English v. Blue Cross Blue Shield of Mich.

Decision Date28 October 2004
Docket NumberDocket No. 243941.
Citation263 Mich. App. 449,688 N.W.2d 523
PartiesJohn R. ENGLISH, D.D.S., Petitioner-Appellee, and Office of Financial and Insurance Services Commissioner, Intervenor-Appellee, v. BLUE CROSS BLUE SHIELD OF MICHIGAN, Respondent-Appellant.
CourtCourt of Appeal of Michigan — District of US

Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and William A. Chenoweth, Assistant Attorney General, for the Commissioner of the Office of Financial and Insurance Services.

Joseph W. Murray and Robert A. Phillips (John P. Jacobs, P.C., by John P. Jacobs, of counsel), Detroit, Detroit, for Blue Cross Blue Shield of Michigan.

Before: METER, P.J., and WILDER and BORRELLO, JJ.


Respondent, Blue Cross Blue Shield of Michigan, appeals by leave granted the trial court's order that affirmed the order of the Commissioner of the Office of Financial and Insurance Services. The commissioner's order, entered pursuant to the Patient's Right to Independent Review Act (PRIRA), MCL 550.1901 et seq., directed respondent to pay for certain laboratory services. We affirm in part, reverse in part, and remand for action consistent with this opinion.


Petitioner, John R. English, is a dentist receiving health care coverage through the Michigan Dental Association's (MDA) insurance plan, titled Comprehensive Health Care Copayment Certificate Series CMM 250 (the contract). In April 2000, petitioner sought treatment with his arthritis specialist, who in the course of his treatment of petitioner ordered that certain blood tests be performed by Quest Diagnostics (Quest). At the same time the blood tests ordered by his arthritis specialist were performed, and with the approval of his general physician, petitioner requested and also received blood tests for Prostate Specific Antigen (PSA), HIV, and Hepatitis. Respondent approved the PSA test but withheld a coverage determination for the remaining blood tests, asserting that the testing company, Quest, had not supplied respondent with sufficient information. After the submission of additional information by Quest, respondent denied coverage on the bases that petitioner's "coverage does not include benefits for routine/screening procedures," and that "[o]nly services necessary to diagnose disease, illness or injury are covered. Because these laboratory tests were billed with a screening diagnosis, they were appropriately denied and you remain liable for those charges."

In February 2001, petitioner filed with the commissioner a request for external review of respondent's decision to deny coverage, as permitted by PRIRA. The commissioner accepted the request and assigned the external review request to the Center for Health Dispute Resolution, an independent review organization (IRO). The IRO assigned review of the matter to a team consisting of one of its physician consultants, a practicing physician who is board-certified in infectious diseases, and a licensed on-staff attorney. The commissioner advised respondent and petitioner of the referral. On first being advised of the referral to the IRO, respondent notified the commissioner that it "had decided not to raise any contractual issues at this time," and reserved the right "to submit documentation supporting both medical and contractual issues" to the IRO.

Respondent submitted materials to the IRO for consideration in its review. The materials consisted of a four-page letter explaining the reasons for respondent's denial of coverage, the cover page and page 57 of the certificate in force at the time the claim was submitted, the cover page and page 3.29 of the Professional-Service Coverage Codes Manual, and the cover page and pages 2e.4 and 2e.28 of the Guide for Physicians and Medical Assistants, Volume 1. In its written submission, respondent asserted that its submission was concerning "the [e]xternal [r]eview of the above-mentioned Blue Cross Blue Shield of Michigan (BCBSM) member" and that

[w]e did not pay for the HIV and Hepatitis laboratory tests provided to Dr. English because these services were not required or directly related to the diagnosis or treatment of an illness or injury. The laboratory tests were not required to diagnose an illness or a medical condition for which Dr. English has shown symptoms. Thus, the claim was appropriately denied and payment is not merited.... The laboratory tests provided to Dr. English were billed with a screening diagnosis. Thus, under the express terms of his health care coverage, the laboratory tests are excluded as a contract benefit.

Thereafter, the IRO issued its recommendation that the HIV-1, Hepatitis B surface antigen (HB s AG), Hepatitis B surface antibody (HB s AB), and Hepatitis B Core AB (HB Core AB) tests were medically necessary, while the Hepatitis E antigen (HB E AG) and Hepatitis E antibody tests were not medically necessary tests for petitioner. The IRO concluded that the HIV-1 test was medically necessary because there are no signs or symptoms of HIV infection, and therefore the HIV-1 test is the only means of diagnosis. Similarly, the IRO noted that chronic Hepatitis B frequently exists without symptoms and is only diagnosed through testing; thus, the IRO concluded that the Hepatitis B tests were medically necessary to assist petitioner, a health care provider, in taking precautions to protect his patients. The commissioner, consistent with the IRO's recommendation, found that the HIV-1 and Hepatitis B tests were medically necessary tests under the terms of the contract, ordered a partial reversal of respondent's denial of coverage, and directed that respondent pay the costs of petitioner's HIV-1 and Hepatitis B tests.

Respondent filed with the commissioner a request for reconsideration and a stay of the commissioner's order, and simultaneously appealed the commissioner's decision to the circuit court.1 In its request for reconsideration and a stay, respondent asserted for the first time that it serves only as the administrator of petitioner's health care plan and that BCS Insurance, and not respondent, is the entity with financial responsibility for petitioner's claim. The commissioner considered respondent's argument that it was not the financially responsible entity to be untimely raised and cited this and other factors in denying respondent's request for reconsideration and a stay.

In its claim of appeal to the circuit court, respondent asserted that the commissioner's order was arbitrary, capricious, and clearly erroneous on the bases that (1) BCS Insurance rather than respondent held financial responsibility for petitioner's claim, and (2) petitioner's contract did not provide coverage for the tests at issue. Respondent also contended that in ordering that respondent pay for the tests, the commissioner exceeded the commissioner's authority under the common law and violated respondent's due process rights under the state and federal constitutions. On stipulation of the parties, the circuit court permitted the commissioner to intervene in this matter.2

The circuit court affirmed the commissioner's order, ruling that the order was not arbitrary or capricious and that respondent's constitutional rights had not been violated in the proceedings. This Court granted leave to appeal the order of the circuit court.


We review the final decision of an administrative officer, in cases where a hearing is not required, to determine whether the decision was authorized by law. Northwestern Nat'l. Cas. Co. v. Comm'r. of Ins., 231 Mich.App. 483, 487-488, 586 N.W.2d 563 (1998)

. "[A]n agency's decision that `is in violation of statute [or constitution], in excess of the statutory authority or jurisdiction of the agency, made upon unlawful procedures resulting in material prejudice, or is arbitrary and capricious,' is a decision that is not authorized by law." Id. at 488, 586 N.W.2d 563, quoting Brandon School Dist. v. Michigan Ed. Special Services Ass'n., 191 Mich.App. 257, 263, 477 N.W.2d 138 (1991) (emphasis in original).

We review the constitutionality of a statute de novo. DeRose v. DeRose, 469 Mich. 320, 326, 666 N.W.2d 636 (2003), citing Tolksdorf v. Griffith, 464 Mich. 1, 5, 626 N.W.2d 163 (2001). "Statutes are presumed constitutional unless the unconstitutionality is clearly apparent." DeRose, supra at 326, 666 N.W.2d 636, citing McDougall v. Schanz, 461 Mich. 15, 24, 597 N.W.2d 148 (1999). If a case can be resolved on nonconstitutional grounds, we will not decide the constitutional issues presented. Pythagorean, Inc. v. Grand Rapids Twp., 253 Mich.App. 525, 527, 656 N.W.2d 212 (2002), citing Widdoes v. Detroit Pub. Schools, 242 Mich.App. 403, 408 n. 4, 619 N.W.2d 12 (2000).


Enacted in 2000, PRIRA provides covered persons with the opportunity to seek external review of a health carrier's adverse determination, such as a decision to terminate or deny coverage for a health care service.3 MCL 550.1907, 550.1911. The act dictates that within sixty days of receiving notice of an adverse determination, a covered person or the person's authorized representative may file a request for external review with the commissioner. MCL 550.1911(1). Within five business days of receiving such a request, the commissioner must conduct a preliminary review of the request to determine whether the requesting individual is a covered person; whether the service denied reasonably appears to be covered under the covered person's health care plan; whether the covered person has exhausted applicable internal grievance procedures; whether the covered person has provided the commissioner complete information and forms; and whether the dispute appears to concern issues of medical necessity. MCL 550.1911(2).

When, the commissioner accepts a request for external review, the commissioner must inform the covered person that the person may, within seven business...

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