Coonce v. Aetna Life Ins. Co.

• Decision Date: 06 November 1991
• Docket Number: No. 90-0487-CV-W-1.,90-0487-CV-W-1.
• Citation: 777 F. Supp. 759
• Parties: Tarra Lynne COONCE, et al., Plaintiffs, v. AETNA LIFE INSURANCE CO., et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

777 F. Supp. 759

Tarra Lynne COONCE, et al., Plaintiffs, v. AETNA LIFE INSURANCE CO., et al., Defendants.

No. 90-0487-CV-W-1.

United States District Court, W.D. Missouri, W.D.

November 6, 1991.

COPYRIGHT MATERIAL OMITTED

Timothy Brownlee, Crew, Smart, Whitehead & Waits, Kansas City, Mo., for plaintiffs.

John W. Cowden, Peter F. Travis, and Brian E. Howard, Baker & Sterchi, Kansas City, Mo., for defendant Aetna.

Mark D. Herbert, Sullins, Johnston, Rohrbach & Magers, Houston, Tex., for defendant San Marcos Treatment.

ORDER

WHIPPLE, District Judge.

Five motions are pending before this court. They are intervenor plaintiff San Marcos Treatment Center's Motion for Partial Summary Judgment, filed May 31, 1991; defendants' Motion for Partial Summary Judgment on the Claims of Plaintiff Tarra Lynne Coonce, filed June 14, 1991; defendants' Motion for Summary Judgment on Intervenor San Marcos Treatment Center's Complaint in Intervention, filed June 14, 1991; intervenor plaintiff San Marcos Treatment Center's Motion for Leave to File First Amended Complaint in Intervention, filed September 4, 1991; and plaintiff Tarra Lynne Coonce's Motion for Leave to File First Amended Complaint, filed October 21, 1991.

For the reasons set forth below, San Marcos Treatment Center's motion for partial summary judgment will be denied, defendants' motion for partial summary judgment on plaintiff Coonce will be granted, defendants' motion for summary judgment on San Marcos Treatment Center will be granted in part and denied in part, San Marcos Treatment Center's motion to file its First Amended Complaint will be granted in part and denied in part, and plaintiff Tarra Lynne Coonce's motion to file her First Amended Complaint will be denied.

I. BACKGROUND

This action arises under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Plaintiff Tarra Lynne Coonce ("Tarra") challenges the decision of defendants Trustees of Sickness and Accident Fund Local 235 GCIU ("Trustees") and Aetna Life Insurance Co. ("Aetna"), denying a claim for medical benefits under a group health insurance plan.

Since 1978, Tarra has been employed by TransAmerica Color Systems, Inc. As a benefit of her employment, Tarra is insured as a participant under a group health care plan. Tarra's minor daughter, Tina Marie Coonce ("Tina"), is also an insured participant under the plan. The plan is administered by the Trustees. The Trustees are responsible for making initial determinations regarding what level of benefits a participant is entitled to under the plan. Aetna is an agent of the Trustees with respect to the plan. Aetna is responsible for making final determinations regarding what level of benefits a participant is entitled to, as well as processing and paying claims submitted thereunder. The insurance plan is subject to the requirements of ERISA.

Prior to 1985, Tarra's daughter Tina began receiving psychiatric treatment on an out-patient basis. She subsequently received in-patient treatment. Prior to June of 1986, plan participants were reimbursed in full for in-patient treatment of "mental and nervous disorders" up to a lifetime cap of $1 million. In June of 1986, the Trustees amended the plan benefits, reducing reimbursement for in-patient mental health care to eighty percent. Notice of the change was provided to plan participants. Tarra received notice of the change in coverage sometime during 1986. Dep. of Tarra Lynne Coonce at 25. In July of 1989, the Trustees again amended the benefits for mental health coverage by reducing the lifetime cap from $1 million to $80,000.00. Additionally, the Trustees put a limit on the number of days a plan participant could be confined for mental health care on an annual basis. Before the amendment, there was no limit on the number of days per confinement. The only limitation was that the confinement had to be approved (pre-certified) by Aetna prior to admission. After July 1, 1989, plan participants were limited to thirty days in-patient treatment in any one calendar year. Pre-certification remained a requirement.

In the spring of 1989, Tina was receiving in-patient care at a facility located in Kansas City, Missouri. In May of that year, Tarra sought to transfer Tina to plaintiff San Marcos Treatment Center ("San Marcos"),¹ a facility located in San Marcos, Texas. Between the months of May and July of 1989, in a series of telephone conversations participated in by representatives of San Marcos, Aetna, and the Trustees (union), the parties sought to determine what level of coverage Tina would be entitled to in light of the scheduled changes in plan benefits.² Specifically, the parties sought to determine whether the reduction in the lifetime cap and the limit on the number of days per confinement would apply to Tina, given that she would be receiving treatment for an ongoing condition. Dep. of Barbara Manzullo at 283; Dep. of Beth Cathcart at 73-74.

Sometime during the month of June, Aetna representative Barbara Manzullo ("Manzullo") advised San Marcos representative Beth Cathcart ("Cathcart") that Aetna would pre-certify a two-week stay at San Marcos. Dep. of Manzullo at 135. However, a question remained as to whether there would be a limitation on the number of days Tina could be confined for treatment.³ On July 18, 1989, Cathcart was advised by Manzullo that Tina's confinement would be conditioned solely on obtaining the necessary pre-certification and that no day limit would be imposed. Pre-certification would be contingent upon a finding of "medical necessity." Dep. of Cathcart at 82; Dep. of Manzullo at 261-62.

On the same day Cathcart received this information from Manzullo, she completed a San Marcos Benefit Certification form to confirm all the oral representations which had been made to her regarding Tina's insurance coverage. Where the form asked for information regarding the time limit on coverage, Cathcart typed "per certification." Where the form asked for information regarding the dollar limit on coverage, Cathcart typed "one million."⁴ Cathcart sent the form by certified mail to the union. Dep. of Cathcart at 86-87. She sent the form to the union's office because she had been advised that bills and verification of insurance matters should be routed to that office. Id. The union received the benefits verification form; it did not forward a copy of the form to Aetna. Id. The form was not returned to San Marcos.

On July 24, 1989, Tina was admitted to San Marcos for treatment. On the same day of her admission, Tarra assigned her interest in insurance benefits to San Marcos. The assignment form, which was provided by San Marcos, stated:

Acceptance of third party Insurance Carrier benefits by The San Marcos Treatment Center for partial or full payment of the hospital charges incurred by patients of The San Marcos Treatment Center is contingent upon the assignment of benefits to the hospital by the policy owner/holder.

Assignment means that benefits which are available under the policy will be paid directly to The San Marcos Treatment Center.

....

I hereby assign, transfer and set over to The San Marcos Treatment Center, as its interest may appear under my insurance policy, out of any such benefits that I may be due.

After Tina completed her two-week stay at San Marcos, Aetna refused to certify any additional days of confinement. Despite Aetna's decision not to approve any additional days, Tina remained at San Marcos until her release in November of 1990.

This suit was filed on May 25, 1990, following exhaustion of the internal appeals process. In her six-count petition, Tarra raises the following claims: 1) Count I: claim for civil enforcement under 29 U.S.C. § 1132(a)(1)(B); 2) Count II: claim for breach of fiduciary duty by the Trustees for their decision in June of 1986 to reduce the level of reimbursement from 100% to 80% for in-patient care after it had "accrued, vested and attached"; 3) Count III: claim for vexatious refusal to pay under Mo.Rev.Stat. § 375.420; 4) Count IV: claim for breach of contract; 5) Count V: claim for breach of contract arising from certain oral representations made by Aetna to San Marcos regarding what coverage Tina had under the plan; and 6) Count VI: claim for breach of fiduciary duty by Aetna for refusing to reimburse, on a 100% basis, claims for in-patient care submitted after June 1986.

In September of 1990, San Marcos sought leave of court to intervene as a party in the present action. The court granted San Marcos leave to intervene on December 11, 1990. In its six-count petition, San Marcos raises the following claims: 1) Count I: various claims under the Texas Deceptive Trade Practices-Consumer Protection Act and Insurance Code (statutory claims for misrepresentation); 2) Count II: claim for breach of contract; 3) Count III: claim for breach of the duty of good faith and fair dealing; 4) Count IV: claim for negligent misrepresentation; 5) Count V: claim for equitable estoppel; and 6) Count VI: claim for civil enforcement under 29 U.S.C. § 1132(a)(1)(B).

II. DISCUSSION

A. Standard of Review

A movant is entitled to summary judgment under Rule 56(c) of the Federal Rules of Civil Procedure "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."

The moving party bears the burden of proof. Aetna Life Ins. Co. v. Great Nat'l Corp., 818 F.2d 19, 20 (8th Cir.1987). When considering a motion for summary judgment, the court must scrutinize the evidence in the light most favorable to the non-moving party, according the non-moving party the benefit of every factual inference and resolving all doubts as to the facts or existence of any material fact against the moving party. United States v. Conservation Chemical Co., 619 F.Supp. 162,...