Decatur Memorial Hosp. v. Connecticut General Life Ins. Co.

• Decision Date: 01 April 1993
• Docket Number: No. 92-2532,92-2532
• Citation: 990 F.2d 925
• Parties: , 16 Employee Benefits Cas. 2069 DECATUR MEMORIAL HOSPITAL, Plaintiff-Appellant, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY and Bridgestone/Firestone, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 925

990 F.2d 925

61 USLW 2675, 16 Employee Benefits Cas. 2069

DECATUR MEMORIAL HOSPITAL, Plaintiff-Appellant, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY and Bridgestone/Firestone, Inc., Defendants-Appellees.

No. 92-2532.

United States Court of Appeals Seventh Circuit.

Argued Feb. 17, 1993.

Decided April 1, 1993.

Darrell E. Statzer, Jr. (argued), Thom Moss, Wilson, Dyar, Moss & Statzer, Decatur, IL, for plaintiff-appellant.

Susan M. Hickman, William Hardy (argued), Hinshaw & Culbertson, Springfield, IL, for defendants-appellees.

Before EASTERBROOK and KANNE, Circuit Judges, and WILL, Senior District Judge. ^*

EASTERBROOK, Circuit Judge.

Decatur Memorial Hospital provided medical care to James Long between his admission on September 24, 1989, and his death 32 days later. Information supplied by another hospital led Decatur Memorial Hospital to believe that Long had health insurance underwritten by Connecticut General Life Insurance Company. The Hospital checked with Connecticut General, which verified coverage and approved the medical services the Hospital proposed to supply. Whoever answered the Hospital's inquiries had stale information: since April 1989 Long's coverage had been supplied by another firm. Whether this was because Long had changed jobs, or because his employer (Bridgestone/Firestone, Inc.) had changed carriers, the record does not reveal. Eventually the Hospital submitted its bill to the insurer providing coverage during Long's final month. That insurer paid only half, penalizing the Hospital for neglecting to obtain approval of the services in advance. The Hospital filed this suit against Connecticut General and Bridgestone/Firestone, seeking to collect the rest of its fees.

The Hospital's complaint, filed in state court, asserts that "[b]ut for the negligent misrepresentation by [Connecticut General] ... in verifying nonexistent coverage [the Hospital] would have further investigated coverage for this patient, obtained precertification [from the actual carrier] and would have received payment in full for the medical services rendered to the patient.... [Connecticut General therefore] is estopped by virtue of the negligent misrepresentation of its employee, servant or agent from denying coverage." Connecticut General promptly removed the action to federal court, observing that by requesting "coverage" under a policy that fulfilled an employer's welfare benefit plan, the complaint necessarily stated a claim under the Employee Retirement Income Security Act. ERISA in turn scuttles such claims, the district court held, because that statute does not require employers and their carriers to do anything other than carry out their commitments. Arguments that negligent misrepresentations "estop" sponsors or administrators from enforcing the plans' written terms have been singularly unsuccessful. E.g., Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987); Russo v. Health, Welfare & Pension Fund, 984 F.2d 762, 767-769 (7th Cir.1993); Pohl v. National Benefits Consultants, Inc., 956 F.2d 126 (7th Cir.1992); Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073 (7th Cir.1992).

Attempting to avoid these decisions, the Hospital observes that it is a provider of medical care rather than a beneficiary under the ERISA plan. It is not a party to, and thus not bound by, limitations in the plan. For good measure, the Hospital adds that by the time it rang up Connecticut General, that carrier was not administering any ERISA plan for Long's benefit. Why, then, should ERISA have anything to do with this case?, the Hospital inquires. One potential answer is that the resources to pay any judgment must come ultimately from the ERISA plan that Bridgestone/Firestone maintains for its employees' benefit. The function of the anti-estoppel doctrine is to preserve the assets of welfare benefit plans for the purposes laid out in them. A second potential answer is that to the extent the Hospital demands "coverage", as its complaint insists, it steps into the shoes of the beneficiary to whom it provided care. An assignee cannot have greater rights than the assignor possessed, and cases such as Pohl hold that the beneficiary cannot obtain more than the plan provides in writing. An assignee of benefits under an ERISA plan becomes a statutory "beneficiary" and thus may use 29 U.S.C. § 1132(a)(1)(B) to collect, see Kennedy v. Connecticut General Life Insurance Co., 924 F.2d 698 (7th Cir.1991); with this designation comes all limitations on beneficiaries' entitlements.

Although these replies have force, they are not necessarily conclusive. A beneficiary may read the plan to ascertain his entitlements. Employers must furnish their workers with summaries of the plans and make the full texts available on demand. Cases holding that misrepresentations by the plan's administrator or insurer do not permit departures from the plan may establish no more than that the written word prevails over inconsistent oral declarations. A third-party provider of medical care, by contrast, may lack access to the written plan. Medical providers that cannot rely on carriers' oral representations of coverage may decline to furnish care or raise their prices as a hedge against nonpayment. Either response would undermine the interests of the workers that ERISA is supposed to protect. What is more, permitting physicians, hospitals, and other providers to collect for services rendered in reliance on oral representations could fulfill the written terms of plans. This case may be an example. Long was entitled to medical care. The Bridgestone/Firestone plan reduces the amounts paid to hospitals that neglect to obtain certification in advance. But Decatur Memorial Hospital did obtain certification, albeit from the wrong insurer. The plan gets a windfall, saving half of the costs of care furnished to a covered employee, when in all likelihood a call to the right carrier would have produced certification and full payment. Employers cannot expect to assure medical benefits for...