Title: Long v. Great West Life & Annuity Ins. Co.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Long v. Great West Life & Annuity Ins. Co.1998 WY 54957 P.2d 823Case Number: 96-285Decided: 04/20/1998Supreme Court of Wyoming
 
Larry LONG and Virginia Long, Appellants (Plaintiffs),

v.

GREAT WEST LIFE & 
ANNUITY INSURANCE COMPANY, a foreign corporation; Great West Life Assurance 
Company, a foreign corporation; and Linda Carpenter, a resident of Wyoming, 
Appellees (Defendants).

Rehearing Denied 
May 15, 1998.

Appeal from the District 
Court, Natrona County, Dan Spangler, J.,

 

John I. Henley 
and David A. Drell (argued) of Brooks, Henley & Drell, P.C., Casper, for 
Appellants.

Patrick J. 
Murphy of Williams, Porter, Day & Neville, P.C., Casper, for 
Appellees.

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

GOLDEN, 
Justice.

[¶1]      Appellants Larry 
and Virginia Long brought suit against Appellee Great-West, two unknown doctors 
employed by Great-West and an employee of Great-West, Linda Carpenter, after 
they refused to preauthorize surgery and, instead, advised Mr. Long to undergo 
an alternative procedure. The district court determined that Mr. Long's 
exclusive remedy was administrative which he had failed to exhaust and granted 
summary judgment to Great-West.

[¶2]      We reverse and 
remand.

ISSUES

[¶3]      Long presents 
these issues:

I. The District 
Court inappropriately applied Wyoming Rule of Civil Procedure 56, and 
inappropriately considered and adopted untimely submitted, conclusory and 
contested evidence by the appellee in granting summary 
judgment.

II. Wyoming 
Statutes, 9-3-202, et seq., do not mandate that claims alleging torts and civil 
rights violations against appellees be held in abeyance until or forfeited 
because Larry Long's grievance contesting the imposition of a reimbursement 
penalty had not been heard by the State Employees' and Officials' Group 
Insurance Board.

III. The 
interpretation by the District Court of Wyoming Statute 9-3-205 is 
Unconstitutional.

IV. The basis 
for the dismissal has been corrected, the tort and civil rights claims should 
not have been dismissed with prejudice.

[¶4]      Great-West 
presents these issues:

1. Did the 
District Court correctly grant summary judgment where the state employee failed 
to exhaust, or even use, his administrative grievance 
remedy?

2. Did the 
district court correctly rule that it is constitutionally permissible for the 
legislature to limit a claimant to an administrative forum and remedy, and 
subsequent Rule 12 judicial review of that administrative 
remedy?

FACTS

[¶5]      Larry Long is an 
employee of the State of Wyoming (employer) and participates in and pays 
premiums to a health insurance plan sponsored by the employer. The defendant, 
Great-West, administers the plan for the employer in accordance with an 
insurance contract issued to insured employees, contained in the Employee 
Benefit Booklet. The plan's terms accord Great-West virtually total control and 
discretion in the administration of the plan and, when claims are denied, 
provides for an appeal procedure to Great-West and a grievance procedure to the 
State Employees' and Officials' Group Insurance Board. As part of the benefit 
plan, Great-West provided participants with a list of physicians it calls a 
network with whom it has billing and treatment agreements.

[¶6]      Long's doctor, 
neurologist Dr. Hollifield, recommended that Long have back surgery for chronic 
pain that he had been experiencing for some time. The plan required 
preauthorization for the surgery, and because Dr. Hollifield is a non-network 
physician, Long had the responsibility of ensuring his doctor received 
preauthorization for the surgery. Preauthorization triggered the involvement of 
a telephone-based utilization review program, Health Care Review Service (HCRS), 
in the recommended treatment decision. It is not clear from the record whether 
the utilization review is a program of Great-West or an independent service. On 
July 17, 1995, Long completed pre-admission at the hospital but received word 
the day before surgery that his doctor had canceled surgery because Great-West 
had withdrawn authorization for the surgery based upon the recommendation of 
HCRS. Under the contract, surgery performed without authorization would result 
in a payment penalty. Authorized surgery was paid at 80% up to $5,000.00 less 
deductibles and then 100% over $5,000.00, while unauthorized surgery would only 
be paid at 60% for all costs.

[¶7]      Although 
Great-West advised Long to contact HCRS for an explanation for the surgery 
cancellation, HCRS did not respond and that explanation was given to him first 
by Great-West and then by Dr. Hollifield after he spoke with HCRS. HCRS had 
determined that Long should receive the conservative treatment of steroid 
injections. Long and Dr. Hollifield scheduled the steroid injection treatment 
for July 21, 1995, with a board certified anesthesiologist, Mark Steffen, M.D. 
On that date, Dr. Steffen advised Long that ethically he could not administer 
the injections. Because Dr. Steffen believed that the injections would be of no 
physical benefit to Long and would involve some risk, Dr. Steffen concluded that 
he could not ethically subject Long to the additional medical intervention and 
then bill him for it.

[¶8]      On July 24, 1995, 
Long called HCRS requesting HCRS' fax number and address and information on the 
review process. An HCRS representative advised Long that he should make the 
statements directly to him as opposed to writing a letter; however, on July 25, 
Long faxed a letter to HCRS explaining that his doctor advised against the 
steroid treatments and another doctor had refused to administer the steroid 
injections. Long's letter commented that since HCRS seemed to be calling the 
shots he would welcome it if they arranged a medical consultation for him. He 
received a letter dated July 29, 1995, from Great-West stating again that 
surgery would not be authorized because of an inadequate trial of conservative 
therapy or insufficient diagnostic evaluation. On July 31, 1995, Long again 
called HCRS and was advised that further grievance or appeal needed to be 
directed to the main benefit office of Great-West and was given an 800 telephone 
number. Long immediately called the 800 number and was then transferred to 
Cheyenne, where he talked with a "Lucy" who would not give her last name. She 
advised him to send a copy of the records and that they would be reviewed again 
in about three weeks. Long requested Dr. Hollifield's office to forward the 
material to the attention of "Lucy" at a post office box address in Cheyenne. At 
some point, Long was apparently advised that physical therapy was another 
alternative conservative treatment that his insurance deemed appropriate rather 
than surgery. On August 1, 1995, Long attended an appointment with Dr. Al Metz, 
a neurosurgeon in Casper. His examination of Long resulted in the following 
diagnosis as related to Dr. Hollifield:

His MRI films . 
. . were reviewed . . . [and] show a huge herniation at L4-5, occupying 60% to 
70% of the spinal canal, greater on the left side. . . . The herniation is 
certainly impressive.

I told Mr. Long 
that I concurred with your recommendation for surgery. If this were a minor 
recurrence or if the postoperative films showed nothing but scar tissue, then I 
think a course of steroids would be indicated. I wonder if the steroids would 
even have access to this nerve root, because of the blocking effect of the disc 
and almost certainty of some postoperative scar around the nerve root. I have to 
applaud Dr. Steffen for his ethical stand on this matter. By the same token, 
physical therapy and other peripheral methods of addressing the secondary and 
tertiary effects of this herniation would simply be a waste of the patient's 
time, medical resources and money. It is a certainty that he would eventually 
have to undergo the appropriate surgical treatment anyway.

[¶9]      On August 3, 
1995, Long wrote to Great-West and told it that his doctors had advised him that 
all pertinent medical records had been sent to Great-West for further study. The 
letter indicated that HCRS had told Long's doctors that physical therapy was an 
acceptable alternative, but his doctors did not believe that it would be of any 
real benefit. Long then requested that Great-West inform him what type of 
physical therapy program was required and of what duration was needed to satisfy 
its requirement of conservative treatment. Great-West did not respond directly 
to that question but only replied in a letter dated August 7, 1995, that his 
claim had been forwarded to the head office for review. On August 24, 1995, Long 
wrote Great-West another letter stating that Dr. Hollifield had attempted to 
confer further with Great-West about the status of his care and had not received 
any reply. Long called or faxed other letters requesting a decision about his 
care several more times. On August 29, 1995, an employee for the Wyoming 
Employees' Official Group Insurance Office explained to Long that he had not 
received an answer because a preauthorization for surgery was not considered a 
claim and therefore there were no strict time constraints upon Great-West to 
make any decision.

[¶10]   During the period of time from his 
surgery authorization cancellation until September 8, 1995, Long's condition 
deteriorated. He suffered weakness in his left foot and the pain worsened to 
such an extent that he curtailed daily activities and reduced his hours each day 
at work. His gait became abnormal, he began to use a cane to assist his 
ambulation, and he experienced motor deprivation and sensory changes. On 
September 8, 1995, Long had the surgery. His claim for benefits was paid at the 
60% penalty rate.

[¶11]   Long filed suit on May 2, 1996, 
alleging breach of contract, civil conspiracy, civil rights violation, unlawful 
practice of medicine, assault, intentional interference with contractual 
relationship, intentional infliction of emotional distress, violation of the 
duty of good faith and fair dealing, tort of outrage, and punitive damages. 
Great-West filed a motion to dismiss or for summary judgment, claiming Long had 
not exhausted his administrative remedies as required by Wyoming statute and the 
provisions of the insurance contract. The trial court ruled that the contract 
called for Long to file a grievance when his claim was denied and that he had 
not properly filed such a grievance. Summary judgment was granted to Great-West. 
Long then filed a grievance with the Group Insurance Board for the denial of his 
claim for benefits at the contract rate. On October 22, 1996, before a hearing 
before the Board was held, Great-West withdrew its opposition to Long's claim 
for benefits after Sheridan, Wyoming, neurosurgeon Meredith Miller, M.D. 
reviewed and assessed Long's case and a medically necessary determination was 
made in favor of Long.1 This appeal of the summary judgment 
order followed.

DISCUSSION

[¶12]   Long contends that neither Wyoming 
statute nor the terms of his insurance contract provide that the grievance 
procedure involving the Board is the exclusive remedy for complaints against the 
utilization review process. He distinguishes between the utilization review 
process and the claim for benefits process, contending the former implicates 
Great-West's handling of a recommendation for a treatment alternative entitling 
him to a judicial remedy for breach of contract, tort, and civil rights claims 
while the latter, by contract, restricts his remedy to the appeal and grievance 
procedure for a denial of payment.

Nature of 
Utilization Review

[¶13]   The past decade has produced a 
fundamental reorganization of this nation's health care delivery system. Its 
centerpiece is the managed care concept which contains costs by concurrent and 
prospective utilization review systems. Historically, our national health care 
delivery system consisted simply of a doctor-patient relationship involving 
"fee-for-service" where medical decisions were made by an attending physician 
and if made negligently resulted in a medical malpractice suit. Those patients 
who had medical coverage insurance traditionally had a retrospective indemnity 
insurance plan which reviewed claims for payment after treatment had occurred. 
Under this system, "[d]enial of a claim meant that the cost of treatment was 
absorbed by an entity other than the one designed to spread the risk of medical 
costs - the insurer." Corcoran v. United HealthCare, Inc., 965 F.2d 1321, 1327 
(5th Cir. 1992), cert. denied, 506 U.S. 1033, 113 S. Ct. 812, 121 L. Ed. 2d 684 
(1992); see Jonathan J. Frankel, Medical Malpractice Law and Health Care Cost 
Containment Lessons for Reformers from the Clash of Cultures, 103 YALE L.J. 1297 
(1994); Michael A. Dowell, Avoiding HMO Liability for Utilization Review, 23 U. 
TOL. L.REV. 117-18 (1991).

[¶14]   In past decades, health care costs 
rose dramatically and, by the 1980's, the third party payor system of private 
insurers had introduced patients and physicians to the managed care notion of 
cost containment in the form of concurrent and prospective utilization review 
systems. These systems have fundamentally shifted the way that health care is 
funded, organized and administered by involving a third party in cost-conscious 
medical decision-making. Typically, the provider of utilization review services 
reviews the treating physician's prescribed course of care and treatment plans, 
requires pre-admission certification for hospital stays, and monitors a hospital 
stay to determine its continuing appropriateness. Usually, the provider, who may 
or may not be a doctor, relies upon established clinical guidelines for a 
"statistical person" and does not have firsthand knowledge of the particular 
patient.2 The cost of care that is not 
approved prospectively or concurrently is shifted to the patient or the treating 
physician in the case of a health maintenance organization. Corcoran, 965 F.2d  
at 1326; John D. Blum, An Analysis of Legal Liability in Health Care Utilization 
Review and Case Management, 26 HOUS. L.REV. 191, 192-93 (1989). Despite the 
involvement of the provider of the utilization review process (provider), the 
medical malpractice liability of the treating physician does not change if 
injury or death occurs from inappropriate medical treatment. Wickline v. State 
of California, 192 Cal. App. 3d 1630, 239 Cal. Rptr. 810, 819 (1986), cert. 
granted, 231 Cal. Rptr. 560, 727 P.2d 753, review dismissed, cause remanded, 239 Cal. Rptr. 805, 741 P.2d 613 (1987). However, the issue that has been created and 
which courts only recently have begun to explore is whether the provider can be 
held liable when a decision denying treatment causes injury or death. Corcoran, 
965 F.2d  at 1327; Wilson v. Blue Cross of So. California, 222 Cal. App. 3d 660,271 Cal. Rptr. 876, 883 (1990); Pacificare of Oklahoma, Inc. v. Burrage, 59 F.3d 151, 155 (10th Cir. 1995). Although the attending physician is the ultimate 
decision-maker regarding a patient's treatment, it is, as commentators note, 
naive to assume that a provider's determination that recommended care is not 
medically necessary, and therefore not covered by insurance or the health plan, 
will not affect the treatment ultimately received by the patient. Anne J. 
Williams, Mark E. Reagan, Managed Care Utilization Review. Is It the Practice of 
Medicine?, INSIDE HEALTH LAW, Jan. 1997; Pennsylvania Medical Society, 
Utilization Review Safeguards, Issue 5, Oct. 15, 1996; Vernellia R. Randall, 
Managed Care, Utilization Review, and Financial Risk Shifting: Compensating 
Patients for Health Care Cost Containment Injuries, 17 U. PUGET SOUND L.REV. 1, 
34 (1993). As courts have recognized, imposing liability necessarily requires 
determinations that the provider has made a medical decision and that a mistaken 
conclusion about medical necessity in a prospective review process has 
effectively deprived the insured of necessary medical care. Wilson, 271 Cal. Rptr.  at 883; Corcoran, 965 F.2d  at 1331-32. Corcoran described the 
different impact of the systems in this way:

A prospective 
decision is, however, different in its impact on the beneficiary than a 
retrospective decision. In both systems, the beneficiary theoretically knows in 
advance what treatments the plan will pay for because coverage is spelled out in 
the plan documents. But in the retrospective system, a beneficiary who embarks 
on the course of treatment recommended by his or her physician has only a 
potential risk of disallowance of all or a part of the cost of that treatment, 
and then only after treatment has been rendered. In contrast, in a prospective 
system a beneficiary may be squarely presented in advance of treatment with a 
statement that the insurer will not pay for the proposed course of treatment 
recommended by his or her doctor and the beneficiary has the potential of 
recovering the cost of that treatment only if he or she can prevail in a 
challenge to the insurer's decision. A beneficiary in the latter system would 
likely be far less inclined to undertake the course of treatment that the 
insurer has at least preliminarily rejected.

Id. at 
1331-32.

[¶15]   The involvement of third party 
payors in medical decision-making has blurred the liability distinctions that 
the law has formerly made. Previously, malpractice actions addressed injuries 
caused by medical decisions, and bad faith tort actions addressed injuries 
caused by an insurer's improper investigations and payments of claims after 
medical treatment was received. The rules of law applicable to these causes of 
action do not address Long's complaint which is that Great-West made a medical 
decision that effectively denied him timely appropriate treatment, and no 
meaningful appeal of that decision was available in a timely fashion. Today, 
judicial decisions either hold that federal law completely preempts denial of 
treatment claims or permit medical malpractice actions against plan 
administrators in a limited fashion under various theories such as agency or 
vicarious liability. Corcoran, 965 F.2d at 1337-38; Pacificare, 59 F.3d  at 155; 
Tufino v. N.Y. Hotel & Motel Trades Council, 223 A.D.2d 245, 646 N.Y.S.2d 799, 801-02 (1996)(listing cases).

[¶16]   The utilization review in Long's 
plan is characterized as a prospective review program requiring authorization 
before treatment is administered in order to receive the insurance contract 
rates. Failure to comply with the utilization review program results in an 
assessment of a penalty rate. In Long's case, three attending physicians, 
experts in the particular field, all concluded that the recommended course of 
treatment by doctors of HCRS was inappropriate and did not agree to the 
treatment. HCRS refused to change its medical decision to recommend steroid 
injection treatments, and Long, unable to receive the treatment, did not have 
surgery because of HCRS' decision. As his condition worsened, he had the surgery 
and suffered a payment penalty. At that point, a grievance procedure became 
available to him and, ultimately, after another independent review by a 
neurosurgeon, resulted in his receiving the full benefits to which he was 
entitled under his contract. Still, Long believes the medical decision by HCRS 
has created legal causes of action deserving trial. As described above, other 
courts have recognized that utilization review is medical decision-making, and a 
plan administrator that involves itself in a medical decision that amounts to a 
denial of treatment is making a medical decision. It has also been recognized 
that if the law requires a complaint system for utilization review decisions, 
the insurer must act in good faith in administering the complaint system that it 
has established. Williams v. HealthAmerica, 41 Ohio App.3d 245, 535 N.E.2d 717, 
721 (1987). With this background, we examine Wyoming law concerning the duties 
of an insurer, the statute creating this particular insurance program and the 
contract language to resolve the sole issue for our review, which is whether 
Long's exclusive remedy for utilization review process decisions is 
administrative.

Applicable State 
Law

[¶17]   As a preliminary matter, we must 
address Great-West's contention that it is not the proper party to be sued. The 
insurance contract suggests that HCRS is a Great-West program although the 
record does not clearly identify the relationship between the two. During oral 
argument, Great-West contended that it is not the proper party to be sued as it 
was merely a claims processor performing ministerial functions for the employer, 
the State of Wyoming. Under federal law, a third-party plan administrator that 
performs ministerial functions is not subject to suit because the law does not 
define it as a "fiduciary." Santana v. Deluxe Corp., 920 F. Supp. 249, 253-54 
(D.Mass. 1996). An administrator that exercises discretionary authority or 
discretionary control in the administration and management of the plan may 
qualify as a fiduciary. Id.

[¶18]   Under state law, several theories 
are available that would subject Great-West to suit; however, there was no 
factual development on this issue before entry of summary judgment. The record 
does allow us to determine that a genuine question of material fact exists as to 
whether the terms of the insurance contract issued to Long created a fiduciary 
relationship between him and Great-West. The wording of Long's insurance 
contract would appear to contradict Great-West's contention that it, is a mere 
claims processor. The contract informs the employee that Great-West provides the 
network of physicians and hospitals that permits an employee to receive maximum 
contract benefit rates. The contract also states that "HCRS is a telephone-based 
utilization review program, supervised by physicians and nurses, that helps you 
receive appropriate care for your condition and control your out-of-pocket 
costs." Employees are told that, among other services, HCRS will determine "the 
medical necessity of the treatment." Later in the contract, employees are told 
"Great-West may require proof in writing that any type of treatment, service or 
supply received is Medically Necessary. Medical necessity will be determined 
solely by Great-West." Such control and discretion as evidenced by the contract 
necessarily require that we consider whether a fiduciary relationship exists 
under these particular circumstances. We have said that "[f]iduciary duty is not 
created by a unilateral decision to repose trust and confidence; it derives from 
the conduct or undertaking of the purported fiduciary" and have defined a 
fiduciary as "[a] person having duty, created by his own undertaking, to act 
primarily for another's benefit in matters connected with such undertaking." 
Martinez v. Associates Financial Services Co. of Colorado, Inc., 891 P.2d 785, 
790 (Wyo. 1995). In describing fiduciary relationships, we have 
said:

Of the two 
essential kinds of fiduciary relationships, the first arises from specific legal 
relationships. "In cases of trustee and beneficiary, principal and agent, and 
the like, the relations are essentially fiduciary, and the inference or 
presumption follows of course." . . . The second is less susceptible of exact 
definition, being "implied in law due to the factual situation surrounding the 
involved transactions and the relationship of the parties to each other and to 
the questioned transactions."

Martinez, 891 P.2d  at 789 (citations omitted). There is a genuine question of material fact 
regarding Great-West's liability, and the order of summary judgment will not be 
upheld on the basis that Great-West's function was merely 
ministerial.

Long's 
Claims

[¶19]   Besides the breach of contract 
issues, we perceive Long's other numerous causes of action as being in the 
nature of a claim for bad faith in handling and investigating his claim for 
appropriate medical treatment.

[¶20]   In Wyoming, a breach of the implied 
covenant of good faith and fair dealing which rises to the level of an 
independent tort is actionable for compensatory and punitive damages under 
proper circumstances. McCullough v. Golden Rule Ins. Co., 789 P.2d 855, 860-61 
(Wyo. 1990). Recovery is allowed because of a special relationship created by 
the unequal bargaining power that an insurer has over an insured. Id. at 858. 
The duty of good faith and fair dealing imposes an obligation "that neither 
party will do anything which will injure the right of the other to receive the 
benefits of the agreement." State Farm Mut. Auto. Ins. Co. v. Shrader, 882 P.2d 813, 825 (Wyo. 1994). "It is the obligation, deemed to be imposed by the law, 
under which the insurer must act fairly and in good faith in discharging its 
contractual responsibilities." Id.

[¶21]   In Williams, it was held that acts 
which evidence a course of conduct by the insurer's plan administrator of 
disregarding its duties to the insured are sufficient to raise an issue of fact 
for a jury as to the insurer's lack of good faith. Williams, 535 N.E.2d  at 721. 
In this case, Long specifically requested that the insurer provide him with the 
name of a doctor in his area who could perform the course of treatment that the 
insurer would cover and although the plan states that this information will be 
supplied, he did not receive an answer; Long specifically requested that the 
insurer provide him with the type of and duration of physical therapy which the 
insurer would cover and did not receive that information; Long specifically 
requested for nearly two months further information to receive appropriate 
treatment following the insurer's denial of treatment but the organization did 
not take any further steps to either assist Long in resolving the controversy or 
inform him of any rights he might have under the contract or the law. As our 
discussion below finds, the insurer did not provide an appropriate appeals 
process for denial of treatment decisions and effectively denied Long the 
benefits of insurance coverage to which he was entitled. All of these facts are 
material to the issue of bad faith, preclude entry of summary judgment and 
require trial unless Long's exclusive remedy was administrative. See Williams, 
535 N.E.2d  at 721.

[¶22]   The Employee Benefit Booklet issued 
by the State of Wyoming discusses the denial of claims and the utilization 
review process separately in two different sections. The utilization review 
section states in relevant part:

How Does the 
Health Care Review Service Work?

HCRS is a 
telephone-based utilization review program, supervised by Physicians and nurses, 
that helps you receive appropriate care for your condition and control your 
out-of-pocket costs. This program includes:

· Pre-treatment 
review of all Hospital stays and surgeries to help protect you from receiving 
outdated or unnecessary treatment.

· Discharge 
planning to ensure that Hospital stays are only as long as Medically Necessary 
and to identify alternatives to extended Hospital stays.

· Identification 
of patients who might benefit from Great-West's Catastrophic Case Management 
program.

Your Physician 
will talk with the medical professionals at HCRS to determine a treatment 
plan-before you receive treatment.

HCRS will 
determine and authorize:

· The medical 
necessity of the treatment;

· The 
appropriate location for the treatment to be provided; and

· If you need to 
be admitted to a Hospital, the appropriate length of stay.

* * * 
*

How Do I Use 
HCRS?

* * 
*

If your 
Physician and an HCRS review Physician do not concur on a course of treatment, 
an independent second opinion will be recommended. In such cases, expenses for 
obtaining a second opinion are payable at 100%, and are not subject to the 
calendar year deductible. If geographic location or Physician access prohibit 
you from obtaining a second opinion, the recommendation will be withdrawn and 
the non-compliance penalty . . . will not be applied.

* * * 
*

What Happens If 
I Don't Use HCRS?

. . . If your 
physician does not obtain pretreatment authorization from HCRS, or you do not 
follow the HCRS-recommended treatment plan, a 60% non-compliance coinsurance 
penalty will be applied to your claim. This non-compliance penalty cannot be 
used to satisfy the calendar year deductible or the 
breakpoint.

[¶23]   An earlier section of the contract 
is devoted to payment of benefits and contains the following provisions 
concerning the denial of claims:

Notice of Denial 
of Claim

 

If any benefits 
are denied, you will be sent a written notice of the denial. This notice will 
include:

· Specific 
reason or reasons for the denial;

· Specific 
reference to the plan provisions on which the denial is 
based;

· An explanation 
of additional material or information needed to complete the claim. You must be 
given notice of claim denial within 90 days after the claim is filed. If special 
circumstances require more than 90 days to act on the claim, another 90 days 
will be allowed. . . .

Appeal Of A 
Claim Denial

If you have any 
questions about a claim payment, contact the Plan Administrator. If you disagree 
with the reasons for a claim denial, you can initiate a claim review procedure 
by giving written notice to the Plan Administrator within 60 days after you 
receive the written claim denial. . . .

Decision on 
Review

You will be 
notified of the final decision within 60 days after receipt of a request for 
review. . ..

Grievance 
Procedure

If you are not 
satisfied with how a claim has been settled, you may file a grievance with the 
State Employees' and Officials' Group Insurance Board. Certain steps must be 
followed:

· You must file 
a brief statement with the Board explaining the situation. This statement must 
contain the following information:

- your name, 
address, social security number and place of employment;

- a description 
of the situation;

- copies of all 
pertinent documents, including bills;

- all 
information received from the Benefit Payments Office; and

- the specific 
response or actions requested from the Board.

[¶24]   We agree with Long that the plain 
language of the contract only contemplates applying the appeals and grievance 
procedures to a claim for payment and does not contemplate applying the appeals 
and grievance procedures to HCRS' treatment decisions through the utilization 
review process. The section outlining the procedure for appealing a denial of a 
claim is expressly limited to benefit payments and speaks of lengthy time frames 
which are inappropriate for resolving a dispute over treatment or for appealing 
a utilization review recommended treatment decision. The section on HCRS 
decisions plainly states that a failure to follow its recommended treatment will 
result in the non-compliance penalty and does not provide for an appeals 
procedure before receiving treatment, causing us to conclude that none is 
available. Whether or not a contract can be plainly understood to mean one thing 
is a question of law. Examination Management Services, Inc. v. Kirschbaum, 927 P.2d 686, 689 (Wyo. 1996). The meaning of a contract that is not ambiguous is 
controlled by its language. Id. The plain meaning of this contract is that Long 
is not given an appropriate appeal procedure in order to contest HCRS' 
recommended treatment decision or its later conduct when Long was unable to find 
a doctor who would administer the steroid injection 
treatment.

[¶25]   At the same time, the plain meaning 
of the contract is that Great-West will assist an insured in receiving medically 
appropriate care and suggests that a dispute between the treating doctor and 
HCRS will be resolved by a second opinion. In this case, a third opinion did not 
assist Long in receiving medically appropriate care at the time he was seeking 
it and, unless the statute prohibits a judicial remedy, we find there are 
genuine issues of material fact regarding Great-West's handling of Long's 
request for medical treatment through its utilization review 
process.

Wyoming 
Statute

[¶26]   Great-West contends that Wyoming 
statutory law prohibits Long from seeking a judicial remedy and restricts him to 
the grievance procedure. WYO. STAT. § 9-3-205 (1997) 
states:

Administration 
and management of group insurance program; powers and duties; adoption of rules 
and regulations.

(a) The board 
shall administer and manage the state employees' and officials' group insurance 
program and, subject to the provisions of this act:

* * * 
*

(vi) Shall 
establish a procedure by which the board shall hear complaints by insured 
employees concerning the allowance and payment of claims, eligibility for 
coverage and other matters. Unless otherwise provided in the group insurance or 
supplemental plan or plans, any decision of the board upon complaints is not 
binding upon either the employee or carrier and the provisions of the Wyoming 
Administrative Procedure Act shall not apply to the proceedings. The group 
insurance or supplemental plan or plans may provide that the decision of the 
board shall be binding upon both the employee and the carrier as to certain 
disputes and in such event the procedure adopted by the board shall conform to 
the provisions of the Wyoming Administrative Procedure 
Act;

[¶27]   The Board promulgated rules and 
regulations concerning the grievance procedure which state in relevant 
part:

Section 4. 
Exclusivity of Remedy. These rules provide the exclusive administrative remedy 
available to state employees and officials, the carrier, and the other aggrieved 
parties in adjudicating disputes concerning insurance claims and coverage. These 
rules are intended to and shall be construed to provide adjudication in a manner 
that is as speedy and inexpensive as is consistent with a full and fair hearing 
and appropriate deliberation.

Insurance Board 
of Administration, State Employees' and Officials' Group Health, Rules, Ch. 3, 
Section 4 (1991).

[¶28]   Long contends that the statutory 
and rule language does not preclude him from seeking a judicial remedy for 
contract, civil rights, and tort claims arising from the utilization review 
process as handled by Great-West.

[¶29]   The statute requires the Board to 
establish a procedure to address an insured's complaints "concerning the 
allowance and payment of claims, eligibility for coverage and other matters" but 
leaves it to the Board's discretion as to whether or not the procedure shall be 
the exclusive remedy. Under its promulgated rule, the Board has established that 
its grievance procedure to address an insured's dispute concerning "insurance 
claims and coverage" shall be the exclusive remedy. As we discussed above, the 
utilization review process involves the insurer's administrator in medical 
decisions. We consider this kind of involvement in an insured's medical care as 
beyond the traditional understanding of "insurance claims and coverage." This 
activity is relatively new to insurance and completely new to this Court. We 
conclude that the Board has limited the grievance procedure to denial of a claim 
for payment and has not provided an administrative remedy for denial of 
treatment decisions during the utilization review process. This conclusion is 
supported by the fact that the contract does not provide for an appeals process 
for decisions resulting from the utilization review procedure. The conclusion is 
also confirmed by the particular facts of this case which indicate that 
Great-West and the Board did not perceive the grievance procedure as applying 
until after the claim for payment was denied and by Long's experience when his 
doctor was not further advised by an HCRS physician once Long was unable to 
receive the steroid injection treatment. Under these circumstances, Long is 
permitted to seek a judicial remedy.

CONCLUSION

[¶30]   We recognize that this area of the 
law is developing and have chosen to proceed cautiously. Our decision that Long 
may proceed judicially is based on a recognition that the medical decision made 
by Great-West must be made in accord with its obligations expressed in the 
contract and in accord with the duty of good faith. Based on the plain language 
of the contract, Great-West has agreed to provide appropriate medical care to 
its insured despite its involvement in cost-conscious medical decision-making 
through the utilization review process. The grievance procedure contained in the 
contract does not apply to the utilization review process; Long may seek a 
judicial remedy for Great-West's course of conduct. Reversed and remanded for 
trial.

Footnotes

1 This Court 
granted the appellants' motion to strike post summary judgment events from 
consideration when determining the propriety of summary judgment; however, the 
occurrence of these events limited the issues presented on appeal and are noted 
for that reason.

2 Clinical 
practice guidelines are defined as "systematically developed statements to 
assist practitioner and patient decisions about appropriate health care for 
specific clinical conditions." Medical practice guidelines must be distinguished 
from guidelines for utilization review which serve only a cost containment 
purpose. William R. Trail and Brad A. Allen, Government Created Medical Practice 
Guidelines: The Opening of Pandora's Box, 10 J.L. & HEALTH 231, 234-36 
(1996); Andrew L. Hyams, et al., Medical Practice Guidelines in Malpractice 
Litigation: An Early Retrospective, 21 J. HEALTH POL., POL'Y & L. 289, 304 
(1996) (citing Grogan, C.M., et al., How Will We Use Clinical Guidelines? The 
Experience of Medicare Carriers, 19 J. HEALTH POL., POL'Y & L. 7, 
26(1994)).

THOMAS, Justice, 
dissenting.

[¶31]   Perhaps this case is an example of 
the axiom of Justice Oliver Wendell Holmes, Jr., that, "Great cases like hard 
cases make bad law." Northern Securities Co. v. U.S., 193 U.S. 197, 400, 24 S. Ct. 436, 468, 48 L. Ed. 679 (1904) (emphasis added). Certainly the facts as 
reported by Long, which are reiterated in the majority opinion, invoke sympathy 
and perhaps call strongly for relief. On the other hand, there may well be 
enough blame here for everyone to share.

[¶32]   My analysis of the majority 
opinion, however, causes me to conclude that the Court has indeed reasoned from 
rather than to a conclusion. The essence of my critical analysis is captured in 
the statement from the Conclusion of the majority (emphasis 
added):

Based on the 
plain language of the contract, Great-West has agreed to provide appropriate 
medical care to its insured despite its involvement in cost-conscious medical 
decision-making through the utilization review process.

It may be that 
there is some language in the statute, the rules and regulations, or the 
Employee Benefit Booklet that encompasses that agreement, but the majority 
opinion does not include it, and I cannot find it. Perhaps the statement is 
necessary to make the opinion congruent with the philosophical discussion of the 
health care system in the United States.

[¶33]   The majority opinion adopts as 
legislative facts the ideas of other judges and academics that may or may not be 
supportable by empirical data. The product of that discussion is that a medical 
decision has been made by Great West and that a mistaken conclusion about 
medical necessity deprived Long of necessary medical care. The suggestion is 
advanced that a medical malpractice action is justified against a plan 
administrator because of that "medical decision." It is clear, however, from the 
philosophical discussion that the premise for the assumed harm is that the 
insured will forego appropriate care because of the advanced advice that the 
carrier will not pay in full. The logical fallacy presented is that the carrier 
could be guilty of malpractice in a situation in which a physician could not. It 
would be fruitless to search for authority that a medical practitioner is guilty 
of malpractice because his patient decided not to pursue treatment because of 
the potential expense.

[¶34]   The majority abandons its reliance 
on federal authority that permits "medical malpractice actions against plan 
administrators in a limited fashion under various theories such as agency or 
vicarious liability." Instead, an amorphous theory of a fiduciary relationship 
is espoused to make Great West a proper defendant. This is followed by a 
reported perception that "Long's other numerous causes of action [are] in the 
nature of a claim for bad faith in handling and investigating his claim for 
appropriate medical treatment." Reliance then is premised on McCullough v. 
Golden Rule Ins. Co., 789 P.2d 855, 860-61(Wyo. 1990), the case in which this 
Court (mistakenly I remain convinced) injected tort remedies into a contractual 
relationship. The majority then selectively reports a disregard of the plan 
administrator's duties from Long's pleadings.

[¶35]   One fact that curiously is not 
included in the majority opinion, probably because it is missing from Long's 
Complaint, is Long's L4-5 discectomy in February of 1994, approximately one year 
prior to the onslaught of Long's symptoms in this case. That discectomy was at 
the identical site for which this surgery was recommended by Long's treating 
physician. For me, that puts a slightly different spin on the dialogue between 
Great West, through HCRS, and Long. It is natural to wonder why a patient would 
need the identical surgery a second time within little more than one year. 
Presumably, since the case is being remanded for trial that question also will 
be resolved at that time.

[¶36]   I also wonder whether Long's real 
problem is that he was caught in the cross-fire between non-network physicians 
and the plan manager. Is it possible that he was used as a tool to intimidate 
the plan manager? It also must be remembered that it was not Long who canceled 
the surgery because of the refusal of pre-treatment authorization. The treating 
physician simply advised Long that the surgery had been canceled. One wonders, 
"What are the liability implications of a unilateral decision by a physician to 
refuse treatment because of uncertainty about payment?" Specifically, the 
unilateral action of the treating physician well may be an efficient intervening 
cause between any medical decision by Great West and harm to 
Long.

[¶37]   For me, the only correct resolution 
of this case is to require Long to follow the provisions of the statute, the 
rules and regulations, and the Employee Benefit Booklet. One of two options 
should be applied. Either the issue is one of "insurance claims and coverage" 
under the rules and regulations or it is an issue that should be held for 
resolution when Long presented a claim for benefits that had been denied. (I 
note the concession in the majority opinion that full benefits were paid which 
seems effectively to dispose of Long's breach of contract claim.) We never will 
know whether the grievance process would have been followed by Great West and 
the board since Long did not, with respect to the pre-treatment denial of 
authorization, initiate a proceeding before the board by filing a statement 
pursuant to the rules and regulations. In an analogous situation involving 
employment rights, we have said:

When an 
employee, like Hermreck, enjoys a remedy pursuant to a collective bargaining 
agreement, the societal interest can be protected by asserting retaliatory 
discharge in the grievance process, and we should not permit avoidance of the 
collective bargaining grievance process by an independent 
action.

Hermreck v. 
United Parcel Service, Inc., 938 P.2d 863, 866 (Wyo. 1997). Similarly here, the 
societal interest can be protected by asserting wrongful denial of pre-treatment 
authorization in the grievance process.

[¶38]   Respectfully, I must dissent from 
the decision of the majority of the Court in this case. It may be that the 
majority concluded that the result was necessary to protect societal interests. 
For me, however, the case is far more simple, involving only a question of 
whether a party to a health insurance contract is bound to follow the exclusive 
remedy provided in the contract before turning to the judicial system for 
relief. The validity of the summary judgment in this instance is quite 
comparable to the summary judgment upheld in Bryant v. Pacific Power and Light, 
701 P.2d 1165 (Wyo. 1985). The majority opinion offers no refutation to the 
reliance by Great West upon Davis v. State, 910 P.2d 555 (Wyo. 1996), and Glover 
v. State, 860 P.2d 1169 (Wyo. 1993). It would seem that, at the very least, the 
district judge is entitled to some explanation as to why the latter case is not 
even acknowledged in the majority opinion. This is particularly true in view of 
the approval by implication of the grievance process in Squillace v. Wyoming 
State Employees' and Officials' Group Ins. Bd. of Admin., 933 P.2d 488 (Wyo. 
1997).

[¶39]   I simply cannot agree with the 
holding of the majority that the utilization review process involves the 
insurer's administrator in medical decisions; "this kind of involvement in an 
insured's medical care * * * [is] beyond the traditional understanding of 
'insurance claims and coverage.' " The issue simply is whether contemplated 
treatment is covered by the plan. The majority quotes from the statute, WYO. 
STAT. § 9-3-205:

Administration 
and management of group insurance program; powers and duties; adoption of rules 
and regulations.

(a) The board 
shall administer and manage the state employees' and officials group insurance 
program and, subject to the provisions of this act:

* * 
*

(vi) Shall 
establish a procedure by which the board shall hear complaints by insured 
employees concerning the allowance and payment of claims, eligibility for 
coverage and other matters. Unless otherwise provided in the group insurance or 
supplemental plan or plans, any decision of the board upon complaints is not 
binding upon either the employee or carrier and the provisions of the Wyoming 
Administrative Procedure Act shall not apply to the proceedings. The group 
insurance or supplemental plan or plans may provide that the decision of the 
board shall be binding upon both the employee and the carrier as to certain 
disputes and in such event the procedure adopted by the board shall conform to 
the provisions of the Wyoming Administrative Procedure 
Act;

* * 
*

(b) The board 
shall adopt rules and regulations consistent with the provisions of this act as 
necessary to carry out its statutory duties and 
responsibilities.

Then the 
majority quotes from the Board's promulgated rules and regulations concerning 
the grievance procedure:

Section 4. 
Exclusivity of Remedy. These rules provide the exclusive administrative remedy 
available to state employees and officials, the carrier, and the other aggrieved 
parties in adjudicating disputes concerning insurance claims and coverage. These 
rules are intended to and shall be construed to provide adjudication in a manner 
that is as speedy and inexpensive as is consistent with a full and fair hearing 
and appropriate deliberation.

[¶40]   Long's proposed surgery presented a 
dispute concerning "insurance * * * coverage," and his remedy pursuant to the 
Board's rules was exclusive. We should afford the same significance to this 
contractual provision that we would afford to an agreement for mandatory 
arbitration. We should not extend Golden Rule. The policy choice is whether a 
state structured plan to provide a benefit to its employees at a reasonable cost 
is to be burdened by the expenses of litigation such as this or whether disputes 
should be resolved under the contractual provisions. I submit the latter choice 
is the reasonable one, and we should require Long to follow the contractual 
remedy.

[¶41]   I also recognize our rule that if 
we can uphold summary judgment under the record presented under any proper legal 
theory, we will do so. Century Ready-Mix Co. v. Campbell County School Dist., 
816 P.2d 795, 799 (Wyo. 1991), followed in Peterson v. Sweetwater County School 
Dist. No. One, 929 P.2d 525, 529 (Wyo. 1996), and Rissler & McMurry Co. v. 
Sheridan Area Water Supply Joint Powers Bd., 929 P.2d 1228, 1232 (Wyo. 1996); 
Reeves v. Boatman, 769 P.2d 917, 920 (Wyo. 1989). The majority characterizes 
Long's "other numerous causes of action as being in the nature of a claim for 
bad faith in handling and investigating his claim for appropriate medical 
treatment." His Complaint does not contain the factual allegations we required 
in State Farm Mut. Auto. Ins. Co. v. Shrader, 882 P.2d 813, 833-34 (Wyo. 1994), 
a case cited in the majority opinion, where we said:

We hold the 
scope of available compensatory damages for a breach of the duty of good faith 
and fair dealing includes damages for harm to pecuniary interests and emotional 
distress. Crisci [v. Security Ins. Co. of New Haven, Conn., 66 Cal. 2d 425, 426 P.2d 173, 58 Cal. Rptr. 13 (1967)], 58 Cal. Rptr.  at 19, 426 P.2d  at 179. There is 
a limitation, however, upon the recovery of damages for emotional distress for a 
breach of this duty. Gruenberg [v. Aetna Ins. Co., Cal.3d 566, 108 Cal. Rptr. 480, 510 P.2d 1032], 108 Cal. Rptr.  at 489, 510 P.2d  at 1041; Anderson [v. 
Continental Ins. Co., 85 Wis.2d 675, 271 N.W.2d 368 (1978)], 271 N.W.2d  at 378. 
We agree with the court in Gruenberg, that to recover damages for emotional 
distress, the insured must allege that as a result of the breach of the duty of 
good faith and fair dealing, the insured has suffered substantial other damages, 
such as economic loss, in addition to the emotional distress. Gruenberg, 108 Cal. Rptr.  at 489, 510 P.2d  at 1041. See Restatement (Second) of Torts, supra, 
at § 905 cmt. c. The economic losses may include loss of earnings, inability to 
pay creditors, loss of business, costs of litigation brought against the insured 
as a result of the breach and medical expenses. Gruenberg, 108 Cal. Rptr.  at 
489-90, 510 P.2d  at 1041-42. This limitation is imposed to prevent fictitious 
claims for emotional distress and preserve judicial resources. Crisci, 58 Cal. Rptr.  at 19, 426 P.2d  at 179.

Long has 
suffered no damages for breach of the contract, and his Complaint fails to 
allege the sort of economic losses that our language in Shrader 
requires.

[¶42]   I would affirm the summary judgment 
entered in favor of the defendants in the district court.