Opinion ID: 3012804
Heading Depth: 2
Heading Rank: 2

Heading: The Tracheostomy Tube

Text: We will first examine DiFelice’s claim that Aetna interfered with Dr. Picariello’s medical decision regarding the special tube. Under Pryzbowski, the first question is whether Aetna’s “medical necessity” determination is clearly either a medical treatment decision or an eligibility decision. DiFelice has couched this claim in terms of Aetna’s negligent interference with his care, which seems to imply that Aetna itself engaged in medical treatment. However, DiFelice’s complaint does not include any allegation that Dr. Picariello was an agent of Aetna, that Aetna did not exercise reasonable care in monitoring Dr. Picariello’s care, or that Aetna itself provided medical treatment; rather, his claim rests on Aetna’s “instruction” to Dr. Picariello “that the specially designed tracheostomy tube he deemed necessary was medically unnecessary,” a direct reference to the “medical necessity” determination called for in the Plan. Looking behind DiFelice’s use of language sounding in negligence, he is alleging that Aetna 11 wrongfully denied him coverage for the special tube. Thus, the complaint has aspects of treatment and coverage. That is, in making its determination, Aetna necessarily had to exercise some medical judgment, i.e., it had to determine whether the special tube was “as likely to produce a significant positive outcome as, and no more likely to produce a negative outcome than, any alternative service or supply, . . . [was] related to diagnosis of an existing illness or injury, . . . [and was] no more costly (taking into account all health expenses incurred in connection with the service or supply) than any equally effective service or supply.” However, here there is no allegation that Aetna actually provided the medical care, and Aetna’s use of medical judgment could only have led to an eligibility, not a treatment, decision. Because the decision here was in some sense both a medical treatment and an eligibility decision, thus falling between the two poles discussed in Pryzbowski, we must refer to section 502(a) and determine whether DiFelice’s claim regarding the tube could have been the subject of a civil enforcement action under ERISA. Pryzbowski, 245 F.3d at 273. Clearly, it could have been. DiFelice could have challenged Aetna’s “medical necessity” determination by filing a claim under 502(a)(1)(B) “to recover benefits due to him under the terms of his plan,” and arguing that the special tube was in fact “medically necessary,” and was therefore a “covered benefit.” He could have requested an injunction forcing Aetna to pay for the special tube, or alternatively, paid for the tube himself and then later filed an action for reimbursement. Numerous ERISA participants have in fact brought such actions challenging their HMO’s “medical necessity” determinations and seeking to recover benefits they alleged were due under their plans. See, e.g., Mario v. P&C Food Mkts., Inc., 313 F.3d 758, 762-63 (2d Cir. 2002) (reviewing claim under section 502(a) challenging HMO’s determination that sex change operation was not “medically necessary”); Fritcher v. Health Care Serv. Corp., 301 F.3d 811, 814-15 (7th Cir. 2002) (reviewing claim under section 502(a) challenging HMO’s determination that custodial care was not “medically necessary”); Kopicki v. Fitzgerald Auto. Family Employee Benefits Plan, 121 F. Supp. 2d 467, 480 (D. Md. 2000) (granting preliminary 12 injunction to prevent HMO from denying preauthorization for cancer treatment it had deemed not “medically necessary”); see also Heasley v. Belden & Blake Corp., 2 F.3d 1249, 1253 (3d Cir. 1993) (reviewing claim under section 502(a) challenging an HMO’s determination that a liver/pancreas treatment was an “experimental procedure”). DiFelice’s claim falls squarely within this jurisprudence. Because DiFelice’s claim that Aetna improperly deemed his special tube to be “medically unnecessary” could have been brought under section 502(a), it is completely preempted by ERISA. We will therefore affirm the District Court’s exercise of removal jurisdiction and its order dismissing Count I as to Aetna’s conduct regarding the tracheostomy tube. DiFelice urges that this result is inconsistent with the Supreme Court’s decision in Pegram and our decisions in U.S. Healthcare and Lazorko. We disagree. In Pegram, the Supreme Court answered the question whether an HMO may be liable for a breach of fiduciary duty when its physician owners make “mixed eligibility and treatment decisions.” Pegram, 530 U.S. at 229. There, a physician, who was also an owner of the HMO that covered her patient, waited to order an ultrasound for the patient’s inflamed appendix, and the appendix ruptured. Id. at 215. The patient sued the HMO for breach of fiduciary duty, alleging that the HMO created an incentive for the physicians to make decisions in their own financial interests, rather than in the exclusive interests of the plan participants. Id. The Court held that HMOs do not act as “fiduciaries” as envisioned by ERISA when their physician owners make decisions that touch both on the patient’s medical treatment and the patient’s eligibility for benefits under the plan. Id. at 218. The Court first set forth a framework for understanding the kinds of acts that physician owners acting on an HMO’s behalf might undertake. On the one hand are “pure ‘eligibility decisions’ ” turning on the plan’s coverage for a particular medical treatment, and on the other are “treatment decisions,” choices about how to go about diagnosing and treating a patient’s condition. Id. at 228. In between are situations in which the “eligibility decision and the treatment decision [are] inextricably mixed,” that is, 13 when an eligibility decision necessarily rests on the “physicians’ judgments about reasonable medical treatment.” Id. The Court found that it was presented with just such a “mixed” decision: the physician owner had determined that the patient’s “condition did not warrant immediate action; the consequence of that medical determination was that [the HMO] would not cover immediate care.” Id. Having concluded that the decision before it was a “mixed” decision, the Court went on to hold that an HMO’s physician owners do not act as fiduciaries under ERISA when making such decisions. Id. at 231. The Court focused on the nature of “fiduciaries,” explaining that these mixed decisions are not “fiduciary in nature,” and bear “only a limited resemblance to the usual business of trustees.” Id. The Court feared that a contrary result would open the floodgates to malpractice suits against HMOs and individual physicians under the guise of ERISA breach of fiduciary duty claims, and would erode the distinction between state malpractice and federal ERISA actions. Id. at 235-36. Although, as we noted above, Pegram set forth helpful terminology for preemption analysis, see Pryzbowski, 245 F.3d at 273, the Court’s holding that a “mixed” determination made by a physician owner does not subject an HMO to liability for breach of fiduciary duty does not translate to, or govern in, the preemption context. Rather, Pegram sets a standard for when liability is to be imposed on individuals acting in a fiduciary capacity. It does not presume to encompass ERISA claims enforcement as such. In fact, the Pegram Court specifically stated that it was not discussing the standards governing a claim that a patient had been wrongfully denied benefits due under a plan nor the interaction between such a claim and state law causes of action. Pegram, 530 U.S. at 229 n.9; accord Roark v. Humana, Inc., 307 F.3d 298, 308 (5th Cir. 2002) (stating that the Supreme Court has not decided whether section 502(a)(1)(B) preempts a medical malpractice claim involving “mixed decisions,” but holding under Fifth Circuit law that it does not). In fact, it could be argued that allowing plaintiffs to do an end-run around ERISA by permitting 14 them to couch plan decisions that have some impact on treatment in negligence terms would have a similar effect of undermining ERISA as was feared by the Court in Pegram. We remain convinced that, after Pryzbowski, we look at what decisions are subject to enforcement, which is a radically different inquiry from when can an HMO be sued for breach of fiduciary duty.3 We are also not persuaded that U.S. Healthcare and Lazorko — both of which pre-date Pryzbowski and rely on the “quality-quantity” distinction — compel a different result. In U.S. Healthcare, we held that a suit against an HMO challenging its policy of pre-certifying a twenty-four hour discharge of mother and newborn was not preempted by ERISA because it went to the quality of the health care provided. U.S. Healthcare, 193 F.3d at 162. Significantly, we noted that the plaintiffs did not allege “a failure to provide or authorize benefits under the plan,” nor did they 3. We note that other federal courts of appeals have followed different paths in determining whether a claim is preempted under section 502(a). Some have concluded, on the facts before them, that a suit challenging a “medical necessity” determination was preempted, see Marks v. Watters, 322 F.3d 316, 326-27 (4th Cir. 2003) (holding that a suit against an HMO utilization review case manager was completely preempted under section 502(a) because the HMO did not actually provide medical treatment); Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1489 (7th Cir. 1996) (holding that a negligence claim against an HMO utilization review case manager was completely preempted because the claim was “in effect a claim for denial of benefits”), and some have concluded that it was not. See Land v. CIGNA Healthcare of Fla., 339 F.3d 1286, 1293 (11th Cir. 2003) (holding that claims that an HMO failed to correctly diagnose a condition and authorize proper medical treatment were tort claims outside of the scope of section 502(a)); Cicio v. Does, 321 F.3d 83, 102 (2d Cir. 2003) (concluding that under Pegram, a state law medical malpractice action based on a “mixed” decision is not preempted by ERISA when the state law cause of action “challenges an allegedly flawed medical judgment as applied to a particular patient’s symptoms”); Roark v. Humana, Inc., 307 F.3d 298, 309 (5th Cir. 2002) (holding that a claim that an HMO had failed to use ordinary care in making a medical necessity determination sounded in tort and was not preempted). We believe that the framework we set forth in Pryzbowski provides the controlling method of analysis here and compels the conclusion that DeFelice’s claim regarding the tube is preempted. 15 claim “that they were denied any of the benefits that were due under the plan.” Id. Rather, they alleged that the HMO was negligent in adopting the discharge policy and in supervising the physicians with whom they contracted for services, and that the HMO’s incentive structure adversely affected the physicians’ medical judgment regarding when newborns should be discharged. The plaintiffs were not seeking to enforce benefits they thought were due to them under the plan; they were challenging the discharge policy itself and the HMO’s actions “in its role as a provider or arranger of medical services,” not in its role as administrator of benefits. Id. at 163. The HMO’s “policy and incentive structure were such that the [patients] never had the option of making an informed decision as to whether to pay for the hospitalization themselves, as would occur in a situation in which coverage is sought and denied.” Id. Although we analyzed the claims in U.S. Healthcare under the “quality-quantity” rubric, our holding squares with the preemption framework we later set forth in Pryzbowski. Because the plaintiffs in U.S. Healthcare were not suing for any benefits due under the plan, but rather were challenging the plan itself, they could not have sued under section 502(a), and therefore, even under Pryzbowski, their claims would not have been preempted. Lazorko involved a similar issue. There, we held that a claim that financial disincentives imposed by an HMO discouraged medical providers from hospitalizing a patient who later committed suicide was a “quality of care” claim and therefore not preempted. Lazorko, 237 F.3d at 249250. We noted that Lazorko was not claiming that the HMO plan was supposed to include hospitalization, but rather that her doctor was influenced in his decision-making by the incentive structure. Id. As in U.S. Healthcare, the patient could not have sued under ERISA because she never had the option of seeking continued hospitalization — her doctor, as influenced by the HMO policy, did not offer it to her. Id. Unlike in U.S. Healthcare and Lazorko, here, DiFelice is suing based on denial of a benefit he claims he was due under the Plan. He is not claiming that Aetna negligently adopted a particular policy regarding tracheostomy tubes or 16 imposed an incentive structure that interfered with his physician’s independent medical judgment. Rather, he claims that the special tube was not “medically unnecessary,” and that Aetna wrongfully determined that it was, a claim that is based on the language of the Plan and pertains to the nature of benefits provided. Unlike the plaintiffs in U.S. Healthcare and Lazorko, DiFelice sought and was denied coverage for a benefit, and could have paid for the benefit himself and sued under section 502(a) for reimbursement. Because under our most recent controlling precedent, Pryzbowski, DiFelice’s claim that Aetna was negligent in determining that the special tube was “medically unnecessary” could have been the subject of a suit under section 502(a) for benefits due under the Plan, his claim is preempted by ERISA.4 We will therefore affirm the District Court’s exercise of removal jurisdiction and subsequent dismissal of the claim with respect to the tube.