Case Title: Blue Cross & Blue Shield v. Dept. of Banking, Insurance, Securities & Health Care Administration

Citation: 174 Vt. 557, 816 A.2d 429

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2002-10-24T00:00:00Z

Document:
Blue Cross & Blue Shield of VT v. Dept. of Banking, Insurance, Securities
& Health Care Administration (2001-518); 174 Vt. 557; 816 A.2d 429

[Filed 24-Oct-2002]

                                 ENTRY ORDER

                      SUPREME COURT DOCKET NO. 2001-518

                            SEPTEMBER TERM, 2002


  Blue Cross and Blue Shield of Vermont	 }	APPEALED FROM:
                                         }
                                         }
       v.	                         }	Washington Superior Court
                                         }	
  Department of Banking, Insurance,	 }
  Securities and Health Care             }
  Administration	                 }	DOCKET NO. 673-11-99 Wncv

                                                Trial Judge: Matthew I. Katz  

             In the above-entitled cause, the Clerk will enter:


       Appellant State of Vermont Department of Banking, Insurance,
  Securities and Health Care Administration ("BISHCA"), defendant in the case
  below, appeals from a Washington Superior Court order granting appellee
  Blue Cross and Blue Shield of Vermont's ("Blue Cross") request to vacate a
  BISHCA order directing Blue Cross to pay for a subscriber's communication
  device.  On appeal, BISHCA claims it had adjudicatory authority over the
  denied insurance claim pursuant to 8 V.S.A. § 4089f and BISHCA Regulation
  H-99-1.  We conclude that BISHCA did not have review authority over this
  claim, and therefore affirm the decision of the superior court.

       The relevant facts are not in dispute.  In early 1999, a Blue Cross
  Vermont Freedom Plan subscriber requested approval to purchase a Dyna-Vox
  communication device for use by a family member with a serious medical
  condition.  Blue Cross denied the subscriber's request.  The subscriber
  sought review of that decision from the Blue Cross Claim Appeal Committee. 
  Following a hearing, the committee affirmed the initial decision to deny
  approval for the device. 

       The subscriber then filed an appeal of the Blue Cross decision with
  BISHCA, pursuant to 8 V.S.A. § 4089f(b)-(d) and Regulation H-99-1, seeking
  review by an independent review organization ("IRO").  In response, Blue
  Cross argued that BISHCA did not have jurisdiction under the statute since
  the Blue Cross Claim Appeal Committee had determined that the device was
  "an excluded (non-covered) non-medical device as it does not meet the
  contract definition of durable medical equipment (DME) or prosthesis." 
  Nonetheless, BISHCA accepted the subscriber's request, explained that the
  device "reasonably appears" to meet the contract definitions of prosthesis
  and durable medical equipment, and forwarded the case to the IRO for
  review.  Following an investigation, the IRO concluded that the Dyna-Vox
  device was in fact "medically necessary."  BISHCA then reviewed the IRO's
  decision, found that it did not change the terms of coverage under the
  subscriber's health benefit plan, and thus concluded that Blue Cross was
  required to pay for the communication device.
   
       Subsequently, Blue Cross brought a V.R.C.P. 75 action in superior
  court for a declaratory judgment that BISHCA had exceeded its authority
  under § 4089f and Regulation H-99-1.  On 

 

  October 15, 2001, the superior court issued its order, in which it
  concluded that BISHCA had exceeded its statutory authority, and vacated
  BISHCA's order requiring Blue Cross to pay for the communication device. 
  BISHCA appeals this decision.

       BISHCA advances two related arguments in support of its contention
  that its actions were valid.  First, BISHCA contends that the statutory
  language of 8 V.S.A. § 4089f affording an insured "the right to an
  independent external review" is illusory if such review could be eliminated
  by the statement of the insurer that the service at issue was not a covered
  benefit. (FN1)  Second, BISHCA asserts its adoption of Regulation H-99-1 is
  a reasonable interpretation of the statute entitled to a presumption of
  validity precisely because it protects the insured from an insurer's "bad
  faith" decision that the service in question is not a covered benefit
  within the scope of the policy. (FN2)

       We have consistently held that agency actions enjoy a presumption of
  validity.  Vt. Ass'n of Realtors, Inc. v. State, 156 Vt. 525, 530, 593 A.2d 462, 465 (1991).  Although "it is a firm principle of judicial review that
  . . . findings of fact by an administrative agency will not be set aside
  unless clearly erroneous, conclusions of law are not so protected."  Town
  of Cambridge v. Bassett, 142 Vt. 171, 177,