Univ. Hospital of Cleveland v. Emerson Elec.

• Decision Date: 05 August 1999
• Docket Number: No. 98-4061,98-4061
• Citation: 202 F.3d 839
• Parties: (6th Cir. 2000) University Hospitals of Cleveland, Plaintiff-Appellant, v. Emerson Electric Company and Emerson Electric Company Benefit Plan, Defendants-Appellees. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 839

202 F.3d 839 (6th Cir. 2000)

University Hospitals of Cleveland, Plaintiff-Appellant, v. Emerson Electric Company and Emerson Electric Company Benefit Plan,

Defendants-Appellees.

No. 98-4061

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: August 5, 1999

Decided and Filed: February 1, 2000

Rehearing and Suggestion Rehearing En Banc Denied March 3, 2000 ^*

Appeal from the United States District Court for the Northern District of Ohio at Cleveland, No. 92-01555--Paul R. Matia, Chief District Judge. [Copyrighted Material Omitted] COUNSEL: ARGUED: Daniel W. Dreyfuss, DANIEL W. DREYFUSS CO., Cleveland, Ohio, for Appellant.

Phillip J. Campanella, CALFEE, HALTER & GRISWOLD, Cleveland, Ohio, for Appellees.

Before: NELSON and MOORE Circuit Judges; ROSEN, District Judge.^**

ROSEN, D. J., delivered the opinion of the court, in which MOORE, J., joined. NELSON, J. (pp. 852-54), delivered a separate dissenting opinion.

OPINION

ROSEN, District Judge.

I. INTRODUCTION

Plaintiff/Appellant University Hospitals of Cleveland ("UHOC") appeals from the most recent award of summary judgment in favor of Defendants/Appellees Emerson Electric Company and the Emerson Electric Company Benefit Plan (collectively, the "Plan") in this action brought under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. In the ruling now on appeal, the District Court found that the Plan's administrative review body, the Employee Benefit Committee ("EBC"), did not act arbitrarily or capriciously in denying a claim for health care benefits made by UHOC as assignee of the claims of a deceased Plan participant, Gerald Weaver. In a prior appeal, we reversed an initial award of summary judgment to the Plan, citing evidence in the record that the EBC had "erroneously relied upon a provision that was not included in the actual Plan documents." See University Hosps. of Cleveland v. Emerson Elec. Co. Benefit Plan, No. 93-4924, slip op. at 4 (6th Cir. Dec. 22, 1994). Accordingly, we ordered the matter remanded to the EBC with instructions to reconsider UHOC's claim in light of "the actual Plan provisions applicable to such claim." Id.

On remand, the EBC once again denied UHOC's claim, and the District Court again affirmed that decision under the "arbitrary and capricious" standard of review. UHOC now raises four arguments on appeal: (1) that the District Court erred in ruling that the EBC's decision on remand was exempt from the time limits set forth in the Plan for acting upon requests for review of claim denials; (2) that the lower court improperly disregarded the "law of the case," as purportedly established in our earlier decision, regarding the applicability of the Plan's time limits on remand to the EBC; (3) that the EBC's decision on remand was tainted by the same error that led us to reverse and remand in the initial appeal; and (4) that the EBC acted arbitrarily and capriciously in denying benefits based upon a determination that the decedent, Mr. Weaver, suffered from a pre-existing condition. For the reasons stated below, we find that the EBC's decision to deny benefits was arbitrary and capricious, and we accordingly reverse the award of summary judgment to the Plan.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. The Parties

As we noted in our earlier decision, there is little, if any, factual dispute in this case. Plaintiff/Appellant UHOC brought this ERISA action as the assignee of Gerald Weaver, seeking to recover benefits from the Defendant/Appellee Plan for medical services rendered to Mr. Weaver before his death on June 3, 1991. The Plan's administrative review body, the EBC, has twice denied UHOC's claim for benefits, finding that the medical services at issue were not covered by the Plan because they constituted treatment for a pre-existing condition suffered by Mr. Weaver before he became eligible for Plan benefits.

Mr. Weaver began working for Automatic Switch Company ("ASCO"), a division of Defendant/Appellee Emerson Electric Company, on September 24, 1990. He became eligible for medical benefits under the Plan on December 24, 1990, the ninetieth day of his employment. From March 27, 1991 until his death on June 3, 1991, Mr. Weaver received treatment at UHOC for myelodysplastic syndrome, a bone marrow disease. The principal dispute in this case is whether Mr. Weaver received prior treatments for this disease that would trigger the Plan's "pre-existing condition" exclusion from coverage.

B. Mr. Weaver's 1990-91 Visits to Physicians and Medical Treatments

On September 11, 1990, shortly before he began working for ASCO, Mr. Weaver visited his physician, Dr. Unni Kumar, complaining of fatigue and stress. Dr. Kumar diagnosed Mr. Weaver as suffering from anemia, recommended a blood test, and asked Mr. Weaver to return for further evaluation. (J.A. at 468-70.) That same day, blood samples were taken from Mr. Weaver and submitted to a laboratory for analysis.

On September 28, 1990, four days after Mr. Weaver began his employment at ASCO, Mr. Weaver again visited Dr. Kumar to discuss the results of his recent blood test. Dr. Kumar advised Mr. Weaver that the serum iron, folic acid, and B-12 portions of this test were "all normal." (J.A. at 474.) Nevertheless, in light of the previous diagnosis of anemia, Dr. Kumar recommended that the blood test be repeated "before we embark on a complete hematological work-up." (Id.) In accordance with this recommendation, a second blood sample was taken from Mr. Weaver that day and submitted for laboratory analysis. If this second test proved abnormal, Dr. Kumar "plan[ned] to refer [Mr. Weaver] to a hematologist." (Id.)

This September 28, 1990 test revealed a number of results outside the normal range, including low red blood cell and platelet counts, low hemoglobin and hematoocrit values, and elevated MCV and MCH levels. (J.A. at 473.) Accordingly on October 8, 1990, Dr. Kumar called Mr. Weaver and advised him to see a hematologist. (J.A. at 470.) Although there are two subsequent entries in Dr. Kumar's records for the month of October -- the first dated October 12, 1990, scheduling Mr. Weaver for an additional blood test, and the second dated October 26, 1990, reflecting Mr. Weaver's refusal to submit to this additional test, (J.A. at 475) -- Mr. Weaver declined any further treatment in October, citing a lack of insurance coverage that would pay for a pre-existing condition. (Id.)

Instead, Mr. Weaver elected to wait until January 8, 1991 -- two weeks after his Plan eligibility date of December 24, 1990 -- to visit a hematology specialist as recommended by Dr. Kumar. The examining physician, Dr. Jon Reisman, diagnosed Mr. Weaver as suffering from mild anemia and moderately severe thrombocytopenia. (J.A. at 674.) Over the course of the next several days, Mr. Weaver underwent a number of procedures, including additional blood and bone marrow tests, a chest x-ray, and a CT scan of his abdomen. These procedures were intended, at least in part, to rule out a diagnosis of myelodysplastic syndrome. (J.A. at 476.) When the results proved inconclusive, Dr. Reisman referred Mr. Weaver to Dr. James Weick at the Cleveland Clinic for further evaluation. (J.A. at 671.)

Beginning on February 8, 1991 and continuing until his death four months later, Mr. Weaver received a variety of medical services and treatments at the Cleveland Clinic, UHOC, and elsewhere. His treatments at UHOC commenced on March 27, 1991, and resulted in total billings for medical services in the amount of $233,829.75. Mr. Weaver ultimately was diagnosed as suffering from myelodysplastic syndrome, a bone marrow disease in which defective stem cells proliferate to the exclusion of normal cells. This disease evolved to acute leukemia, and led to Mr. Weaver's death on June 3, 1991 from kidney and heart failure. (J.A. at 536-37.)

C. The Relevant Plan Provisions

This case turns upon the EBC's determination that all of the medical expenses incurred by Mr. Weaver at UHOC derived from treatments for a "pre-existing condition" as defined in the Plan document, and therefore are not "covered medical expenses" under the Plan. This determination rests upon the following Plan provision, entitled "Pre-Existing Condition Limits":

Hospital expenses and other medical expenses incurred in connection with a disease or injury for which a covered individual received treatment or services or took prescribed drugs during the three month period immediately preceding the effective date of such individual's coverage under this Plan will not be included as covered medical expenses prior to the earliest of the dates shown in the Schedule of Benefits.

(Plan, § 4, ¶ 1.84, J.A. at 609.) The Plan's Schedule of Benefits, in turn, sets forth the terms under which a participant may obtain coverage for a pre-existing condition:

No benefits are payable for a pre-existing illness or injury for which an individual was treated or took prescribed medicine within 3 months prior to coverage until:

1) the individual has been covered under this Plan for one year, or

2) the individual has been free of treatment for the pre-existing illness or injury for 3 months.

(Plan, § 7, at 3, J.A. at 625.)

The Summary Plan Description ("SPD") includes similar language, in a section entitled "Expenses Not Covered":

No medical benefits will be paid for the following:

* A pre-existing illness or injury for which you were treated or took prescribed medicines within 3 months before your coverage began until:

-- you have been covered under this Plan for a year, or -- you haven't had any charges for this illness or injury for 3 months,

whichever comes first . . . .

(SPD at 12, J.A. at 157.)

D. Procedural Background

This case has a lengthy procedural history. In May of 1991, shortly before his death, Mr. Weaver sought reimbursement from the Plan for a portion of the medical expenses he incurred at UHOC and elsewhere. On May 29, 1991,...