McGee v. Equicor-Equitable HCA Corp.

• Decision Date: 13 January 1992
• Docket Number: EQUICOR-EQUITABLE,90-3217,Nos. 90-3209,s. 90-3209
• Citation: 953 F.2d 1192
• Parties: Charlie McGEE, Plaintiff-Appellant and Cross-Appellee, v.HCA CORPORATION, and Equicor Health Plan, Inc., Defendants-Appellees and Cross-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1192

953 F.2d 1192

Charlie McGEE, Plaintiff-Appellant and Cross-Appellee, v. EQUICOR-EQUITABLE HCA CORPORATION, and Equicor Health Plan, Inc., Defendants-Appellees and Cross-Appellants.

Nos. 90-3209, 90-3217.

United States Court of Appeals, Tenth Circuit.

Jan. 13, 1992.

Phillip R. Fields (Steven P. Smith, with him on the briefs), Wichita, Kan., for plaintiff-appellant and cross-appellee.

Donald W. Bostwick of Adams, Jones, Robinson & Malone, Wichita, Kan., for defendants-appellees and cross-appellants.

Before SEYMOUR, BARRETT and BRORBY, Circuit Judges.

BRORBY, Circuit Judge.

We are called upon to resolve a contract dispute over the extent of medical benefits coverage provided by a Health Maintenance Organization (HMO) to a participant of a welfare benefit plan governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461 (1988).

The district court found the HMO wrongfully denied Plaintiff coverage for two of twenty-five months of rehabilitative care his minor daughter received following an automobile accident. In addition, the district court awarded attorney's fees and costs to Plaintiff.

Both parties appeal. Plaintiff asserts the trial court erred by not finding the HMO liable for coverage for the full twenty-five months of his daughter's rehabilitative care at costs totaling $358,789.63. Plaintiff also seeks reimbursement at the health plan's nursing home rate of $175 per day for his daughter's rehabilitation during an additional three months in the fall of 1989. Alternatively, Plaintiff argues the plan, at a minimum, entitles him to costs for his daughter's entire rehabilitative care at the plan's nursing home rate. Defendants cross appeal contending their policy unambiguously limits benefits coverage to the initial hospital care and the approved sixty days short term rehabilitation Plaintiff's daughter received immediately after the accident. They claim the district court erred by awarding Plaintiff coverage for an additional two months of rehabilitative services at a specialized hospital for neurological injuries outside the HMO's geographical coverage area. Defendants assert the district court impermissibly applied rules of insurance law when interpreting the terms of the agreement and claim the contract terms should not be strictly construed against them. Defendants also argue a trial court should not award attorney's fees "as a matter of course" under an ERISA plan.

While we find portions of the district court's reasoning unclear and some of its findings irreconcilable, we cannot say the district court reached an incorrect result. Accordingly, we affirm.

BACKGROUND

For clarity we summarize only the salient facts. On May 9, 1987, Plaintiff Charlie McGee's seventeen year old daughter, Rachel, received serious injuries in a head-on automobile collision. Hospital personnel flew Ms. McGee to Wesley Medical Center in Wichita, Kansas, where doctors treated her for, among other things, a broken femur and a brain stem injury.

Ms. McGee's status as a dependent of Mr. McGee entitled her to health care benefits under an HMO plan offered to employees of Cessna Aircraft Corporation, where Plaintiff worked. Health Care Plus originally provided benefits under the health agreement but that plan was subsequently assumed by Defendants, Equicor-Equitable HCA Corporation and Equicor Health Plan, Inc. (hereinafter collectively Equicor).

As required by the HMO agreement, Mr. McGee notified Dr. Jon Kardatzke's office of the accident. Dr. Kardatzke, a general practitioner in Wichita, served as Mr. McGee's "primary plan physician" ¹ under the contract. Dr. Kardatzke was out of the country at the time, but personnel in his office told Mr. McGee that he need not communicate with them further because they would stay abreast of the situation.

Meanwhile, several specialists provided care for Ms. McGee at Wesley which Dr As a result of her injuries, Ms. McGee remained comatose for a period of time following the accident but gradually regained higher levels of consciousness. In late June 1987, Mr. McGee sought his daughter's transfer from the Wesley special care unit to Dr. Mills' direct care at the CSRU. Dr. Mills initially indicated the CSRU would benefit Ms. McGee but reversed his position several weeks later since her cognitive functions remained at a level he considered too low for his unit.

                Kardatzke retroactively approved upon his return.   Because Dr. Kardatzke lacked the necessary qualifications to provide specialized treatment for Ms. McGee, he deferred heavily to the advice of Dr. Philip Mills, a physiatrist who served as associate medical director of Wesley's cranial-spinal recovery unit (CSRU) and as Wesley's medical director of rehabilitation services. 2
                

Mr. McGee commenced an independent search for alternative rehabilitative care outside the HMO coverage area and soon focused on Meadowbrook Hospital, a specialized treatment facility for head injuries in Gardner, Kansas. Mr. McGee also investigated alternative insurance sources when questions arose about the extent of coverage provided by Equicor's plan. At the time, Cessna's health benefit option allowed Mr. McGee to switch from the HMO to a standard indemnity plan offered by Aetna Insurance Company. Although Aetna would have paid for Ms. McGee's rehabilitation, Mr. McGee declined the plan since it capped benefits at a lifetime maximum of $250,000. Mr. McGee felt this sum would not adequately cover his daughter's future medical needs.

Dr. Kardatzke notified Equicor's medical director of Mr. McGee's desire to place his daughter in Meadowbrook because it provided an integrated "team approach" to rehabilitative services for head injured patients. However, both Drs. Mills and Kardatzke balked at Mr. McGee's proposal. Instead, they preferred that Ms. McGee remain in a local skilled nursing facility for an interim period until she developed enough responsiveness to benefit from Dr. Mills' CSRU or other rehabilitative services. ³ Mr. McGee, who previously visited several proposed institutions on the advice of the Kansas Head Injury Association, opposed the nursing facilities since they provided rehabilitative therapy only on a contract basis. He insisted Ms. McGee receive the "team" rehabilitation approach offered by Meadowbrook or the CSRU.

Dr. Kardatzke eventually recommended that Ms. McGee enter the CSRU under Dr. Mills' direct supervision without an intermediate stay in a local nursing home. Equicor agreed to at least sixty days coverage at the CSRU beginning in August. The multidiscipline program included physical therapy, speech therapy, occupational therapy and recreational therapy.

However, over the course of the first month the relationship between Dr. Mills and Mr. McGee deteriorated. Dr. Mills advised Mr. McGee that his CSRU would retain his daughter for the remainder of the sixty day period but then "she would have to leave." He added that his unit was not equipped to handle Ms. McGee's slow progress. Instead, he recommended Ms. McGee enter a coma arousal program with integrated team rehabilitation. ⁴ However Meanwhile, Equicor and Mr. McGee exchanged a series of telephone calls and letters. Mr. McGee's attorney made a formal demand to Equicor for preauthorization of Ms. McGee's care in what Plaintiff loosely referred to as a "coma arousal program," ⁶ specifying Meadowbrook as a suitable facility. However, Equicor's medical director responded that Equicor regarded coma arousal programs as experimental and unproven, and warned Mr. McGee during an October 9, 1987, telephone conversation if he moved his daughter without the plan physician's consent, any subsequent treatment would not be covered. Equicor reiterated that Dr. Kardatzke, who coincidentally served as medical director of one of the suggested Wichita nursing facilities, believed a nursing home was adequate for Ms. McGee's needs.

Dr. Mills reversed his position again less than three weeks later, stating he no longer felt "a coma arousal center would be of any benefit nor could [he] recommend this type of unproven treatment." ⁵

Nevertheless, Mr. McGee transferred his daughter to Meadowbrook on October 12, 1987, without further approval of either Drs. Mills or Kardatzke. ⁷ Four days later, Mr. McGee received written confirmation of Equicor's position denying coverage. Mr. McGee's attorney immediately filed a grievance with Equicor, asserting they had wrongfully denied coverage for Ms. McGee's "special care and treatment." Although Equicor stood by their decision, they nonetheless offered Mr. McGee "a special additional grievance procedure." Instead of pursuing the offer, Mr. McGee filed suit.

During her stay at Meadowbrook Ms. McGee's condition improved significantly. She progressed from a marginally conscious state to a cognizant level where she was once again able to feed herself, communicate on a limited basis, and walk with some assistance. She also became ambulatory with the use of an electric wheelchair.

DISTRICT COURT'S FINDINGS

In reaching its decision, the district court turned to the language of the health care agreement that Cessna, as plan administrator, provided Mr. McGee. In short, subject to various exceptions, limitations and exclusions, the "comprehensive prepaid program" promised to pay for general care customarily provided by hospitals in the HMO service area if directed by the plan physician. Conversely, the plan excluded coverage for services not authorized by the plan physician or for services obtained outside the coverage area absent prior special authorization. The plan provided extended care services for inpatients at skilled nursing facilities authorized by the plan physician, limited "short term" rehabilitative services and other "medically necessary" services not specifically excluded by the agreement.

Exclusion number 17 precluded "[l]ong-term physical therapy and rehabilitation services" and exclusion number 18...