Saah v. Contel Corp.

• Decision Date: 25 October 1991
• Docket Number: Civ. No. Y-90-2073.
• Citation: 780 F. Supp. 311
• Parties: Norman SAAH, Jr., et al. v. CONTEL CORPORATION.
• Court: U.S. District Court — District of Maryland

780 F. Supp. 311

Norman SAAH, Jr., et al. v. CONTEL CORPORATION.

Civ. No. Y-90-2073.

United States District Court, D. Maryland.

October 25, 1991.

Richard Murray, Washington, D.C., for plaintiffs.

Jeffrey P. Ayres, Eric Paltell, Baltimore, Md., for defendant.

MEMORANDUM

JOSEPH H. YOUNG, Senior District Judge.

Defendant filed a Motion for Summary Judgment and Plaintiffs filed a Cross Motion for Summary Judgment. After a consideration of the pleadings and evidence submitted, the Court finds that Plaintiffs have failed to establish that Defendant's interpretation of its Group Medical Benefit Plan or that Defendant's application of the Plan's terms to Norman Saah, Jr. was an abuse of discretion. Accordingly, Defendant's Motion for Summary Judgment is granted and Plaintiff's Cross Motion for Summary Judgment is denied.

Facts

Plaintiff Norman Saah, Sr. ("Saah") is a full-time, nonunion employee of the Contel Corporation ("Defendant"). As such, Saah is covered by Defendant's Group Medical Benefit Plan ("Plan"). Norman Saah, Jr. is Saah's 21-year-old son ("Son") who is also covered by the Plan.

In August of 1988, Son was involved in an automobile accident which left him in a coma for four weeks and caused some injury to his brain. After the accident, he spent six months at a medical rehabilitation center in Philadelphia, Pennsylvania. In January of 1990, Son was admitted to the Taylor Manor Hospital in Ellicott City. His treating psychiatrist at Taylor Manor, Dr. Billian, diagnosed him as suffering from Bipolar Disorder, Organic Mood Disorder and Poly Substance Abuse. Dr. Billian recommended that Son be transferred to the Health Care Rehabilitation Center in Austin, Texas ("Center") for treatment. In accordance with the requirements of the Plan, Plaintiffs requested pre-certification for the treatment.

Health International ("HI") is Defendant's "managed care" provider. (MSJ pp. 8, 11). HI is responsible for pre-certifying treatment and reviewing claims filed under the Plan. HI prospectively reviews proposed medical and psychiatric treatment of persons covered by the Plan. After evaluating the patient and reviewing the treatment, Health International advises Defendant if the treatment is medically or psychiatrically appropriate.

Health International conducted a pre-certification review of Son's case to determine whether the Plan would cover his transfer to and expenses at the Center. His case was reviewed by Marge Demaret, L.V.N. and Professional Service Coordinator for HI. After consultation with several independent psychiatrists and a representative from the Center, HI determined that Son would receive behavior modification and group therapy at the Center, and that such treatment is considered to be psychiatric. (MSJ, p. 10, 24). Accordingly, Health International recommended authorizing his transfer to the Center under a psychiatric diagnosis, "subject to further evaluation to determine whether he needed medical treatment, psychiatric treatment, or a combination thereof." (MSJ, p. 18).

Nurse Demaret informed the Center of HI's proposed recommendation. The Center rejected this offer and informed HI that it would not admit Son unless it was assured that the Plan's $100,000 limit on psychiatric care and substance abuse treatment would not apply to treatment he received at the Center. (MSJ, p. 19)

By letter dated May 30, 1990, Defendant advised Saah of the Plan's position with regard to the treatment proposed by the Center and Contel's decision to deny pre-certification. Saah appealed this determination, claiming that Son required long-term medical care at the Center. (Exh E, Attach 1). John Dawley, the Plan Administrator, denied the appeal.

By letter dated July 20, 1990, Mr. Dawley explained to the Plaintiffs that Defendant's decision was based upon a finding by Health International that Son would receive treatment that is both psychiatric and medical at the Center. (MSJ Exh C, Attach 2). Specifically, Health International found that Son would receive behavior modification and group therapy, both of which are psychiatric treatments. (Id.). He explained further that Health International denied pre-certification because "the Center would admit Son only if Health International would pre-certify that the Plan's $100,000 limitation for psychiatric or substance abuse care did not apply to the Center's treatment program." (Id.). He also explained that Health International was willing to pre-certify a treatment program for Son at the Center so long as any psychiatric or substance abuse care provided to Son by the Center was subject to the Plan's $100,000 limitation. (Id.; MSJ, p. 29-30).

Defendant moves for summary judgment on grounds that its interpretation of the Plan was reasonable and supported by substantial evidence. Specifically, Defendant alleges that it routinely makes benefit determinations by focusing on the nature of the treatment to be received, not the condition of the recipient; and its finding that Son would receive psychiatric treatment subject to the Plan's coverage limitation was not unreasonable.

Plaintiff opposes Defendant's motion and moves for summary judgment on grounds that Defendant's decision to focus on the nature of the treatment as opposed to the condition being treated was an abuse of discretion. Plaintiff contends that Son's condition is medical and that any treatment he receives for his condition is also medical and not subject to the $100,000 limitation on psychiatric care.

The Law

A. Summary Judgement

Summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. The United States Supreme Court has interpreted this rule to mandate the entry of summary judgment after an adequate time for discovery against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

B. Review of Benefit Determination Under 29 U.S.C. § 1132(a)(1)(B).

Title 29 U.S.C. § 1132(a)(1)(B) permits recovery of benefits due under an employee welfare benefit plan:

A civil action may be brought by a participant or beneficiary ... to recover benefits due to him under the terms of the plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.

A denial of benefits challenged under section 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989); De Nobel v. Vitro Corporation, 885 F.2d 1180 (4th Cir. 1989). If the Plan fiduciary has such authority, then review is limited to "abuse of discretion." De Nobel, at 1186 ("If the plan's fiduciaries are entitled to exercise discretion ..., reviewing courts may disturb the challenged denial of benefits only upon a showing of procedural or substantive abuse.").

The Plan at issue in this case borrows language from Firestone:

The Plan Administrator is Contel Corporation through its Vice President, Human Resources.... The Plan Administrator administers the Plan under contract with the Plan sponsors. The Plan Administrator has discretionary authority to determine eligibility for benefits and to construe the terms of the Plan; (Plaintiff's Exh. 1, p. 29). (Emphasis supplied). See, Firestone, at 115, 109 S.Ct. at 956.

Accordingly, Defendant's benefit determination must be reviewed under the abuse of discretion standard. Under the abuse of discretion standard, the Plan Administrator's interpretation of relevant provisions will not be disturbed if "reasonable." De Nobel v. Vitro Corp., 885 F.2d 1180, 1187 (4th Cir.1989) (citing Firestone v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 954). The Court in De Nobel announced several rules to guide an analysis:

(1) Whether the administrators' interpretation is consistent with the goals of the plan;

(2) Whether the administrators' interpretation might render some language in the plan documents meaningless or internally inconsistent (3) Whether the challenged interpretation is at odds with the procedural and substantive requirements of ERISA;

(4) Whether the provisions at issue have been applied consistently; and

(5) Whether the fiduciaries' interpretation is "contrary to the clear language of the plan."

Ultimately, however, the Plan Administrator's interpretation is entitled to "considered deference." Id. at 1188. Review of the Plan Administrator's decision is limited to the record before the Plan Administrator at the time of his decision. Steever v. Bristol-Myers Co., 727 F.Supp. 986, 989 (D.Md.1989). Where the Plan fiduciaries have offered a reasonable interpretation of disputed provisions, "courts may not replace it with an interpretation of their own, — and therefore cannot disturb as an `abuse of discretion' the challenged benefits determination." De Nobel, supra, 885 F.2d at 1188. If the decision of the Administrator is supported by substantial evidence, there can be no abuse of discretion. Steever v. Bristol-Myers Co., supra, 727 F.Supp. at 989.

At trial, the plaintiff would have the burden of proving an abuse of discretion. Questech, Inc. v. Harford Acc. & Indem. Co., 713 F.Supp. 956, 964 n. 20 (E.D.Va. 1989).

Discussion

According to Defendant, the Plan distinguishes between limitations on coverage for psychiatric care and medical care. Each person covered by the Plan is allowed an individual lifetime maximum of $1,000,000 for medical care and $100,000 for psychiatric or substance abuse care.¹

In response, Plaintiffs contend that the language of the Plan is ambiguous and internally inconsistent....