Blaik v. Health Care Service Corporation
ORDER denying 65 Motion for Summary Judgment. Signed by Honorable Timothy D. DeGiusti on 2/12/2018. (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,
HEALTH CARE SERVICE
CORPORATION, d/b/a BLUE
CROSS BLUE SHIELD OF
Case No. CIV-14-990-D
A.B. is a minor child who has a neurological condition that requires intense
therapy, including physical, occupational, speech and Applied Behavior Analysis
(ABA) therapy. At the time of her birth, A.B.’s parents purchased a child’s major
medical health insurance policy issued by Defendant Health Care Service
Corporation d/b/a Blue Cross Blue Shield of Oklahoma (BCBS). A.B., through her
mother, Sherri,1 filed this lawsuit, alleging BCBS breached the implied covenant of
good faith and fair dealing by repeatedly delaying, refusing, denying, and otherwise
For clarity and privacy, A.B. shall be referred to in this Order by her initials. Ms.
Blaik shall be referenced as “Plaintiff.”
mishandling A.B.’s claims and intentionally interfering with her ability to obtain
benefits for appropriate medical care, specifically ABA and speech therapy.
Before the Court is BCBS’s Motion for Summary Judgment [Doc. No. 65].
Plaintiff has filed her response in opposition [Doc. No. 73] and BCBS has replied
[Doc. No. 77]. The matter is fully briefed and at issue.
BCBS offers health insurance products in Oklahoma. In July 2008, BCBS
issued a Health Check Select Policy (“the Policy”) to A.B. shortly after her birth.
Among other things, the Policy provided coverage for “Hospital Services,” which
included, but was not limited to, “therapy services.” In addition, the Policy covered
“Outpatient Therapy Services,” which included, but was not limited to, “physical
therapy,” as well as “Outpatient Medical Services,” which included, but was not
limited to, “[v]isits and consultation for the examination, diagnosis, and treatment
of an injury or illness.”2 To this end, the Policy stated “[b]enefits for Speech Therapy
are limited to Inpatient services only.” “Inpatient” was defined as “[a] Subscriber
who receives care as a registered bed patient in a Hospital or other Provider where a
room and board charge is made.” The Exclusions section of the Policy stated BCBS
would not provide coverage for “conditions related to autistic disease of childhood,
BCBS’s corporate representative testified there were other therapy services
covered that were not expressly mentioned in the Policy.
hyperkinetic syndromes, learning disabilities, behavioral problems, mental
retardation,3 or Inpatient confinement for environmental change.”
The Policy does not define “injury” or “illness.” Under the Policy, “physical
therapy” is defined as “the treatment by physical means, hydrotherapy, heat or
similar modalities, physical agents, bio-mechanical and neuro-physiological
principles, and devices to relieve pain, restore maximum function, and prevent
disability following disease, injury, or loss of body part.” “Speech therapy” is
“treatment for the correction of a speech impairment resulting from disease, Surgery,
injury, congenital and developmental anomalies, or previous therapeutic processes.”
Lastly, “occupational therapy” is defined as “treatment of a physically disabled
person by means of constructive activities designed and adapted to promote the
restoration of the person’s ability to satisfactorily accomplish the ordinary tasks of
daily living and those required by the person’s particular occupational role.”
A.B. experienced developmental problems at an early age. When she was only
six months old, her parents noticed she was, among other things, having difficulty
gaining weight and experiencing delays in her motor skills. A.B. was ultimately
diagnosed, at the age of two, with hypoplasia of the corpus callosum (“HCC”), a
congenital condition in which part of the brain between the two hemispheres—the
Although the Policy uses this term, current medical nomenclature uses the term
“intellectual disability.” See, e.g., Howell v. Trammell, 728 F.3d 1202, 1206 n. 1
(10th Cir. 2013).
corpus callosum—is not fully developed.4 As a result of her HCC, as indicated
above, A.B. experiences physical delays, gross motor delays, and global
developmental delays. She also has difficulty “crossing midline,”5 using both hands
at the same time, and experiences speech delays and physical body delays, which
include walking and running. Although A.B.’s HCC affects the way she processes
sound, she does not suffer from hearing loss.
Several types of therapy exist that may improve the behavioral and
educational skills of one diagnosed with HCC. One such therapy, ABA, is an
intensive one-on-one therapy designed to analyze a person’s maladaptive behavior
and eliminate those behaviors through repetitive performance of modified behaviors.
ABA therapy utilizes positive reinforcement to encourage desired behavior. See,
e.g., A.F. v. Providence Health Plan, 157 F. Supp. 3d 899, 904 (D. Or. 2016) (noting
“ABA therapy is an intensive behavior therapy that, among other things, measures
and evaluates observable behaviors.”). It is often used as a therapy for children on
the autism spectrum. Id.; see also McHenry v. PacificSource Health Plans, 679 F.
The corpus callosum is a bundle of nerve fibers (over 200 million) that connect the
two hemispheres of the brain and transmit information from the left to the right
hemisphere. See National Organization for Disorders of the Corpus Callosum,
http://nodcc.org/corpus-callosum-disorders/faq/ (last visited December 29, 2017).
“Crossing midline” (or “crossing the midline”) refers to one’s ability to reach
across the middle of the body, with the arms and legs crossing over to the opposite
Supp. 2d 1226, 1231 (D. Or. 2010) (identifying ABA therapy as one of many
treatments focusing primarily on addressing the developmental impairments caused
by autism). A.B. receives ABA therapy to help improve her HCC-related symptoms.
She also receives outpatient speech therapy to address her speech delay.
In 2011, when A.B. was about three years old, Plaintiff submitted two claims
for ABA therapy, but BCBS denied them on the basis they were not covered under
the Policy.6 Notes produced by BCBS during discovery indicated the claims were
denied on the belief A.B. was autistic. The notes stated, “[t]his [member] is not
autistic and it looks like the [claims] are denying for that reason[.]” In support of her
appeal of the coverage decision, Plaintiff produced correspondence from her treating
physician, which stated in relevant part:
[A.B.] was diagnosed with [HCC], a neurological condition in April
2010. It is medically necessary that [A.B.] receive intense therapy,
including physical, occupational, speech and Applied Behavior
Analysis (ABA) therapy so that she may overcome cognitive and
speech deficiency to permit a more normal life. She does not have
Autism or any other mental health issues. … She has recently begun
ABA therapy and there have been significant improvements in her
ability to communicate, thus proof that this type of therapy works and
is medically necessary for [A.B.]. (Emphasis added.)
The Policy required that “proper notice” of an insurance claim be submitted before
BCBS became responsible under the agreement, and set forth a claims handling
procedure for the submission and processing of claims. The Policy reserved the right
to seek recoupment of payments in the event such payments were deemed erroneous.
Once the aforementioned claims were denied, Plaintiff stopped submitting additional
claims for ABA therapy.
Nonetheless, BCBS upheld its denial of the claims.
Beginning in 2012, BCBS initially paid Plaintiff’s claims for A.B.’s speech
therapy based on its interpretation of the Oklahoma Audiology Mandate, 36 OKLA.
STAT. § 6060.7(A)(1) (“the Audiology Mandate”), which provided that any health
benefit plan must “provide coverage for audiological services and hearing aids for
children up to eighteen (18) years of age.” However, in 2014, it reviewed its
interpretation of the statute and stopped paying claims submitted after April 2014 on
the grounds that, in its view, outpatient speech therapy was not covered. BCBS did
not inform Plaintiff of its change in interpretation and there is no evidence in the
record as to what either interpretation specifically stated. BCBS did pay some speech
therapy claims submitted in the latter portion of 2014; however, BCBS contends this
was based on an erroneous application of its former interpretation of the Audiology
Mandate. BCBS later amended the Policy to include outpatient speech therapy as a
covered benefit for services beginning in 2015. Speech therapy claims were limited
to a combined twenty-five claims per year for physical therapy, occupational
therapy, and speech therapy.
STANDARD OF DECISION
Rule 56(a), Federal Rules of Civil Procedure, provides that “[t]he court shall
grant summary judgment if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.” The
Court views the material undisputed7 facts in the light most favorable to the nonmoving party. T.D. v. Patton, 868 F.3d 1209, 1219 (10th Cir. 2017). The Court’s
function at the summary judgment stage is not to weigh the evidence and determine
the truth of the matter asserted, but to determine whether there is a genuine issue for
trial. Birch v. Polaris Indus., Inc., 812 F.3d 1238, 1251 (10th Cir. 2015). An issue is
“genuine” if there is sufficient evidence on each side so that a rational trier of fact
could resolve the issue either way. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670
(10th Cir. 1998). An issue of fact is “material” if under the substantive law it is
essential to the proper disposition of the claim. Id.
Once the moving party has met its burden, the burden shifts to the nonmoving
party to present sufficient evidence in specific, factual form to establish a genuine
factual dispute. Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th
Cir. 1991). The nonmoving party may not rest upon the mere allegations or denials
of its pleadings. Rather, it must go beyond the pleadings and establish, through
admissible evidence, that there is a genuine issue of material fact that must be
resolved by the trier of fact. Salehpoor v. Shahinpoor, 358 F.3d 782, 786 (10th Cir.
To determine which facts are not in genuine dispute, the Court must disregard any
unsupported allegations, legal conclusions, or legal arguments couched as facts that
appear in either party’s statement of material facts or response thereto. See, e.g.,
Chavez v. County of Bernalillo, 3 F. Supp. 3d 936, 949 n. 4 (D.N.M. 2014).
2004). Unsupported conclusory allegations do not create an issue of fact. Finstuen
v. Crutcher, 496 F.3d 1139, 1144 (10th Cir. 2007).
Subject matter jurisdiction for this action is predicated upon diversity of
citizenship. See Compl. ¶¶ 1-2 [Doc. No. 1]. Therefore, the issues before the Court
require consideration of Oklahoma law as well as the Policy language. State Farm
Fire and Casualty Co. v. Pettigrew, 180 F. Supp. 3d 925, 931 (N.D. Okla. 2016)
(“The interpretation of an insurance contract is governed by state law and, sitting in
diversity, we look to the law of the forum state.”) (quoting Houston Gen. Ins. Co. v.
Am. Fence Co., Inc., 115 F.3d 805, 806 (10th Cir. 1997)).8 Under Oklahoma law,
interpretation of an insurance policy, like any written contract, presents a question
of law. May v. Mid-Century Ins. Co., 2006 OK 100, ¶ 22, 151 P.3d 132, 140.
Oklahoma’s rules of construction for insurance policies are the same as those
for other contracts:
An insurance policy is a contract. The rules of construction and analysis
applicable to contracts govern equally insurance policies. The primary
goal of contract interpretation is to determine and give effect to the
intention of the parties at the time the contract was made. In arriving at
the parties’ intent, the terms of the instrument are to be given their plain
and ordinary meaning. Where the language of a contract is clear and
unambiguous on its face, that which stands expressed within its four
corners must be given effect. A contract should receive a construction
Neither party questions that the Policy here is to be interpreted under Oklahoma
that makes it reasonable, lawful, definite and capable of being carried
into effect if it can be done without violating the intent of the parties.
May, 151 P.3d at 140 (citations omitted); State Ins. Fund v. Ace Transp. Inc., 195
F.3d 561, 564 (10th Cir. 1999) (applying Oklahoma law); see also 15 OKLA. STAT.
§ 157 (“The whole of a contract is to be taken together, so as to give effect to every
part, if reasonably practicable, each clause helping to interpret the others.”).
“[I]nsurance contracts are contracts of adhesion because of the uneven
bargaining position of the parties. Consequently, in the event of ambiguity9 or
conflict in the policy provisions, a policy of insurance is to be construed strictly
against the insurer and in favor of the insured.” Spears v. Shelter Mut. Ins. Co., 2003
OK 66, ¶ 5, 73 P.3d 865, 868. In such an event, exclusionary provisions are narrowly
construed against the insurer and words of inclusion are construed in favor of the
insured. See id.; Orthopedic Resources, Inc. v. Nautilus Ins. Co., 654 F. Supp. 2d
1307, 1313 (N.D. Okla. 2009) (“Under Oklahoma law, exclusionary provisions in
an insurance contract are narrowly construed and ‘words of exclusion are construed
against the insurer and words of inclusion are construed in favor of the insured.’”)
The absence of an express definition of a word or phrase within the policy does not
necessarily render it ambiguous. Rather, the test to be applied in determining
whether a word or phrase is ambiguous is whether the term is reasonably susceptible
to two interpretations on its face. Cranfill v. Aetna Life Ins. Co., 2002 OK 26, ¶ 7,
49 P.3d 703, 706. “This test for ambiguity is applied from the standpoint of a
reasonably prudent lay person, not from that of a lawyer.” See id. (citing Couch on
Insurance 3d § 21:14 (1995)).
(quoting Timmons v. Royal Globe Ins., 1982 OK 97, ¶ 20, 653 P.2d 907, 913). The
Court should not focus on a particular clause or take language out of context.
Shawnee Hosp. Auth. v. Dow Constr., Inc., 1990 OK 137, ¶ 6, 812 P.2d 1351, 1353.
If an insurance policy contains no ambiguity, the Court must construe its language
in accordance with the plain, ordinary meaning of its terms. Haworth v. Jantzen,
2006 OK 35, ¶ 17, 172 P.3d 193, 197. Here, neither party argues that the applicable
Policy provisions are ambiguous, but the parties advance divergent views regarding
the scope of coverage based on that Policy language. The mere fact that the parties
disagree or press for a different construction does not make a contract ambiguous.
Pitco Prod. Co. v. Chaparral Energy, Inc., 2003 OK 5, ¶ 12, 63 P.3d 541, 545.10
Plaintiff asserts only one claim—breach of the implied covenant of good faith
and fair dealing. “Under Oklahoma law, ‘[e]very contract ... contains an implied duty
of good faith and fair dealing.’” Combs v. Shelter Mutual Ins. Co., 551 F.3d 991,
998-99 (10th Cir. 2008) (quoting Wathor v. Mutual Assurance Administrators, Inc.,
2004 OK 2, ¶ 5, 87 P.3d 559, 561). To that end, “[a]n insurer has an ‘implied-in-law
duty to act in good faith and deal fairly with the insured to ensure that the policy
Even where an ambiguity is found, if the ambiguity results from the words used
(a patent ambiguity), as opposed to some extrinsic fact (a latent ambiguity), the
construction of the contract remains a question of law for the Court. Walker v. Telex
Corp., 1978 OK 13, ¶ 7, 583 P.2d 482, 485; Paclawski v. Bristol Labs., Inc., 1967
OK 21, ¶ 24, 425 P.2d 452, 455; Shepherd v. French, 1980 OK CIV APP 13, ¶ 10,
612 P.2d 727, 729.
benefits are received.’” Badillo v. Mid Century Ins. Co., 2005 OK 48, ¶ 26, 121 P.3d
1080, 1093 (citing Christian v. American Home Assurance Co., 1977 OK 141, ¶ 8,
577 P.2d 899, 901). “Under Oklahoma law, ‘the essence of the intentional tort of
bad faith with regard to the insurance industry is the insurer’s unreasonable, badfaith conduct,11 including the unjustified withholding of payment due under a
policy.’” Boggs v. Great Northern Ins. Co., 659 F. Supp. 2d 1199, 1216 (N.D. Okla.
2009) (quoting McCorkle v. Great Atlantic Ins. Co., 1981 OK 128, ¶ 21, 637 P.2d
583, 587). “[I]f there is conflicting evidence from which different inferences may
be drawn regarding the reasonableness of insurer’s conduct, then what is reasonable
is always a question to be determined by the trier of fact by a consideration of the
circumstances in each case.” Badillo, 121 P.3d at 1093 (quoting McCorkle, 637 P.2d
at 587). “A central issue in any analysis to determine whether breach has occurred
is gauging whether the insurer had a good faith belief in some justifiable reason for
the actions it took or omitted to take that are claimed violative of the duty of good
faith and fair dealing.” Id. (citing Buzzard v. McDanel, 1987 OK 28, ¶ 10, 736 P.2d
“Bad faith,” for purposes of the tort, has been described as “willful, malicious, or
oppressive for the purposes of delaying or avoiding payment of the insured’s claim.”
Tolman v. Reassure America Life Ins. Co., 2017 OK CIV APP 15, ¶ 15, 391 P.3d
120, 123 (citing Christian, 577 P.2d at 905).
In sum, the elements of Plaintiff’s bad faith claim are: (1) BCBS was required
under the Policy to pay her ABA and speech therapy claims; (2) BCBS’s refusal to
pay the claims was unreasonable under the circumstances because it either (a) did
not perform a proper investigation, (b) did not evaluate the results of the
investigation properly, or (c) had no reasonable basis for the refusal; (3) BCBS did
not deal fairly and in good faith with Plaintiff; and (4) BCBS’s violation of its duty
of good faith and fair dealing was the direct cause of the damages sustained by
Plaintiff and sought to be recovered in this action. See Bannister v. State Farm Mut.
Auto Ins. Co., 692 F.3d 1117, 1126-27 (10th Cir. 2012); see also Badillo, 121 P.3d
BCBS’ Motion with respect to Plaintiff’s claims for ABA therapy is threefold.
First, it contends Plaintiff cannot recover any damages for the cost of ABA therapy
services not submitted as part of a claim; therefore, its duty of good faith and fair
dealing is limited only to the two claims submitted by Plaintiff. Second, Defendant
contends ABA therapy is not covered under the Policy. Third, Defendant states that
even assuming ABA therapy was covered, it legitimately disputed coverage for such
treatment. The Court addresses each argument in turn.
Submission of Claims
It is undisputed that only two claims for ABA therapy were submitted to
Defendant. Plaintiff, however, argues that because Defendant refused to pay the
initial claims, any further attempts to obtain coverage would have been futile.
Plaintiff also argues that Defendant’s material breach of the Policy excused any
further obligation on her behalf to submit additional claims. Although it is generally
true that an insurer’s duty of good faith and fair dealing is triggered upon a notice of
claim, Timmons, 653 P.2d at 913, the law does not require the performance of futile
acts. Cf. Apache Corp. v. State, ex rel. Oklahoma Tax Comm’n, 2004 OK 48, ¶ 9, 98
P.3d 1061, 1063 (noting that Oklahoma law “does not require one to do a vain or
useless thing or to perform an unnecessary act to obtain relief.”) (citations omitted).
Here, the Court finds Plaintiff can establish futility because (1) Plaintiff
sought coverage for ABA treatment and was denied twice on the basis that it was
not covered under the Policy, and (2) there is no evidence in the record that BCBS
either voluntarily paid benefits for ABA therapy or communicated its willingness to
do so. Compare A.F. v. Providence Health Plan, 157 F. Supp. 3d 899, 909 (D. Or.
2016) (plaintiff could demonstrate exhaustion futility where, among other things, the
defendant had not “identified any instance in which it willingly paid for ABA
therapy[.]”); Potter v. Blue Cross Blue Shield of Mich., No. 10-cv-14981, 2011 WL
9378789, at *3 (E.D. Mich. July 14, 2011) (plaintiff successfully demonstrated
exhaustion futility where the defendant “ha[d] not identified one instance in which
it has voluntarily paid benefits for ABA treatment”).
By its own admission in this case, BCBS refused to pay all claims for ABA
therapy since BCBS determined it was not a covered service under the terms of the
Policy. No evidence in the record reflects a change in its position. BCBS asserts that
claims for the denied ABA therapy were required to be repeatedly submitted, over
and over again, despite its no-coverage decision. Such a requirement, under the
circumstances here, would result in the same absurdity BCBS attempts to ascribe to
Plaintiff’s litigation position. The Court finds Plaintiff has carried her burden to
show that submission of additional claims would have been futile. Therefore, her
failure to submit additional claims for ABA therapy does not bar review of BCBS’s
Coverage for ABA Therapy
Whether the Policy provides coverage for ABA therapy is a legal issue for the
Court to decide. Automax Hyundai South, L.L.C. v. Zurich Am. Ins. Co., 720 F.3d
798, 804 (10th Cir. 2013) (citing Dodson v. St. Paul Ins. Co., 1991 OK 24, ¶ 12, 812
P.2d 372, 376). The Policy purports to exclude treatment for “conditions related to
autistic disease of childhood, hyperkinetic syndromes, learning disabilities,
behavioral problems, mental retardation, or Inpatient confinement for environmental
change,” yet at the same time it provides coverage for “physical therapy” and
“outpatient services,” which are designed to ameliorate and provide visits and
consultation for the “examination, diagnosis, and treatment of an injury or illness.”12
Thus, these provisions of the Policy are in apparent conflict.
BCBS’s contention that ABA treatment is expressly excluded by the Policy is
unpersuasive. ABA treatment or therapy is nowhere specifically mentioned in the
Policy and BCBS’s reading of the exclusion in question is strained. BCBS asserts
that HCC is a “condition related to” the enumerated syndromes and symptoms in the
exclusion on page forty-nine of the Policy; but clearly, HCC is the underlying illness
or condition which is manifested in A.B. in myriad ways, some of which are
behavioral. Moreover, BCBS’s argument that because the ABA treatment is in part
sought to alleviate A.B.’s developmental challenges it falls into the excluded
categories of treatment for learning disabilities, behavioral problems, or mental
retardation is so elastic that it could be stretched to engulf the effects of almost any
illness or condition that in part manifests itself through undesirable behaviors.
However, such exclusionary language must be construed narrowly. BCBS’s position
does not survive this narrow construction.
BCBS initially denied Plaintiff’s claims on the basis A.B. was autistic.
Evidence submitted by Plaintiff revealed A.B. was not suffering from autism or any
Webster’s defines “illness” as “an unhealthy condition of body or mind.”
MERRIAM-WEBSTER ONLINE DICTIONARY, available at https://www.merriamwebster.com/dictionary/illness (last visited December 15, 2017).
mental illness, but was diagnosed with the neurological condition HCC, and it was
medically necessary that she receive physical therapy, occupational therapy, speech
therapy, and ABA therapy so that she may overcome cognitive, motor, and speech
deficiencies. As mentioned, the Policy is silent with respect to ABA therapy, but this
of course does not necessary militate in favor of a no-coverage determination—there
are hundreds of established courses of medical treatment and therapies, and an
insurance policy attempting to specifically enumerate all of them would be
unreadable. Both parties agree that HCC is an extremely rare condition without an
established treatment protocol; it comes as no surprise then that neither HCC nor
ABA therapy are expressly mentioned in the Policy. But the Policy does provide
coverage for “Outpatient Medical Services,” which includes “Home, Office, and
other Outpatient visits,” expressly including “visits and consultation for the
examination, diagnosis, and treatment of an injury or illness.” See Policy at p. 27
[Doc. No. 65-1]. Similarly, the Policy specifically provides coverage for “Outpatient
Therapy Services,” which include “Physical Therapy and Occupational Therapy.”
See id. at pp. 29-30.13
“Therapy Service” is defined as a group of enumerated services when ordered by
a physician and used to “treat and promote your recovery for an illness or injury.”
Policy at p. 74 (Emphasis added). “Physical Therapy” is defined as “the treatment
by physical means, hydrotherapy, heat, or similar modalities, physical agents, biomechanical and neuro-physiological principles, and devices to relieve pain, restore
maximum function, and prevent disability following disease, injury, or loss of body
part.” Id. (Emphasis added). The Policy defines “Occupational Therapy,” in
Although the ABA regimen includes therapies to assist A.B. with academic
and social deficits, it involves physical components as well, including therapies to
develop fine and gross motor skills, and comprehensively seeks to address issues
identified by occupational and physical therapists. The various treatment goals are
aggregated by A.B.’s Board Certified Behavior Analyst, and incorporated into her
ABA program. See Depo. of Sherri Blaik at 69-71, Ex. 12 to Pl. Resp. to Mot. for
Summ. J [Doc. No. 73-12]. ABA therapy, although not specifically addressed in the
Policy, shares critical components of what is commonly understood (and defined in
the Policy) as physical and occupational therapy provided on an outpatient basis.
Construing words of inclusion regarding such therapies in favor of the insured,
Spears, 73 P.3d at 868, the Court readily finds that ABA therapy belongs in the same
The Court thus concludes that ABA therapy falls within provisions extending
coverage for “outpatient services,” “physical therapy,” and “occupational therapy”
for “treatment of an injury or illness.” A.B.’s HCC is certainly an “illness” –an
unhealthy condition of the body—and ABA therapy is clearly an outpatient
treatment for such illness.
pertinent part, as “treatment of a physically disabled person by means of constructive
activities designed and adapted to promote the restoration of the person’s ability to
satisfactorily accomplish the ordinary tasks of daily living ….” Id. at 75.
Reasonableness of Denial
Having construed the Policy’s conflicting terms in favor of coverage, the
Court turns to the question of whether BCBS’s denial was reasonable. The
applicable standard on this issue is well-known and oft repeated:
The Oklahoma Supreme Court and this Court have made clear that an
insurer does not subject itself to a claim of bad faith merely by disputing
coverage. The insurer does not breach the duty of good faith by refusing
to pay a claim or by litigating a dispute with its insured if there is a
legitimate dispute as to coverage or amount of the claim, and the
insurer’s position is reasonable and legitimate. So long as there is a
legitimate basis for doing so, disputing coverage is not bad faith per se.
We note, though, that a legitimate dispute as to coverage will not act as
an impenetrable shield against a valid claim of bad faith. An insured
may pursue a claim of bad faith even where the insurer has a legitimate
defense to coverage. However, in order to pursue such a claim, the
insured must present sufficient evidence reasonably tending to show
bad faith. … In sum, in order to establish [a bad faith] claim, the insured
must present evidence from which a reasonable jury could conclude
that the insurer did not have a reasonable good faith belief for
withholding payment of the insured’s claim.
Timberlake Constr. Co. v. U.S. Fid. and Guar. Co., 71 F.3d 335, 343-44 (10th Cir.
1995) (internal citations and quotations omitted). “Whether an insurer’s actions
reasonably give rise to an inference of bad faith must be determined in light of all
facts known or knowable concerning the claim at the time plaintiff requested the
company to perform its contractual obligation.” Oulds v. Principal Mut. Life Ins.
Co., 6 F.3d 1431, 1439 (10th Cir. 1993) (citing Conti v. Republic Underwriters Ins.
Co., 1989 OK 128, ¶ 20, 782 P.2d 1357, 1362).
BCBS contends there was a legitimate dispute concerning coverage because
(1) ABA therapy is not an enumerated treatment in the Policy, (2) the Policy
excludes coverage for ABA therapy, (3) A.B.’s condition was rare, and (4) there is
no standard treatment for a child diagnosed with HCC.
Viewing the evidence and all reasonable inferences in the light most favorable
to Plaintiff, the aforementioned considerations lead the Court to conclude that the
issue of BCBS’s compliance with its duty of good faith is a question of fact best left
for the jury. To support her contention that BCBS acted unreasonably, Plaintiff cites
evidence in the record indicating that BCBS denied claims for symptoms it
associated with autism, despite a physician’s statement that she was not autistic. Yet,
when presented with this contrary evidence, BCBS remained steadfast in its denial
of Plaintiff’s claims.
Although BCBS contends ABA therapy is not specifically enumerated in the
Policy, its corporate representative testified that BCBS has provided coverage for
therapies not specifically listed in Policy provisions. In addition, the Court has
concluded, in light of the Policy’s conflicting terms, that the Policy provides
coverage for ABA therapy. BCBS asserts the Policy excludes coverage for
conditions related to autistic disease of childhood, hyperkinetic syndromes, learning
disabilities, behavioral problems, “mental retardation,” or Inpatient confinement for
environmental change treatment. However, the Court has determined that ABA
therapy is not excluded by the Policy’s language. Lastly, the uniqueness of A.B.’s
condition is of no consequence at the summary judgment stage, since all reasonable
inferences must be viewed in Plaintiff’s favor, and the existence of a unique illness
could just as easily support a conclusion that Plaintiff’s claims should have been
covered. Accordingly, BCBS’s Motion is denied on this issue.
BCBS contends Plaintiff cannot establish bad faith regarding the denial of her
speech therapy claims post-April 2014 because (1) the Policy did not cover
outpatient speech therapy and (2) even assuming speech therapy was covered, there
was a legitimate dispute regarding coverage for such services. Plaintiff responds that
(1) BCBS is estopped from denying coverage for speech therapy, and (2) speech
therapy was covered under the Affordable Care Act’s (ACA) “habilitative” services
In the Court’s view, the record raises a genuine issue of fact concerning
whether BCBS should be estopped from denying Plaintiff’s claims for speech
therapy during the relevant period.14 Estoppel bars a party from alleging or denying
certain rights which might otherwise have existed because of the party’s voluntary
In this regard, the Court finds that the ACA does not apply to the Policy. With
certain exceptions not applicable here, the ACA exempts from its provisions plans
executed on or before March 23, 2010. See 42 U.S.C. § 18011. It is undisputed that
Plaintiff’s Policy was issued in 2008.
conduct. Sullivan v. Buckhorn Ranch P’ship, 2005 OK 41, ¶ 31, 119 P.3d 192, 201.
It is used to prevent injustice and should not be used to work a positive gain to a
party. Id. Moreover, estoppel requires good faith reliance upon a representation or
position by the party asserting it. Id. The essential elements of estoppel are: (1) a
false representation or concealment of facts, (2) which was made with actual or
constructive knowledge of the real facts, (3) the party to whom it was made must
have been without knowledge, or the means of discovering the real facts, (4) the act
or concealment must have been made with the intention that it should be relied or
acted upon, and (5) the party to whom it was made relied on, or acted upon it to their
detriment. Id. Where material facts are in dispute, the issue of estoppel is a question
of fact that cannot be determined by summary judgment. See, e.g., Sunrizon Homes,
Inc. v. American Guar. Inv. Corp., 1988 OK 145, ¶¶ 13-14, 782 P.3d 103, 108; see
also T.V. ex rel. Villnave v. Columbia Nat. Ins. Co., 2013 OK CIV APP 100, ¶ 21,
313 P.3d 1022, 1027 (“Where the facts are not disputed and are subject to only one
interpretation, the question of estoppel becomes one of law to be decided by the
court.”) (Emphasis added).
Viewing the evidence—and all reasonable inferences—in Plaintiff’s favor,
BCBS consistently paid her speech therapy claims on the grounds such services were
compensable under Oklahoma law. However, BCBS ceased making payments based
on an arbitrary change in its interpretation of the law and failed to communicate that
change to Plaintiff. Plaintiff was nonetheless repeatedly informed that coverage for
speech therapy existed, any denial of benefits was mistaken, and wrongly denied
claims would be reopened and paid. As a result, Plaintiff continued to obtain speech
therapy for A.B. A reasonable trier of fact could determine that BCBS’s unilateral
change in position and decision not to pay further claims for speech therapy was an
intentional effort to avoid payment of A.B.’s claims, and it should be estopped from
doing so. Accordingly, BCBS’s Motion is denied on this ground.
Finally, BCBS moves for summary judgment on Plaintiff’s prayer for punitive
damages. Punitive damages are not an independent cause of action, but a form of
relief dependent on Plaintiff’s other claims. Cf. Douglas v. Miller, 864 F. Supp. 2d
1205, 1220 (W.D. Okla. 2012). Pursuant to 23 OKLA. STAT. § 9.1, punitive damages
may be available in a bad faith suit where the insurer has either (1) recklessly
disregarded its duty to deal fairly and act in good faith with its insured; (2)
intentionally and with malice breached its duty to deal fairly and act in good faith
with its insured; or (3) intentionally and with malice breached its duty to deal fairly
and act in good faith with its insured, and the Court finds that, beyond a reasonable
doubt, the insurer acted intentionally and with malice and engaged in life-threatening
conduct. Id. Submission of punitive damages to a jury may be improper even where
there is evidence to support an award of actual damages. LeBlanc v. Travelers Home
and Marine Ins. Co., No. CIV-10-503-HE, 2011 WL 2748616, at *5 (W.D. Okla.
July 13, 2011).
Based on its findings regarding the reasonableness of BCBS’s conduct, the
Court finds that whether such conduct constitutes any of the aforementioned
categories of conduct warranting the imposition of punitive damages cannot be
determined as a matter of law based on the instant summary judgment record. The
record before the Court does not sway the Court in either direction as to whether the
issue of punitive damages will be presented to the jury; hence, any ruling on the
issue of punitive damages is premature.
BCBS’s Motion for Summary Judgment [Doc. No. 65] is DENIED as set
IT IS SO ORDERED this 12th day of February 2018.
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