Neal v. Christopher & Banks Major Medical Plan, Case No. 08-C-464.

• Decision Date: 28 August 2009
• Docket Number: Case No. 08-C-464.
• Citation: 651 F.Supp.2d 890
• Parties: Ralph C. NEAL, Plaintiff, v. CHRISTOPHER & BANKS COMPREHENSIVE MAJOR MEDICAL PLAN, Christopher & Banks Group Disability Income Insurance Plan, and Christopher & Banks, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

651 F.Supp.2d 890

Ralph C. NEAL, Plaintiff, v. CHRISTOPHER & BANKS COMPREHENSIVE MAJOR MEDICAL PLAN, Christopher & Banks Group Disability Income Insurance Plan, and Christopher & Banks, Inc., Defendants.

Case No. 08-C-464.

United States District Court, E.D. Wisconsin.

August 28, 2009.

COPYRIGHT MATERIAL OMITTED

George Burnett, Thomas Wickham Schmidt, Liebmann Conway Olejniczak & Jerry SC, Green Bay, WI, for Plaintiff.

Timothy E. Branson, Glenn M. Salvo, Dorsey & Whitney LLP, Minneapolis, MN, Elizabeth A. McDuffie, Gonzalez Saggio & Harlan LLP, Milwaukee, WI, for Defendants.

DECISION AND ORDER

WILLIAM C. GRIESBACH, District Judge.

Plaintiff Ralph C. Neal brought this action seeking medical benefits under his employer's comprehensive major medical plan for a combined liver and kidney transplant he underwent in April of 2006 and related treatment provided thereafter. Neal's claims for benefits were initially denied on the ground that the transplant and related services did not fall within the definition of medical necessity contained in the plan. The denial was upheld on administrative review on the same ground and, additionally as to some of the claims, on the ground that Neal's appeal was untimely. Because the action arises under the Employee Retirement Income and Security Act of 1976 ("ERISA"), 29 U.S.C. §§ 1001 et seq., federal jurisdiction is conferred by 28 U.S.C. § 1331. The case is presently before the Court on cross motions for summary judgment. For the reasons set forth below, Christopher & Banks' motion will be granted and Neal's motion denied.

FACTS

Neal was admitted to Bellin Memorial Hospital in Green Bay on March 9, 2006, and transferred to the University of Wisconsin Hospital and Clinic the following day where doctors determined he needed a liver transplant due to "cirrhosis presumably secondary to alcohol abuse." (Pl.'s Proposed Finding of Fact ("PPFOF") ¶¶ 7-8.) The cirrhosis had been discovered approximately one year earlier when Neal underwent a Whipple Procedure to remove a pancreatic mass that turned out to be benign. Despite the diagnosis of cirrhosis of his liver, Neal continued to intermittently consume alcohol up until six weeks before his admission to Bellin Memorial Hospital on March 9. (Defendants' Proposed Findings of Fact ("DPFOF") ¶¶ 13-15.)

As a retiree of Christopher & Banks, Inc., a Minneapolis-based apparel retailer, Neal was a participant in the Christopher & Banks Comprehensive Major Medical Plan ("the Plan"). (PPFOF ¶ 1.) The Plan is a self-funded ERISA employee welfare benefit plan, within the meaning of 29 U.S.C. § 1002(1). (DPFF ¶ 1.) Christopher & Banks serves as the Plan Administrator, but contracts with Coventry Health Care (previously First Health, and hereinafter collectively "Coventry") to perform claims processing and other specified services relating to the Plan. The Plan affords Christopher & Banks broad discretion to construe the terms of the Plan and determine eligibility for benefits:

The plan administrator shall have the sole discretionary authority to determine eligibility for plan benefits or to construe the terms of the plan, and benefits under the plan will be paid only if the plan administrator decides in its discretion, that the participant or beneficiary is entitled to such benefits.

(DPFOF ¶ 2; Decl. of Glenn Salvo, Ex. B at 79.)

On March 16, 2006, Coventry received a telephone call from UW Hospital inquiring whether Coventry has an alcohol abstinence policy for transplants. Coventry advised that its policy requires that candidates for transplants have six months of sobriety and be in treatment for substance abuse. (DPFOF ¶¶ 9-10.) On March 21, 2006, Dr. Anthony D'Alessandro, Neal's transplant surgeon, wrote to Coventry requesting prior authorization for a combined kidney and liver transplant for Neal. Dr. D'Alessandro stated that, although UW Hospital's normal abstinence period was also six months, he did not feel that Neal's overall health would allow him to wait that long. Dr. D'Alessandro noted that Neal seemed sincere in his willingness to seek treatment and that he had a supportive family to help him through the recovery process. The letter concluded, "Right now we see no technical, medical, infectious or psychosocial contraindications to proceeding and feel that we should place his name to the active liver transplant waiting list." (DPFOF ¶ 16.)

Following review by Floyd Shewmake, M.D., J.D., its medical director, Coventry wrote to Neal on March 23, 2006, to inform him that it was unable to recommend certification of the proposed transplant as "medically necessary," as defined in the Plan. While it is apparently undisputed that the transplant was "medically necessary" in the ordinary sense that if Neal did not receive a new liver, he would die, Coventry made its determination based on the Plan's definition of the phrase, which incorporates other considerations. The Plan defines "medically necessary services and/or supplies" as such services and/or supplies that the plan administrator determines, in the exercise of its discretion, to be:

1. Medically appropriate, which means that the expected health benefits (such as increased life expectancy, improved functional capacity, prevention of complications, relief of pain) exceed the expected health risks by a sufficiently wide margin;

2. Necessary to meet the basic health needs of the patient as a minimum requirement;

3. Rendered in the most cost-efficient manner and setting appropriate for the delivery of the health service;

4. Consistent in type, frequency and duration of treatment with scientifically-based guidelines of national medical research, professional medical specialty organizations or governmental agencies that are accepted by the plan;

5. Consistent with the diagnosis of the condition;

6. Required for reasons other than the comfort or convenience of the patient or his or her physician; and

7. Of demonstrated value based on clinical evidence reported by peer reviewed medical literature and by generally recognized academic medical experts; that is, it is not investigational/experimental.

(Id. ¶ 67.) Under the Plan, a "treatment, procedure, service, or supply must meet all seven of the criteria listed above to be considered medically necessary and to be eligible for coverage." (Id. ¶ 7.) The Plan defines "investigational/experimental" as follows:

A health product or service is deemed experimental if one or more of the following criteria are met:

* Any drug not approved for use by the FDA; any drug that is classified as IND (investigational new drug) by the FDA; any drug requiring pre-authorization that is proposed for off-label prescribing;

* Any health product or service that is subject to Investigational Review Board (IRB) review or approval;

* Any health product or service that is the subject of a clinical trial that meets criteria for Phase I, II, or III as set for the by the FDA regulations;

* Any health product or service whose effectiveness is unapproved base on clinical evidence reported in peer-reviewed medical literature.

(Id. ¶ 8.) The Review Notification Coventry sent Neal gave the following reason for non-certification:

Treatments, procedures, services or supplies, as determined by The Plan Administrator are expected to be of clear clinical benefit to the patient, appropriate for the care and treatment of the injury or illness and conform to the standards of good medical practice as supported by the applicable medical and scientific literature. The terms of your benefit plan require that treatments procedures, services or supplies be medically necessary. Our review has determined the services not to be medically necessary. Therefore, we are unable to recommend certification of the proposed services as medically necessary, as defined under your plan because: The medical necessity of the planned/proposed services is not supported by the medical information made available to us.

(Salvo Decl., Ex. K, CB000178.) A copy of the Review Notification was sent to UW Hospital and Dr. D'Alessandro, and the hospital was also notified by telephone.

Notwithstanding Coventry's refusal to certify the transplant as medically necessary, UW Hospital proceeded with the surgery, and on April 7, 2006, Neal underwent a liver-kidney transplant. (DPFOF ¶ 19.) After the transplant, Neal required additional medical care and hospitalization related to the transplant. (DPFOF ¶ 21; PPFOF ¶ 20.) From April 5, 2006 through October 29, 2007, Coventry received multiple claims submitted by medical care providers on Neal's behalf for transplant and transplant-related services, all of which were denied as not medically necessary. (DPFOF ¶ 23.) The billed charges on the claims that were denied total $518,388.20. During the same period, the Plan paid $108,598.63 for non-transplant-related claims by or on behalf of Neal. (Id. ¶¶ 24-25.) Each Review Notification advising Neal of a claim denial advised him of his right to appeal the decision and expressly warned, "Your appeal must be submitted within 180 days from the date of receipt of this notification." (Decl. of Deana Johnson at FH000068.)

By letter dated September 19, 2007, counsel for Neal notified Coventry of his intent to appeal the denial of certification of his transplant surgery. Because the transplant surgery had already been performed, Coventry explained that the issue of certification was moot and agreed to treat counsel's September 19, 2007 letter as an appeal from its denials of his claims for benefits for services performed notwithstanding the denial of certification. (Salvo Decl., Ex. A. at CB0000001.) In subsequent correspondence, Neal's attorney expressed his understanding that Coventry had only 40 pages of the medical records in its file and indicated he was in the process of gathering additional medical records which would be forwarded on once they were received. (Id., Ex. N.) The parties agreed that Coventry would "hold the...