Florence Nightingale Nursing Service, Inc. v. Blue Cross/Blue Shield of Alabama

41 F.3d 1476
CourtCourt of Appeals for the Eleventh Circuit
DecidedJanuary 9, 1995
DocketNos. 93-6867, 93-6918
StatusPublished
Cited by11 cases

This text of 41 F.3d 1476 (Florence Nightingale Nursing Service, Inc. v. Blue Cross/Blue Shield of Alabama) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Florence Nightingale Nursing Service, Inc. v. Blue Cross/Blue Shield of Alabama, 41 F.3d 1476 (11th Cir. 1995).

Opinion

DUBINA, Circuit Judge:

In Case No. 93-6867, Blue Cross/Blue Shield of Alabama (“Blue Cross”) appeals the district court’s judgment entered in favor of Florence Nightingale Nursing Service, Inc. (“Nightingale”) in this ERISA/insurance benefits action. 832 F.Supp. 1456. Based upon our review of the record, we affirm. In a companion case, Case No. 93-6918, Nightingale appeals the district court’s order denying its motion for attorney’s fees in its suit against Blue Cross. Because we hold that the district court did not abuse its discretion in denying Nightingale’s motion for attorney’s fees, we also affirm the district court’s judgment in that case.1

I. BACKGROUND

Nightingale provided skilled home nursing care between July 8, 1987, and September 5, 1987, in Fort Lauderdale, Florida, to Frank Lungarella (“Lungarella”), who was in the later stages of the AIDS virus. Prior to the onset of his illness, Lungarella was an employee of Intergraph Corporation (“Inter-graph”) and, as such, was covered by Inter-graph’s Medical Benefits Plan for Active and Retired Employees (“the Plan”). The Plan is [1479]*1479governed by ERISA (Employee Retirement Income Security Act), 29 U.S.C. § 1001, et seq. Blue Cross was and is the claims administrator for the Plan and, in that capacity, had the fiduciary responsibility for receiving, processing, and paying claims. The Plan is self-funded by Intergraph.2

The Plan document provided that private duty skilled nursing care was a covered benefit to the extent such care was “medically necessary.” The Plan did not cover “custodial care” because the Plan did not deem skilled nursing in a private home environment “medically necessary.” Nightingale billed Blue Cross for services rendered to Lungarella at an hourly rate of $47.50 for the 268 hours of service between July 8, 1987, and July 19, 1987, a period during which Lungarella underwent intravenous (“IV”) treatment at home under nursing supervision. Nightingale charged a reduced rate of $42.50 per hour for the 1,132 hours between July 20,1987, when the IV was removed, and September 5, 1987, the date of Lungarella’s death. The Plan provided that only “reasonable” charges would be paid.

After a non-jury trial, the district court found that prior to providing home care to Lungarella, Ms. Warren, Nightingale’s owner, telephoned Blue Cross. A Blue Cross representative orally assured her that Lun-garella’s home care was covered. Warren mailed a letter confirming her telephone conversation with the Blue Cross representative. Nightingale produced a copy of this letter at trial; Blue Cross said that it could not find its copy. The letter stated that Nightingale’s understanding was that it would be reimbursed 100% for the private duty nursing, and that if this understanding was inaccurate, Blue Cross should notify Nightingale within five days. Warren never received a response from Blue Cross to her letter.

Until this dispute arose, Blue Cross never told Nightingale what it would consider to be a “reasonable” charge if Nightingale’s regular and customary charge was not deemed “reasonable,” nor did it indicate what home nursing care was or was not “medically necessary.” The Plan defines “charge” as follows:

Charge means the reasonable charge by a provider of covered services or supplies not exceeding the provider’s actual charge regularly and customarily made for these services or supplies.

The Plan defines “medically necessary” as follows:

Medically Necessary means the use of a Hospital or the furnishing of other services or supplies which are necessary to treat a Member’s illness or injury. To be Medically Necessary, the services and supplies furnished must (as determined by the claims administrator):
be appropriate and necessary for the symptoms, diagnosis, or treatment of the Member’s condition, disease, ailment, or injury; and
be provided for the diagnosis or direct care of Member’s medical condition; and be in accordance with standards of good medical practice accepted by the organized medical community; and not be solely for the convenience of the Member, his family, his Physician or another provider of services; and not be Experimental or Investigative; and
be performed in the least costly setting the Member’s medical condition requires.

A “setting” may be a Member’s home....

After Nightingale billed Blue Cross at $47.50 and $42.50 per hour, Blue Cross responded by reimbursing Nightingale at the rate of $19.00 per hour for the services rendered prior to July 19,1987 (IV care), and by paying nothing for the services rendered after July 19, 1987 (after the IV was discontinued). Blue Cross posits that a charge of $47.50, which is obviously substantially in excess of Blue Cross’s pre-determined $19.00 per hour for skilled private duty nursing, is not “reasonable.” Blue Cross also contends that after the IV was discontinued, Lungarel-la was only under “custodial care” not requir[1480]*1480ing skilled nursing, during which time Nightingale’s services were no longer “medically necessary.” Essentially, Blue Cross maintains that Lungarella’s family was capable of providing all of the care he needed after the IVs were removed.

After Blue Cross refused to pay Nightingale’s invoice in full, Nightingale filed suit in the Superior Court of the State of California. Blue Cross removed the case to the United States District Court for the Central Division of California. That court subsequently transferred the case to the Northern District of Alabama. One of Blue Cross’s first defenses was that Nightingale had failed to exhaust internal administrative remedies available under the Plan. Accordingly, the district court dismissed the action without prejudice in order that Nightingale might seek an internal administrative remedy.

The parties then presented their contentions to Dr. Renee Holloway (“Holloway”), who was and is Blue Cross’s Assistant Medical Director and chief claims evaluator. The irony here is that Blue Cross’s own legal department was opposing Nightingale in front of Holloway, Blue Cross’s claims evaluator.3 Holloway did not conduct an oral hearing, choosing instead to rely on written documentation. She also considered Blue Cross’s internal guidelines and material regarding nursing rates obtained ex parte by Blue Cross investigators. Before Holloway released her findings, Blue Cross’s in-house counsel edited her opinion. This in-house counsel later served as Blue Cross’s corporate representative at trial. Except for ordering additional reimbursement for a few hours of what she found to be “medically necessary” private duty nursing following the extraction of the IV, Holloway agreed completely with Blue Cross’s initial evaluation of the case.

After Holloway made her findings, Nightingale again filed suit in the district court. The district court conducted a bench trial and entered findings in favor of Nightingale. The district court ordered full reimbursement for Nightingale’s services, along with substantial prejudgment interest. Blue Cross then perfected its appeal (Case No. 93-6867).

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41 F.3d 1476, Counsel Stack Legal Research, https://law.counselstack.com/opinion/florence-nightingale-nursing-service-inc-v-blue-crossblue-shield-of-ca11-1995.