Phillips v. Lincoln Nat. Life Ins. Co.

• Decision Date: 24 March 1993
• Docket Number: No. 91-3477,91-3477
• Citation: 978 F.2d 302
• Parties: , 15 Employee Benefits Cas. 2763 Gordon B. PHILLIPS, as Guardian of James G. Phillips, Plaintiff-Appellee, v. LINCOLN NATIONAL LIFE INSURANCE COMPANY, an Indiana Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 302

978 F.2d 302

61 USLW 2263, 15 Employee Benefits Cas. 2763

Gordon B. PHILLIPS, as Guardian of James G. Phillips Plaintiff-Appellee, v. LINCOLN NATIONAL LIFE INSURANCE COMPANY, an Indiana Corporation, Defendant-Appellant.

No. 91-3477.

United States Court of Appeals Seventh Circuit.

Argued June 2, 1992.

Decided Oct. 21, 1992.

As Amended Oct. 22, and Nov. 9, 1992.

Rehearing and Rehearing In Banc

Denied March 24, 1993.

Dennis J. O'Hara (argued), Wilson & McIlvaine, Stephen C. Voris, Le Ann Pope and Andrew James, Burke, Warren and MacKay, Chicago, Ill., for Gordon B. Phillips, as Guardian of James G. Phillips.

David J. Novotny, J. Robert Geiman, William A. Chittenden, III (argued), Douglas Varga, Peterson & Ross, Chicago, Ill., for Lincoln Nat. Life Ins. Co. Alan M. Posner, Robert C. Johnson, Duane C. Quaini, Sonnenschein, Nath & Rosenthal, Chicago, Ill., Joe Peel, Theresa L. Sorota, Health Ins. Ass'n of America, Washington, D.C., for Health Ins. Ass'n of America, amicus curiae.

Robert W. Gettleman, Jeffrey H. Bergman, Jean M. Snyder, D'Ancona & Pflaum, Chicago, Ill., for National Depressive and Manic Depressive Ass'n, amicus curiae.

Before BAUER, Chief Judge, COFFEY and RIPPLE, Circuit Judges.

COFFEY, Circuit Judge.

Gordon B. Phillips ("Phillips"), as guardian for his dependent son, James G. Phillips ("James"), brought this action in the district court under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461, against Lincoln National Life Insurance Company ("Lincoln") seeking recovery of benefits under an employee welfare benefit plan ("the Plan") established by his employer, Seedboro Equipment Company ("Seedboro"), pursuant to its purchase of an insurance policy from Lincoln. Both parties agree that the Plan is an employee welfare benefit plan governed by ERISA. Phillips argued in the district court that Lincoln erroneously applied the Plan's mental illness benefit limitation to Phillips' benefits claim for expenses incurred in the treatment of James' illness. The district court entered summary judgment in favor of Phillips, and Lincoln appeals. We affirm.

I. BACKGROUND

On November 1, 1984, Seedboro established a benefit plan for its employees through its purchase of a group health insurance policy from Lincoln. The Plan defined the health insurance benefits available for eligible employees of Seedboro and their dependents. Phillips, who is Seedboro's president, and his dependent son James were eligible participants in the Plan. The Plan provisions relevant to the instant dispute are as follows:

                                            MAJOR MEDICAL BENEFITS
                Maximum Benefit (Lifetime Aggregate)                                 $1,000,000
                Except that, the Maximum Benefit (Lifetime Aggregate)                $   25,000
                  for charges for mental illness(es) is
                

* * * *

                                           MAJOR MEDICAL LIMITATIONS
                The maximum payment for care of mental illness or care of nervous conditions of
                  any type or cause by a doctor will not be more than
                1.                      $20.00 for each visit; and
                2.                      one visit on any one day; and
                3.                      50 visits during any calendar year
                (A "visit" occurs each time the doctor provides care to the patient)
                                                    * * * *
                                                  DEFINITIONS
                Illness-means
                1.                      A disorder or disease of the body or mind..............
                                                    * * * *
                

The Plan provided no definition of the term "mental illness."

In December, 1981, when he was 16 years old, James was diagnosed as suffering from what doctors call "congenital encephalopathy." Congenital encephalopathy is a brain malfunction, manifested by neurological defects, whose exact location in the brain cannot be pinpointed. James' condition was diagnosed through extensive neuropsychological testing measuring language ability, motor and perceptual skills, visual and verbal memory, and intelligence. In addition, a brain scan performed in 1989 revealed that a portion of James' brain was "not putting out the electrical impulses or processing electrical stimuli and impulses the way it would normally." In James' case, his neurological defect has given rise to a cluster of behavioral disorders. Those afflicted with this condition are referred to as suffering from "organic brain syndrome." Dr. Erin Bigler, a neuropsychologist who has examined James, explained in a deposition that organic brain syndrome is

"a disorder of brain function that in turn affects the behavior of the patient in some way. Some organic brain syndromes only affect intellectual and reasoning abilities. Other organic brain syndromes may affect only certain aspects of emotional control or functioning. In a mixed organic brain syndrome it means that you basically have some diffuse brain dysfunction that's affecting pretty much all aspects of behavior."

According to Dr. Bigler, James suffers from mixed organic brain syndrome. James' disorder manifests itself in numerous and varied behavioral episodes. James has what his doctors describe as "horrible" social skills and is "often very loud and obnoxious." James frequently inappropriately touches others and engages in "repetitive mannerisms" such as rocking back and forth. James can be hyperactive, hyperexcitable, "extremely self abusive" and "physically abusive to [others]." At times he is psychotic, suffers from periods of compulsive eating, and has rapid mood swings. James also has significant difficulties processing visual information. Although he is not mentally retarded, he does have a learning disability.

At the time of the filing of this appeal, James was being treated at Healthcare Rehabilitation Center in Austin, Texas ("Healthcare"). Healthcare specializes in the treatment and rehabilitation of persons suffering from neurological disorders. Healthcare does not provide general psychiatric treatment and refers patients who are diagnosed as requiring psychiatric care to other hospitals. Healthcare is licensed as a mental health facility in the state of Texas, but, according to Dr. John Batemen, the neuropsychiatrist who oversees James' treatment at Healthcare, the facility is so licensed solely for the purpose of confining its patients for their own safety.

According to the record, medical science has been unable to implement a treatment program to successfully attack and contain the mental affliction from which James suffers. Therefore, doctors are forced to confine their efforts to helping James control and function with the behavioral manifestations of his illness. Under Dr. Bateman's care, James is treated with medications to control his neurological problems and lives in a monitored environment where he is hopefully learning how to cope with his condition. James is also given low dosages of medications to ameliorate some of the behavioral manifestations of his illness, such as irritability and extreme anxiety.

Dr. Bateman stated in his deposition that James does not have a mental illness, but rather has an "organic mental disorder as one manifestation of his underlying neurological disease." However, in a deposition Dr. Bigler agreed with the statement made by a Lincoln attorney that organic brain syndrome is an example of "a mental disorder or a mental illness" that is organically based. Both doctors agreed that certain mental illnesses can be organically based.

From the effective date of the Plan in 1984 until October, 1987, Lincoln paid $25,000 in Plan benefits for the expenses Phillips incurred in the treatment of James' illness. Having reached the Plan's mental illness limitation cap, Lincoln refused to reimburse Phillips for any of the subsequent expenses arising from his son's treatment. In early 1990, Phillips appealed Lincoln's determination to the Lincoln National Appeals Committee, arguing that James' illness was a physical condition which gave rise to certain mental deficiencies and thus fell outside the scope of the Plan's mental illness limitation. The Appeals Committee affirmed the original claim determination.

Following the decision of the Lincoln Appeals Committee, Phillips filed a complaint in the district court. In Count I of his complaint, Phillips sought a declaratory judgment that the Plan's $25,000 mental illness limitation did not apply to his claim for benefits and further sought recovery of costs and attorneys' fees pursuant to 29 U.S.C. § 1132(g)(1). In Count II of his complaint, Phillips sought recovery of monetary damages in the amount of denied benefits for expenses incurred in the treatment of James' condition through November 1, 1990. ¹ Both parties filed motions for summary judgment.

In a published opinion, the district court explained that Phillips and Lincoln advanced "competing reasonable interpretations" of the Plan term "mental illness". Phillips v. Lincoln National Life Insurance Company, 774 F.Supp. 495, 499 (N.D.Ill.1991). The court noted that Phillips argued in his summary judgment motion that the term "mental illness" referred only to those illnesses with non-physical causes, "such as illnesses traceable to abuse suffered in one's childhood or to other types of traumatic experiences. According to [Phillips], behavioral problems traceable to an organic or physical cause are other than 'mental illnesses.' " Id. Lincoln's summary judgment motion took issue with Phillips' definition of mental illness, arguing that the cause of a behavioral illness does not determine whether it is a mental illness. Id. at 500. In Lincoln's view, an illness is a mental illness if its symptoms include extremely abnormal behavior. Id.

The district court questioned Lincoln's definition of "mental illness", reasoning that "aberrant behavioral symptoms are a necessary but not sufficient component of any definition of mental illness" because

"[t]here is no question that some conditions are marked primarily by...