Pellicano v. Office of Personnel Mgmt. Insurance Operations

• Decision Date: 25 March 2014
• Docket Number: Civil Action No. 11–405.
• Citation: 8 F.Supp.3d 618
• Parties: Michael V. PELLICANO, Plaintiff, v. OFFICE OF PERSONNEL MANAGEMENT, INSURANCE OPERATIONS, Defendant.
• Court: U.S. District Court — Middle District of Pennsylvania

8 F.Supp.3d 618

Michael V. PELLICANO, Plaintiff

v.OFFICE OF PERSONNEL MANAGEMENT, INSURANCE OPERATIONS, Defendant.

Civil Action No. 11–405.

United States District Court, M.D. Pennsylvania.

Signed March 25, 2014.

Filed March 26, 2014.

Michael V. Pellicano, Olyphant, PA, pro se.

Mark E. Morrison, Office of the United States Attorney, Melissa A. Swauger, U.S. Attorney's Office, Harrisburg, PA, for Defendant.

ORDER

JOEL H. SLOMSKY, District Judge.

AND NOW, this 25th day of March 2014, upon consideration of the Complaint (Doc. No. 1), Plaintiff's Motion for Judgment (Doc. No. 61), Defendant's Motion to Dismiss and for Summary Judgment (Doc. No. 62), Defendant's Statement of Facts in Support of the Motion for Judgment (Doc. No. 63), Defendant's Brief in Opposition to Plaintiff's Motion for Judgment (Doc. No. 64), Plaintiff's Brief in Opposition to Defendant's Motion to Dismiss and for Summary Judgment (Doc. No. 65), the Report and Recommendation of United States Magistrate Judge Martin C. Carlson (Doc. No. 67), Plaintiff's Objections to the Report and Recommendation (Doc. No. 70), Defendant's Brief in Opposition to Plaintiff's Objections to the Report and Recommendation (Doc. No. 71), Plaintiff's Reply to Defendant's Brief in Opposition (Doc. No. 72), and in accordance with the Opinion of the Court issued this day, it is ORDERED as follows:

1. The Report and Recommendation of Magistrate Judge Carlson (Doc. No. 67) is APPROVED and ADOPTED.

2. Defendant's Motion for Summary Judgment (Doc. No. 62) is GRANTED.

3. Plaintiff's Motion for Judgment (Doc. No. 61) is DENIED.

4. The Clerk of Court shall close this case for statistical purposes.

OPINION

I. INTRODUCTION

Before the Court is a request for judicial review of an administrative decision by the Office of Personnel Management (“OPM” or “Defendant”), an agency of the federal government. In 2008, pro se Plaintiff Michael Pellicano (“Plaintiff”) purchased medical equipment and sought reimbursement through his primary insurance provider. The provider covered 65% of the cost, instead of the full 100% sought by Plaintiff. (Doc. No. 1 at 2.) As a federal employee, Plaintiff is enrolled in a health benefits plan under the Federal Employees Health Benefits Act (“FEHBA”), 5 U.S.C. § 8901 et seq. In accordance with the FEHBA, Plaintiff appealed his insurance provider's coverage decision to OPM. On February 22, 2010, OPM decided that 65% coverage for the purchase of necessary medical equipment was appropriate under Plaintiff's plan and concurred with his primary insurance provider's decision to cover that amount. (Doc. No. 1 at 15.) OPM sent a letter to Plaintiff notifying him of the decision and advising him that if he disagreed with the decision then he “may file suit against [OPM] in [f]ederal court.” (Id. )

On March 2, 2011, Plaintiff filed a Complaint against OPM in this Court, alleging that the agency had “breached fiduciary duties [and] was arbitrary and capricious in denying additional benefits.” (Id. at 1.) Pursuant to M.D. Pa. Local Rule 73.1(d), the case was assigned to U.S. Magistrate Judge Martin C. Carlson and this Court. On November 22, 2011, OPM filed a motion to remand the proceedings to the administrative agency in order to develop a full and complete factual record. (Doc. No. 21.) After briefing, Judge Carlson issued a Report and Recommendation, recommending that the case be remanded to OPM for further proceedings. (Doc. No. 26.)

On April 12, 2012, 2012 WL 1243226, over Plaintiffs objections, this Court adopted Judge Carlson's Report and Recommendation and remanded the case for further administrative proceedings. (Doc. No. 35.) On remand, OPM reaffirmed its initial decision to uphold the reimbursement of 65% of the cost of the durable medical equipment. With a more thorough administrative record, the case returned to this Court for review and was again referred to Judge Carlson. The parties then filed cross-motions for summary judgment on the administrative record.

On November 8, 2013, after reviewing OPM's extensive administrative record (Doc. No. 54), and the motions for summary judgment and supporting documents (Doc. Nos. 61–65), Judge Carlson issued a Report, recommending that Defendant's Motion for Summary Judgment be granted and Plaintiff's Motion for Summary Judgment be denied. (Doc. No. 67.) Plaintiff filed timely objections to the Magistrate Judge's Report and Recommendation, and those objections are now before this Court for consideration.¹

II. FACTUAL BACKGROUND

The following factual account is taken from the Magistrate Judge's Report and Recommendation:

The plaintiff, Mr. Pellicano, was an enrollee in the Service Benefit Plan (SBP), an federal employee health care benefit plan overseen by OPM under the Federal Employee Health Benefit Act, (FEHBA) 5 U.S.C. § 8901. (Doc. 54, OPM admin. Record, pp. 1–1124) Sometime in 2008, Pellicano filed a prior approval request with the local Blue Cross Blue Shield (BCBS) Plan administering his benefit plan in Pennsylvania, Pennsylvania Blue Cross Blue Shield. In this request, Pellicano sought full reimbursement for payment of a specific piece of durable medical equipment, a device called a Functional Electrical Stimulation (FES) cycle ergonometer. (Id., p. 44, 71–74.)

This request then set in motion a protracted journey through various health care bureaucracies. At the outset, upon receipt of Pellicano's request the local Pennsylvania Blue Cross Blue Shield Plan determined that the provider for this particular piece of durable medical equipment was located in Baltimore, Maryland. Accordingly, Pennsylvania Blue Cross Blue Shield advised Pellicano to submit a prior approval request to CareFirst Blue Cross Blue Shield (CareFirst), which was responsible for such requests in Maryland. (Id. ) Pellicano followed this direction and submitted a request for prior approval with CareFirst, which initially denied the claim as non-covered on January 26, 2009. (Id., p. 65.)

Mr. [sic] Pellicano challenged this coverage determination in a letter dated March 6, 2009, and requested reconsideration of the carrier's denial of the claim. (Id., pp. 55–57.) One month later, on April 7, 2009, CareFirst responded to Pellicano's request. In this response CareFirst explained that the claim had been processed with an incorrect rejection code, stated that Medicare was Pellicano's primary insurer, informed Pellicano that his federal benefit plan provided secondary coverage, and advised Pellicano that “[y]ou must submit a claim for this charge to Medicare. After Medicare has paid, please send your claim for benefits to your Local Blue Cross and Blue Shield Plan or the Plan serving the area where the services were rendered.” (Id. pp. 58.)

Thus, CareFirst's April 2009 response directed Pellicano to take another bureaucratic journey: Specifically, to secure reimbursement Pellicano was required to first file an appeal with Medicare. If his appeal was denied by Medicare he was then permitted to appeal to the Blue Cross Blue Shield carrier as a secondary health insurer. (Id. ) CareFirst then completed the bureaucratic process of addressing Pellicano's initial claim by reprocessing the claim under a new claim number and denying the claim for the correct reason. (Id., p. 66.)

Undeterred, Pellicano launched two parallel efforts to secure reimbursement of this medical expense. First, on or about July 6, 2009, Pellicano sought reconsideration of the denial of this claim. (Id., p. 59.) In addition, Pellicano attempted to comply with the directions he received from CareFirst that he exhaust any claims first through Medicare, by submitting a Medicare denial benefit statement and Medicare appeal denial letter indicating that Medicare denied the claim for the this durable medical equipment. (Id., pp. 59–63.) This Medicare appeal decision found that the Functional Electrical Stimulation (FES) cycle ergonometer was not covered by Medicare because “the motorized cycle system [he] purchased is categorized as exercise equipment. Medicare does not provide reimbursement for equipment that is not primarily medical in nature.” (Id., p. 61.)

On September 23, 2009, after considering information submitted by Pellicano and receiving requested medical documentation from Pellicano's medical providers, CareFirst issued its decision on reconsideration[,] finding that the Functional Electrical Stimulation (FES) cycle ergonometer met the criteria for covered durable medical equipment and was medically necessary for Pellicano's condition. (Id., pp. 2–4.) Accordingly, Pellicano was informed that the claim was found to be reimbursable but was advised that CareFirst would only pay the claim using 65% of the billed charge as the Plan allowance. (Id., p. 4.) This letter also stated that a check had been issued to Pellicano in the amount of $13,435.05—65% of the billed amount—and that Pellicano's total responsibility for the claim was $20,697.00. (Id. )

Dissatisfied with this decision, Pellicano filed an appeal of this decision with OPM on December 2, 2009. (Id., pp. 1–16.) In this appeal, Pellicano challenged the amount that was paid on the claim, specifically, disputing the decision to allow reimbursement of only 65% of this equipment expense. (Id. ) On appeal, Pellicano raised a twofold claim, arguing first that nothing in the health benefit plan justified a reduced 65% reimbursement rate for this expense. In addition, Pellicano provided redacted copies of two other redacted Explanation of Benefit (EOB) forms which appeared to have approved full reimbursement of similar devices in the past. (Id., pp. 10, 12.) According to these copies, it appeared that the billed charge amount was the amount used as the Plan allowance, although the Explanations of Benefits letters did not reflect precisely what services or supplies were at issue on those specific claims. Nor did the forms explain the nature of the claimant's medical justification for this equipment. (Id. )

On December 29, 2009, [sic] CareFirst, in turn,

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