Opinion ID: 74766
Heading Depth: 3
Heading Rank: 2

Heading: Contractual Interpretation

Text: 5 Two Circuits, although not commenting specifically on Chevron or its interplay with prior case law, have held that the arbitrary and capricious standard of review applies to OPM’s benefits decisions based on OPM’s interpretation of provisions of an insurance contract. See Nesseim v. Mail Handlers Benefit Plan, 995 F.2d 804, 807 (8th Cir. 1993); Harris v. Mutual of Omaha Cos., 992 F.2d 706, 712 (7th Cir. 1993). 10 The insurance policy between Appellees and PCA contains six sections governing benefits: medical and surgical benefits; hospital/extended care benefits; emergency benefits; mental conditions/substance abuse benefits; prescription drug benefits; and other benefits. The parties focus on two specific provisions of the policy – one in the medical and surgical benefits section, the other in the mental conditions/substance abuse benefits section. The medical and surgical benefits section states “[a] comprehensive range of preventive, diagnostic and treatment services is provided by Plan doctors and other Plan providers.” Under the limited benefits subsection, the plan provides: Short-term rehabilitative therapy (physical, speech, cardiac, and occupational) is provided on an inpatient or outpatient basis for up to two months per condition if significant improvement can be expected within two months; . . . Speech therapy is limited to treatment of certain speech impairments of organic origin. The medical and surgical benefits section concludes by stating that it does not cover long-term rehabilitative therapy. The mental conditions/substance abuse benefits section, by contrast, provides that “[t]o the extent shown below, this Plan provides the following services necessary for the diagnosis and treatment of acute psychiatric conditions, including treatment of mental illness or disorders: diagnostic evaluation, psychological testing, psychiatric 11 treatment (including individual and group therapy), [and] hospitalization (including inpatient professional services).”6 The parties agree that autism is a mental health disorder for purposes of the plan. OPM concluded, and contends here, that Appellees sought coverage for speech therapy and the plan (in the medical and surgical benefits section) specifically limits coverage for speech therapy to two months. Appellees counter that coverage for autism, a mental disorder, arises from the mental conditions section, specifically the “psychiatric treatment” of “individual therapy.” While the plan might be susceptible to either reading, we conclude OPM did not act arbitrarily or capriciously. Instead, OPM offers a reasonable interpretation that the plan considers speech therapy a “medical benefit,” as evidenced by the specific provision governing speech therapy in the medical and surgical benefits section. Appellees contend that speech therapy qualifies as the psychiatric treatment of individual therapy. The plan, however, contains no indication that individual therapy, which OPM argues suggests the common understanding of counseling by a psychiatrist, includes speech therapy. Appellees rely on the fact that a psychiatrist prescribed the therapy as evidence that speech therapy amounts to psychiatric 6 The four items after the colon appear as bullet points in the policy. For simplicity, we have listed them without the accompanying bullet points. 12 treatment. However, the plan provides benefits, and sets out limitations, based upon the type of coverage sought, not the caregiver who provides it. For instance, if a psychiatrist prescribed drugs as part of a treatment for a mental condition, the prescription drug benefit section and its limitations would apply instead of the seemingly unlimited coverage provided by the mental conditions section. Similarly, OPM did not act arbitrarily or capriciously when it determined that the specific provision for speech therapy in the medical benefits section, instead of the open-ended mental conditions section, controls coverage for speech therapy.7 Accordingly, the district court erred by entering summary judgment for Appellees.8