Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-arwd-3_05-cv-03012/USCOURTS-arwd-3_05-cv-03012-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

HARRISON DIVISION

WILEY E. STEVENS, and

CORA STEVENS PLAINTIFFS

v. Case No. 05-3012

USABLE LIFE DEFENDANT

MEMORANDUM OPINION & ORDER

The above referenced action is before this Court pursuant to

the provisions of the Employee Retirement Income Security Act of

1974 (“ERISA”), 29 U.S.C. § 1001 et seq., challenging defendant’s

decision to deny coverage for certain claims under a Limited

Benefit Cancer and Specified Disease Policy issued by USAble Life

and made available to the defendants under an employee welfare

benefit plan. The defendant submitted the administrative record

(the “AR”) that was before the claims administrator. (Doc. 15)

The parties have submitted briefs (Docs. 16, 17) on the issues

before the Court and the matter is now ripe for consideration. For

the reasons set forth herein, the decision of the defendant will be

upheld, the plaintiffs’ claim will be denied, and this case will be

dismissed.

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Background

1. The plaintiffs in this action are Wiley Stevens and Cora

Stevens. In August of 1993, Cora Stevens completed an application

for a “Limited Benefit Cancer and Specified Disease Policy”

(hereinafter the “Cancer Policy”) which was made available to her

as a part of an employee welfare benefit plan provided by her

employer, Wood Manufacturing Company, Inc. (AR 22, 300). The

application lists Wiley Stevens, Cora Stevens’ husband, as an

individual to be covered under the policy issued by the defendant,

USAble Life (“USAble”). (AR 22).

2. Wiley Stevens was originally diagnosed with cancer of the

rectum in 2001. In late 2003, Mr. Stevens’ cancer reappeared and

he was advised by his doctors in Mountain Home, Arkansas to have

additional surgery. Mr. Stevens then received treatment from

another doctor in Tulsa, Oklahoma. A series of tests, and,

ultimately, surgery was performed on Mr. Stevens at the

Southwestern Regional Medical Center in Tulsa. 

3. In their complaint, the Stevens seek coverage under the

Cancer Policy for the series of tests performed in Tulsa, Oklahoma

which totaled $10,769.85. USAble asserts that the tests at issue

are not covered under the Cancer Policy. 

4. Specifically, USAble points to the following provisions

in the Cancer Policy in support of their decision to refuse

coverage: 

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SECOND AND THIRD SURGICAL OPINION: We will pay the actual

charges incurred for a second, or third if necessary

surgical opinion. Second surgical opinion means the

evaluation of the need for surgery by a second physician.

Third surgical opinion means the evaluation of a third

physician if the opinions of the first two physicians are

in conflict. 

(AR 307). 

6. The employee welfare benefit plan, of which the Cancer

Policy is a part, grants discretionary authority to the

administrator: 

9.1 Plan Administration

The operation of the Plan shall be under the supervision

of the Administrator. It shall be a principal duty of

the Administrator to see that the Plan is carried out in

accordance with its terms, and for the exclusive benefit

of Employees entitled to participate in the Plan. The

Administrator shall have full power to administer the

Plan in all of its details, subject, however, to the

pertinent provisions of the Code. The Administrator’s

powers shall include, but shall not be limited to the

following authority, in addition to all other powers

provided by this Plan: 

. . .

(b) To interpret the Plan, the Administrator’s

interpretations thereof in good faith to be final and

conclusive on all persons claiming benefits under the

Plan; 

(Affidavit of Mark McCuin, doc. 10, Exhibit A, Wood Manufacturing

Company, Inc. Cafeteria Plan, p. 22). The employee welfare benefit

plan also provides the following provision concerning the terms of

any insurance policy offered under the plan: 

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9.4 Insurance Control Clause

In the event of a conflict between the terms of this Plan

and the terms of an Insurance contract of an independent

third party Insurer whose product is then being used in

conjunction with this Plan, the terms of the Insurance

Contract shall control as to those Participants receiving

coverage under such Insurance Contract. For this

purpose, the Insurance Contract shall control in defining

the persons eligible for insurance, the dates of their

eligibility, the conditions which must be satisfied to

become insured, if any, the benefits Participants are

entitled to and the circumstances under which insurance

terminates. 

(Affidavit of Mark McCuin, doc. 10, Exhibit A, Wood Manufacturing

Company, Inc. Cafeteria Plan, p. 23). 

7. The record submitted in this case reveals that Mr.

Stevens visited the Cancer Treatment Centers of America at

Southwestern Regional Medical Center in Tulsa, Oklahoma in January

of 2004. He initially visited the Tulsa medical center for a

second opinion with respect to the recommendation of Dr. Peter

MacKercher that surgery be performed to treat the recurrence of

cancer of the rectum. During his treatment in Tulsa, Mr. Stevens

was seen and/or treated by several doctors including Joseph M.

Padolick, M.D.; Pierre J. Greeff, M.D.; Petra Ketterl, M.D.;

Douglas A. Kelly, M.D.; W. Todd Bookover, M.D.; Raymond F.

Sorensen, D.O.; Don King II, M.D.; Wesley D. Hughes, M.D.;

Christine Girard, N.D.; and Ziad Sous, M.D; From the medical

records it appears that during January of 2004 Dr. Padolick and/or

Dr. Greeff recommended and ordered that additional tests, including

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CT scans, be performed to determine the extent of Mr. Stevens’

cancer and to help to determine a proper course of treatment. 

As set forth above, the dispute in this case is the series of

tests performed at the Tulsa medical center in January of 2004

prior to surgery. Following the submission of the claim for

benefits, USAble determined that the “diagnostic tests” were not

covered under the “second surgical opinion” benefit of the Cancer

Policy. 

8. In a letter dated March 23, 2004, Beth Largent, RN, a

Case Manager at the Tulsa medical center, explained to USAble that

Mr. Stevens came to the Tulsa medical center in January 2004 or a

second opinion by Dr. Greeff. (AR 118). Ms. Largent further

explained that “[i]n order for Dr. Greeff to give Mr. Wiley an

accurate second opinion it was imperative that he have results of

current testing. So for that reason, it was necessary for scans

and other tests to be repeated so the results would be up to date.”

(AR 118). 

8. Following USAble’s denial of coverage for the claims at

issue, the Stevens filed a complaint with the Arkansas Insurance

Department. (AR 327-328). On June 17, 2004, USAble responded to

the Arkansas Insurance Department explaining the reason for its

decision that the tests were not covered. (AR 285-286). According

to the letter:

On October 1, 2001, we received a claim for Wiley Stevens

for the diagnosis of rectal carcinoma. The claim was

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approved October 3, 2001 and benefits have been paid

since that time for covered expenses. 

On March 4, 2004, we received additional bills from Mr.

Wiley including three (3) office visits that he had

indicated were for a second surgical opinion of Dr. Greef

on January 20, 23, and 26, 2004. 

The cancer supplement policy covering Mr. Stevens states

in relevant part:

“SCHEDULE OF BENEFITS

PART G BENEFITS

SECOND AND THIRD SURGICAL OPINION:

We will pay the actual charges for a second,

or third if necessary, surgical opinion.

Second surgical opinion means an evaluation of

the need for surgery by a second physician.

Third surgical opinion means the evaluation of

a third physician if the opinions of the first

two physicians are in conflict.”

 

Based on the above policy provision, USAble Life paid the

full amount due for the Second Opinion charges of Dr.

Greef in making his evaluation of the need for surgery.

The policy does not state that payment will be made for

diagnostic tests needed to reach that opinion, nor is

there an intent to provide benefits for these under the

Stevens’ limited specified disease policy. Even if one

used a layman’s definition of “opinion” such as is found

in Merriam Webster’s Dictionary, which defines the term

as a view or judgment about a particular matter, coverage

cannot be extended beyond the physician’s charge for his

view or judgment as to the need for surgery. 

Consequently, we respectfully decline to issue payment

for the diagnostic testing undergone by Mr. Wiley in

anticipation of the surgery that was performed on or

about January 28, 2004. 

(AR 285-286). 

9. In a letter dated June 21, 2004, USAble notified Wiley

Stevens of its decision: 

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After careful review of your claim, it does not appear

benefits are payable for services indicated below with

XXX:

XXX Lab Work

XXX Diagnostic x-rays

XXX Office Visits

Outpatient transportation/lodging expenses

Non-chemotherapy drugs and prescriptions

Calendar year maximum has been paid for 

chemotherapy/radiation

Other:

If you disagree with this determination, you or your

authorized representative may appeal this decision by

filing a written request for review to Connie Phillips,

Appeals Coordinator, USAble Life, within 60 days of

having received this notice. Your appeal should include

your comments and view of the issues, in writing. You

may examine pertinent documents relative to your claim.

However, we must have written authorization from your

physician before you can review medical information. 

A decision will be made by USAble Life no later than 60

days after we receive your request for review. If there

are special circumstances that have an impact on the

review process, the decision will be made as soon as

possible, but no later than 120 days after we receive

your request. 

(AR 297-298). 

10. In a letter dated June 22, 2004, the Arkansas Insurance

Department asked for USAble’s reconsideration of the claim and also

sought additional information from USAble:

Please review this case again and reconsider paying

benefits for the testing Dr. Greeff performed in able for

him to accurately provide an opinion for

abdominioperineal resection. Also, please send us a

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current copy of Claims History payments that you have

paid benefits under Mr. Wiley’s Cancer Supplemental

policy. 

(AR 279-280). 

11. In a letter dated July 12, 2004, USAble responded to the

Arkansas Insurance Department with a history of paid claims and

reiterated its position as follows: 

The charges that were not paid were for laboratory,

radiology, and other scans that were clearly performed as

pre-surgery tests and not covered under the policy.

Further, although Dr. Greef did not code his services on

January 20, 23 and 26 as confirmatory consultations,

these were paid based on information received from Ms.

Stevens that the charges were for second surgical

opinions. Those payments are reflected as follows:

Claim Detail Date of Service Procedure Amount Paid

36 1-20/1-26-04 99211/99241 $240.00

Our previous reference to Radiation, Radio-Active

Isotopes Therapy, Chemotherapy, or Immunotherapy section

of the policy was meant to demonstrate the policy’s

intent that the policy does not pay for laboratory tests

or diagnostic x-rays. While these procedures are not

specifically excluded in the Second and Third Surgical

Opinion provision, neither is it stated that we will pay

for laboratory tests or diagnostic x-rays. Further, we

have never paid for charges other than the charge for the

physician’s medical opinion as evidenced in charges that

carry the Current Procedural Terminology coding for such

services. 

Based on te foregoing facts, it appears that USAble has

adjudicated Mr. Stevens’ claim in accordance with the

terms and provisions of Cora Stevens’ limited benefit

cancer and specified disease policy, and we respectfully

decline to reimburse charges that are not payable under

the contract. 

(AR 271-272). 

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12. On July 20, 2004, the Arkansas Insurance Department, in

a letter to Cora Stevens, stated the following:

My findings substantiate that the pre-surgical testing

that included laboratory tests, radiological and other

scans would fall outside of the charge applicable to the

. . . surgical opinion rendered. 

It appears that the results of the above mentioned items

were in fact used as preparatory tests to establish a

surgical pln of treatment. These items would be covered

under your Major Medical Policy for the surgery on Mr.

Stevens. Supplemental policies are not as inclusive in

the benefit coverage incorporated Major Medical Policies.

(AR 269). 

13. This lawsuit was filed by the Stevens in February of

2005. 

Discussion

* Standard of Review

1. ERISA provides a plan beneficiary with the right to

judicial review of a benefits determination. See 29 U.S.C. §

1132(a)(1)(B). A denial of benefits by a plan administrator must

be reviewed de novo unless the benefit plan gives the administrator

discretionary authority to determine eligibility for benefits or to

construe the terms of the plan, in which case the administrator’s

decision is reviewed for an abuse of discretion. See Firestone

Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). As set forth

above, under the terms of employee welfare benefits plan, the plan

administrator grants discretionary authority to the administrator.

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Accordingly, defendant’s decision should be reviewed for an abuse

of discretion. 

2. Under the abuse-of-discretion standard, the Court must

determine whether a reasonable person could have reached the same

decision. See House v. Paul Revere Life Ins. Co., 241 F.3d 1045,

1048 (8th Cir. 2001). This inquiry focuses on the presence or

absence of substantial evidence supporting the administrator’s

decision. Id. While the administrator’s decision need not be

supported by a preponderance of the evidence, there must be “‘more

than a scintilla.’” Id. (citations omitted).

* Defendant’s Denial of Coverage

3. In its decision denying coverage, USAble found the tests

at issue were not covered by the Cancer Policy. Specifically,

USAble found that the tests did not fall under the “second and

third surgical opinion” benefit of the Cancer Policy. 

4. As set forth above, the decision to deny coverage under

the Cancer Policy is being reviewed by this Court for abuse of

discretion. Under the abuse-of-discretion standard, the Court must

determine whether a reasonable person could have reached the same

decision. See House v. Paul Revere Life Ins. Co., 241 F.3d 1045,

1048 (8th Cir. 2001). This inquiry focuses on the presence or

absence of substantial evidence supporting the administrator’s

decision. Id. While the administrator’s decision need not be 

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supported by a preponderance of the evidence, there must be “‘more

than a scintilla.’” Id. (citations omitted).

Although the plaintiffs argue that the Cancer Policy is

ambiguous, this Court finds no ambiguity. Further, this Court

finds that the information before USAble is sufficient to support

its decision to deny coverage. See House v. Paul Revere Life Ins.

Co., 241 F.3d 1045, 1048 (8th Cir. 2001). Although the Cancer

Policy provides for coverage for a “second or third surgical

opinion,” there is no provision that provides for coverage for

diagnostic testing to determine a course of treatment. 

Conclusion

5. Based on the foregoing, the plaintiffs are not entitled

to a judgment against the defendant. Accordingly, the plaintiffs’

claim is hereby DENIED and this case is DISMISSED. Each party

shall bear its own costs and attorney’s fees.

IT IS, THEREFORE, ORDERED that plaintiffs’ claim is DENIED and

this case is DISMISSED. Each party shall bear its own costs and

attorney’s fees. 

IT IS SO ORDERED this 13 day of December 2006. th

/S/JIMM LARRY HENDREN 

JIMM LARRY HENDREN

UNITED STATES DISTRICT JUDGE

 

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