California State Law Regarding Health Insurance Coverage and Reimbursement (AB 88)
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THE LAW OF HMO/PPO SPECIAL NEEDS STATE MANDATES
By: Christopher E. Angelo, Attorney at Law
Angelo & Di Monda
1721 North Sepulveda Boulevard
Manhattan Beach, California 90266
(310)939-0099
1. Assembly Bill 88 and "Medically Necessary":
a. Healthcare plans shall
"provide coverage for the ... medically necessary treatment
of severe mental illnesses of a person of any age" in an amount equal
to those benefits offered "to other medical conditions." Health
& Safety Code § 1374.72(a); Insurance Code
§10144.5(a).
The same applies for "serious
emotional disturbances," but only: in children under 18 years of age; with
one or more DSM mental disorders (except primary substance disorders or
developmental disorders); that result in inappropriate behavior; and which meet
one or more of the following criteria:
(1) substantial impairment in at
least two of the following: self care, school functioning, family
relationships, or ability to function in the community; and
(2) further resulting in any of the
following occurrences: risk of removal or actual removal from home; mental
disorder has lasted beyond six months or is likely to continue beyond one year
without treatment; child displays psychotic features, suicidal or violent
tendencies due to a mental disorder unrelated to substance abuse or
developmental delay; or the child meets special education eligibility
requirements under Government Code §7570 et seq. because "a
child with a disability shall be the joint responsibility of the
Superintendent of Public Instruction and the Secretary of Health and Welfare
... [and] the [former] shall ensure that this chapter is carried out through
monitoring and supervision." Health & Safety Code
§1374.72(a), (e); Insurance Code §10144.5 (a), (e); incorporating
Welfare and Institutions Code §5600.3 and Government Code
§7570 et seq. (Special education school district mandates.)
(3) every plan shall provide an
external, independent review process to re-examine any plan's coverage decision
regarding experimental or investigational therapies. Health & Safety
Code § 1370.4.
b. "Severe mental
illnesses" include: "(1) schizophrenia; (2) schizoaffective disorder;
(3) bipolar disorder (manic-depressive illness); (4) major depressive
disorders; (5) panic disorder; (6) obsessivecompulsive disorder; (7) pervasive
developmental disorder or autism; (8) anorexia nervosa; and (9) bulimia
nervosa." Health & Safety Code § 1374.72(d)(1)-(9); Insurance
Code § 10144.5(d)(1)-(9). Non-group lifetime waivers of mental
health coverage rights are unenforceable. Health & Safety Code
§ 1374.5. Plans may not enter into MediCare Supplement contracts that
contain State-prohibited provisions. Health & Safety Code §
1358.10.
c. Mandated services are: "(1)
outpatient services; (2) inpatient hospital services; (3) partial hospital
services; (4) prescription drugs, if the... contract includes coverage
[already] for prescription drugs." Health & Safety Code
§ 1374.72(b)(1)-(4); Insurance Code § 10144.5(b)(1)-(4). No
plan shall refuse to cover, refuse to continue to cover or limit the amount of
coverage solely because of a physical or mental impairment, except where
the refusal, limitation or rate differential is based on sound actuarial
principles applied to actual experience, or, if insufficient actuarial
experience is available, then to sound underwriting practices. Health
& Safety Code § 1367.8.
A plan shall provide, upon an enrollee's
request, a list of all medical groups, psychologists and social workers within
the enrollee's "general geographic area." Health &
Safety Code § 1367.26.
An enrollee shall not be prohibited from
selecting any primary care physician who contracts with the plan in the service
area where the enrollee lives or works. Health & Safety Code §
1373.3. Plans that offer professional mental health services on an employer-sponsored
group basis, shall maintain and provide to an enrollee upon request its
"written continuity of care policy." This policy must include
provisions "ensuring that reasonable consideration is given to the
potential clinical effect on an enrollee's treatment caused by a change of
provider." Health & Safety Code § 1373.95(a)(2)(E), (c).
Mental health providers include
psychiatrists, licensed psychologists, licensed marriage and family therapists
or licensed social workers. Effective 2003, non-network mental health
providers may be required by plans to agree in writing to the same contractual
terms that are imposed upon network providers. Health & Safety
Code § 1373.95(b)(3), (e)(2).
Effective January 1, 2004, every plan shall
have a "standing referral procedure" that allows for an enrollee to
receive "continuing care from a specialist" or "specialty care
center" without constant and repetitive requests for preapproval from the
primary care physician and/or the medical director of the plan
itself. This only applies to those enrollees suffering from
"life-threatening, degenerative or disabling" medical conditions that
require "specialized medical care over a prolonged period of
time." The plan may limit the number of visits and the period of time
the visits are authorized, and may also require regular reports from the
specialist. Once the enrollee provides a proposed continuous treatment
program supported by "all appropriate medical records and other items of
information necessary [for the plan] to make the determination" that such
a standing referral treatment program is medically necessary, the plan must
reach its decision within three business days of the enrollee's request for
this treatment program. If the plan agrees that such specialty care is
necessary, the referral to the specialist shall be made within four business
days thereafter. A "specialty care center" means a center that
is accredited by the State or Federal government or by a voluntary national
health organization having special expertise in treating this type of
condition. "Standing referral" means a "referral by a
primary care physician to a specialist for more than one visit to the
specialist, as indicated in the treatment plan, if any, without the primary
care physician having to provide a specific referral for each
visit." Health & Safety Code § 1374.16.
d. In the "historical and
statutory notes" of the above two statutes, the California Legislature
"finds and declares" that "mental illness is treatable,"
that inadequate treatment "causes relapse and untold
suffering for individuals... and their families," that
the lack of adequate treatment "has contributed significantly to
homelessness, involvement with the criminal justice system, and other
significant social problems experienced by individuals with mental illness and
their families," that the failure to provide adequate coverage "has
resulted in significant increased expenditures for state and local governments,"
and "that other states that have adopted mental illness legislation have
experienced minimal additional costs if medically necessary
services were well managed." In short, severe mental
illnesses are deemed treatable, limited only by medical necessity.
e. State mandates nullify
contrary plan language, Samson v. Transamerica (1981) 30 Cal.3d
220, 231; 178 Cal.Rptr. 343, 350, and are not preempted by federal ERISA
law. Metropolitan Life v. Mass. (1985) 471 U.S.
724. State mandated healthcare standards may generally be found at Health
& Safety Code §§ 1367-1374.16. Knox-Keene Managed Care
Organizations (MCOs) are governed by the Health & Safety Code and not the
Insurance Code. Williams v. California Physicians' Service
(1999) 72 Cal.App.4th 722, 729. Nevertheless, MCOs may still be sued for
bad faith denial of medical care. Sarchett v. Blue Shield
(1987) 43 Cal.3d 1, fn. 1. Knox-Keene plans must provide
"access" to "quality services," "protect and promote
interests of enrollees" and maintain "consumer
protections." Health & Safety Code §§ 1341, 1342.1.
2. "Medically Necessary"
defined and applied: "when it is reasonable and necessary to protect
life, to prevent significant illness or significant
disability, or to alleviate severe pain." Welfare &
Institutions Code §14059.5. Whether proposed treatment is
"reasonable and necessary" can be established by medical
literature. For instance, early intervention is medically necessary
because "at least six comprehensive [early intervention] treatment
programs designed to stimulate wide-spread changes in young children with
autism have published positive outcome data in peer-reviewed journals ...
[&#para;]. All the studies reported (a) significant acceleration of
developmental rates, resulting in significant IQ gains; (b) significant
language gains in the treated children; (c) improved social behavior and
decreased symptoms of autism ... [&#para;]. [Children with autism appear most
able to benefit when intervention is begun very early, between ages 2 and 4,
making far more progress than do older children receiving the same
interventions..., and when intervention is intensive, including 15 or more
hours per week of focused treatment with very low child-to-adult ratios over
one to two years or more". Rogers, "Early Intervention in
Autism," Journal of Autism and Developmental Disorders (April, 1996) Vol.
26, No. 2, Plenum Press, New York and London, pps. 243-245. Jurors may
determine medical necessity unless an enrollee has waived this right. Holmes
v. Kizer (1992) 11 Cal.App.4th 395, 13 Cal.Rptr.2d 746.
3. Financial inducements to limit medically
necessary care are illegal. Health & Safety Code §
1348.6(a). Plans are prohibited from engaging in any "unfair payment
pattern," such as unreasonable delays, denials, benefit/service
reductions, or repeated failures to pay the uncontested portions of a
claim. Health & Safety Code § 1371.37.
4. "Medical Care"
defined: "under the general or special supervision and upon the advice
of or to be rendered by a physician". Family Code § 6902.
5. Every plan must also provide
"basic health care services," defined as: "physician
referrals, hospital inpatient services, home health services, preventive
and emergency healthcare services." Health
& Safety Code § 1345(b)(1)-(6); § 1367(i).
6. Every plan must also provide
"Emergency Medical Care," defined as: "Medical conditions
which, if not immediately diagnosed and treated, could lead to serious physical
or mental disability or death." Health & Safety
Code § 1799.110(b). Emergency services may be denied only
if the plan reasonably determines that "the enrollee did not require emergency
services" and "the enrollee reasonably should have known that
an emergency did not exist." Health & Safety Code §
1371.4(c).
7. Every plan must also provide: "continuity
of care," "good professional practice," "ready
referral," "allied health manpower... consistent with good medical
practice," "medical decisions ... unhindered by fiscal and
administrative management." Health & Safety Code §
1367(d)-(i). These obligations "shall not be waived when the plan
delegates any services that it is required to perform to its medical groups...
or other contracting entities." Health & Safety Code §
1367(j). These "continuity of care" duties require "program
requirements" to be maintained by the Plan, including screening measures
to prevent the occurrence or spreading of disease (28 CCR 1300.70) as well as
"healthcare documentation" for the "detection of asymptomatic
diseases." (28 CCR 1300.67.1) Violations of the above can cause
license revocation. Health & Safety Code § 1386.
8. Plans have duty to "thoroughly
investigate" requests for care and "fully inquire" into
"all possible bases" that might support the request for care. Egan
v. Mut. of Omaha (1979) 24 Cal.3d 809, 819.
9. Plans have duty to "promptly
respond" (utilization review decisions) to requests for care within 72
hours after receipt of relevant information that an enrollee faces an imminent
and serious threat to his health, otherwise within 5 business days. Health
& Safety Code § 1367.01. However, the National Committee for
Quality Assurance (NCQA), an accrediting body to whom most managed care
organizations (MCOs) promise allegiance, publishes Standards for the
Accreditation of Managed Care Organizations that require plans to respond to
non-urgent care requests within 2 working days, and urgent care requests within
1 working day, of obtaining the necessary information. NCQA Standard UM 4.
10. Plans are prohibited from
excluding persons suffering from progressive, degenerative and dementing
illnesses from receiving home-based care. Insurance Code §
11512.177; Health & Safety Code § 1373.14 [includes, but is
not limited to, Alzheimer's disease, stroke, illness or injury-caused
dementias, alcoholism, AIDS, and other mental or nervous disorders that would
fall within the reach of these statutes]. Plan contracts shall not contain
any provision restricting a hospital's duty to arrange for appropriate
posthospital care at home or at a skilled or intermediate care facility. Health
& Safety Code §§ 1367.5, 1262.5.
11. MCOs have duty to ensure that qualified
health professions make utilization review decisions. NCQA Standard UM
3 provides that "qualified health professionals access the clinical
information used to support [utilization review] decisions" and that there
be procedures for "using board-certified physicians from appropriate
specialty areas to assist in making determinations of medical
necessity." Furthermore, only a health care provider "who is
competent to evaluate the specific clinical issues involved in the health care
services requested" may deny a request for care based on medical
necessity. Health & Safety Code § 1367.01(e). MCOs
must communicate decisions to delay, deny or modify requests for care in
writing and provide a clear and concise explanation of the reasons for its
decision, a description of the criteria or guidelines used, and clinical
reasons for decisions regarding medical necessity. Health &
Safety Code § 1367.01(h)(4). An MCO's internal "written
policies and procedures establishing the process by which the plan"
approves, delays or denies requests by providers and enrollees "shall be
disclosed by the plan to providers and enrollees upon request." Health
& Safety Code §§ 1367.01(b), 1363.5.
12. Plans have a non-delegable duty
to "process claims fairly and in good faith." Hughes v.
Blue Cross (1989) 215 Cal.App.3d 832, 848. See also, Health
& Safety Code § 1367(j), 1345(f)(1). Where "an insurer has
used an agent [or primary care medical group] to determine when to pay
benefits, the agent's derelictions might support liability in tort" against
the plan. Rattan v. USAA (2001) 84 Cal.App.4th 715,
723. More specifically, NCQA Standard UM 12 provides that an MCO "is
accountable for all the [utilization review] activities conducted for its
members. Although it may delegate all or parts of [utilization review], it
retains accountability for the decisions made." This is consistent
with the fact that MCOs, although not insurers, are still subject to the same
insurer duties of good faith and fair dealing because an MCO "provides health
care... as an insurer." Rush Prudential HMO v. Moran
(2002) 536 US 355. Accord, Smith v. PacifiCare (2001) 93
Cal.App.4th 139, 157-8. Lastly, parent companies of MCOs, if publicly
traded, sometimes disclose in their SEC 10-K filings certain admissions
about their involvement or control over subsidiary MCO business. To the
extent that the parent company acts as a joint-venturer with the subsidiary MCO
to restrict the delivery of medically necessary care, it too may be liable for
torts or civil wrongs committed against enrollees. Grant v.
Weatherholt (1954) 123 Cal.App.2d 34, 45. Similarly, MCOs and
primary care physician (PCP) medical groups also enter into contracts which
normally provide PCPs with financial incentives to deny care in two forms,
capitation payments and risk-sharing pools. Capitation payments are
legal under Health & Safety Code § 1348.6 and involve fixed
monthly payments by a plan to the PCP medical group on a per capita
basis, meaning based solely on the number of subscribers assigned to that
medical group by the plan and irrespective of whether any treatment is rendered
to any of the subscribers. For instance, an HMO or MCO may pay a PCP $35
per month for each subscriber, whether or not that subscriber is ever seen by
the PCP. If the subscriber becomes extremely ill and requires substantial
care, the PCP must pay for the expensive care although it still only receives
$35 for the subscriber. The PCP is expected to purchase sufficient
"stop-loss" insurance to cover the risk of assigned subscriber
medical expenses exceeding capitated payments. MCOs also withhold a
portion of capitated payments to establish a "risk-sharing pool"
of funds to limit the utilization of certain medical services, such as hospital
stays and prescription drug costs. If the actual year-end total cost of
hospital stays for all members exceeds the withheld risk-sharing pool budget,
the PCP, not the plan, will be financially responsible for at least some of the
additional cost. If the cost is less than the budget, the PCP receives a
percentage of the money left in the pool. Because MCOs have tremendous
bargaining power over PCPs, many PCPs have experienced extreme financial
trouble, if not bankruptcy. Hence, a marginal PCP, desirous of reaching
solvency, may have a strong financial motive to deny medical care.
13. Medical Necessity and Civil
Code § 3428: Managed care entities now have "a duty of
ordinary care to arrange for... medically necessary healthcare
service." See also, Health & Safety Code §
1345(f)(1). If the breach of this duty causes "substantial harm"
through the unreasonable "denial, delay or modification of the healthcare
service recommended for, or furnished to, a subscriber or enrollee," then
the victim may sue. A primary care physician (PCP) medical group
[aka Independent Practice Association (IPA)] who interferes with the Evidence
of Coverage by improperly denying or delaying covered medical care for its own
financial gain may be sued for tortious interference with the contract
between the healthcare plan and the enrollee, Wilson v. Blue Cross
(1990) 222 Cal.App.3d 660, 673, or for breach of fiduciary duty for
failing to disclose to the enrollee financial incentives in its IPA Services
Agreement with the Plan that may affect coverage decisions. Moore v.
Regents (1990) 51 Cal.3d 120, 128-32. Remember, the primary
difference between traditional "indemnity" insurance and current MCOs
is the requirement in the latter that care other than "primary care"
usually requires prior authorization by the plan even if the care would
otherwise be medically necessary and covered. Wickline v. State of
California (1986) 192 Cal.App.3d 1630 (malpractice implications also
discussed). Nothing precludes "a finding of liability on the part of
a plan, any entity contracting with a plan, or a provider, based on the... statutory
or common law." Health & Safety Code §
1371.25. Upon request, Plan must disclose its service "guidelines
used... to determine whether to authorize, modify or delay
services." These guidelines must be developed by healthcare providers,
be "consistent with sound clinical principles" and be updated
annually. Health & Safety Code § 1363.5,
1367.01(b). Every parent has a right to request and obtain any and all
records (25¢ per page or 50¢ per page from microfilm), irrespective of whether
all bills have been paid. Health & Safety Code §
123110(b) and (g). Assuming that one may sue a Plan for excessive bad
faith red tape delay based on violation of the duty to ensure "that
medical decisions are rendered by qualified medical providers, unhindered by
fiscal and administrative management" [Health & Safety Code
§ 1367.(g)], an enrollee can not do so until after exhausting all internal
administrative and appeal remedies made available by the Plan whenever requests
for care are originally denied, delayed or modified by it on the grounds that
the requested care was not medically necessary. Civil Code §
3428(k)(1); Abelleira v. District Court of Appeal (1941) 17
Cal.2nd 280, 292-293; Sierra Club v. San Joaquin Local Agency Formation
Com. (1999) 21 Cal.4th 489, 501.
14. Broughton v. CIGNA
Healthplans (1999) 21 Cal.4th 1066, 1080, 90 Cal. Rptr.2d 334:
Abusive HMO practices can now be stopped by court order even if the insured
signed an arbitration clause. See also, Engalla v. Permanente
(1997) 15 Cal.4th 951, 64 Cal.Rptr.2d 843 [HMO's delay can waive its
arbitration right on damage claims]; Guess? Inc. v. Superior Court
(2000) 79 Cal.App.4th 553, 94 Cal.Rptr.2d 201. Failure to disclose waiver
of jury right in a clear and separate article immediately before the signature
line for the group representative and individual enrollee makes arbitration
clause unenforceable. Malek v. Blue Cross (2004) 121
Cal.App.4th 44. One injured or killed by a private
employer-provided group [ERISA] healthcare plan's denial of medically necessary
care cannot sue for damages. 29 USC § 1001; Aetna Health, Inc. v.
Davila (2004) 124 S.Ct.Rptr. 2488, 2498-99. ERISA is inapplicable
where: employer does not endorse, but merely recommends a plan; employee
participation is completely voluntary; premiums are paid entirely by the
employee; the employer's sole function is to collect the premiums through
payroll deductions and to remit the premiums to the insurer; and the employer
receives no consideration, except reasonable compensation for collecting and
remitting the premiums [29 CFR § 2510.3-1(j)(1)-(4) (2002); Qualls v.
Blue Cross (9th Cir. 1994) 22 F.3d. 839, 843; Kanne v.
Conn. Gen. Life Ins. (9th Cir. 1988) 867 F.2d 489, 492; Johnson
v. Watts (1st Cir. 1995) 63 F.3d 1129, 1133, 1136; Hrabe
v. Paul Revere Life (M.D. Ala. 1996) 951 F.Supp. 997, 1001]; claims by
government employees like judges, teachers, police, district attorneys, etc.
[29 USC § 1002(32), 1003(b)]; claims by church or church business employees [29
USC §§1003(b)(2); 1002(33)(A); 1002(33)(C)(iv)]; claims by independent
contractors or those insured as individuals [Nationwide Mut. Ins. v.
Darden (1992) 503 US 319, 320-21, 327-28; Harper v.Am. Chambers
Life Ins. (9th Cir. 1990) 898 F.2d 1432, 1434]; claims by
self-employed persons [Kennedy v. Allied Mut. Ins. (9th
Cir. 1991) 952 F.2d 262, 264; 29 CFR § 2510.3-3(b)-(c) (2002)] unless the
partner or sole proprietor has an employee covered under the same policy [ Peterson
v. Am. Life & Health Ins. (9th Cir. 1995) 48 F.3d 404,
409]. Medical malpractice claims are not preempted by ERISA. PacifiCare
of Oklahoma v. Burrage (10th Cir. 1995) 59 F.3d 151; Dukes
v. US Healthcare (3rd Cir. 1995) 57 F.3d 350. However,
a $250,000 pain and suffering limit exists for medical malpractice claims no
matter how serious the injury.
15. Applying law to Autism:
Denying speech, physical, occupational and applied behavioral analysis
therapies once a diagnosis of autism is made is arbitrary, capricious and
unenforceable. In addition, exclusions based on developmental delay and
non-restorative medical conditions do not apply to autism. Wheeler
v. Aetna Life Ins. Co. (N.D.Ill. 2003) 31 Employee Benefits Cas.
1782, 2003 WL 21789029 (N.D. Ill.). California courts may rely on
unpublished decisions like Wheeler, so long as these decisions
originate from other states. Labrilla v. Farmer Group Inc.
(2004) 119 Cal.App.4th 1070, 16 Cal.Rptr.3d 25, 31-32.
16. Remember Leverage: Strike
arbitration clause; support federal Patient's Bill of Rights; know your judicial
candidates' record before voting (contact Autism Society of Los Angeles); tell
your U.S. Senators and Congresspersons to legislatively overrule the U.S.
Supreme Court's decision in Aetna Health v. Davila (2004) 542
U.S. 200, which held that federal ERISA law did not allow enrollees to sue
employer-provided healthcare plans (only) for death or injury caused by the
denial of medically necessary care unless the person killed or injured is a
government employee, church employee or business owner; be jealous in
protecting your civil liberties or lose them!
Not Reported in F.Supp.2d
31 Employee Benefits Cas. 1782, Pens. Plan Guide (CCH) P 23985Q
(Cite as: 2003 WL 21789029 (N.D.Ill.))
United States District Court,
N.D. Illinois, Eastern Division.
Michael WHEELER and Bryce Wheeler, Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant.
No. 01 C 6064.
July 23, 2003.
MEMORANDUM OPINION
GRADY, J.
*1 Before the court is defendant Aetna Life Insurance Company's motion
for summary judgment. For the reasons stated below, the motion is denied.
BACKGROUND
Plaintiff Michael Wheeler claims that
defendant, Aetna Life Insurance Company ("Aetna"), violated
ERISA by wrongfully denying coverage for medical treatment of his son,
co-plaintiff Bryce Wheeler, who suffers from various conditions, including
autism. Aetna argues that the denial of benefits was reasonable based upon the
medical records and language of the insurance plan.
The undisputed facts are as follows.
Michael Wheeler is employed by Westmoreland Country Club
("Westmoreland") and at all relevant times was a participant in the
insurance plan provided by Aetna, Group Insurance Policy Number 434025. Michael
Wheeler's son, Bryce, was born on March 8, 1994, and since March 1997 has been
a covered dependent under the insurance policy.
Bryce Wheeler's Diagnoses
When Bryce was 18 months old, he began to
exhibit delays in speech development and deficits in motor skills, and he had
hearing difficulties. In 1996, Bryce was evaluated by various medical
specialists. An electroencephalogram (EEG) was performed, and was interpreted
as "possibly abnormal" because of "left temporal slowing"
or "subcortical abnormality in the left." [FN1] The report indicated that "the
record is recorded in sleep only and should be cautiously interpretated [sic].
Perhaps repeated reconfirmation." (Aetna's Statement of Material Facts,
Ex. B, at 559.) An MRI study of Bryce's brain performed around the same time
was normal. (Id. at 560.)
FN1. On the EEG report, the sentence containing
these phrases apparently has a missing word: "This EEG is possibly
abnormal because of left temporal slowing which could be seen with ------ or
subcortical abnormality in the left." (Aetna's Statement of Material
Facts, Ex. B, at 559.)
In 1997, Bryce was diagnosed (by physicians
at the Child Evaluation Center at the University of Louisville in Kentucky)
with autism, central nervous system immaturity/dysfunction, speech and language
delays, perceptual/fine motor and self-care skills delays, and sensory integration
difficulties. [FN2] (Id. at 556-66, 648.) Thereafter,
Dr. Michael Chez, a pediatric neurologist and Bryce's primary treating
physician, treated Bryce for "encephalopathy, receptive/expressive
language delay, autism and pervasive developmental delay." [FN3] (Id. at 504-505.)
FN2. "Autism" is defined in various
ways and in various levels of detail, but here is a standard dictionary
definition: "A mental disorder originating in infancy that is
characterized by self-absorption, inability to interact socially, and language
dysfunction." Merriam-Webster Online Dictionary (July 17, 2003), at
http://www.merriam-webster.com.
FN3. Aetna's statement of material facts
states: "Dr. Michael Chez, a neurologist and Bryce Wheeler's primary
treating physician, treated Bryce for receptive/expressive language delay,
autism, pervasive developmental delay and "possible"
encephalopathy," citing Dr. Chez's letter to Aetna dated September 23,
2000. (&#para; 11.) However, this may not be a fair characterization of Dr. Chez's
letter. The letter states: "Bryce is followed in our practice for a
diagnosis of encephalopathy, receptive/expressive language delay, autism and
pervasive developmental delay. He also has a history of abnormal EEG, which
indicates a possible encephalopathic process, which may be contributing to his
global delays including central auditory processing disorder and motor
apraxia." (Aetna's Statement of Material Facts, Ex. B, at 504 (emphasis
added).) The way in which the letter is phrased makes it difficult to tell if
Dr. Chez has in fact diagnosed Bryce with encephalopathy or simply
"possible" encephalopathy.
Aetna also states that "Dr. Chez's
suggestion that Bryce has 'possible' encephalopathy is premised solely upon
November 6, 1996 EEG conducted by Dr. Robert Tillet in which he found it was
'possibly abnormal." ' (Aetna's Statement of Material Facts, &#para; 12.) It
appears to us that Aetna's attribution of the diagnosis "solely" to
the EEG is pure conjecture. Dr. Chez does not state the premise for his diagnosis
of encephalopathy or "possible" encephalopathy. Accordingly,
paragraph 12 of Aetna's Statement of Material Facts is stricken as unsupported
by the evidence.
"Encephalopathy" is defined as
"a disease of the brain, especially one involving alterations of brain
structure." Merriam-Webster Online Dictionary (July 17, 2003), at http://www.merriam-webster.com.
Plaintiffs' Requests for Benefits Payments for Various Therapies
Plaintiffs' medical providers submitted
bills to Aetna relating to speech therapy, occupational therapy, physical
therapy, applied behavioral analysis therapy, and sensory integration therapy
treatments for Bryce. There are four providers at issue here: (1) Early
Intervention Approaches (physical therapy and applied behavioral analysis therapy);
(2) Therapeutic Resources (occupational therapy and sensory integration
therapy); (3) Children's Therapy and Resource Center (speech therapy); and (4)
Zier & Associates (occupational therapy). Aetna sent letters to Early
Intervention Approaches and Therapeutic Resources requesting additional
information, including physician orders and treatment plans, initial treatment
date, initial evaluation, therapy notes for each session, progress notes,
anticipated length of therapy, discharge date, and credentials of the provider.
Aetna received and reviewed records from those providers as well as from
Children's Therapy and Resource Center and from Bryce's previous medical
providers, some of which had diagnosed Bryce's conditions.
*2Aetna states that its claim processors, "without sending the
claims for review, mistakenly and sporadically paid for some of" Bryce's
treatments that it now contends are not covered under the policy. (Aetna's
Statement of Material Facts, &#para; 38.) On April 6, 2000, Mary M. Hurley of Aetna
sent Michael Wheeler a letter, quoted infra, notifying him that Aetna
would not cover claims for physical therapy, occupational therapy, sensory
integration therapy, or speech therapy not related to previous ear infections.
The letter stated that sporadic claims that had been paid were done so in
error, but that Aetna was not seeking overpayment refunds. Moreover, Ms. Hurley
stated that there was still a possibility that coverage for the speech therapy
would be allowed if the Wheelers submitted additional documentation detailing
Bryce's treatments and showing that the loss of speech was related to prior ear
infections. (Id., Ex. B, at 257-58.)
On June 8, 2000, Doni Dukarski of Aetna
sent Mrs. Wheeler a letter reiterating what information Aetna required to
review the denial of benefits for speech therapy and also requesting additional
information "[t]o reconsider the Physical and Occupational
therapies." (Id., Ex. B, at 360.) Ms. Dukarski stated that
"this can be sent for additional review, if we provide enough information
for the Medical area to get a complete picture of what's happened with
Bryce." (Id.)
In November 2000, the Wheelers responded to
Ms. Dukarski's letter, appealing the denial of benefits and attaching numerous
documents detailing Bryce's medical history, diagnoses, therapies, and
progress. (Id., Ex. B, at 509- 511.) [FN4] The material submitted by the Wheelers
included the September 2000 letter to Aetna from Dr. Chez containing his
diagnoses of Bryce, as well as initial evaluations of Bryce and diagnoses
performed by various providers in 1996.
FN4. Although the Wheelers' letter states
exactly what documents were enclosed with the letter, Aetna has not provided us
with the enclosures in such a way that we can tell what specific documents
Aetna received from the Wheelers with the letter (in other words, the
enclosures do not follow the letter, in Exhibit B). This is not highly
significant, but it is an example of the slipshod manner in which Aetna has
submitted relevant documents. Exhibit B to Aetna's Statement of Material Facts
is the 1366-page claim file for Bryce, and the claim file has not been
presented in any way that would be helpful to the court. It is neither
chronologically nor topically organized. Aetna's internal documents are mixed
in with provider documents, and the claim file appears to contain multiple
copies or versions of the same material. We have done our best to wade through
Aetna's unorganized mound of paper.
Plaintiffs attach to their statement of
material facts certain medical documents, including a letter from Dr. Chez
dated November 20, 2002 (while this motion was being briefed). Aetna moves (in
a footnote in its reply) to strike those documents because they were not part
of the administrative record. Aetna's motion is denied as moot because we have
not taken the additional documents into consideration. Our review is limited to
the information actually submitted to Aetna. See Perlman v. Swiss Bank Corp. Comprehensive Disability Prot.
Plan, 195 F.3d 975, 981-82 (7th Cir.1999).
Thereafter, Aetna began its medical review.
For the first level of review, Monica Oberley, a registered nurse, completed a
Clinical Claim Review Referral form, dated December 21, 2000, summarizing in
detail Bryce's medical records and making an initial recommendation regarding
the appeal. Ms. Oberley recommended affirming the denial of benefits, and the
"rationale for [her] decision" was as follows:
This is a very complicated case. I had
denied s.t. based on child with autism and based on initial review it appeared
to be d/t his autism and they are doing some sensory integration in his therapy.
Parents had stated he spoke some until he was 18mo old and then stopped. This
plan does have eep general exclusions and speech must be restorative. New
information states he had several episodes of otitis media and eventually had
tube placement. Hearing test prior to placement was wnl. Upon diagnosis of
autism it was stated it is normal for children with autism to lose speech at
that age. The o.t. was denied as we do not cover o.t. for learning or
developmental delays and feel the listening program is more geared to sensory
integration. We would also deny the ABA as it is more sensory integration
related and we would not cover. The therapies are also billing cpt code (99362)
which we have been told is for conferences with teachers. We have paid intermittent
claims for therapies. A letter was sent from a Member Service Representative to
member on 4/6/00 stating that some claims had been paid in error and it was not
felt we should collect overpayments for those claims but not felt we should pay
any further. I do note that a few claims were paid after that date.
*3 Unsure if we should benefit the speech therapy even though he is
making some progress because it seems to be more geared for sensory integration
and I am not sure if the loss of speech was d/t the otitis media or the autism.
I do not feel we should cover the O.T. or the ABA as it appears to be for the
autism and not for a disease or injury. Feel it is more sensory integration
related also. We should not allow the ept codes 99362 for teacher conferences.
(Id., Ex. B, at 577-78.) The appeal
was then referred to a Medical Director for Aetna, Dr. John Reed.
On January 11, 2001, Dr. Reed completed a
"CMM Medical Director Referral Response" regarding the Wheelers'
appeal. It is unclear what documents Dr. Reed reviewed in order to make his
decision. His decision was as follows, in relevant part:
Do not approve benefits for the multiple
requested therapies (speech, occupational, physical, and Applied Behavioral
Analysis), as this member's plan excludes therapies for conditions of
developmental delay, learning or educational problems, and non-restorative
medical conditions. Also, Aetna coverage policy notes that sensory integration
therapy is not covered, as the effectiveness of sensory integration therapy has
not been proven.
(Id., Ex. B, at 659.) On January 25,
2001, Dr. Reed sent a letter to Mr. Wheeler, quoted infra, notifying Mr.
Wheeler that Aetna was "unable to approve payment for the services
requested." (Id., Ex. B, at 667-68.) Dr. Reed stated that the
Wheelers had the right to a second appeal of Aetna's determination.
The Wheelers appealed again. On May 1,
2001, Dr. Joel Hellmann, another Medical Director for Aetna, completed the
"CMM Medical Director Referral Response" for the second appeal. Dr. Hellmann
concluded that Aetna should deny coverage for all of the therapies except for
the first six months of speech therapy. His "explanation/rationale"
was as follows:
Aetna U.S. Healthcare provides coverage for
Speech therapy subject to plan descriptions and benefit limitations. In
general, speech therapy is covered for the treatment of non-chronic conditions,
for acute illness and injuries that result in an impairment in the ability to
speak, or when the patient has a speech-language disorder that is the result of
a disease or injury causing loss of previously existing speech function.
Aetna U.S. Healthcare does not cover
sensory (auditory) integration therapy. This procedure has been proposed as a
treatment approach to the management of children with various communication,
behavioral, emotional, and learning disorders. The effectiveness of this
therapy is unproven.
Occupational therapy is a health care
service that involves the use of purposeful activities to help people regain
performance skills lost through injury or illness.
Aetna U.S. Healthcare does not extend
coverage for long term occupational therapy in the management of patients with
chronic diseases except as indicated in our individual benefit plans.
*4 Aetna U.S. Healthcare does not cover sensory integration therapy. The
effectiveness of this therapy has not been proven.
Medical documentation reviewed include
[sic] 4/6/00 discussion with customer service, 6/8/00 request for information,
and 11/13/00 member response with review of all documents noted in that letter.
Documentation establishes that there was one possibly abnormal EEG, not
reconfirmed as recommended in the report and "cautiously
interpreted"; a more clear diagnosis of autism, delays in language,
social, behavioral, perceptual, and motor skills; a 7/15/96 note that the
patient was not talking much and didn't seem to hear as well as he had with an
impression of repeated OM over a 6-9 month period, marked speech delay, and
subsequent invasive treatment with PE tubes; a 9/96 assessment that behaviors
diagnostic of autism included unusual eye contact, diminished facial
expressiveness, and inadequate co-ordination of eye gaze, vocalization and
gesture.
The documentation reviewed indicates the
vast majority of problems can be attributable to the primary diagnosis of
autism or developmental delay. There is a question as to whether the documented
recurrent ear infections caused a loss of some already existing speech function
and played a contributory role in the delayed speech development. Based on this
review would recommend that a component of the speech delay be considered to be
due to the ear infections, although this is not entirely clear, and that speech
therapy be considered allowed expenses for a period of 6 months to allow for the
component of speech delay that may be attributable to the documented ear
infections.
The other services for sensory integration
therapy, occupational therapy would be considered developmental delays, likely
due to the primary diagnosis of autism, and would not be covered services.
(Id., Ex. B, at 694.) On May 7,
2001, Dr. Hellmann sent a letter to plaintiffs' counsel, quoted infra,
notifying counsel of his decision. Dr. Hellmann also stated that the Wheelers
had reached the final level of appeal available through Aetna. (Id., Ex.
B, at 690-91.)
The Group Insurance Plan Issued by Aetna and Aetna's Positions Regarding Coverage for Certain Therapies
The group insurance contract between Aetna and Westmoreland provides:
For the purpose of ... ERISA, Aetna is a
fiduciary with complete authority to review all denied claims for benefits
under this policy. This includes, but is not limited to, the denial of
certification of the medical necessity of hospital or medical treatment. In
exercising such fiduciary responsibility, Aetna shall have discretionary
authority to:
determine whether and to what extent
employees and beneficiaries are entitled to benefits; and construe any disputed
or doubtful terms of this policy.
Aetna shall be deemed to have properly
exercised such authority unless Aetna abuses its discretion by acting
arbitrarily and capriciously.
*5 (Aetna's Statement of Material Facts, Ex. D, Group Life and Accident
and Health Insurance Policy, at 9190.)
Regarding benefits, the relevant terms of
the policy, as set forth in the Summary Plan Description, are as follows:
• "Charges incurred by a person for
the effective treatment of ... a mental disorder while not confined as a
full-time inpatient in a hospital; or treatment facility; are Covered Medical
Expenses."
• "Effective Treatment of a Mental
Disorder" is defined as a "program that: is prescribed and supervised
by a physician; and is for a disorder that can be favorably changed."
• A "mental disorder" is defined
as "a disease commonly understood to be a mental disorder whether or not
it has a physiological or organic basis and for which treatment is generally
provided by or under the direction of a mental health professional such as a
psychiatrist, a psychologist or a psychiatric social worker. A mental or
nervous disorder includes; but is not limited to: ... Pervasive Mental
Developmental Disorder (Autism)."
• Coverage is not provided for charges
"for or related to services, treatment, education testing or training
related to learning disabilities or developmental delays."
• Coverage is not provided for charges
"for or in connection with speech therapy. This exclusion does not apply
to charges for speech therapy that is expected to restore speech to a person
who has lost existing speech function (the ability to express thoughts, speak
words, and form sentences) as the result of disease or injury."
• Coverage is not provided for charges
"for services and supplies [n]ot necessary, as determined by Aetna, for
the diagnosis, care or treatment of the physical or mental condition involved.
This applies even if they are prescribed, recommended or approved by the
attending physician or dentist."
• A service is "necessary"
"if Aetna determines that it is appropriate for the diagnosis, the care or
the treatment of the disease or injury involved."
• To be "appropriate," the
service must "[b]e care or treatment, as likely to produce a significant
positive outcome as, and no more likely to produce a negative outcome than, any
alternative service or supply, both as to the disease or injury involved and
the person's overall health condition."
• "In determining if a service or
supply is appropriate under the circumstances, Aetna will take into
consideration: [i]nformation provided on the affected person's health status;
[r]eports in peer reviewed medical literature; [r]eports and guidelines
published by nationally recognized health care organizations that include
supporting scientific data; [g]enerally recognized professional standards of
safety and effectiveness in the United States for diagnosis, care or treatment;
[t]he opinion of health professionals in the generally recognized health
specialty involved; and [a]ny other relevant information brought to Aetna's
attention."
*6 (Aetna's Statement of Material Facts, Ex. C, Summary Plan Description,
at 18, 20, 22, 36, 41, 42.)
Aetna issues Coverage Policy Bulletins
("CPBs"), which express Aetna's position as to whether certain
services or treatments meet the requirements for coverage under its plans. The
CPBs include reviews of medical literature. On August 27, 1999, Aetna issued a
CPB stating that "sensory (auditory) integration therapy" is not
covered because its effectiveness is unproven. (Aetna's Statement of Material
Facts, Ex. B, at 729-30.) On October 19, 1998, Aetna issued a CPB relating to
occupational therapy, which states that Aetna "does not extend coverage
for long term occupational therapy in the management of patients with chronic
diseases except as indicated in our individual benefit plans." (Id.
at 5-6.) The plan documents here do not state that long-term occupational
therapy for the treatment of chronic diseases is covered.
This Action
Plaintiffs filed this action in August
2001, alleging the wrongful denial of benefits by Aetna in violation of the
Employment Retirement Income Security Act, 29 U.S.C. § 1001 et seq. ("ERISA"). In
their complaint, plaintiffs seek an order directing Aetna to resume payment for
Bryce's therapies and to pay previous charges incurred for those therapies, in
addition to attorney's fees and costs. Aetna now moves for summary judgment.
DISCUSSION
Summary judgment "shall be rendered
forthwith if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to
a judgment as a matter of law." Fed.R.Civ.P. 56(c). In considering such a motion, the court
construes the evidence and all inferences that reasonably can be drawn
therefrom in the light most favorable to the nonmoving party. See Pitasi v. Gartner Group, Inc., 184 F.3d 709, 714 (7th
Cir.1999). "Summary judgment should be denied if the dispute is
'genuine': 'if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party." ' Talanda v. KFC Nat'l Mgmt. Co., 140 F.3d 1090, 1095 (7th
Cir.1998) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)). The court will enter summary judgment against a party who does not
"come forward with evidence that would reasonably permit the finder of
fact to find in [its] favor on a material question." McGrath v. Gillis, 44 F.3d 567, 569 (7th Cir.1995).
Plaintiffs concede that our review is
limited to determining whether the denial of benefits was "arbitrary and
capricious." This is because the plan delegated to Aetna the fiduciary
responsibility and discretionary authority to interpret the plan's terms and
determine eligibility for benefits. See Herzberger v.. Standard Ins. Co., 205 F.3d 327, 331 (7th
Cir.2000).
"Under the arbitrary and capricious
standard, a plan administrator's decision should not be overturned as long as
(1) 'it is possible to offer a reasoned explanation, based on the evidence, for
a particular outcome,' (2) the decision 'is based on a reasonable explanation
of relevant plan documents,' or (3) the administrator has based its decision on
a consideration of the relevant factors that encompass the important aspects of
the problem ." ' Hess v. Hartford Life & Accident Ins. Co., 274 F.3d
456, 461 (7th Cir.2001) (citation omitted). Although the arbitrary and
capricious standard grants significant deference to the plan's determination of
eligibility, our review is not simply a "rubber stamp": "[I]f
fiduciaries or administrators of an ERISA plan controvert the plain meaning of
a plan, their actions are arbitrary and capricious." Swaback v. American Info. Techs. Corp., 103 F.3d 535,
540 (7th Cir.1996). The arbitrary and capricious standard, though
deferential, nonetheless requires "a 'rational' connection between the
issue to be decided, the evidence in the case, the text under consideration,
and the conclusion reached." Exbom v. Central States, S.E. & S.W. Areas Health & Welfare Fund, 900 F.2d 1138,
1143 (7th Cir.1990) (citation omitted).
*7 Aetna was required to give the Wheelers every reason for its denial of
benefits at the time of denial. [FN5] See Reich v. Ladish Co., 306 F.3d 519, 524 n. 1 (7th
Cir.2002). There are three letters in the record that Aetna sent to
plaintiffs which state Aetna's reasons for the denial of benefits for Bryce's
various therapies. [FN6] We will quote the relevant portions of
each letter, beginning with the April 6, 2000 letter from Mary M. Hurley:
FN5. Therefore, we will not consider additional
reasons for Aetna's denial of benefits, to the extent that it attempts to
bolster its decisions at this juncture.
FN6. The letters are replete with grammatical
errors, repetitions, and sentences that are incomplete and difficult to
understand. We quote the letters verbatim.
Dear Mr. Wheeler:
This letter serves as a reiteration of the
telephone discussion that I had today with Mrs. Wheeler concerning the ongoing
treatment that Bryce has been and is continuing to receive from three different
providers: Early Intervention Approaches, Therapeutic Resources, Inc., and
Children's Therapy & Resource Center.
Sensory integration treatment is not
covered under your health benefits plan with Aetna U.S. Healthcare for any
diagnosis. It is excluded from coverage and there is no documentation that you
or the provider(s) can give to us that will allow it to be covered.
...
Physical therapy, occupational therapy, and speech therapy, if billed in relation to autism, is not covered.
All instances where we have reviewed these
services prior to payment have been denied. Upon review of the file, it does
appear that sporadic claims have been allowed without review in error. Despite
these errors in payment, we are not seeking overpayment refunds from your
providers at this time.
The last issue is speech therapy.
Currently, the standing review does indicate that all charges for speech
therapy should be denied as well. However, as I mentioned to Mrs. Wheeler on
the phone, there is a chance that speech therapy charges for Bryce can be
covered because the loss of speech may have been related to otitis media (ear
infections). To appeal our denial, we are in need of the following items before
the file can be referred to the Independent Medical Consultant for review:
1. Initial evaluation for speech therapy
2. The first two months of speech therapy notes
3. The name and address of the doctor who was treating Bryce for ear infections
4. That doctor's notes from that treatment
It is my hope that with this additional
information surrounding Bryce's speech therapy that the review will come back
more favorably and benefits will be allowed for that portion of his treatment.
...
Sincerely,
Mary M. Hurley, Customer Service Team
Leader
Aetna U.S. Healthcare
(Aetna's Statement of Material Facts, Ex. B, at 257-58).
The letter to the Wheelers from Dr. Reed,
who reviewed the first appeal, states in pertinent part:
Dear Mr. Wheeler:
We have received your request to reevaluate
our determination regarding a predetermination of benefits for Bryce Wheeler
for the proposed multiple requested therapies (speech, occupational, physical),
and Applied Behavioral Analysis. After completing this review, we are unable to
approve payment for the services requested.
*8 Coverage is provided for a service which is necessary. A service
furnished by a particular provider is necessary if Aetna U.S. Healthcare
determines that it is appropriate for the diagnosis, the care, or treatment of
the disease or injury involved. After review of the medical documentation
submitted, it has been determined that the multiple requested therapies
(speech, occupational, physical), and Applied Behavioral Analysis will not be
covered benefits under the provisions of the Plan.
The medical staff is unable to approve
benefits for the multiple requested therapies (speech, occupational, physical,
and Applied Behavioral Analysis), as this member's plan excludes therapies for
conditions of developmental delay, learning or educational problems, and
non-restorative medical conditions. Also, sensory integration therapy is not
covered, as Aetna coverage policy notes its effectiveness has not been proven.
...
Despite this determination about plan
benefits, we want to emphasize that the member and physician still make the
final determination whether the proposed treatment is performed.
You have the right to a second appeal of
our determination....
Sincerely,
John B. Reed, D.O.
Medical Director
(Id., Ex. B, at 667-68.)
The third letter, which was sent to counsel
for the Wheelers, was signed by Dr. Hellmann. It states in relevant part:
Dear Attorney Saphire-Bernstein:
We have received your request for a final
review of benefit reimbursement of the speech therapy, occupational therapy and
sensory integration therapy for Bryce Wheeler. After completing this review, we
are unable to approve payment for these services.
Under the Plan, benefits for speech therapy
are not covered. Aetna U.S. Healthcare provides coverage for speech therapy
subject to plan descriptions and benefit limitations. In general, speech
therapy is covered for the treatment of non-chronic conditions, for acute
illness and injuries that result in an impairment in the ability to speak, or
when the patient has a speech- language disorder that is the result of a
disease or injury causing loss of previously existing speech function.
Aetna U.S. Healthcare does not cover
sensory (auditory) integration therapy. This procedure has been proposed as a
treatment approach to the management of children with various communication,
behavioral, emotional, and learning disorders. The effectiveness of this
therapy is unproven.
Occupational therapy is a health care
service that involves the use of purposeful activities to help people regain
performance skills lost through injury or illness. Aetna U.S. Healthcare does
not extend coverage for long term occupational therapy in the management of
patients with chronic diseases except as indicated in our individual benefit
plans.
Aetna U.S. Healthcare does not cover
sensory integration therapy. The effectiveness of this therapy has not been
proven.
Medical documentation reviewed include
4/6/00 discussion with customer service, 6/8/00 request for information, and
11/13/00 member response with review of all documents noted in that letter.
Documentation establishes that there was one possibly abnormal EEG, not
reconfirmed as recommended in the report and "cautiously
interpreted"; a more clear diagnosis of autism; delays in language,
social, behavioral, perceptual and motor skills, a 7/15/96 note that the
patient was not talking much and didn't seem to hear as well as he had with an
impression of repeated OM over a 6-9 month period, marked speech delay, and
subsequent invasive treatment with PE tubes, a 9/96 assessment that behaviors
diagnostic of autism included unusual eye contact, diminished facial
expressiveness, and inadequate coordination of eye gaze, vocalization and
gesture.
*9 The documentation reviewed indicates the vast majority of problems can
be attributable to the primary diagnosis of autism or developmental delay.
There is a question as to whether the documented recurrent ear infections
caused a loss of some already existing speech function and played a
contributory role in the delayed speech development. Based on this review we
would recommend that a component of the speech delay be considered to be due to
the ear infections, although this is not entirely clear, and that speech therapy
be considered allowed expenses for a period of 6 months to allow for the
component of speech delay that may be attributable to the documented ear
infections.
The other services for sensory integration
therapy, occupational therapy would be considered developmental delays, likely
due to the primary diagnosis of autism, and would not be covered services.
Therefore, the Plan will not cover these services.
With this review, your request for benefit
reimbursement of health care services has reached the final level of appeal
available through Aetna U.S. Healthcare....
Sincerely,
Joel B. Hellmann, MD
Medical Director
(Id., Ex. B, at 690-91.)
A few initial comments regarding the three
letters are in order. Our first observation upon reviewing these letters is that
they utterly fail to consider the actual language of the plan at issue here.
The letters also largely fail to connect Aetna's denial of benefits to the
specific situation and Bryce's diagnoses. Ms. Hurley's letter is cursory and
simply states that sensory integration therapy is not covered, without
explaining why. As for the other therapies, Ms. Hurley states that they are not
covered "if billed in relation to autism," which is simply incorrect,
given that autism is a covered condition under the plan. [FN7] Dr. Reed's letter is similarly cursory.
He invokes the exclusion of coverage for treatment that Aetna deems not
necessary, but fails to state whether it is Aetna's position that any of the
therapies are in fact not necessary. Dr. Reed states that benefits for the
"multiple requested therapies" will be denied because the plan does
not cover "conditions of developmental delay, learning or educational
problems, and non-restorative medical conditions." This statement
completely ignores the diagnosis of autism. Dr. Reed further explains that
sensory integration therapy is not covered because its effectiveness has not
been proven, but does not tie this explanation to any particular language of
the plan.
FN7. Aetna concedes that autism is a covered condition
under the plan.
Dr. Hellmann's letter is the most intelligible and comprehensive of the three letters (which is not saying much,
as we will discuss infra ). Therefore, we will use it as our primary
basis for reviewing Aetna's denial of benefits.
Speech Therapy
Dr. Hellmann states that "[i]n
general, speech therapy is covered for the treatment of non-chronic conditions,
for acute illness and injuries that result in an impairment in the ability to
speak, or when the patient has a speech- language disorder that is the result
of a disease or injury causing loss of previously existing speech
function." The question is not, however, what is covered "in
general." The question is what the plan specifically provides. The summary
plan description states that the exclusion of coverage for speech therapy does
not apply to charges for speech therapy "that is expected to restore
speech to a person who has lost existing speech function (the ability to
express thoughts, speak words, and form sentences) as the result of a disease
or injury." (Aetna's Statement of Material Facts, Ex. C, Summary Plan
Description, at 22.) The text pertaining to speech therapy makes no reference
to or distinction between "non-chronic" or "chronic"
conditions. [FN8]
FN8. We recognize that whether a condition is
chronic affects the question of whether speech therapy can be expected to
restore function. However, we point out the absence of language in the plan
regarding "chronic" conditions because Aetna characterizes autism as
a "chronic" condition, and then argues from this characterization
that Bryce's therapies are accordingly not covered. There is no basis in the
plan for making this "chronic/non-chronic" distinction, or for so
simplifying the analysis regarding speech therapy.
*10 Thus, for speech therapy to be a covered benefit under the plan, (1)
there must have been existing speech function, (2) lost as the result of
disease or injury, (3) which is expected to be restored by the therapy. Dr.
Hellmann never explains why, in Aetna's view, Bryce's therapy does not meet
this test. He does not explain whether it is Aetna's view that autism (which is
considered under the plan to be a "disease," see definitions supra
) did not cause Bryce to lose existing speech function, or whether Aetna
considers the therapy to be non-restorative, or both. Instead, Dr. Hellmann
glosses over autism as the possible cause and goes right to the ear infections:
"There is a question as to whether the documented recurrent ear infections
caused a loss of some already existing speech function and played a
contributory role in the delayed speech development. Based on this review we
would recommend that a component of the speech delay be considered to be due to
the ear infections, although this is not entirely clear, and that speech
therapy be considered allowed expenses for a period of 6 months to allow for
the component of speech delay that may be attributable to the documented ear
infections." (Aetna's Statement of Material Facts, Ex. B, at 691.)
Dr. Hellmann is correct that it is not
entirely clear from the medical history whether the ear infections played a
role in Bryce's speech problems. However, there are several indications in the
medical history that Bryce's speech problems stem from autism. First, there is
a psychological evaluation, dated September 4, 1996, by Dr. Allan Bloom of the
Child Evaluation Center. The evaluation indicates that Bryce had "fairly
normal" speech development until he was about 18 months old, at which time
there was "an alarming and precipitous drop in communication.... Prior to
18 months, Bryce was using many single words, as well as some word
combinations. At this present time, the youngster was essentially
nonverbal." (Id. at 556.) After observing Bryce, Dr. Bloom
diagnosed Bryce with autism and stated that "[t]he decline in
communication at 18 months was consistent with the development and pattern of
many children with autism." Dr. Bloom added: "Bryce will obviously
require intensive speech and language therapy." (Id. at 558.)
Dr. Bloom's report was issued in the
context of the Child Evaluation Center's more extensive examination of Bryce.
The Center's comprehensive evaluation, authored by two pediatricians, states:
"Bryce is a 31 month old youngster who was referred to the Child Evaluation
Center because of concerns about his loss of ability to talk, odd
behaviors and attention problems.... During the first 18 months of his life,
Bryce seemed to have normal language development. He had acquired the ability
to say things such as, "Wow," "What's that?" (while
pointing with two fingers). After losing this ability, however, he is beginning
to make some gains in that he now babbles...." The report also contains a
diagnosis of autism. (Id. at 561-66 (emphasis added).) Furthermore, it
is the opinion of Bryce's treating physician, Dr. Chez, that the loss of
Bryce's speech function resulted from "pathological brain activity."
(Id. at 504.) [FN9] Thus, there is support in the medical
history from which to conclude that autism caused Bryce to lose previously
existing speech skills. Conversely, there is no indication in the medical
history that the loss of speech skills was caused by anything else (save the
ear infections). [FN10] Aetna has offered no reasoned
explanation for why it ignored this support.
FN9. "Pathological" means
"diseased" or "altered by disease." Webster's Third New
International Dictionary 1655 (1971).
FN10. We do not find unreasonable Aetna's
determination that the medical history is unclear as to whether the ear
infections resulted in or contributed to the loss of speech. (Aetna's position,
evidently, is that if the loss of speech were due to ear infections, the
therapy would be covered.) The medical history indicates that Bryce was
experiencing ear infections at approximately the same time his loss of speech
occurred, but none of Bryce's providers attributes the loss of speech to the
ear infections.
*11 We move on to the question of whether the therapy is expected to
restore Bryce's speech. Again, it is unclear whether Aetna's position is that
the therapy is non-restorative, but even if it were, there is no basis in the
medical records for that conclusion. The August 18, 2000 "Speech and
Language Treatment Plan Summary," completed by Bryce's speech and language
pathologist at the Children's Therapy and Resource Center, indicates that Bryce
"continued to respond well to individual speech and language
therapy," that pictures and gestures were used to elicit speech, and that
Bryce's spontaneous use of speech increased. (Id. at 521.) One of the
long-term goals set for Bryce is a "functional communication system."
(Id.) In addition, Dr. Chez states that speech therapy will enable Bryce
to "continue to increase his processing ability" and that speech
therapy is important "in order to restore the loss of function that came
about as a result of pathological brain activity." Dr. Chez recommends a
minimum of 2 to 3 speech therapy sessions per week. (Id. at 504.)
We conclude that Aetna failed to
acknowledge the actual language of the plan provisions and failed to analyze
Bryce's speech problems, in light of the medical records, in accordance with
those plan provisions. Aetna did not and does not explain why it rejected the
opinions of Bryce's medical providers. Aetna also chose not to conduct an
independent medical examination. Because Aetna failed to make a rational
connection between the evidence, the plan language, and its conclusion to
terminate speech therapy benefits, its termination of benefits was arbitrary
and capricious.
Sensory Integration Therapy
Regarding sensory integration therapy, Dr.
Hellmann states: "Aetna U.S. Healthcare does not cover sensory
(auditory) integration therapy. This procedure has been proposed as a treatment
approach to the management of children with various communication, behavioral,
emotional, and learning disorders. The effectiveness of this therapy is
unproven." (Id. at 690.)
There is no exclusion under the plan for
therapies whose "effectiveness ... is unproven." Dr. Hellmann never
states that Aetna determined that sensory integration therapy is unnecessary
for Bryce's treatment. For purposes of this motion, we will assume that Dr.
Hellmann is implying that sensory integration treatment is unnecessary. (That
is the argument Aetna advances in its briefs.) [FN11] Even giving the letter this generous
interpretation, though, it is clear that such a conclusion was arbitrary and
does not comport with the plain language of the plan.
FN11. Aetna does not argue, nor do the letters
state, that the charges for sensory integration therapy were not for the
"effective treatment of a mental disorder" as that phrase is defined
in the plan. Aetna does not argue that the therapy was not prescribed and
supervised by a physician or that it is for a disorder that cannot be favorably
changed.
We begin with the plan's definitions of
"necessary" and "appropriate" treatment. A service is
"necessary" if it is "appropriate for the diagnosis, the care or
the treatment of the disease or injury involved." (Aetna's Statement of
Material Facts, Ex. C, Summary Plan Description, at 42.) To be
"appropriate," treatment must be "as likely to produce a
significant positive outcome as, and no more likely to produce a negative
outcome than, any alternative service or supply, both as to the disease or
injury involved and the person's overall health condition." (Id.)
Furthermore, the plan states that when determining if a service is appropriate "under
the circumstances, Aetna will take into consideration"
information provided on the affected person's health status." (Id.
(emphasis added).)
*12 It is clear from the terms of the plan that the necessary/appropriate
determination will involve an individualized determination, considering the
particular circumstances, medical condition, and health condition, of the
possible outcome of a certain treatment relative to alternative treatments. No
such determination was made here with respect to Bryce. Aetna does not state
that the sensory integration therapy was not as likely to produce a significant
positive outcome as and no more likely to produce a negative outcome than any
alternative treatments, nor does Aetna state what the possible alternative
treatments are. Moreover, there was no individualized determination of what was
necessary or appropriate treatment in light of Bryce's particular situation.
Instead, Aetna refers (in its briefs, not in its letters to the Wheelers) to
its "Coverage Policy Bulletin," which states that Aetna will not
cover sensory integration therapy.
As with the analysis regarding speech
therapy, this constituted cursory analysis that did not comport with the terms
of the plan. Aetna may very well have a "Coverage Policy Bulletin"
relating to sensory integration therapy, but it failed to consider the express
terms of the plan--the definitions of "necessary" and
"appropriate," and it failed to make a rational connection between
the particular medical evidence and its conclusion to terminate benefits
for this therapy. Aetna's decision regarding these benefits, therefore, was
arbitrary and capricious.
Physical/Occupational/Applied Behavioral Analysis Therapies
Regarding occupational therapy, Dr.
Hellmann states as follows: "Occupational therapy is a health care service
that involves the use of purposeful activities to help people regain
performance skills lost through injury or illness. Aetna U.S. Healthcare does
not extend coverage for long term occupational therapy in the management of
patients with chronic diseases except as indicated in our individual benefit
plans." (Aetna's Statement of Material Facts, Ex. B, at 690.) In addition,
Dr. Hellmann states: "The other services for sensory integration therapy,
occupational therapy would be considered developmental delays, likely due to
the primary diagnosis of autism, and would not be covered services." (Id.
at 691.) Dr. Hellmann does not refer specifically to either physical or applied
behavioral analysis therapy, but Dr. Reed's letter states: "The medical
staff is unable to approve benefits for the multiple requested therapies
(speech, occupational, physical, and Applied Behavioral Analysis), as this
member's plan excludes therapies for conditions of developmental delay,
learning or educational problems, and non-restorative medical conditions."
[FN12] (Id. at 667.)
FN12. There is no basis in the plan language
for the "non-restorative medical conditions" portion of this
reasoning. As for the "learning or educational problems" portion, the
exact language of the plan refers to "learning disabilities."
(Aetna's Statement of Material Facts, Ex. C, Summary Plan Description, at 22.)
Even a cursory review of the medical history shows that Bryce has not been
diagnosed with a learning disability.
Dr. Hellmann's first reason for denying
benefits for occupational therapy is that Aetna does not cover "long term
occupational therapy" for patients with "chronic diseases." This
conclusion evidently is based on a Coverage Policy Bulletin, but it is not
based on any language of the plan. There is no language in the plan carving out
a "chronic disease" or a "long-term therapy" exception to
coverage. Accordingly, this reasoning is wholly arbitrary.
*13 Dr. Hellmann and Dr. Reed provide a second reason for the denial of
benefits: the therapies are related to developmental delays--which may or may
not be due to autism, depending on whose letter you read. Dr. Reed states that
Aetna does not cover "therapies for conditions of developmental
delay." (Id. at 667 .) Dr. Hellmann's version of this reasoning is
that occupational therapy is not covered because it is related to
"developmental delays, likely due to the primary diagnosis of
autism." (Id. at 691.)
Aetna's position in its briefs is somewhat
unclear--it seems to want to have it both ways and relies on both versions of
the developmental delay argument. Dr. Reed's position appears to be that the
therapies are not covered benefits because they relate to developmental delays
and not autism. There is no explanation for how Dr. Reed or Aetna came to this
conclusion, and it is arbitrary given the records. The diagnosis of autism is
primary and pervasive throughout Bryce's medical records. Dr. Hellmann, on the
other hand, states that the developmental delays in his opinion are likely due
to the autism. Aetna admits that autism is a covered condition under the
plan. Thus, there is a tension here, unless Aetna's position is that
developmental delays are not covered even if they are caused by autism.
The plan is ambiguous regarding this issue.
Charges for the effective treatment of mental disorders are clearly covered,
and autism (which the plan also deems "Pervasive Mental Developmental
Disorder") is explicitly included as a mental disorder. However, the plan
excludes coverage for treatment "related to" "developmental
delays."
We interpret the terms of the policy
"in an ordinary and popular sense as would a [person] of average
intelligence and experience." Phillips v. Lincoln Nat'l Life Ins. Co., 978 F.2d 302,
308 (7th Cir.1992). Ambiguous terms in an insurance contract are strictly
construed in favor of the insured. See id. Accordingly, we find
that the "developmental delay" exclusion is inapplicable to
developmental delays caused by autism. This reading is the only reasonable
reading of the plan and comports with the plan's own definition of autism.
Defining autism as a developmental disorder, but then excluding treatment for
developmental delays caused by autism, would in effect render the provision for
coverage for autism meaningless.
Therefore, under either version of the
"developmental delay" argument, Aetna's decision to deny benefits for
the physical, occupational, and applied behavioral analysis therapies was
arbitrary and capricious. Aetna either misconstrued the terms of the plan in an
arbitrary fashion, or it concluded with absolutely no basis in the medical
records that the therapies were related to developmental delays unrelated to
autism.
CONCLUSION
We find as a matter of law that Aetna's
termination of benefits for all of Bryce Wheeler's therapies was arbitrary and
capricious. It appears that on the basis of this finding, summary judgment for
the plaintiffs would be appropriate, but plaintiffs have not cross-moved
for summary judgment. Therefore, we will give defendant leave to file a
memorandum, if it wishes, showing cause why we should not enter summary
judgment for plaintiffs. Defendant may file this memorandum by August 4, 2003.
*14 Defendant's motion for summary judgment is denied.
2003 WL 21789029 (N.D.Ill.), 31 Employee
Benefits Cas. 1782, Pens. Plan Guide (CCH) P 23985Q
END OF DOCUMENT
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