Opinion
2023 CA 0136
11-03-2023
Donald Clay GARDNER v. STATE of Louisiana, THROUGH the OFFICE OF the GOVERNOR, Division of Administration, Office of Group Benefits
Brian F. Blackwell, James R. Bullman, Baton Rouge, Louisiana, Attorneys for Plaintiff/Appellant, Donald Clay Gardner Marjorie G. O’Connor, Bridget B. Denicola, Margaret A. Collier, Baton Rouge, Louisiana, Attorneys for Defendant/Appellee, State of Louisiana, Office of the Governor, Division of Administration, Office of Group Benefits
On Appeal from the 19th Judicial District Court, In and for the Parish of East Baton Rouge, State of Louisiana, Trial Court No. C715300, Honorable Kelly Balfour, Judge Presiding
Brian F. Blackwell, James R. Bullman, Baton Rouge, Louisiana, Attorneys for Plaintiff/Appellant, Donald Clay Gardner
Marjorie G. O’Connor, Bridget B. Denicola, Margaret A. Collier, Baton Rouge, Louisiana, Attorneys for Defendant/Appellee, State of Louisiana, Office of the Governor, Division of Administration, Office of Group Benefits
BEFORE: THERIOT, PENZATO, AND GREENE, JJ.
PENZATO, J.
2Donald Clay Gardner appeals the trial court’s November 9, 2022 judgment granting the exception of prescription filed by defendant, the State of Louisiana through the Office of the Governor, Division of Administration, Office of Group Benefits (OGB), and dismissing, with prejudice, Mr. Gardner’s suit against OGB. We affirm.
FACTS AND PROCEDURAL HISTORY
OGB is the state agency within the Division of Administration responsible for establishing and administering group health benefit and related plans for state employees, dependents, and retirees. See La. R.S. 42:801, et seq. Mr. Gardner was a plan participant in the OGB Magnolia Local Plus Plan (the Plan), a comprehensive medical benefit plan, for the 2020 plan year. During the period from January 25, 2020, through March 26, 2020, Mr. Gardner was hospitalized at Apollo Behavioral Health Hospital (ABHH) in Baton Rouge, Louisiana.
Article XVIII(I)(1) of the Plan provides as follows:
All Claims must be filed within ninety (90) days from the date services were rendered, unless it is not reasonably possible to do so. In no event may any Claim be filed later than twelve (12) months from the date services were rendered.
For the services it rendered, ABHH submitted two electronic claims to OGB through its third-party claims administrator, Blue Cross Blue Shield of Louisiana (BCBSLA). One claim was for services rendered from January 25, 2020, through February 5, 2020; the other claim was for services rendered from February 6, 2020, through March 26, 2020.
OGB, through BCBSLA, received both claims on April 7, 2020.
3OGB, through BCBSLA, issued benefits for the services rendered from January 25, 2020, through February 5, 2020, and denied benefits for the services rendered from February 6, 2020, through March 26, 2020.
On behalf of Mr. Gardner, ABHH timely requested a first level medical appeal and a second level medical/external appeal, as provided by Article XIX of the Plan. On August 25, 2020, the independent review organization issued its decision upholding the denial of benefits for the services rendered from February 6, 2020, through March 26, 2020. Article XIX(D) of the Plan provides that a plan participant exhausts his administrative remedies when he completes the external review process, and after exhaustion, the claimant may pursue any other legal remedies available to him.
Article XIX(E) of the Plan, entitled "Legal Limitations," provides, in pertinent part, as follows:
A Plan Participant must exhaust his administrative remedies before filing a legal action. A lawsuit related to a claim must be filed no later than twelve (12) months after the claim is required to be filed, or more than thirty (30) calendar days after the Plan Participant has exhausted his administrative remedies, whichever is later.
Mr. Gardner filed the instant suit against OGB on January 25, 2022, contending OGB improperly refused to pay his claim for the services rendered from February 6, 2020, through March 26, 2020. In response thereto, OGB filed an exception of prescription, contending that Mr. Gardner’s suit was not filed within the time period required by the Plan.
Following a hearing, at which the parties introduced into evidence a joint stipulation of facts and the 2020 Plan document, file trial court signed a judgment on November 9, 2022, granting OGB’s exception of prescription and dismissing Mr. Gardner’s suit with prejudice. Mr. Gardner appeals the November 9, 2022 judgment.
4 ASSIGNMENTS OF ERROR
Mr. Gardner assigns the following as error:
1. The trial court erred in finding that Mr. Gardner’s claims were not a personal action subject to a liberative prescription of 10 years;
2. The trial court erred in finding that a prescriptive period more onerous than 10 years could be adopted for the Plan; and
3. The trial court erred when it found that the Plan was not ambiguous with respect to the period during which Mr. Gardner was required to file a lawsuit for benefits under the Plan.
LAW AND DISCUSSION
[1] If evidence is introduced at the hearing on the peremptory exception of prescription, the trial court’s findings of fact are reviewed under the manifest error standard of review. Cawley v. National Fire & Marine Ins. Co., 2010-2095 (La. App. 1 Cir. 5/6/11), 65 So. 3d 235, 237. But in a case involving no dispute regarding material facts—only the determination of a legal issue—a reviewing court must apply the de novo standard of review, under which the trial court’s legal conclusions are not entitled to deference. Id.
[2] In his first assignment of error, Mr. Gardner contends that his claims are a personal action subject to a liberative prescription of 10 years. In his related second assignment of error, Mr. Gardner argues that in the absence of legislation, the provision of the Plan establishing a prescriptive period more onerous than 10 years is null.
See La. C.C. art. 3499, which provides that "[u]nless otherwise provided by legislation, a personal action is subject to a liberative prescription often years."
Louisiana Revised Statutes 42:801 provides that the general administration of all aspects of group benefit plans for state employees, dependents, and retirees is 5vested in and the responsibility of the OGB. OGB has the powers and privileges of a corporation and shall exercise all powers, duties, functions, and responsibilities provided or authorized for it by law; OGB shall directly exercise all powers, duties, functions, and responsibilities provided or authorized for it which are in the nature of policymaking, rulemaking, licensing, regulation, enforcement, or adjudication and shall directly exercise all advisory powers, duties, and functions provided to it by law. La. R.S. 42:802(A)(1). In addition, OGB has the power to adopt and promulgate rules and regulations for the administration, operation, and management of programs and benefit plans offered through the OGB. La. R.S. 42:802(B)(1). Pursuant to this legislative grant of authority, OGB promulgated a rule providing that the OGB plan, including the schedule of benefits, together with the application for coverage and any related documents executed by or on behalf of the enrollee, constitutes the entire agreement between the parties. LAC 32:1:507(B).
Louisiana Administrative Code Title 32 Pt. I, § 507 further provides as follows:
C. In the event of any conflict between the written provisions of the OGB plan or any OGB plan of benefits with any information provided by OGB or its contractors or rules or regulations promulgated by OGB, the written provisions of the OGB plan or plan of benefits shall supersede and control.
D. A plan participant shall exhaust the administrative claims review procedure before filing a suit for benefits. No legal action shall be brought to recover benefits under an OGB plan or plan of benefits more than one year after the time a claim is required to be filed or more than 30 days after mailing of the notice of a final administrative decision, whichever is later, unless otherwise provided in the terms of the participant's plan. A decision is not final until all levels of the administrative appeals process are exhausted.
Thus, based on the powers designated to OGB by the legislature, as well as the rules promulgated by the OGB pursuant to that authority, OGB had the authority to contract with Mr. Gardner and to include within that contract agreement a prescriptive period.
Mr. Gardner argues that neither La. R.S. 42:801 or 42:802 delegate to OGB the authority to alter the prescriptive period for personal actions contained in La, C.C. art. 3499, citing Arrant v. Wayne Acree PLS, Inc., 2015-0905 (La. 1/27/16), 187 So. 3d 417, 418. However, in the present case, OGB does not rely on the prescriptive period contained in the Administrative Code, but on the prescriptive period contained in its contractual agreement with Mr. Gardner.
[3–5] 6The Plan is the contract between OGB and Mr. Gardner. As noted above, it contains a provision, Article XIX(E), entitled "Legal Limitations," that requires a lawsuit related to a claim to be filed no later than 12 months after the claim is required to be filed, or more than 30 days after the plan participant exhausts his administrative remedies, whichever is later. Generally, legal agreements have the effect of law upon the parties, and, as they bind themselves, they shall be held to a full performance of the obligations flowing therefrom. See La. C.C. art. 1983; Brown v. McGinity, 2021-1405 (La. App. 1 Cir. 7/14/22), 347 So. 3d 900, 905, writ denied, 2022-01239 (La. 11/8/22), 349 So. 3d 575. Moreover, the parties are free to contract for any object that is lawful. La. C.C. art. 1971. "Freedom of contract" signifies that parties to an agreement have the right and power to fashion their own bargains. Louisiana Smoked Products, Inc. v. Savoie’s Sausage & Food Products, Inc., 96-1716 (La. 7/1/97), 696 So. 2d 1373, 1380; Brawn, 347 So. 3d at 906.
See Bayham v. State Through Office of Croup Benefits, 2018-1708 (La. App. 1 Cir. 8/29/19), 285 So. 3d 1111, 1115, writ denied, 2019-01667 (La. 1/14/20), 286 So, 3d 1040.
Mr. Gardner argues that the "Legal Limitations" provision contained in the Plan is null because it shortens the 10-year prescriptive period contained in La. C.C. art. 3499. Pursuant to La. C.C. art. 3471, a contract purporting to exclude prescription, to specify a longer period than that established by law, or to make the requirements of prescription more onerous, is null. Mr. Gardner argues that the requirements of prescription are made more onerous when they are shortened. However, contrary to Mr. Gardner’s argument, the Louisiana Supreme Court has stated that prescriptive periods "may be shortened upon agreement of the parties." Louisiana Health Service and Indemnity Co. v. McNamara, 561 So. 2d 712, 719 (La. 1990) (citing Symeonides, 7 One Hundred Footnotes to the New Law of Possession and Acquisitive Prescription, 44 La.L.Rev. 69, 135 n.100 (1983); 12 Aubry & Rau, Droit Civil Francais, Prescription § 774 ter, in 5 Civil Law Translations 450 (La.St.L.Inst. trans. 1972)). See also Leiter Minerals, Inc. v. California Co., 241 La. 915, 939, 132 So. 2d 845, 853 (1961) ("It has also been recognized in this state, and by the courts of other states and the Supreme Court of the United States, that those entering into a contract may stipulate a different period of prescription or limitation from that provided by a state statute, and that the limitation or prescriptive period as thus stipulated, if reasonable, will be binding upon the parties.") While Leiter Minerals predates the enactment of La. C.C. art. 3471, comment (a) indicates that the provision "does not change the law."
Symeonides, One Hundred Footnotes to the New Law of Possession and Acquisitive Prescription, footnote 100 states in part:
With regard to agreements purporting to shorten prescription, the clear implication of [Art.] 3471 is that they are in principle valid. The argument inclusio unius est exclusio alteráis is clearly applicable here. The fact that Greek Civil Code article 275, which is re-produced in the comments as the source provision of [Art.] 3471, prohibits such agreements [to shorten prescription] simply reinforces the argument that had the redactors wanted to prohibit such agreements they would have said so expressly. From a policy standpoint, agreements shortening prescription— unlike renunciations or agreements lengthening prescription—not only reduce the court’s workload by clearing many claims from the docket at an earlier date, but work to the benefit of the debtor who is usually the weak party. Such agreements, therefore, ought to be in principle valid, unless the law expressly provides otherwise, or unless it turns out that the debtor is in fact the economically strong party. In the latter situation, the agreement should be invalidated if it bears adhesionary characteristics. For an example in which the law expressly prohibits the shortening of prescription to less than one year, see LA. R.S. 22:629(A)(3) (1978) (insurance contracts). It is not a coincidence that in such contracts the creditor (insured) is the economically weak party.
Mr. Gardner fails to address these pronouncements by the Louisiana Supreme Court, relying instead upon cases that he contends support his argument that a contractual prescriptive period of less than 10 years is more onerous than that required by La. C.C. art. 3499, and thus null. In Cameron v. Bruce, 42,873 (La. App. 2 Cir. 4/23/08), 981 So. 2d 204, writ denied, 2008-1127 (La. 9/19/08), 992 So. 2d 940, the Second Circuit Court of Appeal affirmed the trial court’s denial of an exception of prescription in connection with an inspection contract that provided that 8no legal action could be commenced after one year from the date of inspection. The Second Circuit found that the contractual limitation was peremptive, and because it "swept away" the contra non valentem doctrine, it was clearly "more onerous." Id. at 207.
In Contours Unlimited, Inc. v. Board of Commissioners of the Port of New Orleans, 630 So. 2d 916 (La. App. 4 Cir. 1993), writ denied, 634 So. 2d 863 (La. 1994), also relied upon by Mr. Gardner, the Louisiana Fourth Circuit Court of Appeal found that, in light of the 5-year prescriptive period provided for public contracts contained in La. R.S. 38:2189.1, a contractual provision that provided for only a 30-day prescriptive period was more onerous than that provided by law, and was a nullity. Id. at 917-18.
Finally, in Prestridge v. Bank of Jena, 2005-545 (La. App. 3 Cir. 3/8/06), 924 So. 2d 1266, 1280, writ denied, 2006-0836 (La. 6/2/06), 929 So. 2d 1261, the Louisiana Third Circuit Court of Appeal found that a 60-day "preclusionary period" contained in Bank of Jena’s signature card agreement attempted to shorten the legal prescriptive period, making it more onerous, and therefore null. However, in Grow v. Capital One, 2010-0476 (La. App. 1 Cir. 9/10/10), 47 So. 3d 1038, 1043-44, this Court declined to follow Prestridge, finding that the shortened preclusionary period contained in the signature card agreement was not a prescriptive period, but rather a substantive element for payment of a claim. Thus, this Court held that the provision was not violative of La. C.C. art. 3471.
We do not find that any of the cases relied upon by Mr. Gardner support his contention that La. C.C. art. 3471 prohibits all attempts to contractually shorten the 10-year prescriptive period contained in La. C.C. art. 3499. Moreover, such an interpretation ignores the clear language of La. C.C. art. 3471. If Article 3499 is interpreted to require legislation to contractually reduce the 10-year prescriptive period for personal actions, Article 3471 is rendered meaningless.
9The starting point in the interpretation of any statute is the language of the statute itself as what a legislature says in the text of a statute is considered the best evidence of its intent and will. Mayeux v. Charlet, 2016-1463 (La. 10/28/16), 203 So. 3d 1030, 1036. When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature. La. C.C. art. 9. Additionally, all laws pertaining to the same subject matter must be read in pari materia, and the legislature is presumed to enact each statute with deliberation and with full knowledge of all existing laws on the same subject. La. C.C. art. 13; Woodrow Wilson Construction, LLC v. Amtek of Louisiana, Inc., 2017-1156 (La. App. 1 Cir. 8/6/18), 256 So. 3d 305, 314-15.
We find that, based upon the language of La. C.C. art. 3471 and its analysis by the Louisiana Supreme Court in McNamara, OGB may contractually establish a period for filing suit shorter than 10 years, provided the contractual period is "reasonable." See Leiter Minerals, 132 So. 2d at 853. Thus, we must determine whether the prescriptive period contained in the "Legal Limitations" provision of the Plan is reasonable.
Mr. Gardner argues that because the Plan is not subject to the Louisiana Insurance Code, La. R.S. 22:1, et seq., the provisions of La. R.S. 22:868(B) are inapplicable. He further contends that cases involving contracts of insurance are not applicable in our determination of whether the Plan provision fixing the time for filing suit is reasonable and thus valid. However, OGB does not rely on the 10provisions of the Louisiana Insurance Code in seeking to enforce the "Legal Limitations" provision of the Plan. Rather, OGB relies upon the general rules relating to contracts contained in the Louisiana Civil Code. Moreover, although OGB health plans are excluded from the general definition of insurance contained in the Louisiana Insurance Code, OGB plans are similar to insurance and have been treated as insurance contracts by this Court. In Jones v. Board of Trustees, Louisiana State Employees Group Ben. Program, 96-0467 (La. App. 1 Cir. 12/20/96), 684 So. 2d 1174, 1177, we found that a policy exclusion in a state plan precluded coverage for orthodontic services. This court stated:
Louisiana Revised Statutes 22:46(13)(a) defines "Insurance" as "a contract whereby one undertakes to indemnify another or pay a specified amount upon determinable contingencies. It shall include any trust, plan or agreement …except … plans of the state or political subdivisions."
Louisiana Revised Statutes 22:868(B) provides, in pertinent part, that:
No … health and accident policy insuring a resident of this state … shall contain any condition, stipulation, or agreement limiting right of action against the insurer … to a period of less than one year from the time when the cause of action accrues ….
OGB was created by La. Acts 2001, No. 1178, § 5. The powers of the Board of Trustees were transferred to OGB. See La. R.S. 36:4 and 42:801.
It is well settled that "[a]n insurance contract is the law between the parties, and every provision therein must be construed as written. Insurers may limit their liability, so long as the limitations are not in conflict with statutory provisions or public policy and so long as the limitations are unambiguous and easily understandable." Additionally, a clear and unambiguous provision in an insurance contract which limits liability must be given effect. (Citations omitted, emphasis added).
[6] The right to contractually shorten prescriptive periods is not limited to insurers. Rather, the Louisiana Supreme Court has indicated that an insurance policy is a contract between the parties and should be construed by using the general rules of interpretation of contracts set forth in the Civil Code. Louisiana Ins. Guar. Ass’n v. Interstate Fire & Cas. Co., 93-0911 (La. 1/14/94), 630 So. 2d 759, 763. The Supreme Court has recognized the right of insurers, like other individuals, to limit their liability and to impose and to enforce reasonable conditions upon the policy obligations they contractually assume. Id.
The Louisiana Supreme Court has held that in a claim for breach of contract, the insurance contract is governed by the clear and unambiguous terms of the policy, despite the 10-year prescription period provided by La. C.C. art. 3499. 11 Taranto v. Louisiana Citizens Property Ins. Corp., 2010-0105 (La. 3/15/11), 62 So. 3d 721, 728. The Supreme Court explained:
Insurers, like other individuals, are entitled to limit their liability and to impose and enforce reasonable conditions upon the policy obligations they contractually assume. In the absence of a statutory prohibition, a clause in an insurance poli
?? fixing a reasonable time to institute suit is valid.
There is no statutory prohibition that precludes OGB from similarly contracting to limit its liability and to impose and enforce reasonable conditions upon the policy obligations it contractually assumes. Thus, the contractual period for filing suit defined in the Plan is binding unless the time provided is unreasonable.
The "Legal Limitations" provision of the Plan provides that a lawsuit related to a claim must be filed no later than 12 months after the claim is required to be filed, or more than 30 days after exhaustion of administrative remedies. As noted above, the Louisiana Supreme Court has allowed insurers to limit the time for their insureds to file suit to one year from the time the cause of action accrues. We do not find that the one-year limitation provided in the Plan is more onerous for Plan participants than for individuals insured by policies governed by the Louisiana Insurance Code. Thus, we find the shortened time period within which OGB plan participants must file suit to be reasonable, and thus valid.
Mr. Gardner’s first and second assignments of error are without merit.
[7, 8] In his third assignment of error, Mr. Gardner argues that the Plan is ambiguous with respect to the period by which he was required to file a lawsuit for benefits under the Plan. He contends that the Plan provided two separate dates by which claims had to be filed: (1) within 90 days from the date services were rendered, and (2) no later than 12 months from the date services were rendered. He further argues 12that the Plan provided two separate dates by which lawsuits had to be filed: (1) no later than 12 months after the claim was required to be filed, and (2) no more than 30 days after the participant exhausted his administrative remedies.
Article XVIII(I)(1) of the Plan provides that all claims must be filed within 90 days from the date services were rendered, unless it was not reasonably possible to do so. In no event could any claim be filed later than 12 months from the date services were rendered.
Article XIX(E), entitled "Legal Limitations," provides that a lawsuit related to a claim must be filed no later than 12 months after the claim is required to be filed, or more than 30 days after the plan participant has exhausted his administrative remedies, whichever is later. Mr. Gardner has properly interpreted this provision to mean "no more than 30 days" after exhaustion of administrative remedies. A contract must be interpreted in a common-sense fashion, according to the words of the contract in their common and usual significance. Prejean v. Guillory, 2010-0740 (La. 7/2/10), 38 So. 3d 274, 279. Moreover, a contract provision that is susceptible of different meanings must be interpreted with a meaning that renders the provision effective, and not with one that renders it ineffective. La. C.C. art. 2049; Clovelly Oil Co., LLC v. Midstates Petroleum Co., LLC, 2012-2055 (La. 3/19/13), 112 So. 3d 187, 192. To read this provision otherwise (i.e., as requiring a lawsuit relating to a claim to be filed "more than 30 days" after exhaustion of administrative remedies) would result in the "Legal Limitations" provision of the Plan failing to provide for a prescriptive period for filing a lawsuit, thus rendering the provision ineffective.
[9] Interpretation of a contract is the determination of the common intent of the parties. La. C.C. art. 2045. Each contractual provision must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole. La. C.C. art. 2050. When the words of a contract are clear, explicit, and lead to no absurd consequences, no further interpretation may be made in search of the parties’ intent. La. C.C. art. 2046. The rules of contractual interpretation do not authorize a perversion of the words or the exercise of inventive powers to create an ambiguity where none exists or the making of a new contract when the terms express with sufficient clarity the parties’ intent. Sims v. Mulhearn Funeral Home, Inc., 2007-0054 (La. 5/22/07), 956 So. 2d 583, 589.
Under the terms of the Plan, a participant was required to file his claim within 90 days from the date services were rendered, unless it was not reasonably possible to do so. In the event it was not reasonably possible to file a claim within 90 days from the date services were rendered, a participant had to file his claim no later than 12 months from the date services were rendered. Thereafter, a participant had to file a lawsuit related to a claim no later than 12 months after the claim was required to be filed, or more than 30 days after he exhausted his administrative remedies, 13whichever was later. When these provisions are read in pari materia, there is no ambiguity with respect to the period by which a participant was required to file a lawsuit. This assignment of error is without merit.
We find the "Legal Limitations" provision of the Plan fixing the time within which lawsuits must be filed is controlling. Pursuant to the Plan, Mr. Gardner was required to file his claim within 90 days from the date services were rendered, unless it was not reasonably possible for him to do so. Services were rendered from January 25, 2020, through March 26, 2020. OGB, through BCBSLA, received Mr. Gardner’s claims on April 7, 2020. Thus, it was reasonably possible for him to file his claims within 90 days from the date services were rendered, and he did so. In order to be timely, Mr. Gardner’s suit had to be filed no later than 12 months after his claim was required to be filed, or no more than 30 days after he exhausted his administrative remedies, whichever was later. Mr. Gardner was discharged from ABHH on March 26, 2020. His claim was required to be filed within 90 days of that date, or June 24, 2020. Mr. Gardner exhausted his administrative remedies on August 25, 2020, the date the external review process was completed. Under the clear terms of the Plan, Mr. Gardner had until June 24, 2021 (12 months after his claim was required to be filed), or September 24, 2020 (30 days after he exhausted his administrative remedies), whichever was later, to file suit. As June 24, 2021 was the later date, that was the date his suit was required to be filed. Mr. Gardner did not file suit until January 25, 2022, and thus his suit is prescribed. The trial court correctly granted OGB’s exception of prescription.
CONCLUSION
For the above reasons, we affirm the November 9, 2022 judgment granting the exception of prescription filed by the State of Louisiana through the Office of the Governor, Division of Administration, Office of Group Benefits, and dismissing. 14with prejudice, Donald Clay Gardner’s suit against OGB. Appeal costs are assessed to Donald Clay Gardner.
AFFIRMED.