Case Title: Kahn v. Providence Health Plan

Citation: 

Docket Number: S48091

State: oregon

Court: Oregon Supreme Court

Date: 2003-06-12T00:00:00Z

Document:
Filed: June 12, 2003
IN THE SUPREME COURT OF THE STATE OF OREGON

DEBBIE KAHN,
	Petitioner on Review,
	v.
PROVIDENCE HEALTH PLAN,
an Oregon non-profit corporation,
	Respondent on Review.
(CC 9710-08059; CA A103759; SC S48091)

	On review from the Court of Appeals.*
	Argued and submitted September 6, 2001.
	Hank McCurdy, Portland, argued the cause and filed the
petition for petitioner on review.
	Paul R. Duden, Portland, argued the cause for respondent on
review.
	Before Carson, Chief Justice, and Gillette, Durham, Riggs,
De Muniz, and Balmer, Justices.**
	GILLETTE, J.
	The decision of the Court of Appeals and the judgment of the
circuit court are reversed.  The case is remanded to the circuit
court for further proceedings.
	*Appeal from Multnomah County Circuit Court, Robert P. Jones, Judge. 170 Or App 602, 13 P3d 556 (2000). 
    **Leeson, J., resigned January 31, 2003, and did not
participate in the decision of this case. 
	GILLETTE, J.
This is an action by an injured worker (plaintiff)
against defendant, a managed care organization (MCO) (1) that, under
an arrangement with plaintiff's employer's workers' compensation
insurer, was responsible for making recommendations respecting
the kind of medical care that plaintiff should receive for her
injury.  The complaint alleged two claims, one for negligence and
one for breach of contract, both of which were based on
defendant's refusal to approve an operation that plaintiff's
physician had recommended.  The trial court granted summary
judgment for defendant, holding that plaintiff's sole remedy was
under the workers' compensation statutes, as provided in ORS
656.260(6). (2)  The Court of Appeals agreed.  Kahn v. Providence
Health Plan, 170 Or App 602, 13 P3d 556 (2000).  We allowed
plaintiff's petition for review to consider whether, under the
circumstances alleged, an injured worker may bring an action for
damages arising out of an MCO's conclusion that a proposed
medical treatment is unnecessary.  We conclude, on grounds
somewhat different than those that the Court of Appeals stated,
that the relevant statute appears to preclude such an action.  
	When, as here, we review a decision granting summary
judgment, we take the facts in the record in the light most
favorable to the nonmoving party -- in this case, plaintiff.  See 
Jones v. General Motors Corp., 325 Or 404, 420, 939 P2d 608
(1997) (stating rule).  The following facts are not in dispute. 
Plaintiff suffered a compensable back injury in 1977 and
underwent major back surgery at that time.  Plaintiff had no
significant problems with her back for the next 17 years.  In
1994, however, plaintiff began to experience back pain, which
gradually increased in severity.  Plaintiff eventually sought
medical treatment and also sought to reopen her original workers'
compensation claim.    
	In September 1996, plaintiff's employer's workers'
compensation insurer, Industrial Indemnity, informed plaintiff
that her claim for reopening had been accepted and that she had
been enrolled in defendant MCO for purposes of that claim. 
Shortly thereafter, in November, Industrial Indemnity advised
plaintiff that defendant had authorized her doctor, Golden, to
treat her back injury.
	Golden proposed to treat plaintiff's back problems with
surgery.  Pursuant to its contract with Industrial Indemnity,
defendant evaluated Golden's surgery proposal through a process
known as "utilization review."  In that review process, defendant
concluded that the proposed surgery was not medically necessary
and, therefore, declined to recommend it.  Defendant issued its
decision to that effect in January 1997.  
Although the workers' compensation statutes provide an
administrative review process that a dissatisfied worker may use
to challenge decisions like defendant's decision in this case,
see ORS 656.260(14)-(16) (setting out procedure), plaintiff did
not avail herself of that process.  Nonetheless, for reasons that
are not clear from the record, Industrial Indemnity decided to
authorize and pay for the surgery.  The surgery was performed in
March 1997 -- about nine weeks after defendant's initial
decision (3) -- and, according to plaintiff, "greatly improved" her
condition.  It is the delay between the initial decision and the
subsequent surgery that lies at the heart of this case.
Following her surgery, plaintiff filed the present
action against defendant for negligence and breach of contract,
seeking damages for extreme pain, continued disability, and depression that allegedly was so severe that it required
hospitalization, (4) all allegedly suffered because of the delay
that was occasioned by defendant's decision.  Defendant moved for
summary judgment, arguing, inter alia, that (1) a workers'
compensation statute, ORS 656.260(14), provided plaintiff's sole
remedy for her injuries; (2) ORS 656.018(3) exempts defendant
from liability as a "contracted agent" of plaintiff's employer's
insurer; and (3) defendant has no contractual relationship with
plaintiff that could form the basis of a breach of contract
claim.  The trial court granted defendant's motion, explaining
that, as a matter of law, "plaintiff's exclusive remedy for
injuries related to a service utilization review is under the
workers['] compensation statutes."  
	On plaintiff's appeal, the Court of Appeals affirmed. 
That court held that, regardless of how plaintiff characterizes
her claims, both arise out of defendant's service utilization
decision which, under ORS 656.260(6), is subject "solely" to
"review" by the Director of the Department of Consumer and
Business Services "or as otherwise provided in this section." 
The Court of Appeals concluded that, because no other provision
of the statute fairly could be read to provide for review of such
a decision by means of a civil action for damages, the trial
court's conclusion that plaintiff's remedy lies exclusively under
the workers' compensation statutes was correct.  Kahn v.
Providence Health Plan, 170 Or App at 606-08.
	Before this court, plaintiff argues that the Court of
Appeals oversimplified her claims as merely seeking "review" of
the correctness of defendant's service utilization decision. 
Plaintiff contends that, in fact, she is seeking damages, under
common-law claims for medical malpractice and breach of contract,
for the pain and suffering that she was forced to endure because
of the delay that defendant's decision engendered.  She argues
that ORS 656.260(6), the statute on which the Court of Appeals
relied, does not address such issues or preclude a civil action
for damages. 
	We begin by noting that the Court of Appeals
incorrectly treated the provisions of ORS 656.260(6) as
dispositive.  That statute is a procedural one that sets out the
route that a dissatisfied claimant must follow through the
apparatus of the workers' compensation system to obtain review of
a utilization review decision.  That statute is not substantive;
it does not forbid actions such as the one that plaintiff brought
here.  However, we further note that, although plaintiff objects
to the Court of Appeals' characterization of her claims, she does
not deny that the record made on summary judgment shows that both
claims arose out of defendant's conclusion, made in the context
of a "service utilization review," that the surgery that
plaintiff's doctor proposed was not medically necessary.  In our
view, that fact implicates another, related subsection of ORS
656.260 that is substantive.
	ORS 656.260(8) provides:
		"A person participating in service utilization
review, quality assurance, dispute resolution or peer
review activities pursuant to this section shall not be
examined as to any communication made in the course of
such activities or the findings thereof, nor shall any
person be subject to an action for civil damages for
affirmative actions taken or statements made in good
faith."
(Emphasis added.)  Defendant is a "person" for the purposes of
that statute.  See ORS 656.005(23) (respecting ORS chapter 656,
"'[p]erson' includes partnership, joint venture, association,
limited liability company and corporation").  Thus, by the
express terms of ORS 656.260(8), defendant is immune from this
action for civil damages if defendant's determination that
plaintiff's proposed surgery was unnecessary was "participation"
in a service utilization review, was an "affirmative action[],"
and was "taken * * * in good faith."  On the present record,
there is no evidentiary question whether defendant participated
in service utilization review or whether defendant acted in bad
faith; therefore, plaintiff's claims against defendant fail if
defendant's decision was an "affirmative action[]."
	In our view, it was.  The Workers' Compensation Law,
ORS chapter 656, contains no definition of the term "affirmative
actions."  We therefore assume that, in using it, the legislature
intended that it be understood in the ordinary, dictionary sense. 
See PGE v. Bureau of Labor and Industries, 317 Or 606, 611, 859
P2d 1143 (1993) (prescribing that methodology for identifying
legislative intent respecting words of common usage).
	"Action" means "* * * 3.  The process of doing:
exertion of energy: PERFORMANCE * * *[;] 4.  a voluntary act that
will manifest itself externally."  Webster's Third New Int'l
Dictionary 21 (unabridged ed 1993).  Without question, the
decision that defendant made to recommend against surgery for
plaintiff was an "action" under that definition, i.e., it was a
"voluntary act * * * manifest[ing] itself externally" in an
opinion, and forming and offering such opinions was precisely
what defendant had agreed that it would do for Industrial
Indemnity. (5)
Read in context, the statutory requirement that the
action be "affirmative" does not change our analysis.  Although
that word might, in different circumstances, be a reference only
to the outcome of an opinion, i.e., it could be a reference only
to a decision to approve a proposed medical procedure, the word
cannot be read that way when it is used in connection with the
phrase "actions taken."  Conceptually, the phrase "actions taken"
is broader than a decision to approve (or even to disapprove)
something.  That is, the term is to be read in contrast with a
failure to decide or other neglect.  That broader reading of the
term being the only tenable one, (6) it follows that there is no
factual basis on this record that would remove plaintiff's case
from the immunity provided in ORS 656.620(8).  That is, nothing
in this record raises any factual issue whether defendant's
conduct amounted to something more than an "affirmative action[]
taken * * * in good faith." 
	We recognize that the foregoing conclusion means that
ORS 656.260(8) grants immunity to defendant on the facts shown
here.  However, that is the extant legislative choice, as shown
by the statutory wording.  If that choice is to be changed or
modified, that, too, must be a legislative choice.  We hold that,
on the present evidentiary record, defendant is immune from the
action that plaintiff has brought against it in this case by
virtue of the immunity that ORS 646.620(8) confers.
Ordinarily, the foregoing holding would dispose of the
case.  However, we are reluctant to direct that result here,
because the specific statutory subsection on which we rely -- ORS 656.260(8) -- was not the ground on which either the trial
court or the Court of Appeals decided this case. (7)  Although it is
not clear to us how plaintiff might avoid the immunity conferred
by that statute, we do not believe that it would be just to deny
her at least the opportunity to try.  We therefore remand the
case to the trial court with instructions to consider any factual
or legal argument that plaintiff may wish to assert respecting
the application of ORS 656.260(8) to her case.
	The decision of the Court of Appeals and the judgment
of the circuit court are reversed.  The case is remanded to the
circuit court for further proceedings.



1. 	An MCO is a health care group organized and certified
as provided in ORS 656.260(1) to (5) "to provide managed care to
injured workers for injuries and diseases compensable under [the
workers' compensation statutes]."  ORS 656.260(1).  The director
of the Department of Consumer and Business Services certifies
MCOs to provide managed care under a plan.  Before certifying an
MCO's plan, the director must find that certain requirements
pertaining to quality of care, nondiscrimination, service costs
and utilization, methods of review, and other criteria are met. 
ORS 656.260(4).  

2. 	ORS 656.260(6) provides that "[a]ny issue concerning
the provision of medical services to injured workers subject to a
managed care contract * * * shall be subject solely to review by
the director [of the Department of Consumer and Business
Services]."

3. 	Plaintiff's complaint indicates that her doctors
appealed defendant's decision and that defendant issued a final
decision, affirming its earlier decision, sometime in February. 
That later decision is not in the record.  

4. 	Although it is not clear from the complaint, plaintiff
argues to this court that her negligence claim essentially is a
common-law medical malpractice claim against defendant in its
capacity as her physician.  Respecting the breach of contract
claim, she argues that she is a third-party beneficiary of
defendant's contract with Industrial Indemnity.

5. 	All the evidence submitted in connection with the
motion for summary judgment established that defendant acted
solely in a consultative capacity in this case.	
		Although plaintiff argues the point strenuously, this
is not a case in which there is any evidence that defendant
itself was treating plaintiff.  We therefore express no opinion
whether that additional fact, if it were present, would affect
our analysis respecting the applicability of ORS 656.260(8).

6. 	We have found no other statutory provision that casts
doubt on the foregoing construction of "affirmative" or on our
reading of the phrase "affirmative actions."

7. 	The Court of Appeals noted the existence of the
statute, but did not pursue it.  Kahn v. Providence Health Plan,
170 Or App at 607.