Draper v. Wellmark, Inc.

Decision Date15 March 2007
Docket NumberNo. 06-CV-24-LRR.,06-CV-24-LRR.
PartiesKirk DRAPER and Laurie Draper, Plaintiffs, v. WELLMARK, INC., Defendant.
CourtU.S. District Court — Northern District of Iowa

Mark John Seidl, Seidl & Chicchelly, Cedar Rapids, IA, for Plaintiffs.

Debra Lynne Hulett, Nyemaster Goode West Hansell & O'Brien, PC, Des Moines, IA, for Defendant.

ORDER

READE, Chief Judge.

                TABLE OF CONTENTS
                I.  INTRODUCTION.......................................................1104
                 II.  RELEVANT PROCEDURAL HISTORY........................................1104
                
                III.  JURISDICTION.......................................................1104
                 IV.  FACTUAL BACKGROUND.................................................1104
                  V.  STANDARD FOR SUMMARY JUDGMENT......................................1106
                 VI.  ANALYSIS...........................................................1107
                      A.  Count I — RISA Claim..........................................1107
                          1.  The term "calendar year"...................................1108
                          2.  Applicability of contractual limitations provision.........1108
                          3.  Waiver.....................................................1110
                          4.  Conclusion.................................................1111
                      B.  Count II — Negligent Misrepresentation Claim..................1111
                          1.  ERISA preemption...........................................1111
                          2.  Section 514(a)'s "express" preemption......................1112
                              a.  Express reference......................................1112
                              b.  Connection with ERISA plan.............................1113
                          3.  Section 502(a)'s remedial scheme preemption................1114
                VII.  CONCLUSION.........................................................1114
                
I. INTRODUCTION

The matter before the court is Defendant Wellmark, Inc.'s Motion for Summary Judgment ("Motion") (docket no. 26).

II. RELEVANT PROCEDURAL HISTORY

On February 10, 2006, Plaintiffs Kirk Draper and Laurie Draper ("Drapers") filed a two-count Complaint against Defendant Wellmark, Inc. ("Wellmark"). Count I alleges a violation of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA"). Count II alleges common law negligent misrepresentation.

On June 21, 2006, Wellmark filed the instant Motion. On July 12, 2006, the Drapers filed a resistance to the Motion ("Resistance"). On August 18, 2006, Wellmark filed a reply ("Reply").

Neither party requested oral argument. The court finds oral argument is unnecessary to the determination of the Motion. It shall turn now to consider the Motion.

III. JURISDICTION

The court has federal question subject matter jurisdiction over Count I pursuant to 28 U.S.C. § 1331, because the Drapers' claim for benefits arises under ERISA. See 28 U.S.C. § 1331 ("The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."). The court finds it has supplemental juris diction over the Drapers' common law claim pursuant to 28 U.S.C. § 1367. See id. § 1367(a) ("[T]he district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy...."). But see id § 1367(c) (granting district court discretion to decline to exercise supplemental jurisdiction over state law claims under certain circumstances). The court has jurisdiction to review each of the Drapers' claims.

IV. FACTUAL BACKGROUND

Viewing the facts in the light most favorable to the Drapers, as the law requires, see Baer Gallery, Inc. v. Citizen's Scholarship Found. of Am., 450 F.3d 816, 820 (8th Cir.2006) (citing Drake ex rel. Cotton v. Koss, 445 F.3d 1038, 1042 (8th Cir.2006)), the court finds the following facts for purposes of the Motion:

Prior to February 10, 2003, Kirk Draper was employed by OPN, Inc., d/b/a Midland OPN Architect ("OPN"). Kirk Draper was a participant in OPN's employee welfare benefit plan ("Plan"), and Laurie Draper was a beneficiary of the Plan. The Plan is governed by ERISA.

As part of the Plan, OPN offered a health benefit for its eligible employees. OPN purchased a group insurance policy from Wellmark, which served as the insurer and claim administrator of the health benefit portion of the Plan.

The health benefits available under the Plan are set forth in an Alliance Select Benefits Certificate ("Certificate"). The Certificate provides, in part:

Legal Action

You may not start legal action regarding a claim that [Wellmark has] denied under this [C]ertificate unless you have exhausted the appeal process....

No legal or equitable action may be brought against [Wellmark] because of a claim under this [C]ertificate, or because of the alleged breach of this [C]ertificate, more than two years after the end of the calendar year in which the services or supplies were provided.

Defendant's Appendix, at 43 (emphasis in original). The term "calendar year" is not defined in the Certificate. Section 5 of the Certificate sets forth the "Appeal Procedure" and the "External Review" procedure. Section 7 of the Certificate provides information about rights under ERISA.

In June of 2002, Laurie Draper had an MRI, which revealed a spinal cord tumor. After the tumor was discovered, Laurie Draper was referred to a local neurosurgeon, who referred her to a doctor at the Mayo Clinic and a doctor at The University of Iowa Hospitals and Clinics. When Laurie Draper met with the specialist at the Mayo Clinic, she learned that her tumor was exceedingly rare. The Mayo Clinic specialist had only seen twelve cases like hers in his twenty-year career.

Eventually, the Drapers were referred to Dr. Paul C. McCormick, M.D., of Neurosurgical Associates, P.C., in New York, New York. Dr. McCormick's specialty is neurosurgery involving spinal cord tumors in adults. The Drapers had a consultation with Dr. McCormick, and they determined that they wanted him to perform the surgery.

After having a consultation with Dr. McCormick, the Drapers met with their insurance representative at TrueNorth Companies, L.C. ("TrueNorth"), in Cedar Rapids. The purpose of this meeting was to determine the out-of-pocket cost for the surgery by Dr. McCormick, since he was an out-of-network doctor. The TrueNorth representative told the Drapers that they would have to pay the first $1,000 for a deductible, as well as 30% co-insurance on the rest of the surgery costs, with an outof-pocket maximum of $3,000. This cost, along with the cost of traveling to New York and staying there for the recovery period, was the cost the Drapers were prepared to pay in order for Dr. McCormick to perform the surgery.

After meeting with the TrueNorth representative, Laurie Draper then called a Wellmark representative to obtain precertification for the surgery. The Wellmark representative told Laurie Draper that Dr. McCormick was a "non-participating" doctor. The Wellmark representative provided Laurie Draper with information about costs that was consistent with the information the TrueNorth representative had given the Drapers.

The Drapers asked for the cost information in writing, but never received any cost information in writing from TrueNorth or Wellmark.

On February 10, 2003, Dr. McCormick performed neurosurgery on Laurie Draper and removed her spinal cord tumor.

The "billed charges" for the surgery totaled $22,860.00. Wellmark processed Laurie Draper's claim for benefits regarding the surgery. Wellmark's settlement with Dr. McCormick was in the amount of $8,747.20. Such an insurance settlement left the Drapers owing $14,112.80 to Dr. McCormick.

In a letter dated July 28, 2003, and signed by Kirk Draper, Laurie Draper appealed Wellmark's initial settlement determination.

On September 29, 2003, after reviewing the appeal, Wellmark Special Inquiries representative Janet Nicolino sent a letter to the Drapers. Nicolino notified Laurie Draper that Wellmark was upholding the initial determination. The letter also provided:

You have now exhausted your administrative review, however, if you still do not agree with our determination, and if you have employer group coverage subject to the Employee Retirement Income Security Act (ERISA), you have the right to bring civil action under Section 502(a) of ERISA.

Defendant's Appendix, at 100.

In an undated letter that was received by Wellmark on October 8, 2003, Kirk Draper requested copies of all documents relevant to the initial determination and appeal. In a letter dated October 16, 2003, Nicolino informed Laurie Draper that she was enclosing four documents, pursuant to Kirk Draper's request. The Drapers claim they never received copies of the documents.

On July 12, 2005, the Drapers' attorney, Mark Seidl, sent Nicolino a letter and requested a further explanation about the initial determination and appeal.

On August 4, 2005, Nicolino sent a letter to Attorney Seidl. Wellmark refused to provide Attorney Seidl with information regarding Laurie Draper, due to the requirements of the Health Insurance Portability and Accountability Act ("HIPPA").

On August 17, 2005, Wellmark received Laurie Draper's HIPPA authorization, which permitted it to disclosure Laurie Draper's health care information to Attorney Seidl.

In a September 15, 2005 letter, Nicolino wrote Attorney Seidl and further explained the "position of Wellmark" on Laurie Draper's claim.

In a December 19, 2005 letter, Attorney Seidl contacted Nicolino and questioned how Wellmark arrived at the "maximum allowable fee" for the February 10, 2003 surgery.

On February 1, 2006, Nicolino emailed Attorney Seidl. The email provided, in part:

Mr. Seidl, I am in receipt of your December 19, 2005, letter. I am in the process of gathering the information together that explains how the February 10, 2003, claim for Laurie...

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