FAY v. OXFORD HEALTH PLANS OF NEW YORK, INC., (S.D.N.Y. 2001)

JOHN S. MARTIN, Jr., U.S.D.J.

This case is a classic example of the conflicts that arise in trying to reconcile a patient's desire for a particular medical service and the insurance company's effort to limit its liability to pay the costs of those services.

There is no dispute that Louis Fay is seriously afflicted with multiple sclerosis and diabetes and needs extensive medical care. It is his desire to have that care provided by twenty-four hour private duty nursing care in his home. He has insurance coverage provided by Oxford Health (NY), Inc. ("Oxford") through the participation of his wife, Anna Fay, in a group health insurance plan at Mount Sinai Hospital where she is employed.

Defendants state that the name in the caption Oxford Health Plans of New York, Inc. is incorrect.

This is not a case in which the insurer was unsympathetic to the insured's conditions or desires. When Oxford first became involved in providing coverage for Mr. Fay in 1996, it worked with the Fays ("Plaintiffs") and Mount Sinai to provide him with private duty nursing care at home. Oxford agreed to combine the Home Care 200 four hour visit benefit and the 200 day Skilled Nursing Facility benefit in order to provide Mr. Fay with 233 days of twenty-four hour private duty nursing care. Mount Sinai agreed that it would provide the private duty nursing coverage for the balance of the year. However, Oxford refused to continue this coverage for the years 1998 and beyond, and contended that the appropriate place for Mr. Fay to receive care was a skilled nursing facility.

Unwilling to accept Oxford's solution to his treatment problem, Mr. Fay has elected to continue his treatment at home with private duty nurses and brought this action to compel Oxford to pay for these services. While the Court could not be more sympathetic to Mr. Fay's plight, there is no legal basis for requiring Oxford to pay the cost of unlimited private duty nursing care in his home.

A. The Contract

As will be discussed below, there is a dispute between the parties concerning the standard of review to be applied in this case. However even using Plaintiffs' statement of the standard, it is clear that Oxford's contract with Mt. Sinai does not require it to provide unlimited twenty-four hour private duty nursing care at home, even if such care is determined to be medically necessary. Plaintiffs set forth the governing principles as follows:

Since the Plan is subject to de novo review, the usual rules applicable to insurance policies govern the Court's construction and interpretation of Plan terms. These rules include: (1) plan terms `must be given their plain meanings, meanings which comport with the interpretations given by the average person,' Wickman v. Northwestern Nat. Ins. Co., 908 F.2d 1077, 1084 (1st Cir.), cert. denied, 498 U.S. 1013 (1990); (2) a policy should be read and interpreted as a whole, Alfin, Inc. v. Pac. Ins. Co., 735 F. Supp. 115, 119 (S.D.N Y 1990); (3) the fiduciary is obliged to show that the plan beneficiary's interpretation of the policy is unreasonable and that its own interpretation is the only one that could fairly be placed on the policy, Id.; and (4) any ambiguities in the policy must be construed in favor of the plan beneficiary, particularly where the ambiguity occurs in an exclusionary clause, Masella v. Blue Shield of Conn., Inc., 936 F.2d 98, 107 (2d Cir. 1991).

(Mem. Supp. Pls.' Mot. Summ. J. at 8.)

Applying these standards of contract interpretation to the language of the policy at issue compels the conclusion that the policy does not provide a benefit for unlimited private duty nursing care at home. Because the policy must be read as a whole, the structure of the policy must be considered. In so far as is relevant here, the Oxford contract provides a list of covered services under the following headings:

A. Professional Services.

1. Medical Care.

2. Surgical and Obstetrical Physician Services.

3. Laboratory Procedures and X-Ray Examinations.

4. Home Health Care.

a. House Calls.

b. Home Care.

5. Short-Term Rehabilitation Services.

6. Care of Newborns.

B. Hospital Services in Hospitals, Skilled Nursing Facilities and Hospice Care.

1. Impatient Services.

2. Outpatient Services.

3. Skilled Nursing Facility Services.

4. Hospice Services.

(Scherzer Aff. Ex. 5 at 11.)

The text accompanying each of the above headings contains descriptions of the services and in some cases limitations on the coverage provided. For example, as noted above, the Home Care benefit is limited to 200 home care visits per year and the Skilled Nursing Facility benefit is limited to 200 days per calendar year. The policy also lists a number of items as specifically excluded from coverage including: "Private or special duty nursing, unless determined to be Medically Necessary and approved in advance by the Health Plan." (Scherzer Aff. Ex. 5 at 15.)

Plaintiffs try to convert this exclusion into an obligation to provide unlimited private duty nursing at home any time a physician determines that it is medically necessary. Unfortunately their argument runs counter to the plan's "plain meanings, which comport with the interpretations given by the average person." Wickman, 908 F.2d at 1084.

The fact that a service is excluded from coverage cannot be a basis for finding that it is an included benefit. The purpose of the exclusion is to make clear that, even if any of the listed benefits might be read to include the excluded item, it will not be covered except as specified.

The exclusion of "private or special duty nursing" must be read in conjunction with the description of benefits provided for care in hospitals, skilled nursing facilities and hospices which specifically include "general nursing care." (Scherzer Aff. Ex. 5 at 13.) In this context, it is obvious that the intent of the exclusion was to make clear that "private or special duty nursing" could be provided in such facilities only if medically necessary, and not to provide a type of covered benefit not subject to any of the limitations that would apply to other covered services. The exclusion is also relevant to the home care benefit which includes services of "Physician-supervised health professionals other than Physicians." (Scherzer Aff. Ex. 5 at 11.)

To give the contract the interpretation Plaintiffs urge would make the specific limitation on the home care benefit meaningless. As noted above the policy specifically limits the home care benefit to "200 home care visits per year." (Scherzer Aff. Ex. 5 at 11.) No reasonable person reading the contract could interpret it to mean that despite this specific limitation on the in-home services of "Physician-supervised health professionals other than Physicians," (Scherzer Aff. Ex. 5 at 11), the insurer was obligating itself to provide unlimited private duty nursing care at home. See Comm'rs of the State Ins. Fund v. Ins. Co. of N. Am., 607 N.E.2d 795, 797 (1992) ("This Court is not permitted to construe a clause in a way that drains it of its only intended meaning. To divine ambiguity here would violate that principle and would defeat the use of plain English language in this insurance policy and clause.").

Plaintiffs argue that the interpretation of the policy which its plain meaning requires should be rejected because Oxford has taken inconsistent positions on the meaning of the policy language. This is simply not the case. From the outset, Oxford has taken the position that the home care benefit limited Mr. Fay's right to private duty nurses at home to 200 four hour visits. The fact that Oxford took extra steps to try to accommodate Mr. Fay's desires cannot and should not be used against it. Oxford's Medical Policy Manual, provided to Plaintiffs in 1998, describes the private duty nursing benefit as follows:

Private duty nursing is nursing care provided to a patient on a one to one basis within the hospital setting. These services can also be received as part of Home Care.

(Scherzer Aff. Ex. 7.)

This interpretation is totally consistent with the policy language and there is no basis to find that Oxford ever abandoned the contention that private duty nursing was only available in those circumstances. Oxford's most recent decision advising Plaintiffs of their conclusion that private duty nursing was not medically necessary cannot reasonably be construed as an abandonment of Oxford's consistent position that private duty nursing care in the home is limited to 200 four hour visits.

B. Medical Necessity

Even if the Court were to find that the language of the policy might give rise to an obligation to provide unlimited private duty nursing at home, the determination by Oxford's Medical Director that Mr. Fay could best be cared for in a skilled nursing facility would be sustained.

In a prior ruling holding that Plaintiffs had to exhaust their administrative remedies before proceeding with this action the Court noted: "The Certificate gives Oxford's Medical Director discretion to determine whether the benefits sought by Mr. Fay were `medically necessary.' Thus, the arbitrary and capricious standard of review is applicable to this case." Fay v. Oxford Health Plans of N.Y., Inc., no. 98 civ. 0350, 1998 WL 437159, at *1 n. 1 (S.D.N.Y. July 31, 1998) (citing Pagan v. NYNEX Pension Plan, 52 F.3d 438, 441 (2d Cir. 1995)).

Plaintiffs argue that the Court should reconsider this ruling in light of the subsequent decision of the Second Circuit in Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243 (2d Cir. 1999). However, Kinstler does not require a different result. The policy at issue there required a claimant to submit "satisfactory proof" of total disability. The Second Circuit found that language did not confer discretion on the plan administrator because every insurance company requires satisfactory proof with respect to a claim. See Kinstler, 181 F.3d at 252. Here the plan provides that what is medically necessary is to be "determined by [the] Health Plan's Medical Director." (Scherzer Aff. Ex. 5 at 2.) This language is sufficient to support the conclusion that the plan gives the Medical Director discretion to determine what is medically necessary. Therefore, the Medical Director's decision will only be overturned if it is found to be arbitrary and capricious.

Judged by that standard, the determination of the Medical Director that the appropriate level of care for Mr. Fay would be provided in a skilled nursing facility must be sustained. Indeed, even if the Court applied the de novo standard of review, the Medical Director's decision would not be overturned.

In support of their claim that Mr. Fay would receive better care in his home than in a skilled nursing facility, Plaintiffs submitted opinions from two doctors, Dr. Kellogg and Dr. Sloan. In his letter, Dr. Kellogg does not argue that the skilled nursing facilities will not have the appropriate type of medical personnel to take care of Mr. Fay. (Scherzer Aff. Ex. 1.) Rather, he suggests that the staff of the skilled nursing facility will be too busy to provide Mr. Fay with the care he needs. (Scherzer Aff. Ex. 1.) In effect, he argues that the staff will be negligent in carrying out their duty to care for Mr. Fay. This assumption is not one that either the Medical Director or the Court should accept without far better proof than this type of speculation. Moreover, while there may be skilled nursing facilities licensed by the state that do not provide the type of service they should, the choice of the particular skilled nursing facility for Mr. Fay will be made by the Fays and not by Oxford. There is nothing in the record to support the conclusion that the Fays will be unable to find a single State-licensed facility in New York which will live up to its responsibility to provide appropriate care to Mr. Fay.

Oxford has provided evidence that there are skilled nursing facilities with special units for ventilator assisted patients such as Mr. Fay.

While Dr. Sloan makes the alternative argument in his declaration that Mr. Fay would require a higher level of care that could appropriately be provided in a special unit in a hospital (Scherzer Aff. Ex. 1), the Fays never asked Oxford to provide that type of care and, therefore, there is no reason for the Court to decide that issue. Obviously, should Mr. Fay enter a skilled nursing facility, and should his doctors determine that a greater level of care is required, the Plaintiffs can then seek approval of such care from Oxford.

In sum, the Oxford contract does not entitle Plaintiffs to reimbursement for unlimited twenty-four hour private duty nurse care in his home, even if such care was medically necessary. Alternatively, Plaintiffs have failed to establish that the decision of Oxford's Medical Director was in error in determining that the appropriate level of care for Mr. Fay is that provided by a skilled nursing facility. Therefore, Plaintiffs' motion for summary judgment is denied and Oxford's motion for summary judgment is granted.

Plaintiffs also seek leave to amend the complaint to allege that Oxford violated 29 U.S.C. § 1132(c)(1) by failing to produce promptly certain records that Plaintiffs requested. The motion is denied because the claim is without merit. See Bd. of Trs. of the CWA/ITU Negotiated Pension Plan v. Weinstein, 107 F.3d 139 (2d Cir. 1997); Medoy v. Warnaco Employees Long Term Disability Ins. Plan, 43 F. Supp.2d 303 (E.D.N.Y. 1999).

CONCLUSION

For the foregoing reasons, the complaint is dismissed.

SO ORDERED.