Anna Fay and Louis Fay v. Oxford Health Plan

This is an appeal from a January 3, 2001 judgment of the United States District Court for the Southern District of New York (John S. Martin, Jr., Judge) dismissing the complaint of plaintiffs-appellants Anna and Louis Fay upon summary judgment motion of defendant-appellee Oxford Health Plan of New York. The Fays claimed, pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., coverage for 24-hour


private in-home nursing care for Louis Fay under the employee

benefits plan in which Anna Fay, through her employment at Mt. Sinai Medical Center, is a participant. We affirm the district court's conclusion that the Fays are not entitled to the 24-hour, in-home care they desire because such care is not generally covered by the Fays' health care plan and because the health plan has determined such care is not medically necessary in Mr. Fay's case.

I.

There is no dispute about Louis Fay's medical condition. Mr. Fay has multiple sclerosis, diagnosed in 1961, and diabetes mellitus. Mr. Fay is quadriplegic, is totally dependent in all self care, has a tracheostomy, and is ventilator-dependent due to respiratory insufficiency. Mr. Fay is competent, and although unable to speak, communicates using a letter board. Although Mr. Fay's condition is severe, his health insurance carrier need only provide those services promised in its contract provisions. Despite its empathy for Mr. Fay and his family, this Court finds that the contract does not extend to the 24-hour, in-home care Mr. Fay desires.

II.

Since 1992, Mr. Fay has received 24-hour nursing care at his home to assist with mechanical ventilation and a tracheostomy, and to manage his diabetes through injections and blood glucose



monitoring. 1 Anna Fay, who works for Mt. Sinai Medical Center, receives health care benefits through her employer. Louis Fay, her husband and dependent, also receives these benefits. Prior to 1996, Mt. Sinai offered an Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), plan through Aetna which included a benefit for 24-hour in-home private duty nursing. Mr. Fay received such a benefit. As of January 1, 1996, however, Mt. Sinai chose to offer its health plan benefits through Oxford Health Plans.

A. The Mt. Sinai/Oxford Point-of-Service Plan ("the Plan")

The Plan describes coverage for participants as follows:

A Member shall be entitled to receive the following medical care and services of Physicians, Surgeons, and other Plan Providers as set forth in Attachment A, including medical, surgical, diagnostic, therapeutic, and preventive services, which are generally and customarily provided in the area, which are determined by Health Plan to be Medically Necessary AND WHICH ARE PERFORMED, PRESCRIBED, DIRECTED OR AUTHORIZED IN ADVANCE BY MEMBER'S PRIMARY CARE PHYSICIAN, OR HEALTH PLAN.

The body of the Plan sets out the details of plan administration, including eligibility, termination of coverage, and limitations of coverage, and provides definitions of key terms like

"Medically Necessary" 2 and "Medical Director." 3 The specific details of the Plan's coverage appear in Attachment A's "Schedule of Benefits and Exclusions." Introducing these benefits, Attachment A first explains that "all services and benefits under this Certificate are available . . . only if and to the extent that they are Medically Necessary and are provided, authorized or directed by Member's Primary Care Physician or Health Plan." The Attachment then establishes the parameters for several key aspects of the Plan's health care coverage.

Attachment A defines "Medical Care" as including "Medically Necessary medical care and services, including office visits and consultations, Hospital and Skilled Nursing Facility visits, and periodic physical examinations . . . when authorized in advance by Member's Primary Care Physician and/or Oxford as required under the terms of this Certificate." It also expressly defines "Home Health Care" to include (1) house calls and, (2) home care, further defined as:

[c]are in the home by Physician-supervised health professionals other than Physicians, provided by a state licensed or certified Home Health Agency within the Service Area when authorized in advance by Member's Primary Care Physician and Health Plan. Such care shall be limited to two hundred (200) home care visits per contract year. For the purpose of this Certificate, a visit is defined as treatment of up to 4 hours by an eligible home health provider. Home care includes (i) part-time or intermittent home nursing care by or under the supervision of a registered professional nurse (R.N.), (ii) part-time or intermittent home health aide services which consist primarily of caring for the Member, (iii) physical, occupational, or speech therapy where provided by the home health service or agency, and (iv) medical supplies, drugs and medications prescribed by a Participating Physician, and laboratory services by or on behalf of a certified home health agency to the extent such items would have been covered or provided hereunder if the Member had been hospitalized or confined in a Skilled Nursing Facility.

The Attachment then explains that "Skilled Nursing Facility" ("SNF") services may include "non-custodial care which is Medically Necessary for 200 days per Member per calendar year," but not "[c]ustodial, convalescent or domiciliary care in an SNF or elsewhere."

Having detailed these available areas of coverage, Attachment A next sets out several explicit exclusions, including "[p]rivate or special duty nursing," i.e., full-time, in-home care. Specifically, the Plan states, "[e]xcept as specifically provided in any Attachment hereto, the following services and benefits are excluded from coverage hereunder. . . . (13) [p]rivate or special duty nursing, unless determined to be Medically Necessary and approved in advance by Health Plan."

Attachment C to the Plan outlines the Grievance Procedure, which consists of four elements: (1) the Member who is dissatisfied files a complaint with a Customer Service Associate, who investigates and attempts to achieve a resolution, and notifies the Member of such resolution within fifteen days; (2) if the Member is still dissatisfied, she may file a written complaint with the Issues Resolution Department ("IRD"), which conducts a review and provides a written response within fifteen days; (3) if still dissatisfied, the Member may file a formal written grievance with the Grievance Review Board, composed of a committee of Health Plan employees designated by the Health Plan's Board of Directors, that issues a decision within fifteen days; and (4) if still dissatisfied, the Member may appeal in writing to the Board of Directors by letter to the Secretary of the Grievance Review Board. An appeals committee designated by the Board of Directors reviews the final appeal, holding a hearing if the Member so desires. The appeals committee issues a "final ruling" within fifteen days.

B. Oxford's Coverage of Care for Mr. Fay

In 1996 and 1997, Oxford provided to Mr. Fay coverage for 24-hour private duty nursing care, under the Plan's "Home Health Care" and "Skilled Nursing Facility" provisions. Both items of coverage had annual limits: (1) the home health benefit provided 200 visits, of 4 hours each, per year (33 days of 24-hour per day care); and (2) the SNF benefit provided 200 days of coverage in such a facility. For 1996 and 1997, Oxford agreed to convert the 200 SNF days to cover Mr. Fay's home care "provided that his condition continue[d] to meet the criteria for Home Care," giving a total of 233 days of private duty coverage. Oxford informed the Fays, however, that when the Fays exhausted these benefits, Oxford would no longer cover full-time, in-home care for the remainder of the year. In 1996, Mt. Sinai agreed to cover the remainder of the days, as "an interim solution and an exception to [the] contract provisions." In a letter to Mrs. Fay, Mt. Sinai advised that "Mount Sinai will not extend the extra contractual benefits into 1997" and that Mrs. Fay should pursue other coverage and funding options.

As warned, Oxford notified the Fays that coverage for home nursing services would cease on August 21, 1997, and that they should inquire as to other funding options. Oxford enclosed with its notification letter a list of federal and state agencies from which the Fays might seek additional funds. In 1998, Oxford did not approve the Fays' request for home care benefits, claiming that such coverage was neither covered by the Plan nor "medically necessary," as that term is used in the Plan. While Oxford approved the 200 "home care" visits (33 days of 24-hour per day coverage) for 1998, it refused to "convert" the 200 SNF days as it had in 1996 and 1997. No home nursing care benefits have been paid since that time.

C. District Court Proceedings

The Fays filed this lawsuit against Oxford Health Plan of New York, Inc. 4 and the Mount Sinai Medical Center Point-of-Service Plan on January 20, 1998. The Fays sued to recover plan benefits, pursuant to ERISA, 29 U.S.C. §1132(a)(1)(B), which provides that "a civil action may be brought ...by a participant or beneficiary ...to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 5

Upon the parties' cross-motions for summary judgment, the district court granted defendants' motions and denied the plaintiffs' motion. Fay v. Oxford Health Plans, No. 98 Civ. 0350 (JSM), 1998 WL 437159 (S.D.N.Y. July 31, 1998). The district court concluded that the Plan was not a proper party, because it was incapable of providing the requested relief, as the Plan had specifically assigned to Oxford the responsibility for coverage determination and benefit payment. Fay, 1998 WL 437159, at *2. The Fays do not appeal this dismissal. The district court then granted Oxford's motion for summary judgment "on the basis that plaintiffs have failed to exhaust administrative remedies." Id.

Thereafter, the Fays exhausted the Plan's grievance procedures. The IRD issued a written decision on October 29, 1998, stating that coverage was denied "both because private duty nursing is not a covered benefit under Mr. Fay's Oxford policy and because, in the opinion of Oxford's Medical Director, the home nursing being provided to Mr. Fay is not Medically Necessary" as it is not "the most appropriate supply or level of service which can safely be provided." The Grievance Review Board upheld the IRD's denial of in-home care in a March 30, 1999 letter, stating that the Home Care benefit is appropriate for "part-time or intermittent nursing care only" and not for the 24-hour nursing care requested. The Fays appealed to the Grievance Committee, which, on June 30, 1999, upheld the denial of coverage stating that private duty nursing is excluded from coverage, except in cases where the Medical Director determines it to be medically necessary, and that, here, no such determination was made.

The district court restored the action to its active calendar after Oxford's final determination denying coverage. After initial discovery, Oxford and the Fays again cross-moved for summary judgment. On January 3, 2001, the district court issued a memorandum opinion and order, granting Oxford's motion. Fay v. Oxford Health Plans, No. 98 Civ. 0350 (JSM), 2001 WL 8592 (S.D.N.Y. Jan. 3, 2001). The district court first concluded that "Oxford's contract with Mt. Sinai does not require it to provide unlimited twenty-four hour private duty nursing care at home, even if such care is determined to be medically necessary." Id. at *1. The district court reasoned that the "private duty nursing" exclusion could not be read to obligate Oxford to provide such benefits, even if medically necessary, because such an interpretation contravened the plain language of the Plan. Id. at *2. The district court then concluded that, even if the Plan could be read to obligate Oxford to provide such coverage, "the determination by Oxford's Medical Director that Mr. Fay could best be cared for in a skilled nursing facility would be sustained." Id. at *3. The district court noted its previous conclusion that the Plan gave the Medical Director discretion to make medical necessity determinations and that, therefore, the court could overturn decisions of the Director only if it found those decisions arbitrary and capricious. Id. at *3. The district court explained, however, that the Fays' claim would fail under either an arbitrary and capricious or a de novo standard of review. Id. at *4. The court then dismissed the Fays' complaint. Id. at *5.

D. Claims on Appeal

On appeal, the Fays raise several challenges to the district court's grant of summary judgment: (1) The district court incorrectly concluded that the plan unambiguously excludes coverage for private duty nursing coverage; (2) the district court erroneously deferred to the Medical Director's opinion as to the Medical Necessity of in-home care for Mr. Fay; and (3) the district court improperly accorded privileged status to a document prepared by Oxford's in-house counsel, Gary Burfoot. 6 Because this Court finds the first two issues dispositive, it does not reach the third issue. The court also rejects the Fays' alternative claim for damages.

* * *

The Plan invokes discretion by defining "Medically Necessary" as those services which, "as determined by [the] . . . Medical Director," meet four listed requirements. (emphasis added). This phrase grants Oxford discretionary authority as to determinations of what is "Medically Necessary," but does not afford Oxford broader discretion to construe other Plan terms. Thus, while this Court will review determinations of medical necessity with deference to the findings of the Medical Director under an arbitrary and capricious standard, see Zuckerbrod, 78 F.3d at 49, it will review other exercises of the agreement de novo, seeBruch, 489 U.S. at 115. Even under de novoreview, however, the Fays' claim that the Plan generally provides the 24-hour home health care requested fails.

B. Plan Interpretation

ERISA plans are construed according to federal common law. Masella v. Blue Cross & Blue Shield of Conn., Inc., 936 F.2d 98, 107 (2d Cir. 1991). This Court will review the Plan as a whole, giving terms their plain meanings. See, e.g., Brass v. Am. Film Techs., Inc., 987 F.2d 142, 148 (2d Cir. 1993) ("Where the [contract] language is plain and unambiguous, a court may construe the contract and grant summary judgment."); Bradwell v. GAF Corp., 954 F.2d 798, 800 (2d Cir. 1992) ("In construing the policy, we look to the language of the policy and other indicia of the intent of the policy's creator."). Where there are ambiguities in an ERISA plan that this Court is reviewing de novo, those ambiguities are construed in favor of the plan beneficiary. Masella, 936 F.2d at 107. "Language is ambiguous when it is capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire . . . agreement." O'Neil v. Ret. Plan for Salaried Employees of RKO Gen., Inc., 37 F.3d 55, 59 (2d Cir. 1994) (internal quotation marks and citations omitted). "Whether contract language is ambiguous is a question of law that is resolved by reference to the contract alone." Id.at 58-59 (internal quotation marks and citations omitted).

* * *

Click the case caption above for the full text of the Court's opinion.

This Court affirms the district court's grant of summary judgment to defendant-appellee Oxford on the basis that the Plan's explicit language provides at best a very narrow exception to a blanket exclusion of the full-time, in-home care the Fays request. Based on Oxford's determination, neither arbitrary nor capricious, that such care is not "Medically Necessary" within the meaning of the plan, treatment of Mr. Fay cannot fall within that exception. Despite the Court's sympathy for Mr. Fay and his family, the district court's grant of summary judgment is AFFIRMED.

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