Blaik v. Health Care Service Corporation
Filing
33
ORDER denying 20 Motion to Dismiss. Parties to move for entry of new scheduling order within 14 days. Signed by Honorable Timothy D. DeGiusti on 10/20/2015. (mb)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
A.B., a minor child by and through
her Parent and Legal Guardian,
SHERRI BLAIK,
Plaintiff,
v.
HEALTH CARE SERVICE
CORPORATION, d/b/a BLUE
CROSS BLUE SHIELD OF
OKLAHOMA,
Defendant.
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Case No. CIV-14-990-D
ORDER
Before the Court is Defendant Blue Cross Blue Shield’s (“Defendant”) Motion
to Dismiss for Failure to Exhaust Non-Judicial Remedies or Alternatively, to Stay
Litigation Pending Such Exhaustion [Doc. No. 20]. Plaintiff A.B., by and through her
parent and legal guardian, Sheri Blaik (“Plaintiff”) has filed her response in
opposition [Doc. No. 23]. The matter has been fully briefed and is at issue.
I.
NATURE OF THE DISPUTE
Plaintiff is a minor child who has a neurological condition that requires intense
therapy, including physical, occupational, speech and Applied Behavior Analysis
(ABA) therapy.1 Plaintiff began to receive such medical services when she was about
one year old and continues to receive such treatment. In 2008, at the time of her birth,
Plaintiff’s parents bought a child’s major medical health insurance policy (“the
Policy”) issued by Defendant. At the back of the Policy is a section titled,
“Complaint/Appeal Procedure.” This section outlines a procedure to review a
policyholder’s “dissatisfaction, complaints, and/or appeals.” The procedure consisted
of two levels of review. If a customer was not satisfied with their initial attempt to
resolve their problem (direct communication with a customer representative), “Level
I” required the customer to submit a written request to Defendant’s appeal
coordinator located in Tulsa, OK. The request was to contain certain subscriber
information deemed relevant to the appeal.
Upon review, Defendant’s administration staff would consider the merits of
the appeal no later than 60 days after receipt. If the claim went unresolved at the
Level I stage, the policy granted the policyholder the right to submit their dispute for
“Level II reconsideration,” which also required the submission of a written request.
Upon receipt, Defendant’s “Member Participation and Protection Committee” would
1
The facts are taken from the parties’ submissions, including affidavits and the
Policy at issue. In deciding a motion to dismiss for failure to exhaust non-judicial
remedies, the court may look beyond the pleadings and decide disputed issues of fact.
Henderson v. Thomas, 891 F. Supp. 2d 1296, 1309 (M.D. Ala. 2012) (citing Bryant
v. Rich, 530 F.3d 1368, 1374 (11th Cir. 2008)).
2
review the claim “to protect [the enrollee’s] rights and to provide a mechanism to
review and resolve issues which are not resolved to [the enrollee’s] satisfaction
through the Level I appeal process.” Written notice of the committee’s decision
would be provided in 60 days, barring an extension.2 The Policy stated policyholders
“must exhaust the Level I and Level II appeal processes before pursuing other legal
remedies.”
From the time Plaintiff’s parents began submitting them up to February 2014,
Defendant paid benefits under the policy for Plaintiff’s speech therapy bills.
However, Defendant began denying coverage for speech therapy benefits on the
grounds they were not covered under the Policy. Plaintiff’s mother repeatedly called
Defendant’s representatives regarding the denials and was informed that the benefits
would be paid; however, Defendant continued to issue denials. Plaintiff’s mother
continued to call Defendant’s representatives, but the matter went, and remains,
unresolved.
On September 15, 2014, Plaintiff filed the instant lawsuit, alleging Defendant
breached the implied covenant of good faith and fair dealing by repeatedly delaying,
2
The policy also provided for a “Level III” stage of review, which granted the
right to external review by an independent review organization pursuant to the
Oklahoma Managed Care External Review Act. That statute, however, was repealed
in 2011.
3
refusing, denying, and otherwise mishandling Plaintiff’s health insurance claims and
intentionally interfering with her ability to obtain benefits for appropriate medical
care. Plaintiff seeks compensatory and punitive damages. After filing an initial
answer, Defendant filed an Amended Answer on January 23, 2015 to include the
affirmative defense of exhaustion3 and on April 10, 2015, it filed the instant motion.
Defendant seeks dismissal of Plaintiff’s Complaint, or alternatively, a stay of these
proceedings, on the basis that Plaintiff failed to exhaust the appeals process provided
either under the Policy or Oklahoma’s Managed Health Care Reform and
Accountability Act, codified at 36 OKLA. STAT. §§ 6591 et seq. (hereinafter “MHCA”
or the “Act”). Plaintiff contends Defendant’s motion should be denied, since (1) she
is not bringing a cause of action under the Act, (2) exhaustion would be futile because
no coverage issue exists regarding her medical expenses, (3) Defendant was dilatory
in seeking the requested relief, and (4) exhaustion would be inadequate because
Defendant cannot award her adequate relief in the form of compensatory and punitive
damages.
3
A judicially created exhaustion doctrine is often considered an affirmative
defense, rather than a jurisdictional prerequisite. Forest Guardians v. U.S. Forest
Service, 641 F.3d 423, 431 (10th Cir. 2011).
4
II.
STANDARD OF DECISION
A motion to dismiss for failure to exhaust non-judicial remedies is treated as
an “unenumerated” motion under Rule 12(b). Albino v. Baca, 697 F.3d 1023, 1029
(9th Cir. 2012) (citing Wyatt v. Terhune, 315 F.3d 1108, 1119 (9th Cir. 2003)); Gould
v. Donald, No. 4:08–CV–155 (CDL), 2009 WL 1606520, at *3 (M.D. Ga. June 8,
2009). In deciding such a motion, the Court accepts as true all well-pled allegations,
Anjelino v. New York Times Co., 200 F.3d 73, 88 (3d Cir. 1999), and, as stated above,
may look beyond the pleadings and decide disputed issues of fact. Henderson, 891
F. Supp. 2d at 1309; see also Ontiveros v. Los Angeles County, 611 F. Supp. 2d 1090,
1095 (C.D. Cal. 2009). If the district court concludes the plaintiff has not exhausted
non-judicial remedies, the proper remedy is dismissal of the claim without prejudice.
Wyatt, 315 F.3d at 1120.
III.
DISCUSSION
For purposes of this discussion, there are no disputes of material fact. Instead,
the Court is tasked with determining whether Plaintiff has exhausted her non-judicial
remedies. Even if she has not exhausted her remedies, the Court must consider
whether equity favors an excusal of the exhaustion requirements under the
circumstances.
5
A.
Exhaustion Under the MHCA
The MHCA is a statutory mechanism set up to resolve disputes between
patients and managed care entities, which typically arise when such organizations
deny coverage for medical treatment, services, or equipment the patient believes to
be medically necessary. It generally states that health insurance carriers, health
maintenance organizations (HMOs), or other managed care entities have the duty to
exercise ordinary care when making health care treatment decisions and shall be
liable for damages for harm to an enrollee proximately caused by the breach of that
duty. 36 OKLA. STAT. § 6593(A). “Enrollee” is defined as “an individual who is
enrolled in a health care plan.” Id. § 6592(1).
Prior to bringing any action under its provisions, the Act requires an aggrieved
party to (1) exhaust any appeal and review process applicable under the utilization
review requirements of the plan, (2) exhaust all applicable remedies specified in the
Oklahoma Managed Care External Review Act (now repealed), and (3) provide
written notice of the claim to the health insurance carrier, HMO, or managed care
entity against whom the action will be brought at least thirty (30) days before the
action is filed. Id. § 6594.
The Court finds exhaustion under the Act is not required, as Plaintiff does not
bring an action under its provisions. “[S]tatutes are to be interpreted in accordance
6
with their plain, ordinary meaning according to the import of the language used.”
Hubbard v. Kaiser-Francis Oil Co., 2011 OK 50, ¶ 8, 256 P.3d 69, 72 (citing In re
Certification of Question of State Law, 1977 OK 16, 560 P.2d 195). “When the
language of the statute is plain, it will be followed without further inquiry.”
Oklahoma City Zoological Trust v. State ex rel. Public Employees Relations Bd.,
2007 OK 21, ¶ 6, 158 P.3d 461, 464.
Here, the Act’s remedial procedure clearly applies to actions brought for
alleged violations of the statute. See 36 OKLA. STAT. § 6594(A) (“A person may not
maintain a cause of action under this act . . .” (emphasis added); Walker v. Group
Health Services, Inc., 2001 OK 2, ¶ 11, 37 P.3d 749, 755 (“[W]here the Managed
Health Care Act applies, HMOs may be sued once the enrollee has exhausted appeal
and review processes available under the insurer’s plan and those provided by the
Oklahoma Managed Care External Review Act.”) (emphasis added). Nowhere in the
Act’s provisions does it either state or indicate that it intended to serve as the
exclusive remedy for breach of contract/bad faith insurance actions, and there is no
evidence that the legislature intended the statute to preempt such common law claims.
The Court cannot read into a statute a provision that does not exist. Okla. City
Zoological Trust, 158 P.3d at 464 (“It is for [this court] to ascertain [the meaning of
these words]—neither to add nor to subtract, neither to delete nor to distort.”)
7
(quoting 62 Cases, More or Less, Each Containing Six Jars of Jam v. U.S., 340 U.S.
593, 596, 71 S.Ct. 515, 95 L.Ed. 566 (1951) (paraphrasing in original)). Accordingly,
the Court finds the Act’s exhaustion requirements have no applicability to the facts
and circumstances of the instant case and Defendant’s motion is denied on that
ground.
B.
Exhaustion Under Defendant’s Internal Review Process
As stated, the Policy provides Plaintiff “must exhaust the Level I and Level II
appeal processes before pursuing other legal remedies.” In view of this provision,
exhaustion appears mandatory. Indeed, public policy favors exhaustion because it
promotes judicial economy by encouraging settlement and filtering out frivolous
claims, promotes consistent treatment of claims, non-adversarial dispute resolution,
and decreases the cost and time of settlement. White v. Keychoice Welfare Ben. Plan,
827 F.Supp. 690, 698 (D. Wyo. 1993). However, where exhaustion is not statutorily
imposed, courts apply the requirement as a matter of judicial discretion and will
excuse exhaustion under limited circumstances, such as if resort to non-judicial
remedies would be futile or the remedy provided is inadequate. McGraw v. Prudential
Ins. Co. of America, 137 F.3d 1253, 1264 (10th Cir. 1998); Massengale v. Bd. of
8
Examiners in Optometry, 30 F.3d 1325, 1328 (10th Cir. 1994).4
A court may also bypass the exhaustion requirement using equitable doctrines
such as waiver, estoppel, and tolling. Million v. Frank, 47 F.3d 385, 389 (10th
Cir.1995)(exhaustion requirement that is not a jurisdictional prerequisite “is a
condition precedent to suit that functions like a statute of limitations and is subject
to waiver, estoppel, and equitable tolling”); Hoover v. West, 93 F. App’x 177, 182
(10th Cir. Feb. 19, 2004) (unpublished) (noting “non-jurisdictional prerequisites to
suit in federal court are typically subject to equitable estoppel,” but declining to
address whether equitable estoppel applied since plaintiff failed to make threshold
showing) (citation omitted).
Taking Plaintiff’s allegations as true, Plaintiff’s mother called Defendant on
multiple occasions to settle the dispute. On each occasion, she was informed that the
denial of her speech therapy claims were being processed, calculated and would be
paid. However, the claims never were paid, which led to another round of calling,
4
Futility exists where resort to such remedies is “clearly useless.” McGraw, 137
at 1264 (citation omitted). A plaintiff must show that the claim would be denied on
appeal, and not merely just that she doubts that an appeal will result in a different
decision. Lane v. Sunoco, Inc. (R & M), 260 F. App’x 64, 66 (10th Cir. 2008)
(unpublished); Lindemann v. Mobil Oil Corp., 79 F.3d 647, 650 (7th Cir.1996). The
fact that a dispute exists over the plaintiff’s entitlement to the subject benefits does
not, in itself, establish futility. Fortelney v. Liberty Life Assur. Co. of Boston, 790 F.
Supp. 2d 1322, 1358 (W.D. Okla. 2011).
9
reassurances, and ultimate non-payment. Defendant waited nearly a year into this
litigation to move for dismissal on exhaustion grounds, during which time it actively
participated in the litigation and conducted discovery. Moreover, Defendant waited
until nearly the close of discovery to move for dismissal. Therefore, at this juncture,
the Court finds it would be highly prejudicial to require Plaintiff to dismiss her claims
based solely on a procedural technicality that Defendant should have raised at the
very beginning of this case. Given that Defendant has offered no legitimate
justification for this delay, the Court finds this circumstance serves as support for
waiving the exhaustion requirement.
The Court has carefully considered all of the parties’ arguments. To the extent
any issue was not specifically addressed above, it is either moot or without merit.
Under the particular circumstances of this case, the Court finds equity warrants an
excusal of the exhaustion requirements. Plaintiff has diligently pursued her claims
and Defendant waited for nearly a year to move for dismissal under an exhaustion
theory. For these reasons, Defendant’s Motion to Dismiss is denied.
IV.
CONCLUSION
For the reasons stated, Defendant’s Motion to Dismiss for Failure to Exhaust
Non-Judicial Remedies, or Alternatively, to Stay Litigation Pending Such Exhaustion
[Doc. No. 20] is DENIED. Pursuant to this Court’s Order of September 21, 2015
10
[Doc. No. 32], the parties are directed to move for the entry of a new scheduling order
within fourteen (14) days of this Order.
IT IS SO ORDERED this 20th day of October, 2015.
11
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?