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Baudoin v. Bluecross Blueshield of Louisiana

United States District Court, W.D. Louisiana, Lafayette Division

March 21, 2018

ALEX BAUDOIN, ET AL
v.
BLUECROSS BLUESHIELD OF LOUISIANA incorporated as LOUISIANA HEALTH SERVICE & INDEMNITY COMPANY

          HANNA, MAG. JUDGE.

          MEMORANDUM RULING

          JAMES T. TRIMBLE, JR. UNITED STATES DISTRICT JUDGE.

         The instant Petition for Damages, Penalties and Attorney's Fees against Defendant, BlueCross BlueShield of Louisiana, incorporated as Louisiana Health Service & Indemnity Company ("BCBS") is an ERISA case wherein Plaintiffs are suing BCBS for benefits due under Plaintiffs' health insurance contract, penalties in the amount of double the amount of benefits due, attorney's fees, legal interest from the date of judicial demand, and costs.

         Plaintiffs allege that BCBS improperly denied mental health benefits for Alex's treatment received at The Meadows at Wickenburg, Inc. ("The Meadows") in Arizona and the JayWalker Lodge (the "Lodge") in Colorado. There is no dispute that the health plan is governed by ERISA; thus, ERISA preempts all state law claims. BCBS maintains that the Plaintiffs are seeking to recover benefit payments not due under the Plan, and thus their denial was proper.

         BACKGROUND AND PROCEDURAL HISTORY

         Scotty and Maggie Baudoin are the parents of Alex Baudoin. At all times pertinent, BCBS was the insurer of the Baudoin family through Mr. Baudoin's employer. On October 15, 2010, Alex was experiencing severe depression and polysubstance dependence. On that same day, Plaintiffs assert that Alex attempted to end his life.[1]

         The next day, Alex's family coordinated a meeting with counselor, Roy Petitfils, who examined and evaluated Alex[2] ultimately concluding that based upon Alex's symptoms, Alex required 24-hour staff supervision. Mr. Petitfils recommended that Alex be immediately placed in inpatient treatment.

         The Meadows

         Mr. and Mrs. Baudoin took their son to The Meadows in Wickenburg, Arizona where he received in-patient care from October 21, 2010 through November 24, 2010. The Baudoins claim that The Meadows advised them that BCBS had been notified and the benefits for the inpatient care had been verified. The total charges by The Meadows for Alex's treatment was $40, 799.92; the majority of this amount had to be paid in advance. Mr. and Mrs. Baudoin borrowed money to pay the amount.

         A claim was filed with BCBS which forwarded the claim to Magellan Health Services ("Magellan")[3] for a retroactive review for authorization of the inpatient care. Ultimately, BCBS denied all of the charges for various reasons including inadequate medical information from the provider, a wrong form was filed and items for personal convenience were excluded. Mr. Baudoin provided additional information and appealed the denial.

         In two separate letters, Magellan corresponded with Alex Baudoin and advised that his inpatient treatment was not medically necessary based on the 2010 Magellan Behavioral Health Medical Necessity criteria, i.e "the medical necessity criteria for the requested level of care were not met."[4] Specifically, the first letter dated March 25, 2011 stated that

[b]ased on the records submitted, your vital signs were stable and it appeared there was no substance related withdrawals. You were not an imminent danger to yourself or others and did not appear to require 24 hour staff supervision. You could have safely and effectively been treated in a less intensive level of care.[5]

         The second letter also dated March 25, 2011 stated that

[b]ased on the records submitted, you were not experiencing any substance related withdrawals. You did not have any major medical or psychiatric co-morbid problems that required 24 hour staff supervision. You were not an imminent danger to yourself or others. You had support available. You could have safely and effectively been treated in a less intensive level of care.[6]

         The Baudoins, via The Meadows, appealed the denial: Magellan again forwarded a letter dated May 2, 2011 again determining that Alex's in-patient treatment was not medically necessary for the following reasons:

Based on the medical records submitted, you are not an imminent danger to yourself or others. There were no logistic impairments such as distance from treatment facility, mobility, limitations that preclude participation in a partial hospital setting. You were not exhibiting any symptoms that require 24-hour nursing care. You could have been safely and effectively treated at a less-intensive level of care.

         In response, the Baudoins forwarded correspondence and a sworn Affidavit by Roy Petitfils in an attempt to convince BCBS and/or Magellan that Alex's inpatient treatment was medically necessary. The April 7, 2011 letter authored by Mr. Petitfils stated the following:

Alex called and asked to see me because he was considering hurting himself. He was especially concerned because during the previous four months he had experienced increasingly frequent and intense thoughts of self-harm including suicide. In a two hour-long visit Alex chronicled for me his history of substance abuse beginning in high school, continuing to the present.
Alex was forthcoming about his many sincere, yet unsuccessful attempts to get "clean" and away from several addictive substances including but not limited to marijuana and alcohol. He said he felt "like giving up."
When I met with Alex, he met the criteria for a Substance Dependence Disorder with subsequent substance induced depressive episodes...[7]

         The letter was considered a first level appeal of the denial; Magellan reviewed the appeal and again determined that the inpatient admission was not medically necessary.[8]Plaintiffs then filed the instant lawsuit; it was then determined that Plaintiffs had not exhausted their administrative remedies. Consequently, the lawsuit was stayed pending the appeal.

         The second level appeal was conducted by an Independent Review Organization, [9]MCMC and a physician, board-certified in psychiatry and child psychiatry concluded that the inpatient services were not medically necessary.

         After leaving The Meadows, Alex was admitted to JayWalkerfor inpatient aftercare from November 27, 2010 until his discharge on April 18, 2011. The charges for the JayWalker services was $51, 250. JayWalker filed a claim which was returned because the claims were not on the proper forms and did not contain all of the necessary information.

         At that time, the instant lawsuit had been filed; counsel for Plaintiff and BCBS were able to obtain the proper information to process the claim for benefits. Magellan reviewed the claim but denied the benefits finding that the JayWalker services were not medically necessary. Specifically, Magellan found that Alex's aftercare did not meet the guidelines for "Magellan MNC Residential Treatment, Substance Use Disorders, Rehabilitation, Adult and Geriatric." On appeal, Magellan again concluded that the services were not medically necessary. Thereafter, Plaintiffs filed the second level appeal to an Independent Review Organization where the appeals board concluded that the JayWalker services were not medically necessary.

         STANDARD OF REVIEW

         A denial of benefits challenged under § 1132(a)(1)(B) is generally reviewed under a de novo standard unless the benefit plan gives the Plan Administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan.[10] If the plan grants the Plan Administrator discretion, BCBS's determinations are reviewed only for abuse of discretion.[11] Under an abuse of discretion standard, the court considers whether BCBS's actions were arbitrary and capricious.[12]

         The BCBS Plan states that "[t]he company has full discretionary authority to determine eligibility for Benefits and/or construe the terms of this Benefit Plan."[13] Plaintiffs complain that even though the Plan defines "Company" as Blue Cross and Blue Shield of Louisiana, "[14] the "Plan Administrator" is not defined. Plaintiffs suggest that the absence of a defined "Plan Administrator" is the insurer's attempt to take advantage of the favorable standard of review. In other words, insurers wish to be identified as the Plan Administrator in order to have the final review afforded to such Administrators. Thus, Plaintiffs argues that the Plan does not grant the Plan Administrator discretionary authority, which would cause the standard of review by this court to be a de novo review.

         As noted by BCBS, the Plan authorizes BCBS to delegate "[a]ny of the functions to be performed by [BCBS] under this Benefit Plan, " to third parties.[15] 29 U.S.C. § 1105(c)(1)B) authorizes such delegations and states that the Plan documents may expressly provide for, "... named fiduciaries to designate persons other than named fiduciaries to carry out fiduciary responsibilities ... under the Plan."[16]

         The court finds that the Plan grants BCBS discretionary authority to determine eligibility for benefits or to construe the terms of the Plan. Accordingly, the standard or review by this court will be under an abuse of discretion standard. Our review is a "two-step process when conducting [an] abuse of discretion review."[17] A court must first determine the legally correct interpretation of the plan and inquire as to whether the interpretation was consistent with a fair reading of the Plan. If BCBS's interpretation of the Plan was legally correct, there is no abuse of discretion.[18] If we find that BCBS did not give the Plan the legally correct interpretation, then we must determine if BCBS's decision was an abuse of discretion.

         Abuse of discretion is synonymous with the arbitrary and capricious standard.[19] A decision is arbitrary and capricious only if "made without a rational connection between the known facts and the decision or between the found facts and the decision.[20]

         ANALYSIS

         BCBS maintains that its interpretation of the Plan was consistent with a fair reading of the Plan. Moreover, its determination that Alex's inpatient treatment was not medically necessary was consistent with a fair reading of the Plan. Plaintiffs, on the other hand, maintain that Alex's inpatient treatment met the criteria for allowing benefits for inpatient treatment.

         The Plan defines "inpatient" as a plan member whose "medical symptoms or conditions must require continuous twenty-four (24) hour a day Physician and nursing intervention."[21] The Plan further provides that "[i]f the services can be safely provided to the Member as an Outpatient, the Member does not meet the Criteria for an Inpatient.[22]The Plan defines "Medically Necessary (or Medical Necessity) as:

Health care services, treatment, procedures, equipment, drugs, devices, items or supplies that a Provider, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing or treating an illness, injury, disease or its symptoms, and that are;
A. In accordance with nationally accepted standards of medical practice;
B. Clinically appropriate, in terms of type, frequency, extent, level of care, site and duration, and considered effective for the patient's illness, injury or disease; and
C. Not primarily for the personal comfort or convenience of the patient, or Provider, and not more costly than alternative service, treatment, procedures, equipment, drugs, devices, items, supplies or sequence thereof and that are as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient's illness, injury or disease.
For these purposes, "nationally accepted standards of medical practice" means standards that are based on credible scientific evidence published in peer-reviewed medical literature generally recognized by the relevant medical community, Physician Specialty Society recommendations and the views of Physicians practicing in relevant clinical areas and any other relevant factors.[23]

         BCBS asserts that Magellan used criteria developed with input from peer reviewed scientific literature, national mental health care standards, regulatory agencies, and a behavioral health advisory committee made up of behavioral health care practitioners, network providers, and national consultants.[24]

         BCBS's denials for benefits at The Meadows were based on a review of the medical records wherein Magellan concluded that Alex (1) had stable vital signs, (2) had no substance abuse related withdrawals; (3) was not an imminent danger to self or others; (4) did not require 24-hour supervision, (5) could have safely and effectively been treated in a less intensive ...


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