RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 ELECTRONIC CITATION: 2000 FED App. 0040P (6th Cir.) File Name: 00a0040p.06
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _________________
; UNIVERSITY HOSPITALS OF CLEVELAND, Plaintiff-Appellant, No. 98-4061
v. > EMERSON ELECTRIC
ELECTRIC COMPANY BENEFIT COMPANY and EMERSON PLAN, Defendants-Appellees. 1
Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 92-01555—Paul R. Matia, Chief District Judge. Argued: August 5, 1999 Decided and Filed: February 1, 2000
Before: NELSON and MOORE Circuit Judges; ROSEN, District Judge.*
* The Honorable Gerald E. Rosen, United States District Judge for the Eastern District of Michigan, sitting by designation.
1 2 University Hospitals v. No. 98-4061 Emerson Electric Co., et al.
_________________ COUNSEL ARGUED: Daniel W. Dreyfuss, DANIEL W. DREYFUSS CO., Cleveland, Ohio, for Appellant. Phillip J. Campanella, CALFEE, HALTER & GRISWOLD, Cleveland, Ohio, for Appellees. ON BRIEF: Daniel W. Dreyfuss, DANIEL W. DREYFUSS CO., Cleveland, Ohio, for Appellant. Phillip J. Campanella, CALFEE, HALTER & GRISWOLD, Cleveland, Ohio, for Appellees. ROSEN, D. J., delivered the opinion of the court, in which MOORE, J., joined. NELSON, J. (pp. 25-29), delivered a separate dissenting opinion. _________________ OPINION _________________ ROSEN, District Judge. I. INTRODUCTION Plaintiff/Appellant University Hospitals of Cleveland (“UHOC”) appeals from the most recent award of summary judgment in favor of Defendants/Appellees Emerson Electric Company and the Emerson Electric Company Benefit Plan (collectively, the “Plan”) in this action brought under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. In the ruling now on appeal, the District Court found that the Plan’s administrative review body, the Employee Benefit Committee (“EBC”), did not act arbitrarily or capriciously in denying a claim for health care benefits made by UHOC as assignee of the claims of a deceased Plan participant, Gerald Weaver. In a prior appeal, we reversed an initial award of summary judgment to the Plan, citing evidence in the record that the EBC had “erroneously relied upon a provision that was not included in No. 98-4061 University Hospitals v. 3 Emerson Electric Co., et al.
the actual Plan documents.” See University Hosps. of Cleveland v. Emerson Elec. Co. Benefit Plan, No. 93-4924, slip op. at 4 (6th Cir. Dec. 22, 1994). Accordingly, we ordered the matter remanded to the EBC with instructions to reconsider UHOC’s claim in light of “the actual Plan provisions applicable to such claim.” Id. On remand, the EBC once again denied UHOC’s claim, and the District Court again affirmed that decision under the “arbitrary and capricious” standard of review. UHOC now raises four arguments on appeal: (1) that the District Court erred in ruling that the EBC’s decision on remand was exempt from the time limits set forth in the Plan for acting upon requests for review of claim denials; (2) that the lower court improperly disregarded the “law of the case,” as purportedly established in our earlier decision, regarding the applicability of the Plan’s time limits on remand to the EBC; (3) that the EBC’s decision on remand was tainted by the same error that led us to reverse and remand in the initial appeal; and (4) that the EBC acted arbitrarily and capriciously in denying benefits based upon a determination that the decedent, Mr. Weaver, suffered from a pre-existing condition. For the reasons stated below, we find that the EBC’s decision to deny benefits was arbitrary and capricious, and we accordingly reverse the award of summary judgment to the Plan. II. FACTUAL AND PROCEDURAL BACKGROUND A. The Parties As we noted in our earlier decision, there is little, if any, factual dispute in this case. Plaintiff/Appellant UHOC brought this ERISA action as the assignee of Gerald Weaver, seeking to recover benefits from the Defendant/Appellee Plan for medical services rendered to Mr. Weaver before his death on June 3, 1991. The Plan’s administrative review body, the EBC, has twice denied UHOC’s claim for benefits, finding that the medical services at issue were not covered by the Plan because they constituted treatment for a pre-existing condition 4 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 29 Emerson Electric Co., et al. Emerson Electric Co., et al.
suffered by Mr. Weaver before he became eligible for Plan Given the structure of the Pre-existing Limitation provision, benefits. where “Pre-existing” has no meaning except in relation to the start of coverage and where the date used for the calculation Mr. Weaver began working for Automatic Switch Company of the first two of the three time periods mentioned is clearly (“ASCO”), a division of Defendant/Appellee Emerson the date on which the individual becomes eligible under the Electric Company, on September 24, 1990. He became plan, it was not irrational for the Committee to conclude that eligible for medical benefits under the Plan on December 24, the drafters intended the use of the same date for calculating 1990, the ninetieth day of his employment. From March 27, the third time period as well. This is not the only possible 1991 until his death on June 3, 1991, Mr. Weaver received construction of the provision, but it is certainly not an treatment at UHOC for myelodysplastic syndrome, a bone irrational construction. marrow disease. The principal dispute in this case is whether Mr. Weaver received prior treatments for this disease that The parties agree that there was no three-month period would trigger the Plan’s “pre-existing condition” exclusion when Mr. Weaver was treatment-free between December 24, from coverage. 1990, the date on which he became eligible for coverage, and June 3, 1991, the date on which he died. Accordingly, and B. Mr. Weaver’s 1990-91 Visits to Physicians and because I agree with the district court that the Committee’s Medical Treatments most recent decision was rendered pursuant to the order of remand and was not subject to the contractual time limits that On September 11, 1990, shortly before he began working applied during the initial decision-making process, I would for ASCO, Mr. Weaver visited his physician, Dr. Unni affirm the challenged judgment. Kumar, complaining of fatigue and stress. Dr. Kumar diagnosed Mr. Weaver as suffering from anemia, recommended a blood test, and asked Mr. Weaver to return for further evaluation. (J.A. at 468-70.) That same day, blood samples were taken from Mr. Weaver and submitted to a laboratory for analysis. On September 28, 1990, four days after Mr. Weaver began his employment at ASCO, Mr. Weaver again visited Dr. Kumar to discuss the results of his recent blood test. Dr. Kumar advised Mr. Weaver that the serum iron, folic acid, and B-12 portions of this test were “all normal.” (J.A. at 474.) Nevertheless, in light of the previous diagnosis of anemia, Dr. Kumar recommended that the blood test be repeated “before we embark on a complete hematological work-up.” (Id.) In accordance with this recommendation, a second blood sample was taken from Mr. Weaver that day and submitted for laboratory analysis. If this second test 28 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 5 Emerson Electric Co., et al. Emerson Electric Co., et al.
489 U.S. 101, 115 (1989), and Yeager v. Reliance Standard proved abnormal, Dr. Kumar “plan[ned] to refer [Mr. Life Ins. Co., 88 F.3d 376, 381 (6th Cir. 1996). Weaver] to a hematologist.” (Id.) The record leaves no room for doubt as to why the This September 28, 1990 test revealed a number of results Committee upheld the denial of benefits in the case at bar. As outside the normal range, including low red blood cell and the deposition testimony of Committee Member James platelet counts, low hemoglobin and hematoocrit values, and Draeger shows, the Committee saw no reason even to elevated MCV and MCH levels. (J.A. at 473.) Accordingly, consider whether Mr. Weaver had received treatment or on October 8, 1990, Dr. Kumar called Mr. Weaver and services during the first 90 days after September 28, 1990. advised him to see a hematologist. (J.A. at 470.) Although The Committee upheld the denial of benefits solely on the there are two subsequent entries in Dr. Kumar’s records for basis of its construction of the provisions of the Plan relating the month of October — the first dated October 12, 1990, to pre-existing medical conditions. And the record shows, I scheduling Mr. Weaver for an additional blood test, and the believe, that the Committee had a rational basis for construing second dated October 26, 1990, reflecting Mr. Weaver’s the provisions in the way that it did. refusal to submit to this additional test, (J.A. at 475) — Mr. Weaver declined any further treatment in October, citing a Addressing the Pre-existing Limitation clause in the lack of insurance coverage that would pay for a pre-existing Schedule of Benefits, Mr. Draeger explained at page 104 of condition. (Id.) his deposition transcript that “this particular provision starts where an individual is eligible for the plan . . . .” (Mr. Instead, Mr. Weaver elected to wait until January 8, 1991 Weaver became eligible on December 24, 1990.) The — two weeks after his Plan eligibility date of December 24, exclusion for medical expenses incurred in connection with 1990 — to visit a hematology specialist as recommended by certain pre-existing conditions, Mr. Draeger went on to Dr. Kumar. The examining physician, Dr. Jon Reisman, explain, continues “for a period of one year.” Draeger Depo. diagnosed Mr. Weaver as suffering from mild anemia and Trans. at 104-105. Once eligibility starts, in other words, moderately severe thrombocytopenia. (J.A. at 674.) Over the course of the next several days, Mr. Weaver underwent a “[the exclusion] is going to go for one year from that number of procedures, including additional blood and bone date. Or it is going to go . . . from that date for three marrow tests, a chest x-ray, and a CT scan of his abdomen. months. These procedures were intended, at least in part, to rule out a diagnosis of myelodysplastic syndrome. (J.A. at 476.) When Q From which date? the results proved inconclusive, Dr. Reisman referred Mr. Weaver to Dr. James Weick at the Cleveland Clinic for A We are talking about an individual becoming further evaluation. (J.A. at 671.) eligible under the plan, so now the individual is eligible. So now we are talking about one date Beginning on February 8, 1991 and continuing until his [i.e., one year] from the date of eligibility, or if death four months later, Mr. Weaver received a variety of the individual has been free of treatment at any medical services and treatments at the Cleveland Clinic, three-month period during that particular one UHOC, and elsewhere. His treatments at UHOC commenced year period of time, whichever fi[r]st occurs.” on March 27, 1991, and resulted in total billings for medical Id. at 105. services in the amount of $233,829.75. Mr. Weaver 6 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 27 Emerson Electric Co., et al. Emerson Electric Co., et al.
ultimately was diagnosed as suffering from myelodysplastic 2) the individual has been free of treatment for the syndrome, a bone marrow disease in which defective stem pre-existing illness or injury for 3 months.” cells proliferate to the exclusion of normal cells. This disease evolved to acute leukemia, and led to Mr. Weaver’s death on As written, the second clause is open to conflicting June 3, 1991 from kidney and heart failure. (J.A. at 536-37.) interpretations. It is possible that the drafters intended to provide that the one-year-of-coverage requirement would be C. The Relevant Plan Provisions overridden upon the expiration of three treatment-free months commencing with the last treatment. Had this been their This case turns upon the EBC’s determination that all of the intent, the drafters could have said so explicitly. They could medical expenses incurred by Mr. Weaver at UHOC derived have said, for example, that the year-of-coverage requirement from treatments for a “pre-existing condition” as defined in would be overridden once the individual had gone without the Plan document, and therefore are not “covered medical treatment for three months “from the date of the last expenses” under the Plan. This determination rests upon the treatment.” Unfortunately, the quoted words were not following Plan provision, entitled “Pre-Existing Condition included in the Pre-existing Limitation provision. Limits”: It is also possible – and perhaps more likely – that the Hospital expenses and other medical expenses incurred drafters intended to provide that the year-of-coverage in connection with a disease or injury for which a requirement would be overridden once the individual had covered individual received treatment or services or took been free of treatment for three months during that first year prescribed drugs during the three month period of coverage. Unfortunately, however, the drafters did not immediately preceding the effective date of such explicitly say this either. Through inadvertence, no doubt, individual’s coverage under this Plan will not be they left their intention ambiguous. included as covered medical expenses prior to the earliest of the dates shown in the Schedule of Benefits. Such ambiguities are almost certain to creep into a document as complex as this one. The drafters could, of (Plan, § 4, ¶ 1.84, J.A. at 609.) The Plan’s Schedule of course, have left the resolution of these inevitable ambiguities Benefits, in turn, sets forth the terms under which a to the courts. But they chose not to. Instead, the drafters participant may obtain coverage for a pre-existing condition: provided that a five-member Employee Benefit Committee appointed by the Emerson Electric Company’s Board of No benefits are payable for a pre-existing illness or Directors should have “discretionary authority to determine injury for which an individual was treated or took eligibility for benefits or to construe the terms of the Plan prescribed medicine within 3 months prior to coverage . . . .” And they further provided that unless the Committee’s until: construction of the Plan’s terms should be “arbitrary and capricious” – i.e., simply irrational – the Committee’s 1) the individual has been covered under this Plan for decision “shall be final and non-reviewable . . . .” In the face one year, or of such language, it is clear that the courts have no authority to second-guess the Committee unless the Committee has 2) the individual has been free of treatment for the acted irrationally. See Firestone Tire & Rubber Co. v. Bruch, pre-existing illness or injury for 3 months. 26 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 7 Emerson Electric Co., et al. Emerson Electric Co., et al.
has not been briefed and argued, however, and I have (Plan, § 7, at 3, J.A. at 625.) conducted no independent research on the matter. I dissent here not because of what was said by the original panel (a The Summary Plan Description (“SPD”) includes similar panel of which I was a member, incidentally), but because I language, in a section entitled “Expenses Not Covered”: remain of the opinion that it was not irrational for the Committee to construe the terms of the Plan as meaning that No medical benefits will be paid for the following: no benefits would be payable in connection with Mr. Weaver’s pre-existing illness during the first year of coverage • A pre-existing illness or injury for which you were unless and until there had been three months of coverage in treated or took prescribed medicines within 3 months which Mr. Weaver had been free of treatment for the illness. before your coverage began until:
I acknowledge that the language of the Plan is not as clear — you have been covered under this Plan for a year, or as it might be. The Plan’s Benefit Provisions start off plainly enough by establishing certain “Pre-Existing Condition — you haven’t had any charges for this illness or Limits” once coverage commences: injury for 3 months,
“Hospital expenses and other medical expenses incurred whichever comes first . . . . in connection with a disease or injury for which a (SPD at 12, J.A. at 157.) covered individual received treatment or services or took prescribed drugs during the three month period D. Procedural Background immediately preceding the effective date of such individual’s coverage under this Plan will not be This case has a lengthy procedural history. In May of 1991, included as covered medical expenses prior to the earliest shortly before his death, Mr. Weaver sought reimbursement of the dates shown in the Schedule of Benefits.” from the Plan for a portion of the medical expenses he incurred at UHOC and elsewhere. On May 29, 1991, the Under the catchline “Pre-existing Limitation” (a reference, Plan’s third-party administrator, Pension Associates obviously, to the limits pertaining to medical conditions that Incorporated (“PAI”), denied this claim for benefits, stating were “pre-existing” as of the commencement of coverage), that “[n]o benefits are payable for a condition for which you the Plan’s Schedule of Benefits – speaking as of the received diagnosis, were treated or took prescribed medicines commencement of coverage, in the Committee’s undertaking within 3 months before [the] effective date” of Plan coverage. – then says this: (J.A. at 224.)1 On August 15, 1991, PAI reiterated this position upon being presented with a request for “No benefits are payable for a pre-existing illness or injury for which an individual was treated or took prescribed medicine within 3 months prior to coverage until: 1 As we observed in UHOC’s prior appeal to this Court, PAI’s 1) the individual has been covered under this Plan reference to a condition “for which you received diagnosis” does not for one year, or comport with either the Plan or the SPD, both of which speak only of receiving treatment or taking prescribed drugs. 8 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 25 Emerson Electric Co., et al. Emerson Electric Co., et al.
reimbursement of additional medical expenses incurred by ________________ Mr. Weaver before his death. (J.A. at 355.) DISSENT On November 11, 1991, the executor of Mr. Weaver’s ________________ estate, Clark Weaver, assigned to UHOC “all benefits in the form of health insurance or similar benefits under an DAVID A. NELSON, Circuit Judge, dissenting. I agree employer-sponsored health and welfare fund which Gerald with my colleagues on the panel that the Employee Benefit Weaver (deceased) had at the time of his treatment at Committee did not act irrationally in determining that Mr. [UHOC], not to exceed the hospital/physician charges.” (J.A. Weaver received “treatment or services” when he saw Dr. at 28.) At about the same time, Clark Weaver appealed the Kumar on September 28, 1990. I also agree that the denial of benefits to the Plan’s administrative review body, Committee did not act irrationally in determining that the the EBC, asserting that Mr. Weaver “had never been hospital and medical expenses incurred after the diagnosed nor had he ever been treated for any condition” commencement of coverage were incurred in connection with prior to the date of Plan coverage. (J.A. at 364.) On April 10, the same pre-existing disease for which Mr. Weaver received 1992, the EBC denied this appeal, quoting the above-cited treatment or services on September 28. I cannot agree, Plan language regarding pre-existing conditions, and stating however, that the Committee acted irrationally in determining that “based upon the information which was reviewed by two that Mr. Weaver failed to come within the three-months- medical consultants, it is the Committee’s decision that [Mr. without-treatment exception to the provision under which the Weaver’s] illness was pre-existing and, as such, the charges payment of benefits for such a pre-existing disease is barred have been correctly denied.” (J.A. at 225.) until there has been a full year of coverage. UHOC then brought this action on July 1, 1992, seeking If the Committee was irrational in finding this exception reversal of the EBC’s decision to deny benefits. On October inapplicable, then a unanimous three-judge panel of this court 29, 1993, the District Court granted the Plan’s motion for must have been equally irrational when, speaking for the court summary judgment. In so ruling, the Court found that Mr. when the case was here earlier, the panel quoted the pertinent Weaver’s September 28, 1990 visit to Dr. Kumar triggered sections of the Plan in their entirety and went on to note that the Plan’s “pre-existing condition” exclusion, because it neither exception to the preclusion of benefits for certain pre- occurred less than three months before Mr. Weaver became existing conditions – neither the one-year-of-coverage eligible for Plan coverage on December 24, 1990. The Court provision nor the three-months-without-treatment provision next held that the EBC had reasonably construed the Plan’s – had been satisfied in the matter at hand. See University Schedule of Benefits as requiring that a participant go without Hospital of Cleveland v. Emerson Electric Co. Benefit Plan, treatment of a pre-existing condition for three months after No. 93-4924, slip op. at 3 n.1 (6th Cir. Dec. 22, 1994) (“It his Plan eligibility date — as opposed to any three-month should be noted that neither exception (1) nor exception (2) period, before or after the eligibility date, as UHOC applies to the matter at hand”). contended — in order to qualify for coverage of further medical expenses incurred in connection with a pre-existing I should have thought, at first blush, that this court’s 1994 condition. Because Mr. Weaver had visited a physician on opinion might well have established the law of the case with January 8, 1991, just two weeks after his eligibility date, the respect to the issue on which the current panel rests its decision. The applicability of the law-of-the-case doctrine 24 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 9 Emerson Electric Co., et al. Emerson Electric Co., et al.
it be remanded to the EBC for further proceedings in Court upheld the EBC’s determination that his subsequent accordance with our ruling.13 medical expenses were not covered under the Plan. IV. CONCLUSION UHOC appealed to this Court, and we reversed. In our December 22, 1994 Opinion, we held that the EBC’s For the foregoing reasons, we REVERSE the judgment of determination could not be sustained, in light of the evidence the court below and REMAND this matter to the District in the record that the EBC had considered a definition of “pre- Court, with instructions that UHOC’s claim be remanded to existing condition” that could not be found either in the Plan the EBC for further proceedings consistent with this decision. or in the SPD. Accordingly, we ordered the matter remanded to the EBC with instructions to review UHOC’s claim “under the terms of the actual Plan provisions applicable to such claim.” University Hosps. of Cleveland v. Emerson Elec. Co. Benefit Plan, No. 93-4924, slip op. at 4 (6th Cir. Dec. 22, 1994). On remand, the EBC again concluded, in a decision dated June 7, 1995, that UHOC was not entitled to an award of benefits: After a thorough reconsideration and review, the Employee Benefit Committee voted unanimously to deny the appeal of the University Hospitals of Cleveland. The Employee Benefit Committee concluded that the expert testimony establishes that Gerald Weaver had a disease for which he received treatment or services during the three month period immediately preceding the effective date of his coverage under the Plan. In addition, the evidence establishes that Mr. Weaver was not covered by the Plan for one year, and the evidence further establishes that Mr. Weaver had not been free of treatment for the pre-existing condition for the three month period as required by the terms of the 13 Because the EBC determined that the expenses incurred at UHOC Plan. This decision is consistent with past interpretations were wholly excluded from coverage as relating to a “pre-existing of the applicable Plan provisions. condition,” it appears that neither the third-party administrator nor the EBC considered whether the particular expenses claimed by UHOC were (J.A. at 767-68.) covered by the Plan, subject to a deductible, or the like. Thus, we cannot order an award of benefits, but must order the matter remanded to the EBC, with the understanding that further proceedings must be confined Following this second EBC determination, the District to addressing the specific expenses contained in UHOC’s claim. Court issued an Opinion and Order on January 17, 1997, 10 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 23 Emerson Electric Co., et al. Emerson Electric Co., et al.
restoring the case to its active docket, and setting a briefing thereby satisfied the Plan’s requirement for coverage of a pre- schedule for cross-motions for summary judgment. The existing condition. Thus, having surveyed all of the possible parties filed their cross-motions and, by Opinion and Order bases for the EBC’s determination to the contrary, and finding dated August 6, 1998, the Court granted the Plan’s motion each of them lacking in reasoned justification, we conclude and denied UHOC’s motion. In this decision, as in its 1993 that the EBC’s decision to deny UHOC’s claim was arbitrary ruling, the District Court found that the EBC’s denial of and capricious. benefits was not arbitrary and capricious. The Court also rejected UHOC’s argument that the EBC failed to timely In so holding, we cannot be blind to the totality of the issue its latest decision in accordance with the relevant Plan circumstances surrounding Mr. Weaver’s medical treatment. provision governing appeals of claim denials. UHOC now2 According to Dr. Kumar’s medical records, Mr. Weaver appeals this latest award of summary judgment to the Plan. affirmatively cited the “pre-existing condition” limitation on his health care coverage when he refused further treatment in III. ANALYSIS October of 1990. The Plan suggests that this was opportunistic behavior, and urges us to reject “the notion that A. The Standards Governing Review of the Challenged a person can deliberately and intentionally ignore a Denial of Benefits recommended course of care in order to create the illusion of the absence of treatment for an existing disease.” A participant or beneficiary of an ERISA plan — or, as in (Defendants/Appellees’ Appeal Br. at 30.) Yet, we discern no this case, an assignee of the rights held by a plan participant “illusion” here, nor any unfairness in the result. Rather, Mr. — may bring suit in federal district court to recover benefits Weaver’s conduct was the entirely foreseeable and reasonable allegedly due under the terms of the plan. See 29 U.S.C. product of Plan language that created an incentive to forego § 1132(a)(1)(B). It is by now well-established that courts treatment of a pre-existing condition. If the Plan wishes to review such challenges to benefit determinations under the de curtail “deliberate and intentional” elections by its novo standard, unless the benefit plan gives the plan participants to “ignore” recommended courses of treatment, administrator discretionary authority to determine eligibility then the Plan should be amended so as not to encourage such for benefits or to construe the terms of the plan. See behavior. As the Plan is now written, however, such conduct is 2 rewarded, and we see no reason to penalize Mr. Weaver for We recently held in Wilkins v. Baptist Healthcare Sys., Inc., 150 conforming his health care decisions to a reasonable — F.3d 609, 617-19 (6th Cir. 1998), that summary judgment generally is an inappropriate mechanism for adjudicating ERISA claims for benefits. indeed, in our view, the only reasonable — construction of the The District Court did not have the benefit of this decision, issued just a Plan. Accordingly, we find that the EBC’s denial of UHOC’s few days before the ruling now on appeal. In any event, as we explained claim for benefits was arbitrary and capricious, we reverse the in Wilkins, such reliance on summary judgment standards does not judgment of the court below upholding this denial, and we warrant reversal, so long as the District Court’s review of the challenged remand this matter to the District Court with instructions that benefit decision is confined to the evidence contained in the administrative record. 150 F.3d at 620. The lower court’s decision in this case appears to satisfy this standard. Likewise, in our review of the District Court’s ruling, we will consider only the materials available to the EBC, and not any depositions, affidavits, or similar litigation-related materials that the parties submitted to the District Court. 22 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 11 Emerson Electric Co., et al. Emerson Electric Co., et al.
be termed “treatment” was administered or received on Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, October 8. See American Heritage College Dictionary 1440 109 S. Ct. 948, 956 (1989); Smith v. Ameritech, 129 F.3d 857, (3d ed. 1993) (defining “treatment” as “[a]dministration or 863 (6th Cir. 1997). In this latter case, the administrator’s application of remedies to a patient or for a disease or an benefit determination is reviewed under an “arbitrary and injury,” or “[t]he substance or remedy so applied”). Rather, capricious” standard. Firestone, 489 U.S. at 115, 109 S. Ct. the treatment was received on September 28, and the at 956-57; Smith, 129 F.3d at 863. doctor/patient contact on October 8 merely followed up on this prior treatment,12reporting its outcome and recommending The Plan in this case provides that the EBC “shall have the further treatment. We do not believe that a mere discretionary authority to determine eligibility for benefits or recommendation constitutes treatment, particularly where, as to construe the terms of the Plan,” (Plan, § 6, Blanket here, the patient declines to adopt the recommended course of Amendment, J.A. at 629), and further provides: care. The Employee Benefit Committee, as outlined in The Plan’s suggestion that the October 8 contact was part Section One (2.), is empowered to review requests for of an ongoing “treatment” is all the more untenable when review of denied claims submitted in writing by any considered in light of the SPD, which effectively equates participant. The Plan gives the Employee Benefit “treatment” with “charges.” The record does not indicate that Committee the discretionary authority to determine Mr. Weaver incurred any charges based on Dr. Kumar’s eligibility for benefits or to construe the terms of the Plan October 8 telephone call, and one would not expect that such in carrying out the duties outlined in this Section [i.e., a physician contact following an office visit would result in a Section 5] and Section One (2.). The decision of the separate charge. Because we must give controlling effect to Review Board shall be final and non-reviewable unless the language of the SPD, it is not enough that the October 8 found to be arbitrary and capricious by a court of contact might constitute “treatment” under some conceivable competent review. definition of that term, if Mr. Weaver incurred no charges that day. (Id.) As the parties apparently agree, this language constitutes a sufficient grant of discretionary authority to trigger In any event, even if the October 8 contact could be viewed application of the “arbitrary and capricious” standard of as “treatment” under the Plan and its SPD, Mr. Weaver review. See, e.g., Bagsby v. Central States, Southeast & waited three full months, until January 8, 1991, before Southwest Areas Pension Fund, 162 F.3d 424, 428 (6th Cir. seeking any further treatment of his condition. Under the 1998); Smith, 129 F.3d at 863.3 plain language of the Plan, then, Mr. Weaver remained “free of treatment for the pre-existing illness or injury for three 3 months,” between October 8, 1990 and January 8, 1991, and While conceding that this Plan language, viewed in isolation, dictates application of the deferential “arbitrary and capricious” standard, UHOC argues that the de novo standard should apply here by virtue of the 12 EBC’s alleged failure to timely issue a decision following our prior Tellingly, in an August 20, 1991 letter clarifying “the status of Mr. remand of this matter to that body for reconsideration. As UHOC points Gerald Weaver and the contact he has had with our office,” Dr. Kumar out, if a plan administrator fails to timely decide an appeal of a claim did not even mention any contacts with Mr. Weaver in October of 1990, denial, the challenged claim “shall be deemed denied on review,” 29 but instead concluded his summary with the September 28, 1990 office C.F.R. § 2560.503-1(h)(4), and the claimant may then “bring a civil action visit. (J.A. at 367.) to have the merits of his application determined, just as he may bring an 12 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 21 Emerson Electric Co., et al. Emerson Electric Co., et al.
Under this deferential “arbitrary and capricious” standard, condition. Although this phrase is not further defined in the we will uphold a benefit determination if it is “rational in Plan, the Summary Plan Description (“SPD”) restates the light of the plan’s provisions.” Yeager v. Reliance Standard Plan’s three-month treatment-free provision as requiring that Life Ins. Co., 88 F.3d 376, 381 (6th Cir. 1996) (internal “you haven’t had any charges for this illness or injury for 3 quotations and citation omitted). Stated differently, “[w]hen months.” (SPD at 12, J.A. at 157 (emphasis added).) it is possible to offer a reasoned explanation, based on the Because employees rely on summary descriptions “for evidence, for a particular outcome, that outcome is not information which will allow them to make intelligent arbitrary or capricious.” Davis v. Kentucky Finance Cos. decisions about their future benefit needs,” we have held that Retirement Plan, 887 F.2d 689, 693 (6th Cir. 1989) (internal the language of the SPD controls over any conflicting quotations and citation omitted), cert. denied, 495 U.S. 905 language in the Plan itself. Helwig v. Kelsey-Hayes Co., 93 (1990). F.3d 243, 247-48 (6th Cir. 1996), cert. denied, 519 U.S. 1059 (1997). Accordingly, in considering the Plan’s contention We note, however, that our deferential review of the benefit that Mr. Weaver was not “free of treatment” in October of denial at issue here is tempered by two principles. First, as 1990, we must be mindful of the SPD’s linkage between UHOC argued in the early stages of this litigation before the “treatment” and “charges.” District Court, we should not overlook the fact that the Plan is funded largely by Defendant/Appellee Emerson Electric, Viewed in this context, it is clear that nothing in Mr. and that the EBC is appointed by Emerson’s Board of Weaver’s medical history for October of 1990 could Directors. The “possible conflict of interest” inherent in this reasonably be considered “treatment.” First, the cursory entry situation “should be taken into account as a factor in for October 12 does not establish any contact whatsoever determining whether the [EBC’s] decision was arbitrary and between Mr. Weaver and his physician, much less the capricious.” Davis, 887 F.2d at 694; see also Borda v. Hardy, “treatment” required under the terms of the Plan. Next, the Lewis, Pollard & Page, P.C., 138 F.3d 1062, 1069 (6th Cir. October 26 entry not only fails to reflect any treatment received by Mr. Weaver, but affirmatively shows his refusal of treatment. Plainly, such a refusal cannot be equated with treatment, as it is the very antithesis of treatment. And, the record is devoid of any evidence that Mr. Weaver incurred charges relating to these October 12 and October 26 entries in his medical history. action to challenge an outright denial of benefits.” Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 144, 105 S. Ct. 3085, 3091 (1985). Although neither the regulation nor Russell addresses the applicable Turning, finally, to the October 8 contact between Dr. standard of review in such circumstances, there is undeniable logic in the Kumar and Mr. Weaver, the Plan asserts that it is reasonable view that a plan administrator should forfeit deferential review by failing to view this as a continuation of the September 28 office visit, to exercise its discretion in a timely manner. But see Daniel v. Eaton in which Dr. Kumar reported the results of the tests Corp., 839 F.2d 263, 267 (6th Cir. 1988) (stating that “the standard of administered during the office visit and recommended a review is no different whether the appeal is actually denied or is deemed further course of action. Yet, the Plan itself is clear in stating denied”), cert. denied, 488 U.S. 826 (1988). In any event, given our ruling on the merits of the EBC’s denial of benefits, we need not decide that only treatment is relevant, and not, for example, the mere whether the EBC timely issued its decision on remand, nor whether any “services” that are sufficient to initially trigger the exclusion failure to timely decide UHOC’s appeal should trigger a less deferential for pre-existing conditions. Simply stated, nothing that could standard of review. 20 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 13 Emerson Electric Co., et al. Emerson Electric Co., et al.
without “treatment” for this condition, whether before or after 1998).4 Next, to the extent that the Plan’s language is his Plan eligibility date. The parties agree that Mr. Weaver susceptible of more than one interpretation, we will apply the did not seek treatment in November or December of 1990, “rule of contra proferentum” and construe any ambiguities and that his treatment resumed on January 8, 1991. The against Defendants/Appellees as the drafting parties. Perez dispositive question, therefore, is whether Mr. Weaver was v. Aetna Life Ins. Co., 150 F.3d, 550, 557 n. 7 (6th Cir. 1998). “free of treatment” during all or most of October, 1990, so that there was a three-month period before January 8, 1991 in B. The EBC’s Interpretation of the Plan as Not Covering which he received no treatment for his condition. the Medical Expenses Mr. Weaver Incurred at UHOC Is Arbitrary and Capricious. Dr. Kumar’s medical history for Mr. Weaver includes three entries for October of 1990. First, on October 8, 1990, Dr. As indicated by the above-quoted Plan provisions relating Kumar called Mr. Weaver to inform him of the results of his to pre-existing conditions, the EBC’s consideration of recent blood test and recommend that he see a hematologist. UHOC’s claim for benefits involved a two-step inquiry. First, (J.A. at 470.) Next, there is a short entry for October 12, under the Plan’s definition of a “pre-existing condition,” the 1990, stating only “CBC,” which apparently reflects an EBC had to determine whether Mr. Weaver’s medical attempt to schedule an additional blood test.10 (J.A. at 475.) expenses at UHOC were “incurred in connection with a Finally, an entry dated October 26, 1990 indicates that Mr. disease or injury for which [Mr. Weaver] received treatment Weaver refused a blood test, stating that his health insurance or services or took prescribed drugs during the three month would not cover a pre-existing condition. (Id.) The Plan period immediately preceding” Mr. Weaver’s Plan eligibility argues that these October entries reflect a “continuing” course date of December 24, 1990. If so — in other words, if Mr. of treatment which began with Mr. Weaver’s September 28 Weaver’s medical expenses were traceable to a “pre-existing office visit. (Defendants/Appellees’ Appeal Br. at 27.)11 condition” — the EBC then would have to consider whether Mr. Weaver satisfied either of the two conditions under which We cannot accept this as a reasonable characterization of the Plan would commence to pay expenses relating to this Mr. Weaver’s medical history. We begin by observing that the Plan itself offers considerable guidance in determining what it means to be “free of treatment” for a pre-existing 4 In its initial decision granting summary judgment to the Plan, the District Court rejected UHOC’s claim of a conflict of interest, reasoning that “[t]he Plan is clearly a separate and distinct entity requiring fiduciary 10 duties under ERISA.” (District Court’s 10/29/93 Op. at 4, J.A. at 680.) The record does not indicate whether this blood test was to occur Because we found a different defect in the EBC’s decisional process, we on October 12 or some other date, nor whether Mr. Weaver was contacted did not reach this issue in the initial appeal, and UHOC has not raised it in regard to this matter. In any event, it appears that Dr. Kumar’s office in the present appeal. Nevertheless, we believe it appropriate to observe did not administer any blood tests in October. here that the mere existence of fiduciary duties, which always are present 11 in any benefit determination governed by ERISA, does not obviate the We note that there is nothing in the administrative record to need to more carefully examine decisions that might be tainted by a indicate that the EBC ever made such a finding of a “continuing course conflict of interest. Courts should be particularly vigilant in situations of treatment” extending into October of 1990. Nevertheless, in the where, as here, the plan sponsor bears all or most of the risk of paying interest of resolving this nearly eight-year-old litigation, we will address claims, and also appoints the body designated as the final arbiter of such this argument as a possible alternate ground for sustaining the EBC’s claims. Under these circumstances, the potential for self-interested decision. decision-making is evident. 14 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 19 Emerson Electric Co., et al. Emerson Electric Co., et al.
“pre-existing condition”: namely, either (1) that Mr. Weaver Given all these express references to the date a participant’s was “covered under this Plan for one year,” or (2) that he had coverage commences, we cannot help but place significance been “free of treatment for the pre-existing illness or injury on the absence of any such language in the three-month for 3 months.” Upon carrying out this two-step inquiry, the treatment-free provision at issue here. If we were to view the EBC concluded that Mr. Weaver’s UHOC expenses were Plan as “impliedly” including the additional qualification traceable to a pre-existing condition, but that he had not imposed by the EBC, we would sanction an inconsistent satisfied either of the two conditions for coverage of this pre- reading and permit the Plan to have it both ways. Under the existing condition by the time he was treated at UHOC. EBC’s interpretation, a Plan participant triggers the “pre- UHOC now challenges both of these conclusions. existing condition” exclusion by accepting any treatment or services at any time within the three months prior to his Plan As for the first step of the inquiry — namely, whether Mr. coverage date. Yet, in the EBC’s view, no significance Weaver triggered the “pre-existing condition” exclusion by attaches to any decision by a Plan participant to forego receiving “treatment or services” within three months prior to treatment during this same three-month period; such his Plan eligibility date of December 24, 1990 — we find that decisions, we are told, count only if made after the Plan the EBC’s determination was reasonable in light of the coverage date. available evidence. It is undisputed that Mr. Weaver visited his physician, Dr. Kumar, on September 28, 1990, and that he We cannot accept this attempt to impose an additional and provided a blood sample for testing that day. Plainly, then, one-sided limitation not stated in the Plan itself. This is Mr. Weaver received medical treatment or services within the particularly so where, as we have noted, the Plan is largely three-month period prior to December 24, 1990. funded by Defendant/Appellee Emerson Electric and the EBC is appointed by Emerson’s Board of Directors, so that the UHOC, however, challenges the EBC’s finding that the EBC has an evident self-interest in seeing that UHOC’s rather condition for which Mr. Weaver received treatment on sizable claim is not paid.9 Moreover, the rule of contra September 28, 1990, was the same “pre-existing condition” proferentum precludes the EBC from finding an “ambiguity” for which he subsequently received treatment at UHOC in in the Plan’s three-month treatment-free provision, and then March through June of 1991. In reaching this conclusion, the invoking its discretionary power to “construe” this provision EBC obtained and considered two separate and independent in the Plan’s favor. There is no ambiguity here: the provision medical opinions, both of which indicated that the condition in question includes no limitation beyond the requirement of diagnosed in early 1991 was a continuation of the condition three months without treatment. for which Mr. Weaver sought treatment in September of 1990. (J.A. at 543-44.) In addition, in its review upon This leads us to the second suggested basis for the EBC’s remand, the EBC heard a presentation from UHOC’s counsel, decision: that, following his visit to Dr. Kumar in late and was provided an opinion from UHOC’s medical expert, September of 1990 which triggered the “pre-existing Dr. Lawrence Kass, stating that it was “uncertain” whether the condition” exclusion, Mr. Weaver never went three months anemia diagnosed by Dr. Kumar in September of 1990 “eventually evolved” into myelodysplasia, and that it would be “only speculative” to so conclude. (J.A. at 391.) 9 Although Plan participants are required to pay certain deductibles and co-pays, there is nothing in the record to indicate that any such participant contributions would significantly reduce the burden on the Plan if it were determined that the Plan must pay UHOC’s claim. 18 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 15 Emerson Electric Co., et al. Emerson Electric Co., et al.
coverage of expenses incurred in connection with a pre- Given this range of medical opinions and evidence before existing condition, a participant must be “free of treatment for the EBC, we cannot say that its determination on this point the pre-existing illness or injury for 3 months.” On its face, was arbitrary and capricious. In particular, where the EBC’s this language is satisfied by any three-month period without decision enjoys the support of two independent medical treatment, whether it falls entirely after the Plan eligibility opinions, it is sufficiently grounded in reason and evidence to date or extends into the890-day period before an employee is satisfy the “least demanding form of judicial review,” the covered by the Plan. It is not a permissible act of arbitrary and capricious standard. Davis, 887 F.2d at 693 “construction” to augment this language with the additional (internal quotations and citation omitted). Although UHOC’s qualifier that a participant must be “free of treatment . . . for medical expert reached a different conclusion, complete 3 months after the effective date of Plan coverage.” Rather, consensus is not required to establish a reasoned basis for an the terms of the Plan must be construed “according to their administrative decision. Indeed, even UHOC’s expert was plain meaning, in an ordinary and popular sense,” Perez, 150 unwilling to say that the anemia suffered by Mr. Weaver in F.3d at 556, and those terms simply do not impose the September of 1990 was altogether unrelated to the requirement that a participant not seek treatment for three myelodysplastic syndrome that ultimately led to his death; he months after he is covered by the Plan. stated only that any such connection was “uncertain” and “speculative.” The EBC could rationally have elected instead The implausibility of the EBC’s interpretation is amply to heed the opinions of two other experts, both of whom illustrated through comparison with other Plan language, also viewed the evidence in Mr. Weaver’s medical history as relating to “pre-existing conditions,” that does compute time sufficient to make this connection.5 periods by reference to a participant’s date of coverage. For example, the Plan defines a “pre-existing condition” as one The next step in the EBC’s inquiry, however, is more “for which a covered individual received treatment or services problematic. All are agreed that Mr. Weaver was not covered or took prescribed drugs during the three month period under the Plan for a year prior to his treatment at UHOC, so immediately preceding the effective date of such that he did not satisfy the first of the two conditions for Plan individual’s coverage under this Plan.” (J.A. at 609 coverage of a pre-existing disease. The EBC also found that (emphasis added).) The Plan further provides that coverage of a pre-existing condition will commence once the participant “has been covered under this Plan for one 5 year.” (J.A. at 625 (emphasis added).) Similarly, the SPD UHOC argues that these expert opinions necessarily are “tainted” states that a pre-existing condition is one “for which you were by our ruling in the prior appeal that the EBC’s initial decision might have rested upon a definition of “pre-existing condition” not found in the Plan treated or took prescribed medicines within 3 months before or the SPD. As the District Court observed in rejecting this argument, your coverage began,” and that medical expenses will be however, these medical opinions do not turn on matters of Plan paid for such a condition once “you have been covered under interpretation or any particular definition of “pre-existing condition,” but this Plan for a year.” (J.A. at 157 (emphasis added).) instead are based upon analysis of Mr. Weaver’s medical history to see whether his treatments before and after December 24, 1990 were directed at the same or different medical conditions. Once the medical experts weighed in on this issue, it was left to the EBC to decide whether Mr. 8 Weaver’s particular interactions with medical personnel in the three Likewise, the SPD requires only that “you haven’t had any charges months before December 24, 1990 constituted “receiv[ing] treatment or for this illness or injury for 3 months,” and does not further specify that services or t[aking] prescribed drugs” within the meaning of the Plan’s this three-month period must follow the date of Plan coverage. definition of a “pre-existing condition.” 16 University Hospitals v. No. 98-4061 No. 98-4061 University Hospitals v. 17 Emerson Electric Co., et al. Emerson Electric Co., et al.
Mr. Weaver did not satisfy the second condition, stating in its in matters of Plan interpretation, the Plan argues that we must June 7, 1995 decision that “the evidence further establishes defer to this construction of the three-month treatment-free that Mr. Weaver had not been free of treatment for the pre- requirement. If this proposed construction is accepted, it existing condition for the three month period as required by follows that the EBC properly denied UHOC’s claim, as it is the terms of the Plan.” (J.A. at 768.) We find insufficient undisputed that Mr. Weaver sought treatment within two support in the record to sustain this determination, even under6 weeks after he became eligible for Plan benefits. the deferential “arbitrary and capricious” standard of review. Upon reviewing the plain language of the Plan, however, While the EBC’s decision is stated in somewhat conclusory we find that the EBC has exceeded its power to interpret the fashion, the Plan suggests two possible rationales for this Plan, and instead has effectively rewritten it. To trigger decision, and argues that either is adequate to sustain it. First, we are told that the EBC “construed the Plan as requiring participants with a pre-existing disease to be free of treatment for a three month period after the effective date of coverage from considering evidence, such as Draeger’s testimony, that is not part of the administrative record. by the Plan in order to receive benefits for the pre-existing disease.” (Defendants/Appellees’ Appeal Br. at 25-26 Indeed, we should be all the more reluctant to stray from the (emphasis added).)7 Given the EBC’s discretionary authority administrative record where, as here, the proffered evidence is one person’s post hoc explanation of an administrative body’s decision. In an analogous situation, we do not look to post-enactment statements of legislators when determining the meaning of statutes. See Michigan 6 United Conservation Clubs v. Lujan, 949 F.2d 202, 209-10 (6th Cir. As Judge Nelson notes in his dissent, our decision in the prior 1991). More importantly, it strikes us as problematic to, on one hand, appeal of this case included a footnote tersely stating, without discussion, recognize an administrator’s discretion to interpret a plan by applying a that the Plan’s three-month treatment-free provision did not “appl[y] to deferential “arbitrary and capricious” standard of review, yet, on the other the matter at hand.” University Hosps. of Cleveland v. Emerson Elec. Co. hand, allow the administrator to “shore up” a decision after-the-fact by Benefit Plan, No. 93-4924, slip op. at 3 n.1 (6th Cir. Dec. 22, 1994). testifying as to the “true” basis for the decision after the matter is in Notably, in the present appeal, the Plan does not even mention this earlier litigation, possible deficiencies in the decision are identified, and an statement, much less argue that we have already ruled upon the attorney is consulted to defend the decision by developing creative post applicability of the three-month treatment-free provision. Similarly, while hoc arguments that can survive deferential review. The concerns inherent Judge Nelson quotes this footnote, he elects not to rely on the “law of the in this scenario are even more pronounced where, as here, the case” doctrine in his dissent. Having considered the matter, we do not administrator has a financial incentive to deny benefits. To depart from believe that this statement represents the “law of the case,” where our the administrative record in this fashion would, in our view, invite more earlier ruling did not address the merits of or reasoning behind the EBC’s terse and conclusory decisions from plan administrators, leaving room for initial denial of benefits, but instead rested on the limited ground that the them — or, worse yet, federal judges — to brainstorm and invent various EBC might have erroneously relied on language not found in the Plan proposed “rational bases” when their decisions are challenged in ensuing itself. As we have observed, the “law of the case” doctrine is “limited to litigation. At a minimum, if we permit such rehabilitation of the those questions necessarily decided in the earlier appeal.” Hanover Ins. administrative record, there no longer is any reason why we should not Co. v. American Eng’g Co., 105 F.3d 306, 312 (6th Cir. 1997). apply a more searching de novo review of the administrator’s decision. 7 The dissent sees “no room for doubt” that this construction was the Having said this, we do not mean to imply that Mr. Draeger’s one adopted by the EBC in denying UHOC’s claim. This conclusion is testimony fails to accurately reflect the basis for the EBC’s decision. The based on the deposition testimony of one EBC member, James Draeger; point is, we simply cannot tell from the text of the decision itself, nor the EBC’s written decision includes no such statement of its reasoning. from the administrative record. Ideally, that text should be the principal Our decision in Wilkins, supra, 150 F.3d at 618, however, precludes us point of reference in our review of a challenged denial of benefits.