Birchard v. Blue Cross & Blue Shield of N.C., Inc.

• Decision Date: 17 May 2022
• Docket Number: COA21-729
• Citation: 873 S.E.2d 635
• Parties: Katherine BIRCHARD, Plaintiff, v. BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, INC., the North Carolina State Health Plan a/k/a North Carolina State Health Plan, a body politic and corporate, and the Board of Trustees of the State Health Plan for Teachers and State Employees, Defendant.
• Court: North Carolina Court of Appeals

873 S.E.2d 635

Katherine BIRCHARD, Plaintiff,

v.BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, INC., the North Carolina State Health Plan a/k/a North Carolina State Health Plan, a body politic and corporate, and the Board of Trustees of the State Health Plan for Teachers and State Employees, Defendant.

No. COA21-729

Court of Appeals of North Carolina.

Filed May 17, 2022

Barry Nakell, for plaintiff-appellant.

Gallivan, White & Boyd, P.A., by Christopher M. Kelly, Charlotte, and Kelsey N. Dorton, for defendant-appellee Blue Cross and Blue Shield of North Carolina, Inc.

TYSON, Judge.

¶ 1 Katherine Birchard ("Plaintiff") appeals the trial court's order dismissing her complaint for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted in favor of Blue Cross and Blue Shield of North Carolina, the North Carolina State Health Plan, and the Board of Trustees for the State Health Plan for Teachers and State Employees (collectively "Defendants"). We affirm.

I. Background

¶ 2 Plaintiff was a member of a medical insurance plan entitled "State Health Plan for Teachers and State Employees Enhanced 80/20 PPO Plan" ("Plan"). The Plan was made available to Plaintiff pursuant to N.C. Gen. Stat. §§ 135-48.1 et seq. and 135-75.2 (2021), because of her employment at the University of North Carolina School of Medicine as a licensed physician and faculty member of the Radiology Department.

¶ 3 The Plan is administered under a state contract with Defendant, Blue Cross Blue Shield of North Carolina ("BCBSNC"). BCBSNC is a private North Carolina corporation and serves as the contract administrator of the Plan. BCBSNC also separately provides medical insurance to other subscribers and members in the State of North Carolina. The Plan requires a member to request "certification from the Mental Health Case Manager" before accessing coverage and benefits for care in a "Psychiatric Residential Treatment Center." The Plan specifically states there is no coverage for services "that are: Not medically necessary."

¶ 4 Plaintiff requested certification from BCBSNC of coverage and benefits for her to be treated and monitored for severe depression and suicidal ideation

in a "Psychiatric Residential Treatment Center." Defendant denied Plaintiff's request in December 2017 after finding the request was "Not medically necessary" in accordance with Beacon NMNC 1.101.02. These standards require: first, the patient shows "symptoms consistent with a DSM or corresponding ICD diagnosis"; second, the "member's psychiatric condition requires 24-hour medical/psychiatric and nursing services and of such intensity that needed services can only be provided in an acute psychiatric hospital"; third, "[i]npatient psychiatric services are expected to significantly improve the member's psychiatric condition within a reasonable period of time so that acute, short-term 24-hour inpatient medical/psychiatric and nursing services will no longer be needed"; and, fourth, the "symptoms do not result from a medical condition that would be more appropriately treated on a medical/surgical unit."

¶ 5 Plaintiff filed her original complaint in superior court in January 2021 alleging breach of contract, in violation of N.C. Gen. Stat. § 59-3-220 (2021), and unfair and deceptive trade practices against only BCBSNC. BCBSNC filed motions to dismiss for lack of subject matter jurisdiction and failure to assert a claim by law pursuant to North Carolina Rules of Civil Procedure 12(b)(1) and 12(b)(6).

¶ 6 Plaintiff filed her First Amended Complaint on 14 April 2021 and added Defendants, North Carolina State Health Plan, and the Board of Trustees of the State Health Plan for Teachers and State Employees, as parties. Plaintiff alleged breach of contract, violation of N.C. Gen. Stat. § 59-3-220, unfair and deceptive trade practices, and bad faith refusal to pay health or medical insurance benefits against Defendants. Plaintiff never asserted any claim before the Industrial Commission. Defendants filed a motion to dismiss Plaintiff's First Amended Complaint for lack of subject matter jurisdiction and for failure to state a claim for which relief can be granted.

¶ 7 The trial court granted Defendants’ Rules 12(b)(1) and 12(b)(6) motions to dismiss. Plaintiff appeals.

II. Jurisdiction

¶ 8 Appellate review is proper pursuant to N.C. Gen. Stat. § 7A-27(b) (2021).

III. Issues

¶ 9 Plaintiff raises two issues of whether the trial court erred by: (1) dismissing her First Amended Complaint against Defendants under Rule 12(b)(1) of the North Carolina Rules of Civil Procedure for lack of subject matter jurisdiction in the superior court; and, (2) dismissing her First Amended Complaint against Defendants under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.

IV. Analysis

A. Standard of Review

¶ 10 A trial court's order granting a motion to dismiss under Rule 12(b)(1) and under Rule 12(b)(6) is reviewed de novo on appeal. Corwin as Tr. for Beatrice Corwin Living Irrevocable Tr. v. Brit. Am. Tobacco PLC , 371 N.C. 605, 611, 821 S.E.2d 729, 734 (2018).

B. Procedural Status

¶ 11 Plaintiff argues the superior court possessed jurisdiction to review BCBSNC's decision to deny her certification.

[Part 4. Health Benefit Plan External Review] applies to all insurers that offer a health benefit plan and that provide or perform utilization review pursuant to G.S. 58-50-61, the State Health Plan for Teachers and State Employees , and any optional plans or programs operating under Part 2 of Article 3A of Chapter 135 of the General Statutes.

N.C. Gen. Stat. § 58-50-75(b) (2021) (emphasis supplied).

¶ 12 The statutes provide several definitions applicable here. The standard of external utilization review provides "a covered person" may file for review within 120 days of notice and be assigned an independent review organization. N.C. Gen. Stat. § 58-50-80 (2021). A " ‘[u]tilization review organization’ [is] an entity that conducts utilization review under a managed care plan, but does not mean an insurer performing utilization review for its own health benefit plan." N.C. Gen. Stat. § 58-50-61(a)(18) (2021).

¶ 13 N.C. Gen. Stat. § 58-50-61(a)(12) provides,

"Medically necessary services or supplies" means those covered services or supplies that are:

a. Provided for the diagnosis, treatment, cure, or relief of a health condition, illness, injury, or disease.

b. Except as allowed under G.S. 58-3-255, not for experimental, investigational, or cosmetic purposes.

c. Necessary for and appropriate to the diagnosis, treatment, cure, or relief of a health condition, illness, injury, disease, or its symptoms.

d. Within generally accepted standards of medical care in the community.

e. Not solely for the convenience of the insured, the insured's family, or the provider.

For medically necessary services, nothing in this subdivision precludes an insurer from comparing the cost-effectiveness of alternative services or supplies when determining which of the services or supplies will be covered.

N.C. Gen. Stat. § 58-50-61(a)(12) (2021).

¶ 14 Under the statute: " ‘noncertification’ means a determination by an insurer or its designated utilization review organization that an admission, availability of care, continued stay, or other health care service has been reviewed and, based upon the information provided, does not meet the insurer's requirements for medical necessity[.]" N.C. Gen. Stat. § 58-50-61(a)(13) (2021).

¶ 15 BCBSNC is the Plan's designated "utilization review organization" ("URO") to which "a covered person" must seek review of all "medically necessary" care under the Plan. Id.

¶ 16 The General Assembly specifically determined the "utilization review" for coverage and benefits under the Plan is regulated by Chapter 58. See N.C. Gen. Stat. § 58-50-75(b) (2021). The General Assembly created an avenue to review external "utilization review" claims under the State Health Plan before the Industrial Commission. See N.C. Gen. Stat. § 58-50-61 ; N.C. Gen. Stat. § 143-291(a) (2021).

¶ 17 When this Court reviews a statute, "it is presumed the legislature acted with full knowledge of prior and existing law, and with care and deliberation. Every statute is to be interpreted in light of the ... laws as they were understood at the time of the enactment at issue." Dare Cty. Bd. of Educ. v. Sakaria , 127 N.C. App. 585, 588, 492 S.E.2d 369, 371 (1997) (citations and internal quotation marks omitted).

¶ 18 The parties stipulated this dispute involves contract claims and not negligence claims. "The legislature has the power to define the circumstances under which a remedy is legally cognizable and those under which it is not." Lamb v. Wedgewood South Corp. , 308 N.C. 419, 444, 302 S.E.2d 868, 882 (1983).

¶ 19 BCBSNC's role as the Plan's URO, conducted two rounds of internal reviews, Plaintiff then sought an appeal of those decisions via external review by an independent review organization, which was assigned pursuant to N.C. Gen. Stat. § 58-50-80(b)(5).

¶ 20 "An external review decision is binding on the insurer." N.C. Gen. Stat. § 58-50-84(a) (2021). "[A]n independent review organization ... shall not be liable for damages to any person for any opinions rendered during or upon completion of an external review conducted under this Part, unless the opinion was rendered in bad faith or involved gross negligence." N.C. Gen. Stat. § 58-50-89 (2021).

¶ 21 Plaintiff exhausted her remedies by seeking the external review by the independent review organization, and by failing to seek further review before the Industrial Commission. Plaintiff and BCBSNC are both bound by the decision to uphold the denial of coverage by the independent review organization. Plaintiff could have sought review with the Industrial Commission, if she sought to challenge the external independent review organization's decision. Plaintiff does not allege negligence or bad faith in the decision levied by the independent review...