Devillers v. Blue Cross & Blue Shield of R.I.

ROBERT J. deVILLERS v. BLUE CROSS & BLUE SHIELD OF RHODE ISLAND

C.A. No. 13-173ML

UNITED STATES DISTRICT COURT DISTRICT OF RHODE ISLAND

March 11, 2014

REPORT AND RECOMMENDATION

Lincoln D. Almond, United States Magistrate Judge

This is a pro se action brought by Robert J. deVillers ("Plaintiff") against Blue Cross & Blue Shield of Rhode Island ("BCBS") alleging breach of contract. Because the action arises out of an employer-sponsored group health insurance plan, Plaintiff's claim is governed by the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"). In his Amended Complaint, Plaintiff alleges that BCBS breached the health insurance policy covering his family by failing to pay the costs (totaling $47,608.00) for "residential rehabilitation services" provided to his then minor son¹ from August 2011 to June 2012 by Alternative Youth Care in Kalispell, Montana ("AYC"). Plaintiff's son entered the AYC program after being discharged from an inpatient rehabilitation facility known as Hazelden Center for Youth located in Minnesota.²

BCBS has moved for summary judgment arguing that its denial of benefits must be affirmed under ERISA's deferential standard of review because it "reasonably concluded" that Plaintiff "failed to provide any information to establish that AYC was an 'eligible provider' of covered services." (Document No. 20 at pp. 5, 10). Alternatively, BCBS argues that the Plan expressly excludes coverage for "halfway houses or other residential facilities" such as AYC. Id. at p. 12. In his Opposition to BCBS's Motion, Plaintiff argues, in part, that BCBS "did not pay for any of [his son's] therapy or counseling while attending AYC" and notes that the "majority of the costs at AYC ($26,900.00) were for counseling and therapy yet BCBS has refused to cover any of these costs." (Document No. 23 at pp. 4, 9). In its Reply, BCBS argues that Plaintiff cannot now amend his claim to obtain partial recovery by parsing out portions of a properly denied claim. (Document No. 25 at p. 5). It also contends that, even if any counseling and therapy services were provided by "eligible providers" and might be reimbursable, the amount requested by Plaintiff "would far exceed any benefit potentially available under the Plans for those services" since they are subject to out-of-network limitations. Id. Finally, BCBS asserts that any partial reimbursement determination must be made in the first instance by the Plan Administrator, not by this Court sitting in review pursuant to ERISA. Id. at n.3.

Discussion

A. Procedural History

A hearing was held on BCBS's Motion for Summary Judgment on October 16, 2013. After further review of the Administrative Record, the Court issued an Order For Further Briefing on November 14, 2013. (Document No. 27). The Order directed the parties to submit Supplemental Briefs addressing the following two issues:

1. Is this Court precluded by the administrative exhaustion requirement read into ERISA from considering, in the context of this pending case, the issue of Plaintiff's son's entitlement, if any, to coverage, out-of-network or otherwise, for any of the outpatient therapy or counseling services he received while residing at AYC?; and

2. Does this Court have the authority under ERISA to order a remand of this claim to the Plan Administrator for further development of the Administrative Record and a determination as to whether Plaintiff's son was entitled to coverage, out-of-network or otherwise, for any of the outpatient therapy or counseling services he received while residing at AYC?

The Supplemental Briefs have been filed and reviewed by the Court. (Document Nos. 28, 30 and 32).

B. Standard of Review

Both sides appear to agree that this dispute boils down to whether BCBS abused its discretion in denying Plaintiff's claim. This standard of review applies "[w]hen an ERISA plan gives an administrator discretionary authority to determine eligibility for benefits or construe the plan's terms." D&H Therapy Assocs., LLC v. Boston Mut. Life Ins. Co., 640 F.3d 27, 34 (1^st Cir. 2011). Here, the Plan gives BCBS discretionary authority to interpret the Plan, to determine eligibility for benefits and to determine medical necessity. See Doe v. Blue Cross & Blue Shield of R.I., 1:11-cv-00647-M, Bench Decision Rendered on May 30, 2013 (D.R.I.). In particular, Section 1.1 of the plans provides that "[Blue Cross] will make a determination regarding your eligibility for benefits...." (Administrative Record "AR" at 00229; see also Document No. 21 at ¶ 4). Additionally, Section 1.4 states that a service is only covered under the plans "if it is medically necessary. We review medically [sic] necessity in accordance with our medicl [sic] policies andrelated guidelines." (AR at 00229-00230 (emphasis in original); see also Document No. 21 at ¶ 5). That section goes on to provide that "[t]his agreement provides coverage for health care services that we have reviewed and determined are eligible for coverage. Health care services which we have not reviewed or which we have reviewed and determined are not eligible for coverage are not covered under this agreement." (AR at 00230 (emphases in original); see also Document No. 21 at ¶ 5). Likewise, Section 3.2B provides that "[t]his agreement does NOT cover chemical dependency services provided in any covered program that are reviewed by us and we decide are recreational therapy programs, wilderness programs, or non-clinical services. We review the program...to decide whether [it]...meets our medical guidelines and criteria." (AR at 00246; see also Document No. 21, p. 2-3, ¶ 6).

The administrator's reading need not be the best interpretation of the plan, nor come to the same conclusion the Court would if analyzing the plan on its own. D&H Therapy, 640 F.3d at 35. A benefit determination is within the discretion of the administrator as long as it is reasoned and supported by substantial evidence. Id. Evidence is substantial where it is "reasonably sufficient to support a conclusion." Desrosiers v. Hartford Life & Accident Ins. Co., 515 F.3d 87, 92 (1^st Cir. 2008) (quoting Wright v. R.R. Donnelley & Sons Co. Grp. Benefits Plan, 402 F.3d 67, 74 (1^st Cir. 2005)). Where the administrator both pays benefits and determines eligibility for claims, as is the case here, the Court must consider this inherent conflict of interest in applying the abuse of discretion standard. Denmark v. Liberty Life Assurance Co. of Boston, 566 F.3d 1, 9 (1^st Cir. 2009) (holding that "courts should review benefit-denial decisions for abuse of discretion, considering any conflict as one of a myriad of relevant factors"). This dual role is known as a "structural conflict" as opposed to a situation where a fiduciary's decision was in fact motivated by an actual conflict ofinterest. Id. at 5 n.2. Thus, BCBS's interpretation is afforded deference and should only be overturned if found to be an abuse of discretion, recognizing that the Court must be cognizant of the dual role being played by BCBS and the potential conflict this creates.

C. Scope of the Claim

BCBS argues that Plaintiff's claim has consistently been to recover reimbursement for the entirety of AYC's charges,³ and that consideration of reimbursement for a subset of AYC's charges at this late stage would improperly interject a new claim on appeal in violation of ERISA's administrative exhaustion requirements. Although ERISA itself does not contain a statutory exhaustion requirement, it is well-established that a beneficiary under an ERISA plan generally must exhaust the administrative appeal remedies provided by the plan before filing suit. Drinkwater v. Metro. Life Ins. Co., 846 F.2d 821, 825 (1^st Cir. 1988). "A plaintiff has not exhausted his administrative remedies on an issue if he fails to raise it before the plan administrator." Harris v. Trustmark Nat'l Bank, 287 Fed. Appx. 283, 288 (5^th Cir. 2008). Thus, the issue for exhaustion purposes is what was the scope of Plaintiff's claim to BCBS.

Initially, there is no dispute that Plaintiff presented and exhausted his claim to recover the full cost of his son's stay at AYC including housing and counseling services. (See, e.g., AR at 00180). There is also no dispute that BCBS considered and denied the claim. BCBS concluded that the information provided to it by AYC and Plaintiff was insufficient to "demonstrate that the program offered at AYC meets BCBSRI eligibility and/or credentialing requirements for an acute substance abuse residential program." (AR at 00122).

Plaintiff has not met his burden of establishing that BCBS's refusal to pay for the entirety of AYC's services was arbitrary and capricious on this record. The Plan covers certain inpatient chemical dependency treatments including "Acute Rehabilitation or Residential treatment." (AR at 00246). It also gives BCBS the discretion to "review the program, hospital or inpatient facility and the specific services provided to decide whether a program, hospital or inpatient facility meets our medical guidelines and criteria." Id. By letter dated November 8, 2012, BCBS informed Plaintiff that the information he submitted regarding AYC "was not sufficient to demonstrate the program [his son] attended meets BCBSRI's requirements for health care benefit coverage." (AR at 00131). Plaintiff was given notice of the requirements and a fair opportunity to submit information demonstrating AYC's credentials. However, the Administrative Record reflects that BCBS's determination that his submissions were insufficient was reasonable and supported by the record.

Although Plaintiff's pro se arguments are difficult to parse, his primary challenge to BCBS's denial appears to be that its representative erroneously "used the requirements needed to support the validity of an 'in-patient chemical detoxification' facility or an 'acute rehabilitation' facility and applied and added these requirements to a 'residential treatment' fa...