Tomlinson v. Combined Underwriters Life Ins. Co.

• Decision Date: 09 April 2010
• Docket Number: No. 08-CV-259-TCK (FHM).,08-CV-259-TCK (FHM).
• Parties: Terri TOMLINSON, Plaintiff,v.COMBINED UNDERWRITERS LIFE INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Northern District of Oklahoma

708 F.Supp.2d 1284

Terri TOMLINSON, Plaintiff,v.COMBINED UNDERWRITERS LIFE INSURANCE COMPANY, et al., Defendants.

No. 08-CV-259-TCK (FHM).

United States District Court,

N.D. Oklahoma.

April 9, 2010.

Eric James Begin, Jon Douglas Starr, McGivern Gilliard Curthoys, Tulsa, OK, for Plaintiff.

James W. Connor, Jr., Jason Travis Seay, Philip Raymond Richards, Richards & Connor, Jo Lynn Jeter, Joel L. Wohlgemuth, Ryan A. Ray, Joel L. Wohlgemuth, Norman Wohlgemuth Chandler & Dowdell, Tulsa, OK, for Defendants.

OPINION AND ORDER

TERENCE C. KERN, District Judge.

Now before the Court is the Motion for Summary Judgment (Doc. 79) filed by Defendants Combined Underwriters Life Insurance Company (“Combined Underwriters”), Citizens, Inc., Citizens Insurance Company of America (“CICA”), Citizens National Life Insurance Company (“Citizens National”), Texas International Life Insurance Company (“TILIC”), and Actuarial Management Resources, Inc. (“AMR”). As set forth in prior orders, this case arises out of a dispute concerning claims submitted and benefits payable under a Cancer and Dread Disease Insurance Policy (“the Policy”) issued to Plaintiff Terri Tomlinson (“Plaintiff”). Plaintiff initially asserted claims for breach of contract, bad faith and negligence. She later stipulated to dismissal of her negligence claim and conceded the summary judgment motion of defendant AMR. The Court permitted Plaintiff to add Austin Insurance Management, Inc. (“Austin Insurance”) as a defendant, and Austin filed a separate motion for summary judgment.¹ For purposes of the summary judgment motion before the Court, references to “Defendants” are to all remaining defendants other than Austin Insurance.

I. Factual BackgroundA. Relationship Among Defendants

Although the relationship among the Defendants is more relevant to Plaintiff's veil-piercing claims, the following details may be helpful to an understanding of the issues in this case. Combined Underwriters issued the Policy in 1991 to Plaintiff's former husband, under which Plaintiff was also an insured. Citizens, Inc. purchased Combined Underwriters in 2002, and gave the stock of Combined Underwriters to CICA, a subsidiary of Citizens, Inc. CICA designated Combined Underwriters to be its subsidiary and changed Combined Underwriters' name to Citizens National in 2004. Citizens National and TILIC entered into a “Coinsurance Reinsurance Agreement” in December of 2004 whereby TILIC assumed the role of a co-insurer and reinsurer for a group of insurance policies that included the Policy at issue here. Austin Insurance is the parent corporation of TILIC. TILIC hired (the now-dismissed) AMG to administer Plaintiff's claims.

B. Denial of Claims

Plaintiff has a family history of cancer and was first diagnosed herself with breast cancer in 1997. She submitted expenses to Combined Underwriters and received policy benefits. Plaintiff was again diagnosed with breast cancer in June of 2004.

1. Drugs

From December 2004 to March 2005, Plaintiff had chemotherapy treatments. Plaintiff telephoned Citizens National to inquire about whether the drugs Neupogen or Neulasta would be covered under the Policy. A memorandum by the employee taking the call indicated that these drugs would be covered if used for definitive cancer treatment. The employee also requested that Plaintiff's doctor send a statement to the insurer. Plaintiff's doctor, Allen M. Keller, explained in a letter dated January 14, 2005, that he administered the Neupogen and Neulasta to her “to support bone marrow recovery so that chemotherapy can be given on the denser schedule.” ( Id., Ex. 8.)

Plaintiff submitted a claim in February 22, 2005. The bill for chemotherapy lists codes for chemotherapy treatments which differ from codes for Neupogen and Neulasta treatments, and the differing treatments were never given on the same day. After Plaintiff called the insurer to inquire as to whether the Neupogen would be covered, TILIC representative Suzie Ortiz called the office of Plaintiff's physician to inquire about the Neupogen and Neulasta. A nurse told Ortiz that the treatments were given to increase Plaintiff's blood count. ( Id., Ex. 8.) In emails to another representative, Ortiz admits that she was not sure of the meaning of Policy terms “antigenic preparations” and “immunosuppressive techniques.” (Resp.Br., Doc. 111, Exs.33, 34.)

On March, 2, 2005, TILIC requested a medical review of the Neupogen/ Neulasta issue by Medical Review Institute of America (“MRIA”). (Resp.Br., Doc. 111, Ex. 36.) On March 3, 2005, an internal medicine physician concluded that Neupogen/Neulasta would not be covered by the Policy. ( Id., Ex. 37.) TILIC relied upon the MRIA physician review to support its denial of benefits for Neupogen and Neulasta. The insurer tendered a check to Plaintiff for $25,179.00 of the $82,811.36 in submitted expenses on March 2, 2005 and explained its decision in a letter to Plaintiff dated March 4, 2005.

On March 8, 2005, Plaintiff complained to the Oklahoma Department of Insurance (“DOI”) about the denial of her claim for Neupogen and Neulasta and submitted a letter from her treating oncologist regarding the use of these drugs. The letter indicates that Plaintiff's chemotherapy program “is now considered standard therapy for women with her stage of breast cancer .... and cannot be administered in this fashion without all components of the program including the Neulasta.” (Mot.Summ. J., Doc. 79, Ex. 15.) Nonetheless, the DOI responded again with a determination that “[b]ased upon the information contained in [TILIC's] letter, the claim would appear to have been processed in accordance with the terms of your policy.” ( Id., Ex. 16.)

On March 30, 2005, TILIC requested that MRIA provide an oncologist review of the Neupogen/Neulasta issue. On March 31, 2005, the reviewing oncologist authored a report in which the oncologist states that Neupogen and Neulasta, “are an integral part of the chemotherapy treatment program. Without either Neupogen or Neulasta chemotherapy doses often have to be reduced, cycles delayed, or both. These agents allow the use of full dose chemotherapy on schedule.” (Resp.Br., Doc. 111, Ex. 43.) The physician also noted that supportive care medications are not excluded in the applicable policy provisions. The reviewer also disagreed with the previous review and stated: “This should be considered part of the chemotherapy regimen. It should be certified.” ( Id. at 2-3.)

TILIC did not disclose the report to Plaintiff or the DOI in the pending complaint process. Instead, TILIC faxed two questions challenging the findings of the MRIA physician and conducted a subsequent teleconference. There is some handwritten notation in the record indicating that someone did not want the conversation recorded. On April 4, 2005, the reviewing physician changed his opinion and concluded that, given “additional information from the carrier regarding the plan's coverage, Neupogen or Neulasta would not be a covered benefit as it does not directly destroy or modify cancerous tissue.” ( Id., Ex. 44 (emphasis added).) TILIC notified Plaintiff of the decision on April 16, 2005.

In May 2005, Plaintiff also submitted claims under the Policy for the drug Arimidex, which is a hormone therapy drug. Plaintiff's doctor prescribed the drug for her and she had the prescription filled at a pharmacy. TILIC denied the claim based on its determination that the drug was not “administered” by a chemotherapist but “self-administered” by Plaintiff.

2. Breast Surgeries

In 2000, 2001, and 2002, Combined Underwriters forwarded notices of certain insurance benefits made mandatory by the State of Oklahoma which were applicable to the Policy. The notices provided the following with respect to reconstructive breast surgery:

Reconstructive breast surgery as the result of a partial or total mastectomy will be covered, except as prohibited by Federal law or regulations pertaining to Medicaid. Reconstructive breast surgery includes:

(a) reconstruction of the breast on which the mastectomy was performed;

(b) surgery and reconstruction of the other breast to achieve a symmetrical appearance, provided it is performed within 24 months of reconstruction of the breast on which the mastectomy was performed;

(c) prosthesis and treatment of physical complication, including lymphedemas, at all stages of mastectomy.

( Id., Ex. 7.)

On August 4, 2004, she underwent bilateral mastectomies. Plaintiff made an insurance claim for $25,338.55 on the Policy, but Citizens National tendered a check to her for only $4,203.75. Plaintiff called Citizens National in October 2005 to inquire as to the insurance coverage for her breast prosthesis and was told that the Policy covers “only the prosthesis” and “nothing else.” ( Id., Ex. 28.) Plaintiff filed a complaint with the DOI on November 3, 2004. Citizens National responded to the DOI's inquiry, and DOI responded with a letter to Plaintiff stating that, “[b]ased upon the information contained in [TILIC's] letter, the claim would appear to have been processed in accordance with the terms of your policy.” (Mot.Sum. J. Doc. 79, Ex. 7.)

On June 12, 2005, Plaintiff submitted a claim under the Policy's breast prosthesis benefit for the second stage of her breast reconstruction performed on May 26, 2005. TILIC initially tendered a check for $3,007.64, which included payment only for the prostheses and their implantation. The payment represents a denial of $13,184.35 of the $16,191.99 submitted as expenses. Plaintiff points out that Ortiz initially erred in responding to an email by another TILIC employee as to whether surgery to both breasts would be covered, but the next day Ortiz sent an email acknowledging the Oklahoma law mandating insurance coverage for surgery to both breasts. (See Resp. Br., Doc. 111, Ex. 50.) TILIC made a supplemental payment on August 7, 2005, in the amount of $3,750.00 for the second stage reconstruction surgery of May 26, 2005.

Plaintiff...