Court Opinion

ID: 3034192
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:50:40.781327+00
Date Added: 2024-06-11T09:49:46.449191
License: Public Domain

United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT

                                    ___________

                                    No. 02-4147
                                    ___________

Computer Aided Design Systems, Inc.,*
                                    *
             Appellee,              *
                                    * Appeal from the United States
      v.                            * District Court for the Southern
                                    * District of Iowa.
Safeco Life Insurance Company,      *
                                    *
             Appellant.             *
                                    *
                               __________

                           Submitted: October 23, 2003
                               Filed: March 2, 2004
                                  ___________

Before BYE, HANSEN, and MELLOY, Circuit Judges.
                           ___________

MELLOY, Circuit Judge.

       This appeal arises from a suit by an employer, Computer Aided Design
Systems (“CADSI”), against an excess loss insurer, Safeco Life Insurance Company
(“SAFECO”), who denied CADSI’s claim for expenses incurred by covering a certain
medical treatment of one of its beneficiaries. The district court granted summary
judgment in favor of CADSI, concluding that the Plan Administrator’s decision to
cover a claim under the employee health benefit plan is reviewable only for an abuse
of discretion, and that the Plan Administrator did not abuse his discretion in covering
the claim in question. SAFECO now appeals the grant of summary judgment for
CADSI. We affirm.

                                           I.
       CADSI had a self-funded employee benefit plan (“Plan”) and contracted with
SAFECO for excess loss insurance. CADSI also contracted with an independent
medical review and utilization service, Great Plaines Health Network (“Plaines
Health”), receiving a lower premium rate from SAFECO as a result. Lynda Solomon,
a beneficiary of the benefit plan, was diagnosed with Stage IV breast cancer, and her
doctors at the University of Iowa Hospitals and Clinics recommended that Solomon
undergo an autologous peripheral blood stem cell transplant with high-dose
chemotherapy. Solomon submitted a preauthorization claim for the treatment with
the Plan Administrator. Solomon’s medical records and information about the
proposed treatment were submitted to Plaines Health. Plaines Health concluded that
the treatment was “medically necessary” and not “specifically excluded in the
certificate language.”

       In addition, the Plan Administrator submitted the records and information to
SAFECO’s excess loss referral assistance program, a voluntary program that helps
plan administrators review a claim and determine whether it is covered. Through this
program, SAFECO responded that it believed the treatment was not “medically
necessary,” as defined under the Plan and also an “experimental procedure,” as
defined under the Plan. SAFECO thus found the procedure was not covered under
the terms of the Plan. SAFECO provided with its finding the opinions of three
oncologists employed by SAFECO.

      Because of the apparent conflict, the Plan Administrator solicited the opinion
of Dr. Roger Gingrich, an oncologist at the University of Iowa. Dr. Gingrich
provided an opinion that rebutted the opinions of the three SAFECO oncologists.
The Plan Administrator submitted the rebuttal to SAFECO, which responded with

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rebuttal opinions by its three oncologists. After considering all the information and
opinions mentioned above, the Plan Administrator concluded that Solomon’s
proposed treatment was medically necessary and not experimental, and approved
payment of the claim. CADSI paid Solomon’s medical bills and filed a claim with
SAFECO for excess loss of $146,482.62. SAFECO denied the claim.

                                         II.
      We review the district court’s grant of summary judgment de novo. Jackson
v. Ark. Dep’t of Educ., Vocational and Technical Educ. Div., 272 F.3d 1020, 1025
(8th Cir. 2001). SAFECO argues that the district court erred (1) in applying an abuse
of discretion standard when assessing whether the Plan Administrator properly
approved a claim; (2) in concluding that coverage of the stem cell transplant was not
barred as experimental; and (3) by drawing inferences for the moving party, CADSI,
in granting its motion for summary judgment.

      We find these arguments are unpersuasive. The district court properly analyzed
the contract between SAFECO and CADSI under Washington State contract law.
This contract, which SAFECO drafted, stated that SAFECO would “reimburse you
[CADSI] for a percentage of the amount of covered expenses you have paid for
covered persons under your plan.” App. at 190. The policy made no provision for
SAFECO to review whether claims were covered under the Plan. Instead, SAFECO’s
policy fully incorporated CADSI’s employee benefit plan, which gave the CADSI
Plan Administrator the exclusive authority to decide whether to grant or deny claims,
reviewable only for an abuse of discretion.1 Thus, though SAFECO urges the Court

      1
          The health benefit plan states:

      The Employer also has the sole authority and responsibility to review
      and make final decisions on all claims for benefits hereunder.

      ***

                                            -3-
to review CADSI’s coverage decision objectively, SAFECO’s Excess Loss Policy
limits the inquiry to whether or not the Plan Administrator abused his discretion.

       We conclude that the Plan Administrator did not abuse his discretion when he
made the decision to cover Lynda Solomon’s claim. The Plan Administrator solicited
and reviewed information from several sources before making his decision that
Solomon’s treatment was covered. In making this determination, he had at his
disposal: (1) information about the treatment submitted by Solomon and the
University of Iowa Hospitals and Clinics, (2) the three SAFECO expert opinions, (3)
the rebuttal opinion of Dr. Gingrich at the University of Iowa, (4) SAFECO’s experts’
responses to Dr. Gingrich’s rebuttal, (5) the opinion by the independent medical
review service Plaines Health. Substantial evidence–the opinion of Plaines Health,
the opinion of Dr. Gingrich, combined with the other information submitted by the
University and Solomon–supported the Plan Administrator’s decision to extend
coverage to Solomon. We find this decision was reasonable and not an abuse of
discretion.

      Accordingly, the judgment of the district court is affirmed.
                          ______________________________

      In exercising its authority under this Plan, the Fiduciary and/or Plan
      Administrator and any such designated subsidiaries and affiliates shall
      have discretionary authority to determine whether and to what extent
      participants and beneficiaries are entitled to benefits, and to construe
      disputed or doubtful Plan terms. The Fiduciary and/or Plan
      Administrator and any such designated subsidiaries and affiliates shall
      be deemed to have properly exercised such authority unless they have
      abused their discretion hereunder by acting arbitrarily and capriciously.

CADSI Self-Funded Employee Health Benefit Plan, App. at 131-32 (emphasis
added).

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