Long v. Great West Life & Annuity Ins. Co.

• Decision Date: 20 April 1998
• Docket Number: No. 96-285,96-285
• Citation: 957 P.2d 823
• Parties: Larry LONG and Virginia Long, Appellants (Plaintiffs), v. GREAT WEST LIFE & ANNUITY INSURANCE COMPANY, a foreign corporation; Great West Life Assurance Company, a foreign corporation; and Linda Carpenter, a resident of Wyoming, Appellees (Defendants).
• Court: Wyoming Supreme Court

Page 823

957 P.2d 823

Larry LONG and Virginia Long, Appellants (Plaintiffs), v. GREAT WEST LIFE & ANNUITY INSURANCE COMPANY, a foreign corporation; Great West Life Assurance Company, a foreign corporation; and Linda Carpenter, a resident of Wyoming, Appellees (Defendants).

No. 96-285.

Supreme Court of Wyoming.

April 20, 1998.

Rehearing Denied May 15, 1998.

John I. Henley and David A. Drell (argued) of Brooks, Henley & Drell, P.C., Casper, for Appellants.

Patrick J. Murphy of Williams, Porter, Day & Neville, P.C., Casper, for Appellees.

Before TAYLOR, C.J., and THOMAS, MACY, GOLDEN and LEHMAN, JJ.

GOLDEN, Justice.

Appellants Larry and Virginia Long brought suit against Appellee Great-West, two unknown doctors employed by Great-West and an employee of Great-West, Linda Carpenter, after they refused to preauthorize surgery and, instead, advised Mr. Long to undergo an alternative procedure. The district court determined that Mr. Long's exclusive remedy was administrative which he had failed to exhaust and granted summary judgment to Great-West.

We reverse and remand.

ISSUES

Long presents these issues:

I. The District Court inappropriately applied Wyoming Rule of Civil Procedure 56, and inappropriately considered and adopted untimely submitted, conclusory and contested evidence by the appellee in granting summary judgment.

II. Wyoming Statutes, 9-3-202, et seq., do not mandate that claims alleging torts and civil rights violations against appellees be held in abeyance until or forfeited because Larry Long's grievance contesting the imposition of a reimbursement penalty had not been heard by the State Employees' and Officials' Group Insurance Board.

III. The interpretation by the District Court of Wyoming Statute 9-3-205 is Unconstitutional.

IV. The basis for the dismissal has been corrected, the tort and civil rights claims should not have been dismissed with prejudice.

Great-West presents these issues:

1. Did the District Court correctly grant summary judgment where the state employee failed to exhaust, or even use, his administrative grievance remedy?

2. Did the district court correctly rule that it is constitutionally permissible for the legislature to limit a claimant to an administrative forum and remedy, and subsequent Rule 12 judicial review of that administrative remedy?

FACTS

Larry Long is an employee of the State of Wyoming (employer) and participates in and pays premiums to a health insurance plan sponsored by the employer. The defendant, Great-West, administers the plan for the employer in accordance with an insurance contract issued to insured employees, contained in the Employee Benefit Booklet. The plan's terms accord Great-West virtually total control and discretion in the administration of the plan and, when claims are denied, provides for an appeal procedure to Great-West and a grievance procedure to the State Employees' and Officials' Group Insurance Board. As part of the benefit plan, Great-West provided participants with a list of physicians it calls a network with whom it has billing and treatment agreements.

Long's doctor, neurologist Dr. Hollifield, recommended that Long have back surgery for chronic pain that he had been experiencing for some time. The plan required preauthorization for the surgery, and because Dr. Hollifield is a non-network physician, Long had the responsibility of ensuring his doctor received preauthorization for the surgery. Preauthorization triggered the involvement of a telephone-based utilization review program, Health Care Review Service (HCRS), in the recommended treatment decision. It is not clear from the record whether the Although Great-West advised Long to contact HCRS for an explanation for the surgery cancellation, HCRS did not respond and that explanation was given to him first by Great-West and then by Dr. Hollifield after he spoke with HCRS. HCRS had determined that Long should receive the conservative treatment of steroid injections. Long and Dr.Hollifield scheduled the steroid injection treatment for July 21, 1995, with a board certified anesthesiologist, Mark Steffen, M.D. On that date, Dr. Steffen advised Long that ethically he could not administer the injections. Because Dr. Steffen believed that the injections would be of no physical benefit to Long and would involve some risk, Dr. Steffen concluded that he could not ethically subject Long to the additional medical intervention and then bill him for it.

utilization review is a program of Great-West or an independent service. On July 17, 1995, Long completed pre-admission at the hospital but received word the day before surgery that his doctor had canceled surgery because Great-West had withdrawn authorization for the surgery based upon the recommendation of HCRS. Under the contract, surgery performed without authorization would result in a payment penalty. Authorized surgery was paid at 80% up to $5,000.00 less deductibles and then 100% over $5,000.00, while unauthorized surgery would only be paid at 60% for all costs.

On July 24, 1995, Long called HCRS requesting HCRS' fax number and address and information on the review process. An HCRS representative advised Long that he should make the statements directly to him as opposed to writing a letter; however, on July 25, Long faxed a letter to HCRS explaining that his doctor advised against the steroid treatments and another doctor had refused to administer the steroid injections. Long's letter commented that since HCRS seemed to be calling the shots he would welcome it if they arranged a medical consultation for him. He received a letter dated July 29, 1995, from Great-West stating again that surgery would not be authorized because of an inadequate trial of conservative therapy or insufficient diagnostic evaluation. On July 31, 1995, Long again called HCRS and was advised that further grievance or appeal needed to be directed to the main benefit office of Great-West and was given an 800 telephone number. Long immediately called the 800 number and was then transferred to Cheyenne, where he talked with a "Lucy" who would not give her last name. She advised him to send a copy of the records and that they would be reviewed again in about three weeks. Long requested Dr. Hollifield's office to forward the material to the attention of "Lucy" at a post office box address in Cheyenne. At some point, Long was apparently advised that physical therapy was another alternative conservative treatment that his insurance deemed appropriate rather than surgery. On August 1, 1995, Long attended an appointment with Dr. Al Metz, a neurosurgeon in Casper. His examination of Long resulted in the following diagnosis as related to Dr. Hollifield:

His MRI films ... were reviewed ... [and] show a huge herniation at L4-5, occupying 60% to 70% of the spinal canal, greater on the left side.... The herniation is certainly impressive.

I told Mr. Long that I concurred with your recommendation for surgery. If this were a minor recurrence or if the post-operative films showed nothing but scar tissue, then I think a course of steroids would be indicated. I wonder if the steroids would even have access to this nerve root, because of the blocking effect of the disc and almost certainty of some post-operative scar around the nerve root. I have to applaud Dr. Steffen for his ethical stand on this matter. By the same token, physical therapy and other peripheral methods of addressing the secondary and tertiary effects of this herniation would simply be a waste of the patient's time, medical resources and money. It is a certainty that he would eventually have to undergo the appropriate surgical treatment anyway.

On August 3, 1995, Long wrote to Great-West and told it that his doctors had advised him that all pertinent medical records had been sent to Great-West for further study. The letter indicated that HCRS had told Long's doctors that physical therapy was an During the period of time from his surgery authorization cancellation until September 8, 1995, Long's condition deteriorated. He suffered weakness in his left foot and the pain worsened to such an extent that he curtailed daily activities and reduced his hours each day at work. His gait became abnormal, he began to use a cane to assist his ambulation, and he experienced motor deprivation and sensory changes. On September 8, 1995, Long had the surgery. His claim for benefits was paid at the 60% penalty rate.

acceptable alternative, but his doctors did not believe that it would be of any real benefit. Long then requested that Great-West inform him what type of physical therapy program was required and of what duration was needed to satisfy its requirement of conservative treatment. Great-West did not respond directly to that question but only replied in a letter dated August 7, 1995, that his claim had been forwarded to the head office for review. On August 24, 1995, Long wrote Great-West another letter stating that Dr. Hollifield had attempted to confer further with Great-West about the status of his care and had not received any reply. Long called or faxed other letters requesting a decision about his care several more times. On August 29, 1995, an employee for the Wyoming Employees' Official Group Insurance Office explained to Long that he had not received an answer because a preauthorization for surgery was not considered a claim and therefore there were no strict time constraints upon Great-West to make any decision.

Long filed suit on May 2, 1996, alleging breach of contract, civil conspiracy, civil rights violation, unlawful practice of medicine, assault, intentional interference with contractual relationship, intentional infliction of emotional distress, violation of the duty of good faith and fair dealing, tort of outrage, and punitive damages. Great-West filed a motion to dismiss or for summary judgment, claiming Long had not exhausted his administrative remedies as required by Wyoming statute and the...