Hughes v. Blue Cross of Northern California, A032025

• Decision Date: 14 November 1989
• Docket Number: No. A032025,A032025
• Citation: 215 Cal.App.3d 832,263 Cal.Rptr. 850
• Court: California Court of Appeals Court of Appeals
• Parties: Jurdy HUGHES, Plaintiff and Appellant, v. BLUE CROSS OF NORTHERN CALIFORNIA et al., Defendants and Appellants.

Page 850

263 Cal.Rptr. 850

215 Cal.App.3d 832

Jurdy HUGHES, Plaintiff and Appellant, v. BLUE CROSS OF NORTHERN CALIFORNIA et al., Defendants and Appellants.

No. A032025.

Court of Appeal, First District, Division 1, California.

Nov. 14, 1989.

Certified for Partial Publication. ^*

Review Denied March 1, 1990.

Arnold R. Levinson, Griffinger, Levinson, Freed & Heinemann, San Francisco, Leonard Sacks, Encino, for plaintiff and appellant.

Peter W. Davis, Stephen A. McFeely, Jacqueline M. Jauregui, Joseph P. Mascovich, Crosby, Heafey, Roach & May, Oakland, for defendants and appellants.

NEWSOM, Associate Justice.

This appeal arises from an action brought by Sally Hughes (hereafter Mrs. Hughes) and her estranged husband, Jurdy Hughes (hereafter Mr. Hughes), against Blue Cross of California (hereafter Blue Cross) alleging several causes of action arising from the denial of insurance benefits for their son's hospitalization. Upon petition of Blue Cross, the plaintiffs' right to the disputed benefits was referred to arbitration and the arbitrator ordered payment. Mrs. Hughes then proceeded to trial to recover damages for Blue Cross's alleged breach of its implied covenant of good faith and fair dealing. The jury rendered a special verdict awarding her $150,000 in compensatory damages and $700,000 in punitive damages. Although not covered by the Blue Cross insurance contract, Mr. Hughes also proceeded to trial on theories of breach of the implied covenant of good faith and fair dealing, unfair insurance claims practices, and negligent infliction of emotional distress. Finding that he had no standing to sue, the trial court directed a verdict against him and later entered a judgment of dismissal.

On September 6, 1981, Patrick Hughes, a young man 21 years old, took an overdose of about 30 aspirins and stabbed himself repeatedly in the abdomen with a screwdriver. After discovering the boy's condition, his father and mother took him to the emergency ward of St. Luke's hospital. It was Patrick's first episode of serious mental disorder. In the first grade and again in the eighth grade, he had briefly undergone psychological counseling after showing signs of nervousness. Later, he appeared to fare well in his high school years. Electing to live with his father so that he could attend St. Ignatius Preparatory School, he received good grades and seemed "to fit right in." But he had difficulty coping after graduation and dropped out of a junior college. In recent months, he had been fired from his job and quarreled with his father and his girlfriend.

A psychiatrist, Dr. Hector De Lorente, arranged for Patrick's transfer to the psychiatric ward of Mary's Help Hospital where he remained for about six weeks. Dr. De Lorente found that Patrick was "extremely anxious" and "overwhelmed by images which had the contents of knives, axes as well as fire." He did not respond well to treatment. After several weeks he confided to Dr. De Lorente a grandiose delusion characteristic of schizophrenia. In an excited condition, he explained that God's eyes were within him. If he could witness the sunrise with his girlfriend, there would be less crime and less pressure for people in the world. On Dr. De Lorente's recommendation, Patrick was taken on October 25th to Belmont Hills Psychiatric Center, an institution providing acute psychiatric care.

At Belmont Hills Patrick was put under the care of Dr. William E. Lofthouse. He continued to be "withdrawn, behaving inappropriately, was depressed, was talking about subjects like death and dying and violence." In time Dr. Lofthouse also learned of his obsessive delusion about saving the world by witnessing the rising sun. Dr. Lofthouse put him on a "rigorous trial on an antipsychotic medication."

The "Nursing Referral and Care Plan" at Belmont Hills documents an early and continued concern with planning for Patrick's discharge. But he did not respond well to the antipsychotic medication. "Throughout his stay in the hospital he was somewhat isolated, related in a superficial manner, [and] had major difficulties using any individual or group psychotherapy." Nevertheless, Dr. Lofthouse was concerned "to avoid institutionalizing him." By December his symptoms "were beginning to be less active," although "his instability was always apparent." While recognizing that "he was not well," Lofthouse arranged for Patrick to be released to his family on December 18th for the Christmas holiday and to enter a half-way house in January.

In about two weeks Patrick suffered a crisis similar to that which had first precipitated his hospitalization. A day after his admission to a half-way house, he ran away, returned to his mother's home, and took an overdose of four aspirin and seventeen tetracycline. He was taken again to Mary's Help Hospital on January 6, 1982. Dr. De Lorente recalls, "He was extremely agitated. He was extremely frightened. I think he was in panic. He had not slept for one or two days." After two days he was readmitted to Belmont Hills where Dr. Lofthouse noted that "he had a strong belief of a delusional nature that his soul was going to hell."

Patrick's second hospitalization at Belmont Hills lasted until February 12, 1982, when he was discharged to his parents with the recommendation that he receive treatment as an outpatient. During the next four months, he continued to receive psychotherapy once a week but was mute and withdrawn and often refused to take medication. In an effort to lift his mood of depression, the Belmont Hills clinic administered electroconvulsive therapy on four occasions. Late in May his condition deteriorated. He was reluctant to rise from bed in the morning and neglected his personal appearance, refusing to dress, bath, shave, or comb his hair. Late at night he could be seen staring at religious programs on television, with the volume on high and his face "right in front of [the television]." His parents appealed to Dr. De Lorente who visited Patrick at home to persuade him to return to the hospital. After getting no response, Dr. De Lorente suggested the option of calling the police to place him involuntarily in a mental ward.

On the morning of June 11th, Patrick was seen wandering the streets near his home, clad in a bathrobe, with a catatonic demeanor. That afternoon his father took him to Belmont Hills for a previously scheduled outpatient visit. Dr. Lofthouse directed that he be placed in a locked ward for 14 days--the period of involuntary confinement permitted under Welfare and Institutions Code section 5254--and observed, "[t]he patient was not talking and seemed extremely frightened and in a trance." Patrick vigorously resisted this hospitalization. Showing uncharacteristic resourcefulness, he succeeded in retaining an attorney and applied for a writ of habeas corpus. Pleased by this unexpected display of assertiveness, Dr. Lofthouse decided not to contest the writ. Patrick was discharged on June 23th.

Within three days, Patrick began to talk "about fears of hurting himself" and was again admitted to Mary's Help Hospital for emergency hospitalization. Dr. De Lorente noted, "[h]e was agitated. He appeared to be frightened. He was hallucinating. He admitted to visual images of knives and axes." He had apparently remained insomniac for about two days before hospitalization and continued to be unable to sleep despite extra dosage of hypnotic medicine. He remained under treatment at Mary's Help until a bed became available at Belmont Hills on July 6th.

After being placed under the 72-hour detention permitted by Welfare and Institutions Code section 5150, Patrick angrily denied the facts of his past psychiatric history and soon managed to escape from the hospital. Returning home, he had difficulty sleeping and seemed nervous and quite frightened. On July 13th he was taken for a fifth time to Belmont Hills. Dr. Lofthouse testified that he clearly needed hospitalization "[b]ecause his behavoir [sic] beyond any doubt indicated that he was incapable of functioning as an outpatient at home. He just could not cope. His illness was too active." Lofthouse signed the certification required by Welfare and Institutions Code section 5252 to hold Patrick involuntarily for 14 days. The certification, which was cosigned by Dr. Ronald Hayman, the director of the Belmont Hills center, attested that the patient was "gravely disabled" and in need of "intensive care." When Patrick again filed a writ of habeas corpus, Dr. Lofthouse appeared in court in opposition. He explained, "[h]e wasn't getting help, he was acting bizarrely. We could rarely get him into what I would consider a stable outpatient condition and I felt that he probably needed much longer period of hospitalization." The court denied the writ, and Patrick was transferred on August 15th for long term care at the Institute for Living in Hartford, Connecticut.

As an employee of Ralph K. Davies Medical Center, Sally Hughes and her dependents were covered by group medical insurance offered by Blue Cross of California. This action concerns the periods of hospitalization at Belmont Hills from October 26 to December 18, 1981, and July 13 to August 15, 1982. For these periods, Mrs. Hughes submitted claims for hospital expenses totalling $23,698.69. Blue Cross consented to pay only $6,598.69, disallowing the balance on the ground that the hospitalizations were not medically necessary. The insurance company denied coverage for the portion of the 1981 hospitalization between November 21st and December 18th, and for all of the period of hospitalization in July-August, 1982.

Blue Cross asserts that there was no substantial evidence to support the jury's verdict. The contention calls for examination of the record dealing with the processing of the respondent's claims. In viewing this record, the court must bear in mind the familiar rule of Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429, 45 P.2d 183: "[W]hen a...