Halpern v. Blue Cross / Blue Sheild of Western New York
Filing
32
DECISION AND ORDER GRANTING Defendant's 16 Motion for Summary Judgment; DENYING Plaintiff's 24 Cross-Motion for Summary Judgment; DIRECTING the Clerk of the Court to close this case. Signed by William M. Skretny, Chief Judge on 8/30/2014. (MEAL) - CLERK TO FOLLOW UP -
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
BRUCE J. HALPERN,
Plaintiff,
v.
DECISION AND ORDER
12-CV-407S
BLUE CROSS / BLUE SHIELD OF
WESTERN NEW YORK,
Defendant.
I. INTRODUCTION
Plaintiff Bruce J. Halpern (“Plaintiff”) commenced this action for breach of contract
against Blue Cross / Blue Shield of Western New York, also known as HealthNow New
York, Inc.,
(“HealthNow” or “Defendant”) in state court following the denial of
reimbursement claims under a group health benefits plan. Because the reimbursement
claims were related to an employee benefit plan, HealthNow removed the matter to this
Court on May 4, 2012, pursuant to the Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. § 1132(a)(1)(B), (e)(1). Currently pending before this Court are the
parties’ cross-motions for summary judgment. For the following reasons, Defendant’s
motion is granted, and Plaintiff’s cross-motion is denied.
II. BACKGROUND
A.
Facts
The following facts are undisputed unless otherwise noted.
During the period at issue in this case, Plaintiff was covered under a Traditional Blue
point-of-service health benefit plan (“the Plan”) issued by HealthNow.
In mid-December, 2009, Plaintiff’s dependant son B.H. entered Telos Residential
Facility (“Telos”) for teenage boys in Orem, Utah. Telos describes itself as a “unique,
clinically sophisticated, relationship-based treatment center for teenage boys,” and
specializes in the treatment of problems such as anxiety, depression, substance abuse,
and learning differences. (Def. Ex. Q.) The facility provides therapy, academics, and offcampus activities. (Id.)
Upon admission to the Telos Residental Treatment Center, B.H. was evaluated by
an adolescent psychiatrist who diagnosed B.H. with mood disorder, not otherwise
specified; anxiety disorder, not otherwise specified; ADHD; cognitive disorder, not
otherwise specified with social delays, executive functioning delays, rigid thinking, and a
possible non-verbal learning disability disorder. (Pl. Aff. ¶14 & Pl. Ex. E.) A Master
Treatment Plan was then developed for B.H. (Pl. Aff. ¶¶15-20 & Pl. Exs. E-I.)
B.H. left Telos on April 12 or April 15, 2011, the last date for which Plaintiff claims
an entitlement of benefits. HealthNow reimbursed Plaintiff for B.H.’s stay at Telos from
December 2009 through July 2010.
In a letter dated July 6, 2010, Health Integrated, which provides mental health
utilization management on behalf of HealthNow, informed Plaintiff that B.H. was not
entitled to residential treatment benefits under the Plan.
HealthNow nonetheless
reimbursed Plaintiff for B.H.’s stay for the month of July, but denied Plaintiff’s
reimbursement claims for B.H.’s stay at Telos from August 2010 through November of
2010. In a letter dated November 11, 2010, Health Integrated again advised Plaintiff that
B.H. did not have residential benefits, and Plaintiff’s reimbursement claims for December
2010, through January 2011 were subsequently denied by HealthNow.
2
Plaintiff filed a grievance dated December 23, 2010, arguing that identical prior
treatment had previously been routinely reimbursed, and there had been no finding that
such treatment was not medically necessary. (Def. Ex. K.) On January 18, 2011, Plaintiff
was advised by letter that the decision to deny Plaintiff benefits would be upheld, that any
past reimbursement had been made in error, and that Telos did not qualify as a hospital
as defined by the Plan, a definition that includes any “hospital” as defined by New York
Mental Hygiene Law § 1.03(10). (Def. Ex. L.)
On April 4, 2011, Plaintiff filed an administrative appeal. Plaintiff argued that the
denial of his claims was inappropriate because Telos was a “residential treatment facility
for children and youth” under subdivision (33) of § 1.03 of the Mental Hygiene Law and
therefore qualified as a “hospital” under subdivision (10) of § 1.03, requiring coverage
under the Plan. (Def. Ex. M.)
The administrative appeal was denied by letter dated May 2, 2011, which stated
that inpatient residential mental health treatment was not a covered benefit of Plaintiff’s
plan. The letter stated that, although acute hospital care or rehabilitative care were covered
benefits, residential treatments failed to qualify under either benefit provision as they were
“more loosely structured and . . . generally more vocational in nature.” (Def Ex. N.) The
grievance procedures information and instruction sheet Plaintiff received for his claim
denials provided that Plaintiff had the right to bring a civil action pursuant to ERISA should
his claim for benefits be denied following an appeal. (Pl. Aff. ¶ 22 & Pl. Ex. J.)
Plaintiff then commenced this action on April 23, 2012, by filing a summons and
complaint in New York State Supreme Court, Erie County. Defendant removed the matter
to this Court on May 4, 2012.
3
III. DISCUSSION
In its motion, Defendant contends that it is entitled to summary judgment because:
(1) Plaintiff’s claim is time-barred; and (2) Plaintiff’s claim relates to a benefit that is not
covered under the Plan. (Def. Mem. 11-24.) Plaintiff opposes the Defendant’s motion on
the grounds that his claim is timely. Alternatively, Plaintiff asserts that a fact issue exists
as to whether Plaintiff was properly notified of the limitations period contained in the Plan.
Plaintiff also cross-moves for summary judgment on the basis that the Plan Administrator’s
decision to deny benefits was arbitrary and capricious as a matter of law because B.H.’s
treatment at Telos was a covered benefit under the Plan. (Pl. Mem. 9-25.)
The standard for the grant of summary judgment pursuant to Federal Rule of Civil
Procedure 56 is well-established. “A motion for summary judgment may properly be
granted . . . only where there is no genuine issue of material fact to be tried, and the facts
as to which there is no such issue warrant the entry of judgment for the moving party as
a matter of law.” Kaytor v. Elec. Boat Corp., 609 F.3d 537, 545 (2d Cir. 2010). Where, as
here, both parties move for summary judgment, “each party's motion must be examined
on its own merits, and in each case all reasonable inferences must be drawn against the
party whose motion is under consideration.” Morales v. Quintel Entm’t, 249 F.3d 115, 121
(2d Cir. 2001). Further, in denial-of-benefits cases such as this one, the applicable
summary judgment standard “must also be viewed in conjunction with the standard of
review of administrative actions under the ERISA guidelines.” Diagnostic Med. Assoc.,
M.D., P.C. v. Guardian Life Ins. Co. of Am., 157 F. Supp. 2d 292, 297 (S.D.N.Y. 2001).
A.
Limitations Periods under ERISA
As a threshold matter, this Court must determine whether Plaintiff’s suit is timely.
4
Defendant argues that Plaintiff’s suit is time-barred under the Plan’s contractual limitations
period because Plaintiff filed his ERISA suit over one year from the last date for which he
claimed benefits. (Def. Mem. 11-16.) Plaintiff counters that the Plan’s one-year period is
unenforceable because: (1) it violates the statutory minimum for limitations periods
applicable to insurance benefit actions under New York Insurance Law; (2) a one-year
limitations period in group health plans covered by ERISA is unreasonable; and (3)
Defendant failed to effectively notify Plaintiff of shortened limitations period. (Pl. Mem. 919.)
Generally, because ERISA contains no statute of limitations for actions brought
under 29 U.S.C. § 1132, such claims are subject to the most analogous state statute of
limitations. Guilbert v. Gardner, 480 F.3d 140, 148-49 (2d Cir. 2007); Miles v. N.Y.S.
Teamsters, 698 F.2d 593, 598 (2d Cir. 1983), cert denied, 464 U.S. 829 (1983). In New
York, courts typically apply the six-year limitations period for contract actions set forth in
N.Y. Civil Practice Law and Rules (“CPLR”) § 213(2). See, e.g., Burke v. Price
WaterHouseCoopers LLP Long Term Disability Plan, 572 F.3d 76, 78 (2d Cir. 2009);
Bilello v. JPMorgan Chase Ret. Plan, 607 F. Supp. 2d 586, 592 (S.D.N.Y. 2009). This
limitations period may be shortened, however, where the parties memorialize such
agreement in writing. Burke, 572 F.3d at 78 (citing CPLR § 201). Indeed, absent a
controlling contrary statute, enforcement of contractual limitations provisions as written is
especially appropriate in ERISA context. see Heimeshoff v. Hartford Life & Acc. Ins. Co.,
– U.S. –, 134 S. Ct. 604, 611-12 187 L. Ed. 2d 529 (2013) (a plan’s limitation provision
must be enforced unless unreasonably short or contrary to a controlling statute).
Here, the Plan language provides that “You must start any lawsuit against us under
5
this Plan within one year from the date you received the service for which you want us to
pay.” (Def. Exs. D at HN00072; E at HN00179; F at HN00303.) Plaintiff does not dispute
that this action was not commenced within this contractual limitations period. He argues
that his suit is nonetheless timely because the Plan’s limitation period violates Section
3221 of the New York Insurance Law, which prohibits group health insurance policies from
containing a limitations period of less than two years. (Pl. Mem. 9-17.)
New York Insurance Law § 3221(a) provides, in relevant part:
No policy of group or blanket accident and health insurance shall . . . be
delivered or issued for delivery in this state unless it contains in substance
the following provisions or provisions which in the opinion of the
superintendent are more favorable to the holders of such certificates or not
less favorable to the holders of such certificates and more favorable to
policyholders.
The required provisions include a minimum statute of limitations, specifically:
That no action at law or in equity shall be brought to recover on the policy
prior to the expiration of sixty days after proof of loss has been filed in
accordance with the requirements of the policy and that no such action shall
be brought after the expiration of two years following the time such proof of
loss is required by the policy.
N.Y. Ins. Law § 3221(a)(14) (emphasis added).
As Plaintiff argues, courts have consistently recognized that contractual provisions
that fail to meet the minimum requirements of New York Insurance Law are unenforceable
as written. See Terry v. UNUM Life Ins. Co. of Am., 394 F.3d 108, 110 (2d Cir. 2005);
1303 Webster Ave. Realty Corp. v. Great Am. Surplus Lines Ins. Co., 63 N.Y.2d 227, 231,
471 N.E.2d 135 (1984) (1984); cf. Burke, 572 F.3d at 76 n.1 (finding plan's three-year
limitations period permissible because it was “more favorable” than
N.Y. Ins. L. §
3221(a)(14) requires.); see also Prabhakar v. Life Ins. Co. of N. Am., – F. Supp. 2d –, 2013
6
WL 4458728, *12 (E.D.N.Y. Aug. 16, 2013) (noting that “under New York law, a group
policy . . . cannot contain a limitations period shorter than two years after proof of loss is
required by the policy . . . .”); see also Quaker Hills, LLC v. Pacific Indem. Co., 728 F.3d
171, 180-81 (2d Cir. 2013) (collecting cases). In such cases, the policy is read as if it
conformed with the minimum statutory requirement. Terry, 394 F.3d at 110; 1303 Webster
Ave. Realty Corp., 63 N.Y.2d at 231.
Defendant responds that the instant suit arises under ERISA, therefore any
“provisions of state law purportedly restricting the freedom of contracting parties to
establish a shorter limitations period are not controlling.” (Def. Reply Mem. 3.) However,
with the exception of self-funded plans, which are deemed not to be insurance companies
for the purposes of state insurance law, ERISA’s preemption provision contains a
categorical exception for “any law of any State which regulates insurance, banking, or
securities.” 29 U.S.C. § 1144(a),(b)(2); FMC Corp. v. Holliday, 498 U.S. 52, 61, 111 S. Ct.
403, 112 L. Ed. 2d 356 (1990) (state may indirectly regulate insured employee benefit
plans through regulation of insurer and insurer’s contracts).
Thus, the application of New York Insurance Law § 3221 here is not a question of
borrowing a limitations period from state law. (See Def. Reply Mem. 4 n.1.) Instead,
because the policy provision requirements mandated by this section are “clearly and
obviously directed toward the insurance industry,” this statute is one regulating insurance
and is therefore saved from preemption. Macro v. Independent Health Ass’n, 180 F. Supp.
2d 427, 433-36 (W.D.N.Y. 2001) (finding that § 1144’s savings clause applied to § 3221
after application of the “common sense” test and McCarran-Ferguson factors); Trapanotto
v. Aetna Life Ins. Co., No. 95 CIV. 10704, 1996 WL 417519, *7 (S.D.N.Y. July 25, 1996)
7
(same); see also UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 375, 119 S. Ct. 1380,
143 L. Ed. 2d 462 (1999) (reaffirming that state laws mandating certain insurance contract
terms are saved from preemption). There is also nothing in the record contradicting
Plaintiff’s assertion that the Plan is insured and not self-funded. (See Pl. Reply Mem. 2.)
Further, Defendant has not cited “any contrary case authority suggesting that laws
regulating the terms of insurance contracts should not be understood as laws that regulate
insurance.” Metropolitan Life Co. v. Massachusetts, 471 U.S. 724, 744, 105 S. Ct. 2380,
85 L. Ed. 2d 728 (1985); Macro, 180 F. Supp. 2d at 436. Although Defendant relies on
Buffalo Anesthesia Assoc., P.C. v. Gang, in that case the plaintiff did not contest the oneyear contractual limitation period, but instead argued that his continuous treatment
rendered part of his claim timely. No. 05–CV–0204, 2009 WL 1449047 (W.D.N.Y. May 20,
2009) (counsel’s affidavit at Docket No. 36). Accordingly, the Court in that case did not
consider either the application of § 3221 or the reasonableness of the contractual
limitation.
Finally, Defendant contends that the Plan is consistent with New York Insurance
Law § 3221 because it was approved by New York’s Superintendent of Insurance. (Def.
Reply Mem. 4; Def. Exs. X, Y.) Defendant argues that, because the Superintendent is
permitted to approve policies with provisions deviating from § 3221's specified
requirements, the Plan at issue here does not run afoul of New York law. However, a
policy provision approved by the Superintendent nonetheless “cannot be enforced if it runs
counter to the legislative intent or if it violates existing law.” Burke v. First UNUM Life Ins.
Co., 975 F. Supp. 310, 316 (S.D.N.Y. 1997) (internal quotation marks and citation omitted).
Here, the relevant portion of this statute provides:
8
No policy of group or blanket accident and health insurance shall . . . be
delivered or issued for delivery in this state unless it contains in substance
the following provisions or provisions which in the opinion of the
superintendent are more favorable to the holders of such certificates or not
less favorable to the holders of such certificates and more favorable to
policyholders.
N.Y. Ins. L. § 3221(a) (emphasis added). Thus, “[a]lthough the wording of such policy
provisions may, with the approval of the superintendent of insurance, differ from the
statutory language, the substance of the policy provision may ‘not [be] less favorable in any
respect to the insured.’ ” Terry, 394 F.3d at 109 (considering similarly worded subsection
in N.Y. Insurance Law § 3216(d)).
This Court therefore finds that New York Insurance Law § 3221 applies in the instant
case, and the Plan must be read as conforming with this section’s required minimum
limitations period of “two years following the time such proof of loss is required by the
policy.” N.Y. Ins. L. § 3221(a)(14). Plaintiff commenced the instant action in state court on
April 23, 2012, accordingly all services from August 2010 to April 2011 for which Plaintiff
now seeks reimbursement fall within the statutorily modified limitations period.1
B.
Plaintiff’s Entitlement to Reimbursement
With respect to the merits, Plaintiff seeks payment on claims made for B.H.’s
treatment at Telos from August 2010 through April 2011. The Plan provides coverage for
certain mental, nervous or emotional disorders or ailments under the following relevant
terms:
1
In light of this, there is no need for the Court to consider the distinction, if any, between the
statute’s commencement of the limitations period at the time “proof of loss is due” and the Policy’s
commencement of this period of “the date you received the service for which you want us to pay.” (Def.
Exs. D at HN00072; E at HN00179; F at HN00303.)
9
If you are confined as an inpatient in a hospital as defined by subdivision
ten of Section 1.03 of the New York Mental Hygiene Law, we will provide
coverage for up to aggregate of 20 days per person in each plan year2 for
Active Treatment of mental, nervous, or emotional disorders or ailments, if
it is medically necessary in the judgment of a participating physician, and
approved by our medical director under [either the in-network and out-ofnetwork sections of the Policy]. Active Treatment means treatment furnished
in conjunction with inpatient confinement for mental, nervous, or emotional
disorders or ailments that meet such standards as shall be prescribed
pursuant to the regulations of the Commissioner of Mental Hygiene.
(Def. Exs. D at HN00015-16 (§ 3(9) (in-network)), HN00035 § 12(8) (out-of-network)); E
at HN00121-22, HN00141 (same) (emphasis added).)
The parties agree that the primary issue in determining whether benefits were
improperly denied is whether Telos is a hospital as defined by New York Hygiene Law §
1.03(10). This subdivision states:
“Hospital” means the in-patient services of a psychiatric center under the
jurisdiction of the office of mental health or other psychiatric in-patient facility
in the department, a psychiatric in-patient facility maintained by a political
subdivision of the state for the care or treatment of the mentally ill, a ward,
wing, unit, or other part of a hospital, as defined in article twenty-eight of the
public health law, operated as a part of such hospital for the purpose of
providing services for the mentally ill pursuant to an operating certificate
issued by the commissioner of mental health, a comprehensive psychiatric
emergency program which has been issued an operating certificate by such
commissioner, or other facility providing in-patient care or treatment of
the mentally ill which has been issued an operating certificate by such
commissioner.
N.Y. Mental Hygiene Law § 1.03(10) (emphasis added). Plaintiff does not dispute that
Telos is not a hospital as defined by the criteria listed in this subdivision, but contends that
subdivision 10 must be read in conjunction with subdivision 33, which expands the class
of facilities that fall within the definition of “hospital.” (Pl. Mem. 20.) This subdivision defines
2
Neither party has raised the issue that Plaintiff’s claims exceed this 20 day maximum.
10
a category of facilities known as Residential Treatment Facilities for Children and Youth
(“RTFC”), which are:
inpatient psychiatric facilit[ies] which provide[] active treatment under the
direction of a physician for individuals who are under twenty-one years of
age, provided that a person who, during the course of treatment, attains the
age of twenty-one may continue to receive services in a residential treatment
facility for children and youth until he or she reaches the age of twenty-two.
The term “residential treatment facility for children and youth” does not apply
to the children's psychiatric centers described in section 7.17 of this chapter
or to facilities specifically licensed by the office of mental health as children's
hospitals. Residential treatment facilities for children and youth are a
sub-class of the class of facilities defined to be “hospitals” in
subdivision ten of this section.
N.Y. Mental Hygiene Law § 1.03(33) (emphasis added).
Plaintiff contends that he is entitled to summary judgment because Telos is a RTFC,
and therefore, as a member of the sub-class, it necessarily falls within the larger class of
hospitals under subdivision 10. Defendant disputes this assertion, arguing that this subclass encompasses only those facilities that meet both subdivision 10’s definition of
hospital and subdivision 33’s RTFC definition.
In resolving this argument, the threshold question arises of the appropriate degree
of deference to be afforded Defendant’s own interpretation of the Plan. Dobson v. Hartford
Life & Acc. Ins. Co., 518 F. Supp. 2d 365, 371 (D. Conn. 2007). Generally, “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.” Firestone Tire &
Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Where such discretionary authority is
present, a court “will not disturb the administrator’s ultimate conclusion unless it is arbitrary
11
and capricious.” Pagan v. NYNEX Pension Plan, 52 F.3d 438, 441 (2d Cir. 1995)(internal
quotation marks omitted); see Tocker v. Philip Morris Co. Inc., 470 F.3d 481, 487 (2d Cir.
2006).
Defendant argues that such discretionary authority has been conferred here, and
therefore deference is warranted, because the Plan gives it “all the powers necessary or
appropriate. . .to construe the Plan[ and] to determine all questions arising under this Plan.”
(Def. Mem. 9 (citing Ex. F at HN 00303).) Defendant concedes that this language is found
only in the version of the Plan in effect in 2009, but argues that later versions contain
separate, individual provisions which nonetheless make clear that Defendant retained
overall discretion with respect to benefit eligibility decisions. (Id. at 9-10.)
Even assuming that such discretion is conferred by all relevant versions of the Plan,3
however, the initial question raised by the parties – whether a RTFC is a hospital as
defined by Mental Hygiene Law § 1.03(10) – is one of statutory interpretation. “When an
eligibility determination by plan administrators turns on a question of law, courts have not
hesitated to apply a de novo standard of review.” Weil v. Ret. Plan Admin. Comm. of
Terson Co., 913 F.2d 1045, 1048-49 (2d Cir. 1990), vacated in part on other grounds, 933
F.2d 106 (2d Cir. 1991); Dobson, 518 F. Supp. 2d at 371. Further, the Appeals Committee
denied Plaintiff’s appeal without expressly addressing subdivision 33 or Telos’ status as
a RTFC, stating instead that “residential treatment” was not considered either the acute
hospital or rehabilitative care covered under the Plan. (Def. Ex. N.) This Court cannot
defer to a interpretation that was never expressly made or explained. See Strom v. Siegel
3
A conclusion that this Court need not, and therefore does not, reach.
12
Fenchel & Peddy P.C. Profit Sharing Plan, 497 F.3d 234, 243 (2d Cir. 2007).
In considering the parties’ statutory argument de novo, “[i]t is axiomatic that the plain
meaning of a statute controls its interpretation, and that judicial review must end at the
statute’s unambiguous terms. Legislative history and other tools of interpretation may be
relied upon only if the terms of the statute are ambiguous.” In re Venture Mortgage Fund,
L.P., 282 F.3d 185, 188 (2d Cir. 2002) (quoting Lee v. Bankers Trust Co., 166 F.3d 540,
544 (2d Cir. 1999)). “Meaning and effect should be given to all language of a statute.
Words are not to be rejected as superfluous where it is practicable to give each a distinct
and separate meaning.” Rosner v. Metro. Prop. & Liab. Ins. Co., 729 N.Y.S.2d 658, 754
N.E.2d 760, 762 (2001); see Photopaint Tech. v. Smartlens Corp., 335 F.3d 152, 157 (2d
Cir. 2003).
Here, the plain language of section 1.03, read in context, supports the conclusion
that RTFCs fall within subdivision 10’s definition of “hospital.” Indeed, to hold otherwise
would be to ignore the New York Legislature’s express statement that such facilities are
“a sub-class of the class of facilities defined to be ‘hospitals’ in subdivision ten.” N.Y.
Mental Health Law § 1.03(33). Contrary to Plaintiff’s contention, however, subdivision 33
does not expand or provide an alternative definition of “hospital” that circumvents the state
oversight requirements also found in subdivision 10.4 (Pl’s Mem of Law at 20.)
Plaintiff argues that “[i]f the facilities referred to in subdivision 33 would have
qualified as hospitals under subdivision ten in any event, then the sentence [defining
4
In any event, if subdivision 33 did provide a different, alternative definition for “hospital” than that
intended by subdivision 10, as Plaintiff argues, then an RTFC is not a hospital “as defined by subdivision
ten” as required by the plain language of the Plan. It would instead be a hospital defined exclusively by
subdivision 33.
13
RTFCs as a subclass] serves no purpose; it is meaningless legislative chit-chat.” (Pl. Mem.
20.) This Court disagrees. Subdivision 10 ends with a catch-all provision including any
“other facility providing in-patient care or treatment of the mentally ill which has been
issued an operating certificate by [the] commissioner [of mental health].” N.Y. Mental
Hygiene Law § 1.03(10). To that end, a RTFC is an “inpatient psychiatric facility” providing
active mental health treatment and, pursuant to § 31.02 of the Mental Hygiene Law,
requires an operating certificate from the commissioner of mental health. See N.Y. Mental
Hygiene Law §§ 1.03(2), (33); 31.02(a)(4). Thus, subdivision 33 merely defines an RTFC
as one specific type of “other facility” that falls within subdivision 10's definition of hospital,
but does not negate the operating certificate requirement. Further, this separate definition
is not meaningless but, as Defendant argues, allows for ease of reference with respect to
the subsequent regulations and requirements specific to this subset of hospitals throughout
New York’s Mental Hygiene Law. See, e.g. N.Y. Mental Hygiene Law § 9.51 (admission
and retention requirements for RTFCs); § 31.26 (commissioner’s powers and responsibilies
with respect to RTFCs).
Plaintiff further argues that the Plan cannot be read as incorporating state
certification obligations because this would preclude coverage for any inpatient mental
health treatment at a facility not part of the New York public mental health care system, a
conclusion Plaintiff argues contradicts the Plan’s coverage of “out-of-network” mental
health care. (Pl. Reply Mem. 9-10.) He also asserts that this interpretation is belied by
Defendant’s payment of B.H.’s prior treatment at the out of state Aspen facility and six
months of treatment at Telos before issuing a denial. (Id. at 10.)
Resolution of this issue requires a shifting of focus from the statute to the Plan itself.
14
As with statutory interpretation, a court considering an ERISA plan must first look to its
terms, interpreting and enforcing unambiguous language in accordance with its plain
meaning. Gibbs ex rel. Estate of Gibbs v. CIGNA Corp., 440 F.3d 571, 578-79 (2d Cir.
2006) (construing an ERISA-regulated plan in accordance with federal common law);
Strom, 487 F.3d at 244. “ ‘Language is ambiguous when it is capable of more than one
meaning when viewed objectively by a reasonably intelligent person who has examined the
context of the entire integrated agreement.’ ” Gibbs, 440 F.3d at 579 (quoting Aramony v.
United Way Replacement Benefit Plan, 191 F.3d 140, 149 (2d Cir. 1999)). Whether
contract language is ambiguous is a question of law for a court to resolve by reference to
the contract alone. Fay v. Oxford Health Plan, 287 F.3d 96, 104 (2d Cir. 2002).
As noted above, the relevant Plan provision reads as follows:
If you are confined as an inpatient in a hospital as defined by subdivision ten
of Section 1.03 of the New York Mental Hygiene Law, we will provide
coverage for up to aggregate of 20 days per person in each plan year for
Active Treatment of mental, nervous, or emotional disorders or ailments, if
it is medically necessary in the judgment of a participating physician, and
approved by our medical director under [either the in-network and out-ofnetwork sections of the Policy]. Active Treatment means treatment furnished
in conjunction with inpatient confinement for mental, nervous, or emotional
disorders or ailments that meet such standards as shall be prescribed
pursuant to the regulations of the Commissioner of Mental Hygiene.
(Def. Exs. D at HN00015-16 (§ 3(9) (in-network)), HN00035 § 12(8) (out-of-network)); E
at HN00121-22, HN00141 (same).)
It is a “cardinal principle of contract construction that a document should be read to
give effect to all its provisions and to render them consistent with each other.” Perreca v.
Gluck, 295 F.3d 215, 224 (2d Cir. 2002) (internal quotation marks and brackets removed).
Here, because both the Plan and Mental Hygiene Law § 1.03(10) refer to inpatient
15
psychiatric facilities or services, there would be no need for the Plan to incorporate this
statutory provision unless the intent was to include the additional characteristics identified
therein. The only specific characteristics subdivision 10 requires of inpatient psychiatric
facilities or services is oversight by the state office of mental health or an operating
certificate issued by the commissioner of mental health. N.Y. Mental Hygiene Law §
1.03(10). As Plaintiff himself asserts, “there is no point in adopting a statutory definition
and then ignoring it.” (Pl. Mem. 20.) Thus, to give effect to the plain language of this Plan
provision, it must be read as incorporating the oversight and certification requirements.
This reading is further supported by the Plan’s own requirement that any active treatment
provided must meet “such standards as shall be prescribed pursuant to the regulations of
the Commissioner of Mental Hygiene.” (Def. Exs. D at HN00015-16 (§ 3(9) (in-network)),
HN00035 § 12(8) (out-of-network)); E at HN00121-22, HN00141 (same).)
Contrary to Plaintiff’s argument, the fact that the Plan uses the same language with
respect to both in-network and out-of-network coverage does not belie the conclusion that
state oversight is required. Under the plain language of the Plan, the phrases “in network”
and “out of network” are not the equivalent of “in state” and “out of state.” Instead, innetwork services are those: (1) provided by a beneficiary’s chosen primary care physician;
(2) provided by a participating in-network specialist; or (3) constituting emergency care
covered under section eight of the plan. (Def. Exs. D at HN 00006; E at HN00112) Out-ofnetwork benefits include specified services that do not meet one of these three conditions.
(Id.) Thus, there is no conflict or contradiction created by the incorporation of the oversight
requirements when the provisions are considered in the context of the contract as a whole.
For example, the Plan would provide out-of-network coverage for active treatment
16
furnished by a non-participating mental health specialist in an inpatient facility operating
pursuant to a certificate issued by the commissioner of mental health. In contrast, to
interpret the Plan as Plaintiff urges would render the references to New York’s Mental
Hygiene
Law
and
relevant
regulations
meaningless.
See
Burke
v.
PriceWaterHouseCoopers LLP Long Term Diability Plan, 572 F.3d 76, 81 (2d Cir. 2009)(a
court must not rewrite a contractual term that is clear and unambiguous).
Finally, it is only when provisions are ambiguous that courts may look to extrinsic
factors such as bargaining history or past practices to interpret ERISA-plan provisions.
Sciascia v. Rochdale Village, 851 F. Supp. 2d 460, 474 (E.D.N.Y. 2012 (citing Aeronautical
Indus. Dist Lodge 91 v. United Tech. Corp., 230 F.3d 569, 576 (2d Cir. 2000)); see U.S.
Airways v. McCutchen, 133 S. Ct. 1537, 1549, 185 L. Ed. 2d 654 (2013) (a court may look
outside the plan’s written language when the words of a plan “leave gaps”). Because this
Court concludes that the relevant Plan provisions are unambiguous as written,
consideration of Defendant’s prior benefit payments in apparent contravention of these
provisions cannot be considered. See Moore v. Metropolitan Life Ins. Co., 856 F.2d 488,
492 (2d Cir. 1988) (extrinsic evidence may not be used to amend or contradict an express
provision of an ERISA plan); Am. Fed. of Grain Millers v. Int’l Multifoods Corp., 116 F.3d
976, 981 (2d Cir. 1997) (extrinsic evidence could not be used to alter the meaning of
unambiguous contract provision).
IV. CONCLUSION
The unambiguous language of the Plan provides that there is mental health
coverage for active treatment at inpatient facilities, including residential treatment centers
for children and youth, but only when those facilities are operating under the oversight of
17
the office of mental health or pursuant to an operating certificate issued by that office’s
commissioner. Because there is no dispute that Telos is not such a facility, Plaintiff’s
motion for summary judgment is denied, and Defendant’s motion for summary judgment
is granted.
V. ORDERS
IT HEREBY IS ORDERED, that Defendant’s Motion for Summary Judgment (Docket
No. 16) is GRANTED;
FURTHER, that Plaintiff’s Cross-Motion for Summary Judgment (Docket No. 24) is
DENIED;
FURTHER, that the Clerk of the Court shall close this case.
SO ORDERED.
Dated: August 30, 2014
Buffalo, New York
/s/William M. Skretny
WILLIAM M. SKRETNY
Chief Judge
United States District Court
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