Burgin v. Office of Personnel Management

• Decision Date: 07 August 1997
• Docket Number: No. 96-1289,96-1289
• Citation: 120 F.3d 494
• Parties: 21 Employee Benefits Cas. 2101 Virginia BURGIN; Joseph K. Burgin, Plaintiffs-Appellants, v. OFFICE OF PERSONNEL MANAGEMENT, Defendant-Appellee, and HealthPlus, Incorporated, Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 494

120 F.3d 494

21 Employee Benefits Cas. 2101

Virginia BURGIN; Joseph K. Burgin, Plaintiffs-Appellants, v. OFFICE OF PERSONNEL MANAGEMENT, Defendant-Appellee, and HealthPlus, Incorporated, Defendant.

No. 96-1289.

United States Court of Appeals, Fourth Circuit.

Argued May 6, 1997.

Decided Aug. 7, 1997.

ARGUED: Joseph Martin Gorvoy, Ferris, Hansen & Gorvoy, Greenbelt, MD, for Appellants. George Levi Russell, III, Assistant United States Attorney, for Appellee.

BRIEFED: Lynne A. Battaglia, United States Attorney, Baltimore, MD, for Appellee.

Before MURNAGHAN and NIEMEYER, Circuit Judges, and STAMP, Chief United States District Judge for the Northern District of West Virginia, sitting by designation.

Reversed and remanded by published opinion. Judge NIEMEYER wrote the opinion, in which Judge MURNAGHAN and Chief Judge STAMP joined.

OPINION

NIEMEYER, Circuit Judge:

We must determine in this case whether the United States Office of Personnel Management ("OPM") acted arbitrarily, in abuse of its discretion, or otherwise not in accordance with law in affirming the denial of health insurance coverage to a federal employee. The employee claimed coverage for his wife under a health plan that HealthPlus, Inc. issued pursuant to a contract with OPM to provide insurance in accordance with the Federal Employees Health Benefits Program. After HealthPlus denied coverage and the OPM affirmed the decision, the employee filed this action. On OPM's motion for summary judgment, the district court affirmed OPM's decision. We reverse and remand.

I

Joseph K. Burgin, a retired federal employee, and his wife, Virginia, were covered by health insurance provided pursuant to the Federal Employees Health Benefits Program. The health insurance in force during the period at issue in this case was provided by HealthPlus, Inc. pursuant to a contract it had with OPM for the benefit of federal employees.

In September 1993, Virginia Burgin suffered a cardiac arrest, and as a result of a lack of oxygen to her brain, she lapsed into a coma from which she never recovered. In December 1993, Mrs. Burgin was transferred from the hospital to the Regency Nursing and Rehabilitative Treatment Center ("Nursing Center") in Forestville, Maryland, where she remained until her death in September 1995.

In January 1994, Joseph Burgin made a claim to HealthPlus to pay for his wife's stay at the Nursing Center. He relied on the language of HealthPlus' policy that "[t]he Plan provides a comprehensive range of benefits with no limit as to dollars or days when full-time skilled nursing care is necessary and confinement in a skilled nursing facility is medically appropriate as determined by a Plan doctor. You pay nothing. All necessary services are covered." (Emphasis in original). HealthPlus, however, denied coverage, relying on a Plan exclusion for "custodial care, rest cures, domiciliary or convalescent care." It invited Burgin to submit additional medical reports in support of reconsideration.

Burgin then obtained a letter from Dr. George C. Hajjar, Mrs. Burgin's treating physician and a "Plan doctor." Dr. Hajjar stated:

[Mrs. Burgin] is fed via a gastrostomy tube, is given insulin injections twice a day, and breathes through a tracheostomy tube that requires suctioning several times a day. All of the above treatments are considered "skilled care." These treatments require the 24 hour supervision of a licensed nurse. Therefore, Mrs. Burgin does require "skilled care" rather than merely custodial care.

Burgin obtained a second letter from the Nursing Center, which reported Mrs. Burgin as suffering from anoxic encephalopathy secondary to cardiac arrest, seizure disorder, insulin dependent diabetes mellitus, coronary artery disease, and tracheostomy and gastrostomy tube placement and described eight separate procedures regularly required by Mrs. Burgin that under federal and state law must be performed by Licensed Practical Nurses under the supervision of the attending physician and Registered Nurses. The Nursing Center's letter also stated that Mrs. Burgin was considered to require skilled nursing care under the existing Medicaid and Medicare regulations.

When HealthPlus did not respond to Mr. Burgin's submissions and repeated claims for coverage, Burgin complained to the Maryland Insurance Administration. The Administration submitted Mrs. Burgin's records to an independent nursing evaluator associated with Sinai Hospital of Baltimore and obtained an appraisal of Mrs. Burgin's care needs. The evaluator wrote a letter concluding:

This patient, by virtue of receiving Insulin twice daily, in addition to management of a tracheostomy, foley catheter and a gastrostomy tube for nutrition and medications clearly falls within the criteria for skilled care.

What was not identified in her medical history, but no doubt is a very critical part of her plan of care is the neurological and cardiopulmonary monitoring and evaluation that must occur given that she is bedbound and unresponsive. She is also at risk for complications arising from compromised skin integrity resulting in decubitus ulcers. All of these activities are considered skilled.

There is no question that the care necessary to maintain an appropriate level of medical management must continue to be of a skilled nature.

The Maryland Insurance Administration sent a copy of this letter to HealthPlus, requesting reconsideration of their denial of coverage to the Burgins. HealthPlus responded that the Maryland Insurance Administration had no jurisdiction over this matter of federal employee health benefits coverage, and the Maryland Insurance Administration took no further action.

Finally, Mr. Burgin sought help from Congressman Albert Wynn, who intervened on behalf of the Burgins and appealed to OPM, forwarding to OPM the three letters obtained by Burgin about his wife's condition and her need for skilled nursing care. OPM then contacted HealthPlus, which responded by reaffirming its denial of coverage under the exclusion for custodial care. In a letter to OPM, HealthPlus stated its position:

[Care provided to Mrs. Burgin] is clearly custodial in nature as it primarily supports activities of daily living (feeding, bathing, turning, elimination of bodily waste etc.). This care is necessary because Mrs. Burgin is not capable of independently sustaining her bodily functions. The fact that the custodial services being provided, such as turning, feeding, passive range of motion exercises, skin care and the taking of vital signs, are performed by nursing or ancillary health care personnel does not change the essential nature of the services themselves; they remain custodial since they serve to support activities of daily living.

HealthPlus added that the Burgins would receive coverage for acute and emergency problems, such as pneumonia or a hip fracture, explaining, "This acute care would be covered because it would be definitive medical treatment provided for a specific condition which could be treated and resolved."

After considering HealthPlus' letter, Kenneth A. Lease, Chief of Health Benefits Division of OPM, wrote Congressman Wynn that OPM was affirming HealthPlus' denial of coverage for the Burgins. Lease stated that "[t]he issue in this case is whether Mrs. Burgin is receiving medically necessary skilled nursing care to aid her in her treatment, or custodial care designed primarily to assist her with activities of daily living, such as hygiene and nutrition." Lease then went on to repeat HealthPlus' position which concluded that the services being rendered to Mrs. Burgin were "primarily in support of activities of daily living."

On seeing Lease's letter, Burgin requested that OPM conduct a formal review and reconsideration. With his request, Burgin attached the three letters relating to Mrs. Burgin's condition and needs, two definitions of "skilled nursing care," and his wife's medical records. Without any formal hearing, for which the regulations make no provision, OPM reaffirmed HealthPlus' denial of coverage. Repeating its view that the proper inquiry was "whether Mrs. Burgin is receiving skilled nursing care designed to treat her condition so that she will get better, or whether the nature of her care is custodial; that is, care designed mainly to support her living functions," OPM stated that there was "no indication that the care is designed or likely to treat and solve her medical condition" and that it thus had "no contractual basis to compel the Plan to provide benefits." OPM also informed Burgin that he had exhausted his administrative review rights and was free to file suit in federal court.

Burgin filed this action against OPM directly, complying with OPM's regulation that suit not be brought against the private insurance carrier. See 5 C.F.R. § 890.107(c). On OPM's motion, the district court entered summary judgment for OPM, ruling that OPM's action in affirming HealthPlus' denial of coverage was not "arbitrary and capricious" and that there was no evidence that OPM's interpretation of the Plan was "plainly erroneous or inconsistent with the plain language of the Plan." The court concluded that it would not substitute its judgment for that of the agency, even if it would have reached a different conclusion. This appeal followed.

II

On the motion for summary judgment, the district court had before it only a sparse agency record composed of the health plan, three medical opinions supplied by Burgin, and the decisions of HealthPlus and the OPM employee authorized to review private carriers' coverage determinations. See 5 C.F.R. § 890.105(e). But the district court's review based only on the administrative record complied with the dictates of the Administrative Procedure Act, which states that a court's review of any final agency action must be made on the "whole record" that was before the agency, even in a case--such as that before us--in which the agency action was the...