Meredith v. Louisiana Health Service & Indemnity Company

Filing 35

ORDERED that the claim of Plaintiff Curtis Locke Meredith, Jr. for damages in this matter is hereby DISMISSED WITH PREJUDICE. (GEC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

MEREDITH

CIVIL ACTION

VERSUS

NO: 08-795

LOUISIANA HEALTH SERVICE &
INDEMNITY COMPANY

SECTION: “J”(4)

ORDER AND REASONS
The instant claim for insurance benefits is before the Court
on summary judgment.

The Court previously denied the parties’

cross-motions for summary judgment (Rec. Doc. 24), but also
ordered that the parties file any desired additional briefings
regarding the issues raised in those motions (Rec. Doc. 33).
case is now ripe for decision.

The

Having considered the memoranda

of counsel, the record, and the applicable law, the Court finds
that the plaintiff’s claim should be dismissed with prejudice.

PROCEDURAL HISTORY AND BACKGROUND FACTS
This case arises from a complaint filed by Plaintiff, Curtis
Locke Meredith, Jr., against Defendant Louisiana Health Service

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and Indemnity Company, doing business as Blue Cross, Blue Shield
of Louisiana and/or HMO Louisiana, Inc. (hereinafter “BCBS of
Louisiana,” or simply “BCBS”).

Plaintiff was an employee of

Locke Meredith and Associates APLC (“Locke Meredith”), which had
in place a group health insurance plan that was administered by
BCBS.

Plaintiff had surgery on October 25, 2007 at the Laser

Spine Institute (“LSI”) in Tampa, Florida.

Mr. Meredith alleges

that he was told by a BCBS representative that his surgery would
be covered by BCBS, that the surgery did not require preapproval, and that BCBS would pay 60% of the allowable charge.
BCBS only paid a small portion of the total charges of the
surgery.

It took the position that although the claim was

covered, because LSI was a nonparticipating provider at the time
of the surgery, BCBS was not required under the insurance plan to
insure the cost of Mr. Meredith’s surgery beyond the allowable
charge for the surgery.

Mr. Meredith completed two separate

internal appeals with BCBS, both of which BCBS denied.

The

insurance plan at issue is governed by the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq.,1 and
Plaintiff seeks reimbursement for $51,181.00 in expenses he
incurred as a result of the surgery.

1

Plaintiff alleges that BCBS

The parties do not contest that the case is governed by ERISA.

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only paid $3,672.00 of the charges billed by LSI.

THE PARTIES’ ARGUMENTS
Defendant BCBS avers that the administrative record is
complete and that it had full discretionary authority to
determine benefits, and it seeks a judgment upholding its
decision to deny further payment to Plaintiff, Mr. Meredith.
Defendant asserts that according to the plan’s plain language,
benefit payments are based on the “Allowable Charge.”

If an

insured goes outside the network of providers approved by BCBS,
Defendant cannot be held liable for any payments above the
allowable charge for the medical procedure performed by the
nonparticipating (or non-network) provider.

Thus, Defendant

argues, because LSI was a nonparticipating provider, LSI did not
have a contract with BCBS that would have held Plaintiff harmless
for any amounts in excess of the allowable.

Defendant further

argues that each plan has its own terms, conditions, and payment
methodologies.

Thus, it argues, charges and payments differ

according to the terms of each individual patient’s plan.

It

avers that the allowable used in this case was properly based on
BCBS of Florida’s pricing because Florida was the geographic
location where medical services were rendered.

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Plaintiff asserts that Defendant picked arbitrary numbers to
represent allowable charges and that Defendant’s interpretation
of the plan directly contradicts the plain meaning of the
language in the plan.

He argues that BCBS’s legal interpretation

was incorrect because BCBS did not give the plan a uniform
construction.

Plaintiff avers that before receiving the surgery

in question, he contacted BCBS and was told that he did not need
pre-approval for the surgery and that BCBS would cover 60% of the
allowable.

Plaintiff argues that the payment actually made by

BCBS was inappropriate because under the express provisions of
the contract, when a member uses a nonparticipating provider,
allowable charges must be computed based on the fees of most
participating providers in the geographic location where the
services are rendered.

He avers that in Florida, where the

surgery was performed, the allowable charge for procedure code
63030 is $27,500.00, which is far greater than the Louisiana
allowable charge of $977.21.

Plaintiff refers to documentation

in the record to show that BCBS of Florida (and other Blue Cross
licensees) have paid much higher amounts to LSI for the exact
procedure at issue than what BCBS of Louisiana paid in this case
on Mr. Meredith’s behalf.

Finally, Plaintiff argues that

Defendant should be estopped from denying coverage based on its

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representative’s communication with Plaintiff, and that Defendant
should have warned Plaintiff that he would be liable for
thousands of dollars in charges.

DISCUSSION
A.

Summary Judgment Standard
Summary judgment is appropriate when “the pleadings, the

discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
FED. R. CIV. P. 56(c)(2); Celotex Corp. v. Catrett, 477 U.S. 317,
322-23 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075
(5th Cir. 1994).

When assessing whether a dispute as to any

material fact exists, the Court considers “all of the evidence in
the record but refrains from making credibility determinations or
weighing the evidence.”

Delta & Pine Land Co. v. Nationwide

Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008).

All

reasonable inferences are drawn in favor of the nonmoving party,
but a party cannot defeat summary judgment with conclusory
allegations or unsubstantiated assertions.
1075.

Little, 37 F.3d at

A court ultimately must be satisfied that “a reasonable

jury could not return a verdict for the nonmoving party.”

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Delta,

530 F.3d 399.
If the dispositive issue is one on which the moving party
will bear the burden of proof at trial, the moving party “must
come forward with evidence which would ‘entitle it to a directed
verdict if the evidence went uncontroverted at trial.’”

Int’l

Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1263-64 (5th
Cir. 1991) (citation omitted).

The nonmoving party can then

defeat the motion by either countering with sufficient evidence
of its own, or “showing that the moving party’s evidence is so
sheer that it may not persuade the reasonable fact-finder to
return a verdict in favor of the moving party.”

Id. at 1265.

If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in
the record is insufficient with respect to an essential element
See Celotex, 477 U.S. at 325.

of the nonmoving party’s claim.

The burden then shifts to the nonmoving party, who must, by
submitting or referring to evidence, set out specific facts
showing that a genuine issue exists.

See id. at 324.

The

nonmovant may not rest upon the pleadings, but must identify
specific facts that establish a genuine issue for trial.
e.g., id. at 325; Little, 37 F.3d at 1075.

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See,

B.

ERISA Standard of Review
ERISA applies in this case and is preemptive of all state

law insofar as said law relates to an employee benefit plan
covered by ERISA.

Transitional Hosps. Corp. v. Blue Cross and

Blue Shield of Tex., Inc., 164 F.3d 952, 954 (5th Cir. 1999).

In

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989),
the Supreme Court held that “a denial of benefits challenged
under § 1132(a)(1)(B) is to be reviewed under a de novo standard
unless the benefit plan gives the administrator or fiduciary
discretionary authority to determine eligibility for benefits or
to construe the terms of the plan.”

Because the plan at issue

states that BCBS has discretionary authority to determine
benefits,2 the Court reviews the plan administrator’s decision
under an abuse of discretion standard.

See Anderson v. Cytec

Industries, Inc., 619 F.3d 505, 512 (5th Cir. 2010) (“Where a
benefits plan ‘gives the administrator or fiduciary discretionary
authority to determine eligibility for benefits or to construe
the terms of the plan,’ . . . the reviewing court applies an
abuse of discretion standard to the plan administrator’s decision
to deny benefits.”).

The Court first assesses whether the plan

2

See Rec. Doc. 16-2, at 1 (“The Company has full discretionary
authority to determine eligibility for Benefits and/or to construe the terms
of this Benefit Plan.”).

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administrator made a legally correct decision and, if the
decision was incorrect, the Court then determines whether or not
the plan administrator abused its discretion.

See Crowell v.

Shell Oil Co., 541 F.3d 295, 312 (5th Cir. 2008) (stating that if
the administrator’s determination was legally correct, the
inquiry ends, but if not, the court asks whether the
determination was an abuse of discretion).
If the Court reaches the second step, it considers possible
conflicts of interest in its determination of whether the plan
administrator abused its discretion.

The Fifth Circuit has

previously noted that “[b]ecause Blue Cross is both the plan
administrator and the insurer, this conflict ‘should be weighed
as a factor in determining whether there is an abuse of
discretion.’”

Lafleur v. La. Health Serv. and Indem. Co., 563

F.3d 148, 160 n.27 (5th Cir. 2009).

The weight of this factor

depends upon the facts of the case.

Id; see also Welch v. HMO

Louisiana/Blue Cross, 2009 WL 3401046, at *1 (E.D. La. Oct. 20,
2009).

Because of this conflict of interest, BCBS’s decision

need not be given full deference.

See Gooden v. Provident Life &

Accident Ins. Co., 250 F.3d 329, 333 (5th Cir. 2001).
C.

BCBS’s Plan Interpretation and Decision
This case is chiefly a dispute about whether BCBS used as an
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improper allowable charge to calculate its payment to Mr.
Meredith.

To determine whether BCBS’s interpretation of the plan

and the resultant allowable used was legally correct, the Court
looks to “(1) whether the administrator has given the plan a
uniform construction, (2) whether the interpretation is
consistent with a fair reading of the plan, and (3) any
unanticipated costs resulting from different interpretations of
the plan.”

Crowell, 541 F.3d at 312.

“[W]hether the

administrator’s interpretation is consistent with a fair reading
of the plan” is the most important of these three factors.
at 313.

Id.

Thus, the Court begins its analysis with whether the

allowable charge that BCBS used is consistent with a fair reading
of the plan.
It is not disputed that LSI was a nonparticipating provider.
The plan states, “The Company establishes an Allowable Charge for
Covered Services provided by Nonparticipating Providers that is
based on the negotiated fee that has been accepted by
Participating Providers.”

Rec. Doc. 16-1, at 2.

Therefore,

BCBS’s interpretation of the plan is fair to the extent that BCBS
used an allowable charge that was “based on” the negotiated fee
that participating providers have accepted.

The plan does not

define how this nonparticipating allowable is calculated, but

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simply states that it is “based on” participating provider fees.
The plan goes on to provide a caveat that a “[m]ember may pay
significant costs when he uses a Nonparticipating Provider.

This

is because the amount that some Providers charge for a Covered
Service may be higher than the negotiated fee that has been
accepted by Preferred and Participating Providers.”

Id.

Therefore, under the second Crowell factor, it is fair to read
the plan as permitting a nonparticipating allowable that leads to
a lower benefit payment than that applicable to services provided
by participating providers, especially where the plan does not
require the administrator to base its allowable calculation on
any particular formula.
Plaintiff’s main argument is that under the plan, BCBS of
Louisiana must set the allowable charge at a level comparable to
that established by the BCBS licensee in Florida—the geographic
area where the services were obtained.
statement from the plan:

Plaintiff cites a

“When a Member receives Covered

Services from a Nonparticipating Provider, the Company pays its
Coinsurance percentage of the Allowable Charge that most
Participating Providers have agreed to accept for the service in
the geographic location where it was obtained.”
at 3 (emphasis added).

Rec. Doc. 16-1,

The Court notes that this statement is

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located within “Scenario 3,” which is an example “for
illustration purposes and may not be a true reflection of the
member’s actual deductible and coinsurance amounts. The member
should refer to his schedule of benefits.”

Rec. Doc. 16-1, at 2

(emphasis removed from original).
Even assuming that “Scenario 3” is binding upon BCBS, this
does make BCBS’s plan interpretation unfair or unreasonable.
Citing the language in Scenario 3, Plaintiff argues that BCBS of
Louisiana was required to set the allowable charge at a level
comparable to that established by the BCBS licensee in Florida.
There is evidence in the record that Defendant did just that.
There is a letter that is BCBS of Louisiana’s statement to
Plaintiff that it contacted the Legal Affairs Division of BCBS of
Florida and verified that the allowable amounts submitted were
correct.

Rec. Doc. 27-1, at 2.

That first letter references a

second letter, which originated with BCBS of Florida.

Said

letter (the “Letter”) states that LSI is a nonparticipating
provider and that BCBS of Florida priced the claims at issue
according to standard nonparticipating rates.
3.

Rec. Doc. 27-1, at

The Letter then describes that the allowance was set at a

certain percentage of the Medicare allowable.

Therefore, the

Letter is an assertion by BCBS of Florida that it priced the

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Plaintiff’s coverage claim using standard nonparticipating
provider rates.

Plaintiff points to no contrary evidence in the

administrative record.

Therefore, based on the Letter, the Court

concludes that BCBS of Louisiana fairly interpreted the plan in
using an allowable based on “standard non-participating provider
rates” in Florida.

Id.3

Plaintiff’s argument to the contrary boils down to a query
of how a properly calculated allowable could result in
reimbursement of only $3,672.00 of $54,853.00 in medical charges
for a surgery that Defendant agrees was a covered service.

The

legal insufficiency of this approach is that the plan under
review does not impose a duty on BCBS to show any more than it
has regarding its calculation of the allowable charge.

The plan

explains that the allowable is calculated as the result of
negotiations to arrive at similar allowables for participating
providers.

See Rec. Doc. 16-1, at 2 (“The Company establishes an

Allowable Charge for Covered Services provided by
Nonparticipating Providers that is based on the negotiated fee
that has been accepted by Participating Providers.”) (emphasis
added).

The plan does not state that an insured such as

3

Although not necessary to reach a decision, the Court notes that BCBS
of Florida indicated that its nonparticipating provider allowance is set at
110% of the allowable that Medicare uses. Rec. Doc. 27-1, at 3.

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Plaintiff is entitled to see details of the negotiations or
calculations that establish an allowable charge for a particular
surgical procedure by a particular healthcare provider.

The

plan’s terms give BCBS full discretionary authority to construe
the plan and do not bind BCBS to negotiate for or calculate
allowables in any particular manner.
Moving to the first Crowell factor, Plaintiff attempts to
show that the plan administrator has not given the plan a uniform
construction.

Indeed, Plaintiff has submitted evidence that

patients at LSI who underwent the surgical procedure at issue
benefitted from a much higher allowable charge used by BCBS than
the charge applied to Plaintiff’s coverage claim.

For example,

one BCBS of Florida payment register shows payment in full of
costs ($27,500) associated with procedure code number 63030,
which identifies the procedure Plaintiff underwent.4
9-5, at 9.5

Rec. Doc.

Additionally, a “provider voucher” (Rec. Doc. 9-5,

4

Procedure code 63030 indicates the procedure provided to Plaintiff.
Plaintiff asserts as much and Defendant not contest this assertion.
5

The cited record document, and some others in this order, were filed
with a motion that the Court denied. However, the Court notes the following:
On March 3, 2009, Defendant moved for leave to file the administrative record
under seal. Rec. Doc. 7. The Magistrate Judge denied that motion, reasoning
that there was no reason to file the entire administrative record into the
court record at the time. Rec. Doc. 8. Thereafter, Defendant filed an
apparently identical motion on August 6, 2009 (Rec. Doc. 9), this time in
connection with its motion for summary judgment, which was filed the same date
(Rec. Doc. 10). Once again, the Magistrate Judge denied the motion. Rec.
Doc. 14. He stated that Defendant wanted to “dump the entire administrative

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at 11) that Defendant suggests (Rec. Doc. 12, at 3) refers to
claims by members of BCBS of Michigan plans shows that the
“allowed amount” for procedure 63030 was equivalent to the
“approved to pay” amount.6

Plaintiff argues that these documents

show that BCBS licensees in the geographic areas where services
were performed paid out much higher amounts for the type of
surgery at issue than the payment amount Plaintiff received from
BCBS of Louisiana.

Plaintiff points to another document to

assert that although the charges applicable to procedure 63030 in
Plaintiff’s case were $27,500.00, BCBS paid only $859.94 for that
procedure code.

Rec. Doc. 9-6, at 14.

However, as BCBS

persuasively argues, every plan is different.

The

nonparticipating allowable calculated under one plan is different
from the allowable calculated under the next plan.

Thus, that

BCBS used different allowable charges for different patients for
the same procedure does not mean that BCBS has non-uniformly

record” into the court record, which amounted to “lazy lawyering.” Id. The
Magistrate Judge permitted the parties until November 18, 2009 to supplement
their cross-motions for summary judgment with copies of relevant documents.
Id. The parties did so (Rec. Docs. 15-17), but their supplemental filings are
not sequentially bates-paginated, making reference to the appropriate portions
of those record documents difficult. Thus, the Court’s citations are to
record documents deemed properly before the Court.
6

The Court’s discussion here revolves around documents of poor image
quality. However, the Court draws from Defendant’s interpretation (Rec. Doc.
12, at 3) of their tiny print to the extent that said interpretation is, if
anything, beneficial to Plaintiff’s case. In essence, the Court treats said
interpretation as undisputed fact.

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interpreted the plan at issue.

Namely, Plaintiff does not cite

any evidence that the other patients who underwent this type of
surgery at LSI were insured under the plan at issue, which was
available to Locke Meredith employees such as Plaintiff.
Under the three Crowell factors, the Court finds that BCBS’s
legal interpretation of the plan at issue was correct.
Specifically, under the first factor, there is no evidence that
the plan administrator has not given the plan a uniform
construction.

Under the second factor, the plan administrator’s

interpretation is consistent with a fair reading of the plan.
The third factor addresses any unanticipated costs resulting from
different plan interpretations.

However, because there have been

no differing interpretations shown, this third factor has no
applicability in this case.

Because BCBS’s plan interpretation

was correct, the Court does not reach Plaintiff’s abuse-ofdiscretion argument.
Nor is there sufficient evidence to invoke the doctrine of
ERISA estoppel.

Under that doctrine, “the plaintiff must

establish: (1) a material misrepresentation; (2) reasonable and
detrimental reliance upon the representation; and (3)
extraordinary

circumstances.” Mello v. Sara Lee Corp., 431 F.3d

440, 444-45 (5th Cir. 2005).

Accepting as true that a BCBS
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representative told Plaintiff he was covered for the surgery,
this was not an assertion by BCBS as to the amount for which he
would be covered.

If there was evidence that a BCBS

representative told Plaintiff that the allowable would be larger
than it actually was, this would likely change the outcome.

But

where the plan itself states, “The Member may pay significant
costs when he uses a Nonparticipating Provider” (Rec. Doc. 16-1,
at 2), it was not reasonable for Plaintiff to assume that he
would be covered for the bulk of the costs of the procedure.

CONCLUSION
At most, the plan’s plain terms only required BCBS of
Louisiana to use an allowable based on rates used by BCBS of
Florida because the procedure occurred in Florida.

Defendant has

submitted evidence—which Plaintiff has not rebutted—that BCBS of
Louisiana based its allowable on BCBS of Florida pricing that
used standard nonparticipating rates.

Plaintiff has pointed to

no other plan language constraining BCBS to calculate a
nonparticipating allowable in any particular manner.

BCBS of

Louisiana correctly interpreted the plan at issue in making its
payment decision on Mr. Meredith’s claim.

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Accordingly,

IT IS ORDERED that the claim of Plaintiff, Curtis Locke
Meredith, Jr., for damages in this matter is hereby DISMISSED
WITH PREJUDICE.
New Orleans, Louisiana, this 1st day of March, 2012.

____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

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