Crawford v. Blue Cross Blue Shield of La.

• Decision Date: 03 November 2000
• Docket Number: No. 99 CA 2503.,99 CA 2503.
• Citation: 770 So.2d 507
• Parties: John Felder CRAWFORD, II v. BLUE CROSS BLUE SHIELD OF LOUISIANA.
• Court: Court of Appeal of Louisiana — District of US

770 So.2d 507

John Felder CRAWFORD, II v. BLUE CROSS BLUE SHIELD OF LOUISIANA.

No. 99 CA 2503.

Court of Appeal of Louisiana, First Circuit.

November 3, 2000.

COPYRIGHT MATERIAL OMITTED

Luke Edwards, Lafayette, Counsel for Plaintiff/Appellee John Felder Crawford, II.

Stephanie B. Laborde, Baton Rouge, Counsel for Defendant/Appellant Louisiana Health Service and Indemnity Company d/b/a Blue Cross Blue Shield of Louisiana.

Before: CARTER, C.J., WEIMER, and KLINE,¹ JJ.

WEIMER, J.

The plaintiff in this action, John Felder Crawford, II, sought penalties and attorney's fees pursuant to LSA-R.S. 22:657 for the failure of defendant, Blue Cross/Blue Shield of Louisiana (Blue Cross) to pay timely medical expenses incurred in a hospital stay that was pre-certified by the insurer. The trial court ruled in plaintiffs favor, awarding a penalty of $27,202.22 and attorney's fees in the amount of $5,000.00.

Blue Cross perfected this appeal. Mr. Crawford answered the appeal. For the following reasons, we amend the judgment and affirm as amended.

BACKGROUND

The events that preceded the filing of this lawsuit were stipulated to by the parties prior to trial, as follows:

1. Blue Cross Blue Shield of Louisiana issued a policy of major medical health insurance to John Felder Crawford, II, bearing policy number 498 748X1.

2. On November 4, 1995, Crawford was in an automobile accident wherein he suffered injuries, for which he refused treatment at the scene.

3. On December 7, 1995, Crawford was hospitalized at St. Frances Cabrini Hospital in Alexandria. On December 9, 1995, Crawford was transferred to Lafayette General Medical Center. Crawford was discharged from Lafayette General Medical Center on December 20, 1995.

4. Claims for the medical bills incurred as a result of these hospitalizations were submitted to Blue Cross for payment under the provisions of his policy.

5. The primary diagnosis provided by Lafayette General Medical Center to Blue Cross for these claims was "300.11," which is listed in the DSM-II under the general classification of "Neurotic Disorders, Personality Disorders, and other Nonpsychotic Mental Disorders," within the subclassification of "Hysteria."

6. The claims were initially denied on the basis that the hospital charges for which payment was being sought constituted charges for Mental and Nervous Conditions, which were excluded from coverage under the terms of his policy.

7. The appeal provisions in Crawford's policy instruct an insured to direct questions about the payment of a claim to:

Customer Service Center

Blue Cross and Blue Shield of Louisiana P.O. Box 98029 Baton Rouge, Louisiana 70898-9029

8. In response to the initial denial, Crawford and others on his behalf contacted Blue Cross by telephone and written correspondence requesting payment of the disputed claim. The correspondence was addressed to:

Ms. Cathe Thoman²

Blue Cross-Blue Shield of Louisiana Subrogation/Worker's Compensation Specialist

Liability and Recovery Unit P.O. Box 98029 Baton Rouge, Louisiana 70898-9029

9. Crawford filed the instant suit on April 4, 1996.

10. Upon review of the denial of these claims, Blue Cross reversed its prior denial based upon the medical records in its possession at that time, and paid Crawford's claims in accordance with the terms of his policy.

11. Despite the Mental and Nervous Condition diagnosis contained on the original claim submitted by the Hospital, Blue Cross ultimately determined that the entire hospitalization was covered under Crawford's policy, when it reviewed additional medical information in its possession, other than some disallowed charges which are not in dispute in these proceedings.

12. The amount which was in dispute on these claims totals $26,030.22.³

13. The claims for medical expenses which were formerly in dispute in these proceedings are now considered by all parties to have been paid in full.

14. All documents listed as exhibits on the pre-trial order and/or exchanged between the parties at least thirty (30) days prior to trial will be deemed to be authentic and copies shall be accepted in lieu of the originals. All other objections to admissibility are reserved for trial.

This matter went to trial on June 28, 1999. On July 12, 1999, the trial court issued oral reasons for judgment, which included the following factual findings:

1. Mr. Crawford was admitted to St. Frances Cabrini Hospital⁴ in Alexandria, Louisiana, with a diagnosis of postconcussion syndrome, and he was later transferred to Lafayette General Medical Center.

2. Dr. James Gengelbach, the medical director of Blue Cross, pre-certified Mr. Crawford to the hospital as having coverage. During the pre-certification process, Dr. Gengelbach concluded hospitalization was a medical necessity, irrespective of what the lay diagnosis was.⁵

3. In releasing Mr. Crawford, the hospital submitted to Blue Cross a request for payment that was denied based upon the fact that the codes submitted indicated the hospitalization was for matters that were not covered by the Blue Cross policy.

4. "Immediately and subsequent to" the denial, plaintiffs counsel submitted materials to Blue Cross, and Blue Cross was contacted and called. All of the letters were forwarded to the claims office, but there is no clear indication of what was done with the requests after that. Blue Cross had no official policy for appealing a denial of benefits, but the appeal could be oral or written.

5. On February 28, 1996, a demand letter was sent, which letter was "sufficient to put Blue Cross/Blue Shield on notice that plaintiff wanted his money."

6. Subsequent to the demand letter, all matters regarding the claim were forwarded to the Blue Cross legal department.⁶

7. It was not until July of 1996 that the medical director of Blue Cross considered the issues regarding payment after receiving materials forwarded from the legal department of Blue Cross. He immediately determined Mr. Crawford's claim was compensable and covered "irrespective of the diagnosis that had been placed on there by the computer." Once the medical director reviewed the claim, it was immediately authorized for payment.

8. Blue Cross was arbitrary and capricious for failure to review the matter and pay the claims immediately following the requests by plaintiff's counsel.

9. The bills for St. Frances Cabrini Hospital were for $4,612.42, and for Lafayette General Hospital were for 822,589.80.

10. The work product of plaintiffs counsel supported an award of $5,000.00 attorney's fee.

On appeal, Blue Cross assigns the following errors:

A. Procedural Errors

1. The parties were denied the right to present closing arguments to the Court, despite the Court's ruling to the contrary and the parties' preservation of their rights to do so.

2. The Trial Court awarded a penalty in excess of the amount of the claim stipulated by the parties.

3. The final Judgment does not accurately reflect the Oral Ruling of the Trial Court.

B. Factual Errors

1. The Trial Court erroneously held that the December 28, 1996 correspondence from plaintiffs counsel to Cathe Thoman in Blue Cross' Subrogation Department constituted an appeal of the denial of plaintiffs claim.

2. The Trial Court erroneously held that Blue Cross took no action with respect to plaintiffs additional claims submissions.

3. The Trial Court erroneously held that plaintiffs discharge diagnosis, provided by his treating physicians who have refused to change this diagnosis despite multiple requests, was provided by a computer or a lay person.

C. Errors of Law

1. Louisiana Revised Statute 22:657 does not provide authority for the penalty awarded by the Trial Court.

2. The Trial Court erroneously found Blue Cross to have been arbitrary and capricious in its denial of this claim.

3. The attorney fees awarded by the Trial Court were excessive.

In his answer to the appeal, Mr. Crawford seeks to have the judgment modified as follows: 1) by awarding multiple penalties for each individual violation of the statute, instead of one penalty; 2) by increasing the attorney's fee to an amount equal that provided in plaintiffs contract with his attorney and an amount for defending the appeal; and 3) by increasing the penalty to double the amount owed to the hospitals prior to the payment by Blue Cross.⁷

DISCUSSION

Oral Argument:

Counsel for Blue Cross states that she was denied an opportunity to present oral argument despite the trial court's earlier indication she would have such an opportunity.

Whether oral argument is presented in a civil trial without a jury is totally immaterial. It is axiomatic that the statements of counsel are not evidence; the trier of fact's determinations are to be based solely on evidence and not upon the statements or suggestions of the attorneys. See Cooper v. United Southern Assurance Co., 97-0250, pp. 17-18 (La.App. 1 Cir. 9/9/98), 718 So.2d 1029, 1038. Furthermore, it is well established that the trial judge has great discretion in the manner in which proceedings are conducted before the court, and it is only upon a showing of gross abuse of discretion that appellate courts have intervened. State, Through Department of Social Services Support Enforcement Services v. Guichard, 94-1795, p. 10 (La.App. 1 Cir. 5/5/95), 655 So.2d 1371, 1378, writ denied, 95-1405 (La.9/15/95), 660 So.2d 454.

Further, we note that Blue Cross was provided an opportunity for argument by virtue of the submission of a post trial memorandum, which was filed on July 7, 1999. On the date previously set for oral argument, July 12, 1999, when the trial court gave oral reasons for judgment, there was no contemporaneous objection for the lack of oral argument.

This assignment of error is without merit.

Amount Stipulated:

On February 1, 1999, Mr. Crawford stipulated that the amount in dispute, which represented charges by two hospitals, totaled $26,030 .22. In light of this stipulation. Blue Cross argues that it was...