OSF Healthcare System v. Concert Health Plan Insurance Company et al
Filing
115
OPINION by U.S. Magistrate Judge Byron Cudmore: Defendant Concert Health Plan Insurance Company's Motion to Clarify and Reconsider the Orders of October 4 and October 5, 2011 109 ALLOWED in part and DENIED in part. See written order entered by Judge Cudmore on 12/1/2011. (LB, ilcd)
E-FILED
Thursday, 01 December, 2011 09:44:45 AM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
OSF HEALTHCARE SYSTEM,
an Illinois not for profit corporation
d/b/a St. Francis Medical Center,
Plaintiff,
v.
CONCERT HEALTH PLAN
INSURANCE CO., RONALD MILLER
and ROBIN MILLER,
Defendants.
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No. 08-CV-1328
OPINION
BYRON G. CUDMORE, U.S. MAGISTRATE JUDGE:
This matter comes before the Court on Defendant Concert Health
Plan Insurance Company’s (Concert) Motion to Clarify and Reconsider the
Orders of October 4 and October 5, 2011 (d/e 109) (Motion). Concert asks
this Court to reconsider its Opinion entered October 4, 2011 (d/e 107)
(Opinion). This matter arises from the Plaintiff OSF Healthcare System
d/b/a St. Francis Medical Center’s (St. Francis) action for benefits from an
ERISA qualified health insurance plan (Plan), pursuant to 29 U.S.C.
Page 1 of 8
§1132(a)(1)(B).1 Defendant Ronald Miller’s employer purchased the Plan
through Concert. Beginning on or about August 12, 2010, St. Francis
provided health care to Miller. Concert paid St. Francis based on the
Plan’s out-of-network rates. See Opinion, at 6. St. Francis, as assignee of
Miller, filed this action to recover benefits based on Concert’s in-network
rates. This Court did not decide whether the Plan gave Concert discretion
to interpret and apply the Plan because Concert’s decision would have
been arbitrary and capricious even if Concert had discretion. Id. at 26. The
Court remanded the matter to Concert for redetermination. Id. at 28-29.
Concert asks for reconsideration of the Court’s decision not to decide
whether Concert has discretion to interpret and apply the Plan. Concert
also asks the Court to uphold the decision to pay benefits at the Plan’s outof-network rate. In the alternative, Concert further asks for clarification of
the action to be taken on remand.
To prevail on the Motion, Concert must present newly discovered
evidence, point out an intervening change in controlling law, or clearly
establish that the Court committed a manifest error of law or fact.
Fed. R. Civ. P. 59(e); Caisse Nationale de Credit Agricole v. CBA Indus.,
Inc., 90 F.3d 1264, 1269-70 (7th Cir. 1996). “Reconsideration is
1
ERISA is the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et
seq.
Page 2 of 8
appropriate, generally speaking, only when the Court overlooked or
misunderstood something.” Hickory Farms, Inc. v. Snackmasters, Inc., 509
F. Supp. 2d 716, 719 (N.D. Ill. 2007).2
For the reasons set forth below, the Court allows the Motion in part.
The Court finds that Concert has discretion under the Plan and the arbitrary
and capricious standard of review applies in this action. The Court further
clarifies that on remand Concert is to make a new decision through the
appropriate procedures and the exercise of its discretion in accordance
with the terms of the Plan and the law. The Court is not directing any
particular outcome of this determination. The Motion is otherwise denied.
As explained fully in the Opinion, Miller initially went to the OSF Holy
Family Medical Center (Holy Family) in Monmouth, Illinois. Miller either
had suffered a stroke or had a brain aneurism. Holy Family was an
in-network provider under the Plan. Holy Family determined that it could
not provide Miller with the necessary care and transferred him to
St. Francis, an out-of-network provider under the Plan. Section 1 of the
Plan’s Certificate of Insurance (§ 1) provided that under these
circumstances, the Plan would pay the out-of-network provider at
in-network rates unless another in-network provider was reasonably
2
The Court does not consider the letters attached to the Motion. Those letters
are not newly discovered evidence and so are not properly before the Court. See Fed.
R. Civ. P. 59(e).
Page 3 of 8
available. Opinion, at 8. As explained in the Opinion, Concert’s decision to
pay St. Francis at out-of-network rates was arbitrary and capricious
because Concert never addressed the application of § 1 in its decision.
Opinion, at 26. The Court declines to reconsider this determination.
The Seventh Circuit has determined that the appropriate remedy in
this circumstance is a remand for a new decision through the appropriate
application of the Plan. Opinion, at 28-29 (citing Majeski v. Metropolitan
Life Ins. Co., 590 F.3d 478, 484 (7th Cir. 2009); Schneider v. Sentry Group
Long Term Disability Plan, 422 F.3d 621, 629 (7th Cir. 2005); Quinn v. Blue
Cross and Blue Shield Ass’n, 161F.3d 472, 477-78 (7th Cir. 1998) overruled
on other grounds, Hardt v. Reliance Standard Life Ins. Co., ___ U.S.___,
130 S.Ct. 2149, 2157-58 (2010)).
The Court did not determine whether the Plan gave Concert
discretion to interpret and apply the terms of the Plan. The Court finds this
to have been an error. The Court should not have remanded the matter
without giving Concert sufficient guidance as to this critical issue. The
Court apologizes for this oversight. The Court set forth the plan terms at
issue and the relevant law fully in the Opinion. Opinion, at 19-25. After
careful review, the Court finds that Concert does have discretion to
interpret and apply the Plan. The Application stated that Concert had
discretion to interpret the Plan and the integration clause in the Master
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Group Policy made the Application part of the Plan. See Opinion, at 19,
22. The Court has re-reviewed the applicable law and now concurs with
the decisions in Shyman v. Unum Life Ins. Co., 427 F.3d , 452, 455 (7th Cir.
2005), and Killian v. Concert Health Plan Ins. Co., 2010 WL 2681107 *6
(N.D. Ill. 2010), that such an integration clause is effective to make an
application part of a plan, and in this case, to give Concert discretion to
interpret and apply the terms of the Plan. Therefore, Concert on remand
has discretion to interpret and apply the Plan, and any further review is
whether the decision was arbitrary or capricious.3
The Court further clarifies the basis for the remand. The Seventh
Circuit has been faced with numerous actions for benefits under ERISA
§ 1132(a)(1)(B) in which the plan administrators made erroneous
decisions. The Seventh Circuit has stated that the appropriate remedy is to
maintain the status quo that existed before the decision. For example, if
benefits had been erroneously terminated, then benefits should be
reinstated. E.g., Hackett v. Xerox Corp. Long-Term Disability Income Plan,
315 F.3d 771, 775-76 (7th Cir. 2003). If the administrator was making the
initial decision of whether to pay benefits, then the matter should be
remanded for a new decision using the proper application of the plan. E.g.,
3
The Court notes that St. Francis waived its argument based on Title 50 Illinois
Administrative Code § 2001.3 by raising the argument for the first time in its reply. See
Opinion, at 25.
Page 5 of 8
Majeski, 590 F.3d at 484-85; Leger v. Tribune Co. Long Term Disability
Benefit Plan, 557 F.3d 823, 835 (7th Cir. 2009); Quinn, 161 F.3d at 478;
Huss v. IBM Medical and Dental Plan, 418 Fed. Appx. 498, 508 (7th Cir.
2011). This case fits into the latter category. Concert was making the
initial decision of the rate at which to pay benefits for the care provided by
St. Francis. Concert made the decision in an arbitrary and capricious
manner. Since the factual context was the initial decision regarding the
payment of benefits, the appropriate remedy is to remand for a new
decision through the proper application of the Plan.
The Court does not comment on how Concert should interpret or
apply the terms of the Plan to this case. As the Seventh Circuit explained
in Quinn, “[The plan administrator’s] decision to deny Quinn’s claim was
arbitrary and capricious, but not necessarily wrong. . . . ‘Blue Cross may
still deny Quinn’s claim, but only after it conducts an appropriate
investigation . . . .’” Quinn, 161 F.3d at 478 (quoting Quinn v. Blue Cross &
Blue Shield Ass’n, 990 F. Supp. 557, 563 (N.D. Ill. 1997). In this case,
Concert must make a new decision through appropriate procedures and
the exercise of its discretion in accordance with the Plan and the law. See
Opinion, at 29-30. The Court therefore will not order the award of any sum
of money, as requested by St. Francis. The Court also will not address
costs or fees. The issue of costs and fees should be raised at the
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appropriate time in accordance with the Rules. See Fed. R. Civ. P. 54(d),
Local Rule 54.1; 29 U.S.C.§ 1132(g); Hardt, 130 S.Ct. at 2157-58.
Concert argues that remand is only appropriate in actions brought
under 29 U.S.C. §§ 1133 and 1132(a)(3), and not in actions for benefits
under § 1132(a)(1)(B). Defendant Concert Health Plan Insurance
Company’s Reply in Support of Its Motion to Clarify & Reconsider the
Orders of October 4 and October 5, 2011 (d/e 113), at 2-3. Concert is
incorrect. The Seventh Circuit has repeatedly ordered a remand for a new
decision in actions for benefits brought under§ 1132(a)(1)(B). See Majeski,
590 F.3d at 481; Leger, 557 F3d. At 829; Quinn, 161 F.3d at 473; Huss,
418 Fed. Appx. at 502. The Court acknowledges that the Opinion
incorrectly referenced § 1133. The Court clarifies that its decision to
remand the matter is based on the Seventh Circuit’s instructions in cases
such as Majeski, Leger, and Quinn, not § 1133.
The other requests for reconsideration are denied and the prior
holdings of the Opinion not modified herein remain in full force and effect.
WHEREFORE, Defendant Concert Health Plan Insurance
Company’s Motion to Clarify and Reconsider the Orders of October 4
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and October 5, 2011 (d/e 109) is ALLOWED in part and DENIED
in part.
ENTER:
December 1, 2011
s/ Byron G. Cudmore
BYRON G. CUDMORE
UNITED STATES MAGISTRATE JUDGE
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