Brown v. Group Health Inc., 2007 NY Slip Op 51948(U) (N.Y. Sup. Ct. 9/25/2007), 113170/2005.
| Decision Date | 25 September 2007 |
| Docket Number | 113170/2005. |
| Citation | 2007 NY Slip Op 51948 |
| Parties | MELISSA BROWN, RICHARD CHAMORRO, JOAQUIN VINCENTE, SATNAM SINGH and SUSAN McPHERSON, Plaintiffs, v. GROUP HEALTH INC., Defendant. |
| Court | New York Supreme Court |
In this breach of contract action, defendant Group Health Incorporated (GHI) moves for an order granting summary judgment and dismissing the complaint. Plaintiffs oppose the motion, which is granted in part and denied in part.
Plaintiffs Melissa Brown, Joaquin Vincente, Satnam Singh, and Susan McPherson were insured under a group insurance contract between the City of New York and GHI1 providing for health insurance benefits to City employees and retirees.2 The health insurance benefits under the group contract are set forth in a Comprehensive Benefit Plan (the Plan) contained in a booklet furnished to plaintiffs and others insured under the group contract.
Paragraph one of the booklet states, inter alia, that
Plaintiff Richard Chamorro is covered by a self-funded Employee Retirement Income Security Account (ERISA) plan. It is a welfare benefit plan that is sponsored by the Hotel Employees and Restaurant Employees International Union Welfare Fund (HEREIU).3 GHI is the contracted claims administrator under the HEREIU welfare plan.
During 2004, plaintiffs received medical care and treatment on separate days from a medical practice group known as NeuroAxis Neurosurgical Assoc., PC (NeuroAxis), and were charged the following amounts: Brown, $32,614.20; Vincente, $74,664.80; Singh, $140,612.85; McPherson, $42,381.40; Chamorro, $28,266.60. Subsequent to their respective treatments, plaintiffs submitted claims for the services to GHI for reimbursement. As NeuroAxis was not a member of the GHI network, GHI reimbursed Brown, Vincente, Singh, McPherson, and Chamorro according to its non-participating provider schedule, respectively, in the following amounts; $6,743.29, $17,408.40, $54,258.00, $16,000, and $8,400.80, amounts significantly less than those charged by NeuroAxis. (Exhibit A to Defendant's Motion for Summary Judgment). In an attempt to recover the difference, plaintiffs provided GHI with copies of the invoices and health claims toward the services and supplies they received from NeuroAxis. Despite plaintiffs demands, GHI has not remitted any further payments toward the medical care and services they received (id.).
As a result, plaintiffs commenced this lawsuit, alleging breach of contract for GHI's failure to pay the usual and customary cost of treatment and thereby making plaintiffs liable to NeuroAxis in amounts equal to the difference between the amount charged by NeuroAxis and the amount of reimbursement.4
GHI argues that it is entitled to summary judgment because plaintiffs voluntarily chose to utilize the services of non-participating providers, that is physicians who were not members of the GHI network, and that GHI reimbursed each of the plaintiffs in accordance with the terms of their respective Plan benefits for out-of-network providers. GHI points out that under the Plan, each plaintiff's reimbursement is based upon a scheduled amount, as determined by GHI, and not upon a concept of "usual and customary costs" as plaintiffs contend.
GHI further asserts that Chamorro's claims should be dismissed because: (1) Chamorro failed to exhaust his administrative remedies prior to filing this action, and (2) GHI is not the proper defendant in the Chamorro action because GHI was not the insurer under the HEREIU benefits plan, nor was it designated as the "plan sponsor" or "plan administrator.5"
Plaintiffs contend that GHI is not entitled to summary judgment because: (1) GHI failed to adjudicate their claims in accordance with the terms of the Plan as amended in July 1999 as the amendment detailed a change in the reimbursement methodology concerning "non-participating" providers from 100% of the "allowed charge" to the new rate of 100% of all "reasonable and customary allowances"; (2) the terms "reasonable and customary" have been construed in the case law to mean either the usual charge of the provider, or the usual charge of the provider as against the charge made by other providers in the locality; and (3) the terms "reasonable and customary" or "usual and customary" are ambiguous and must be construed in favor of the plaintiffs.
Plaintiffs contend that Chamorro's claim is properly before this court as: (1) a court has discretion to excuse the failure to exhaust administrative remedies where an appeal would have been futile; (2) that state and federal courts have concurrent jurisdiction over claims involving the recovery of benefits; and (3) GHI acted as a fiduciary under the circumstances herein.
It is undisputed that at the time the services in question were rendered, plaintiffs Brown, Vincente, Singh, and McPherson were insured in accordance with the terms of the Plan and that they utilized a non-participating provider. The determination of this motion turns on the construction of the Plan.
The Plan provides:
(emphasis supplied)
(Exhibit C, page 5 to Defendant's Motion for Summary Judgment). Section Four of the Plan provides the following:
(emphasis supplied).
(Exhibit C, page 12 to Defendant's Motion for Summary Judgment). Section Four further provides:
(emphasis supplied).
Allowed Charges are also defined in Section Four of the Plan. It provides:
"Allowed Charges are the various scheduled amounts which GHI will reimburse for covered services rendered by non-participating providers. The Allowed Charges schedules may vary depending upon the type of covered service you receive, and the applicable level of benefits.
Allowed Charges are based upon data collected by GHI and agreed to by the City of New York.
Allowed Charges for basic benefits for covered services which are rendered by non-participating providers are based upon 1983 procedure allowances. Some allowances have been increased from time to time. The allowed charge may be less than the fee charged by a non-participating provider. You must pay any difference between the allowed charge and the non-participating provider's fee as well as any applicable cost sharing provision.
. . . There are different Allowed Charge schedules that apply to excess hospitalization coverage, catastrophic coverage and ambulance coverage"
(emphasis supplied).
(Exhibit C, page 9 to Defendant's Motion for Summary Judgment).
As stated above, GHI calculated and paid plaintiffs benefits based upon GHI's non-participating provider schedule in accordance with the allowed charges for all services provided by NeuroAxis.
While GHI argues that the payments are consistent with the allowed charge in GHI's schedule, plaintiffs rely on an amendment to the Plan evidenced by a letter from GHI to Plan members dated in July 1999. The letter provides in part:
"Dear City of New York Employees or Non-Medicare Eligible Retirees:
We are pleased to announce a number of significant improvements to your Empire Blue Cross Blue Shield and GHI Comprehensive Benefits Plan (CBP).
Through the joint efforts of the City of New York Office of Labor Relations and The City's unions, represented by the Municipal Labor Committee, you and your eligible dependents will enjoy the following program enhancements: . . . Catastrophic Deductible Reduction The catastrophic deductible has been reduced from $3000 to $1500 per person per calendar year. Once a member has incurred $1,500 in non-participating provider out of pocket expenses, GHI's catastrophic benefit will reimburse a member at 100% of reasonable and customary allowances, as determined by GHI"
(emphasis supplied, including bold).
Exhibit D to Defendant's Motion for Summary Judgment).
Here, the parties disagree as to the meaning of the paragraph in the July 1999 letter with the heading "Catastrophic Deductible Reduction." GHI argues that this paragraph must be read in conjunction with the provision of the...
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