Dowden v. Blue Cross

REVISED
United States Court of Appeals,
Fifth Circuit.
No. 97-30452
Summary Calendar.
Annie DOWDEN, also known as Annie J. Dowden, Plaintiff-Appellant,
v.
BLUE CROSS & BLUE SHIELD OF TEXAS, INC., Defendant-Appellee.
Sept. 19, 1997.
Appeal from the United States District Court for the Western
District of Texas.
Before REAVLEY, JOLLY and HIGGINBOTHAM, Circuit Judges.
PER CURIAM:
Appellant Annie Dowden (Dowden) brought suit against Appellee
Blue Cross & Blue Shield of Texas, Inc. (Blue Cross) for an alleged
breach of a policy obligation to pay benefits for expenses incurred
in treatment for silicone breast implant complications. Dowden
complains on appeal that the district court erred in granting
summary judgment against her, holding that the Employment
Retirement Income Security Act (ERISA), § 29 U.S.C. 1132(a)(1)(B)
governs the facts in this case, and that Blue Cross rationally
determined that the medical expenses which Dowden incurred were not
medically necessary, and therefore, not covered under the insurance
policy. We affirm.
I. JURISDICTION
The district court properly exercised subject matter
jurisdiction pursuant to 28 U.S.C. § 1441(b). A defendant may
remove a case on grounds that the plaintiff has asserted a claim
preempted by § 514(a) of ERISA. Metropolitan Life Ins. Co. v.
Taylor, 481 U.S. 58, 66, 107 S.Ct. 1542, 1547, 95 L.Ed.2d 55(1987). ERISA comprehensively regulates, inter alia, employee
benefit welfare plans that provide medical care or benefits in the
event of sickness through the purchase of insurance. 29 U.S.C. §
1002(1); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45, 107
S.Ct. 1549, 1551, 95 L.Ed.2d 39 (1987); Memorial Hosp. Sys. v.
Northbrook Life Ins. Co., 904 F.2d 236 (5th Cir.1990).
ERISA's preemption clause dictates that ERISA "shall
supersede any state causes of action insofar as they may now or
hereafter relate to any employee benefit plan." 29 U.S.C. §
1144(a). The federal courts have broadly construed the
"deliberately expansive" language of the ERISA preemption clause.
Corcoran v. United HealthCare, Inc., 965 F.2d 1321, 1328-29 (5th
Cir.1992). A state cause of action relates to an employee benefit
plan whenever it has "a connection with or reference to such a
plan." Hubbard v. Blue Cross & Blue Shield Ass'n, 42 F.3d 942, 945
(5th Cir.1995)(quoting Corcoran, 965 F.2d at 1329). If a state law
claim addresses an area of exclusive federal concern, such as the
right to receive benefits under the terms of an ERISA plan, then
the claim falls in the province of the federal courts. Hubbard, 42
F.3d at 945.
Dowden's claim to recover medical expenses from Blue Cross
"relates to an employee benefit plan" thus falling within the scope
of ERISA's preemption provision. "It is clear that ERISA preempts
a state law cause of action brought by an ERISA plan participant or
beneficiary alleging improper processing of a claim for plan
benefits." Memorial Hosp., 904 F.2d at 245 (citing Pilot Life Ins.
Co., 481 U.S. at 48, 107 S.Ct. at 1553). Dowden was insured under
the group health insurance policy issued by her former employer.
Through the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, Dowden continued to participate in the
Blue Cross group policy even after she left her employment.
Dowden, as a former employee, comes under the rubric of ERISA
as a participant, 29 U.S.C. § 1002(7). She is able to assert her
claim pursuant to ERISA's civil enforcement provision, 29 U.S.C. §
1132(a)(1)(B). The Supreme Court has held that any suit falling
within this provision, even if it purports to raise only state law
claims, is necessarily federal in character by virtue of the
clearly manifested intent of Congress. Metropolitan Life, 481 U.S.
at 62, 107 S.Ct. at 1545.
We agree with the district court that Dowden claims a
violation of ERISA when she alleges a denial of benefits due under
the Blue Cross policy. A federal question exists on her claim and
the district court's exercise of jurisdiction was proper. Hubbard,
42 F.3d at 945.
II. MEDICAL NECESSITY
Dowden's theory of recovery and the summary judgment entered
against her rest upon whether Blue Cross as the plan administrator
abused its discretion in interpreting the term "medically
necessary" as expressly defined in the insurance contract.
A denial of ERISA benefits by a plan administrator is
reviewed by the courts de novo unless the plan gives the plan
administrator "discretionary authority to determine the eligibility
for benefits or to construe the terms of the plan." Duhon v.
Texaco, Inc., 15 F.3d 1302, 1305 (5th Cir.1994)(quoting Firestone
Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956,
103 L.Ed.2d 80 (1989)). Contrary to Dowden's assertion, Southern
Farm Bureau Life Insurance Co. v. Moore, 993 F.2d 98 (1993), does
not stand for the proposition that the court may look to general
principles of common law or state law absent ERISA guidance on the
interpretation of the plan. Moore states that because ERISA does
not dictate the appropriate standard of review for evaluating
benefit determinations of plan administrators, courts must first
look to the plan terms to determine if the plan administrator has
the discretionary authority to interpret the plan terms. 993 F.2d
at 100.
The abuse of discretion standard is the appropriate standard
of review to challenges to a plan administrator's interpretation of
the plan terms when that plan grants the administrator the
authority to make a final and conclusive determination of the
claim. Duhon, 15 F.3d at 1305 (citing Bruch, 489 U.S. at 115, 109
S.Ct. at 956). In applying the abuse of discretion standard, we
analyze whether the plan administrator acted arbitrarily or
capriciously. Bellaire Gen. Hosp. v. Blue Cross Blue Shield, 97
F.3d 822, 829 (5th Cir.1996).
The district court correctly concluded that the contested
plan grants Blue Cross "the exclusive and conclusive authority to
determine coverage and benefits, and to interpret provisions of the
plan, including whether treatment is medically necessary." In
pertinent part, the contract provides that "[t]he operation of the
plan requires decisions regarding eligibility and the construction
of terms. In executing this Contract, the Employer gives full and
complete authority and discretion to the Carrier to make decisions
regarding eligibility and benefits under this Contract. Such
authority and discretion includes, but is not limited to,
determination whether services, care, treatment or supplies are
Medically Necessary...." The contract also delineates which
services are medically necessary such as those "essential to,
consistent with and provided for the diagnosis or the direct care
and treatment of the condition, sickness, disease, injury, or
bodily malfunction," as well as those treatments "consistent with
accepted standards of medical practice." Because the plan vests
Blue Cross with such authority, judicial review is limited to
determining whether substantial evidence exists in the record to
support Blue Cross's decision that Dowden's treatment was medically
unnecessary or whether its refusal to pay the submitted claim was
arbitrary and capricious. Bellaire Gen. Hospital, 97 F.3d at 828(5th Cir.1996). "An arbitrary decision is one made without a
rational connection between the known facts and the decision or
between the found facts and the evidence." Id.Dowden carries the burden of proving that Blue Cross
arbitrarily and capriciously concluded that the medical test and
treatments were medically unnecessary and therefore not covered
under the policy. Bayles v. Central States, Southeast, & Southwest
Areas Pension Fund, 602 F.2d 97, 99 (5th Cir.1979). We agree with
the district court's finding that Dowden has not satisfied her
burden. Blue Cross evidences an established procedure and policy
for processing claims involving silicone breast implant patients.
Relying upon learned publications, Dr. Benjamin V. Carnovale, along
with other medical and legal staff, developed a written policy for
the uniform processing of the claims of silicone breast implant
patients. Consistent with the insurance contract, the policy also
enumerates which procedures are medically necessary. We agree with
the district court's finding that Blue Cross demonstrated a
reasonable basis in the record in making its determination of
non-coverage. Dr Carnovale's application of Blue Cross's
established policy and his ensuing interpretation of medical
necessity does not appear to be arbitrary and capricious,
inconsistent or evidence of a lack of good faith.
Dowden contends that in lieu of the definition expressly
provided in the contract, medically necessary treatment should be
defined by "medical experts" with great weight given to the opinion
of the attending physician. No evidence in the record exists nor
does any legal authority stipulate that an attending physician's
opinion should be granted more weight than the established policies
and procedures of the plan administrator. To grant conclusive
weight to the opinion of the attending physician would vitiate the
discretionary authority expressly granted to Blue Cross in the
contract.
Dowden further argues that the trial judge was "absolutely
wrong and unjust" to defer to Dr. Carnovale's determination that
the disputed claim was not medically necessary. Despite Dowden's
contention, it is indeed proper for the district court to exercise
deference to the plan administrator's interpretation when the plan
grants the plan administrator discretionary authority to interpret
the plan. Sunbeam-Oster Co. Group Ben. Plan v. Whitehurst, 102
F.3d 1368, 1373 (5th Cir.1996); Pierre v. Connecticut Gen. Life
Ins. Co., 932 F.2d 1552, 1562 (5th Cir.), cert. denied, 502 U.S.
973, 112 S.Ct. 453, 116 L.Ed.2d 470 (1991)("Federal courts owe due
deference to an administrator's factual conclusions that reflect a
reasonable and impartial judgment.").
Finally, Dowden's allegation that Blue Cross did not assert,
in its answer, an affirmative defense that applies to the district
court's decision, is without merit. Blue Cross affirmatively
asserted its defense that Dowden's claims were not covered by the
ERISA plan and were not medically necessary within the terms,
condition and exclusions of the policy as legally construed by the
plan administrator. Further, there is no requirement that Blue
Cross rely on a fiduciary in order to fall within the abuse of
discretion standard governing the interpretation the contract.
Blue Cross may rely on its own plan administrator to interpret the
contract of insurance. Bruch, 489 U.S. at 115, 109 S.Ct. at 956.
We find no error in the district court's holding that the
ERISA plan vests discretionary authority in Blue Cross to make
determinations as to the medical necessity of treatments. Blue
Cross did not abuse its discretion in refusing to pay Dowden's
claims under Blue Cross's interpretation of the plan terms.
AFFIRMED.