Opinion
Case No. 3:05 CV 7291.
June 20, 2007
MEMORANDUM OPINION
This matter is before the Court on competing motions for summary judgment filed by Defendant Medical Mutual of Ohio ("Defendant" or "MMO") (Doc. 18) and Plaintiffs Rodney and Kathleen Shaull (collectively, "Plaintiffs" or "the Shaulls") (Doc. 21).
Because Defendant did not act arbitrarily and capriciously in terminating Plaintiffs' health insurance policy when at least one premium payment was more than 30 days late, Defendant's motion for summary judgment is hereby granted (Doc. 18), and Plaintiffs' motion for summary judgment is hereby denied (Doc. 21). Additionally, this Court need not rule on the allegations in Plaintiffs' pleadings that Defendant acted arbitrarily and capriciously in denying Plaintiffs health insurance coverage under the Health Insurance Portability and Accountability Act (hereinafter "HIPAA"), 42 U.S.C. § 300gg-11 from October 2003 to May 2004 because no cause of action under HIPAA was stated in the complaint and no private right of action is permitted under the statute.
I. Background
The dispute in this case stems from Plaintiffs' transfer of their organization's health insurance policy from their previous provider, Community Health Plan of Ohio, to MMO. Pls.' Memo. in Opp./Mot. Summ. J., Doc. 21 at 2; Def.'s Reply in Supp. of Mot. Summ. J., Doc. 26 at 5. Ohio Missions' application for transfer of benefits to MMO occurred in October 2003, but the policy did not become effective until at least May 1, 2004. Doc. 21 at 3. Rodney, the head of Ohio Missions, and his wife, Kathleen, were covered as employees under the organization's group health insurance policy. Doc. 21 at 2.; Def.'s Mot. Summ. J., Doc. 18 at 4.
Between October 2003 and May 2004, Plaintiffs were denied insurance by MMO. Doc. 21 at 8; Doc. 26 at 4-6. Kathleen became ill in January 2004 and incurred a disputed amount of medical expenses. Doc. 21 at 3. Rodney's application was eventually accepted and he received an insurance card and premium invoice around May 1, 2004, with a coverage effective date of May 1, 2004. Doc. 21 at 4; Doc. 26 at 6. Kathleen did not receive an insurance card until July 2004 and the effective date of her insurance is disputed by the parties. Doc. 21 at 4; Doc. 26 at 8.
Rodney terminated Kathleen's insurance coverage with MMO in November 2004 because she became eligible for full Medicare benefits. Doc. 21 at 4-5. Ohio Missions' group policy, encompassing Rodney's coverage, was terminated in January 2005, effective December 1, 2004, for non-payment of premiums owed. Doc. 21 at 5-6.; Doc. 18 at 18. Plaintiffs contend that Defendant is required to reimburse them for medical expenses accrued between October 2003 and May 2004 and during December 2004 and January 2005. Doc. 21 at 6.
This lawsuit was originally brought in state court for breach of contract and bad faith. The claim was removed to this Court because it related to an employee benefit plan and therefore was preempted by the Employment Retirement Income Security Act of 1974 (hereinafter "ERISA"), 29 U.S.C. § 1001, et seq. Doc. 21 at 7; Doc. 18, Doc. 18 at 3.
II. Disputed facts
Nearly every major fact in this case is disputed. Plaintiffs allege they were current on all premiums owed to MMO and that Rodney's coverage was terminated due to failure to pay administrative fees for which Plaintiffs received no explanation. Doc. 21 at 12. Defendant alleges the Shaulls did not timely pay their premiums and that December 2004 and January 2005 premiums were more than 60 days late. Doc. 18 at 6.
Plaintiffs also allege they were wrongfully denied coverage during a period of time in which Kathleen incurred approximately $25,000 in medical expenses. Pl.'s Memo. in Opp./Mot. Summ. J. at 6, 8-10. Defendants dispute Plaintiffs were wrongfully denied coverage and contend the amount of medical bills provided by Plaintiffs only total about $2,000. Doc. 26 at 6-7. Additionally, Defendants contend they offered to retroactively extend Plaintiffs' insurance coverage back to October 2003, but Plaintiffs declined to pay the premiums. Doc. 26 at 6.
A pivotal fact on which the parties disagree is whether MMO reimbursed Kathleen for medical claims during May and June 2004, which is critical to determining whether Plaintiffs owe MMO unpaid premiums during those months. While both parties agree that Rodney's insurance effective date was May 1, 2004, Plaintiffs dispute that Kathleen's services also began on that date. Doc. 21 at 3-4. Defendants claim Kathleen's insurance effective date was also May 1, 2004, as noted on a billing statement sent to Plaintiffs dated June 10, 2004. Doc. 26 at 8. Because Kathleen did not receive an insurance card and was not included on an invoice for MMO services until July, Plaintiffs do not believe they owe premiums for Kathleen prior to July 1, 2004. Doc. 21 at 11.
III. Discussion
A. ERISA applicable
The power to regulate employee benefit plans is wholly reserved to the federal government under ERISA. See Shaw v. Delta Air Lines, 463 U.S. 85, 99 (1983); 29 U.S.C. § 1001. "A comprehensive statute designed to promote the interests of employees and their beneficiaries in employee benefit plans," ERISA subjects any employee benefit plan, including pension and welfare (illness, accident, unemployment, etc.) to federal regulation. Id. (internal citations and quotations omitted). ERISA pre-empts all state laws "insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a); Ky. Ass'n of Health Plans, Inc. v. Miller, 538 U.S. 329, 333 (2003). ERISA provides for a private right of action for participants or beneficiaries to recover benefits due under the terms of a person's plan. 29 U.S.C. 1132(a)(1).
Plaintiffs' health insurance coverage is part of an employee benefits plan obtained through their business, Ohio Missions, and which is administered by MMO. Doc. 21 at 2. Therefore, Plaintiffs' lawsuit to recover medical expenses allegedly due under their insurance policy is subject to federal regulation via ERISA.
B. ERISA standard of review
As a general principle of ERISA law, federal courts review a plan administrator's denial of benefits de novo, "unless the benefit plan gives the plan administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 613 (6th Cir. 1998) (citing Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). When a plan administrator has discretionary authority to determine benefits, the Court will review a decision to deny benefits under "the highly deferential arbitrary and capricious standard of review." Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376, 380 (6th Cir. 1996), Sanford v. Harvard Indus., Inc., 262 F.3d 590, 595 (6th Cir. 2001).
The arbitrary and capricious standard "is the least demanding form of judicial review of administrative action." When applying the arbitrary and capricious standard, "the Court must decide whether the plan administrator's decision was rational in light of the plan's provisions. Stated differently, when it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious." Williams v. International Paper Co., 227 F.3d 706, 712 (6th Cir. 2000) (internal citations and quotations omitted). Consequently, a decision will be upheld "if it is the result of a deliberate principled reasoning process, and if it is supported by substantial evidence." Id. (quoting Baker v. United Mine Workers of America Health Retirement Funds, 929 F.2d 1140, 1144 (6th Cir. 1991)). "The ultimate issue in an ERISA denial of benefits case is not whether discrete acts by the plan administrator are arbitrary and capricious but whether its ultimate decision denying benefits was arbitrary and capricious." Spangler v. Lockheed Martin Energy Sys., Inc., 313 F.3d 356, 362 (6th Cir. 2002).
The arbitrary and capricious standard of review "is not, however, without some teeth." McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 172 (6th Cir. 2003) (quoting Cozzie v. Metro. Life Ins. Co., 140 F.3d 1104, 1107-08 (7th Cir. 1998)). "Merely because our review must be deferential does not mean our review must also be inconsequential. While a benefits plan may vest discretion in the plan administrator, the federal courts do not sit in review of the administrator's decisions only for the purpose of rubber stamping these decisions." Moon v. Unum Provident Corp., 405 F.3d 373, 379 (6th Cir. 2005). The court's obligation under ERISA to review the administrative record in order to determine whether the plan administrator acted arbitrarily and capriciously "inherently includes some review of the quality and quantity of the medical evidence and the opinions on both sides of the issue." McDonald, 347 F.3d at 172.
For instance, in reviewing ERISA cases "courts must be aware of a possible conflict of interest and consider it as a factor in determining whether the decision to deny benefits was arbitrary and capricious." Gismondi v. United Technologies Corp., 408 F.3d 295, 298 (6th Cir. 2005). "[A]n actual, readily apparent conflict" exists where the party paying the benefits also decides whether to pay." Id. (quoting Killian v. Healthsource Provident Adm'rs, Inc., 152 F.3d 514, 520 (6th Cir. 1998)); Metropolitan Life Ins. Co. v. Conger, 474 F.3d 258, 266 (6th Cir. 1997). "[S]ixth Circuit case law requires a plaintiff not only to show the purported existence of a conflict of interest, but also to provide `significant evidence' that the conflict actually affected or motivated the decision at issue." Cooper v. Life Ins. Co. of N. Am., 2007 WL 1425488, 40 Employee Benefits Cas. 2293 (6th Cir. 2007) (citing Peruzzi v. Summa Med. Plan, 137 F.3d 431, 433 (6th Cir. 1998) (rejecting a sliding-scale application of arbitrary and capricious standard where conflict of interest is present and instead requiring significant evidence of self-interest or bad faith)). Consequently, a "conflict of interest does not displace the arbitrary and capricious standard of review" but is simply a factor considered "when determining whether the administrator's decision to deny benefits was arbitrary and capricious." Evans v. Unum Provident Corp., 434 F.3d 866, 876 (6th Cir. 2006) (internal citations and quotations omitted).
C. Termination of policy effective December 1, 2004
Both parties' motions for summary judgment are predicated on the same question of fact: whether Plaintiffs were more than 30 days late on any premium payments. Both Plaintiffs and Defendant agree that if Plaintiffs were late on any portion of their premium payments leading up to the January 2005 termination of the remainder of their policy, which encompassed Rodney's coverage, then termination of the policy was proper under the contract. Doc. 21 at 10; Doc. 18 at 6. However, Plaintiffs claim they were current on all premium payments at the time of the policy's termination, making Defendant's decision to end the policy arbitrary and capricious. Doc. 21 at 10. In contrast, Defendants contend Plaintiffs were at least 30 days late on certain premium payments related to Kathleen's coverage and thus a reasonable explanation exists for the termination of the group policy. Doc. 18 at 6.
MMO billing records show that Kathleen filed insurance claims in June 2004 which were subsequently paid by MMO. Doc. 26, Ex. 9 at 1. (Claims were filed by Kathleen for $80 and $70 on June 22, 2004 and June 24, 2004, respectively.) This evidence directly contradicts Plaintiff's contention that Kathleen received no services prior to July 2004. Pl.'s Memo. in Opp./Mot. Summ. J., Doc. 21 at 11.
Plaintiffs admit that premium payments for Kathleen were not paid prior to July 2004. Id. Therefore, at a minimum, because MMO paid claims filed by Kathleen in June 2004, she received services and should have paid the premium payment for June, which was included on an MMO invoice billed on June 10, 2004. Doc. 26, Ex. 10 at 7 (MMO invoice #005359513-8 to Ohio Missions).
The insurance contract, which Plaintiffs signed on Dec. 1, 2003, states that if premium payments are not received within 30 days of the due date, MMO may terminate the contract retroactive to the last day of the billing period for which payments were made. Doc. 26, Ex. 3 at 7. Kathleen's premium payment for June was never received and thus was significantly more than 30 days late at the time Rodney's contract was terminated in January 2005. Therefore, MMO was not arbitrary and capricious in ending Plaintiffs' contract and there is no need to consider allegations of other late payments.
Because Kathleen filed claims in June 2004 which MMO subsequently paid and Plaintiffs admit they did not pay Kathleen's June premium, a reasoned explanation exists for MMO's termination of the remaining portion of Plaintiffs' policy. Therefore, since the unpaid premium occurred more than 30 days prior to MMO's termination of the Shaull's remaining contract for Rodney, MMO was not arbitrary and capricious in terminating the insurance policy and is not required to reimburse Rodney for medical expenses incurred after December 1, 2004.
D. Conflict of interest not fully plead
MMO both pays the claims of its insured and makes the decision on whether those claims are eligible to be reimbursed. Doc. 26 at 3. However, the decision to terminate Plaintiffs' insurance policy is neither alleged nor substantiated by the evidence to have been motivated or affected by this conflict of interest. Such a showing is required in order to establish a conflict of interest under ERISA. Cooper, supra. Rather, Plaintiffs allege that MMO's decision was arbitrary and capricious because Plaintiffs find errors in one of MMO's ledgers to be "sloppy," Doc. 21 at 13, and because the monthly payments allegedly "paid in full" but not counted "must have [been] utilized . . . to satisfy other unpaid costs for which the Shaulls were wrongfully charged . . . effectively creat[ing] a premium shortage. . . ." Doc. 21 at 11. Even giving the benefit of the doubt to the conclusory nature of these statements, the facts they allege do not constitute significant evidence of self-interest or bad faith on the part of Defendant MMO. Peruzzi, supra. To the contrary, MMO submits evidence that Defendant offered to retroactively enroll Plaintiffs back to October 1, 2003 if Plaintiffs agreed to pay the monthly premiums for that period, but Plaintiffs declined the offer. Doc. 26 at 6. Therefore, this Court will not weigh MMO's conflict of interest against Defendant in deciding whether Defendant acted arbitrarily and capriciously in terminating Plaintiffs' policy.
E. HIPAA and claims filed prior to insurance policy effective date
This Court will not consider Plaintiffs' claim that MMO is required to reimburse them for over $25,000 in medical expenses allegedly incurred between October 2003 and May 2004 because Plaintiffs were wrongfully denied insurance coverage under HIPAA, Doc. 21 at 9-10, because Plaintiffs did not state a cause of action for this claim in their complaint. Even if such a claim had been plead, this Court is not prepared to recognize a private right of action under HIPAA on the facts presented in this case. See Wood v. Blyer, 2006 U.S. Dist Lexis 85989 at *27 (N.D. Ohio) ("HIPAA does not provide a private cause of action for improper disclosures of medical information, but rather provides civil and criminal penalties which are enforced by the Department of Health and Human Services."); Henry v. Ohio Victims of Crime Compensation Program, 2007 WL 682427 at *2 (S.D. Ohio 2007); Acara v. Banks, 470 F.3d 569 (5th Cir. 2006); Runkle v. Gonzalez, 391 F. Supp. 2d 210, 237 (D.D.C. 2005); but c.f. Acosta v. Byrum, 638 S.E.2d 246, 253 (N.C.App. 2006) (holding that while HIPAA does not create a private right of action, citing HIPAA may help establish breach of appropriate standards of care).
IV. Conclusion
Defendant's motion for summary judgment is hereby granted (Doc. 18). Plaintiffs' motion for summary judgment is hereby denied (Doc. 21). Defendant's motion to strike (Doc. 38) is hereby denied as moot.
IT IS SO ORDERED.