Opinion
Case No. 1:02-CV-530
July 18, 2003
OPINION
Background
Plaintiff, Laurie A. Landis ("Landis"), has sued Defendant, Syndicate Systems, Inc. ("Syndicate"), under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 to 1461, for review of Syndicate's denial of benefits to Landis. In a prior Opinion and Order issued on March 21, 2003, the Court granted Defendant Healthcare Resources Group, LLC's motion to dismiss and dismissed Healthcare Resources Group, LLC from this case. In addition, the Court granted in part and denied in part Syndicate's motion to dismiss, concluding that the motion should be denied with respect to the issue of exhaustion but granted with respect to Landis' breach of fiduciary duty claim. Thus, the only remaining claim before the Court is Landis' claim for denial of benefits against Syndicate.
Landis has also made reference in her various briefs to a claim under 29 U.S.C. § 1132(c)(1) based upon Syndicate's alleged failure to provide requested Plan documents. Landis did not allege such a claim in her complaint or first amended complaint and has not moved for leave to amend her complaint to assert such a claim. Therefore, there is no claim under § 1132(c) pending before the Court. Moreover, even if Landis attempted to assert a claim against Syndicate under § 1132(c), that provision only applies to requests made to plan administrators, Kamler v. H/N Telecomm. Serv., Inc., No. 00 C 4024, 2001 WL 740516, at *8 (N.D.Ill. June 29, 2001), and the only evidence Landis has submitted shows that she made a request to Healthcare Resources Group, LLC, which was not the plan administrator. Finally, the letter from Landis' counsel to Healthcare Resources Group, LLC did not request a summary plan description or any other plan document to which an ERISA participant or beneficiary is entitled.
The parties have filed briefs regarding the standard of review and the information in the administrative record that supports their respective positions. The Court will treat the parties' briefs as cross-motions for judgment on the administrative record, the alternative to summary judgment in ERISA denial of benefits cases. See Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 619 (6th Cir. 1998). In addition, Syndicate has filed a motion for summary judgment based upon Landis' failure to exhaust her administrative remedies, in which Syndicate has shown that Landis had a copy of the Summary Plan Description which described the procedures for seeking review of a denial of benefits. For the reasons set forth below, the Court concludes that Syndicate is entitled to judgment for the alternate reasons that Landis failed to exhaust her administrative remedies and Syndicate's denial of benefits was not arbitrary and capricious.
Facts
At all times relevant to this action, Landis was a participant in the Syndicate Systems, Inc. Medical and Dental Benefits Plan (the "Plan"), an ERISA plan. Landis' employer, Syndicate, is the Plan sponsor as well as the Plan administrator. Healthcare Resources Group, LLC ("HRG"), which is no longer a defendant in this case, is the claims supervisor for the Plan.
On February 23, 2001, Landis' husband, Michael Landis ("Michael"), an insured dependent of Landis under the Plan, was admitted to Bronson Methodist Hospital for a medical emergency. The initial diagnosis was "syncope and collapse." (Administrative Record (hereafter "A.R.") at HRG 180.) Michael was subsequently transferred to Three Rivers Area Hospital and later to Borgess Medical Center, where his diagnosis was changed to "coma and stupor." (Id. at HRG 182.) The cause of Michael's condition was diagnosed as "poisoning by benzodiazepine-based tranquilizers" and "poisoning by other opiates." (Id. at HRG 184, 186.) Michael went into "respiratory failure" on February 24, 2001, and "renal failure" on February 26, 2001. (Id.) By March 3, 2001, Michael had suffered "anoxic brain damage." (Id. at HRG 188.) Michael died on March 17, 2001. Michael's death certificate listed the immediate cause of death as "acute toxicity" as a result of "overdose of hydrocodone diazepam." (Id. at HRG 110.) The death certificate also indicated that Michael's death was an "accident." (Id.)
Other records Syndicate received in connection with Michael's hospitalization confirm that the principal diagnosis of Michael's condition was poisoning by psychotropic agents, specifically benzodiazepine-based tranquilizers. (Id. at HRG 202, 204, 226.) Michael's condition was also diagnosed as poisoning by analgesics, antipyretics, and antirheumatics (including codeine, meperidine, and morphine). (Id. at HRG 204, 225.) The medical bill from Bronson Methodist Hospital contained a diagnosis of "unspecified drug dependence." (Id. at HRG 203, 219.) The billing records from Borgess Medical Center indicate that Michael suffered acute delirium, acute respiratory failure, acute renal failure, acute and subacute necrosis of the liver, anoxic brain damage, and toxic encephalapothy. (Id. at HRG 202, 204, 218, 220-24.)
Syndicate has included in the Administrative Record excerpts from the Ninth Revision of the International Classification of Diseases ("ICD-9-CM"), which explains the diagnostic codes contained in the medical bills provided by Bronson Methodist Hospital and Borgess Medical Center. (A.R. at HRG 215-226.)
Prior to his death, Michael was being treated for an opiod-type drug dependence. (Id. at HRG 135.) Between July of 1997 and September 27, 1999, Michael received weekly psychotherapy for his dependence. (Id. at HRG 135-58.) From September 1999 to the end of 2000, Michael received weekly methadone and counseling treatments. (Id. at 158-80, 205-14.) All of these treatments were covered under the Plan.
Based upon the diagnoses set forth in the medical billings and other records, HRG denied Landis' claim for payment of the expenses incurred in connection with Michael's hospitalization upon the ground that the "Plan does not cover charges for self inflicted injuries or illnesses." (Id. at HRG 76, 77, 85.) On or about July 5, 2001, Joon Park, of Healthcare Receivables Management, sent a letter to HRG inquiring about the denial of payment for the services provided to Michael. HRG responded:
Based upon the information collected through the investigation of this claim and our thorough review of this information, we have determined that the charges related to this incident are not covered under the group medical plan. The above-referenced determination of denial is based upon an exclusion contained within this plan. Under the plan exclusions in the plan book for Syndicate Systems, it states:
Self-inflicted — Any loss due [sic] an intentionally self-inflicted injury, while sane or insane.
(Id. at HRG 106.)
Landis did not appeal the denial of her claim to Syndicate, nor did she submit any additional information to HRG or Syndicate to show that Michael's death was not caused by an intentionally self-inflicted injury. Instead, on April 18, 2002, Landis' attorney sent a letter to HRG requesting advice "as to the current state of any appeals or internal reviews and what steps need to be taken to initiate reconsideration and/or resubmission of these charges." (Letter from Morris to HRG of 4/18/02, 1st Am. Compl. ¶ 14 Ex. D.) Landis filed the instant suit after HRG failed to respond to her attorney's inquiry.
Discussion
I. Denial of Benefits
A. Standard of Review
The issue presented in this case is whether Syndicate's determination that the expenses of Michael's treatment are excluded from coverage under the Plan is correct. See 29 U.S.C. § 1132(a)(1)(B). A plan administrator's denial of benefits under an ERISA plan is reviewed de novo "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57 (1989); see also Perez v. Aetna Life Ins. Co., 150 F.3d 550, 555 (6th Cir. 1998). The de novo standard of review applies to both the factual determinations and legal conclusions of the plan administrator. See Wilkins v. Baptist Healthcare Sys, Inc., 150 F.3d 609, 613 (6th Cir. 1998).Where the plan clearly confers discretion upon the administrator to determine eligibility or construe the plan's provisions, the determination is reviewed under the "arbitrary and capricious" standard.Wells v. United States Steel Carnegie Pension Fund, Inc., 950 F.2d 1244, 1248 (6th Cir. 1991). The arbitrary and capricious standard "`is the least demanding form of judicial review of administrative action. When it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious.'" Davis v. Kentucky Fin. Cos. Retirement Plan, 887 F.2d 689, 693 (6th Cir. 1989) (citation omitted) (quoting Pokratz v. Jones Dairy Farm, 771 F.2d 206, 209 (7th Cir. 1985)); see also Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 984 (6th Cir. 1991) (noting that administrators' decisions "are not arbitrary and capricious if they are `rational in light of the plan's provisions'") (quoting Daniel v. Eaton Corp., 839 F.2d 263, 267 (6th Cir. 1988)). In applying this standard, the Court must defer to the administrator's interpretation when the plan vests the administrator with discretion to interpret the plan; an administrator's determination will be overturned only upon a showing of internal inconsistency in the plan or bad faith.Davis, 887 F.2d at 695. While no particular language is necessary to vest the plan administrator with discretion to interpret the plan or make benefit determinations, the Sixth Circuit "has consistently required that a plan contain `a clear grant of discretion [to the administrator] to determine benefits or interpret the plan.'" Perez, 150 F.3d at 555 (quoting Wulf v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th Cir. 1993) (italics and alteration in original)).
The Plan contains the following grant of authority to the Plan Administrator:
The Plan Administrator shall administer this Plan in accordance with its terms and establish its policies, interpretations, practices, and procedures. It is the express intent of this Plan that the Plan Administrator shall have the maximum legal discretionary authority to construe and interpret the terms and provisions of the Plan, to make determinations regarding issue which relate to eligibility for benefits, to decide disputes which may arise relative to a Plan Participant's rights, and to decide questions of Plan interpretation and those of fact relating to the Plan. The decisions of the Plan Administrator will be final and binding on all interested parties.
(A.R. at HRG 062.) This language reflects a clear intent to vest the Plan Administrator with full discretion to interpret the terms of the Plan and to make benefit determinations under the Plan. Accordingly, the Court must apply the arbitrary and capricious standard in reviewing Syndicate's denial of Landis' claim.
B. Review of the Denial of Benefits
Syndicate denied Landis' claim on the basis of an exclusion which precludes benefits for: "Any loss due to an intentionally self-inflicted Injury, while sane or insane." (Id. at HRG 050.) The Plan defines "Injury" as "an accidental physical injury to the body caused by unexpected external means." (Id. at HRG 044.) Based upon Michael's long history of opiod-type dependence and the medical information received from the medical providers, which indicated that Michael's condition was caused by an overdose of hydrocodone and Valium, HRG and Syndicate concluded that Michael's condition was the result of a self-inflicted injury.
Several courts have upheld the denial of claims for benefits under ERISA plans in similar circumstances. Wickman v. Northwestern National Insurance Co., 908 F.2d 1077 (1st Cir. 1990), an oft-cited case in the ERISA context, provides guidance on the issue of accidental death benefits. The decedent in that case died when he climbed to the outside of a bridge, hung by one hand, and fell approximately thirty-to-forty feet onto railroad tracks below the bridge. Id. at 1080. The issue was whether the decedent's death was accidental. After determining that the insurance policy was an ERISA plan, the court considered the state law distinction between accidental means and results and instead opted for a federal common law rule focusing upon the reasonableness of the insured's expectations. Id. at 1086. The court summarized its analysis as follows:
If the fact-finder determines that the insured did not expect an injury similar in type or kind to that suffered, the fact-finder must then examine whether the suppositions which underlay that expectation were reasonable. . . . If the fact-finder determines that the suppositions were unreasonable, then the injuries shall be deemed not accidental. The determination of what suppositions are unreasonable should be made from the perspective of the insured, allowing the insured a great deal of latitude and taking into account the insured's personal characteristics and experiences.
Finally, if the fact-finder, in attempting to ascertain the insured's actual expectation, finds the evidence insufficient to accurately determine the insured's subjective expectation, the fact-finder should then engage in an objective analysis of the insured's expectations. In this analysis, one must ask whether a reasonable person, with background and characteristics similar to the insured, would have viewed the injury as highly likely to occur as a result of the insured's intentional conduct. An objective analysis, when the background and characteristics of the insured are taken into account, serves as a good proxy for actual expectation.Id. at 1088 (citations omitted). The court concluded that under the circumstances, the decedent either subjectively expected or reasonably should have expected that injury would occur as a result of his intentional conduct of hanging from the bridge. Id. at 1089.
Applying a similar approach to that taken by the court in Wickman, courts have upheld denials of benefits under "intentionally self-inflicted" exclusions for the intentional misuse of drugs. For example, in Holsinger v. New England Mutual Life Insurance Co., 765 F. Supp. 1279 (E.D.Mich. 1991), the court held that life insurance benefits were properly denied under an ERISA plan containing an exclusion for intentionally self-inflicted injury where the decedent ingested a quantity of codeine that caused his death. Id. at 1282. The court found that the "self-inflicted injury" language was not ambiguous, and formulated a four-part test to determine whether the language of the exclusion applied to the facts:
First, was the ingestion of drugs intentional? Second, did the decedent know that the ingestion of drugs would be likely to cause an injury? Third, did the ingestion of drugs cause an injury? Fourth, did the loss result from the injury?Id. The court devoted its analysis to the second inquiry, because it was undisputed that the decedent intentionally ingested the drugs, and there was no question that the drugs caused an injury that resulted in death. With regard to that inquiry, the court observed that in the case of a prescription drug, a loss caused by self-inflicted injury occurs only where the drug is ingested for a purpose other than for the therapeutic effect for which it was prescribed, because even drugs taken in an appropriate manner pursuant to a valid prescription have known side-effects and may produce severe damage if taken incorrectly or under the wrong conditions. Id. Thus, a person who takes a drug as prescribed for the intended medical benefit, but suffers an injury, would not come within the intentional self-infliction exclusion. Id. On the other hand, the court explained, where the drugs are ingested for an improper purpose, the exclusion will apply only if the ingestion could produce injury and the person ingesting the drugs knew that the drugs could produce an injury. Id. This prevents the exclusion from applying to a situation where a child ingests a bottle of medicine believing it to be candy. Id. The court concluded that it was clear that the ingestion of codeine in the quantity consumed by the decedent could cause injury and that the decedent, a pharmacist and long-time drug abuser, knew that the drugs could cause injury. Id. Moreover, the court held that the exclusion applied even if the decedent did not intend death, so long as he knew that death could result. Id.
In Bevans v. Iron Workers' Tri-State Welfare Plan, 971 F. Supp. 357 (C.D.Ill. 1997), the court held that the plan's "intentionally self-inflicted" exclusion supported the denial of the plaintiff's claim for payment of medical expenses incurred for the care of the plaintiff's teenage son, who, after having consumed some alcohol, ingested several Tylenol tablets out of anger and frustration toward his parents. Id. at 358-59. Applying the four-part inquiry from Holsinger, the court first found that although the plaintiff's son might have swallowed more tablets than intended, his actions in tipping the bottle and swallowing the large amount of tablets that went into his mouth demonstrated that his conduct was intentional and purposeful. Id. at 362. The court then examined whether the plaintiff's son knew that injury could result from his conduct and concluded that while the son may not have known that the Tylenol in combination with the alcohol could have a toxic effect on his liver, a reasonable person in the son's position should have known that taking a large dosage of a pain killer is dangerous and could cause some form of injury. Id. In addition, the court noted that the evidence demonstrated that the plaintiff's son was aware that he might die and observed that "any claim that . . . [an] average seventeen year old could take a large quantity of 500 mg Tylenol tablets without any recognition or expectation that it could cause him some form of harm [was] simply unreasonable." Id. Finally, the court found that the overdose caused serious damage to the son's liver, which required extensive treatment and resulted in the claim for benefits. Id.
Similarly, in McLain v. Metropolitan Life Insurance Co., 820 F. Supp. 169 (D.N.J. 1993), the court, applying an arbitrary and capricious standard of review, held that the defendant properly denied accidental death and dismemberment benefits to the plaintiff under the plan's "purposefully self-inflicted injury" exclusion where the decedent died from an overdose of cocaine. Id. at 178. The court reasoned that the decedent intentionally ingested the cocaine and, based upon his long history of cocaine use, the decedent should have been aware of the dangers inherent in the use of cocaine. Id. at 820-21. See also Gerdes v. John Hancock Mut. Life Ins. Co., 199 F. Supp.2d 861, 865-66 (C.D.Ill. 2001) (holding that although the decedent accidentally overdosed on a combination of cocaine, morphine, and ethanol, the plaintiffs could not reasonably assert that the decedent did know that his ingestion of those drugs could cause serious injury and possibly death); Nelson v. Sun Life Assurance Co. of Can., 962 F. Supp. 1010, 1013 (W.D.Mich. 1997) (concluding that the plaintiff's claim for benefits was barred by an exclusion for self-inflicted injury because "the hazards of drinking while driving or on prescription drugs are well-known to pose serious risks").
Based upon the evidence in the administrative record, Syndicate's decision to deny Landis' claim for benefits was not arbitrary and capricious. The record shows that Michael had a long history of opiod-type dependence; that his last known methadone treatment and counseling occurred at the end of December 2000; and that he was admitted to the hospital on February 23, 2001, for "poisoning by benzodiazepine-based tranquilizers" and "poisoning by other opiates," specifically, ingestion of hydrocodone and valium. Based upon this information, HRG and Syndicate could reasonably conclude that Michael intentionally ingested the drugs for a recreational, rather than a therapeutic, purpose and, that based upon his experience, he knew or should have known of the risks involved with taking controlled substances for an improper purpose. McLain, 820 F. Supp. at 178-79; Gerdes, 199 F. Supp.2d at 865-66. Moreover, nothing in the administrative records suggests that Michael accidentally ingested the drugs or that he was not aware of the inherent dangers of the improper use of prescription medication. Finally, the proper inquiry in determining whether the exclusion for intentionally self-inflicted injury applies is not whether the person intended death or the specific injury that resulted, but whether the person was aware that ingestion of drugs or engaging in other risky behavior could produce some injury. Holsinger, 765 F. Supp. at 1282. Thus, it is irrelevant that Michael may not have intended death.
Landis points out that the death certificate, signed by Dr. Richard Kik, Jr., states that the cause of death was an "accident." Landis contends that this statement is the only evidence in the record regarding the cause of Michael's death and that it clearly shows that his death was an accident. Landis further contends that Dr. Kik's statement in the death certificate is binding upon Syndicate under the Sixth Circuit's decision in Darland v. Fortis Benefits Insurance Co., 317 F.3d 516 (6th Cir. 2003), which held that the "treating physician rule" applicable in Social Security cases also applies to determinations by ERISA plan administrators. This argument is rejected, because the statement in the death certificate does not undermine the conclusion, or the evidence in the record upon which it is based, that the injury giving rise to Landis' claim is barred because it was intentionally self-inflicted. The statement in the death certificate that Michael's death was accidental does not contradict the conclusion that the ingestion of drugs was not accidental. Moreover, even if the "treating physician rule" were applicable, there is no evidence that the medical examiner was ever Michael's treating physician.
In light of the Supreme Court's recent holding in Black Decker Disability Plan v. Nord, ___ U.S. ___, 123 S.Ct. 1965, 1972 (2003), that ERISA does not require plan administrators to accord special deference to opinions of treating physicians, it is questionable whetherDarland remains good law, at least as to the issue of the treating physician rule.
Landis also argues that the Court should consider Syndicate's apparent conflict of interest in applying the arbitrary and capricious standard of review. It is true that a plan administrator's conflict of interest may impact a court's review of a plan administrator's determination. Darland, 317 F.3d at 527. However, the existence of a conflict is simply a factor to be considered by a court in determining whether the plan administrator's decision was arbitrary and capricious.Killian v. Healthsource Provident Adm'rs, Inc., 152 F.3d 514, 520 (6th Cir. 1998). Here there is no showing that Syndicate's conflict, as sponsor and Plan administrator, affected Syndicate's interpretation of the Plan.
II. Exhaustion of Administrative Remedies
In its prior Opinion and Order, the Court denied Syndicate's motion to dismiss with respect to the issue of exhaustion of administrative remedies, in part, because Landis indicated that she did not have a copy of the summary plan description, which contained the appeal procedure. Syndicate has now presented evidence, which Landis does not refute, that Landis in fact received a copy of the amended summary plan description. (Mazur Aff. ¶¶ 2,3, Def.'s Br. Supp. Mot. Summ. J. Ex. 1.) In light of this evidence, which was not before the Court in connection with the prior motions to dismiss, the Court now concludes that Landis failed to exhaust her administrative remedies.It is a firmly established principal that a participant who seeks to recover benefits under an ERISA plan must exhaust her administrative remedies prior to filing suit. Ravencraft v. Unum Life Ins. Co. of Am., 212 F.3d 341, 343 (6th Cir. 2000) (quoting Miller v. Metro. Life Ins. Co., 925 F.2d 979, 986 (6th Cir. 1991)); Baxter v. C.A. Muer Corp., 941 F.2d 451, 453-54 (6th Cir. 1991). Exhaustion "enables plan fiduciaries to efficiently manage their funds; correct their errors; interpret plan provisions; and assemble a factual record which will assist a court in reviewing the fiduciaries' actions." Makar v. Health Care Corp. of Mid-Atlantic, 872 F.2d 80, 83 (4th Cir. 1989). In light of the fact that Landis had a copy of the summary plan description, her failure to file an appeal with Syndicate within sixty days of the denial of her claim, as set forth in the summary plan description, precludes her claim here. Moreover, Landis does not argue that any of the recognized exceptions to exhaustion, such as futility, apply in this case.
In her brief in response to Syndicate's motion for summary judgment, Landis points to inquiries made to HRG by other parties regarding the appeal process and contends that such inquiries constitute an appeal on her behalf. This argument must be rejected because nothing in the administrative record shows that such persons were acting as Landis' agent and no appeal was ever filed by any party.
Conclusion
For the foregoing reasons, judgment will be entered in favor of Syndicate.An Order and Judgment consistent with this Opinion will be entered.