Haidle v. Chippenham Hosp., Inc.

• Decision Date: 09 June 1994
• Docket Number: Civ. A. No. 3:93CV820.
• Citation: 855 F. Supp. 127
• Parties: Marla S. HAIDLE and Joseph A. Haidle, Plaintiffs, v. CHIPPENHAM HOSPITAL, INC. and Aetna Life Insurance Company, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

855 F. Supp. 127

Marla S. HAIDLE and Joseph A. Haidle, Plaintiffs, v. CHIPPENHAM HOSPITAL, INC. and Aetna Life Insurance Company, Defendants.

Civ. A. No. 3:93CV820.

United States District Court, E.D. Virginia, Richmond Division.

June 9, 1994.

Alexander Nathan Simon, Richmond, VA, for plaintiffs.

Jennings Grey Ritter, II, John Edward Holleran, Hunton & Williams, Richmond, VA, and Mark E. Edwards, Jeanne Casstevens Thomas, Nashville, TN, for defendant.

MEMORANDUM OPINION

RICHARD L. WILLIAMS, Senior District Judge.

This matter is before the Court on defendants' motions for summary judgment. For the reasons stated below, the Court grants the motions.

I. Facts

Effective August 1, 1991, the plaintiffs, Joseph A. Haidle and Marla S. Haidle, became enrolled in an employee benefit plan offered through Marla Haidle's employer, defendant Chippenham Hospital, Inc. ("Chippenham Hospital"), by Hospital Corporation of America ("HCA"), the parent company of Chippenham Hospital. The plan provides coverage for certain medical expenses. Pursuant to the terms of an administrative services agreement, Aetna Life Insurance Company ("Aetna") provides claims processing and other administrative services with respect to the medical benefits provided under the plan.

The plan expressly limits coverage for medical expenses due to a preexisting condition to $1,000. The HCA Employee Benefits Handbook defines "preexisting condition" as

an illness or injury or a condition related to an illness or injury for which treatments or services were received or drugs prescribed within three months before the date coverage begins.

On May 7, 1992, Joseph Haidle underwent dental surgery, which was performed by John Alexander, D.D.S. That same day, Alexander received a letter from Aetna which stated that "based on the description of the proposed surgery, it appears that this procedure will be a covered expense under the plan." (Mem.Supp. of Summ.J., Ex. A-1.) The letter also indicated, however, that it was not a guarantee of benefits. (Id.)¹ The total medical expenses for the dental services were $17,299.87. The various health care providers involved in the surgery subsequently submitted claims for services to Aetna for reimbursement by the plan. Ultimately, Aetna denied payment of all but $1,000 of the submitted claims on the basis that a post-operative report by Alexander revealed that Haidle's surgery arose from a preexisting condition as defined by the plan.²

On or about November 12, 1993, plaintiffs filed a motion for judgment in the Circuit Court of the City of Richmond seeking to recover the amount of the claims denied by Aetna. The essence of plaintiffs' motion for judgment is a state law claim based on the common law theory of estoppel. Plaintiffs allege that Aetna made oral representations prior to Joseph Haidle's surgery that the expenses of the surgery would be covered under the plan, that Haidle reasonably relied on such representations and that defendants are therefore estopped from denying coverage under the plan for such medical expenses. See Motion for Judgment, ¶¶ 15-16.

Chippenham Hospital removed the case to this court, citing the concurrent jurisdiction of federal courts pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq.

II. Analysis

A. PLAINTIFFS CANNOT RECOVER BASED ON THE THEORY OF ESTOPPEL

The only theory of recovery alleged by plaintiffs in their motion for judgment is the state common law theory of estoppel. ERISA, however, preempts state common law estoppel claims. Salomon v. Transamerica Occidental Life Ins. Co., 801 F.2d 659, 660 (4th Cir.1986). Furthermore, with respect to application of federal common law, the Fourth Circuit has held that using estoppel principles to modify a written plan's terms would conflict with ERISA's preference for written agreements. Coleman v. Nationwide Life Ins. Co., 969 F.2d 54, 58-59 (4th Cir.1992), cert. denied, ___ U.S. ___, 113 S.Ct. 1051, 122 L.Ed.2d 359 (1993). See also Singer v. Black & Decker Corp., 964 F.2d 1449, 1452 (4th Cir.1992) (holding that "resort to federal common law generally is inappropriate when its application would conflict with the statutory provisions of ERISA, discourage employers from implementing plans governed by ERISA, or threaten to override the explicit terms of an established ERISA benefit plan.").

In Coleman, 969 F.2d 54, the plaintiff was a beneficiary of an employee health benefit plan that had been insured by Nationwide Life Insurance Company. Due to nonpayment of premiums by the employer, Nationwide terminated coverage for the employee health benefits, effective November 1, 1988. In January 1989, plaintiff gave birth and subsequently sought coverage for medical expenses she had incurred. Nationwide denied her claims due to the prior termination of coverage.

Plaintiff filed suit to recover benefits, contending, inter alia, that Nationwide was estopped from denying coverage because, prior to her child's birth, she had been told by Nationwide employees that she was covered by the employer's health insurance policy. See 969 F.2d at 58. The district court rejected this argument.

On appeal, the Fourth Circuit upheld the district court's conclusion that estoppel, whether denominated as state or federal common law, was unavailable to alter the unambiguous terms of an ERISA welfare benefit plan. 969 F.2d at 59-60. Accordingly, Salomon and Coleman dictate dismissal of plaintiffs' claim.

Plaintiffs contend, however, that estoppel principles may be used to interpret the plan. They correctly note that the Fourth Circuit in Coleman reserved judgment on this issue. The court stated:

In an effort to avoid the prohibition against using equitable estoppel to modify the written terms of a plan, Coleman claims that Nationwide's statements constituted an interpretation, not a modification, of the written plan. Based upon this construction of the facts, she argues that we should adopt the view of the Eleventh Circuit that estoppel principles may be invoked in ERISA cases when the statements at issue are interpretations of ambiguous plan provisions. citations omitted We need not decide whether we agree with the view of the Eleventh Circuit, however, because this case involves an outright modification, not an interpretation of the plan.

969 F.2d at 59. Plaintiffs in this case rely on Eleventh Circuit precedent to make the same argument as the plaintiff in Coleman. They contend that Joseph Haidle spoke with an Aetna customer service representative who told him that his impending dental surgery was covered by the plan subject to any deductible, co-insurance, coordination of benefits or other provisions of the plan. (See Mot. for J. ¶ 5.) They further contend that Haidle specifically asked what this "subject to" language meant, and the customer service representative responded that it referred to the possibility that the doctor or hospital would charge more than acceptable standard amounts, in which case Haidle would be responsible for any such over charges. (Id.) Accordingly, plaintiffs contend that Haidle's question to the Aetna representative was a question about the interpretation of the plan and that equitable estoppel is available to interpret the terms of plans covered by ERISA.

The Court rejects plaintiffs' argument. An ambiguous provision in a plan is one about which reasonable persons could disagree as to its meaning and effect. National Cos. Health Benefit Plan v. St. Joseph's Hosp., 929 F.2d 1558, 1572 (11th Cir. 1991). If the Aetna representative's original statement concerning coverage of Haidle's dental surgery constituted the representative's effort to explain the plan in her own words, then the statement cannot be deemed an acceptable interpretation since the provision limiting payment to a maximum of $1,000 for preexisting conditions is unambiguous. Even if this statement was a quotation from the plan itself, it was unambiguous. It clearly indicated that Haidle's coverage was subject to the other provisions of the plan. The statement merely requires a listener to know what the other provisions of the plan are that could possibly limit coverage. In attempting to explain the "subject to any deductible, coinsurance, coordination of benefits or other provisions of the plan" language, the representative failed to mention the plan's preexisting condition provision. Indeed, she failed to explain the meanings of most of the terms she had used. But each term has a precise meaning that is not subject to debate.

In rejecting plaintiff's estoppel argument in Coleman, the Fourth Circuit stated:

In Kane v. Aetna Life Ins., 893 F.2d 1283 (11th Cir.1990), the Eleventh Circuit recognized that `estoppel may not be invoked to enlarge or extend the coverage specified in a contract.' citation omitted In this case, estopping Nationwide from terminating the contract of insurance when no premiums were paid would have the effect of providing Coleman benefits even though the contract unambiguously indicates that she was entitled to none. We can only regard such a result as a modification of the plan's termination provision and, therefore, as being in direct conflict with the statutory requirements.

969 F.2d at 59. Similarly, in this case, it would seem that the plaintiffs seek a modification of the plan's unambiguous provision concerning preexisting conditions.

Plaintiffs argue that Judge Wilkinson in Coleman was particularly concerned about applying the principle of equitable estoppel in a case where no premium had been paid and where there was no writing to rely on. They contend that neither concern is applicable here because premiums have been paid and both the May 7, 1992 letter to Alexander and Aetna's initial payment of benefits are written evidence. But it seems that Judge Wilkinson's real concern was adhering to the written terms of the insurance contract. He stated that "use of estoppel principles to effect a...