Case Title: Squillace v. Wyoming State Employees' and Officials' Group Ins Bd. of Admin.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1997-02-28T00:00:00Z

Document:
Squillace v. Wyoming State Employees' and Officials' Group Ins Bd. of Admin.1997 WY 33933 P.2d 488Case Number: 95-316Decided: 02/28/1997Supreme Court of Wyoming

Mark SQUILLACE

Appellant (Petitioner)

v.

WYOMING STATE EMPLOYEES' AND OFFICIALS' GROUP 
INSURANCE BOARD OF ADMINISTRATION

Appellee (Respondent)

 

Appeal 
from The District Court, Albany County

The 
Honorable Arthur T. Hanscum, Judge

 

Representing Appellant: 

Mark Squillace, pro 
se.

 

Representing Appellee: 

William U. Hill, Attorney 
General; and Michael L. Hubbard, Deputy Attorney General

 

Before TAYLOR, C.J., and THOMAS, MACY, GOLDEN and 
LEHMAN, JJ.

 

LEHMAN, 
Justice.

 [¶1]      Appellant Mark 
Squillace challenges a denial of insurance benefits by Great-West Life & 
Annuity Insurance Company (Great-West), the entity which administers the State 
of Wyoming's group health insurance plan. The Wyoming State Employees' and 
Officials' Group Insurance Board of Administration (Board) found in favor of 
Great-West, and the district court affirmed the Board's decision. Appellant 
appeals the decision of the district court.

 

[¶2]      We 
affirm.

 

[¶3]      Appellant 
presents a single issue for review:

Whether substantial evidence in the record supports 
the Board and district court decisions affirming the denial of insurance 
benefits to the appellant.

 

FACTS

 

[¶4]      Appellant is an 
employee of the University of Wyoming and is enrolled in the State of Wyoming's 
group health insurance plan with family coverage. He seeks recovery for the cost 
of surgery performed on his wife, Brenda Kelley, a covered dependent under his 
health insurance policy.

 

[¶5]      As a result of 
two cesarean sections, Ms. Kelley suffered from abdominal wall laxity. Her 
surgeon, Dr. Christopher Tsoi, diagnosed Ms. Kelley as suffering from fascial 
laxity and a ventral hernia. Her condition limited her ability to function, in 
particular, her ability to perform sit-up type motions and to lift her children. 
Dr. Tsoi discussed two options with Ms. Kelley: 1) no surgery, and 2) surgery to 
repair the abdominal wall and remove excess skin. Ms. Kelley's gynecologist, Dr. 
Kathryn Kohler, concurred with Dr. Tsoi in the need for repair. Dr. Kohler's 
letter stated that Ms. Kelley suffered from diastasis recti, a separation of the 
abdominal muscles, but Dr. Tsoi indicated he did not detect diastasis recti when 
he examined Ms. Kelley.

 

[¶6]      Appellant and Ms. 
Kelley decided that surgery was the best option. Several months before the 
surgery, appellant sought preauthorization from Great-West for the proposed 
procedure. Appellant was notified on December 7, 1993, that the procedure was 
not covered because it was considered cosmetic. On April 5, 1994, Dr. Tsoi 
provided additional information to Great-West, including his medical notes from 
his initial consultation with Ms. Kelley. Pre-authorization was again denied, 
this time because the surgery was deemed not medically 
necessary.

 

[¶7]      According to a 
billing statement from Dr. Tsoi's office, on May 10, 1994, Dr. Tsoi performed 
surgery on Ms. Kelley, repairing an incisnal hernia and removing excess skin and 
subcutaneous tissue. The hospital claim was reviewed on July 8, 1994, by 
Great-West. The claim was denied, again on the basis that the surgery was not 
medically necessary.

 

[¶8]      Appellant filed a 
grievance with the Board seeking review of the claim. He contended that Ms. 
Kelley's surgery was medically necessary because it met the four criteria listed 
under the definition of that term contained in the policy. Even if the surgery 
was deemed cosmetic, appellant pointed out that the policy specifically provided 
for coverage of cosmetic surgery in certain circumstances. He argued Ms. 
Kelley's surgery was performed to correct a deformity that resulted from 
pregnancy, and so is a covered service under the terms of the insurance 
contract.

 

[¶9]      A contested case 
hearing was held; and, on October 13, 1994, the Board issued its findings of 
fact and conclusions of law in favor of Great-West. Appellant appealed to the 
district court, which affirmed the Board's decision on November 13, 1995. 
Appellant timely filed this appeal.

 

STANDARD OF 
REVIEW

 

[¶10]   Our review of agency action is 
governed by W.S. 16-3-114 (1990), which provides:

 

The reviewing court shall:

* * * * * *

(ii) Hold unlawful and set aside agency action, 
findings and conclusions found to be:

(A) 
Arbitrary, capricious, an abuse of discretion or otherwise not in accordance 
with law;

* * * * * *

(E) 
Unsupported by substantial evidence in a case reviewed on the record of an 
agency hearing provided by statute.

 

[¶11]   When reviewing an agency decision, 
we give no special deference to the district court's determination. Rather, 
using the same evidentiary materials and the same review standards as the 
district court, we conduct an independent inquiry into the matter, just as if it 
has proceeded directly to us from the agency. Employment Sec. Comm'n v. Western Gas 
Processors, Ltd., 786 P.2d 866, 870 (Wyo. 1990).

 

[¶12]   We review the entire record to 
determine if there is substantial evidence to support the agency's findings; 
and, if there is, we will not substitute our judgment for that of the agency. Wyoming Ins. Dep't v. Avemco Ins. Co., 
726 P.2d 507, 509 (Wyo. 1986). Substantial evidence is such relevant evidence as 
a reasonable mind might accept as adequate to support a conclusion; it may be 
less than the weight of the evidence but cannot be contrary to the overwhelming 
weight of the evidence. Weidner v. Life 
Care Centers of America, 893 P.2d 706, 709 (Wyo. 1995) (citing City of Casper v. Dep't of 
Employment, 851 P.2d 1, 3 (Wyo. 1993)). The burden of proving a lack of 
substantial evidence is on the party appealing the agency's determination. Devous v. State Bd. of Medical 
Examiners, 845 P.2d 408, 414 (Wyo. 1993).

 

[¶13]   We review conclusions of law to 
determine whether they are in accordance with the law. Weidner, 893 P.2d  at 710. 
If the conclusions are not in accordance with the law, we correct the agency's 
error in either stating or applying the law. Union Pacific R.R. Co. v. State Bd. of 
Equalization, 802 P.2d 856, 861 (Wyo. 1990); Employment Sec. Comm'n v. Western Gas 
Processors, Ltd., 786 P.2d  at 871.

 

DISCUSSION

 

[¶14]   This dispute centers around the 
health insurance policy under which appellant and his dependents are covered. An 
insurance policy is a contract and should be construed in accordance with 
general principles of contractual interpretation. Doctors' Co. v. Ins. Corp. of America, 
864 P.2d 1018, 1023 (Wyo. 1993). "Interpretation connotes consideration of the 
contract as a whole, reading each provision in light of all the others to find 
the plain and ordinary meaning of the words, as they are juxtaposed." Martin v. Farmers Ins. Exch., 894 P.2d 618, 620 (Wyo. 1995) (citing Lund v. 
Lund, 849 P.2d 731, 739 (Wyo. 1993)). We have expressed a general reluctance 
to read parts of an insurance contract in isolation, as opposed to interpreting 
the contract as a whole to effectuate the intent of the parties. Martin, at 621. Here, however, the 
complete policy has not been included in the record on appeal, making it 
impossible for us to construe the contract as a whole. Accordingly, we limit our 
review to determining whether the Board's determinations that the surgery was 1) 
not medically necessary, and 2) not a covered cosmetic surgery, were supported 
by substantial evidence and were in accordance with law.

 

[¶15]   The policy lists four factors under 
its definition of "medically necessary."1 The factor at issue is whether Ms. 
Kelley's surgery was "required for the treatment or management of a medical 
symptom or condition." The Board's order included the following Conclusions of 
Law:

 

2. Ms. Kelley was examined by her physician, Dr. 
Tsoi, in November, 1993, and was diagnosed as suffering from abdominal wall 
laxity. "Surgery and no surgery" were identified by her physician as two options 
available. No evidence was submitted to indicate that Ms. Kelley's bodily 
functions were impaired to the degree that surgery was needed nor was it 
established that she was at risk to adverse medical problems in the future if 
the surgery was not performed. To be considered medically necessary and covered 
under the plan, the service provided must be required for the treatment or 
management of a medical symptom. Since Brenda Kelley's physician did not 
indicate that the surgery was required, nor was there any evidence presented to 
support that it was a required surgery, the surgery did not meet the criteria 
for medical necessity.

* * * * * *

5. The surgery performed by Dr. Tsoi repaired an 
incisnal hernia and removed excess skin and subcutaneous tissues. There was no 
repair of a ventral hernia, as had previously been diagnosed by Dr. Tsoi. 
Documents submitted do not show whether the incisnal hernia repair related to 
prior cesarean sections or whether it was created and repaired as an ordinary 
part of abdominoplasty. In either case, no evidence was presented to indicate it 
was medically necessary.

 

[¶16]   The Board heard testimony from the 
State's expert, Amy Reynolds, a Board Certified Registered Nurse with the State 
of Colorado. Ms. Reynolds worked in an outpatient plastic surgery clinic for 
three years and observed more than twenty patients who came to the clinic with 
varying degrees of abdominal wall laxity. Ms. Reynolds testified that in some 
cases surgery was not medically necessary or medically required. Only in extreme 
cases, where a patient may have been at risk for medical problems or was unable 
to perform activities of daily living (e.g., walking, eating, going to the 
bathroom), was surgical intervention medically required or medically 
necessary.

 

[¶17]   Appellant was provided ten 
additional days after the hearing to secure written testimony to rebut the 
expert's testimony, but declined to do so. Ms. Reynolds' unrebutted testimony 
is, therefore, a reasonable basis on which the Board could determine that 
medical necessity requires some risk to the patient or impairment in the 
functions of everyday living.

 

[¶18]   Substantial evidence on the record 
supports the Board's findings that Ms. Kelley was not at risk or functionally 
impaired to the extent that surgery was medically necessary. Appellant testified 
that his wife had trouble exercising and picking up their children, and 
complained of considerable discomfort. But he had no specific knowledge as to 
the extent his wife's functions were limited or the extent of pain she may have 
experienced. The Board also had before it statements from the three doctors at 
Great-West who had reviewed Ms. Kelley's records. Dr. Lenshaw stated that the 
fact that "no surgery" was an option and that Dr. Tsoi did not detect diastasis 
recti or an umbilical hernia supported his conclusion that the surgery was more 
for appearance than for lack of function. The record does not indicate that Dr. 
Tsoi or Dr. Kohler performed any tests which demonstrated the extent to which 
Ms. Kelley was limited.

 

[¶19]   With regard to cosmetic surgery, 
Appellant is correct in pointing out that the policy provides coverage in 
certain circumstances. Cosmetic surgery may be covered if the operation is 
performed or the treatment is rendered to correct deformities that result from 
illness. Illness is defined in the policy to include pregnancy. Deformity is 
undefined in the policy. Great-West provided a definition from Schmidt's 
Attorneys' Dictionary of Medicine (1988):

 

deformity. A deviation or departure from the normal in shape, 
size, or proportion. A deformity may affect the body as a whole or, more often a 
part of it, especially a limb. Also called malformation.

 

The Board concluded:

 

4. No evidence was submitted to support the claim 
that the condition, abdominal wall laxity, is an unexpected result of pregnancy 
and/or a deviation from normal. Also, no evidence was submitted that showed that 
the degree of laxity experienced by Ms. Kelley was in excess of that normally 
experienced. Therefore, the surgery performed does not meet the criteria needed 
to be considered covered cosmetic surgery, which is, that it be performed to 
correct a deformity that resulted from illness.

 

[¶20]   We find it was reasonable for the 
Board to rely on the definition of deformity provided by Great-West. That 
definition was from a medical dictionary and was not controverted by appellant. 
Further, we find the evidence such that a reasonable mind could accept it as 
adequate to support the Board's findings that Ms. Kelley's condition was not a 
deformity.

 

[¶21]   Ms. Reynolds testified, based on 
her knowledge and experience and what her plastic surgeon employer had told her, 
that abdominal wall laxity - weakening of the connective tissue - "is a normal 
process in all of us." The condition is accelerated in women who bear children. 
Ms. Reynolds testified she would not consider the condition a deformity, but she 
did state that the condition someone suffers after a pregnancy is a deviation 
from what that person would normally look like if they had not been 
pregnant.

 

[¶22]   Dr. Tsoi's medical notes state that 
when Ms. Kelley attempted a sit-up motion, her muscles did not pull 
longitudinally, as would be expected in a normal case. He noted that the 
physical examination was remarkable for mid and lower abdominal wall laxity. 
Before and after photographs were included, showing a marked difference in Ms. 
Kelley's abdomen prior to and after the surgery. However, Dr. Tsoi's medical 
notes do not indicate that Ms. Kelley's abdominal pouching deviated from the 
normal in size, shape or proportion, nor does Dr. Kohler indicate that Ms. 
Kelley suffered a deformity. We find conflicting evidence in Dr. Tsoi's 
post-surgery statement that Ms. Kelley's ventral hernia and fascial laxity 
resulted in deformities in her abdomen.

 

[¶23]   The possibility of drawing two 
inconsistent conclusions from the evidence presented does not preclude an 
agency's conclusion from being supported by substantial evidence. Burlington N.R.R. Co. v. Public Serv. 
Comm'n, 698 P.2d 1135, 1139 (Wyo. 1985). We examine conflicting evidence to 
determine if the Board could reasonably have made its findings based upon all of 
the evidence before it. Anschutz Corp. v. 
Wyoming Oil and Gas Conservation Comm'n, 923 P.2d 751, 754 (Wyo. 1996). 
Apparently, the hearing officer placed more weight on Dr. Tsoi's pre-surgery 
notes and the expert's testimony than on the post-surgery statement, which was 
prepared by appellant in support of this claim and signed by Dr. Tsoi. Weighing 
the evidence is a task assigned to the hearing officer, and we will not second 
guess his determinations. Cabral v. 
Caspar Bldg. Sys., Inc., 920 P.2d 268, 271 (Wyo. 1996) (citing Latimer v. Rissler & McMurry 
Co., 902 P.2d 706, 711 (Wyo. 1995)). In light of the evidence before the 
Board, its findings are reasonable.

 

CONCLUSION

 

[¶24]   We hold that the Board's decision 
was supported by substantial evidence and in accordance with 
law.

 

[¶25]   Affirmed.

  

GOLDEN, Justice, dissenting.

 [¶26]   
I respectfully dissent. There is little question that an insurer is not 
required to pay for medical treatment simply because a treating physician has 
recommended the treatment. It is equally certain, however, that an insurer does 
not have sole discretion to decide that medical treatment obtained upon advice 
of a physician is not medically necessary. Upon the request of either the 
insurer or the insured, courts may review insurance payment decisions and the 
assessment procedures utilized by the insurers in making its decision. In 
conducting that review, courts must not add terms to a contract in order to find 
that substantial evidence supports the conclusions of law of a review board. In 
my opinion, the majority has permitted the Wyoming Employees' and Officials' 
Group Insurance Board (Board) to rewrite this contract. Although the entire 
contract is not before us, given the parties' agreement that the terms at issue 
are in the record, the effect of the Board's interpretation should be reviewed 
as explained below.

 

[¶27]   A court that decides whether or not 
an insurer properly denied payment for a physician-recommended course of 
treatment as not "medically necessary" is required to construe the term 
"medically necessary" in accord with the rules of contract law which apply. Many 
courts have attempted to define this term, some quite liberally in favor of the 
insured and others more restrictively. See Kinzie v. Physician's Liability Ins. 
Co., 750 P.2d 1140, 1141-42 (Okla. App. 1987) (collecting cases). In this 
case, the Board had the policy's definition and criteria before it and 
determined that one criterion used in the policy's definition of this term was 
not met. The second criterion listed for determining whether a procedure is 
"medically necessary" is whether it is "required for the treatment or management 
of a medical symptom or condition." In essence, the Board determined that this 
criterion permitted it to add the requirements that the patient show her "bodily 
functions were impaired to the degree that surgery was needed" and have 
"established that she was at risk to adverse medical problems in the future if 
the surgery was not performed." This interpretation of the second criterion 
listed in the policy essentially defines "required" as meaning that surgery must 
be the only alternative or it is barred from coverage. Such an interpretation is 
simply an exercise in adding terms to a contract which of course is prohibited 
under the traditional contract law our court applies.

 

[¶28]   We have found no case law that has 
interpreted "required" as meaning that the insured must show medical symptoms or 
conditions exist to a certain degree or that the recommended treatment chosen 
was the only alternative. An insurer must expressly provide for these 
limitations in order to avoid a finding that a procedure was medically 
necessary. It is common knowledge that many medical conditions can be tolerated 
without surgery, but the question is whether a patient's choice to undergo 
surgery which will cure the impaired function and pain is medically necessary. 
In this case, the patient complained of pain and an impaired ability to perform 
normal exercise and normal lifting of her children. Her first treating physician 
diagnosed a ventral hernia. The patient wisely received a second opinion and 
received a more serious diagnosis of the cause for her impairment and pain. The 
majority opinion acknowledges that the treating physicians established that the 
medical condition and symptoms existed and were the result of two cesarean 
section surgeries and these serious afflictions could be cured by another 
surgery. Following the surgery, the patient was found to have suffered another 
kind of hernia which was repaired and apparently the surgery has successfully 
alleviated her medical condition. Under these facts, I believe that the terms of 
the insurance contract require that review be limited to the questions of 
whether the medical symptoms and condition existed at all and whether the chosen 
treatment is an accepted or established method of treatment or management. If 
this limitation is not applied, this particular criterion is so elastic as to be 
meaningless. Additionally, it leads to the result reached by the majority, viz., rewriting the contract to support 
Ms. Reynolds' testimony although the patient and her doctors had established 
that surgery would treat her medical condition. It should be noted that under my 
recommended analysis, Appellant was not required to rebut Ms. Reynolds' 
testimony. The evidence of the treating physicians and Appellant's own testimony 
were reasonably sufficient for the Board to properly apply this policy's 
criteria and determine medical necessity. There is no need to have insureds do 
more than what is reasonable or we risk permitting administrative review to 
frustrate the reasonable expectations of the insurer and the 
insured.

 

[¶29]   I am not suggesting that 
consideration of degree of impairment and future risk to adverse medical 
problems would never be appropriate. In fact, the third criterion, whether 
surgery was the most efficient and economical service which can safely be 
provided, would seem to require such consideration. However, the Board did not 
reject the claim on this basis and did not have evidence to make a comparison 
between the efficiency and economy of surgery as opposed to continued medical 
treatment. Instead, it improperly added terms to the definition of "medically 
necessary" under the guise of defining "required" and, as a matter of law, the 
Board's interpretation of the second criterion should be rejected by this 
Court.

 

[¶30]   Additionally, I find that the plain 
language of the policy permits this surgery as a covered cosmetic surgery. The 
Board concluded that coverage included cosmetic surgery to correct deformities 
that result from illness. The Board then concluded that the insured's medical 
condition was a deformity caused by pregnancy, which the policy defines as an 
illness. Although the insured had obviously met the requirements to obtain 
coverage, the Board went further and determined that the deformity was normal 
because it resulted from pregnancy. Nothing in the policy or definition of 
"normal" permits a denial of coverage because the deformity which has resulted 
from the illness is a normal occurrence. Again, this simply rewrites the 
contract to add an additional term and frustrates the reasonable expectations of 
the insurer and insured. I would reverse the Board's decision to deny payment of 
benefits. 

 

Footnotes

 

1 The "General Definitions" section of 
the insurance policy provides:

 

"Medically Necessary" means any services 
and supplies provided for the diagnosis and treatment of a specific illness, 
injury or condition. Such services and supplies must 
be:

- ordered by a Doctor; 
and

- required for the treatment or 
management of a medical symptom or condition; and

- the most efficient and economical 
service which can safely be provided to such person; 
and

- provided in accordance with approved 
and generally accepted medical or surgical 
practice.

 

We may 
require proof in writing satisfactory to us that any type of treatment, service 
or supply received is Medically 
Necessary. Medical necessity will be determined solely by us. The fact that 
a Doctor may prescribe, order, 
recommend or approve a service does not, in itself, make such service or supply 
Medically 
Necessary.

(Emphasis in 
original.) "We," "our" and "us" are defined in the policy as 
referencing Great-West Life & Annuity Insurance 
Company.