Court Opinion

ID: 6341301
Source: CourtListenerOpinion
Date Created: 2022-05-17 12:06:07.638391+00
Date Added: 2024-06-11T08:47:50.134471
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                        2022-NCCOA-333

                                         No. COA21-729

                                        Filed 17 May 2022

     Orange County, No. 21 CVS 007

     KATHERINE BIRCHARD, Plaintiff,

                   v.

     BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, INC., THE NORTH
     CAROLINA STATE HEALTH PLAN a/k/a NORTH CAROLINA STATE HEALTH
     PLAN, a body politic and corporate, and THE BOARD OF TRUSTEES OF THE
     STATE HEALTH PLAN FOR TEACHERS AND STATE EMPLOYEES, Defendant.

             Appeal by plaintiff from order entered 2 July 2021 by Judge Alyson Adams

     Grine in Orange County Superior Court. Heard in the Court of Appeals 26 April

     2022.

             Barry Nakell for plaintiff-appellant.

             Gallivan, White & Boyd, P.A., by Christopher M. Kelly and Kelsey N. Dorton,
             for defendant-appellee Blue Cross and Blue Shield of North Carolina, Inc.

             TYSON, Judge.

¶1           Katherine Birchard (“Plaintiff”) appeals the trial court’s order dismissing her

     complaint for lack of subject matter jurisdiction and for failure to state a claim upon

     which relief can be granted in favor of Blue Cross and Blue Shield of North Carolina,

     the North Carolina State Health Plan, and the Board of Trustees for the State Health

     Plan for Teachers and State Employees (collectively “Defendants”). We affirm.
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                                          Opinion of the Court

                                     I.      Background

¶2         Plaintiff was a member of a medical insurance plan entitled “State Health Plan

     for Teachers and State Employees Enhanced 80/20 PPO Plan” (“Plan”). The Plan was

     made available to Plaintiff pursuant to N.C. Gen. Stat. §§ 135-48.1 et seq. and 135-

     75.2 (2021), because of her employment at the University of North Carolina School of

     Medicine as a licensed physician and faculty member of the Radiology Department.

¶3         The Plan is administered under a state contract with Defendant, Blue Cross

     Blue Shield of North Carolina (“BCBSNC”). BCBSNC is a private North Carolina

     corporation and serves as the contract administrator of the Plan. BCBSNC also

     separately provides medical insurance to other subscribers and members in the State

     of North Carolina. The Plan requires a member to request “certification from the

     Mental Health Case Manager” before accessing coverage and benefits for care in a

     “Psychiatric Residential Treatment Center.” The Plan specifically states there is no

     coverage for services “that are: Not medically necessary.”

¶4         Plaintiff requested certification from BCBSNC of coverage and benefits for her

     to be treated and monitored for severe depression and suicidal ideation in a

     “Psychiatric Residential Treatment Center.” Defendant denied Plaintiff’s request in

     December 2017 after finding the request was “Not medically necessary” in accordance

     with Beacon NMNC 1.101.02. These standards require: first, the patient shows

     “symptoms consistent with a DSM or corresponding ICD diagnosis”; second, the
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     “member’s psychiatric condition requires 24-hour medical/psychiatric and nursing

     services and of such intensity that needed services can only be provided in an acute

     psychiatric hospital”;      third, “[i]npatient psychiatric services are expected to

     significantly improve the member’s psychiatric condition within a reasonable period

     of time so that acute, short-term 24-hour inpatient medical/psychiatric and nursing

     services will no longer be needed”; and, fourth, the “symptoms do not result from a

     medical condition that would be more appropriately treated on a medical/surgical

     unit.”

¶5            Plaintiff filed her original complaint in superior court in January 2021 alleging

     breach of contract, in violation of N.C. Gen. Stat. § 59-3-220 (2021), and unfair and

     deceptive trade practices against only BCBSNC. BCBSNC filed motions to dismiss

     for lack of subject matter jurisdiction and failure to assert a claim by law pursuant to

     North Carolina Rules of Civil Procedure 12(b)(1) and 12(b)(6).

¶6            Plaintiff filed her First Amended Complaint on 14 April 2021 and added

     Defendants, North Carolina State Health Plan, and the Board of Trustees of the State

     Health Plan for Teachers and State Employees, as parties. Plaintiff alleged breach

     of contract, violation of N.C. Gen. Stat. § 59-3-220, unfair and deceptive trade

     practices, and bad faith refusal to pay health or medical insurance benefits against

     Defendants. Plaintiff never asserted any claim before the Industrial Commission.

     Defendants filed a motion to dismiss Plaintiff’s First Amended Complaint for lack of
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                                            Opinion of the Court

       subject matter jurisdiction and for failure to state a claim for which relief can be

       granted.

¶7           The trial court granted Defendants’ Rules 12(b)(1) and 12(b)(6) motions to

       dismiss. Plaintiff appeals.

                                      II.      Jurisdiction

¶8           Appellate review is proper pursuant to N.C. Gen. Stat. § 7A-27(b) (2021).

                                            III.    Issues

¶9           Plaintiff raises two issues of whether the trial court erred by: (1) dismissing

       her First Amended Complaint against Defendants under Rule 12(b)(l) of the North

       Carolina Rules of Civil Procedure for lack of subject matter jurisdiction in the

       superior court; and, (2) dismissing her First Amended Complaint against Defendants

       under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.

                                        IV.        Analysis

                                     A. Standard of Review

¶ 10         A trial court’s order granting a motion to dismiss under Rule 12(b)(1) and

       under Rule 12(b)(6) is reviewed de novo on appeal. Corwin as Tr. for Beatrice Corwin

       Living Irrevocable Tr. v. Brit. Am. Tobacco PLC, 371 N.C. 605, 611, 821 S.E.2d 729,

       734 (2018).

                                      B. Procedural Status

¶ 11         Plaintiff argues the superior court possessed jurisdiction to review BCBSNC’s
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       decision to deny her certification.

                    [Part 4. Health Benefit Plan External Review] applies to
                    all insurers that offer a health benefit plan and that
                    provide or perform utilization review pursuant to G.S. 58-
                    50-61, the State Health Plan for Teachers and State
                    Employees, and any optional plans or programs operating
                    under Part 2 of Article 3A of Chapter 135 of the General
                    Statutes.

       N.C. Gen. Stat. § 58-50-75(b) (2021) (emphasis supplied).

¶ 12         The statutes provide several definitions applicable here. The standard of

       external utilization review provides “a covered person” may file for review within 120

       days of notice and be assigned an independent review organization. N.C. Gen. Stat.

       § 58-50-80 (2021). A “‘[u]tilization review organization’ [is] an entity that conducts

       utilization review under a managed care plan, but does not mean an insurer

       performing utilization review for its own health benefit plan.” N.C. Gen. Stat. § 58-

       50-61(a)(18) (2021).

¶ 13         N.C. Gen. Stat. § 58-50-61(a)(12) provides,

                    “Medically necessary services or supplies” means those
                    covered services or supplies that are:
                       a. Provided for the diagnosis, treatment, cure, or
                       relief of a health condition, illness, injury, or disease.
                       b. Except as allowed under G.S. 58-3-255, not for
                       experimental, investigational, or cosmetic purposes.
                       c. Necessary for and appropriate to the diagnosis,
                       treatment, cure, or relief of a health condition,
                       illness, injury, disease, or its symptoms.
                       d. Within generally accepted standards of medical
                       care in the community.
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                           e. Not solely for the convenience of the insured, the
                           insured’s family, or the provider.
                       For medically necessary services, nothing in this
                       subdivision precludes an insurer from comparing the cost-
                       effectiveness of alternative services or supplies when
                       determining which of the services or supplies will be
                       covered.

       N.C. Gen. Stat. § 58-50-61(a)(12) (2021).

¶ 14         Under the statute: “‘noncertification’ means a determination by an insurer or

       its designated utilization review organization that an admission, availability of care,

       continued stay, or other health care service has been reviewed and, based upon the

       information provided, does not meet the insurer’s requirements for medical

       necessity[.]” N.C. Gen. Stat. § 58-50-61(a)(13) (2021).

¶ 15         BCBSNC is the Plan’s designated “utilization review organization” (“URO”) to

       which “a covered person” must seek review of all “medically necessary” care under

       the Plan. Id.

¶ 16         The General Assembly specifically determined the “utilization review” for

       coverage and benefits under the Plan is regulated by Chapter 58. See N.C. Gen. Stat.

       § 58-50-75(b) (2021). The General Assembly created an avenue to review external

       “utilization review” claims under the State Health Plan before the Industrial

       Commission. See N.C. Gen. Stat. § 58-50-61;N.C. Gen. Stat. § 143-291(a) (2021).

¶ 17         When this Court reviews a statute, “it is presumed the legislature acted with

       full knowledge of prior and existing law, and with care and deliberation. Every
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       statute is to be interpreted in light of the . . . laws as they were understood at the

       time of the enactment at issue.” Dare Cty. Bd. of Educ. v. Sakaria, 127 N.C. App. 585,

       588, 492 S.E.2d 369, 371 (1997) (citations and internal quotation marks omitted).

¶ 18         The parties stipulated this dispute involves contract claims and not negligence

       claims. “The legislature has the power to define the circumstances under which a

       remedy is legally cognizable and those under which it is not.” Lamb v. Wedgewood

       South Corp., 308 N.C. 419, 444, 302 S.E.2d 868, 882 (1983).

¶ 19         BCBSNC’s role as the Plan’s URO, conducted two rounds of internal reviews,

       Plaintiff then sought an appeal of those decisions via external review by an

       independent review organization, which was assigned pursuant to N.C. Gen. Stat. §

       58-50-80(b)(5).

¶ 20         “An external review decision is binding on the insurer.” N.C. Gen. Stat. § 58-

       50-84(a) (2021). “[A]n independent review organization . . . shall not be liable for

       damages to any person for any opinions rendered during or upon completion of an

       external review conducted under this Part, unless the opinion was rendered in bad

       faith or involved gross negligence.” N.C. Gen. Stat. § 58-50-89 (2021).

¶ 21         Plaintiff exhausted her remedies by seeking the external review by the

       independent review organization, and by failing to seek further review before the

       Industrial Commission. Plaintiff and BCBSNC are both bound by the decision to

       uphold the denial of coverage by the independent review organization. Plaintiff could
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       have sought review with the Industrial Commission, if she sought to challenge the

       external independent review organization’s decision.         Plaintiff does not allege

       negligence or bad faith in the decision levied by the independent review organization.

       We are bound as is BCBSNC, and any asserted contract claim against BCBSNC is

       improper regarding the external review organization’s decision to deny coverage.

                                         C. Meyer v. Walls

¶ 22         Plaintiff relies upon Meyer v. Walls, 347 N.C. 97, 489 S.E.2d 880 (1997), and

       argues the superior court possesses jurisdiction to adjudicate these claims. In Meyer,

       the plaintiff committed suicide while under the care of the county department of

       social services. Id. at 102, 489 S.E.2d at 883. Plaintiff therein filed negligence claims

       against the county and the individuals involved. Id. at 103, 489 S.E.2d at 883. The

       Court reasoned, “[a] plaintiff may maintain both a suit against a state agency in the

       Industrial Commission under the Tort Claims Act and a suit against the negligent

       agent or employee in the General Court of Justice for common-law negligence.” Id. at

       108, 489 S.E.2d at 886 (emphasis supplied). The court denied the defendants’ 12(b)(1)

       motion. Id. at 109, 489 S.E.2d at 887.

¶ 23         The Court’s holding in Meyer does not support Plaintiff’s contract arguments

       here under the State Tort Claims Act:

                    The North Carolina Industrial Commission is hereby
                    constituted a court for the purpose of hearing and passing
                    upon tort claims against the State Board of Education, the
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                    Board of Transportation, and all other departments,
                    institutions and agencies of the State. The Industrial
                    Commission shall determine whether or not each
                    individual claim arose as a result of the negligence of any
                    officer, employee, involuntary servant or agent of the State
                    while acting within the scope of his office, employment,
                    service, agency or authority, under circumstances where
                    the State of North Carolina, if a private person, would be
                    liable to the claimant in accordance with the laws of North
                    Carolina. If the Commission finds that there was
                    negligence on the part of an officer, employee, involuntary
                    servant or agent of the State while acting within the scope
                    of his office, employment, service, agency or authority that
                    was the proximate cause of the injury and that there was
                    no contributory negligence on the part of the claimant or
                    the person in whose behalf the claim is asserted, the
                    Commission shall determine the amount of damages that
                    the claimant is entitled to be paid, including medical and
                    other expenses, and by appropriate order direct the
                    payment of damages as provided in subsection (a1) of this
                    section[.]

       N.C. Gen. Stat. § 143-291(a) (2021) (emphasis supplied).

¶ 24         Plaintiff’s amended complaint against BCBSNC alleges breach of contract and

       unfair and deceptive trade practices, not negligence. Meyer allows a negligence claim

       against an agent of the state in superior court that is separate from the state agency

       asserted before the Industrial Commission under the State Tort Claims Act. Meyer,

       347 N.C. at 108, 489 S.E.2d at 886.

¶ 25         The holding in Meyer is inapplicable here.         Plaintiff’s right to review the

       independent review organization’s decision lies by statute with the Industrial

       Commission. BCBSNC is bound by that decision. Plaintiff did not assert claims
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                                          Opinion of the Court

       against or join the independent review organization as a party, nor did they pursue

       review of their decision before the Industrial Commission.

¶ 26         The General Assembly is presumed to have “acted with full knowledge” when

       they opted to not further waive North Carolina’s sovereign immunity or choice of

       forum, and to create further liability for the taxpayers of the State and its agencies

       regarding contract coverage disputes over treatments and payments of Plan benefits.

       Sakaria, 127 N.C. App. at 588, 492 S.E.2d at 371. The superior court does not possess

       subject matter jurisdiction to review the decision made by the independent review

       organization or the State Health Plan and claims against BCBSNC are properly

       dismissed.

¶ 27         Even if Plaintiff was entitled to further review the denial of coverage, she did

       not initiate nor invoke the statutory “utilization review” process the General

       Assembly expressly provided before the Industrial Commission. N.C. Gen. Stat. § 58-

       50-61 (2021).   The trial court’s order specifically found and concluded “Plaintiff

       concedes jurisdiction for this case lies in the Industrial Commission rather than in

       the superior court[.]” Plaintiff’s arguments are overruled. In light of our holding on

       this issue, we need not reach Plaintiff’s remaining arguments.

                                        V.     Conclusion

¶ 28         Plaintiff bears the burden on appeal of showing the superior court possessed

       subject matter jurisdiction over her claims review, or alternatively, she is entitled to
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       another review for her admittedly contractual and statutory claims. Plaintiff has

       failed to meet this burden.

¶ 29         Plaintiff failed to utilize the statutory review process provided to her by

       Chapter 58. N.C. Gen. Stat. § 58-50-61. She is not entitled to further review in the

       superior court pursuant to our statutes. The trial court’s order is affirmed. It is so

       ordered.

             AFFIRMED.

             Judges WOOD and GRIFFIN concur.