Lamb v. Time Ins. Co.

• Decision Date: 21 March 2011
• Docket Number: 10-0241,No. 0-944,0-944
• Parties: DALE A. LAMB, Plaintiff-Appellant, v. TIME INSURANCE COMPANY, f/k/a, FORTIS INSURANCE COMPANY d/b under the Brand Name, ASSURANT HEALTH, Defendant-Appellee.
• Court: Iowa Court of Appeals

DALE A. LAMB, Plaintiff-Appellant,

v. TIME INSURANCE COMPANY, f/k/a, FORTIS INSURANCE COMPANY d/bunder the Brand Name, ASSURANT HEALTH, Defendant-Appellee.

No. 0-944

10-0241

COURT OF APPEALS OF IOWA

Filed March 21, 2011

Appeal from the Iowa District Court for Poweshiek County, Gary D.

McKenrick, Judge.

An insured appeals the district court's decision granting summary judgment to the insurer because the insured failed to seek judicial review of an external review decision under Iowa Code chapter 514J (2007). AFFIRMED.

Gail E. Boliver of Boliver & Bidwell Law Firm, Marshalltown, for appellant.

Michael W. Thrall and Christian P. Walk of Nyemaster, Goode, West, Hansell & O'Brien, P.C., Des Moines, for appellee.

Heard by Sackett, C.J., and Potterfield and Mansfield, JJ.

MANSFIELD, J.

In this case, a father challenges an insurer's denial of coverage for an intravenous antibiotic treatment for his son's Lyme disease. The father pursued the remedies afforded by Iowa Code chapter 514J (2007), "External Review of Health Care Coverage Decisions," but after receiving an adverse decision from the independent review entity attempted to start over in court—rather than seeking judicial review of the decision under section 514J.13. We conclude the father failed to exhaust the final stage of his administrative remedies, namely judicial review, and therefore affirm the district court's grant of summary judgment to the insurer.

I. Background Facts & Proceedings

Dale Lamb purchased a health insurance policy from Time Insurance Company, doing business as Assurant Health, for his son. The policy provided coverage for health care expenses that were "medically necessary." The term "medically necessary" is defined in the policy as follows:

Treatment that we determine:

• is appropriate and consistent with the diagnosis and is in accordance with accepted United States medical practice and federal government guidelines;

• can reasonably be expected to contribute substantially to the improvement of a condition resulting from an illness or injury;

• is not for Experimental or Investigational Services;

• is provided in the least intense setting without adversely affecting the condition or the quality of medical care provided; and

• is not primarily for the convenience of you, your family, your Health Care Practitioner, or provider.

In 2004, Lamb's child was diagnosed with Lyme disease. Time provided coverage for the child's medical expenses. Eventually, Lamb sought treatmentfor the child with Dr. Charles Crist in Springfield, Missouri. Dr. Crist treated the child with intravenous antibiotics. Time refused to reimburse Lamb for this treatment, stating it was not medically necessary because the treatment was experimental or investigational for Lyme disease.¹

Lamb exhausted the internal appeal process with Time. Iowa Code chapter 514J provides "a mechanism for the appeal of a denial of coverage based on medical necessity," for a person who has exhausted all internal appeal mechanisms with an insurance carrier. Iowa Code §§ 514J.1,.5(1)(c). A person who "receives health care benefits coverage through a carrier or organized delivery system," may file a written request for external review of a coverage decision with the Insurance Commissioner. Id. §§ 514J.2(2), (4),.4(1). The request for review must be accompanied by a twenty-five dollar filing fee, unless the fee is waived. Id. § 514J.4(2).

The commissioner keeps a list of certified independent review entities, and the insurance carrier must select an independent review entity from this list. Id. §§ 514J.6(3),.7(1)(a). "The independent review entity shall be an expert in the treatment of the medical condition under review." Id. § 514J.7(1)(a). Theindependent review entity, in turn, has three business days to select an individual to actually perform the review and provide the insured and the carrier with a brief description of this person including the reasons why he or she is an expert in the treatment of the medical condition under review. Id. § 514J.7(2). The review entity does not need to disclose the name of the person. Id. The insured or the insured's treating health care provider

may object to the independent review entity selected by the carrier... or to the person selected as the reviewer by the independent review entity by notifying the commissioner and carrier or organized delivery system within ten days of the mailing of the notice by the independent review entity.

Id. § 514J.7(3). The commissioner approves or denies any such objection. Id. If the objection is sustained, the commissioner selects an independent review entity. Id.

The insurance carrier must provide the independent review entity with any information previously submitted by the insured or his/her health care provider, as well as any relevant documents previously considered by the insurer. Id. § 514J.7(4). The insured or his/her health care provider may provide any information submitted under the internal appeal mechanisms and any "other newly discovered relevant information." Id. § 514J.7(5).

The independent review entity reviews this information de novo. Id. § 514J.12. Treatment recommended by a treating health care provider "shall be upheld upon review so long as it is found to be medically necessary and consistent with clinical standards of medical practice." Id.

Lamb availed himself of this process and on September 6, 2007, filed a request with the commissioner for an external review of Time's decision denyingcoverage. On September 11, 2007, Time provided notice that the independent review entity it had chosen from the commissioner's list was Medical Review Institute of America, Inc. (MRIoA). On September 18, 2007, MRIoA indicated it would be using a reviewer who was board certified by the American Board of Pediatrics in Pediatrics and Pediatric Infectious Disease who had been in active practice since 2000. Lamb made some additional inquiries about the reviewer's qualifications and experience with Lyme disease, which the commissioner requested MRIoA answer. These inquiries were forwarded to the reviewer, but there is no indication in the record that he ever responded or that Lamb objected to the selected reviewer.

On October 9, 2007, the reviewer, Dr. Andres Ramgoolam, provided an eight-page letter concluding the intravenous antibiotic treatment was not "medically necessary." The reviewer added, "[T]his form of treatment should not be considered standard of care and should be deemed as not necessary or investigational and may very well be harmful." The letter set forth reasons for this conclusion and noted the materials considered by the reviewer.

The decision of the independent review entity is binding upon the insurance carrier. Id. § 514J.13(1). On the other hand, an insured "may appeal the review decision by the independent review entity... by filing a petition for judicial review" within fifteen business days of the review decision. Id. § 514J.13(2). In such an appeal, "[t]he findings of fact by the independent review entity conducting the review are conclusive and binding." Id. § 514J.13(2). Also, the external review process is not considered a contested case under chapter 17A. Id. § 514J.13(1).

Dr. Ramgoolam's October 9, 2007 letter detailed these rights of appeal. Lamb, however, did not seek judicial review of the external review decision. Instead, on May 6, 2008, Lamb filed a separate petition against Time raising claims of breach of contract, breach of fiduciary duty, negligence, ² and constructive misrepresentation. In July 2009, Lamb moved to compel certain discovery. While that motion was pending, Time filed a motion for summary judgment urging the following grounds: (1) Lamb had failed to seek judicial review of the external review decision as required by chapter 514J; (2) the claims were barred by the doctrine of res judicata; and (3) as to the claims of breach of fiduciary duty and constructive misrepresentation, Lamb had failed to allege any facts giving rise to a fiduciary relationship.

The court granted Time's request to stay proceedings on the discovery motion until its motion for summary judgment had been decided. Lamb then resisted Time's summary judgment motion, arguing he was not required to seek judicial review of the external review decision because "[t]he external review had no judicial or constitutional process." Lamb also asserted res judicata did not apply to the MRIoA's external review determination. In addition, Lamb maintained he was unable to respond to the motion for summary judgment on the fiduciary duty and misrepresentation claims because of a lack of discovery.

Following a telephonic hearing, the district court on January 27, 2010, granted Time's motion for summary judgment on all claims. As to the breach of contract claim, the court concluded:

In reviewing this statutory framework [chapter 514J], the Court concludes that the legislature intended to supplant, not supplement, the common law remedies available to an insured in the context of the denial of coverage based on medical necessity. To hold otherwise would negate and make ineffectual the statutory provisions for judicial review of the external review process. An insured seeking judicial review under § 514J.13(2) would be bound by the factual determinations of the external review while a common law claimant would not.

Because the plaintiff failed to seek judicial review of the external review decision, the determination of that review that the medical treatment at issue was not medically necessary is binding on the plaintiff in this action. Therefore, the plaintiff is unable to prove that the defendant breached its contract with the plaintiff by failing to provide coverage for the treatment at issue. The defendant is entitled to summary judgment on the breach of contract claim.

On the breach of fiduciary duty claim, the court found, "The mere allegations of the petition, which are all the plaintiff has submitted on this issue,...