Krauss v. Oxford Health Plans, Inc.

• Decision Date: 26 February 2008
• Docket Number: Docket No. 06-0343-cv.
• Parties: Daniel J. KRAUSS and Geri S. Krauss, Plaintiffs-Appellants, v. OXFORD HEALTH PLANS, INC., Oxford Health Plans (N.Y.), Inc. and Oxford Health Insurance, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

517 F.3d 614

Daniel J. KRAUSS and Geri S. Krauss, Plaintiffs-Appellants, v. OXFORD HEALTH PLANS, INC., Oxford Health Plans (N.Y.), Inc. and Oxford Health Insurance, Inc., Defendants-Appellees.

Docket No. 06-0343-cv.

United States Court of Appeals, Second Circuit.

Argued: February 7, 2007.

Decided: February 26, 2008.

Geri S. Krauss, Esq., New York, NY, Pro Se, for Plaintiffs-Appellees.^*

Peter P. McNamara, Rivkin Radler LLP, (Cheryl F. Korman, of counsel), Uniondale, NY, for Defendants-Appellants.

Before: WALKER and SACK, Circuit Judges, and DANIELS, District Judge.^**

SACK, Circuit Judge:

The plaintiffs, Geri S. Krauss and Daniel J. Krauss, wife and husband, are members of an employer-provided health care plan that is governed by the provisions of the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. ("ERISA"). The defendants, Oxford Health Plans, Inc., Oxford Health Plans (N.Y.), Inc., and Oxford Health Insurance, Inc. (collectively, "Oxford"), administer claims for benefits under the plan.

In April 2003, Geri Krauss was diagnosed with breast cancer. Shortly thereafter, she underwent a double mastectomy and bilateral breast reconstruction surgery. The surgical procedures were performed in a single operative session by two different, unaffiliated doctors, neither of whom was a member of the plan's provider network. Following the operation, Mrs. Krauss received care from private-duty nurses. The Krausses paid for both the surgery and post-operative care themselves and sought reimbursement for those expenses from Oxford. Oxford refused payment for one-fourth of the cost of the breast reconstruction surgery and all expenses incurred for private-duty nursing.

After exhausting available administrative appeals, the Krausses filed this lawsuit in the United States District Court for the Southern District of New York. They allege that Oxford's denial of full reimbursement for the bilateral surgery and private-duty nursing care violated the Women's Health and Cancer Rights Act, 29 U.S.C. § 1185b ("WHCRA"), as well as various ERISA provisions. They further allege that Oxford violated ERISA by failing to make certain required disclosures and failing to respond to various grievances in the manner and time periods set forth by their plan.

Following cross-motions for summary judgment, the district court (Colleen McMahon, Judge) ruled in favor of Oxford on all claims. Krauss v. Oxford Health Plans, Inc., 418 F.Supp.2d 416 (S.D.N.Y. 2005). Although we are not unsympathetic to the effects on the Krausses of the bureaucratic misadventures to which they were subjected by Oxford, we must, and do, nonetheless affirm.

BACKGROUND

In April 2003, Mrs. Krauss was diagnosed with breast cancer. Her doctors, who were not members of Oxford's provider network, recommended that she undergo a double mastectomy and bilateral breast reconstruction,¹ to be performed in a single surgical session. On May 5, 2003, Oxford "pre-certified" (i.e., approved in advance) the breast-reconstruction portion of the surgery,² stating that "[p]ayment for approved services [would] be consistent with the terms, conditions, and limitations of [Mrs. Krauss's] Certificate of Coverage, the provider's contract, as well as with Oxford's administrative and payment policies." Letter from Patricia Robik to Geri Krauss dated May 5, 2003. On May 13, 2003, Mrs. Krauss underwent bilateral mastectomy and reconstruction surgery. Following the surgery, upon the doctors' suggestion and the plaintiffs' request, private-duty nurses oversaw Mrs. Krauss's recovery.³

Plaintiffs' Health Care Plan

The Krausses were at all relevant times participants in an ERISA-covered employee health insurance plan called the "Freedom Plan — Very High UCR" (the "Plan"). The Plan was established and sponsored by Mr. Krauss's employer, and claims for benefits under the Plan were administered by Oxford. The Plan's terms are set forth in three documents — the Summary of Benefits, the Certificate of Coverage (for payment of physicians and other providers who were part of the Oxford network), and the Supplemental Certificate of Coverage ("Supplemental Certificate") (for out-of-network care). Because the Supplemental Certificate concerns the use of out-of-network providers including the surgeons who operated on Mrs. Krauss, it is the document of primary relevance for purposes of this appeal. A Plan member utilizing an out-of-network provider must herself pay a higher portion of her medical expenses from her own pocket than must a member receiving care from in-network providers.

Oxford limits its plans' costs for medical services by, inter alia, (1) restricting the services that the insurance plan covers; (2) imposing deductibles and coinsurance payments; and (3) paying medical expenses in accordance with a schedule of "usual, customary, and reasonable" ("UCR") fees for various medical services, Suppl. Certificate, Sec. I. ("How the Freedom Plan® Works"), subsec. 7. Charges in excess of the UCR rate or excluded from coverage by a plan, as well as the deductibles and coinsurance charges, are paid by the insured.

The Plan expressly excludes "[p]rivate or special duty nursing" from Plan coverage. Id. at Sec. IV ("Exclusions and Limitations"), ¶ 28. The Krausses had reached the Plan's annual limit on coinsurance and deductible charges at the time of Mrs. Krauss's surgery, so these charges did not reduce the amount of payments they received. They remained subject to the Plan's UCR schedule, however.

The Supplemental Certificate makes several references to the UCR schedule. The subsection entitled "Your Financial Obligations," for example, states:

A UCR schedule is a compilation of maximum allowable charges for various medical services. They vary according to the type of provider and geographic location. Fee schedules are calculated using data compiled by the Health Insurance Association of America (HIAA)[⁴] and other recognized sources. What We [sic] Cover/reimburse is based on the UCR.

Id. at Sec. I, subsec. 7. Section XII, "Definitions," provides further that the UCR charge is "[t]he amount charged or the amount We [sic] determine to be the reasonable charge, whichever is less, for a particular Covered Service in the geographical area it is performed." Id. at Sec. XII.

According to the Supplemental Certificate, after Plan members receive care from an out-of-network provider, they must pay for services themselves and file a claim for reimbursement with Oxford. Claims for services covered by the Plan are to be paid within sixty days of their receipt.

Plan members who wish to challenge the amount of their reimbursement may seek review through Oxford's grievance procedure. Under that procedure, members' written grievances are first addressed by Oxford's "Issues Resolution Department" — the "First-Level Appeal." Members who remain dissatisfied may appeal to Oxford's "Grievance Review Board" — the "Second-Level Appeal," and then to a committee appointed by the Board of Directors. See Certificate of Coverage, Sec. VI.A; Letter from Celeste Vangilder to Geri Krauss dated Dec. 1, 2003, at 2.

Plaintiffs' Claims History

Dr. Mark Sultan charged the Krausses $40,000 for Mrs. Krauss's breast reconstruction procedure and $200 for a pre-operation consultation. The private-duty nurses charged a total of $8,300 for her post-operative care.

The Krausses timely filed for reimbursement for both sets of services from Oxford. In response, on June 13, 2003, they received a check from Oxford in the amount of $30,200 — $30,000 for the double-breast reconstruction and the $200 consultation fee. The accompanying Explanation of Benefits ("EOB") did not explain why the procedure was not fully reimbursed. It stated only that the maximum allowable benefit was $30,200 and that "[t]his claim reflects industry standards for payment of services which include two surgical procedures." EOB dated June 13, 2003, at 1. Oxford did not explain the absence of reimbursement for the private-duty nursing.

On November 10, 2003, the Krausses filed a grievance with Oxford for the $10,000 of Dr. Sultan's fee and for the $8,300 cost for private-duty nursing that had not been reimbursed. By letter dated December 1, 2003, Oxford denied the Krausses' grievance as to the bilateral reconstruction surgery fee, "as the cpt code 19364-50x1[⁵] was paid at the usual and customary rate, because we have participating providers performing the procedure effectively, and there is no medical reason as to why to grant [sic] an exception outside the UCR...." Letter from Celeste Vangilder to Geri Krauss dated Dec. 1, 2003, at 1.

By letter dated December 3, 2003, Oxford notified the Krausses that it had referred the claim for the private-duty nursing care to its claims department. Oxford contends that it thereafter denied the Krausses' claim for private-duty nursing charges on the ground that private-duty nursing is not covered by the Plan, but the Krausses submit that they never received a report of Oxford's benefits determination in this regard.

On December 9, 2003, the Krausses, in two letters, requested additional information in aid of filing their "Second-Level" appeal regarding the unpaid portion of Dr. Sultan's operating fee. Oxford responded with three additional cursory denial letters dated December 11, 2003, January 21, 2004, and January 22, 2004. These letters stated, respectively, that in-network providers could have performed the surgery and that "there is no medical reason ... to grant an exception outside the UCR," Letter from Celeste Vangilder to Geri Krauss dated Dec. 11, 2003, at 1; that "[n]o additional payment will be forthcoming" because Oxford had determined the claim was paid "correctly at the [UCR]," Letter from Lorraine Paquette to Geri Krauss dated Jan. 21, 2004, at 1; and that, once again, "no additional payment [will] be forthcoming," this time because Oxford's "Medical Management Department confirmed that...