Transitional Learning v. U.S. Off. Personnel

• Decision Date: 09 August 2000
• Docket Number: No. 99-20498,99-20498
• Parties: (5th Cir. 2000) TRANSITIONAL LEARNING COMMUNITY AT GALVESTON, INC., Plaintiff-Appellee, v. UNITED STATES OFFICE OF PERSONNEL MANAGEMENT, Defendant-Appellant
• Court: U.S. Court of Appeals — Fifth Circuit

Page 427

220 F.3d 427 (5th Cir. 2000)

TRANSITIONAL LEARNING COMMUNITY AT GALVESTON, INC., Plaintiff-Appellee, v. UNITED STATES OFFICE OF PERSONNEL MANAGEMENT, Defendant-Appellant.

No. 99-20498

IN THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

August 9, 2000

Appeal from the United States District Court for the Southern District of Texas

Before BARKSDALE, BENAVIDES, and STEWART, Circuit Judges.

CARL E. STEWART, Circuit Judge:

The main issue before us is whether the district court erred when it reversed the Office of Personnel Management's ("OPM") ruling that denied the plaintiff's claims made under a government employees insurance policy. For reasons assigned below, we reverse the district court's ruling.

Factual and Procedural History

Transitional Learning Community, Inc.("TLC"), is a nonprofit corporation in Galveston, Texas. TLC is a comprehensive outpatient rehabilitation facility devoted to post-acute brain injury rehabilitation. It provides individualized treatment programs that include therapy and treatment by clinical psychologists, physical therapists, and occupational therapists.

In May 1996, Senior United States District Court Judge Hugh Gibson ("Judge Gibson") suffered a stroke which resulted in paralysis affecting the left side of his body. Judge Gibson was admitted to the University of Texas Medical Branch Adult Rehabilitation Unit ("UT") where he received comprehensive inpatient care which included stroke rehabilitation. After he was released from the hospital, he continued to receive care from a UT outpatient facility.

In January 1997, Judge Gibson began receiving care from TLC on an outpatient basis. TLC is not affiliated with UT. His treatment included occupational therapy, physical therapy, speech/language pathology, and an abbreviated form of neuropsychological evaluation. Judge Gibson received these services from January 1997 to August 1997.

Judge Gibson was a federal employee covered by a health insurance policy issued by Government Employees Hospital Association ("GEHA"). GEHA is a health benefit plan regulated under the Federal Employee Health Benefits Act ("FEHBA"), 5 U.S.C. §§ 8901-14. Under FEHBA, the OPM is delegated the authority to promulgate regulations and to negotiate and contract with qualifying private insurance carriers to offer health benefit plans to federal employees. See 5 U.S.C. § 8902-03. Judge Gibson assigned his benefits under the GEHA insurance plan (the "Plan") to TLC. TLC submitted charges totaling $15,299 to GEHA for payment for the various therapies provided to Judge Gibson. GEHA denied the claim.

Consequently, TLC sought administrative review of GEHA's denial of TLC's claim. Under 5 C.F.R. § 890.105 (a)(1)(e), TLC may seek review of GEHA's denial to OPM. OPM denied TLC's request to grant coverage, and thus affirmed GEHA's decision. Pursuant to 5 C.F.R. § 890.107, TLC filed an action in federal district court to seek review of OPM's ruling.

At the district court, both parties filed motions for summary judgment. TLC argued that the speech, physical, and occupational therapies that it provided to Judge Gibson were covered under the Plan. OPM maintained that under the "general exclusions" provision, which we address below, the claims were not covered because TLC is a "noncovered facility." The district court reversed OPM's ruling, and granted TLC's motion for summary judgment. OPM now appeals the district court's judgment.

Standard of Review

This court reviews a district court grant of summary judgment de novo. See Rivers v. Central and South West Corporation, 186 F.3d 681, 682 (5th Cir.1999). Summary judgment is appropriate, when, viewing the evidence in the light most favorable to the nonmoving party, the record reflects that no genuine issue of any material fact exists. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The Plan

The purpose of the Plan is to provide health care benefits for federal employees. To achieve this end, health plans covered under FEHBA must conform to minimum standards determined by OPM and must contain a detailed statement of benefits offered and shall include such maximums, limitations, exclusions, and other definitions of benefits as the OPM considers necessary or desirable. See 5 U.S.C. § 8902(d); see also 5 C.F.R. § 890.201. Pursuant to this dictate, OPM provides employees with "such information . . . as may be necessary to enable the individual to exercise an informed choice among the types" of plans offered under FEHBA. Id. at § 8907(a). Thus, employees are issued a document explaining the services or benefits covered under the plans, limitations, exclusions, procedures of obtaining benefits, and the principal provisions of the plans affecting the enrollee and any eligible family members. Id.

The Plan in the instant case is divided into five main sections entitled: (1) "How this Plan Works"; (2) "Benefits";(3) "Other Information"; (4) "How this Plan Changes"; and (5) "Summary of Benefits." The parties' dispute essentially revolves around two of these sections, "How this Plan Works," and "Benefits." In pertinent part, the "How this Plan Works" section defines a "covered facility" and a "covered provider." "Covered facilities" are (1) freestanding ambulatory facilities, (2) Hospice centers, and (3) Hospitals.¹ "Covered providers" include, inter alia, licensed physicians, qualified psychologists, speech, physical and occupational therapists. This subsection expressly provides that the term "doctor" includes these providers when the services are performed within the scope of the license or certification.

The "How This Plan Works" section also includes a subsection entitled "General Exclusions." This subsection provides a list of exclusions. In pertinent part, this subsection states that "[b]enefits will not be paid for services and supplies when" "furnished or billed by a non covered facility, . . . ." (emphasis added). Furthermore, under the "General Exclusions" subsection, the Plan states that "[t]hese exclusions apply to more than one or to all benefit categories. Exclusions that are primarily identified with a single benefit category are listed along with that benefit category, but may apply to other categories." (emphasis added). As such, the Plan advises that enrollees, in addition to reviewing the "General Exclusions," review the specific benefit sections in order to be aware of all of the exclusions.

The Plan lists eight categories of benefits under the "Benefits" section. They include: (1) "Inpatient Hospital Benefits"; (2) "Surgical Benefits"; (3) "Maternity Benefits"; (4) "Mental Conditions/Substance Abuse Benefits; (5) "Other Medical Benefits"; (6) "Additional Benefits"; (7) "Prescription Drugs Benefits"; and (8) "Dental Benefits." Pertinent to this case are the "Inpatient Hospital Benefits" and the "Other Medical Benefits" categories which we address below.

Discussion

At the outset, we note that the parties dispute whether we should defer to OPM's interpretation of the Plan. Thus, the issue is whether we should treat OPM's interpretation of the Plan as if it were an agency regulation and thus accord its construction of the Plan deference under Chevron v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed. 2d 694 (1984)(holding that courts should defer to reasonable agency interpretation of statutes), or whether we should review the Plan under traditional canons of contract interpretation, and thus review the Plan de novo.

In Chevron, the Supreme Court articulated rules to govern judicial review of an agency's interpretation of statutes and regulations. Under Chevron, on review a court shall give controlling weight to an agency's interpretation of statutes and regulations unless the court determines that the agency's decision is "arbitrary, capricious, or manifestly contrary to the statute." Id. at 844, 104 S.Ct. 2778.²

Chevron, however, does not speak to the appropriate level of review courts are to give to an agency's interpretation of a contract. OPM argues that we should defer to its decision because the Plan is akin to a regulatory scheme. Furthermore, OPM contends that even if the court were to view the Plan as a traditional contract, deference is appropriate where the interpretation of the contract is "enhanced by the agency's expert understanding of the industry." Coca Cola v. Atchison, Topeka, & Santa Fe Ry. Co, 606 F.2d 213, 222 (5th Cir. 1979). TLC, however, argues that the case at hand involves an interpretation of a contract, which is traditionally a question of law we review de novo. Furthermore, TLC points the court to an OPM letter denying coverage which indicates that OPM's decision was based on its interpretation of the Plan. Thus, TLC contends that OPM's actions were more akin to a contractual party than a regulatory agency. Although Chevron leaves open the question whether an agency's interpretation of a contract is entitled to deference, nonetheless, we need not resolve this issue today because even under de novo review, we agree with OPM's interpretation of the Plan.

Because the Plan is administered by a federal agency, the federal common law pertaining to the construction of contracts is applicable. Todd v. AIG Life Insur. Co, 47 F.3d 1448, 1451 (5th Cir. 1995) (applying federal common law to interpret insurance plan administered under ERISA). Although we may "draw guidance from analogous state law" in ascertaining the applicable federal common law, see Brandon v. Travelers Ins. Co., 118 F.3d 1321, 1325 (5th Cir. 1991)(internal quotation omitted), "[w]e must nevertheless bear in mind that, in doing so, we may use [it] . . . only to the extent that [it] is not inconsistent with congressional policy concerns." See Todd, 47 F.3d at 1451. In construing provisions of an insurance plan, we interpret the contract language "in an ordinary and popular sense as would a person of average intelligence and...