Thiemann v. D.C. Pub. Sch. Dist.

• Citation: 268 Ed. Law Rep. 572,338 S.W.3d 835
• Decision Date: 22 March 2011
• Docket Number: No. WD 72791.,WD 72791.
• Parties: Jacqueline THIEMANN, Appellant,v.COLUMBIA PUBLIC SCHOOL DISTRICT, Respondent.
• Court: Court of Appeal of Missouri (US)

338 S.W.3d 835
268 Ed. Law Rep. 572

Jacqueline THIEMANN, Appellant,
v.
COLUMBIA PUBLIC SCHOOL DISTRICT, Respondent.

No. WD 72791.

Missouri Court of Appeals, Western District.

March 22, 2011.

[338 S.W.3d 836]

Walter H. Bley, Jr., Columbia, MO, for appellant.Wilbur L. Tomlinson, St. Louis, MO, for respondent.Before Division Three: CYNTHIA L. MARTIN, Presiding Judge, JAMES E. WELSH, Judge and GARY D. WITT, Judge.CYNTHIA L. MARTIN, Judge.

This case involves a dispute over whether a self-funded medical benefits plan was required to provide coverage for a dental surgical procedure performed in a hospital and under anesthesia. Jacqueline Thiemann (“Thiemann”) appeals from a grant of summary judgment in favor of the Columbia Public School District (“CPSD”) and from the denial of a cross-motion for summary

[338 S.W.3d 837]

judgment filed by Thiemann. Thiemann contends that the trial court erred because: (1) the plain terms of CPSD's Medical Benefit Plan (the “Plan”) provided coverage for her procedure; and (2) in the alternative, the Plan is an ambiguous adhesion contract which must be construed against CPSD to afford coverage. We reverse and remand this case with instructions.

Factual and Procedural History

We view the record and reasonable inferences therefrom in the light most favorable to the non-movant in this summary judgment proceeding. C–H Bldg. Assocs., LLC v. Duffey, 309 S.W.3d 897, 899 (Mo.App. W.D.2010) (citing ITT Commercial Fin. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993)).

Thiemann is employed by CPSD as a secretary at Jefferson Junior High School. CPSD maintains the Plan for the benefit of “Covered Individuals” as that term is defined in the Plan. Thiemann is a Covered Individual. FMH Benefits Services (“FMH”) is the third party administrator contracted by the Plan to administer claims.

Thiemann was referred by her dentist to Timothy T. Coyle, D.D.S., M.D., (“Dr. Coyle”) because of difficulties she was having wearing an upper denture. Dr. Coyle concluded that Thiemann suffered from “severe atrophy of the edentulous alveolar ridge—maxilla.” He advised that Thiemann needed a maxilla bone graft in order to permit installation of dental implants. Dr. Coyle wrote to FMH on January 16, 2009 and described Thiemann's condition and his recommended course of action. FMH advised that the treatment proposed by Dr. Coyle would not be covered under the Plan.

Thiemann's dentist, Donald L. Gossett, DDS, (“Dr. Gossett”) contacted FMH on May 20, 2009 regarding coverage. He recommended the following procedures to address Thiemann's severe maxillary atrophy: (1) bone graft to maxilla ¹ and bilateral maxillary sinus lifts; (2) harvesting bone from the left iliac crest ²; and (3) endosteal implants.³ On May 20, 2009, Dr. Gossett was advised by FMH that the proposed surgical procedures would not be covered under the Plan.

Nonetheless, on July 6, 2009, Dr. Gossett, with the assistance of Dr. Ronald Taylor (“Dr. Taylor”), performed the described surgical procedures. The parties agree that the procedures performed on Thiemann involved the “alveolar process.” ⁴ The surgical procedures performed on Thiemann required her to be hospitalized, and were required to be performed under anesthesia.

FMH notified Thiemann that the surgery was not covered by her Plan and that she was responsible for her medical bills. Thiemann administratively appealed the denial of coverage. Thiemann's appeal was denied by letter dated November 18, 2009 (“Denial Letter”). The Denial Letter cited to the section of the Plan entitled LIMITATIONS ON MEDICAL BENEFITS (Article III.D) which provides, in pertinent part, that:

[338 S.W.3d 838]

Benefits shall not be provided for or in connection with:

....

10. Charges for dental procedures or oral surgery, unless specifically listed as a Covered Expense.

Though the phrase “Covered Expense” is capitalized, it is not a defined term in the section of the Plan entitled DEFINITIONS (Article II.A). However, in Article III.C of the Plan, entitled MEDICAL BENEFITS, paragraph 4 is entitled “Covered Expenses.” In Article III.C.4, the Plan states:

Covered Expenses shall include only Reasonable and Customary Charges actually incurred by a Covered Individual while covered under the Plan, and which are not otherwise excluded as provided in the Plan, for the services and supplies listed herein which are Medically Necessary and which are prescribed by the attending Physician and required in connection with Medically Necessary therapeutic treatment of Injury or Illness.

Article III.C.4 is then followed by forty subparagraphs, enumerated “a” through “nn,” which describe the “Covered Expenses” under the Plan. These subparagraphs include: “a. Hospital Services,” and “q. Medical Dental Treatment.” The Denial Letter relied on these two subparagraphs of Article III.C.4 to conclude that Thiemann's surgical procedures were not listed as covered, and that the Plan was, therefore, not obligated to provide coverage pursuant to Article III.D.10.

On January 11, 2010, Thiemann filed a petition against CPSD alleging breach of contract and vexatious refusal to pay.

On March 1, 2010, Thiemann filed a first amended petition which included count one for mandatory injunction and/or remedial writ and count two for vexatious refusal to pay. Thiemann alleged damages of $35,142.36, consisting of $1,400 for anesthesia, $17,684.36 for the hospital, and $16,058.00 for Gossett. On the same day, the trial court granted a pending motion to dismiss the vexatious refusal count for failure to state a claim.⁵

Both CPSD and Thiemann filed motions for summary judgment. The trial court entered judgment (“Judgment”) on June 29, 2010 granting CPSD's motion for summary judgment and denying Thiemann's motion for summary judgment. The Judgment also entered “final judgment” in favor of CPSD. Thiemann timely filed this appeal.

Standard of Review

“We review a trial court's decision to grant a summary judgment motion de novo.” C–H Bldg. Assocs., LLC, 309 S.W.3d at 899. We view the record and reasonable inferences therefrom in the light most favorable to the non-movant. Id. (citing ITT Commercial Fin., 854 S.W.2d at 376).

The single issue on appeal is whether the Plan provided coverage for Thiemann's surgical procedures. “The interpretation of an insurance policy, and the determination whether coverage and exclusion provisions are ambiguous, are questions of law that this Court reviews de novo.” Burns v. Smith, 303 S.W.3d 505, 509 (Mo. banc 2010). Though the parties contest the amount of benefits Thiemann would be entitled to recover if coverage for her procedure is provided by the Plan, the parties agree there are no genuine issues of material fact in dispute involving the facts necessary to permit determination of the coverage question presented in this appeal.

[338 S.W.3d 839]

Notwithstanding the clear declaration in Burns that our standard of review is de novo in disputes of this nature, CPSD contends that our standard of review should be “abuse of discretion.” CPSD points to Article IV.B of the Plan which provides that:

The Employer, or its designee, shall have the sole and absolute authority and discretion to interpret the terms of the Plan, to determine all questions of fact and determine the eligibility of individuals for coverage and benefits and their extent. All determinations and interpretations [sic] the Employer of its designee shall be final and binding on all parties unless such determination is arbitrary or capricious.

(Emphasis added.) CPSD contends that the discretionary authority described in Article IV.B of the Plan is common in non-governmental group benefit plans which are subject to the Employee Retirement Income Security Act (“ERISA”), and that similar language has been construed by federal courts to impose an arbitrary and capricious/abuse of discretion standard of review of coverage determinations.

We are not persuaded by CPSD's argument. First, CPSD concedes the Plan is not an ERISA plan, rendering federal cases construing discretionary authority language through that lens inapposite. Second, CPSD's argument ignores that the Plan, which CPSD drafted, provides in Article IV.E.7 that: “Missouri law shall govern interpretation of this Plan Document.” Third, the discretionary authority language in Article IV.B expressly authorizes CPSD to make determinations of fact, not law. Though the language also affords CPSD the discretion “to interpret” the Plan and to “determine eligibility for coverage,” CPSD cites to no Missouri authority suggesting that our standard of review in interpreting an insurance contract can be summarily modified by an insurer's insertion of a “discretionary authority” provision into a contract, particularly where the contract is not subject to ERISA, and where an insured has no meaningful ability to negotiate the contract's terms.

We will not deviate from our Supreme Court's directive that a trial court's decision to grant a summary judgment motion be reviewed de novo, and that the determination of coverage under an insurance policy be reviewed de novo as a question of law.⁶

Point I

In point one, Thiemann contends that the trial court erred in granting CPSD's motion for...