that term is defined by the Plan. Moreover, even if the Administrator was incorrect in that determination, such an erroneous determination was not an abuse of discretion. The Supreme Court has held that the abuse of discretion standard applies where the Plan gives the administrator discretionary authority to construe the terms of the Plan. Applying the abuse of discretion standard, La Madeleine argues that the Plan Administrator's decision should be upheld.
Finally, the La Madeleine Parties move for summary judgment on their overpayment counterclaim against Plaintiff.
In opposition, Plaintiff argues that her request for review via Mr. Morris' letter was timely because the May 7, 2000, and June 7, 2000, denials did not comply with the specificity requirements of ERISA. Further, La Madeleine has failed to note that Plaintiff sent a hand-written letter to the Plan on June 14, 2000, asking about the status of her claims yet Defendants ignored her letter. Combe Exh. 13. Plaintiff did not amend her complaint to seek benefits until after the May 10, 2002, formal denial letter from the Plan.
Further, the Plan Administrator abused his discretion when he denied benefits because the $1000.00 lifetime maximum applies only to hospital room limits and not to TMJ-related treatment. Thus, the overall $1,000,000.00 plan limit is what applies to Plaintiff's charges. Plaintiff argues to the extent the $1000.00 limitation is ambiguous, it must be construed against the Plan and in favor of Plaintiff. Because Plaintiff relied on the ambiguous language of the Plan, is should be construed in her favor.
Further, the Administrator abused his discretion when he determined that Plaintiff's treatment was for TMJ because no medical evidence has been offered to confirm that assertion and Plaintiff's own expert has stated that her condition does not qualify as TMJ.
Finally, Plaintiff does not owe the Plan any reimbursement as she never received funds from the Plan. Rather, the Plan's only recourse is against those parties who did receive payment.
In reply, the La Madeleine Parties point out that even if the 60-day appeal period began to run on May 10, 2002, following that denial Plaintiff amended her complaint to seek benefits — she did not administratively appeal. Defendants also assert that Plaintiff has raised a new argument before this Court, i.e., that the $1000.00 TMJ limitation in the Plan applied only to hospital room rates. That argument was never raised to the Plan Administrator and under Fifth Circuit jurisprudence Plaintiff is precluded from raising it now. Moreover, the Plan is not ambiguous on this point. Finally, equity demands that the Plan obtain reimbursement from plaintiff for the overpayment.
Law and Analysis
1. Exhaustion off Administrative Remedies
ERISA contains no explicit exhaustion requirement. However, in Denton v. First National Bank, 765 F.2d 1295 (5th Cir. 1985), the Fifth Circuit adopted the common law rule that a plaintiff must generally exhaust administrative remedies before suing to obtain benefits wrongfully denied. Chailland v. Brown Root, Inc., 45 f.3d 947, 950 (5th Cir. 1995). The exhaustion requirement serves to provide a clear record of administrative action if litigation should ensue and strives to prevent every benefit claim from turning into a federal case. Hebert v. Aetna Life Ins. Co., 96 F. supp.2d 540, 542 (E.D. La. 1998) (quoting Hall v. National Gypsum, Co., 105 F.3d 225 (5th Cir. 1997)).
An ERISA welfare benefit plan must provide internal dispute resolution procedures for participants whose claims have been denied. Hebert, 96 F. Supp.2d at 541 (citing 29 U.S.C. § 1133). Federal law mandates that the plan provide adequate, written notice of the specific reasons for such a denial and must provide the participant a reasonable opportunity for a full and fair review of the decision denying the claim. Id. 29 U.S.C. § 1133 (claims procedures); see 29 C.F.R. § 2560.503-1 (claims procedure). "Congress' apparent intent in mandating these internal claims procedures was to minimize the number of frivolous ERISA lawsuits; promote the consistent treatment of benefit claims; provide a nonadversarial dispute resolution process; and decrease the cost and time of claims settlement." Duhon v. Texaco, Inc., 15 F.3d 1302, 1309 (5th Cir. 1994) (quoting Makar v. Health Care Corp., 872 F.2d 80, 83 (4th Cir. 1989).
La Madeleine's Summary Plan Description provides that a request for review of a denied claim must be directed to the Plan Administrator within 60 days of the notification of denial of benefits. La Madeleine Exh. A, UICIA at 433. That same provision states that the Plan shall notify the claimant of the decision upon review within 60 days, and that the written response shall cite the specific plan provisions upon which the denial is based. Id.
Considering the record as a whole, the Court concludes that Defendants' contention that Plaintiff failed to exhaust her administrative remedies is without merit. That Plaintiff might have failed to follow the administrative procedures point by point is of no moment given that the Plan Administrator had the opportunity to, and did in fact, conduct a full and complete review of Plaintiff's claim. The detailed denial letters that ultimately followed that review show that the Plan suffered no prejudice from Plaintiff's failure to strictly comply with the 60 day requirement, and Defendants point to none now. Therefore, all of the goals that the Fifth Circuit has recognized in requiring administrative exhaustion have been satisfied by the Administrator's review, and none of those goals would be served by dismissing Plaintiffs' suit at this juncture. In sum, the Court concludes that Plaintiff did exhaust her administrative remedies in accordance with Fifth Circuit mandates.
The Court also notes that before retaining counsel, Plaintiff wrote to La Madeleine's Director of Operations asking that the company respond in writing as to whether or not her medical claims would be paid but no one responded to her request. Combe Exh. 13. That letter was written on June 14, 2000, well within what La Madeleine considers to be the 60 day review period.
2. The Administrator's Determination
A denial of ERISA benefits by a plan administrator challenged under 29 U.S.C. § 1132 (a)(1)(B) is reviewed by the court 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." Duhon v. Texaco. Inc., 15 F.3d 1302, 1305 (5th Cir. 1994) (quotingFirestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989)). If the terms of the plan grant the administrator the authority to make a final and conclusive determination of the claim, then the denial is reviewed by the court under an abuse of discretion standard or arbitrary and capricious standard. Id. Thus, the only "summary judgment question" before the Court is whether the Administrator's denial of benefits should be upheld under the standard applicable to this case. Id.
Combe agrees that this Court is limited to the abuse of discretion standard of review because by the terms of the La Madeleine Plan its administrator was given the discretionary authority to interpret the Plan. In Wildbur v. ARCO Chemical Co., 974 F.2d 631, 637 (5th Cir. 1992), the Fifth Circuit explained that application of the abuse of discretion standard may involve a two step process. Under the first step, the Court determines whether the administrator has given the plan a legally correct interpretation. Id. In making this determination, a court will 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. at 637-38. If the Administrator's intepretation was legally correct then the inquiry ends and the denial is upheld. See id. at 638.
If, however, the court concludes that the administrator's interpretation is incorrect, the court must then determine whether the administrator abused his discretion. Id. An incorrect interpretation does not per se result in an abuse of discretion, so the court will look to three important factors in the analysis: (1) the internal consistency of the plan under the administrator's interpretation, (2) any relevant regulations formulated by the appropriate administrative agencies, and (3) the factual background of the determination and any inferences of lack of good faith. Id. An interpretation in direct conflict with the express language in the plan is a very strong indication of an abuse of discretion. See id.
La Madeleine's Plan Administrator determined that Plaintiff's claims were for treatment of TMJ. See Combe Exh. 11 at 2. He also determined that the Plan set a lifetime maximum benefit of $1,000.00 for treatment of temporomandibular joint syndrome CTMJ). Id. Thus, this Court's task is to examine under the abuse of discretion standard whether the Administrator's denial of benefits is to be upheld on the basis that 1) Plaintiff's treatment was for TMJ syndrome, as defined by the Plan, and 2) whether the Plan limits TMJ-related treatment to a lifetime maximum of $1000.00 worth of coverage.
The Plan defines TMJ syndrome as:
[T]he treatment of jaw joint disorders including conditions of structures lining the jaw bone and skull and the complex of muscles, nerves, and other tissues related to the temporomandibular joint. Care and treatment shall include, but are not limited to orthodontics, crowns, inlays, physical therapy and any appliance that is attached to or rests on the teeth.
Combe Exh. 6 at 29.
Defendants point to Plaintiff's medical records which they contend demonstrate that she had been treated over the course of several years prior to this most recent treatment for TMJ syndrome. (See discussion in the La Madeleine Parties' Memorandum in Support, at pp. 14-16, and the cites to the medical records contained therein.) While those medical records may be relevant to the issue of whether Plaintiff's most recent treatment was for TMJ syndrome, the characterization of those prior treatments is by no means conclusive of the issue. The only issue before the Court is the proper characterization of the treatment Plaintiff received on December 8, 1999, and on April 5, 2000.
Speaking directly to the proper characterization of this specific treatment, Dr. Kent, who performed the surgeries involved in this dispute, authored a letter to UICIA on October 24, 2000, in which he explains that Plaintiff's most recent treatment was not for TMJ syndrome, which he states is a "nonsurgical entity." Combe Exh. 4. He clarified that Plaintiff's most recent treatment was for "ankylosis of rib grafts to her skull base-those grafts being the ones that were used several years prior to reconstruct her mandibular condyles. Id. Dr. Kent is the only medical expert on record discussing the proper classification of the treatment at issue in this case.
The Court finds Dr. Kent's opinion persuasive in light of the literature regarding TMJ syndrome made part of the record. That literature explains that TMJ syndrome is somewhat of a nebulous concept that can manifest itself via a litany of symptoms. Further, research has yet to help understand the cause and course of TMJ diseases, and few treatments, of which there are over 50, have been validated. Defs.' Exh. B. at 390. The literature explains that insurance companies generally try to avoid covering the cost of TMJ-related claims because of the controversy over the causes and proper treatment, and due to the lack of scientific validation of TMJ therapies. Id. at 391.
Based on the discussion of TMJ syndrome contained in the record literature, and on Dr. Kent's explanation of the specific treatment Plaintiff underwent, the Court is convinced that the specific ailment that necessitated Plaintiff's treatment was not TMJ syndrome. Because TMJ syndrome is not defined with respect to any bright line rules, it is easy to see how the Administrator, a non-medical professional, might assume that Plaintiff's treatment was for TMJ syndrome, especially since TMJ syndrome can be caused by trauma to the face and can often display symptoms like those experienced by Plaintiff. Nevertheless, the Court concludes that the Administrator's determination that Plaintiff was treated for TMJ syndrome is not legally correct.
Of course, the Administrator's denial of benefits must nevertheless be upheld if the denial was not an abuse of discretion notwithstanding its legal incorrectness. Neither party has directed the Court's attention to any applicable administrative regulations that impact this determination nor does the Court discern any indicia of a lack of good faith on the part of the Plan. Thus, the Court will consider inter alia the internal consistency of the Plan under the Administrator's determination and whether the interpretation conflicts with the express terms of the plan.
Clearly, the Administrator's determination is not in direct conflict with the terms of the Plan because, as Plaintiff herself has recognized, the definition of TMJ contained in the Plan description is conceivably broad enough to encompass her treatment. Combe Opposition at 12. However, interpreting the Plan in such a way so as to characterize Plaintiff's surgeries as treatment for TMJ syndrome is troubling to the Court in various respects. For example, the Plan's cited examples for treatment of TMJ syndrome are orthodontics, crowns, inlays, physical therapy and any appliance that is attached to or rests on the teeth. Combe Exh. 6 at 29. Although the definition states that these enumerated examples are merely illustrative, the surgeries Plaintiff endured are unlike any of these listed treatments in both severity and invasiveness. In fact, Plaintiff's treatment for the ankylosis of the mandible that she presented with in 1999, which was caused by a degradation in the grafts she had received in 1991, is so radically different than the superficial non-invasive enumerated examples listed in the Plan, that the Court finds it difficult to conclude that the Administrator properly exercised his discretion when construing the terms of the Plan.
Moreover, the nebulous nature of TMJ syndrome, as explained in the literature that forms a part of the record, elucidates why the La Madeleine plan basically singled out TMJ syndrome for a specific lifetime maximum of $1,000.00. As the literature explains, there are very few "definites" where treatment for TMJ syndrome is concerned. Without a limitation, the Plan could have open-ended exposure to an endless list of potential treatments making it impossible to cover costs. The record makes clear, however, that there is nothing indefinite or nebulous about Plaintiff's treatment. Rather, Plaintiff's treatment was surgery for a specifically diagnosed failure of the rib grafts she received several years ago. This treatment, which the Court has already concluded was not for TMJ syndrome, triggers none of the ramifications which likely prompted the Plan to set the lifetime maximum on TMJ treatment in the first place. Thus, while La Madeleine was surely justified in broadly defining TMJ syndrome so as to limit its exposure in light of the nebulous nature of the disease, it was not only unfair but an abuse of discretion for the Plan Administrator to deny benefits to Plaintiff by invoking a limitation on coverage that was never likely intended to apply to the type of treatment Plaintiff endured.
In sum, the Court concludes that the Plan Administrator's decision to deny benefits was an abuse of discretion. Because the Court concludes that Plaintiff's treatment was not for TMJ syndrome, the Court need not address Plaintiff's argument that the $1,000.00 TMJ limit applied only to hospital room rates. Likewise, the Court need not address Defendants' claim for reimbursement. The La Madeleine Parties' motion for summary judgment is DENIED because they are not entitled to judgment as a matter of law. Plaintiff has not filed a cross motion for summary judgment.
Accordingly;
IT IS ORDERED that the Motion for Summary Judgment on Plaintiff's Claim for Benefits (Rec. Doc. 73) filed by defendants La Madeleine, Inc. La Madeleine Associate Medical Benefit Plan should be and is hereby DENIED.