Blueshield v. State Office of Ins. Com'R, 33069-5-II.

• Decision Date: 14 February 2006
• Docket Number: No. 33069-5-II.,33069-5-II.
• Citation: 131 Wn. App. 639,128 P.3d 640
• Court: Washington Court of Appeals
• Parties: Regence BLUESHIELD, a Washington nonprofit corporation, Appellant, v. STATE of Washington OFFICE OF the INSURANCE COMMISSIONER, Mike Kreidler, Respondent.

128 P.3d 640

131 Wn. App. 639

Regence BLUESHIELD, a Washington nonprofit corporation, Appellant, v. STATE of Washington OFFICE OF the INSURANCE COMMISSIONER, Mike Kreidler, Respondent.

No. 33069-5-II.

Court of Appeals of Washington, Division 2.

February 14, 2006.

COPYRIGHT MATERIAL OMITTED

Jason Wayne Anderson, Timothy James Parker, Carney Badley Spellman PS, Seattle, WA, for Appellant.

Elizabeth Christina Beusch, Robert M. McKenna, Attorney General's Office, Olympia, WA, for Respondent.

VAN DEREN, A.C.J.

¶ 1 Regence Blueshield appeals the trial court's decision that the Office of the Insurance Commissioner (OIC) was justified when it disapproved of Regence's proposed pharmacy rider, form RBS-56, because the contract did not comply with the Diabetes Cost Reduction Act of 1997 (DCRA).¹ Regence argues that (1) annual benefit limits are a permissible cost-sharing provision under the statute's plain language; and (2) its statutory interpretation is correct in light of ejusdem generis,² legislative history, case law, and other authority. Holding that the proposed pharmacy rider is not a cost-sharing provision as the plain language of the DCRA contemplates, and that it improperly eliminates pharmacy coverage for diabetes treatment, we affirm the OIC's disapproval of Regence's form RBS-56.

I. FACTS

¶ 2 Regence provides healthcare benefit contracts to individuals and groups. In August 2001, Regence submitted a proposed pharmacy rider form (RBS-56) for approval as required by RCW 48.44.070³ to the OIC.

¶ 3 RBS-56 proposed a less expensive pharmacy plan providing 50 percent prescription coverage for the first $4,000 of annual prescription costs. The plan provided that Regence would match the subscriber's 50 percent co-pay up to $2,000 per year. Meaning, the subscriber would pay $2,000 and Regence would match it. But after the $4,000 cap was met, the costs of all the subscriber's prescriptions (including diabetes supplies) would be paid solely by the subscriber. RBS-56 specifically stated:

BENEFIT MAXIMUM. Benefits for Prescription Drugs as described below will be provided to an annual maximum of $2,000.

COPAY. The Member will be responsible to pay the Copay percentage specified below for each prescription or refill under the Benefits of this Section.

Approved Pharmacies and Mail Order Service. . . . 50% of the Allowed Amount.

. . . .

PHARMACY BENEFITS. Prescription Drugs and other covered items obtained at an approved pharmacy will be provided after the Member has paid the Copay . . . Prescription Drugs furnished by an approved pharmacy will be limited to a 34-day supply, except as follows: (1) Certain drugs, including but not limited to . . . diabetes test strips . . . may be limited to a lesser supply as indicated on the Member's prescription or as determined by the Company.

Admin. Record (AR) at 141-42.

¶ 4 The OIC disapproved this form and referred the matter to an administrative law judge (ALJ) for a hearing at Regence's request. In support, Regence submitted the declaration of Mary Mauceri, the Benefit Development manager for Regence. Mauceri stated that many health insurance contracts include annual benefit limits. She cited to limits placed on such things as chemical dependency treatment, skilled nursing facilities, and home health care. Regence also presented evidence that the average RBS-56 enrollee would pay $996.23 in annual prescription drug costs.

¶ 5 The OIC submitted a declaration from Steve Bieringer, the National Advocacy Field Director for the American Diabetes Association. Bieringer stated that annual prescription costs for diabetics varied greatly and that a cap on benefits would harm those who had to use insulin to manage the disease, as their annual costs for insulin and other diabetes management supplies was closer to $3,300 per year.

¶ 6 The OIC also submitted a declaration from Donna Dorris, an OIC employee. Dorris stated that benefit caps like the one in RBS-56 were not customary in 1997, when the legislature enacted RCW 48.44.315.⁴ Further, she stated that "annual caps [are not] `cost-sharing' provisions as that term is commonly understood and used in the health care arena." AR at 260. She stated that copayments, coinsurance, and deductibles are the commonly-understood and accepted cost-sharing methods.

¶ 7 The ALJ heard arguments in May 2003, and issued an order in August 2003, ruling that the cost-sharing referred to in the DCRA meant "to divide and parcel out in shares; apportion." AR at 152. The ALJ concluded that, while the statute lists three specific methods of cost-sharing (copayments, coinsurance, and deductibles), it does not indicate whether those three methods are exclusive. Furthermore, the statute used the term "may," indicating that it is permissive in nature. AR at 153. And thus, Regence's annual benefit limit fit the meaning of cost-sharing within the statute because it was "essentially the mirror image of a deductible." AR at 153.

¶ 8 The OIC subsequently rejected the ALJ's determination and issued a final order disapproving RBS-56, finding that it violated the DCRA. It found that:

[a]nnual maximum benefit limits are specifically authorized under some sections of Washington's Insurance Code. The DCRA provides only, however, that Coverage required under this section may be subject to customary cost-sharing provisions established for all other similar services or supplies within a policy.

AR at 137. And with the three typical examples of cost-sharing, the plan member is "responsible for a definite, finite, and fairly foreseeable amount of the costs of the necessary health care services." AR at 138.

¶ 9 Regence appealed to Thurston County Superior Court, which upheld the OIC's final order. The trial court noted that health care service contractors have the option of providing pharmacy coverage and, if they provide it, they must offer benefits for diabetes supplies and equipment.

¶ 10 Regence appeals.

II. ANALYSIS

¶ 11 Regence argues that the OIC erroneously interpreted the DCRA to exclude cost limits as a cost-sharing provision and that annual benefit limits are a permissible cost-sharing method under the statutes plain language because annual limits are (1) within the definition of cost-sharing; (2) consistent with the DCRA's purposes; and (3) consistent with the cost-sharing provisions. It further argues that (1) ejusdem generis; (2) legislative history; (3) case law; and (4) other authorities support its statutorial interpretation. The OIC counters that "[a]n internal maximum benefit limit is not similar to any of the three traditional methods of cost-sharing" and, where the legislature intended to allow both cost-sharing provisions and internal maximums on a mandated benefit, it has stated so expressly in the statutory language. AR at 138.

I. Standard of Review

¶ 12 RCW 34.05.570 governs judicial review of an agency order. We may grant relief only if the party challenging the agency order shows that the order is invalid for one of the reasons specifically set forth in the statute. RCW 34.05.570(1)(a), (3). Regence asserts that the commissioner's final order erroneously interprets and applies the law. RCW 34.05.570(3)(d).

¶ 13 Statutory construction is a question of law, which we review de novo under the error of law standard. City of Pasco v. Pub. Employment Relations Comm'n, 119 Wash.2d 504, 507, 833 P.2d 381 (1992). The error of law standard "allows the reviewing court to essentially substitute its judgment for that of the administrative body, though substantial weight is accorded the agency's view of the law." Franklin County Sheriff's Office v. Sellers, 97 Wash.2d 317, 325, 646 P.2d 113 (1982). "[A]lthough a commissioner cannot bind the courts, the court appropriately defers to a commissioner's interpretation of insurance statutes and rules." Credit Gen. Ins. Co. v. Zewdu, 82 Wash.App. 620, 627, 919 P.2d 93 (1996). And we will not weigh the evidence or substitute our judgment regarding witness credibility, for that is the agency's province. Affordable Cabs, Inc. v. Emp. Sec. Dep't, 124 Wash.App. 361, 367, 101 P.3d 440 (2004). Furthermore, we accord substantial deference to agency views when an agency determination is based heavily on factual matters, especially factual matters that are complex, technical, and close to the heart of the agency's expertise. Hillis v. Dep't of Ecology, 131 Wash.2d 373, 396, 932 P.2d 139 (1997). We give great weight to the statutory interpretation laid down by the executive agency charged with their enforcement. Glaubach v. Regence Blueshield, 149 Wash.2d 827, 834, 74 P.3d 115 (2003).

¶ 14 Our obligation is to give effect to legislative intent. State v. J.P., 149 Wash.2d 444, 450, 69 P.3d 318 (2003). Where a statute uses plain language and defines essential terms, the statute is not ambiguous. McFreeze Corp. v. Dep't of Revenue, 102 Wash.App. 196, 200, 6 P.3d 1187 (2000). Moreover, if the statutory language is clear the court may not look beyond that language or consider legislative history but should glean the legislative intent through the statutory language. C.J.C. v. Corp. of the Catholic Bishop of Yakima, 138 Wash.2d 699, 708, 985 P.2d 262 (1999). In addition, a court "cannot add words or clauses to an unambiguous statute" but must apply the statute as written. J.P., 149 Wash.2d at 450, 69 P.3d 318; (quoting State v. Delgado, 148 Wash.2d 723, 727, 63 P.3d 792 (2003)); Enter. Leasing, Inc. v. City of Tacoma Fin. Dep't, 139 Wash.2d 546, 552, 988 P.2d 961 (1999).

II. Plain Language of the Statute

¶ 15 Both Regence and the OIC argue that the statute is unambiguous and that we should only apply its plain language to determine the meaning of "cost-sharing provisions."

¶ 16 Regence argues that RBS-56's annual benefit limits are within the meaning of "cost-sharing" under RCW 48.44.315(3) because the benefit limits are commonly used within the insurance industry and are consistent with the DCRA's purpose and...