Opinion
CAUSE NO. IP00-1119-C-B/S
October 24, 2003
ENTRY ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND MOTION TO STRIKE EVIDENCE
Defendant, John Alden Life Insurance Company ("JALIC"), issued a Certificate of Group Insurance to Arkanoff Painting, Inc. in October of 1995. The certificate provided health insurance coverage for Frederick and Sandra Arkanoff as well as their children. Frederick and Sandra adopted two children: Emily came into the family from Korea in 1996 and Katelyn also from Korea in 1997. The Arkanoffs brought suit against JALIC alleging that JALIC breached its contractual obligation to reimburse certain medical expenses incurred in connection with medical treatment received by the young girls. The suit was initially filed in Hendricks Superior Court but was removed to this Court on the basis of federal preemption under the Employment Retirement Income Security Act of 1974 ("ERISA").
Since arriving in the United States, Emily and Katelyn have faced various health problems requiring that they undergo significant amounts of physical therapy. Pursuant to the terms of a rider to the JALIC insurance certificate, the insured must obtain certification of the medical necessity of certain medical care via what is known as the Utilization Review Program ("U.R. Program") in order to receive benefits (payment of the covered expenses).
The Arkanoffs sought and received such a certification for physical therapy following Emily's tendon lengthening surgeries in March and July of 1998. Physical therapy sessions for Emily were approved through mid-April of 1999. At that point, approval of thirteen additional sessions was sought, but only seven were approved as medically necessary through the U.R. Program.
As of June, 1997, Katelyn had begun her physical therapy due to developmental problems which later led to a diagnosis of cerebral palsy. She also had several surgeries beginning in 1998 and physical therapy followed those operations. During the summer of 1998, JALIC, apparently without any previous determination by the U.R. Program office, forwarded Katelyn's certification request for seventy-seven physical therapy sessions to the American Physical Therapy Association ("APTA") for review, resulting in a finding by APTA that the visits were medically necessary.
JALIC is based in Minnesota and typically sends its requests for physical therapy peer reviews to the local chapter of the APTA in Minneapolis. Plaintiffs argue that the use of a local Minnesota chapter of the APTA and some language on the cover sheets accompanying the review request and documentation somehow demonstrate an inherent bias against the insured and in favor of JALIC. We find no merit in this argument. There is nothing inherently prejudicial in the use of a local chapter of a nationally recognized professional organization to conduct a peer review (where called for under the plan), nor does the transmittal language appear to be anything more than that — transmittal language. We will not infer a "home town bias" in this professional setting without substantially more evidence than has been submitted here.
In May of 1999, pre-certification of twenty additional physical therapy visits for Katelyn was sought. Again, JALIC sent the request to APIA for review. On May 13, 1999, APTA recommended that Katelyn receive thirteen of the twenty physical therapy requested visits. On that same date, after learning from Emily's physical therapist that JALIC had approved only seven additional sessions of therapy for Emily, Mrs. Arkanoff wrote to JALIC to appeal its decision and raise questions regarding the manner in which JALIC had handled therapy requests for Katelyn as well. In response, JALIC sent the appeal of its determination on Emily's request for physical therapy to APTA for review. This review resulted in a recommendation that Emily receive nine (two more than the U.R. Office had agreed to) of the thirteen requested physical therapy sessions through December 1999. Despite the increase, this decision was not well received by the Arkanoffs, who, in July of 1999, registered complaints with both JALIC and the Indiana Department of Insurance.
JALIC sought a second review by APTA on Katelyn's request following receipt of additional documentation, which prompted no change from the recommendation made previously by APTA that the authorized number of sessions be reduced from the number requested. Included in each of the APTA recommendations was a reference to the need for the Arkanoffs to establish a home therapy program. JALIC incorporated the APTA recommendations into its final decision on the certification requests. From the record it appears that the Arkanoffs secured all the prescribed physical therapy recommended by their doctors and therapists; their response to JALIC's denial of benefits was the filing of this litigation.
THE PLAN LANGUAGE
The Arkanoffs do not contest that the JALIC insurance certificate/policy is a benefit plan governed by ERISA (though they do indicate some exasperation with their agent's failure to inform them of this fact). The language of the plan controls our review of a decision to deny benefits. The key provisions applicable to this case include the following:
Covered Medical Charges
Charges must be Medically Necessary and incurred by You, Your insured Dependent, while insured. . . . Covered Medical Charges include charges:
. . .
19. For rehabilitative therapy rendered by a licensed Physician or by a Licensed Physical Therapist, Occupational Therapist or Speech Therapist to restore function lost due to an illness or injury.
Medically Necessary and Medical Necessity means that a service, supply, or medicine is necessary and appropriate for the diagnosis or treatment of a covered Illness or Injury based on generally accepted current professional medical standards. A service, supply or medicine will be considered Medically Necessary if it meets all the following criteria:
1. it is an appropriate and necessary treatment for the diagnosis or symptoms;
2. it is not in excess of that level of care that is needed to provide safe, adequate and appropriate diagnosis or medical treatment;
3. it is not Experimental or Investigational, or part of a treatment plan that is considered to be Experimental or Investigational for research purposes;
4. the diagnosis or treatment of the Illness or Injury is in accordance with the generally accepted current medical standards; and
5. it is not provided primarily as a convenience to the patient, the patient's family or the provider of care.
The fact that any Physician may prescribe, order, recommend or approve a treatment, service supply or medicine does not, of itself, make the treatment, service, supply or medicine Medically Necessary as defined by this Certificate.
U.R. PROGRAM PROVISIONS U.R. Program means the utilization review program administered by Us or by the utilization review management service We designate (referred to as the U.R. Office). The program provides:
1. Review. Review is performed for . . . certain outpatient diagnostic tests, therapies, and rehabilitative programs; before admission, performance, or acquisition.
2. Concurrent Review: Reviews are performed for . . . rehabilitative programs during the course of treatment.
3. Discharge Planning: When necessary, arrangements are made to facilitate the earliest possible discharge or completion of Your course of treatment.
The U.R Office, upon notification, will determine (in consultation with Your Physician) whether or not a Hospital Confinement, surgery, or other medical care is Medically Necessary. The U.R. Office will Certify all such medical care that is determined to be Medically Necessary or suggest other care options that may exist for treatment of the condition. . . . Any medical care or confinement that is not determined to be Medically Necessary will not be Certified. The U.R. Office will notify You promptly of its determination. It will also notify the Hospital and Your Physician. If Your Physician does not agree with the decision of the U.R. Review Coordinator, the case will be automatically reviewed at a higher level. This secondary review, or peer review, will be done by a Physician who is an advisor to the U.R. Office. If the attending Physician or insured wishes to contest the informal review, a formal review can be initiated by writing an appeal to the U.R Office within 30 days after the initial Certification (or non-certification). Standards for review are based on recommendation of the American Medical Association and other nationally recognized standards.
DISCUSSION AND APPLICATION OF THE LAW
In ERISA actions which challenge the denial of benefits, we review de novo the decisions of the plan administrators (in this case JALIC), except when the plan gives the administrator discretion to interpret plan terms or otherwise to determine benefits eligibility. Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). JALIC does not challenge the propriety of a de novo review here.When construing insurance plans governed by ERISA, we are guided by the federal common law developed with regard to contract interpretation. McNeilly v. Bankers United Life Assurance Co., 999 F.2d 1199, 1201 (7th Cir. 1993). This requires us to interpret the terms consistent with their ordinary and popular meanings as would a person of average intelligence and experience. Id. Further, any ambiguity is to be construed strictly in favor of the insured Brewer v. Protexall, Inc., 50 F.3d 453, 457 (7th Cir. 1995).
JALIC seeks summary judgment affirmance of its decision not to approve or pay for all the physical therapy sessions on the grounds that they were not medically necessary pursuant to the terms of the plan. In ruling on a motion for summary judgment, we review the record and draw all reasonable inferences in a light most favorable to the non-moving party. Del Raso v. United States, 244 F.3d 567, 570 (7th Cir. 2001). Only factual disputes which have a bearing on the outcome of the lawsuit, in light of the substantive law, will preclude summary judgment. JPM, Inc. v. John Deere Indus. Equip. Co., 94 F.3d 270, 273 (7th Cir. 1996).
It is uncontroverted that JALIC's denial of certification and payment for all of the therapy sessions for both Emily and Katelyn was based, almost entirely, upon the recommendations made by the APTA reviewer. The Arkanoffs take issue with the fact that the review was not conducted by a physician and that there is nothing in the record which would clearly establish the credentials of whomever did conduct the review. Prior to the issuance of this entry, but subsequent to the initial briefs and submission of the claims records, we requested that JALIC supplement the record relative to the identity and the credentials of the individual or individuals who performed the APTA review. JALIC now has informed us that the reviewer in all instances was one Stephanie Lunning, a physical therapist registered with the APTA. This brings us squarely to the issue foretold by our earlier entry: was JALIC required to have the insured's request for certification of the physical therapy sessions reviewed by a Physician?
In providing this information, JALIC cited several cover sheets with the claims records that accompanied correspondence from APTA to JALIC. The cover sheets indicated that the correspondence came from the local APTA chapter "Stephanie Lunning — Peer Review Director." Although these references might suggest that the reviews had been conducted by Ms. Lunning, it does not establish with any reliability what her credentials are, whether or not she was in fact the reviewer or whether she was simply transmitting the results of reviews performed by others. However, because JALIC's representation that Ms. Lunning is a fully credentialed physical therapist who performed all the reviews does not alter our analysis, we will accept the representation as true for purposes of this entry.
There is no question that the terms of the plan required the Arkanoffs to pursue certification of the prescribed physical therapy sessions, which they did. When Mrs. Arkanoff learned of the denial of certification for all of Emily's sessions, she sought to appeal that determination. At that time, JALIC, acting on its own, had already forwarded to APTA the latest request for future therapy sessions for Katelyn. Both the initial "in-house" decision on Emily's request and the decision adopting the review recommendations from APTA on Katelyn's request were submitted again to APTA, with whatever additional materials the Arkanoffs or their medical professionals had provided. However, we do not view JALIC's submission to the APTA as comporting with the appeal provisions set out in the plan.
Tracking the language of the plan under the U.R. Program Provisions, the first step the U.R. Office is required to take is to make a determination of medical necessity in consultation with the insured's physician. We have not been alerted to any part of the record which establishes that the U.R. Office did or did not consult with Emily or Katelyn's treating physicians at this juncture. But, even assuming that the request for additional physical therapy came from or included consultation with the girls' physician(s), we are left with a more serious concern. After notification by JALIC of the non-certification decision and alternative care options, Mrs. Arkanoff lodged an appeal, in response to which JALIC forwarded the matter to APTA for further review.
JALIC claims that the plan does not require a review by a consulting physician unless the insured's physician is the person asking for the review. JALIC contends that only if a physician requests the review does the Plan call for "Teer Review" by a physician; if the insured requests the review, then a "Formal Review" pursuant to nationally recognized standards suffices. JALIC says that this "formal review," pursuant to national standards, is what occurred in response to Mrs. Arkanoff' s request for an appeal of the physical therapy certification denials for Emily and Katelyn. The language at issue in the plan provides as follows:
Of special note is the reference in claims records by both the APT A and JALIC personnel which refer to APTA's review as a "Peer Review," as opposed to a "Formal Review" as JALIC now maintains.
If Your Physician does not agree with the decision of the U.R. Review Coordinator, the case will be automatically reviewed at a higher level. This secondary review, or peer review, will be done by a Physician who is an advisor to the U.R. Office. If the attending Physician or insured wishes to contest the informal review, a formal review can be initiated by writing an appeal to the U.R Office within 30 days after the initial Certification (or non-certification). Standards for review are based on recommendations of the American Medical Association and other nationally recognized standards.
The first sentence provides that if the insured's physician disagrees with an initial determination it will be reviewed at a "higher level." It doesn't mention "informal review" or "peer review," but does imply that some type of notification from the insured's physician is required The second sentence uses the pronoun "this" in front of the words "secondary review" which clearly suggests it is referring to the review referenced in the first sentence. It then describes this secondary review as being "peer" and states that it will be conducted by a physician. It is the third sentence that yields the most confusion, describing how the physician or insured can instigate a "formal review" or appeal of the "informal review." But, what constitutes an "informal review" is not explained Is it the initial determination (mentioned in the first sentence of the paragraph) performed by the U.R. Review Coordinator? Is it the "secondary review" or "peer review" mentioned in the second sentence? These queries establish that the paragraph is patently ambiguous, though it seems to us that "informal" best describes the initial review by the U.R. Review Coordinator, or whomever else might be delegated the task of reviewing initially the certification request. "Secondary", "peer" and "formal" seem better to describe a review on appeal performed by someone more experienced or expert than the party who conducted the first review.
Applying the well-established rules of interpretation, requiring that the ordinary meanings be assigned to words and phrases as they would be understood and used by a reasonable individual with an average education and also by construing strictly any potential ambiguities in favor of the insured, we conclude that there are only two levels of review provided for and anticipated by the Plan language. The initial review of the request for certification is properly referred to as the "informal review," which either the insured or the attending physician may challenge on appeal. If an appeal is taken (within 30 days of the decision after the initial review) a second, "formal review" must be conducted by a physician consultant engaged by the U.R. Office. JALIC's attempt to distinguish between "peer review" and "formal review" is simply not consistent with or supported by the Plan language.
In this case, Mrs. Arkanoff asked for a formal review. That request should have resulted in a "formal review" conducted by a physician. The formal review was not conducted by a physician. Therefore JALIC did not meet its obligation under the plan and the decision being appealed to this court was not in compliance with the terms of the plan. Accordingly, JALIC is not entitled to summary judgment.
We caution the plaintiffs at this juncture relative to their stated expectation that "formal reviews" must be conducted by a physician who has actually examined the girls. That is not required by the plan language.
In McGraw v. Prudential Insurance Company of America, 137 F.3d 1253 (10th Cir. 1998), the Tenth Circuit Court of Appeals reviewed a summary judgment which had been entered in favor of the insurer. Plaintiff McGraw had sought reimbursement of the costs of physical therapy, pursuant to the terms of the medical benefit plan afforded her by her husband's employer. The district court affirmed the denial of benefits based on a lack of medical necessity. Having available to it a much more fully developed medical record than we have in this case and applying an arbitrary and capricious standard of review, the Tenth Circuit held that entry of summary judgment had been inappropriate, noting that Prudential's in-house doctor had based his negative recommendation regarding the physical therapy costs on an understanding that the plan required that the desired medical assistance serve to improve a patient's medical condition. However, the Court of Appeals noted that the medical necessity definition in the plan did not require that a "needed service" improve the medical condition in order to be "medically necessary". McGraw's physical therapy apparently assisted in slowing the degenerative process and the development of progressively worse symptoms. The Court opined that treatments which assisted in maintaining the status quo could be regarded medically necessary under the plan. Id. at 1259-60.
Accordingly, the Tenth Circuit in McGraw reversed the grant of summary judgment in favor of Prudential, reasoning that the decision below had been based on an unreasonable interpretation of the plan's terms, thus making the insurer's decision arbitrary and capricious. Id. We find the McGraw decision well reasoned and applicable here. It was unreasonable for JALIC to have concluded that it was not required to conduct a formal review utilizing the expertise of a physician prior to rendering its final determination not to certify or pay for all the physical therapy sessions sought for Emily and Katelyn. Our de novo review here which is broader than the arbitrary and capricious standard utilized in McGraw, allows us to hold with little difficulty that JALIC is not entitled to summary judgment in its favor.
MOTION TO STRIKE
JALIC has moved to strike numerous exhibits which were submitted by the Arkanoffs in support of their summary judgment response. JALIC offers two bases to support its motion. First, JALIC argues that Exhibits 2, 3, 5, 6, 7, 8, 9, 11, 12, 17, 18 and 19 are outside the administrative record that was available to JALIC at the time it reviewed the Arkanoffs' request for certification. Second, JALIC argues that Exhibits 2 and 3 should be stricken for the additional reason that they were obtained through discovery efforts previously ruled impermissible by the Court.
We deal with the latter ground first: we disagree with JALIC's characterization of Exhibits 2 and 3 as being fruits of discovery barred by a previous order of the Court. In Magistrate Judge Shields' order of November 15, 2001, the Arkanoffs' request for leave to tender a non-party request to APTA was denied as untimely under the schedule set in the case management plan. Though, in part, denominated as interrogatory responses, Exhibits 2 and 3 to the Arkanoffs' response to JALIC's motion for summary judgment appear to be a somewhat unconventional method of offering affidavit type testimony from the treating physicians. As noted below, these exhibits have not been relied upon by the Court in reaching its determination on the motion for summary judgment. Further, the manner in which they were submitted, as signed and sworn hand-written answers to questions posed regarding treatment and recommendations, is not as clear, and therefore not as helpful to the Court as affidavit testimony. However, Exhibits 2 and 3 are not inadmissible fruits derived in violation of a previous order and deserving to be stricken on that basis.
The Seventh Circuit Court of Appeals permits district courts in conducting a de novo review, to include evidence outside of the record before the plan administrator, if inclusion of such materials is necessary to allow for an informed decision. Casey v. Uddeholm Corp., 32 F.3d 1094, 1099 (7th Cir. 1994). It is therefore a matter of discretion on the part of the district judge and a tool available to assist in rendering an efficient and just result. See, e.g. Bowman v. Reliance Standard Life Insurance Co., 2003 WL 1524476 (N.D. Ill. 2003). With respect to our decision denying JALIC's Motion For Summary Judgment, it was unnecessary to rely on any of the exhibits challenged in the motion to strike filed concurrently by JALIC. In addition, many of these exhibits were not submitted with a sufficient foundation or other indicia of reliability to be admissible, as required by the Fed.R.Civ.P. 56 and the Federal Rules of Evidence. Therefore, for purposes of this ruling we grant JALIC's Motion To Strike. We do not address whether the same or similar evidence would be admissible in any other context or future stage of this litigation.
CONCLUSION
JALIC'S Motion to Strike Exhibits is GRANTED and Exhibits 2, 3, 5, 6, 7, 8, 9, 11, 12, 17, 18 and 19 to Plaintiffs' Response to Summary Judgment accordingly are so stricken from the record. JALIC's Motion For Summary Judgment is DENIED for the reason that the decision to deny plaintiffs the benefits requested under the plan was made in a manner inconsistent with the terms of the plan.IT IS SO ORDERED.