Decision based on pre-existing conditions but chilling to see court "find" -neg lab results "objective medical evidence" against Lyme.
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156 F.Supp.2d 227, 26 Employee Benefits Cas. 2593
United States District Court, D. Connecticut. Maureen DUNN, Plaintiff, v. STANDARD INSURANCE COMPANY, and Balfour Beatty,
Inc. a/k/a Balfour Beatty Construction, Inc., Defendants. No. CIV.3:00CV00219(AWT). Aug. 23, 2001.
Participant who was denied long-term disability benefits brought suit challenging denial under Employee Retirement Income Security Act of 1974.
On plan administrator's motion for summary judgment, the District Court, Thompson, J., held that: (1) arbitrary and capricious standard of review applied to administrator's decision, and
(2) denial of benefits for claimed Lyme disease was not arbitrary or capricious under objective medical evidence in record. Motion granted.
Matters Affecting Right to Judgment
Materiality and Genuineness of Fact Issue. Most Cited Cases
Only those factual disputes that must be decided in order to resolve a claim or defense will prevent summary judgment from being granted. Fed.Rules Civ.Proc.Rule 56, 28 U.S.C.A.
Challenge to benefits denial under ERISA plan is to be reviewed under a de novo standard unless the benefit plan gives discretionary authority to determine eligibility for benefits or to construe the terms of the plan, in which case deferential standard of review is appropriate. Employee Retirement Income Security Act of 1974, � 502(a)
Clear use of such words as "discretion" and "deference" supports a conclusion that there has been an unambiguous reservation of discretionary authority to determine eligibility for benefits under ERISA plan and, accordingly, that the arbitrary and capricious standard of review applies. Employee Retirement Income Security Act of 1974, � 502(a)(1)(B), 29 U.S.C.A. � 1132(a)(1)(B).
Administrator did not forfeit discretionary authority under ERISA plan to determine eligibility for long-term disability benefits by reason of employer's policy of paying 26 weeks of short-term disability benefits, rather than 13 weeks of short-term benefits as provided under summary of benefits, and thus arbitrary and capricious standard of review applied to its denial of long-term benefits. Employee Retirement Income Security Act of 1974, � 502(a)(1)(B), 29 U.S.C.A. � 1132(a)(1)(B).
Under the highly deferential arbitrary and capricious standard, the court cannot reweigh the evidence so long as substantial evidence supports ERISA plan administrator's benefits determination. Employee Retirement Income Security Act of 1974, � 502(a)(1)(B), 29 U.S.C.A. � 1132(a)(1)(B).
ERISA plan administrator's denial of long-term disability benefits for Lyme disease was not arbitrary or capricious when based on objective medical evidence including negative results of three laboratory tests for Lyme disease, general similarity between plaintiff's symptoms during and after disqualifying exclusion period, and its physician's conclusion that abnormal MRI and brain SPECT (single proton emission resonance imagery technology) scan results were "nonspecific" for diagnosis of Lyme disease. Employee Retirement Income Security Act of 1974, � 502(a)(1)(B), 29 U.S.C.A. � 1132(a)(1)(B). *228 Mark S. Neistat, Neistat & Mason, Newington, CT, for plaintiff.
George J. Kelly, Jr., Siegel, O'Connor, Schiff & Zangari, New Haven, CT, *229 Eric Paltell, Piper Marbury Rudnick & Wolfe, Baltimore, MD, for defendants.
RULING ON MOTION FOR SUMMARY JUDGMENT
THOMPSON, District Judge. The plaintiff, a former employee of Balfour Beatty Insurance Company, brings this action asserting a claim against each defendant pursuant to 29 U.S.C. � 1132(a)(1)(B) for wrongful denial of employee welfare benefits and a claim against each defendant for violation of the Connecticut Unfair Trade Practices Act, Conn. Gen.Stat. � 42-110a et seq. ("CUTPA"). The defendants have moved for summary judgment on all four counts of the plaintiff's complaint. For the reasons stated below, the defendants' motion for summary judgment is being granted as to all counts.
I. FACTUAL BACKGROUND The plaintiff, Maureen Dunn ("Dunn"), resides in Old Saybrook, Connecticut. Old Saybrook borders Old Lyme, Connecticut, where Lyme disease was first reported in 1975. From August of 1997 until June 23, 1998, Dunn was employed as a full-time assistant document controller by defendant Balfour Beatty, Inc., a/k/a Balfour Beatty Construction, Inc. ("Balfour").
On June 23, 1998, Dunn ceased working, as recommended by her employer, due to disabling symptoms such as depression, fatigue, anxiety, blurry vision, dizziness, memory loss and numbness in her limbs.
As an employee of Balfour, Dunn was covered under Balfour's self-funded short-term disability plan ("STD Plan"). The 1996 summary of benefits for the STD Plan states that short-term disability benefits last for up to 13 weeks. The summary also states that the benefits listed therein are subject to being changed or canceled without notice.
When the plaintiff stopped working, she applied for coverage under the STD Plan. She received disability benefits for a period of 26 weeks, i.e., from July 7, 1998 through January 1, 1999.
The plaintiff received 26 weeks of benefits because it was Balfour's policy at the time to give 26 weeks of benefits under the STD Plan, notwithstanding the fact that the 1996 summary of benefits stated that only 13 weeks of benefits would be provided.
When Dunn's short-term disability payments ceased, she applied for benefits under Balfour's long-term disability plan ("LTD Plan"). The LTD Plan was issued by defendant Standard Insurance Company ("Standard") to Balfour, and Standard is the administrator of the LTD Plan. It became effective May 1, 1996.
The LTD Plan contains an "Exclusions and Limitations" section whereby a pre-existing condition exclusion period of 90 days applies to any individual who has not been continuously insured under the policy for twelve months. Under this exclusion, an employee may be denied long-term disability benefits if the employee is claiming disability for a mental or physical condition for which he or she, during the 90-day exclusion period, a) consulted a physician, b) received medical treatment or services, or c) took prescribed drugs or medications. The LTD
Plan states that you are not covered for a disability caused or contributed to by a preexisting condition or medical or surgical treatment of a preexisting condition unless, on the date you become disabled, you ... have been continuously insured under the group policy for the entire exclusion period ... and have been actively at work for at least one full day after the end of the exclusion period.
*230 Pavick Aff. Ex. A. at D 10013. In Dunn's case, the 90-day period prior to her being covered by the LTD Plan commenced on June 20, 1997 and ended on September 17, 1997.
A. Dunn's Relevant Medical History Upon Standard's receipt of the plaintiff's claim under the LTD Plan, it was assigned to Michelle Pavick, a disability benefits analyst. Pavick reviewed Dunn's medical records. Pavick learned that the plaintiff saw a general practitioner, Dr. J P, on two separate occasions during the preexisting condition exclusion period. During the plaintiff's first visit, on July 9, 1997, Dr. P noted Dunn's symptoms as follows: "Complaint of nervousness. Patient having major stresses in life, marital difficulties with their business and children.
Patient exhibiting signs of mild depression, sleep disorder, lack of appetite, [emotionality]. Lack of energy. Patient also complaining of symptoms of sweats, chills, myalgias, runny nose." Pavick Aff. Ex. A at 10176. Dr. P prescribed Paxil and Xanax for Dunn's "depression with anxiety." Id. He also prescribed remedies for a viral illness and for gastroesophageal reflux disease.
On July 22, 1997, for Dunn's second office visit, Dr. P recorded her symptoms as follows: "Anxiety, depression. Patient has started marital counseling which she says is helping a lot. She stopped the Paxil because of dizziness and dry mouth. Complaining of some right shoulder pain. Nonspecific, denies trauma." Pavick Aff. Ex. A at 10175. Dunn was directed to continue using the Xanax on a limited basis for her "mild anxiety with depression." Id.
On November 20, 1997, Dunn visited Dr. K K at her office in Madison, Connecticut. Dunn states that she went to see Dr. K because of a complaint about an itchy red rash that both the plaintiff and her husband had noticed on Dunn's lower back in late October. [FN1]
By the time Dunn actually saw Dr. K, the rash was no longer visible. Dr. K notes from the November 20, 1997 visit indicate that Dunn's symptoms included involuntary loss of thirty-five pounds since July of 1997, family stress, depression, muscle stiffness, cramps, sinus congestion, numbness, heartburn and weepiness.
There is no mention of the plaintiff having had a rash. However, Dr. K did note that in 1991, another doctor suspected that the plaintiff had Lyme disease but Dunn's tests at the time yielded negative results.
FN1. The plaintiff asserts that Dr. K is "one of the few experts in Lyme Disease in the whole country." Pl.'s Mem. In Opp's to Summ. J. at 15. However, there is no evidence in the record to support this contention.
After the plaintiff's November office visit, Dr. K sent a blood sample to the University of Connecticut Health Center to be tested for Lyme disease. The laboratory reported that the tests results were "negative," but on December 9, 1997, Dr. K telephoned the plaintiff and informed her that she had Lyme disease. [FN2]
Throughout 1998, Dr. K treated Dunn for Lyme disease and continued to record in her treatment notes that the *231 plaintiff's symptoms included numbness, depression, headaches, muscle aches and pains, and dizziness. In her March 6, 1998 treatment notes, Dr. K made reference to a rash on the upper part of Dunn's back. [FN3]
Additionally, during an April 21, 1998 visit, Dr. K decided to refer the plaintiff to a psychiatrist, Dr. S, for psychiatric help for depression.
FN2. In a November 29, 2000 report, Dr. K stated that the plaintiff's laboratory tests suggested that the plaintiff had been exposed to Borrelia Burgdorferi, a bacteria that is a causative agent of Lyme Disease.
However, the court granted the defendants' motion to strike this report from the record because it was not available to Standard at the time it reviewed the plaintiff's claim in 1999. See Miller v. United Welfare Fund, 72 F.3d 1066, 1071 (2d Cir.1995) ("[A] district court's review under the arbitrary and capricious standard is limited to the administrative record.").
FN3. The plaintiff states that this March 6, 1998 notation reflects the plaintiff's reminder to Dr. K about the rash she had in October of 1997. However, the plaintiff's claim is that the rash was located on the lower middle part of her back.
In May of 1998, at the direction of Dr. K, Dunn underwent a Brain SPECT (Single Photon Emission Computed Technology) scan and a Brain MRI (Magnetic Resonance Imagery) scan. According to Dr. K, the Brain SPECT results were grossly abnormal and indicated that some parts of the plaintiff's brain were not receiving uniform blood flow. Such findings can be seen in certain neurologic conditions of the brain, such as neuroborreliosis, associated with Lyme disease.
The MRI results were also abnormal but the radiologist, Dr. Stoane, described the findings as "nonspecific." Pavick Aff. Ex. A at D 10132. Dr. Stoane additionally indicated that the MRI scan "raise [d] the question of a demyelinating process." [FN4] Id.
FN4. This process causes the destruction, removal or loss of the myelin sheath of a nerve or nerves.
The plaintiff's blood was tested twice more for Lyme disease, on May 8, 1998 and December 28, 1998, by the University of Connecticut Health Center. On both occasions, the test results were negative.
B. Standard's Review of Dunn's Claim In addition to reviewing the plaintiff's relevant medical records, Pavick also reviewed Dunn's claim statement and her physician statement. On Standard's Long Term Disability Claim Employee's Statement form, Dunn indicated that her disability was due to depression, heart palpitations, fatigue, nervousness, numbness in her back and arms, headaches, memory problems, dizziness, blurry vision and pain in her left eye. Dunn also noted that her "sickness" was Lyme disease.
On Standard's Long Term Disability Claim Attending Physician's Statement form, Dr. K indicated that the plaintiff's primary diagnosis was Lyme disease and that her secondary diagnosis was Hyperlipidemia.
After collecting all relevant materials, P forwarded Dunn's entire claims file to a vocational consultant. Dr. B F, an internist from Oregon, was the vocational consultant who reviewed Dunn's file. He provides Standard approximately 12 to 15 hours of consulting services per week.
Upon reviewing the file, Dr. F concluded that Dunn's medical records were "entirely nonspecific" for a diagnosis of Lyme disease.
Attach. 4 to Def.'s Mem. in Opp'n to Summ. J. at 29. Dr. F noted that abnormal Brain SPECTs have been reported in "virtually every disease process" and that such abnormal SPECTs would not be helpful in trying to diagnose Lyme disease. Id. at 30. Dr. F concluded that the types of minor abnormalities that appeared in Dunn's MRI scan could be caused by multiple factors and are by and large in clinical practice ignored.
Additionally, Dr. F based his conclusion on the absence of evidence of (i) exposure history or a tick bite, (ii) a rash (i.e., erythema migrans) associated with Lyme disease that *232 typically lasts for weeks, [FN5] (iii) serology tests with positive results, and (iv) specific physical findings such as acute arthritis, cardiac complications, or neurological abnormalities such as cranial neuritis, lymphocytic meningitis or encephalomyelitis.
FN5. Erythema migrans is a slowly expanding red annular lesion at least five centimeters in diameter with a central clearing often associated with symptoms such as chills, fever, backache, stiff neck, malaise, headache and vomiting. Dr. F described this rash as quite large and the central clearing as like a bull's-eye.
On April 15, 1999, Dr. F submitted his conclusions to P. In his report, Dr. F noted that because the disabling symptoms Dunn complained of were similar to those Dunn had experienced while being treated for depression by Dr. P during the exclusion period, the plaintiff appeared to be suffering from depression rather than from Lyme disease.
On May 11, 1999, P wrote to Dunn and informed her that her claim had been denied. P gave the following explanation: [W]ith regard to your diagnosis of Lyme Disease, as stated in our telephone conversation of April 19, 1999, your medical records on each occasion of Lyme Disease Testing (November 24, 1997, May 8, 1998 and December 29, 1998) yielded a negative serology.
The Center for Disease Control (CDC) has established the criteria for diagnosing Lyme Disease. The University of Connecticut Hospital, where you were tested for Lyme Disease, was contacted by our physician consultant.
Our physician consultant was informed, by the Director of Serology at the University of Connecticut Hospital , that they adhere to the CDC criteria for the diagnosis of Lyme Disease and that your Lyme Disease test results were negative. Also, the other 2 tests listed in your file[,] the MRI and the Speck Test, although abnormal, did not support or offer any specific diagnosis. Our physician consultant concluded that he was unable to identify a physical illness that would prevent you from performing your occupation.
Our conclusion is that the medical evidence in your file does not currently support a diagnosis of Lyme Disease. However, even if you had Lyme Disease, your claim would still be denied, due to the preexisting condition exclusion as you were seen and treated consistently from about July of 1997 through the present for many of the same physical and psychiatric complaints for which you are claiming disability. Pavick Aff. Ex. A at D 10058.
On May 20, 1999, consistent with Standard's policy, the plaintiff made a written request for a review of her claim. Dunn stated that she had not contracted Lyme disease until October of 1997 and that she saw Dr. K in November of 1997 "because of red marks on [her] lower back and extreme numbness in [her] face, arms and legs and back." P Aff. Ex. A at D 10053-54.
In accordance with Standard's review procedures, Dunn's claims file was referred to its quality assurance unit.
This unit re-evaluates the entire claims file and either reverses or affirms a group benefit examiner's decision. On December 22, 1999, Kim Gahan, a quality assurance specialist, informed the plaintiff's counsel that the quality assurance unit agreed with the initial decision to deny Dunn's claim. Gahan stated that although Dunn's physician had diagnosed her as having Lyme disease, Standard's physician consultant had found that the laboratory tests contradicted that diagnosis.
She stated further that *233 although the actual diagnosis of Lyme disease had not been made during the exclusion period, Dunn was being treated during the exclusion period for the same set of symptoms which eventually led her physician to make a diagnosis of Lyme disease. In other words, the "set of symptoms for which she received treatment [had] been existent since July 1997." Pavick Aff. Ex. A at 10031.
II. LEGAL STANDARD FOR SUMMARY JUDGMENT A motion for summary judgment may not be granted unless the court determines that there is no genuine issue of material fact to be tried and that the facts as to which there is no such issue warrant judgment for the moving party as a matter of law. Fed.R.Civ.P. 56(c). See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Gallo v. Prudential Residential Servs., 22 F.3d 1219, 1223 (2d Cir.1994).
Rule 56(c) "mandates the entry of summary judgment ... against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." See Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548.
When ruling on a motion for summary judgment, the court must respect the province of the jury. The court, therefore, may not try issues of fact.
See, e.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Donahue v. Windsor Locks Board of Fire Comm'rs, 834 F.2d 54, 58 (2d Cir.1987); Heyman v. Commerce & Indus. Ins. Co., 524 F.2d 1317, 1319-20 (2d Cir.1975). It is well-established that "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of the judge." Anderson, 477 U.S. at 255, 106 S.Ct. 2505.
Thus, the trial court's task is "carefully limited to discerning whether there are any genuine issues of material fact to be tried, not to deciding them. Its duty, in short, is confined ... to issue-finding; it does not extend to issue-resolution." Gallo, 22 F.3d at 1224.
[1] Summary judgment is inappropriate only if the issue to be resolved is both genuine and related to a material fact. Therefore, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. An issue is "genuine ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505 (internal quotation marks omitted).
A material fact is one that would "affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. As the Court observed in Anderson: "[T]he materiality determination rests on the substantive law, [and] it is the substantive law's identification of which facts are critical and which facts are irrelevant that governs." Id. at 248, 106 S.Ct. 2505.
Thus, only those facts that must be decided in order to resolve a claim or defense will prevent summary judgment from being granted.
When confronted with an asserted factual dispute, the court must examine the elements of the claims and defenses at issue on the motion to determine whether a resolution of that dispute could affect the disposition of any of those claims or defenses. Immaterial or minor facts will not prevent summary judgment. See Howard v. Gleason Corp., 901 F.2d 1154, 1159 (2d Cir.1990).
When reviewing the evidence on a motion for summary judgment, the court must "assess the record in the light most favorable to the non-movant and ... draw *234 all reasonable inferences in its favor." Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir.2000) (quoting Del. & Hudson Ry. Co. v. Consol. Rail Corp., 902 F.2d 174, 177 (2d Cir.1990)).
Because credibility is not an issue on summary judgment, the nonmovant's evidence must be accepted as true for purposes of the motion. Nonetheless, the inferences drawn in favor of the nonmovant must be supported by the evidence. "[M]ere speculation and conjecture" is insufficient to defeat a motion for summary judgment. Stern v. Trs. of Columbia Univ., 131 F.3d 305, 315 (2d Cir.1997) (quoting W. World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir.1990)). Moreover, the "mere existence of a scintilla of evidence in support of the [nonmovant's] position" will be insufficient; there must be evidence on which a jury could "reasonably find" for the nonmovant. Anderson, 477 U.S. at 252, 106 S.Ct. 2505.
Finally, the nonmoving party cannot simply rest on the allegations in its pleadings since the essence of summary judgment is to go beyond the pleadings to determine if a genuine issue of material fact exists. See Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548. "Although the moving party bears the initial burden of establishing that there are no genuine issues of material fact," Weinstock, 224 F.3d at 41, if the movant demonstrates an absence of such issues, a limited burden of production shifts to the nonmovant, which must "demonstrate more than some metaphysical doubt as to the material facts, ... [and] must come forward with specific facts showing that there is a genuine issue for trial." Aslanidis v. United States Lines, Inc., 7 F.3d 1067, 1072 (2d Cir.1993) (quotation marks, citations and emphasis omitted).
Furthermore, "unsupported allegations do not create a material issue of fact." Weinstock, 224 F.3d at 41. If the nonmovant fails to meet this burden, summary judgment should be granted. The question then becomes: is there sufficient evidence to reasonably expect that a jury could return a verdict in favor of the nonmoving party? See Anderson, 477 U.S. at 248, 251, 106 S.Ct. 2505.
III. DISCUSSION A. Counts I and II In Count I, brought pursuant to 29 U.S.C. � 1132(a)(1)(B), the plaintiff asserts that Standard's decision to deny the plaintiff's claim for long-term disability benefits is "erroneous, and wrong and incorrect, and a breach of the insurance policy for disability benefits ...." Compl. � 11. In Count II, also brought pursuant to 29 U.S.C. � 1132(a)(1)(B), the plaintiff claims that Balfour's decision to stop disability payments "was erroneous and wrong and incorrect and a breach of contract." Id. at � 9.
The plaintiff argues in opposition to the motion for summary judgment that Standard's decision to deny her claim for long-term disability benefits is subject to de novo review, and that even if the court does not apply the de novo standard of review, the denial of Dunn's claim was arbitrary and capricious. The court finds neither argument persuasive.
1. Standard of Review The LTD Plan qualifies as an employee welfare benefit plan under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. � 1002. Dunn seeks redress pursuant to the ERISA section which provides as follows:
A civil action may be brought by a participant or beneficiary ... to recover benefits due to him [or her] under the terms of his [or her] plan, to enforce his [or her] rights under the terms of the plan, or to clarify his [or her] rights to *235 future benefits under the terms of the plan. 29 U.S.C. � 1132(a)(1)(B) (West 2001).
[2] The Supreme Court has held that "a denial of benefits challenged under � 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). If the plan gives such discretionary authority, the trust principles inherent in ERISA "make a deferential standard of review appropriate ...." Id. at 111, 109 S.Ct. 948 (citing Restatement (Second) of Trusts � 187 (1959)). This deferential standard of review, referred to as the "arbitrary and capricious" standard, enables a court to "overturn a decision to deny benefits only if it was without reason, unsupported by substantial evidence or erroneous as a matter of law." Pagan v. NYNEX Pension Plan, 52 F.3d 438, 442 (2d Cir.1995) (internal quotation marks and citations omitted).
[3] The section of the LTD Plan on "Allocation of Authority" unambiguously grants Standard "full and exclusive authority" to administer and interpret the Plan. That section provides that: Except for those functions which the Group Policy specifically reserves to the Policy-owner, we have full and exclusive authority to control and manage the Group Policy, to administer claims, and to interpret the Group Policy and resolve all questions arising in the administration, interpretation, and application to of the Group Policy[.]
Our authority includes, but is not limited to: 1. The right to resolve all matters when a review has been requested;
2. The right to establish and enforce rules and procedures for the administration of the Group Policy and any claim under it;
3. The right to determine: a. Eligibility for insurance; b. Entitlement to benefits; c. Amount of benefits payable; d. Sufficiency and the amount of information we may reasonably require to determine a., b., or c., above.
Pavick Aff. Ex. A at D 10015-16. Although "magic words such as 'discretion' and 'deference' may not be 'absolutely necessary' to avoid a stricter de novo standard of review," clear use of such words supports a conclusion that there has been an unambiguous reservation of discretionary authority to determine eligibility for benefits and, accordingly, that the arbitrary and capricious standard of review applies. Jordan v. Ret. Comm. Of Rensselaer Polytechnic Inst., 46 F.3d 1264, 1271 (2d Cir.1995).
[4] The plaintiff claims that despite the unambiguous language of the LTD Plan, Standard's conduct shows that it has not retained discretionary authority to determine eligibility for benefits under the LTD Plan. Dunn premises this argument on the fact that Balfour's 1996 summary of benefits states that employees are entitled to 13 weeks of short-term disability benefits, but Balfour paid Dunn 26 weeks of benefits. Thus, Dunn argues, Balfour took on the function of determining eligibility for long-term disability benefits, and also took on the function of paying long-term disability benefits at the end of the 13 weeks.
However, this argument is based on mere speculation. The defendants have established *236 that Balfour's policy at the relevant point in time was to provide 26 weeks of benefits under the STD Plan and that Balfour did not play a role in the determination of eligibility or administration of long-term disability benefits. Viewing all the evidence in the light most favorable to the plaintiff, she has failed to create a genuine issue of fact as to this contention. See Weinstock, 224 F.3d at 41 ("[U]nsupported allegations do not create a material issue of fact.").
Thus, the court concludes that Standard has full discretionary authority under the LTD Plan, and consequently, the highly deferential arbitrary and capricious standard of review applies.
2. Standard's Actions Were Not Arbitrary or Capricious In order to successfully oppose summary judgment in a case where the arbitrary and capricious standard of review applies, the plaintiff must show that there is a genuine issue of fact material to the question of whether Standard's decision to deny Dunn benefits was "without reason, unsupported by substantial evidence or erroneous as a matter of law." Pagan v. NYNEX Pension Plan, 52 F.3d 438, 442 (2d Cir.1995) (internal quotation marks and citations omitted).
In resolving that question, the finder of fact "must consider 'whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment ....' " Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974) (quoting Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814 (1971)).
Additionally, "if a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a 'facto[r] in determining whether there has been an abuse of discretion.' " Firestone, 489 U.S. at 115, 109 S.Ct. 948 (quoting Restatement (Second) of Trusts � 187 cmt. d (1959)).
[5] The plaintiff has failed to establish that a genuine issue of material fact exists as to whether Standard's decision to deny benefits was supported by substantial evidence. Substantial evidence "is such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the decision maker [and] ... requires more than a scintilla but less than a preponderance." Sandoval v. Aetna Life & Cas. Ins. Co., 967 F.2d 377, 382 (10th Cir.1992) (internal quotation marks and citations omitted).
Under the highly deferential arbitrary and capricious standard, the court "cannot reweigh the evidence so long as substantial evidence supports the plan administrator's determination." Polizzano v. Nynex Sickness & Accident Disability Benefit Plan, No. 99-7160, 1999 WL 710256 at *2 (2d Cir., Sept. 2, 1999).
[6] Standard's determination that Dunn's disability was caused or contributed to by a pre-existing condition was based on a consideration of relevant factors. Those factors were as follows:
1. The negative results of the three laboratory tests for Lyme disease.
2. The fact that, although Dr. F reading of the tests apparently was contradicted by Dr. K, Dr. F had consulted with the director of the laboratory where the tests were conducted and obtained an explanation as to why the laboratory concluded the tests were negative for Lyme disease.
3. The absence of any notation at all by Dr. K in her treatment notes concerning a complaint of a rash in November 1997, when the plaintiff claims her complaint was a red rash *237 on her back, and the fact that there was never any record of the type of unusual rash that is typical of Lyme disease.
4. Dr. F's conclusion that the MRI and SPECT scan results were "nonspecific" for a diagnosis of Lyme disease; and
5. The fact that a review of the treatment notes of Dunn's visits with Dr. P and with Dr. K showed that there was a general similarity of the plaintiff's symptoms (including depression and related symptoms) during and after the exclusion period.
Thus, the individuals involved in the decision-making process at Standard had before them evidence that a reasonable mind might accept as adequate when they concluded that Dunn did not have Lyme disease and that she had been treated for the same impairing condition during and after the exclusion period.
The plaintiff attempts to create a genuine issue of material of fact, as to whether Standard's denial of benefits was supported by substantial evidence, by arguing that Dr. F was not sufficiently independent. She contends that when approximately 30 percent of a doctor's practice consists of work from one client, that doctor cannot be independent. However, the issue is not material in the context of this case. Even if the court assumes, arguendo, that Dr. Fancher (as opposed to Standard) was not independent and thus was operating under a conflict of interest, and weighs that conflict as a factor, there is nonetheless undisputed objective medical evidence to support Dr. F's conclusions, namely the three sets of laboratory test results, which were negative for Lyme disease.
Moreover, in view of the totality of the relevant factors, adding as a factor a conflict of interest on the part of Dr. F would not change the court's conclusion that there was no abuse of discretion by Standard here.
Based on the foregoing discussion, the court also concludes that the plaintiff has failed to create a genuine issue of material fact as to whether Standard's decision to deny benefits was without reason. The court notes that "[e]ven if the plaintiff's interpretation of the facts is as reasonable as the interpretation adopted by the plan administrator, the arbitrary and capricious standard requires the court to defer to the interpretation of the plan administrator."
Mormile v. Metro. Life Ins. Co., 91 F.Supp.2d 492, 495 (D.Conn.2000). The plaintiff does not argue that Standard's decision to deny benefits was erroneous as a matter of law.
Accordingly, the court concludes that Standard is entitled to summary judgment on Count I. In addition, Balfour is entitled to summary judgment on Count II because Dunn has failed to offer any evidence that it had any duty to pay her benefits under the LTD Plan.
B. Counts III and IV In Counts III and IV, the plaintiff claims that the actions of Standard and Balfour, respectively, constitute unfair and deceptive acts in the conduct of trade or commerce in violation of CUTPA. CUTPA provides in relevant part that "[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." Conn. Gen.Stat. � 42-110b(a) (2001).
In determining whether an act or practice is unfair, "CUTPA directs the courts of Connecticut to be guided by the interpretations given to the Federal Trade Commission Act by the F.T.C. [Federal Trade Commission] and the Federal courts." Bailey Employment Sys., Inc. v. Hahn, 545 F.Supp. 62, 68 (D.Conn.1982). Accordingly, the Federal Trade Commission's "*238 cigarette rule" requires a consideration of the following three factors:
(1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise--whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive or unscrupulous; (3) whether it causes substantial injury to consumers [ (competitors or other businessmen) ].
Rudel Mach. Co., Inc. v. Giddings & Lewis, Inc., 68 F.Supp.2d 118, 129 (D.Conn.1999) (quoting Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 591, 657 A.2d 212 (1995)). "All three criteria need not be satisfied to support a finding of unfairness." Omega Eng'g, Inc. v. Eastman Kodak Co., 908 F.Supp. 1084, 1099 (D.Conn.1995).
As the court finds that Standard's denial of benefits was neither arbitrary nor capricious and that it was not without reason, the plaintiff cannot succeed in asserting that Standard's conduct offended public policy, or that it was immoral and caused substantial injury. Thus, Standard is entitled to summary judgment on Count
III. Additionally, as the plaintiff has failed to offer any evidence that Balfour played a role in the denial of her LTD claim, Balfour is also entitled to summary judgment on Count IV.
IV. CONCLUSION For the reasons stated above, the Defendant's Motion for Summary Judgment [Doc. # 19] is hereby GRANTED.
The Clerk shall close this case. It is so ordered. D.Conn.,2001. Dunn v. Standard Ins. Co. 156 F.Supp.2d 227, 26 Employee Benefits Cas. 2593 END OF DOCUMENT
(C) 2005 Thomson/West. No Claim to Orig. U.S. Govt. Works.
[ 02. June 2007, 12:31 AM: Message edited by: Neil M Martin ]
-------------------- Neil Posts: 697 | From Tucson, AZ USA | Registered: Apr 2002
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quote:Our physician consultant was informed, by the Director of Serology at the University of Connecticut Hospital , that they adhere to the CDC criteria for the diagnosis of Lyme Disease and that your Lyme Disease test results were negative.
Criteria for diagnosis?
I thought the CDC had a criteria for surveillance.
One little word... one huge difference in meaning.
A whole court case could have been ruled different if this wording had been correct. You think?
-------------------- When I lost my grip on Faith in the maze of illness, Hope gently clasped my hand and led on.
RuthRuth Posts: 478 | From California | Registered: Jan 2007
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bettyg
Unregistered
posted
this poor lyme woman was screwed royally by the system and the wording noted above! i'm speechless; that's a rarity!
IP: Logged |
posted
The ERISA playing field is not always level.
If someone asks I can post a few Medicare Social Security Lyme cases. I think I have two. One was favorable.
A CDC.gov search of "Lyme disease diagnosis" got this:
"Lyme disease is diagnosed based on symptoms, objective physical findings (such as erythema migrans, facial palsy, or arthritis), and a history of possible exposure to infected ticks. Validated laboratory tests can be very helpful but are not generally recommended when a patient has erythema migrans. "
Except for the "very" in front of 'helpful' this is pretty good for Govt work. But it continues:
"When making a diagnosis of Lyme disease, health care providers should consider other diseases that may cause similar illness. Not all patients with Lyme disease will develop the characteristic bulls-eye rash, and many may not recall a tick bite. Laboratory testing is not recommended for persons who do not have symptoms of Lyme disease."
Laboratory Testing "Several forms of laboratory testing for Lyme disease are available, some of which have not been adequately validated."
validated?
"Most recommended tests are blood tests that measure antibodies made in response to the infection."
Recommended by whom? For what purpose?
"These tests may be falsely negative in patients with early disease, but they are quite reliable for diagnosing later stages of disease ."
Quite reliable?!
"CDC recommends a two-step process when testing blood for evidence of Lyme disease. Both steps can be done using the same blood sample.
"1) The first step uses an ELISA or IFA test. These tests are designed to be very ``sensitive,'' meaning that almost everyone with Lyme disease, and some people who don't have Lyme disease, will test positive. If the ELISA or IFA is negative, it is highly unlikely that the person has Lyme disease, and no further testing is recommended."
I mean the CDC contradicts itself. In one sentence they'll say that the CDC criteria is for surveillance only and that a diagnosis of Lyme is a clinical one.
And in another sentence they recommend their lab criteria as support for a Lyme diagnosis.
-------------------- The best index to a person's character is how he treats people who can't do him any good, and how he treats people who can't fight back. -Abigail van Buren (Pauline Esther Friedman) (1918-2002) Posts: 409 | From Florida | Registered: Dec 2005
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(The Court's decision is referenced in a "Table of Decisions Without Reported Opinions" appearing in the Federal Reporter. Use FI CTA9 Rule 36-3 for rules regarding the citation of unpublished opinions.)
United States Court of Appeals, Ninth Circuit. Judith BRUGGEMAN, Plaintiff-Appellant, v. Shirley S. CHATER, Commissioner, Social Security Administration, Defendant- Appellee. No. 95-35742. Submitted Jan. 9, 1997. [FN*]
FN* The panel unanimously finds this case suitable for submission on the record and briefs and without oral argument. Fed.R.App.P. 34(a) and Ninth Circuit R. 34-4.
Decided Jan. 21, 1997. Order Clarifying Memorandum Feb. 14, 1997.
Appeal from the United States District Court for the District of Oregon, D.C. No. CV-94-6189-MRH; Michael R. Hogan, Chief District Judge, Presiding. D.Or. REVERSED.
Before: ALDISERT, [FN**] PREGERSON, and THOMAS, Circuit Judges.
FN** Ruggero J. Aldisert, Senior United States Circuit Judge for the Third Circuit, sitting by designation.
MEMORANDUM [FN***]
FN*** This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3.
**1 Judith Bruggeman appeals from the district court's order affirming the Commissioner of the Social Security Administration's denial of her application for disability insurance benefits. She argues that the Commissioner erred in disregarding the opinion of her treating physician and in rejecting her hearing testimony. We agree with Bruggeman on both points. Because the Commissioner would have been compelled to find her disabled if not for these errors, we reverse and remand for payment of benefits.
The district court had jurisdiction under 42 U.S.C. � 405(g). This court has jurisdiction under 28 U.S.C. � 1291. The appeal was timely filed under Rule 4(a) of the Federal Rules of Appellate Procedure.
Bruggeman filed her first application for Social Security disability insurance benefits on May 9, 1988 alleging she became disabled on November 15, 1987 due to Lyme disease. The Commissioner denied her application. Bruggeman requested reconsideration, and on September 6, 1988, her claim was again denied. On September 19, 1988, Bruggeman requested a hearing, but she withdrew her request on October 6, 1988. Bruggeman acted pro se throughout the proceedings on her first application.
In 1992, Bruggeman filed a second application for disability benefits, again alleging she has been disabled since November 15, 1987. The Commissioner considered only the period between September 6, 1988, the date the first decision was final, and December 31, 1988, the date Bruggeman's insured status for disability benefits expired. The Commissioner, finding Bruggeman was not disabled during this period, denied Bruggeman's second application on initial review and again on reconsideration. Bruggeman requested a hearing on her second application. At the hearing, she introduced a 1992 letter from her physician, Dr. R, stating: "in my medical opinion, Judith has been totally disabled since December 28, 1987." ER 90. Dr. R was Bruggeman's treating physician from the onset of her symptoms in late 1987. Bruggeman testified at the hearing that she experienced temporary relief with medication but "each time would hit rock bottom again."
The ALJ disregarded Bruggeman's testimony and the opinion of Dr. R and found that Bruggeman was not disabled. The ALJ relied principally on a letter from a Dr. Enkema, a physician who saw Bruggeman only twice. Dr. Enkema wrote Dr. R on September 9, 1988: It was nice talking with you today ... I am delighted to hear that [Bruggeman's] symptoms have virtually abated on single antibiotic therapy ... I am encouraged that she is undergoing further evaluations of her immune function, and I am also encouraged to know that her weight loss has stabilized.
The ALJ found that Bruggeman's testimony and Dr. R's opinion were inconsistent with Dr. Enkema's statement that Bruggeman's symptoms had "virtually abated."
The ALJ also relied on the Commissioner's denial of Bruggeman's initial application. The ALJ noted that Bruggeman's first application was denied on the grounds that she was not disabled. The ALJ presumed from this decision that Bruggeman remained able to work during the period after her first application was denied.
Further, he concluded that Bruggeman had not proven she was disabled because she had not shown that her condition worsened after the Commissioner denied her initial application.
**2 The ALJ also found that Bruggeman's testimony was inconsistent with her withdrawal of the request for a hearing on her first application. The ALJ reasoned that, if Bruggeman's symptoms had worsened after her first application was denied, she would not have withdrawn her request for a hearing.
The district court affirmed the Commissioner's denial of Bruggeman's application for benefits. This court reviews de novo the district court's order upholding a denial of benefits. Smolen v. Chater, 80 F.3d 1273, 1279 (9th Cir.1996). We must affirm a denial of benefits if the findings are supported by substantial evidence and the Commissioner applied the correct legal standards. Id. Substantial evidence is more than a mere scintilla, but less than a preponderance. Gonzalez v. Sullivan, 914 F.2d 1197 (9th Cir.1990).
I. Bruggeman argues the ALJ erred in disregarding her testimony and the opinion of Dr. R. As discussed above, the ALJ's decision to disregard this evidence was based on the following: (1) Dr. Enkema's letter to Dr. R, Bruggeman's treating physician, stating that Bruggeman's symptoms had "virtually abated," (2) the Commissioner's denial of Bruggeman's first application, (3) the lack of evidence showing that Bruggeman's symptoms worsened after her first application was denied and (4) Bruggeman's withdrawal of her request for a hearing on her first application. We address each of reasons in order.
First, we find that Dr. Enkema's letter was not a sufficient basis for disregarding Bruggeman's testimony and the letter from Dr. R. Dr. Enkema's letter stated only that Bruggeman's symptoms had "virtually abated," without any indication of how long they abated or whether the abatement was permanent.
Dr. Enkema went on to say he was "encouraged [Bruggeman] is undergoing further evaluations." This comment suggests that Dr. Enkema did not think Bruggeman had completely recovered. Thus, Dr. Enkema's letter was consistent with B's testimony and Dr. R's statement that her symptoms "improved temporarily with medication."
A temporary lapse in symptoms does not preclude a finding of disability. See Kornock v. Harris, 648 F.2d 525, 527 (9th Cir.1980).
We now turn to the denial of Bruggeman's first application. If the Commissioner denies a prior claim on the grounds that a claimant is not disabled, such denial normally gives rise to a presumption that the claimant continues to be able to work after the date of the finding. Lester v. Chater, 81 F.3d 821, 827 (9th Cir.1995). This presumption does not apply, however, when the claimant was unrepresented by counsel at the time of the prior claim. Id. at 827-28. Bruggeman was unrepresented by counsel during the proceedings on her first application. Accordingly, the ALJ erred in attaching any significance to the denial of Bruggeman's previous application.
We now consider whether the ALJ properly discounted Dr. R's opinion because Dr. R's contemporaneous record of treatment did not show an increase in symptoms from September 7, 1988 to December 21, 1988. Initially we note that Dr. R doubled Bruggeman's prescription for antibiotics during this period. This fact suggests that Bruggeman's condition did in fact worsen. More importantly, we find the ALJ required Bruggeman to show an increase in symptoms during the relevant period because the ALJ was relying on the denial of Bruggeman's first application. We have already concluded that such reliance was improper. It was therefore not necessary for Bruggeman to show an increase in symptoms during the relevant period.
**3 Having disregarded the first three reasons for the ALJ's decision, we turn to the ALJ's focus on Bruggeman's withdrawal of her request for a hearing on her first application. Bruggeman could not explain her decision to withdraw--she testified that she could not remember even writing the withdrawal letter. In the absence of any other explanation, we might reasonably infer that Bruggeman withdrew her request because her symptoms had subsided. However, we find this inference an insufficient basis for disregarding Bruggeman's testimony and Dr. R's opinion.
Accordingly, we find that the ALJ erred in disregarding this evidence.
II. Where the Commissioner fails to provide adequate reasons for rejecting the opinion of a treating or examining physician, we credit that opinion as a matter of law. Lester, 81 F.3d at 834. Similarly, where the ALJ improperly rejects the claimant's testimony regarding her limitations, and the claimant would be disabled if her testimony were credited, we credit that testimony as a matter of law. Id. Dr. R's opinion and Bruggeman's testimony, when given the effect required by law, establish that Bruggeman has been disabled since December 28, 1987. Accordingly, we remand for the payment of benefits as of that date. REVERSED and REMANDED for payment of benefits.
ORDER Feb. 14, 1997 Appellant's Motion for Clarification and/or Reconsideration is GRANTED.
We make the following clarification to our Memorandum dated January 21, 1997. In that Memorandum we remanded for payment of benefits as of December 28, 1987. In so doing, we implicitly required payment of benefits pursuant to Appellant's application dated May 9, 1988. This clarification does not in any way alter the reasoning or conclusions stated in our Memorandum dated January 21, 1997, which remains in full force and effect. C.A.9 (Or.),1997.
United States District Court, D. Kansas. 1998 WL 596718 (D.Kan.), 57 Soc.Sec.Rep.Serv. 980
United States District Court, D. Kansas. William C. FERGUSON, (SSN: 495-44-3315), Plaintiff, v. Kenneth S. APFEL, Commissioner of Social Security, Defendant. No. Civ.A. 98-2020-KHV. July 30, 1998. Martin M. Meyers, The Meyers Law Firm, Kansas City, MO, for William C Ferguson, plaintiff. Janice M. Karlin, Office of United States Attorney, Kansas City, KS, for Social Security, Commissioner of, Kenneth S. Apfel, defendant.
MEMORANDUM AND ORDER
VRATIL, J. *1 This matter comes before the Court on defendant's Motion To Reverse And Remand And For Entry Of Final Judgment (Doc. # 10) filed June 24, 1998, plaintiff's Motion For Judgment (Doc. # 8) filed May 5, 1998, and plaintiff's Motion For Judgment (Doc. # 12) filed July 14, 1998. Plaintiff brings this action pursuant to 42 U.S.C. � 405(g), seeking judicial review of the Commissioner's decision to deny him social security benefits under Title II of the Social Security Act ("SSA"). Defendant seeks a reversal and remand for the administrative law judge ("ALJ") to further evaluate plaintiff's claim. Plaintiff seeks a reversal and immediate award of benefits or in the alternative, a remand for further consideration. For the reasons set forth below, defendant's motion is granted and plaintiff's motions are necessarily overruled.
PROCEDURAL BACKGROUND In February of 1996, plaintiff filed an application for disability benefits, claiming a disability since August 1995. The Commissioner denied plaintiff's application initially and on reconsideration. (Tr. at 47-51, 65-68). Plaintiff sought a hearing, which occurred on August 27, 1996. (Tr. at 216). On September 9, 1996, the ALJ determined that plaintiff was not entitled to a period of disability or disability benefits. (Tr. at 25). The ALJ's decision contained the following findings:
1. Claimant met the disability insured status requirements of the [SSA] on August 9, 1995, the date claimant stated he became unable to work, and continues to meet them through the date of this decision.
2. Claimant has not engaged in substantial gainful activity since August 9, 1995.
3. The medical evidence establishes that claimant has the following impairments: Lyme's disease, without complications; hypertension, without evidence of end organ failure; and a mild affective disorder. Nonetheless, claimant does not have impairments, considered singularly or in combination, which meet or equal any criteria contained in the Listing of Impairments, Appendix 1, Subpart P, Regulations [sic] No. 4.
4. Claimant's testimony as to the severity of his impairments and alleged need to lie down during the day is found to be unsupported by the medical evidence and the testimony of the medical expert at the hearing.
5. Claimant's impairments, symptoms and resulting residual functional capacity do not prevent him from performing his past relevant work as an offset press operator, and claimant has not met his burden of proving, by substantial evidence, that he is incapable of performing this work.
6. Claimant has not been under a "disability," as defined in the Social Security Act, as amended, at any time since August 9, 1995.
(Tr. at 24-25). Plaintiff sought review from the Appeals Council, and submitted a report from Dr. Dennis Cowan. (Tr. at 186-98). Dr. Cowan performed intensive neuropsychological testing on plaintiff after the ALJ's hearing. (Tr. at 186).
The Appeals Council chose to consider this new evidence. (Tr. at 4). Even after examining the new evidence, the Appeals Council denied plaintiff's request for review on December 2, 1997. (Tr. at 9-11).
STANDARD OF REVIEW *2 The Commissioner's decision is binding if supported by substantial evidence. See 42 U.S.C. � 405(g); Dixon v. Heckler, 811 F.2d 506, 508 (10th Cir.1987). The Court must determine whether the record contains substantial evidence to support the decision and whether the Commissioner applied the proper legal standards. Castellano v. Secretary of Health & Human Servs., 26 F.3d 1027, 1028 (10th Cir.1994).
While "more than a mere scintilla," substantial evidence is only "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971). A claimant can submit new and material evidence to the Appeals Council when the Council reviews the ALJ's decision. 20 C.F.R. � 404 .970(b). If the evidence relates to the period on or before the date of the decision, the Appeals Council "shall evaluate the entire record including the new and material evidence submitted ... [and] then review the case if it finds that the administrative law judge's action, findings, or conclusion is contrary to the weight of the evidence currently of record." Id.
The ALJ's decision becomes the Commissioner's final decision when the Appeals Council denies review. See 20 C.F.R. � 404.981. This "final decision" includes the Appeals Council's conclusion that the ALJ's findings remained correct despite the new evidence. O'Dell v. Shalala, 44 F.3d 855, 859 (10th Cir.1994). The Commissioner's final decision is reviewed for substantial evidence based on "the record viewed as a whole," including evidence only presented to the Appeals Council. Id.; Castellano, 26 F.3d at 1028.
FACTS Plaintiff was 55 years old at the time of the ALJ hearing. (Tr. at 220). He is a high school graduate. (Tr. at 242). Plaintiff worked as an electrician's assistant for two years, but mostly worked as a printing pressman. (Tr. at 72, 184). The only noticeable gap in plaintiff's work history is one year off between January of 1986 and January of 1987. (Tr. at 72). [FN1] Plaintiff's last job was as a pressman from June of 1991 through August of 1995. (Tr. at 72).
FN1. The seeming gap may not be a gap after all, because paperwork filed later by plaintiff does not show the same gap. (Tr. at 184).
Plaintiff alleges that in 1995, he began experiencing a host of problems. Plaintiff first sought treatment from Dr. Yolanda Huet-Vaughn on January 10, 1995. (Tr. at 123). Plaintiff complained of leg and back pain, difficulty raising his legs to cross them, and tenderness in his joints. Id. Plaintiff began falling down on the job and became worried about his ability to work. (Tr. at 235-36). On August 9, 1995, plaintiff experienced chest pains while driving home from work. (Tr. at 113, 236). Plaintiff went to the Trinity Lutheran Hospital emergency room for examination. (Tr. at 113). Hospital personnel took X-rays and examined plaintiff's EKG, but found no problems. Id. Further cardiac testing also revealed no problems. (Tr. at 126).
After this incident, plaintiff became more worried about his medical condition and left his job to seek more treatment. (Tr. at 236-37). On August 10, 1995, plaintiff returned to Dr. Huet-Vaughn. (Tr. at 123). Plaintiff reported that he was suffering from insomnia and "general poor feeling." Id. During plaintiff's later visits, he also complained of joint aches, concentration problems, and night sweats. (Tr. at 138-139, 140).
*3 Dr. Huet-Vaughn ordered various tests on plaintiff, including a treadmill stress test and a sleep study. (Tr. at 126). Plaintiff had to end the treadmill test after seven minutes due to fatigue and shortness of breath. (Tr. at 135). The treadmill test revealed that plaintiff had a mildly hypertensive response to exercise, but good aerobic capacity and no exercise induced arrhythmias. Id. Plaintiff had trouble falling asleep during the sleep study. (Tr. at 134). However, the testing did not indicate any remarkable sleep problems. Id.
Dr. H-V referred plaintiff to Dr. RJ, a psychiatrist. (Tr. at 124). Dr. J met with plaintiff on September 28, 1995. (Tr. at 124). Plaintiff complained of insomnia, memory loss, joint pain, and fatigue. Id. Plaintiff also reported that in 1994 he had found red blotches on his legs after working outside. Id. Dr. J diagnosed "Lyme disease with neurologic complications" as the likely cause of plaintiff's symptoms. (Tr. at 125).
Laboratory testing later confirmed that plaintiff had Lyme's disease. Id. Dr. J referred plaintiff to Dr. JB, a disease specialist, for further treatment. (Tr. at 123, 125).
On October 27, 1995, Dr. B noted that plaintiff complained of shortness of breath, weakness, fatigue, exhaustion, marked sleep disturbance, muscle and joint aches, memory loss, and balance problems. (Tr. at 176).
On March 23, 1996, Dr. J C performed a consultative examination on plaintiff at the request of the Social Security Commissioner. (Tr. at 162). Plaintiff complained of fatigue, shortness of breath, body aches, poor motivation, and poor sleep. (Tr. at 164). Dr. C diagnosed plaintiff with chronic fatigue syndrome. Id.
Dr. B saw plaintiff again on May 2, 1996. Plaintiff reported that his condition was unchanged. (Tr. at 174). Plaintiff also saw Dr. H-V on July 24, 1996. (Tr. at 177). Plaintiff complained of the same problems. Id. Dr. H-V ordered a comprehensive health survey and diagnosed plaintiff with "[c]hronic Lyme's disease with multiple problems secondary to this, i.e. chronic fatigue, joint and muscle pain, problems with insomnia." Id.
Dr. Lynn DeMarco testified as a medical expert at plaintiff's hearing before the ALJ. (Tr. at 253). Dr. DeMarco based his testimony on plaintiff's records; he did not perform his own examination.
Id. Dr. DeMarco testified that while plaintiff tested positive for Lyme's disease, he did not suffer from any complications. (Tr. at 254). Dr. DeMarco based this opinion on the lack of evidence of any neurologic problems. (Tr. at 255). Dr. DeMarco also found no medical evidence that plaintiff suffered joint problems or cardiac problems related to the disease. Id. Dr. DeMarco found that plaintiff's allegation of fatigue was inconsistent with both Lyme's disease and plaintiff's medical record, especially the treadmill test. (Tr. at 260).
*4 After the ALJ hearing, Dr. B referred plaintiff to Dr. D C for a complete neuropsychological evaluation. (Tr. at 186). On October 27, 1996, Dr. C performed numerous tests on plaintiff. (Tr. at 187). Based on this testing, Dr. C found plaintiff's "present neurocognitive/neuropsychological level of functioning would be classified within the 'brain damage' range of abilities at approximately the mild degree of impairment." (Tr. at 189). Dr. C concluded that plaintiff: is indeed experiencing very marked neurocognitive areas of dysfunction which would include that of memory functioning, speed of mentation, attention/concentrational ability, higher level abstract reasoning abilities, problem solving, judgement, decision making, complex sensory-perceptual functioning and diminished motor speed and motor sequencing abilities. (Tr. at 194).
Plaintiff's daily activities include watching television, reading the paper, and watching his infant granddaughter for 45 minutes. (Tr. at 224). Plaintiff can only walk 30 to 50 feet before he becomes fatigued. (Tr. at 228). Plaintiff occasionally prepares himself simple meals and then washes the dishes. (Tr. at 231).
Plaintiff plays the piano when he feels able, (Tr. at 233), helps with the laundry, (Tr. at 80), and shops for groceries twice a month. (Tr. at 81). Plaintiff goes shopping for other things six times a month. Id. Plaintiff visits with his neighbors and attends a Lyme's disease support group. (Tr. at 82). Plaintiff mows the lawn but becomes fatigued and must spread the work over three days. (Tr. at 232), Plaintiff also tries to rake leaves, but this also takes three days because of fatigue. (Tr. at 233). In September of 1995, plaintiff told Dr. J that he mowed three lawns. (Tr. at 117).
After leaving his job, plaintiff received short-term benefits for his medical problems. (Tr. at 238). These benefits expired in January of 1996, and plaintiff has not applied for any other type of unemployment compensation. Id.
ANALYSIS Plaintiff bears the burden of proving disability under the SSA. Ray v. Bowen, 865 F.2d 222, 224 (10th Cir.1989). The SSA defines "disability" as the inability to engage in any substantial gainful activity for at least twelve months due to a medically determinable impairment. 42 U.S.C.A. � 423(d)(1)(A) (1996). The law states as follows:
An individual shall be determined to be under a disability only if his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy, regardless of whether such work exists in the immediate area in which he lives, or whether a specific job vacancy exists for him, or whether he would be hired if he applied for work. For purposes of the preceding sentence (with respect to any individual), "work which exists in the national economy" means work which exists in significant numbers either in the region where such individual lives or in several regions of the country. *5 42 U.S.C.A. � 423(d)(2)(A).
To determine whether a claimant is under a disability, the Commissioner applies a five-step sequential evaluation: (1) whether the claimant is currently working; (2) whether the claimant suffers from a severe impairment or combination of impairments; (3) whether the impairment meets an impairment listed in Appendix 1 of the relevant regulation; (4) whether the impairment prevents the claimant from continuing his past relevant work; and (5) whether the impairment prevents the claimant from doing any kind of work. 20 C.F . R. �� 404.1520, 416.920 (1996).
The Commissioner decided at the fourth step that plaintiff is not disabled. Both sides agree that the Commissioner's decision was not based upon substantial evidence. Upon review of the record, we conclude that the Commissioner made crucial errors in determining if plaintiff can perform his past work.
First, the ALJ made mistakes in determining the credibility of plaintiff's testimony. The Tenth Circuit has set forth the proper framework for analyzing evidence of disabling pain. The relevant factors are (1) whether claimant proves with objective medical evidence an impairment that causes pain; (2) whether a loose nexus exists between the impairment and the subjective complaints of pain; and (3) whether the pain is disabling based upon all objective and subjective evidence. See Glass v. Shalala, 43 F.3d 1392, 1395 (10th Cir.1994); Luna v. Bowen, 834 F.2d 161, 164 (10th Cir.1987). In the final step, the ALJ should consider the following factors: the levels of medication and their effectiveness, the extensiveness of the attempts (medical or nonmedical) to obtain relief, the frequency of medical contacts, the nature of daily activities, subjective measures of credibility that are peculiarly within the judgment of the ALJ, the motivation of and relationship between the claimant and other witnesses, and the consistency or compatibility of nonmedical testimony with objective medical evidence. Huston v. Bowen, 838 F.2d 1125, 1132 (10th Cir.1988).
"The consistency of a claimant's work history is probative of credibility because it measures the claimant's willingness and motivation to work." Hunter v. Chater, 895 F.Supp. 1454, 1462 (D.Kan.1995). The ALJ considered plaintiff's work history, and found that plaintiff "appeared not to be in the work force during 1994, unrelated to any alleged medical problems." (Tr. at 19). This finding is not supported by substantial evidence. The evidence shows that plaintiff was working during this time. (Tr. at 72, 79, 184). The record contains substantial evidence that plaintiff has worked consistently since 1979.
After plaintiff left work, he received short-term disability benefits for six months. The ALJ found that these benefits "may possibly have given him less motivation to return to the work force." (Tr. at 19). There is not substantial evidence in the record--or even a reasonable basis for this contention. See Burkett v. Callahan, 978 F.Supp. 1428, 1431 (D.Kan.1997).
The ALJ noted that plaintiff had a "fairly stable work history." (Tr. at 19). Plaintiff did not apply for unemployment compensation after his short-term benefits ran out. Plaintiff has worked consistently for at least the last 15 years. The evidence shows that plaintiff's work history is a factor that enhances his credibility; it does not show him to lack motivation. Hunter, 895 F.Supp. at 1462.
*6 Some of the ALJ's findings regarding plaintiff's daily activities also lack substantial evidence. The ALJ cannot contradict plaintiff's testimony by misstating plaintiff's daily activities. Jones v. Sullivan, 804 F.Supp. 1398, 1406 (D.Kan.1992). The ALJ claimed that "[i]n a report dated February 14, 1996 (Exhibit 11), claimant noted that he spent 3.75 hours a day caring for his granddaughter." (Tr. at 19). Exhibit 11, however, states that plaintiff cares for his granddaughter 3.75 hours a week, which translates to 45 minutes a day. (Tr. at 80).
The ALJ also found that plaintiff "mows the yard and rakes the leaves in the fall" as evidence that plaintiff's allegations of fatigue are not supported by his activities. (Tr. at 19). This distorts plaintiff's testimony. Plaintiff testified it takes him three days to perform these tasks because he becomes fatigued so easily. Plaintiff's testimony must be viewed in its proper context, because it concerns his allegations of fatigue. The ALJ cannot misconstrue plaintiff's testimony to make him appear more active than he truly is. Owen v. Chater, 913 F.Supp. 1413, 1420 (D.Kan.1995). Plaintiff does not need to show that he is completely incapacitated to receive benefits. Jones, 804 F.Supp. at 1405. Plaintiff's lessened ability is relevant in assessing his disability.
The ALJ did properly consider Dr. Johnson's notes, which state that plaintiff mowed three lawns around September 28, 1995. The ALJ also properly considered plaintiff's other daily activities in determining his credibility. The Commissioner erred in considering the objective medical evidence. "Expert opinions of a treating physician as to the existence of a disability are binding on the fact finder unless contradicted by substantial evidence to the contrary." Claassen v.. Heckler, 600 F.Supp. 1507, 1512 (D.Kan.1985). The Commissioner must specify reasons before he can reject the opinions of a claimant's treating physician.
Byron v. Heckler, 742 F.2d 1232, 1235 (10th Cir.1984). Because the Appeals Council reviewed Dr. Cowan's later report, we must review the ALJ's findings as if the ALJ had Dr. Cowan's report before him when issuing his findings of fact. O'Dell, 44 F.3d at 859. Dr. Cowan's report provides substantial objective medical evidence to support his opinion that plaintiff suffers from neuropsychological problems, causing a variety of mental and motor-skill problems. (Tr. at 186-197). The report provides objective evidence that plaintiff suffers from many of the problems he testified to, including a lack of concentration and memory problems. The Commissioner provided no reasons for rejecting Dr. Cowan's report, yet he found that plaintiff did not have neurological complications. (Tr. at 23).
On remand, the ALJ should also give the testimony of plaintiff's treating physicians greater weight than the testimony of a government-employed consultative physician who did not examine plaintiff. Frey v. Bowen, 816 F.2d 508, 513 (10th Cir.1987). Dr. Cowan, plaintiff's treating physician, diagnosed plaintiff with neurological complications from Lyme's disease. Dr. DeMarco denied that plaintiff had neurological complications. The Commissioner agreed with Dr. DeMarco, giving more weight to the opinion of the medical expert than to the opinions of the plaintiff's treating physicians. The Commissioner's improper rejection of Dr. Cowan's diagnosis amounts to legal error requiring reversal. Byron, 742 F.2d at 1235.
*7 When the Court reverses the Commissioner's ruling, it can either remand for further proceedings or direct an immediate award of benefits. Talbot v. Heckler, 814 F.2d 1456, 1465 n. 6 (1987). In this case, the Commissioner's error has caused plaintiff unnecessary delay. However, a remand for further proceedings is generally required unless it would serve no purpose. Dollar v. Bowen, 821 F.2d 530, 534 (10th Cir.1987). In this case, further proceedings are necessary to determine if plaintiff can perform his past work, or any work. Plaintiff has provided substantial evidence of neurological problems. This alone does not show that plaintiff is unable to work.
The vocational expert considered plaintiff's allegations of fatigue to be the main factor in determining whether plaintiff can perform his past work or any work. (Tr. at 269). There is evidence on both sides concerning plaintiff's fatigue. On this record, we cannot determine whether plaintiff is disabled as defined by the SSA. Additional fact finding is necessary to clarify the extent of plaintiff's condition and his ability to work, especially considering his neurological problems. A remand for additional fact finding is therefore appropriate. Taylor v. Callahan, 969 F.Supp. 664, 673 (D.Kan.1997). The Court reverses the Commissioner's decision and remands to the Commissioner for further proceedings. The ALJ should reconsider plaintiff's claim in light of the new and material medical evidence. The Court further instructs the ALJ to make a determination regarding the credibility of plaintiff's testimony in accordance with the above discussion.
IT IS THEREFORE ORDERED that defendant's Motion to Reverse and Remand and For Entry of Final Judgment (Doc. # 10) filed June 24, 1998 be and hereby is GRANTED. Plaintiff's Motion For Judgment (Doc. # 8) filed May 5, 1998 and Motion For Judgment (Doc. # 12) filed July 14,1998 are DENIED. D.Kan.,1998. Ferguson v. Apfel 1998 WL 596718 (D.Kan.), 57 Soc.Sec.Rep.Serv. 980 END OF DOCUMENT ner of Social Security, Defendant. No. Civ.A. 98-2020-KHV. July 30, 1998.
Martin M. Meyers, The Meyers Law Firm, Kansas City, MO, for William C Ferguson, plaintiff. Janice M. Karlin, Office of United States Attorney, Kansas City, KS, for Social Security, Commissioner of, Kenneth S. Apfel, defendant.
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This annotation collects and discusses the reported cases in which courts have considered whether a health maintenance organization ("HMO") can be held liable for the negligence of member physicians. The cases included in this annotation consider the various legal theories which have been raised in litigation involving HMOs. Additionally, the annotation includes the reported cases in which courts have considered whether state law claims against HMOs for physician negligence are pre-empted by state statutory law or the federal Employee Retirement Income Security Act of 1974, 29 U.S.C.A. � 1001 et seq. (ERISA).
A number of jurisdictions may have rules, regulations, constitutional provisions, or legislative enactments bearing upon this subject. Since these are discussed herein only to the extent that they are reflected in the reported cases within the scope of this annotation, the reader is advised to consult the appropriate statutory or regulatory compilations to ascertain the current status of all statutes discussed, including those listed in the Jurisdictional Table of Cited Statutes and Cases.
[b] Related annotations
What patient claims against doctor, hospital, or similar health care provider are not subject to statutes specifically governing actions and damages for medical malpractice. 89 ALR4th 887. What nonpatient claims against doctors, hospitals, or similar health care providers are not subject to statutes specifically governing actions and damages for medical malpractice. 88 ALR4th 358. Tort liability of medical society or professional association for failure to discipline or investigate negligent or otherwise incompetent medical practitioner. 72 ALR4th 1148. Liability of hospital or sanitarium for negligence of physician or surgeon. 51 ALR4th 235. What constitutes professional services within meaning of statute preserving individual liability of professional employees of professional corporation, association, or partnership. 31 ALR4th 898.
Hospital's liability for negligence in failing to review or supervise treatment given by doctor, or to require consultation. 12 ALR4th 57. Liability of hospital for negligence of nurse assisting operating surgeon. 29 ALR3d 1065. Validity and construction of contract exempting hospital or doctor from liability for negligence to patient. 6 ALR3d 704.
� 2. Summary and comment
[a] Generally
As a general proposition, physician malpractice claims against HMOs are based on the same theories which support physician malpractice claims against hospitals. They include direct negligence claims (for example, negligent hiring, retention, or supervision), vicarious liability, ostensible or apparent agency, and respondeat superior. Such claims are typically included in complaints naming one or more individual physicians as defendants, as well.
Nontort theories of liability, including breach of contract, breach of warranty, and bad faith, are infrequently raised, perhaps because of the unavailability of damages for pain and suffering, and are unlikely to be successful unless a very specific result is promised. [FN1] Such claims are also likely to be pre-empted by federal or state law ( � 3[a]).
To date, there have been few cases of direct negligence brought against HMOs. There is nothing in the relevant decisions to suggest that there is anything which sets them apart from similar claims against hospitals, and it can be expected that as the function of HMOs continues to evolve from that of traditional insurers, toward full-service health care providers, such claims may appear more frequently. Liability on the part of HMOs was held to be established or supportable in several cases ( � 4[a]), but not in others ( � 4[b]).
Claims against HMOs sounding in medical malpractice are subject to pre-emption, by either state or federal law. Several jurisdictions have enacted legislation to protect HMOs chartered under state law from potentially ruinous jury awards, by adopting pre-emption provisions in their enabling legislation. These statutes typically exempt the HMO itself, or one or more classes of HMO employees from liability. Thus, claims against HMOs for the negligence of member physicians have been held exempt in some cases ( � 3[a]), while the opposite result has been reached in others ( � 3[b]).
Where the HMO subscribed to is part of an employee benefit plan, some, and in certain jurisdictions, virtually all, malpractice related negligence claims and usually all nontortclaims, are pre-empted by the Federal Employee Retirement Income Security Act of 1974, 29 U.S.C.A. � 1001 et seq. ( � 3[a]). ERISA is a comprehensive federal statute which regulates the creation and administration of employee pension and benefit plans. [FN2] It contains a pre-emption clause which provides that ERISA "supersedes any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." [FN3] The issue, therefore, is whether the state-law-based claim "relates to" the benefit plan.
Resolution of this question turns on legislative intent. [FN4] The Supreme Court has repeatedly ruled that Congress intended that the pre-emption clause be given broad construction. [FN5] Under a broad construction of ERISA's pre-emption provision, a law relates to an ERISA plan if it "has a connection with or reference to" it, in the "normal sense of the phrase." [FN6] A state-law-based claim may relate to ERISA even if its effect on the plan is indirect. [FN7] Note, also, that a claim may be pre-empted by ERISA even if destruction of the claim leaves the plaintiff without a remedy. [FN8]
In some cases, however, the state-law-based claims may relate to the ERISA plan in "too tenuous, remote, or peripheral a manner to warrant a finding that the law 'relates to' the plan," [FN9] and in such cases, pre-emption has not been found ( � 3[b]). Whether a state- or common-law-based negligence action against an HMO for the malpractice of a member physician "relates to" an ERISA plan sufficiently to trigger pre-emption is largely fact dependent, but it also depends on how broadly the particular court is willing to sweep with its logic.
[b] Practice pointers
As in any tort case, a direct negligence claim against an HMO requires proof of the existence of a duty, breach, causation, and damages. [FN10] Counsel should be aware when framing direct negligence claims against an HMO that claims directed to misfeasance of the HMO (for example, failure to supervise or failure to authorize a particular treatment) are more vulnerable to pre-emption than claims against the HMO based on the physician's negligence, such as vicarious liability and agency-based claims.
Therefore, counsel for the plaintiff should emphasize the HMO's control over the physician and the physician's work. Defense counsel should characterize the physician, wherever possible, as an independent contractor and the HMO's role as an administrator, rather than a deliverer or provider of medical services.
Under the doctrine of respondeat superior, a master may be held liable for the tortious acts of its servant or employee. Claims based on this theory require proof that the physician was an employee of the HMO. Counsel should be aware of the existence, in some HMO/physician contracts, of language which defines the physician's status as that of an independent contractor. If the physician is an independent contractor, the HMO will not be liable under the doctrine of respondeat superior.
If it appears that the physician was an independent contractor, plaintiff's counsel should investigate whether the physician was the "apparent" or "ostensible" agent of the HMO. Drawn from the Restatements of Agency [FN11] and Torts, [FN12] the doctrine of ostensible agency raises two questions: (1) did the HMO create the appearance that the physician was its employee or agent, by "holding out" or otherwise; and (2) did the patient reasonably rely on the apparent agency relationship between the physician and the HMO to his detriment? Counsel should examine closely the representations made in the benefits plan and consider carefully testimony concerning plaintiff's understanding of the relationship between the physician, the service provided, and the HMO. [FN13]
Among other things, counsel should consider with whom the patient corresponded (for example, the HMO office, or the physician?), how the parties to any consent forms were identified (was the HMO or a specific physician named?), how the patient came to be treated by the physician (was the doctor selected from a short list provided by the HMO, or did the patient have a great deal of choice in selecting his doctor?), how the HMO described itself (did it call itself a "full-service" health care system?), and how the HMO actually functioned (did it involve itself in providing health care, or was its role more akin to a traditional insurance agency, limited to reimbursing subscribers for expenses?).
Once the theoretical bases of plaintiff's claims are known, counsel must determine whether the causes of action are subject to pre-emption by state or federal statutes. Many states have enacted statutes regulating the health care industry, including HMOs. Often, such statutes contain an immunity provision which confers immunity on the HMO itself or a described class of HMO employees. Counsel should familiarize themselves with the applicable state statutes and determine whether an immunity provision applies to the defendants in their case.
The interpretation of the scope of immunity is not always clear from either party's perspective and usually requires analysis of the legislative history. These statutes are regularly amended, reflecting rapid development of the health care industry generally, so practitioners must be careful to research the latest changes in the law. Virtually all claims against HMOs are subject to a pre-emption challenge under ERISA. [FN14]
Counsel should closely research the state of the law within the federal circuit in which the complaint is to be brought in order to determine whether ERISA bars recovery against an HMO. In many jurisdictions, a claim of vicarious liability for a physician's malpractice would survive an ERISA challenge. However, in order to minimize the possibility that plaintiff's complaint will be removed to federal court and face an ERISA challenge, counsel asserting vicarious liability should be careful to frame the pleadings so as to emphasize the physician's malpractice and the HMO's vicarious liability through its employment or agency relationship with the physician.
Likewise, defense counsel should closely analyze the pleadings to determine whether ERISA pre-emption can be raised as a valid defense, and if so, she should consider removing the case to federal court and filing either a motion to dismiss the complaint or a motion for summary judgment based on ERISA pre-emption.
� 3. Pre-emption or exemption of claim
[a] Claim held pre-empted or exempt
The courts in the following cases held that claims against HMOs for the negligence of member physicians were pre-empted or exempted by operation of ERISA or state statutes.
In Nealy v US Healthcare HMO (1994, SD NY) 844 F Supp 966, the court dismissed claims against an HMO and its administrator on theories of medical malpractice, negligence, breach of contract, misrepresentation, wrongful death, and related tort claims, holding that such claims are pre-empted by ERISA because they necessarily relate to the administration of the employee benefit plan. Plaintiff alleged that as a result of the HMO's negligence, the decedent was unable to obtain a referral and continue on necessary medication, and that the HMO eventually and in violation of its prior representations, denied coverage for the needed treatment, which caused the decedent's death.
The court stated that in order to rule on the claims, it would be necessary to scrutinize the very existence and core of the plan. Such an exercise, the court said, would create the exact situation Congress wanted to prevent by enacting ERISA and providing for broad pre-emption. [FN15] The District Court remanded the plaintiff's malpractice action against a participating physician, finding that as a provider of medical care, his actions did not relate to the ERISA plan.
Claim by plan participant that health maintenance organization (HMO) which had been retained by employer breached implied covenant of good faith and fair dealing by preventing physicians from advising patients of treatment options not covered by HMO was preempted by ERISA. Employee Retirement Income Security Act of 1974, � 514(a), 29 U.S.C.A. � 1144(a). Weiss v. CIGNA Healthcare, Inc., 972 F. Supp. 748, 21 Employee Benefits Cas. (BNA) 1843 (S.D.N.Y. 1997).
The court dismissed the plaintiff's vicarious-liability claims against an HMO in Ricci v Gooberman (1993, DC NJ) 840 F Supp 316, holding that state tort claims arising under a theory of vicarious liability are pre-empted by ERISA. Reading the pre-emption provision of ERISA broadly, the court observed that the relationship between a provider and the administrative plan (which necessarily determines the outcome of a vicarious-liability claim) relates to the plan, thereby compelling pre-emption.
Similarly, in Butler v Wu (1994, D NJ) 853 F Supp 125, 18 EBC 1373, the federal district court dismissed medical-malpractice claims against an HMO, finding that they were pre-empted by ERISA. The court held that where an HMO is not directly involved in providing health care, ERISA pre-empts medical malpractice claims against it. The court determined that in such cases HMOs are operating in a manner analogous to traditional insurers. In such a scenario, the court reasoned, medical-malpractice claims relate to the employee benefit plan and are pre-empted.
The court declined to address the liability of an HMO which employs the allegedly negligent physician or operates the facility where the negligence occurs.
In Elsesser v Hospital of Phila College of Osteopathic Medicine, Parkview Div. (1992, ED Pa) 802 F Supp 1286, 16 EBC 1063, the court found that ERISA pre-empted a direct-liability claim for failure to pay for a heart-monitoring device, because the action had a connection with or reference to a benefit plan. For the same reason, the court held that ERISA pre-empted plaintiff's claims that the HMO misrepresented the role of its member primary-care physician, and that the HMO breached its contract with the plaintiff by failing to provide a qualified physician.
However, the court ruled that claims of vicarious liability and negligent hiring and supervision were not pre-empted by ERISA, reasoning that such allegations rely not on obligations under the benefits plan, but on principles of professional malpractice, which claims, the court observed, are not generally pre-empted by ERISA. [FN16] The United States District Court for the Eastern District of Pennsylvania dismissed the plaintiffs' claims based on misrepresentation, negligence, and breach of contract, on grounds that they were pre-empted by ERISA, in Kearney v U.S. Healthcare, Inc. (1994, ED Pa) 859 F Supp 182, 18 EBC 1886. Specifically, the plaintiff alleged that the plan represented that its primary-care physicians were "peculiarly competent," when the defendant doctor was in fact "minimally qualified." The HMO was also alleged to have wrongfully limited or discouraged use of specialists, hospitalization, and state-of-the-art diagnostic procedures. The court found those claims to arise from the manner in which the HMO administered benefits, or from the way the plan represented or promised the type and extent of benefits under the plan. The court did allow plaintiffs' vicarious-liability claim to go forward.
State-law-based claims of medical malpractice, direct and vicarious negligence, and intentional infliction of emotional distress were all held to be pre-empted by ERISA, by the U.S. District Court for the District of Maryland in Pomeroy v Johns Hopkins Medical Servs. (1994, DC Md) 868 F Supp 110. The plaintiff was diagnosed with a condition requiring surgery, and the HMO refused to pay for it. His condition worsened, and the HMO again refused to pay for necessary treatment.
As a result of the HMO's refusal to pay for treatment, plaintiff alleged, he became addicted to painkillers. The HMO maintained its no-pay position, this time refusing to pay for drug dependency treatment. The court interpreted plaintiff's claims to be "essentially complaints about the administration of claims under an employee benefit plan" and, thus, directly related to it. The court observed that the HMO would incur liability only if it had an obligation to pay for the requested surgery, and because that determination requires an analysis of the benefits offered and obligations incurred under the plan, the claims are inescapably related to the plan and, therefore, pre-empted. ERISA preempted direct negligence and fraud claims brought by plan participants against health maintenance organization (HMO) arising out of HMO's employment of financial incentives program that rewarded physicians for not ordering tests or treatments and for concealing existence of program from participants. Employee Retirement Income Security Act of 1974, � 514(a), as amended, 29 U.S.C.A. � 1144(a). Lancaster v. Kaiser Foundation Health Plan of Mid-Atlantic States, Inc., 958 F. Supp. 1137, 21 Employee Benefits Cas. (BNA) 2107 (E.D. Va. 1997).
ERISA preempted medical malpractice and negligence claims based on plaintiffs' allegations that insured's death resulted from health maintenance organization's (HMO) decisions and restrictions concerning plan benefits, and therefore claims against HMO were properly removed; allegations that HMO's cost containment and utilization review procedures limited insured's diagnostic testing and treatment options, which caused the misdiagnosis of her illness and failure to treat her lymphoma in its early stages amounted to a claim for denial of ERISA plan benefits over which district court had subject matter jurisdiction. 28 U.S.C.A. � 1331.
Silva v. Kaiser Permanente, 59 F. Supp. 2d 597 (N.D. Tex. 1999).
In Jass v Prudential Health Care Plan (1996, CA7 Ill) 88 F3d 1482, 20 EBC 1580, the court held that plaintiff's vicarious-liability claims under Illinois law against an ERISA plan for alleged negligence of a plan physician directly related to the ERISA plan and, thus, were pre-empted by ERISA where the plan listed the physician and provided a higher level of benefits if participants sought treatment from him. If an agency relationship existed between the plan and the physician, it was solely as a result of the health care plan of which plaintiff was a participant, the court said.
The United States Court of Appeals for the Eighth Circuit upheld a Federal District Court's entry of summary judgment in favor of an HMO in Kuhl v Lincoln National Health Plan of Kansas City (1993, CA8) 999 F2d 298. There, the plaintiff asserted medical-malpractice, emotional-distress, tortious-interference-with-contract, and breach-of-contract claims against an HMO for delaying the approval of heart surgery for the plaintiff, which resulted in his subsequent death. The court found that these claims concerned the HMO's refusal to pre certify the plaintiff for heart surgery and thus were pre-empted by ERISA because they arose from the HMO's denial of benefits under the health plan. There was no allegation of physician malpractice in the case.
The Southern District of Florida considered a motion to remand, on the basis of ERISA pre-emption, two claims against an HMO in Dearmas v Av-Med, Inc. (1994, SD Fla) 865 F Supp 816, 8 FLW Fed D 442. One alleged negligence in the administration of the plan, and the other alleged vicarious liability. In the negligent-administration claim, the plaintiff alleged that the HMO acted negligently in evaluating the patient's condition and by requiring the patient's transfer to several hospitals. The court found that claim to be pre-empted by ERISA, because it related directly to the plan administration. The court remanded the case on the other, vicarious-liability malpractice claim, holding that since the medical-malpractice claim did not relate to the plan administration, it could not be pre-empted by ERISA.
A Colorado court of appeal upheld the trial court's dismissal of a breach-of-contract claim against an HMO in Freedman v Kaiser Found. Health Plan (1992, Colo App) 849 P2d 811, cert den (Colo) 1993 Colo LEXIS 300. The court found that the contract provided that medical services would be provided by independent contractors who were solely responsible for their services. Moreover, the court noted, the HMO was governed by the Colorado Health Maintenance Organization Act, Colo Rev Stat � 10-17-101 et seq. (1987 Repl. Vol. 4A), which precludes an HMO from practicing medicine and provides that HMOs are exempt from laws relating to the practice of medicine. Colorado Health Maintenance Organization Act, Colo Rev Stat � 10-17-125(3) et seq. (1987 Repl. Vol. 4A). Since HMOs are deemed not to be practicing medicine, the court held, they cannot direct the actions of member physicians and cannot, therefore, be held liable for their negligence under the concept of respondeat superior. The plaintiffs in this case did not allege negligent selection or training. Three years later, the same court upheld a trial court's entry of summary judgment in favor of an HMO, in Evans v Colorado Permanente Med. Group, P.C. (1995, Colo App) 902 P2d 867, reh den (Mar 30, 1995) and affd in part and revd in part on other grounds, remanded (Colo) 926 P2d 1218, citing the Freedman case and Colorado law for the proposition that an HMO cannot be liable for the medical malpractice of physicians, because an HMO cannot engage in the practice of medicine.
If health maintenance organization (HMO) that assigned doctors who attended to patient's medical needs were ERISA plan, patient's survivors' direct negligence, corporate liability, and implied contract claims against HMO would be preempted. Employee Retirement Income Security Act of 1974, � 514(a), as amended, 29 U.S.C.A. � 1144(a). In re Estate of Frappier, 678 So. 2d 884 (Fla. Dist. Ct. App. 4th Dist. 1996).
The Appellate Court of Illinois held a defendant HMO not liable for its employee physician's negligence, based on a state statutory exemption in effect at the time of the injury, in Moshe v Anchor Organization for Health Maintenance (1990, 1st Dist) 199 Ill App 3d 585, 145 Ill Dec 681, 557 NE2d 451, app den 133 Ill 2d 559, 149 Ill Dec 324, 561 NE2d 694. The Voluntary Health Services Plans Act, Ill Rev Stat � 1987 et seq., ch 32, par 595, exempted what it defined as health services plan corporations from liability for negligence of anyone rendering services for subscribers. The immunity applied, even though the HMO was also qualified under the Federal Health Maintenance Organizations Act of 1973 (42 U.S.C.A. �� 300e et seq.) (1982) and the State HMO Act Ill Rev Stat � 1981 et seq., ch 111 1/2, par 1401, neither of which contained an immunity clause.
In Jolly v Michael Reese Health Plan Found. (1992, 1st Dist) 225 Ill App 3d 126, 167 Ill Dec 448, 587 NE2d 1063, the court found that a medical-malpractice claim against an HMO for a physician's alleged malpractice was barred by the Voluntary Health Services Plans Act, Ill Rev Stat � 1987 et seq., ch 32, par 595 because that Act contained an immunity provision for health services plan corporations at the time the action was instituted. [FN17]
To extent health maintenance organization (HMO) member's claims sought return of plan benefits unreduced by subrogation and equitable relief, they fell within scope of ERISA civil enforcement provision and were completely preempted, leading to their conversion into federal claims and removal to federal court; member's class-action complaint sought declaratory judgment that subrogation term of health care plan was illegal under Maryland HMO Act, that HMO negligently misrepresented its rights under plan, that HMO members did not have to pay subrogation claims asserted and that HMO had been unjustly enriched as to payments already made, as well as equitable restitution of amounts paid, compensatory damages, and injunction against future violations. 28 U.S.C.A. � 1441; Employee Retirement Income Security Act of 1974, � 502(a), 29 U.S.C.A. � 1132(a); West's Ann. Md. Code, Health-General, �� 19-701 et seq. Singh v. Prudential Health Care Plan, Inc., 335 F.3d 278 (4th Cir. 2003).
Deciding the case on Missouri law, the court in Harrell v Total Health Care, Inc. (1989, Mo) 781 SW2d 58, held that claims of corporate liability and negligent selection of a specialist were pre-empted by Mo Rev Stat � 354.125 (1978) (Mo Const Art V � 3), which conferred immunity on Health Services Corporations as defined by the statute. [FN18]
In a case decided on state and federal law, the court in Dalton v Peninsula Hosp. Ctr. (1995, Sup) 164 Misc 2d 912, 626 NYS2d 362, dismissed a plaintiff's claims against the HMO alleging wrongful death, failure to obtain informed consent, negligence in recommending the defendant primary-care doctor and failing to investigate his qualifications, and breach of contract, arising out of the HMO's failure to provide competent doctors. The first two causes of action were dismissed based on NY Pub Health Law �� 4410 and 2805-d, which precludes both direct and vicarious medical-malpractice claims against HMOs. The court held that the other claims, alleging negligence and breach of contract, related to the benefit plan and were pre-empted by ERISA. Citing the District Court's observation in Nealy v US Healthcare HMO (1994, SD NY) 844 F Supp 966, the court stated that the plaintiff's claims would require the court to "scrutinize the very existence and core of the plan."
State causes of action against health maintenance organizations (HMO) are preempted by Employee Retirement Income Security Act (ERISA), where the HMO or its employees are not actual medical care providers and are sued merely in their capacity as the administrators who determine what medical treatment to pay for or as the insurers who pay independent contractors who in turn provide the actual care. Employee Retirement Income Security Act of 1974, � 514(b)(2)(B), 29 U.S.C.A. � 1144(b). Blaine v. Community Health Plan, 179 Misc. 2d 331, 687 N.Y.S.2d 854 (Sup. Ct. 1998).
An Ohio appellate court in Propst v Health Maintenance Plan, Inc. (1990, Hamilton Co) 64 Ohio App 3d 812, 582 NE2d 1142, motion overr 55 Ohio St 3d 705, 562 NE2d 898, upheld the trial court's dismissal of a medical-malpractice complaint against two HMOs, because, under an Ohio statute (Ohio Rev Code Ann � 1742.30) an HMO is not considered to be engaged in the practice of medicine and, thus, cannot be found liable for medical malpractice.
In Stroker v Rubin (ED Pa) 1994 WL 719694, the court held that, with respect to state-law claims that plaintiffs asserted against an HMO, allegations of the HMO's direct negligence in failing to use due care in its administration of plaintiffs' employee benefit plan were pre-empted by ERISA, while claims based on the HMO's alleged vicarious liability for the actions of plan physicians were not pre-empted.
Employee benefit plan participant's medical malpractice claim under the Texas Health Care Liability Act (THCLA) against health maintenance organization (HMO) arising from HMO's refusal to continue to cover home nursing treatments was preempted under ERISA conflict-preemption provision. Employee Retirement Income Security Act, � 514(a), 29 U.S.C.A. � 1144(a); V.T.C.A., Civil Practice & Remedies Code �� 88.001 et seq. Roark v. Humana, Inc., 307 F.3d 298, 28 Employee Benefits Cas. (BNA) 2612 (5th Cir. 2002). On appeal from a grant of summary judgment in favor of the defendant HMO, the Court of Appeals of Texas affirmed in Williams v Good Health Plus, Inc.- HealthAmerica Corp. (1987, Tex App San Antonio) 743 SW2d 373, holding that under the applicable state statutes, Tex Rev Civ Stat Ann art 4495b, �� 1.03(8) and 3.07(e) (supp 1987) and Texas Health Maintenance Organization Act, articles 20A.29 and 26(c), an HMO was incapable of practicing medicine, and, therefore, could not as a matter of law be liable for malpractice. The court did not rule on the plaintiffs' claims based on a holding-out or ostensible-agency theory, because those claims were untimely raised.
[b] Claim held not pre-empted or exempt
In the following cases, the courts held that claims against HMOs for the negligence of member physicians were not pre-empted or exempted by operation of ERISA or state statutes. The court in Dukes v U.S. Healthcare (1995, CA3 Pa) 57 F3d 350, 19 EBC 1473, cert den (US) 133 L Ed 2d 489, 116 S Ct 564, 19 EBC 2888, reversed the judgments of the district courts in consolidated actions, which dismissed on pre-emption grounds medical-malpractice claims against defendant HMOs. The court held that the plaintiffs' claims for medical negligence were not claims to recover benefits and enforce rights due under ERISA plans or to clarify rights to future benefits; rather, the claims attacked the quality of the benefits received. Accordingly, the court explained, the complete pre-emption doctrine did not apply, and the district court lacked the power to resolve the dispute regarding pre-emption. In reversing with instructions to remand the cases to the state courts from which they had been removed, the court observed that its holding left open, for resolution by the state courts, the issue whether the plaintiff's claims were pre-empted under ERISA.
An HMO's application for a preliminary injunction to enjoin a plaintiff's medical-malpractice suit in state court was rejected in Independence HMO v Smith (1990, ED Pa) 733 F Supp 983, 12 EBC 1329. In this case, the individual brought a state court action alleging that the HMO was liable for a physician's malpractice under an ostensible-agency rationale. The HMO sought the injunction on the basis that the suit was pre-empted by ERISA. The court adopted the pre-emption analysis of its earlier decision in Greenblatt v Budd Co. (ED Pa, 1987) 666 F Supp 735, wherein the court found no pre-emption where the state court negligence action did not impact on an employee benefit plan or affect the Congressional scheme reflected in ERISA. In the instant case, the court found that the state court negligence action was not premised on any violation of ERISA created duties and did not depend on the individual's contractual right to benefits under the plan.
In Elsesser v Hospital of Phila College of Osteopathic Medicine, Parkview Div. (1992, ED Pa) 802 F Supp 1286, 16 EBC 1063, the court found claims alleging vicarious liability and negligent hiring and supervision to be not pre-empted by ERISA, reasoning that such allegations rely not on obligations under the benefits plan, but on principles of professional malpractice, which claims, the court observed, are not generally pre-empted by ERISA, citing Painters of Philadelphia District Council No. 21 Welfare Fund v Price Waterhouse (1991, 3d Cir) 879 F2d 1146. The court did find that ERISA pre-empted a direct liability claim for failure to pay for a heart-monitoring device, as well as plaintiff's misrepresentation and breach-of-contract claim.
The United States District Court for the Eastern District of Pennsylvania found that plaintiffs' state law vicarious-liability claim withstood defendant's ERISA pre-emption challenge in Kearney v U.S. Healthcare, Inc. (1994, ED Pa) 859 F Supp 182, 18 EBC 1886. The court was persuaded that the vicarious-liability claim did not require finding that the plan was negligently administered or that benefits were not provided as promised. The court made the distinction between a claim that a person was denied a promised benefit, which is pre-empted, and a claim that a person received promised service from a provider who performed that service negligently, which is not pre-empted. Moreover, the court expressed certain public policy considerations which supported allowing common-law and tort claims to go forward, including a concern that to preclude them would "create a two track system of justice in which ERISA plan entities operate in 'a fully insulated legal world.' " However, as discussed in � 4, the court dismissed the plaintiff's claims based on misrepresentation, negligence, and breach of contract, on grounds they were pre-empted by ERISA.
On motion for removal to federal court, the US District Court for the District of Maryland in Jackson v Roseman (D Md, 1995) 878 F Supp 820, denied the defendant HMO's motion, rejecting its argument that the plaintiff's vicarious-liability claims arose under and were pre-empted by ERISA. The plaintiff had brought suit against individual doctors and the HMO which employed them, alleging that the doctors were negligent in failing to diagnose and treat his cancer. The court observed that the claims against the HMO were wholly predicated on the actions of the doctors and had nothing to do with a determination of benefits or payment under the plan. The court rejected the HMO's attempt to equate plaintiff's negligence suit for damages with an attempt to obtain a determination of benefits in the form of past, present, and future medical expenses. The court saw the defendant's argument as "tantamount to the generalized assertion that a request for compensatory and punitive damages in a medical malpractice claim is really nothing more than a complaint about the administration of claims under the ... plan," calling it unpersuasive "bootstrapping logic."
The court adopted the reasoning of Kearney v U.S. Healthcare, Inc. (1994, ED Pa) 859 F Supp 182, 18 EBC 1886, in concluding that vicarious-liability claims are not pre-empted, because they turn on evidence of what transpired between the patient and the doctor, and whether the doctor conformed to the accepted standard of care, not on the administration of rights and benefits under the plan. Citing the Kearney case, the court acknowledged the fact that a claim that a person was denied a promised benefit is pre-empted, but a claim that one received a promised service which was performed negligently is another matter.
The U.S. District Court for the Northern District of Illinois denied defendant HMO's motion for summary judgment on its ERISA pre-emption argument, in Smith v HMO Great Lakes (1994, ND Ill) 852 F Supp 669. The plaintiffs alleged that the HMO was negligent, along with individual doctors and the hospital, in providing services to the plaintiff during the delivery of her child and that, as a result, the child was born with severe disabilities. The court took a circumspect view of the scope of ERISA pre-emption, holding that such professional malpractice claims have nothing to do with a denial of plaintiffs' rights under the plan. The court noted that the suit arose not out of the plan, but in common-law principles, and the outcome of the suit would not affect the plan or any scheduled benefits thereunder. The court acknowledged that the plaintiffs' claims would not exist but for the existence of the plan, but it found the connection between the plan and the claims to be too remote to warrant a finding that the claims related to the plan.
In Pacificare, Inc. v Burrage (1995, CA10 Okla) 59 F3d 151, 19 EBC 1572, the United States Court of Appeals for the Tenth Circuit held that direct- and vicarious-liability malpractice claims against an HMO are sustainable and are not pre-empted by ERISA. The plaintiff raised direct- and vicarious-liability claims against the HMO for loss of consortium resulting from the physician's negligence, as well as a vicarious-liability claim. The case was brought before the Court of Appeals by the defendant HMO on writ of mandamus, seeking to direct the judge below to rescind his order remanding the two malpractice claims to state court, having found them not pre-empted by ERISA. The Court of Appeals surveyed the recent district court decisions on pre-emption of malpractice claims and stated that it was persuaded by the rulings in the majority, that malpractice claims are too remotely or tenuously related to the administration of the benefit plan to trigger ERISA pre-emption. The petition for writ of mandamus was denied.
Similarly, in Burke v Smithkline Bio-Science Lab. (1994, MD Fla) 858 F Supp 1181, 8 FLW Fed D 281, the US District Court for the Middle District of Florida considered a claim of ERISA pre-emption involving a case which appears to be against an HMO. There, the court ruled that a breach-of-contract claim concerning the death of a patient was pre-empted by ERISA but held that the plaintiff could amend his complaint to allege vicarious liability against the HMO for medical malpractice and that this claim would not be pre-empted because it did not involve a claim for denial of benefits or negligence in the administration of an employee benefit plan.
The court ordered the case remanded to state court. The U.S. District Court for the Southern District of Florida rejected defendant HMO's ERISA pre-emption defense in Paterno v Albuerne (1994, SD Fla) 855 F Supp 1263, 8 FLW Fed D 242, remanding the plaintiff's vicarious-liability claim to state court. The court found the better reasoning to be that such claims are not pre-empted, citing two points as persuasive: (1) ERISA pre-emption is neither absolute nor all encompassing; and (2) vicarious-liability negligence suits do not involve the administration and disbursement of plan benefits. Since the suit before it did not challenge a core function of ERISA, such as the administration of benefits, the court concluded, it would be too remotely or tenuously related to the plan to be pre-empted.
The Southern District of Florida considered a motion to remand, on the basis of ERISA pre-emption, two claims against an HMO in Dearmas v Av-Med, Inc. (1994, SD Fla) 865 F Supp 816, 8 FLW Fed D 442. One was a vicarious-liability medical-malpractice claim, and the other alleged negligence in the administration of the plan. The court held that since the medical-malpractice claim did not relate to the plan administration, it could not be pre-empted by ERISA. The plaintiffs' claim that the HMO acted negligently in evaluating the patient's condition and by requiring the patient's transfer to several hospitals, however, was found to be pre-empted by ERISA, because it related directly to the plan administration.
On appeal from a grant of summary judgment in favor of the defendant HMO, the Court of Appeals of Indiana held that a health maintenance organization may be held vicariously liable for malpractice for the acts of its employee physicians in Sloan v Metropolitan Health Council, Inc. (1987, Ind App) 516 NE2d 1104. The appellate court reversed the trial court's holding that since state law precludes a corporation from practicing medicine, it cannot be held liable under the doctrine of respondeat superior for the malpractice of its employees. The appellate court read the Professional Corporation Act of 1983, Ind Code � 23-1.5 et seq. to permit a finding of vicarious liability against a medical corporation, where an employee or agency relationship is established. In Dunn v Praiss (1995) 139 NJ 564, 656 A2d 413, 51 ALR5th 799, the Supreme Court of New Jersey determined that a member physician who is found liable for medical malpractice may state a claim for contribution from an HMO under the theory that the HMO breached an independent contractual duty to the plaintiff, as manifested by the physician's malpractice. In this case, the court found that the contribution claim was procedurally barred, because it was not timely asserted. The court noted that HMOs in New Jersey are created pursuant to the 1973 Health Maintenance Organizations Act, NJ Stat Ann � 26:2J-1 to 30. The Act exempts HMOs from certain licensing requirements, holds that they are not considered to be practicing medicine, and grants immunity from suit to certain employees. However, the court noted, the Act does not make HMOs immune from medical malpractice claims, and the court stated that HMOs could be sued under theories of vicarious liability based on respondeat superior, negligent selection and control of physicians, breach of contract or warranty, and corporate negligence such as negligence in the management of its HMO.
On motion for summary judgment, the court in Robbins v HIP of N.J. (1993, Law Div) 264 NJ Super 572, 625 A2d 45, held that a New Jersey statute, which confers immunity on certain HMO employees, applies only to those HMO employees who perform administrative and marketing functions, and not to actual providers of health care services, such as physicians. NJ Stat Ann � 26:2J-25. Denying the HMO's motion, the court also observed that the statutorily defined HMO complaint system requires HMOs to submit annual reports to the Commissioner of Health detailing the malpractice claims settled by the HMO and member physicians, confirming the legislative intent not to exempt HMOs and their member physicians from malpractice liability.
Reversing a trial court's dismissal of a complaint against an HMO in McClellan v HMO (1992) 413 Pa Super 128, 604 A2d 1053, app den 532 Pa 664, 616 A2d 985 and appeal after remand, remanded 442 Pa Super 504, 660 A2d 97, affd (Pa) 686 A2d 801, the court rejected the defendant's position that claims against the HMO were pre-empted by ERISA. Relying on DeGenova v Ansel (1988) 382 Pa Super 213, 555 A2d 147, and Independence HMO v Smith (1990, ED Pa) 733 F Supp 983, 12 EBC 1329, the court found that the state law negligence claims did not "relate to" ERISA.
The court found the facts that the plaintiffs were not seeking benefits or claiming improper administration or distribution persuasive. The court stated that negligence claims are not pre-empted by ERISA, and although the breach-of-contract claim may be pre-empted by that statute, the facts in the case had not been developed sufficiently to permit a determination of that issue.
See also the following cases in which the courts, addressing the issue whether claims against HMOs for the negligence of member physicians were pre-empted or exempted by operation of ERISA or state statutes, held that--
--ERISA did not completely pre-empt a claim that a health maintenance organization was vicariously liable for the alleged malpractice of physicians in its provider network, such that the case was removable under the exception to the well-pleaded complaint rule, the court pointing out that the plaintiff was not claiming that the HMO withheld benefits, and was not seeking court enforcement of rights created under terms of the plan or to clarify future benefits; her complaint was concerned solely with the quality of benefits provided. Prihoda v Shpritz (1996, DC Md) 914 F Supp 113, 19 EBC 2650.
--direct and vicarious state-law claims asserted against health maintenance organizations by health plan beneficiaries based on conduct of a physician employed by or associated with the HMOs were not pre-empted by ERISA, the court stating that even assuming that the plan benefits provided were medical services, the claims related to the quality rather than the quantity of benefits received under plan, and sought to hold the HMOs liable for breaches of duties related to medical care imposed by state law rather than for breaches of contractually imposed duties. Santitoro v Evans (1996, ED NC) 935 F Supp 733.
--ERISA did not apply because the HMO was not acting as an ERISA plan manager, the claims did not concern a denial of benefits by the plan, and the ERISA plan was not a party to the suit. Pickett v Cigna Healthplan of Texas, Inc. (1990, SD Tex) 742 F Supp 946.
--a wrongful-death action against a doctor for medical malpractice and against an ERISA- qualified health care plan for negligence in selecting physicians was improperly removed under the ERISA pre-emption doctrine, where the plaintiff sought compensation for the wrongful death of her children and her resultant injury, not to clarify any rights to future benefits under plan. Fritts v Khoury (1996, ED Mich) 933 F Supp 668.
--an employee's medical-malpractice claim against a health care plan administrator under a state law theory of respondeat superior was not subject to complete pre-emption as a suit to enforce his rights under the ERISA plan; tort liability under the state-law claim depended on apparent agency, and the doctor's authority to act was a question of fact that did not involve interpretation of the plan. Rice v Panchal (1995, CA7 Ill) 65 F3d 637, 19 EBC 1841, amd, reh, en banc, den (CA7 Ill) 1995 US App LEXIS 31419.
--the complaint was not pre-empted by ERISA, because it did not involve a dispute over benefits, would not interfere with the calculation of benefits offered under the health insurance plan, and did not affect the administration of the plan. Haas v Group Health Plan, Inc. (1994, SD Ill) 875 F Supp 544.
--a claim that a health maintenance organization failed to provide, arrange for, or supervise qualified doctors to provide actual medical treatment for plan participants did not "relate to" any employee benefit plan, for ERISA purposes, and, thus, that claim was not pre-empted; statutory or common-law claims actionable in state court that are periphery or remotely related to competing laws affecting ERISA are not pre-empted,according to the court. Frappier v Wishnov (In re Estate of Frappier) (1996, Fla App D4) 678 So 2d 884, 21 FLW D1885.
--plaintiffs' medical-malpractice claims against the defendant physicians and the HMO's potential liability for the doctors' actions bore no relation to the rights provided under the employee benefits plan; while pre-emption will be afforded to claims concerning the direct negligence in the administration of an employee benefits plan, a similar result is not mandated with relation to the vicarious-liability claim against the HMO where the "relation" test has not been satisfied. Stroker v Rubin (ED Pa) 1994 WL 719694.
--state-law medical-malpractice claims against a health maintenance organization which provided administrative services to self-funded employee welfare plans, alleging both direct and vicarious liability for professional negligence, did not "relate to" ERISA plan and, thus, were not pre-empted by ERISA. Dykema v King (D SC) 1997 WL 154777.
--ERISA did not pre-empt state law medical-malpractice claims against physicians, or vicarious-liability claims against a health maintenance organization (HMO) and physicians' medical group, based on the physicians' alleged negligence in diagnosing and treating an ERISA plan participant's brain tumor. Lancaster v Kaiser Foundation Health Plan of Mid-Atlantic States, Inc. (ED Va) 1997 WL 174182.
� 4. Liability under particular circumstances
[a] Liability established or supportable
The courts in the following cases held that an HMO was liable, or at least could be held liable, for the negligence of member physicians. A California appellate court in Pulvers v Kaiser Found. Health Plan (1979, 2nd Dist) 99 Cal App 3d 560, 160 Cal Rptr 392 (criticized on other grounds by Bromme v Pavitt (3rd Dist) 5 Cal App 4th 1487, 7 Cal Rptr 2d 608, 92 CDOS 4012, 92 Daily Journal DAR 6086 and (criticized on other grounds as stated in Williams v Wraxall (1st Dist) 33 Cal App 4th 120, 39 Cal Rptr 2d 658, 95 CDOS 1992, 95 Daily Journal DAR 3405, mod, reh den (1st Dist) 34 Cal App 4th 199b, 95 CDOS 2698, 95 Daily Journal DAR 4649), upheld the jury's finding against the HMO on plaintiff's wrongful-death claim. The court also upheld the trial court's dismissal of claims that the HMO had warranted a higher standard of care than non-negligence, as well as a claim of fraud, based on insufficient evidence.
In a case applying District of Columbia law, the United States Court of Appeals for the District of Columbia in Schleier v Kaiser Foundation Health Plan of Mid-Atlantic States, Inc. (1989) 277 US App DC 415, 876 F2d 174, upheld a jury's verdict that an HMO was vicariously liable for the negligence of a non-HMO physician to whom an HMO physician referred a patient. The HMO argued that it was not vicariously liable because the non-HMO physician was an independent contractor. The court applied the principles of respondeat superior and concluded that the HMO could be held liable for the negligence of the physician, because the physician was acting within the scope of the HMO's regular business in treating the patient and the physician made recommendations to the HMO doctor regarding the treatment of the patient. The court reversed the jury's damages award, because of the failure of the trial judge to instruct the jury that any damages would not be subject to income taxation, and remanded the case for a new trial on damages only.
Wrongful death claim filed by deceased patient's husband against health maintenance organization (HMO), seeking to hold HMO vicariously liable for allegedly negligent treatment provided by patient's physicians as agents or apparent agents of the HMO, was not preempted by ERISA; ERISA did not preempt claims concerning negligent failure to provide adequate medical treatment. Employee Retirement Income Security Act of 1974, � 514(a), 29 U.S.C.A. � 1144(a). Villazon v. Prudential Health Care Plan, Inc., 843 So. 2d 842 (Fla. 2003).
Contractual status of health maintenance organization's (HMO's) network physicians as independent contractors did not alone preclude a finding that they were agents of the HMO, for purposes of holding the HMO vicariously liable for the physicians' alleged medical malpractice. Villazon v. Prudential Health Care Plan, Inc., 843 So. 2d 842 (Fla. 2003).
Evidence that a health maintenance organization (HMO) customarily provided its members with a subscriber certificate stating that participating physicians were independent contractors did not defeat a member's attempt to impose vicarious liability on the HMO for her physician's alleged malpractice under an apparent authority theory, absent evidence that the HMO gave the certificate to this particular member. S.H.A. 215 ILCS 125/1-1 et seq. Petrovich v. Share Health Plan of Illinois, Inc., 188 Ill. 2d 17, 241 Ill. Dec. 627, 719 N.E.2d 756, 23 Employee Benefits Cas. (BNA) 1769 (1999).
The court in Raglin v H M O Illinois, Inc. (1992, 1st Dist) 230 Ill App 3d 642, 172 Ill Dec 90, 595 NE2d 153, observed that "there appears to be no question that HMOs are not immune from liability," but concluded, however, that the facts in that case did not support a finding of liability on any of the plaintiff's viable claims, as discussed in � 4.
In Gugino v Harvard Community Health Plan (1980, Mass) 380 Mass 464, the court reversed a lower court's finding that a medical-malpractice action did not raise a legitimate question of liability for judicial inquiry. [FN19] The court permitted the plaintiff's suit to continue, which included an allegation that an HMO was vicariously liable for the alleged negligence of a physician and a nurse. The court noted that in order for the HMO to be liable, it must be demonstrated that it had the power of direction or control over the allegedly negligent individuals' actions.
Statute providing that a health maintenance organization (HMO) was not engaged in the practice of medicine did not bar HMO from being held vicariously liable for the acts of its employees. McKinney's Public Health Law � 4410. Wisholek v. Douglas, 722 N.Y.S.2d 316 (App. Div. 4th Dep't 2001).
Statute governing health maintenance organizations (HMO) does not preclude HMO from being held vicariously liable for malpractice of its physician employees. McKinney's Public Health Law � 4410, subd. 1. Burg v. Health Care Plan, 722 N.Y.S.2d 843 (App. Div. 4th Dep't 2001). The court in Boyd v Albert Einstein Medical Center (1988) 377 Pa Super 609, 547 A2d 1229, determined that an HMO can be held liable for the negligence of a physician under the theory of ostensible agency, if the evidence demonstrates that a patient looks to the HMO rather than a particular physician for care, and the HMO holds the physician out to the public as its employee. The court reversed an order of summary judgment issued in favor of the HMO and found that there was an issue of material fact as to whether the physician was the ostensible agent of the HMO.
The court reversed a trial court's dismissal of a complaint against an HMO in McClellan v HMO (1992) 413 Pa Super 128, 604 A2d 1053, app den 532 Pa 664, 616 A2d 985 and appeal after remand, remanded 442 Pa Super 504, 660 A2d 97, affd (Pa) 686 A2d 801. The court found the facts sufficient to withstand a demurrer on the issue whether the patient relied on the HMO to provide care, and whether the HMO held the physician out as its employee. The court determined that an HMO could also be liable under theories of negligent selection, retention, and evaluation, as well as misrepresentation, fraud, and breach of contract. The court rejected the defendant's position that claims against the HMO were pre-empted by ERISA. Relying on DeGenova v Ansel (1988) 382 Pa Super 213, 555 A2d 147, and Independence HMO v Smith (1990, ED Pa) 733 F Supp 983, 12 EBC 1329, the court found that the state-law negligence claims did not "relate to" ERISA. The court found the fact that the plaintiffs were not seeking benefits or claiming improper administration or distribution persuasive. The court stated that negligence claims are not pre-empted by ERISA, and although the breach-of-contract claim may be pre-empted by that statute, the facts in the case had not been developed sufficiently to permit a determination of that issue.
[b] Liability not established
In the following cases, the courts held that an HMO was not liable for the negligence of member physicians.
The Appellate Court of Illinois found no basis for liability on theories of respondeat superior or ostensible agency, on the facts before it in Raglin v H M O Illinois, Inc. (1992, 1st Dist) 230 Ill App 3d 642, 172 Ill Dec 90, 595 NE2d 153. The court observed that "there appears to be no question that HMOs are not immune from liability," citing Moshe v Anchor Organization for Health Maintenance (1990, 1st Dist) 199 Ill App 3d 585, 145 Ill Dec 681, 557 NE2d 451, app den 133 Ill 2d 559, 149 Ill Dec 324, 561 NE2d 694, and American Nat'l Bank & Trust Co v Anchor Organization for Health Maintenance (1991, 1st Dist) 210 Ill App 3d 418, 155 Ill Dec 128, 569 NE2d 128, app den 141 Ill 2d 535, 580 NE2d 107.
The court pointed out, however, that the plaintiffs did not allege any negligent acts on the part of the HMO itself, nor did they allege breach of contract by the HMO. Neither was there any evidence that the plaintiffs detrimentally relied on representations by the HMO nor that the HMO held itself out as a total-care provider, as did the defendant in Boyd v Albert Einstein Medical Center (1988) 377 Pa Super 609, 547 A2d 1229, reported at, without op (Pa Super) 1988 Pa Super LEXIS 3132, according to the court.
Therefore, the court observed, the only viable theories of liability were vicarious liability, respondeat superior, and ostensible agency. The facts did not support vicarious liability, the court noted, as no master/servant relationship was shown. Since the physicians were considered independent contractors, respondeat superior was equally inapplicable, the court observed, and since the HMO did not hold itself out as exerting control over the physicians, agency theories were inapplicable. The court found the facts and issues before it to be similar to those presented in Chase v Independent Practice *** 'n (1991) 31 Mass App Ct 661, 583 NE2d 251, discussed in this section, wherein the plaintiff failed to show that the HMO controlled the professional activities of the allegedly negligent doctors, or that the plaintiff detrimentally relied on representations by the HMO that the doctors were its employees. This court followed the Massachusetts court's reasoning in the Chase case, concluding that respondeat superior and agency theories were not sustainable on the factual record before it.
Health maintenance organization (HMO) was not liable on theory of independent corporate negligence for brain damage that subscriber's infant daughter sustained from meningitis after contract physician failed to schedule an immediate appointment; there was no evidence that HMO negligently investigated physician prior to contracting with him, nor was there evidence that delayed treatment was caused by an HMO policy or instruction. Jones v. Chicago HMO Ltd. of Illinois, 301 Ill. App. 3d 103, 234 Ill. Dec. 641, 703 N.E.2d 502 (1st Dist. 1998), appeal allowed, 183 Ill. 2d 569 (1999). No employment relationship existed between health maintenance organization (HMO) and physician, who was under contract with HMO, and as such, doctrine of respondeat superior was inapplicable to malpractice action brought against HMO by patient who was diagnosed with breast cancer shortly after physician refused to order mammogram because patient manifested no objective symptoms and was not yet 40; testimony indicated that HMO did not control physician's medical practice, and while HMO determined whether it would pay for services provided to its members by physician, it did not proscribe how or when mammograms were to be ordered or administered. Berthelot v. Stallworth, 884 So. 2d 648 (La. Ct. App. 4th Cir. 2004).
See Chase v Independent Practice *** 'n (1991) 31 Mass App Ct 661, 583 NE2d 251, where the Appeals Court of Massachusetts, applying traditional principles of agency, found no liability on the part of an organization with which an HMO contracted to provide medical services for the HMO's members. Citing the earlier state case Gugino v Harvard Community Health Plan (1980, Mass) 380 Mass 464, the appellate court recognized that an HMO could be held liable under the same theories that have been applied to hospitals. However, the court pointed out that the HMO in this case contracted with an independent practice association, which in turn contracted with another entity that actually employed the allegedly negligent physician. The claim against the HMO had been dismissed pursuant to a stipulation; the opinion deals with the claim against the independent-practice association. It concludes that there was no liability, because the association did not retain the right to control the activities of the physician. There was also no liability on the part of the HMO under ostensible or apparent agency, the court said, because the plaintiff failed to show that she relied on representations by the HMO that the physician was its agent.
The Supreme Court of Nebraska upheld summary judgment in favor of an HMO in Steineke v Share Health Plan of Nebraska, Inc. (1994, Neb) 246 Neb 374, 518 NW2d 904. In that case, the plaintiff alleged that the HMO refused to authorize her treatment at one hospital and directed her to another hospital which was not able to repair her remaining fallopian tube in emergency surgery.
The plaintiff alleged that she was rendered unable to conceive and that had she been permitted to be treated at the former hospital her fallopian tube could have been saved. The court dismissed her claim, ruling that Nebraska law does not recognize loss of chance as a cause of action. The plaintiff's breach-of-contract claim against the HMO was dismissed because the plaintiff was unable to show within a reasonable degree of medical certainty that her fallopian tube would have been saved had she been treated at the first hospital.
Allegations that health maintenance organization (HMO) failed to exercise reasonable care in formulating rules and policies that provided financial incentive to physicians to reduce health care costs, thereby increasing risk of harm to patient who died from cancer following misdiagnosis by physicians with whom HMO contracted, did not support negligence claim against HMO. Bordlemay ex rel. Estate of Bordlemay v. Keystone Health Plans, Inc., 2001 PA Super 381, 789 A.2d 748 (Pa. Super. Ct. 2001).
-------------------- Neil Posts: 697 | From Tucson, AZ USA | Registered: Apr 2002
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posted
Thanks for posting this info. People talk about suing a lot, but I doubt they have done any research into outcomes of previous cases. This will help to educate them.
Posts: 8430 | From Not available | Registered: Oct 2000
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