Berdeau v. Schaeffler Group USA Inc et al
Filing
42
ORDER: Defendants Motions for Judgment are granted and that Plaintiffs Motion for Judgment is denied. Signed by the Honorable Donald C Coggins, Jr on 05/16/2019. (lsut, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Jason Berdeau,
)
)
Plaintiff,
)
)
vs.
)
)
Schaeffler Group, USA Inc. and Blue
)
Cross Blue Shield of South Carolina,
)
)
Defendants.
)
________________________________ )
C/A No.: 4:17-cv-02744-DCC
OPINION AND ORDER
Pending before this Court are the parties’ Cross-Memoranda In Support of
Judgment. ECF Nos. 24, 25, 26. Defendants filed Replies to Plaintiff’s Memorandum.
ECF Nos. 27, 28. Plaintiff Jason Berdeau alleges that he was a participant in his
employer’s, Schaeffler Group, USA Inc.’s (“Schaeffler”), self-funded health plan (the
“Plan”) and that he was entitled to recover benefits pursuant to the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C. §1001 et seq. Specifically, Plaintiff
alleges that he requested pre-authorization for certain medical procedures and/or
services under the Plan and that his pre-authorization request was improperly denied
by Defendants as not being medically necessary. Plaintiff alleges a cause of action
against both Defendants for recovery of ERISA benefits under 29 U.S.C. § 1132(a)(1)(B)
1
(First Cause of Action).1
The parties entered into and filed a Joint Stipulation agreeing: that Plaintiff
exhausted all of his administrative remedies under the Plan, to the contents of the
administrative record, to the applicable Plan terms, that the Court should apply an abuse
of discretion standard of review as to the determination of medical necessity, and that
the Court may dispose of Plaintiff’s claim based on the Joint Stipulation, the administrative
record and the parties’ Memoranda In Support of Judgment. ECF 19.
The principal issue before this Court is whether the Plan’s final claim decision that
the medical procedure and/or service for which Plaintiff sought preauthorization was not
Medically Necessary was proper under the abuse of discretion standard of review. Based
on the arguments contained in the parties’ Memoranda in Support of Judgment, the joint
stipulation and the administrative record, the Court finds that the Plan’s denial of Plaintiff’s
request for pre-authorization was proper and not an abuse of discretion.
FINDINGS OF FACT
The Court makes the following findings of fact pursuant to Federal Rule of Civil
Procedure 52 based on the administrative record and the parties’ Joint Stipulation:
1.
The Schaeffler Plan
Plaintiff’s employer, Schaeffler, established and/or maintained an ERISA
governed, self-funded group health plan for the benefit of its employees. AR 64-152.
Schaeffler was both the Plan Sponsor and Plan Administrator and at all times acted as
1
By order dated May 23, 2018, the Court granted Defendants’ motions to dismiss
Plaintiff’s ERISA breach of fiduciary duty claim. ECF 23.
2
the claims fiduciary retaining the right to make final claim determinations under the Plan.
AR 80-81, 127, 129, 136. Schaeffler contracted with Defendant Blue Cross Blue Shield
of South Carolina (“BCBSSC”) to provide administrative claims payment services under
the Plan. AR 137. BCBSSC provided administrative claims payment services only and
did not assume any financial risk or obligation with respect to claims. As an eligible
employee, Plaintiff was a participant in the Plan.
2.
Plaintiff’s Claim
On or about February 24, 2017, McLeod Spine Center at McLeod Regional
Hospital (“McLeod”) on behalf of Plaintiff, faxed Defendant BCBSSC seeking preauthorization for an anterior lumbar fusion at L5/S1, CPT codes 22558, 22845 and 22853.
AR 286-92.
On March 7, 2017, Lena Bretous, M.D., a board-certified medical director at
BCBSSC, reviewed Plaintiff’s lumbar fusion claim and found that the requested procedure
was not medically necessary. AR 319. Dr. Bretous opined:
Deny as not medically necessary the requested lumbar fusion procedure
for member with back pain x 2 months with failed pain medications and
epidural injections, based on Plan medical criteria, because the member
has MRI confirmed no central canal stenosis at L5-S1 and no
spondylolisthesis or rapidly progressive signs of motor loss or cauda equina
syndrome; and no failed trial of 6 weeks of physical therapy in the past 6
3
months as required by Plan medical Policy CAM2 7011413 coverage
requirements. The Plan confirmed that member has quit smoking x 6 weeks.
(AR 319) (footnotes not in original).
On March 7, 2017, McLeod contacted BCBSSC and requested a peer to peer
review between Dr. Bretous and McLeod physician, Willie S. Edwards, Jr., concerning
the requested lumbar fusion procedure. (AR 822). On March 9, 2017 a telephone peer
to peer review took place between Drs. Bretous and Dr. Edwards.
(AR 874).
Contemporaneous notes of this peer to peer conversation by Dr. Bretous stated:
First attempt: spoke to Austin; placed on hold; regarding denied ALIF
[anterior lumbar interbody fusion] at L5-S1 for indication of DDD
[degenerative disc disease] and HNP [herniated nucleus pulposus] after
failed epidural injection, no 6 week trial of PT [physical therapy] and member
quit smoking x 6 weeks. Per plan medical policy fusion procedure for
symptomatic DDD with HNP. Spoke directly with Dr. Edwards; who
analyzed adjacent segment disease above L5 and may not be a good
candidate for fusion procedure at level below; member came from a
2
CAMs are medical policies assembled by BCBSSC as part of its duties as the
third-party claims processor. CAMs aggregate the most current peer-reviewed medical
literature on a given medical procedure or services, and make recommendations
regarding criteria for medical necessity and/or the investigational (experimental) nature
of services based on the consensus of the medical community. The CAMs state: “This
medical policy was developed through consideration of peer-reviewed medical literature
generally recognized by the relevant medical community, U.S. FDA approval status,
national accepted standards of medical practice and accepted standards of medical
practice in his community, Blue Cross and Blue Shield Association technology
assessment program (TEC) and other non-affiliated technology evaluation centers,
reference to federal regulations, other plan medical policies, and accredited national
guidelines.” AR 642.
3
The relevant pages of CAM 701141 can be found at AR 1262-64.
4
previous PCP [primary care provider] who put member through PT [physical
therapy] as well as injection, Dr. Edwards understands reason for denial.
Denial upheld on peer to peer.
AR 874.
On or about March 10, 2017, BCBSSC received a fax request for pre-authorization
for the approval of durable medical equipment (“DME”) known as an osteogenesis
stimulator E0748 and a lumbar sacral orthosis L0637 from Palmetto Medical Equipment
of Florence. AR 646. On that same date, Dr. Bretous conducted a medical review of the
DME claim and found that the DME claim was also not medically necessary. (AR 859).
Dr. Bretous found:
Deny as not medically necessary the requested bone growth stimulator and
back brace for post-operative use because the authorization for the
requested lumbar fusion was denied as not medically necessary upon
medical review and upheld on peer to peer discussion with the requesting
physician. Plan medical policy for lumbar fusion for an indication of severe,
symptomatic lumbar degenerative disc disease is considered
investigational and not approved for coverage. Therefore, the associated
equipment for post-surgical therapy is also denied as not medically
necessary.
AR 859.
On March 10, 2017, BCBSSC wrote Plaintiff, Rakesh P. Chokshi, M.D., and
Palmetto Medical Equipment of Florence that Plaintiff’s DME claim was denied because
it was not medically necessary and investigational. AR 824-35. The letters stated in
relevant part:
Deny as not medically necessary the requested bone growth stimulator and
back brace for post-operative use because the authorization for the
requested lumbar fusion was denied as not medically necessary upon
medical review and upheld on peer to peer discussion with the requesting
physician. Plan medical policy for lumbar fusion for an indication of severe,
symptomatic lumbar degenerative disc disease is considered
investigational and not approved for coverage. Therefore, the associated
5
equipment for post-surgical therapy is also denied as not medically
necessary.
AR 824.4
On March 29, 2017, BCBSSC wrote Plaintiff, Dr. Edwards and McLeod that the
request for pre-authorization for the anterior lumbar interbody fusion had been denied
because it was not medically necessary. AR 836-49. These letters stated in relevant part:
[The] Medical Director has reviewed the service request for Spinal
procedure 22558, 22845, 22853. We regret that we are unable to authorize
the service request scheduled for 03/08/0217 for the following reason:
The clinical and treatment information we received did not meet medical
necessity criteria. According to the physician:
Deny as not medically necessary the requested lumbar fusion procedure
for member with back pain x 2 months with failed pain medications and
epidural injections, based on Plan medical criteria, because the member
has MRI confirmed no central canal stenosis at L5-S1 and no
spondylolisthesis or rapidly progressive signs of motor loss or cauda equina
syndrome; and no failed trial of 6 weeks of physical therapy in the past 6
months as required by Plan medical policy CAM 701141 coverage
requirements. The Plan confirmed that member has quit smoking x 6 weeks.
Medically Necessary/Medical Necessity: healthcare services that a
Provider, exercising prudent clinical judgment, would provide to a patient
for the purpose of preventing, evaluating, diagnosing or treating an illness,
injury, disease or its symptoms, and that are:
1. In accordance with generally accepted standards of medical practice;
4
Despite being put on notice of his right to appeal the DME denial in the March
10, 2017 denial letter and a subsequent April 24, 2017 Explanation of Benefits (AR 648651), Plaintiff never separately appealed the denial of the DME claim. However, because
the DME claim was contingent on the lumbar fusion claim, Plaintiff’s lumbar fusion claim
most probably was encompassed by Plaintiff’s appeal of the fusion claim and Defendants
have so stipulated.
6
2. Clinically appropriate, in terms of type, frequency, extent, site and
duration, and considered effective for the patient's illness, injury or disease;
and,
3. Not primarily for the convenience of the patient or Provider and not more
costly than an alternative service or sequence of services at least as likely
to produce equivalent therapeutic or diagnostic results as to the diagnosis
or treatment of that patient's illness, injury or disease.
AR 836-37, 844-45, 847-48.
On April 10, 2017, Plaintiff appealed the denial of the lumbar fusion. AR 302-18.
On April 26, 2017, a specialty matched, independent external review was conducted on
Plaintiff’s claim by board certified orthopedic surgeon Ryan Gocke, M.D. AR 1045-47. Dr.
Gocke found:
Questions
1. Is there sufficient published peer-reviewed data from well-constructed
clinical studies to permit scientific conclusion regarding the durable benefit
to health outcomes of the requested anterior lumbar interbody fusion L5S1?
No
2 Based on the clinical Information provided, have all appropriate
conservative treatments been tried for this condition?
No
3. Does the MRI demonstrate appropriate findings that would qualify the
member for the requested surgery and if so are the imaging findings
consistent with the clinical signs and symptoms?
No
4. Given the unique clinical circumstances of the member and utilizing
evidence-based guidelines would the requested services be considered
medically necessary and standard of care?
No
Rationale:
7
Per the review of the submitted clinical documentation, this is a 43-year old
patient who is appealing the denial of surgery. The medical records indicate
that the patient has multilevel degenerative disc changes. The patient has
mild degenerative disc disease at L4-5 with moderate right and mild left
neural foraminal stenosis. However, all appropriate conservative treatments
have not been tried for this condition. The patient has not completed
physical therapy, activity modifications, or pain management injections.
There is not sufficient published peer-reviewed data from well-constructed
clinical studies to permit scientific conclusion regarding the durable benefit
to health outcomes of the requested anterior lumbar interbody fusion L5-S1
for this patient. The MRI does not demonstrate appropriate findings that
would qualify the member for the requested surgery. No instability is noted.
Therefore, given the unique clinical circumstances of the member and
utilizing evidence-based guidelines, the requested services would not be
considered medically necessary or standard of care.
AR 1045-46.
On April 26, 2017, Michael Lawhead, M.D., a board certified medical
consultant with BCBSSC reviewed Plaintiff’s anterior lumbar interbody fusion claim
and concurred with Dr. Gocke’s findings. AR 301. Dr. Lawhead found:
Deny coverage. Specialty matched independent external review has
determined that the patient has not completed physical therapy, activity
modifications, or pain management injections. There is not sufficient
published peer-reviewed data from well-constructed clinical studies to
permit scientific conclusion regarding the durable benefit to health
outcomes of the requested anterior lumbar interbody fusion L5-S1for this
patient. The MRI does not demonstrate appropriate findings that would
qualify the member for the requested surgery. No instability is noted.
Therefore, given the unique clinical circumstances of the member and
utilizing evidence-based guidelines, the requested services would not be
considered medically necessary or standard of care. The plan agrees.
Medically necessary/medical necessity: health care services that a
provider, exercising prudent clinical judgment, would provide to a patient for
the purpose of preventing, evaluating, diagnosing or treating an illness,
injury, disease or its symptoms, and that are:
8
1. In accordance with generally accepted standards of medical or behavioral
health practice;
2. Clinically appropriate, in terms of type, frequency, extent, site and
duration, and considered effective for the patient's illness, injury or disease;
3. Not primarily for the convenience of the patient, patient, caregiver(s) or
provider; and,
4. Not more costly than an alternative service or sequence of services at
least as likely to produce equivalent therapeutic or diagnostic results as to
the diagnosis or treatment of that patient's illness, injury or disease.
All requirements of the above-referenced definition must be met in order for
a health care service to be deemed medically necessary. The failure of a
health care service to meet any one of the above referenced requirements
means, in the discretion of the corporation . . .
AR 301.
On April 27, 2017, BCBSSC wrote Plaintiff, Dr. Edwards and McLeod that
Defendants’ denial of the requested lumbar fusion was being upheld on appeal.
AR 1048-58.
On May 25, 2017, BCBSSC received a request from Plaintiff’s authorized
representative for an external review of Plaintiff’s requested lumbar fusion claim.
AR 918. On July 14, 2017, the Medical Review Institute of America, Inc., an
external review organization accredited by the URAC,5 wrote Plaintiff upholding
the denial of Plaintiff’s pre-authorization request for anterior lumbar interbody
fusion. AR 806-12. This decision stated in relevant part:
Final External Review Decision:
5
URAC is a Washington DC-based non-profit organization that helps promote
health care quality through the accreditation of organizations involved in medical care
services.
9
Upon independent review the reviewer finds that the previous adverse
determination/adverse determinations should be:
Upheld
The requested L5-S1 anterior lumbar interbody fusion (CPTs 22558, 22845
and 22853) is not considered medically necessary for this patient based on
the medical policy, Lumbar Spinal Procedures, #CAM 161.
A Description of the Qualifications of the Reviewer:
Reviewer Code: 3884
This physician reviewer is board certified by the American Board of
Orthopaedic Surgery in General Orthopaedic Surgery and completed a
Fellowship in Spine surgery. This physician reviewer is a member of the
North American Spine Society Evidence Based Medicine Committee. This
physician has been in active practice since 1999.
.
.
.
Explanation of Findings:
Per the Medical Policy, Lumbar Spinal Procedures, # CAM 1616:
“Single level lumbar fusion with or without decompression is considered
MEDICALLY NECESSARY when the following conditions are met:
1) Lumbar back pain, neurogenic claudication, and/or radicular leg pain
without sensory or motor deficit that impairs daily activities for at least 6
months; AND --CRITERIA MET
2) Failure to improve with at least 6 weeks of appropriate conservative
therapy (six months for isolated LBP). Documented failure of at least 6
consecutive weeks of any 2 of the following physician directed conservative
treatments
• Analgesics, steroids, and/or NSAIDS--CRITERIA MET
• Structured program of physical therapy--CRITERIA MET
• Structured home exercise program prescribed by a physical therapist,
chiropractic
provider of physician --CRITERIA MET
• Epidural steroid injection and or facet injections/selective nerve root
blocks; AND—CRITERIA NOT MET
3) Imaging studies corresponding to the clinical findings; AND
4) At least one of the following clinical conditions:
• Spondylolisthesis (Neural Arch Defect-Spondylolytic spondylolisthesis,
degenerative spondylolisthesis and congenital unilateral neural arch
hypoplasia); OR --CRITERIA NOT MET
6
CAM 161 replaced CAM 701141 in April 2017 and contained substantially the
same criteria. AR 614.
10
• Evidence of segmental instability-Excessive motion, as in degenerative
spondylolisthesis, segmental instability, and surgically induced segmental
instability; OR ---CRITERIA NOT MET
• Revision surgery for failed previous operation(s) for pseudoarthrosis at the
same level at least 6-12 months from prior surgery** if significant functional
gains are anticipated; OR---CRITERIA NOT MET
• Revision surgery for failed previous operation(s) repeat disk herniations if
significant functional gains are anticipated; OR ---CRITERIA NOT MET
• Fusion for the treatment of spinal tumor, cancer or infection; OR --CRITERIA NOT MET
• Chronic low back pain or degenerative disc disease (disc degeneration
without significant neurological compression presenting with low back pain)
must have failed at least 6 months of appropriate active non-operative
treatment (completion of a comprehensive cognitive behavioral
rehabilitation program is mandatory) and must be evaluated on a case-bycase basis” ---CRITERIA NOT MET
In this 44 year old claimant, he does not meet the criteria for the requested
service. The patient does not demonstrate any instability or neurological
deficit. Therefore, the request is not medically necessary based on the
medical policy criteria.
Per the Summary Plan Description, Exclusions section, page 40, Excluded
services include:
NOT MEDICALLY NECESSARY SERVICES OR SUPPLIES
Any service or supply that is not Medically Necessary. However, if a service
is determined to be not Medically Necessary because it was not rendered
in the least costly setting, Covered Expenses will be paid in an amount
equal to the amount payable had the service been rendered in the least
costly setting.”
The prior denial is upheld.
AR 807, 809-10 (footnotes not in original).
3.
Relevant Plan Language
The Court finds that the Plan terms are clear and unambiguous. The Plan
states:
Medically Necessary/Medical Necessity: health care services that a
Provider, exercising prudent clinical judgment, would provide to a patient
for the purpose of preventing, evaluating, diagnosing or treating an illness,
injury, disease or its symptoms, and that are:
11
1. In accordance with generally accepted standards of medical or
behavioral health practice;
2. Clinically appropriate, in terms of type, frequency, extent, site and
duration, and considered effective for the patient's illness, injury
or disease;
3. Not primarily for the convenience of the patient, patient’s
caregiver(s) or Provider; and,
4. Not more costly than an alternative service or sequence of
services at least as likely to produce equivalent therapeutic or
diagnostic results as to the diagnosis or treatment of that patient’s
illness, injury or disease.
All requirements of the above-referenced definition must be met in order for
a health care service to be deemed Medically Necessary. The failure of a
health care service to meet any one of the above referenced requirements
means, in the discretion of the Corporation [BCBSSC] or CBA, the health
care service does not meet the definition of Medically Necessary/Medical
Necessity.
For the purposes of determining Medically Necessary/Medical Necessity:
1. The Corporation and CBA have the discretion to utilize and rely
upon any medical and behavioral health (which includes
substance use and mental health) standards, policies, guidelines,
criteria, protocols, manuals, publications, studies or literature
(herein collectively referred to as “criteria”), whether developed
by them or others, which in their discretion are determined to be
generally accepted by the medical and/or behavioral health
community;
2. “Generally accepted standards of medical or behavioral health
practice” means United States standards that are based on
credible scientific evidence published in peer-reviewed medical
and/or behavioral health literature generally recognized by the
relevant United States medical or behavioral health community,
physician
or
behavioral
health
specialty
society
recommendations, and/or any other factors deemed relevant in
the discretion of the Corporation or CBA; and,
3. The Corporation and CBA may use, including but not limited to,
Corporate Administrative Medical (“CAM”) Policies, Technology
Evaluation Center (“TEC”) Assessments, Behavioral Health Care
12
Utilization Management Criteria and/or any Care Guidelines or
criteria by MCG Health, LLC or affiliated companies which reflect
and are clinically appropriate health care services and generally
accepted standards of medical and behavioral health practice.
MCG Health, LLC and/or its affiliated companies are independent
companies that develop evidence based guidelines and criteria
for medical, behavioral health and insurance industries to
interpret clinical determinations and determine the Medical
Necessity and appropriateness of requested services,
procedures, devices and supplies.
AR 78-79.
Investigational or Experimental: surgical or medical procedures,
supplies, devices or drugs which, at the time provided, or sought to be
provided, are in the judgment of the Corporation, not recognized as
conforming to generally accepted medical or behavioral health practice in
the United States, or the procedure, drug or device:
1.
Has not received required final approval in the United States
to market from appropriate government bodies;
2.
Is one about which the peer-reviewed medical literature in the
United States does not permit conclusions concerning its
effect on health outcomes;
3.
Is not demonstrated in the United States to be superior to
established alternatives;
4.
Has not been demonstrated in the United States to improve
net health outcomes; or,
5.
Is one in which the improvement claimed is not demonstrated
in the United States to be obtainable outside the
Investigational or Experimental setting.
AR 76.
A. PAYMENT
The payment of Covered Expenses for Benefits is subject to all terms and
conditions of the Plan of Benefits and the Schedule of Benefits. In the event
of a conflict between the Plan of Benefits and the Schedule of Benefits, the
Schedule of Benefits controls. Oral statements cannot alter the terms of the
Plan of Benefits or Schedule of Benefits. Covered Expenses will only be
paid for Benefits…
4.
For which the required Preadmission Review, Emergency
Admission Review, Preauthorization and/or Continued Stay
Review has been requested and Preauthorization was
received from the
Corporation (the Member should refer to the Schedule of
Benefits for services that require Preauthorization);
13
5.
That are Medically Necessary;
6.
That are not subject to an exclusion under Article IV of this
Plan of Benefits . . .
AR 90.
ARTICLE IV - EXCLUSIONS AND LIMITATIONS
THE EMPLOYER’S GROUP HEALTH PLAN WILL NOT PAY ANY
AMOUNT FOR THE SERVICES AND PRODUCTS LISTED IN THIS
ARTICLE IV EXCEPT: (1) SERVICES ARE RENDERED BY A HEALTH
CARE PROVIDER AS PART OF A VALUE-BASED PROGRAM OR (2) IF
REQUIRED BY LAW.
. . .
INVESTIGATIONAL OR EXPERIMENTAL SERVICES
Services or supplies or drugs that are Investigational or Experimental.
. . .
NOT MEDICALLY NECESSARY SERVICES OR SUPPLIES
Any service or supply that is not Medically Necessary. However, if a service
is determined to be not Medically Necessary because it was not rendered
in the least costly setting, Covered Expenses will be paid in an amount
equal to the amount payable had the service been rendered in the least
costly setting.
AR 102, 106-07.
CONCLUSIONS OF LAW
1.
Standard of Review
The parties stipulated that the Court should apply an abuse of discretion standard
of review as to the determination of Medical Necessity (as that term is defined in the Plan).
ECF 19, Joint Stipulation ¶ 3. Under the Supreme Court’s holding in Metro. Life Ins. Co.
v. Glenn, 554 U.S. 105 (2008), and the Fourth Circuit’s holding in Champion v. Black &
Decker, 550 F.3d 353 (4th Cir. 2008), even if the Court were to assume a structural
conflict of interest existed in this matter, the conflict does not change the requirement that
14
the Court is to review the decision at issue for an abuse of discretion. Therefore, under
Glenn and Champion, a conflict of interest is to be weighed as a factor in determining
whether the Plan abused its discretion when it denied Plaintiffs claim. The “conflict of
interest” factor “should prove more important (perhaps of great importance) where
circumstances suggest a higher likelihood that it affected the benefits decision . . . .”
Glenn, 554 U.S. at 117. The factor “should prove less important (perhaps to the vanishing
point) where the administrator has taken active steps to reduce potential bias and to
promote accuracy, for example, by walling off claims administrators from those interested
in firm finances, or by imposing management checks that penalize inaccurate decision
making irrespective of whom the inaccuracy benefits.” Id. Thus, “[t]he more incentive for
the administrator . . . to benefit itself by a certain interpretation of benefit eligibility or other
plan terms, the more objectively reasonable the administrator[’s] . . . decision must be
and the more substantial the evidence must be to support it.” Ellis v. Metro. Life Ins. Co.,
126 F.3d 228, 233 (4th Cir. 1997).
In the present case, the Court finds that the conflict of interest factor should be
given relatively little weight. First, although Schaeffler was both the Plan Sponsor and
Plan Administrator and at all times retained the right to make final claims determinations
under the Plan, Schaeffler hired BCBSSC, who had no financial risk or obligation with
respect to the payment of claims to provide administrative claims payment services under
the Plan. AR 80-81, 136-37. See Palmetto Health v. Nucor Corp. Grp. Health Plan, C/A
No. 3:17-cv-02807-RMG, 2018 WL 5300187 (D.S.C. 2018) (holding that while it is true
that the employer acted as fiduciary, administrator, and the sole-funder of the plan, the
role of the conflict did not affect the reasonableness of the decision where the employer
15
adopted the well-reasoned determination of its third-party administrator which lacked a
direct financial interest in the matter, citing Champion, at 359). Second, the medical
reviews of Plaintiff’s claim were conducted by multiple independent, board certified
medical experts, including two BCBSSC medical reviewers and two independent
orthopedic surgeons, who had no incentive, financial or otherwise, to deny Plaintiff’s
claim. Additionally, and more significantly, the independent external reviews were blindly
assigned to appropriately matched medical specialists, with one of the experts even
giving an attestation that he had no conflict of interest in reviewing Plaintiff’s claim. AR
1046. Finally, the medical experts reviewing Plaintiff’s claim relied on Plaintiff’s own
medical records and established CAM policies that were referred to in the Plan in the
process of reviewing Plaintiff’s claim. The Court finds that while a potential structural
conflict of interest existed, the safeguards mentioned above mitigated against giving the
potential conflict any great weight.
2.
The Burden of Proof
The Court finds that Plaintiff had the burden of proving that the services he was
requesting were Medically Necessary and therefore a “Covered Expense” under the
terms of the Plan. AR 90. If the claimant satisfied this burden, the burden shifted to the
Plan to show that some exclusion applied which precluded payment of benefits. Catledge
v. Aetna Life Ins. Co., 594 F. Supp. 2d 610 (D.S.C. 2009); see also Band v. Paul Revere,
14 F. App’x 210 (4th Cir. 2001) (a plaintiff has the burden of proving entitlement to benefits
the terms of an ERISA plan); Tucci v. First Unum Life Ins. Co., 446 F. Supp. 2d 473
(D.S.C. 2006); Fuja v. Benefit Trust Life Insurance Company, 18 F.3d 1405, 1408 (7th
Cir. 1994) (ERISA plaintiff has burden of proving coverage); see also Gable v. Sweetheart
16
Company, Inc., 35 F.3d 851, 855-56 (4th Cir. 1994) (ERISA plaintiff bears the burden of
proving their employer’s ERISA plan contains a promise to provide vested benefits), Lown
v. Continental Cas. Co., 238 F.3d 543 (4th Cir. 2001) (applying de novo standard of review
holding that insurer properly denied the plaintiff’s claim where the plaintiff failed to meet
her burden of proving that she was totally disabled under the terms of a long-term
disability plan).
3.
Plaintiff’s Claim
The Court finds that the Plan’s claim determination was the result of a deliberate,
principled reasoning process and was supported by substantal evidence. Under the
abuse of discretion standard, an administrator’s decision will not be disturbed if it is
reasonable, even if the reviewing court would have come to a different conclusion
independently. See, e.g., Evans, 514 F.3d at 323; Smith v. Cont'l Cas. Co., 369 F.3d 412,
417 (4th Cir. 2004); Feder v. Paul Revere Life Ins. Co., 228 F.3d 518, 522 (4th Cir. 2000).
“[A] decision is reasonable if it is the result of a deliberate, principled reasoning process
and if it is supported by substantial evidence.” Ellis v. Metro. Life Ins. Co., 126 F.3d 228,
232 (4th Cir. 1997); Bernstein v. CapitalCare, Inc., 70 F.3d 783, 788 (4th Cir. 1995).
Substantial evidence is “evidence which a reasoning mind would accept as sufficient to
support a particular conclusion” and which “consists of more than a mere scintilla of
evidence but may be somewhat less than a preponderance.” LeFebre v. Westinghouse
Elec. Corp., 747 F.2d 197, 208 (4th Cir. 1984). A reviewing court must assess the
reasonableness of the administrator’s decision based on the facts known to the
administrator at the time of the decision. See, e.g., Elliott v. Sara Lee Corp., 190 F.3d
601, 608-09 (4th Cir. 1999).
17
A reviewing court may consider various factors to assess the reasonableness of
the administrator's decision. These factors include (but are not limited to): (1) the
language of the plan; (2) the purposes and goals of the plan; (3) the adequacy of the
materials considered to make the decision and the degree to which they support it; (4)
whether the fiduciary’s interpretation was consistent with other provisions in the plan and
with earlier interpretations of the plan; (5) whether the decision-making process was
reasoned and principled; (6) whether the decision was consistent with the procedural and
substantive requirements of ERISA; (7) any external standard relevant to the exercise of
discretion; and (8) the fiduciary's motives and any conflict of interest it may have. Booth
v. Wal-Mart Stores, Inc. Assocs. Health & Welfare Plan, 201 F.3d 335, 342 (4th Cir. 2000).
The Booth factors are best viewed “as more particularized statements of the elements
that constitute a deliberate, principled reasoning process and substantial evidence . . . .”
Donnell v. Metro. Life Ins. Co., 165 Fed. Appx. 288, 294 n.6 (4th Cir. 2006) (unpublished)
(quotations omitted).
a.
Language of the Plan
The Court finds that BCBSSC’s interpretation of the definition of Medical Necessity
and the exclusions contained in the Plan was supported by the Plan’s unambiguous
language. Subject to ultimate approval by Schaeffler, the Plan clearly gave BCBSSC
discretion to determine medical necessity and authorized the use of standards, policies,
guidelines, and criteria, including, but not limited to, CAM policies to determine clinically
appropriate health care services and generally accepted standards of medical health
practice. The Court further finds that BCBSSC’s use of the above criteria to interpret
clinical determinations and make recommendations regarding the medical necessity and
18
appropriateness of Plaintiff’s requested procedure and medical devices was consistent
with the terms of the Plan and was not an abuse of discretion. Finally, the Court notes
that while Plaintiff alleges that he is entitled to benefits, Plaintiff makes no allegation that
BCBSSC misinterpreted the terms of the plan. Accordingly, the Court finds that first Booth
factor weighs in Defendants’ favor.
b.
The Purposes and Goals of the Plan
The Court finds that the purpose of the Schaeffler Plan was to offer self-funded
health coverage to its employees as an employee benefit. Accordingly, the goal of the
Plan was to provide a maximum benefit to those covered within the available resources.
To meet this goal, the Plan had to be constructed to ensure that claims submitted for
covered services were paid. At the same time, the Plan had to be constructed to exclude
from coverage other services such as those considered not Medically Necessary and
Investigational or Experimental. As can be seen by the definition of Medically Necessary,
to be payable, the service had to be in accordance with generally accepted standards,
clinically appropriate and not more costly than an alternative service at least as likely to
produce equivalent results. Services that were not Medically Necessary and/or were
Experimental or Investigational in addition to not being covered were specifically excluded
under the terms of the Plan. AR 76, 78-79, 106-107.
In the present case, the evidence in the record, including peer-reviewed standards,
policies, guidelines, and criteria; the opinions of two in-house board certified BCBSSC
medical reviewers; and two board certified independent specialist medical reviewers
determined that Plaintiff’s requested procedure and/or DME were not Medically
Necessary and/or were Experimental or Investigational. Because the purpose of the Plan
19
was to allow only benefits for services and/or DME that were Medically Necessary and/or
not Experimental or Investigational, the Court finds that BCBSSC’s recommendation to
deny Plaintiff’s claim was consistent with the purposes and goals of the Plan.
c.
Adequacy of the Materials Considered to Make the Decision and the Degree
to Which They Support It.
The Court finds that the Plan’s claim determination was supported by substantial
medical evidence and was not an abuse of discretion. As was previously discussed, this
evidence included peer-reviewed standards, policies, guidelines, and criteria, including
CAM policies; the opinions of two in-house board certified BCBSSC medical reviewers;
and two board certified independent specialist medical reviewers who all found that
Plaintiff’s requested procedure and/or DME were not Medically Necessary and/or were
Experimental or Investigational.
First, Plaintiff’s own objective diagnostic MRI on January 1, 2017, indicated that
while Plaintiff had mild DDD with minimum disc protrusion at L5-S1, Plaintiff had no
central canal compromise, no canal stenosis and no neural impingement. AR 317. On
February 21, 2017, Plaintiff’s treating physician, Dr. Edwards, found that Plaintiff had no
evidence of instability at L5-S1, had 90 flexion in the lumbar region, had a motor strength
5 out of 5 bilaterally with normal symmetric 2+ reflexes, and had no abnormal gait or long
tract findings. AR 313. While Dr. Edwards advocated for Plaintiff to receive the requested
lumbar fusion, Dr. Edwards’ opinion was not supported by the objective medical evidence.
“Courts in the Fourth Circuit routinely hold that it is not an abuse of discretion for an
ERISA-regulated plan’s claim administrator to deny benefits unsupported by objective
evidence.” Collins v. Qwest Disability Plan, C/A No. 7:06-cv-1128-HMH, 2006 WL
2946466 (D.S.C. 2006) (internal quotations marks and citation omitted). Accordingly, the
20
Court finds that BCBSSC did not abuse its discretion in failing to give Dr. Edward’s opinion
controlling weight.
Second, the Court finds that the fact that Dr. Edwards believed that the requested
procedure was medically necessary was not binding on the Plan. Under an abuse of
discretion standard of review, the Plan was not obligated to give greater weight to the
opinions of Plaintiff’s treating physicians. Black & Decker Disability Plan v. Nord, 538 U.S.
822 (2003); Elliot v. Sara Lee Corp., 190 F.3d 601 (4th Cir. 1999). Plans are not bound
by the opinion of a treating doctor in determining medical necessity. See Sheppard &
Enoch Pratt Hosp., Inc. v. Travelers Ins. Co., 32 F.3d 120, 125 (4th Cir. 1994) (In
determining benefits, “the very judgment of the treating doctor as to the medical necessity
of the prescribed treatment is being assessed by the Plan administrator and its medical
consultants. To require the Plan to give conclusive weight to the opinion of the treating
physician would deprive it of its role in determining medical necessity”); Free v. Travelers
Ins. Co., 551 F. Supp. 554, 560 (D. Md. 1982) (“the plaintiff’s unfettered right to select a
physician and follow his advice does not create a corresponding responsibility in the
defendant to pay for every treatment so chosen . . . [t]o require insurers to pay for every
remedy, proven or unproven, prescribed by a physician, could invalidate the actuarial
basis of current premium rates”); Unlike the opinions of the independent medical
reviewers, the BCBSSC in-house medical reviewers and the BCBSSC CAM policies, Dr.
Edward’s opinion was merely conclusory and failed to address the requirements of the
Plan’s definition of Medically Necessary and address the required Plan criteria. Therefore,
the Court finds that BCBSSC did not abuse its discretion in failing to give Dr. Edward’s
opinion controlling weight.
21
Third, the Court finds that the Plan did not abuse its discretion in giving greater
weight to the opinions of the two independent, board certified orthopedic surgeons,
Dr. Gocke and the medical reviewer from Medical Review Institute of America, who
both opined that the requested DME and/or services were not medically necessary
and/or were investigational. See AR 806-812, 1045-1047. These reviewers were
neutral, appropriately matched specialists who properly applied the terms of the Plan
and the applicable plan criteria. The Court finds that BCBSSC’s recommendation
giving these opinions greater weigh was not an abuse of discretion.
Fourth, the Court finds that the Plan did not abuse its discretion in relying on the
opinions of BCBSSC’s own board certified medical reviewers, Drs. Bretous and Lawhead.
See AR 301, 319, 859, 874. Both Drs. Bretous and Lawhead reviewed Plaintiff’s medical
records and applied the terms of the Plan and the Plan authorized peer-reviewed
standards, policies, guidelines, and criteria, including CAM policies to come to the
conclusion that Plaintiff’s requested procedure and DME were not medically necessary.
Because the Plan was self-funded and BCBSSC was not the insurer of the Plan, the Court
finds that Drs. Bretous and Lawhead were neutral experts. Accordingly, the Court finds
that the Plan’s reliance on Drs. Bretous’ and Lawhead’s opinions and the applicable
BCBSSC CAM policies was not an abuse of discretion. See Martin v. Blue Cross Blue
Shield of Virginia, 115 F.3d 1201 (4th Cir. 1997) (upholding the denial of benefits for high
dose chemotherapy and peripheral stem cell rescue as being experimental based in part
on a Blue Cross Blue Shield of Virginia TEC assessment); Evans v. Blue Cross Blue
Shield of South Carolina, 834 F. Supp. 887 (D.S.C.1993) (upholding the denial of benefits
22
for a radial keratotomy based on a BCBSSC TEC assessment and the opinion of
BCBSSC’s Medical Director).
Fifth, the Court finds that BCBSSC did not abuse its discretion in choosing between
conflicting medical evidence. The Fourth Circuit has held it is not an abuse of discretion
for a plan fiduciary to deny benefits where conflicting medical reports are presented. Elliot,
190 F.3d 601 (4th Cir. 1999); Ellis v. Metropolitan Life Ins. Co., 126 F.3d 228 (4th Cir.
1997) (finding no abuse of discretion in fiduciary’s denial of benefits where claimant’s
primary medical provider’s finding of disability conflicted with reports of independent panel
of medical specialists); Brogan v. Holland, 105 F.3d 158 (4th Cir.1997) (affirming district
court’s grant of summary judgment for trustees where medical evidence was conflicting
as to whether the plaintiff’s stroke occurred during course of employment). The Court
finds that the fact that BCBSSC gave more weight to the objective medical findings; the
opinions of two independent, board-certified orthopedic surgeons; the opinions of two
board-certified in-house medical reviewers and peer-reviewed CAM policies; all of which
specifically addressed the terms of the Plan and the Plan criteria; over the conclusory
opinions of Plaintiff’s treating physician was not an abuse of discretion.
Additionally, the Court finds that Plaintiff did not engage in sufficient physical
therapy to meet the Plan’s medical necessity criteria. The Plan’s Medical Necessity criteria
required that Plaintiff attempt at least 6 weeks of physical therapy. AR 319, 614, 1262-64.
However, Plaintiff stated that she engaged in physical therapy from March 23, 2017,
through April 5, 2017, ECF 26 at 4, and the records of Hartsville Physical Therapy and
Rehabilitation Center indicated that Plaintiff engaged in 22 days of physical therapy from
March 14, 2017, through April 5, 2017, AR 933-37. While it is undisputed that Plaintiff did
23
engage in some physical therapy, the Court finds that Plaintiff did not engage in 6 weeks
of physical therapy as was required by the Plan criteria.7, 8
Likewise, the Court further finds there was substantial evidence in the record that
Plaintiff did not complete the required course of pain management injections. According
to the evidence in the administrative record, Plaintiff received one epidural steroid
injection on February 8, 2017. AR 942. No other steroid injections were noted in the
record. Accordingly, the Court finds that Plaintiff failed to meet the required 6 weeks of
conservative care required by the criteria. AR 614, 1262-64.9
The Court also finds there was no evidence in the administrative record that
Plaintiff’s daily activities were impaired for 6 months or that Plaintiff suffered significant
functional impairment for 3 months which also were requirement of the Medical Necessity
criteria. AR 614, 1262-64. 10
The Court notes that while there was some variation in the opinions of the
reviewing physicians as to which particular criteria Plaintiff met, all of the reviewing
physicians unanimously found that Plaintiff failed to meet the required combination of
Medical Necessity criteria for the requested procedure and durable medical equipment to
7
This conclusion also was supported by BCBSSC’s board certified in-house
medical reviewers, Drs. Bretous, AR 319, 859, and Lawhead, AR 301, as well as
independent, board certified orthopedic surgeon Dr. Ryan Gocke, AR 643-44.
8
There was also no evidence in Plaintiff’s records that Plaintiff engaged in a home
exercise program prescribed by a physical therapist, chiropractic provider or physician
which was also one of the criteria. AR 614.
9
This conclusion was supported by the expert opinions of Drs. Gocke, AR 104547, Lawhead, AR 301, and the Medical Review Institute of America, Inc. orthopedic spine
surgeon, AR 807, 809-10.
10
Drs. Gocke and Lawhead both opined that there was no evidence that Plaintiff
suffered activity modifications. AR 301, 1045-47.
24
be covered by the Plan. The fact that BCBSSC chose to give greater weight to a particular
finding contained in one or more of these opinions did not amount to an abuse of
discretion. See Elliot, 190 F.3d 601 (4th Cir. 1999) (it is not an abuse of discretion for a
plan fiduciary to deny benefits where conflicting medical reports are presented).
Plaintiff argues that he should prevail based on the Fourth Circuit’s holding in
DuPerry v. Life insurance Co. of N. Am., 632 F. 3d 860 (4th Cir. 2011). However, the
Court disagrees and finds that Plaintiff’s reliance on DuPerry is misplaced because
DuPerry can be easily distinguished. First, DuPerry involved a claim for long term
disability benefits due to fibromyalgia, and not a claim for determining medical necessity
based on established medical necessity criteria. Second, the claim administrator in
DuPerry was also the insurer of the plan. Therefore, the Fourth Circuit found that this
conflict of interest weighed heavily against LINA. Here, although Defendant Schaeffler
was both the Plan Sponsor and Plan Administrator and at all times retained the right to
make final claims determinations under the Plan, Schaeffler hired BCBSSC, who had no
financial risk or obligation with respect to the payment of claims, to provide administrative
claims payment services under the Plan. AR 80-81, 136-37. Accordingly, the structural
conflict of interest in the present case did not weigh heavily against Defendants. Third, in
DuPerry, the Court found that LINA’s medical reviewers’ opinions ignored the plaintiff’s
subjective complaints of pain and were merely conclusory. Here, BCBSSC relied on the
opinions of four board certified medical reviewers who made specific findings addressing
established Plan Medical Necessity criteria using Plaintiff’s own medical records and
objective medical evidence. On the other hand, Plaintiff’s treating physician made
conclusory statements that did not address the Plan criteria, and were inconsistent with
25
Plaintiff’s own medical records and objective medical evidence. As a result, the Court
finds that DuPerry is distinguished and has no application to the facts of this case.
The Court’s review of the administrative record establishes that the Plan’s decision
to deny Plaintiff’s claims resulted from a process that was deliberate and principled. There
was substantial evidence in the administrative record indicating that Plaintiff failed to meet
the required Medical Necessity Plan criteria. Therefore, the surgical procedure and
durable medical equipment requested by Plaintiff was not in accordance with generally
accepted standards of medical practice, and was not clinically appropriate, in terms of
type, frequency, extent, site and duration, and was not considered effective for the
patient’s illness, injury or disease, and therefore was not Medically Necessary. BCBSSC
reviewed all medical records submitted by Plaintiff and/or his providers. Multiple medical
reviews were performed on Plaintiff’s claim by board certified physicians including
independent external specialists. BCBSSC applied unambiguous Plan terms and
specifically approved, peer-reviewed criteria in reviewing Plaintiff’s claims. Plaintiff and/or
his providers were given ample opportunity to submit any evidence they desired to
support Plaintiff’s claims and his appeals. Plaintiff and/or his providers even availed
themselves to a peer to peer call and an external medical review. At all times during the
claim, Plaintiff was kept apprised of the status of the claim and written communications
with Plaintiff fully informed Plaintiff of his ERISA rights. Accordingly, the Court finds that
the Plan’s claim determination was deliberate, principled and was not an abuse of
discretion. See Donnell v. Metro. Life Ins. Co., 165 Fed. Appx. 288, 294-95 (4th Cir. 2006)
(approving of decision making process that included review of all submitted medical
evidence, measurement of claimant’s vocational abilities, an independent medical
26
evaluation, and timely notice of claim status); see Hensley v. IBM, 123 Fed. Appx. 534,
538 (4th Cir. 2004) (record demonstrated decision to terminate benefits resulted from a
deliberate, principled reasoning process where administrator issued multiple requests for
information from claimant’s physicians, conducted several reviews of her medical records
by
independent consultants, and, on appeal, gave consideration to claimant's
supplemental medical evidence); Tucci v. First Unum Life Ins. Co., 446 F. Supp. 2d 473,
484-85 (D.S.C. 2006) (review process “deliberate and principled” where insurer obtained
input from treating physicians, obtained multiple medical reviews of claimant’s records,
reviewed all medical records, offered claimant the opportunity to provide supplemental
medical evidence, advised claimant of her rights, and kept claimant apprised of the status
of her claim).
d.
Whether the Fiduciaries Interpretation Was Consistent With the Other
Provisions In The Plan and Earlier Interpretations of The Plan.
As was previously discussed, the Court holds that BCBSSC’s interpretation was
consistent with the terms of the Plan. The Court also finds that Plaintiff failed to submit
any evidence that the BCBSSC’s interpretation was inconsistent with any prior
interpretations. Accordingly, this Booth factor weighs in Defendants’ favor.
e.
Whether The Decision-making Process Was Reasoned and Principled.
As was previously discussed, the Court holds that the Plan’s claim determination
was reasoned and principled.
f.
Whether The Decision-making Process Was Consistent With The Procedural
and Substantive Requirements of ERISA.
The Court’s review of the administrative record indicates that there were no
procedural irregularities during the claim. Plaintiff was kept informed as to the status of
27
his claim. The denial letters fully and/or substantially complied with the requirements of
the ERISA claim regulations. Once the claim was initially denied, Plaintiff was given
opportunities to appeal and supply BCBSSC with supporting documentation. Accordingly,
the Court finds that the Plan fully complied with the procedural and substantive
requirements of ERISA.
g.
Any External Standard Relevant to The Exercise of Discretion.
The Court finds that no party submitted any evidence of any external standard
relevant to this case. Therefore, the Court finds that this Booth factor is not applicable to
this case.
h.
The Fiduciary’s Motives and Any Conflict of Interest It May Have.
As this Court previously discussed in its holding concerning the applicable
standard of review, the Court finds that while a potential structural conflict of interest
existed, the safeguards mentioned above mitigated against giving the potential conflict
any great weight.
i.
Evidence Outside of The Administrative Record
The parties stipulated in the Joint Stipulation that Plaintiff’s claim can be decided
on the administrative record, and no party argued that evidence outside of the
administrative record should be considered by the Court. Therefore, the Court finds that
this Booth factor does not apply to this case.
III. CONCLUSION
After careful consideration of the relevant Memoranda In Support of Judgment, the
administrative record and the Joint Stipulation, the Court determines that the Defendants
engaged in a deliberate, principled reasoning process and that their decision was
28
supported by substantial evidence that the services requested by Plaintiff were not
Medically Necessary and/or were Experimental or Investigational under the terms of the
Plan. Therefore, for the reasons set out herein, is hereby ordered that Defendants’
Motions for Judgment are granted and that Plaintiff’s Motion for Judgment is denied.
IT IS SO ORDERED.
s/ Donald C. Coggins, Jr.
United States District Judge
May 16, 2019
Spartanburg, South Carolina
29
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