Siegal v. Health Care Service Corp.

• Decision Date: 05 February 1980
• Docket Number: No. 78-1888,78-1888
• Citation: 401 N.E.2d 1037,81 Ill.App.3d 784,36 Ill.Dec. 899
• Parties: , 36 Ill.Dec. 899 Sol SIEGAL and Marian Siegal, Plaintiffs-Appellees, v. HEALTH CARE SERVICE CORP., d/b/a Blue Cross-Blue Shield, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 1037

401 N.E.2d 1037

81 Ill.App.3d 784, 36 Ill.Dec. 899

Sol SIEGAL and Marian Siegal, Plaintiffs-Appellees, v. HEALTH CARE SERVICE CORP., d/b/a Blue Cross-Blue Shield Defendant-Appellant.

No. 78-1888.

Appellate Court of Illinois, First District, Second Division.

Feb. 5, 1980.

Kirkland & Ellis, Chicago, for defendant-appellant; Donald J. Duffy, Chicago, of counsel.

Robert F. Lisco, Lisco & Field, Chicago, forplaintiffs-appellees; Sidney Z. Karasik, Chicago, of counsel.

STAMOS, Justice:

This action was brought to recover benefits under a major medical insurance policy issued by defendant. Plaintiffs' complaint in two counts was predicated on a contract theory for breach of the medical insurance policy and a wilful tort theory for breach of implied duty to deal in good faith. The jury returned a verdict of $20,000 compensatory damages for breach of contract and $55,000 punitive damages for the wilful tort. Defendant filed a post-trial motion seeking either judgment notwithstanding the verdict or a new trial. From the judgment on the verdict and the denial of the post-trial motions defendant appeals, contending that the proof was insufficient to support the jury verdict and a new trial or directed verdict should have been granted; that punitive damages were improperly assessed against a not-for-profit corporation, Blue Cross-Blue Shield; and that certain errors in the admission of evidence and the presentation of instructions to the jury were committed by the trial court.

Defendant, Health Care Service Corporation, d/b/a Blue Cross-Blue Shield, issued a comprehensive major medical policy to plaintiff Sol Siegal which provided for family coverage. The initial policy of April 1, 1976, provided:

"(15) 'Covered Medical Expenses' means the regular and customary charges incurred by a Beneficiary for necessary services or other items, subject to the Exclusions of IV, as follows:

(k) Private nursing services of an actively practicing nurse, other than a nurse who ordinarily resides in the Beneficiary's home, or is a member of the Beneficiary's immediate family, as follows:

(2) Other than in a Hospital, services of a registered nurse (R.N.);

ARTICLE IV EXCLUSIONS

No benefits shall be provided hereunder on account of

(6) Services or supplies not necessary to treatment of injury or illness; * * * "

On April 1, 1977, plaintiffs' insurance group purchased a different plan which provided coverage, inter alia, for:

"(22) Private Duty Nursing Services

When services of an actively practicing registered nurse or licensed practical nurse, other than a nurse who ordinarily resides in a Member's home or is a member of the Member's immediate family, when the attending Physician verifies the medical necessity for active treatment.

ARTICLE V

EXCLUSIONS

A. No payment will be made under Article IV of Part 'C' for any expenses incurred for items or services:

(1) which are not reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body member * * *"

After the change the policy provided for the services of a licensed practical nurse in addition to the coverage already extended to the services a registered nurse might provide.

Sol Siegal's wife, plaintiff Marian Siegal, developed a serious degenerative neurological condition which was originally diagnosed as Parkinson's disease but later as Steele-Richardson Olszeuski Syndrome (otherwise known as progressive supranuclear palsy). In late 1976, she was hospitalized for treatment of burns. Following discharge from the hospital, her treating physician ordered skilled nursing care to be provided Mrs. Siegal. A private duty registered nurse was immediately engaged and a claim for services from December 2 through December 23, 1976, was submitted to and paid by Blue Cross. Plaintiffs presented a second claim accompanied by a doctor's certification that skilled nursing services were necessary on February 28, 1977. Plaintiffs continued to submit periodic claims thereafter, but Blue Cross after having paid the first claim, refused to honor any subsequent billings. During this period (beginning March 7, 1977), plaintiffs were asked to provide Blue Cross with the name of the nurse, her license number, what skilled services she was performing, the doctor's notes, two medical reports, itemized professional bills, and the nurse's notes. However, plaintiffs did not fully comply and all requested information, including letters by treating physicians dated July 22 and August 5, 1977, was not gathered and resubmitted with prior claims until September 5, 1977.

Dr. Collette Rasmussen, Associate Medical Director of Blue Cross, first reviewed plaintiffs' claim file on September 22, 1977, nine months after the first claims were submitted. Upon review of the claims information, Dr. Rasmussen determined that although Mrs. Siegal might require a constant companion, the skills of a registered nurse were not medically necessary except for an allowance of one hour a day for prescribed exercises. She stated that her standard of review of medical necessity was not based upon the diagnosis of the doctor or his conclusion that a registered nurse was required. Instead, Dr. Rasmussen focused on whether skilled nursing care was necessary, interpreted as that which an intelligent adult even with teaching could not do. She made her determination based on two factors what the doctor ordered and what the nurse actually provided. Both elements had to show the need for a skilled registered nurse. The "(d)octor could order a skilled service and the nurse could omit to provide it, so you have to have both." Since Rasmussen considered an examination of Mrs. Siegal and an inspection of hospital records or neurologist's notes to be irrelevant to whether the nursing services as provided were skilled, she did not seek additional information from these sources. Dr. Rasmussen explained her actions: "(i)t's what (the attending doctor) orders the nurse to do that determines whether that is skilled or not." Following her recommendation, a letter was sent to plaintiffs on September 28, 1977, informing them that Blue Cross had denied their claim.

At trial, three employees of Blue Cross testified to explain customary expediting procedures for claims and that routine procedures were followed in plaintiffs' case. Casimier Gaik, a self-employed insurance broker who administered the group plan under which plaintiff was covered, also testified, over defendant's objection, concerning common industry practice with regard to claims of this type and about his attempted help in expediting the Siegal claim. Gaik stated that over the years he had acted as a broker for several different insurance companies and was familiar with the various provisions of the individual policies. As an example, he said that the Travelers health insurance contract contained similar "medical necessity" provisions which other insurance carriers would interpret to accept the doctor's opinion as to what services or supplies were medically necessary in the treatment of his patient.

Gaik became aware of the Blue Cross request for nursing notes in April or May of 1977. On contacting the nursing agencies, he found that one did not keep notes, but Gaik provided Blue Cross with those records that were available. He also stated that the nurses are not legally required to keep notes and Gaik had never before actually encountered a situation where he had to go back and request such notes. As a broker for various insurance plans, he did not place too much weight on nursing notes, which he stated tend to be extremely misleading, because "(m)any of the ones we have reviewed more or less tells more or less (sic) what the nurse was doing to protect the nurse (from certain liabilities of their profession), as opposed to what the patient was doing."

Dr. Eugene Blonsky, a physician specializing in neurology, testified that he had conducted his first neurological exam on Mrs. Siegal in December of 1975. Her condition was diagnosed as Parkinson's disease. On February 22, 1977, he admitted Mrs. Siegal to the hospital and discovered during a brain scan that a stroke had occurred the previous day. He also noted that her condition appeared to be deteriorating, in that she had great difficulty in standing and walking, she had begun to fall frequently, and her eye movement had become increasingly paralyzed, at times fixed in an unblinking, straight-ahead staring position. It was during this stay that Dr. Blonsky rediagnosed her condition as Steele-Richardson Olszeuski Syndrome. Dr. Blonsky concluded that:

"My diagnosis in her case is Steele-Richardson Olszeuski Syndrome and her prognosis is very poor. This condition is a total irreversible progressive condition and there is nothing I know of, medically or surgically, which will reverse or arrest the progress. There will be deterioration to the point where she will be not ambulatory, confined to a wheelchair or some other sitting position; there may be progressive changes in her intellectual status; problems with swallowing will become a serious difficulty and may require a feeding tube directly into the stomach in order to maintain her nutrition. I am of the opinion that this patient requires skilled nursing care."

He further testified that Mrs. Siegal:

"needs skilled nursing care because she requires medication at specific intervals during the course of the day, which she is totally incapable of handling on her own; vital signs, blood pressure, pulse, respiration, etc., to be checked periodically; she requires physical therapy, exercise, walking and patterning activities, et cetera. She needs someone who can deal with problems which might arise if she were to choke or aspirate food or liquid into the trachea, which might seriously compromise her breathing and endanger her life. She needs someone who is alert to her problems and in a position to...