HLD, v. 32, n. 9 (September 2004)
U.S. Court In New York Says Denial Of Healthcare Claim Was Proper
In November 1998, Anthony E. Zebrowski (plaintiff) was admitted
to Community General Hospital (Community) for major depression. Plaintiff had
healthcare coverage through his employer, Lockheed Martin's self insured managed
care plan, which was governed by the Employee Retirement Income Security Act
(ERISA). Lockheed Martin has a separate agreement with CIGNA Behavioral Health,
Inc. (CIGNA) to act as the claims administrator for the mental health portion
of the plan.
CIGNA approved treatment for plaintiff through November 24, 1998.
On November 25, plaintiff's treating physician, Dr. Levine was about to discharge
plaintiff when he was informed plaintiff's wife did not want him to return home
and plaintiff had no place to go. Levine decided not to discharge plaintiff
because he would be at risk and had no place to go. CIGNA only authorized care
through November 26. Plaintiff was discharged on December 11, and CIGNA refused
to cover plaintiff's inpatient care after November 26 because it was not medically
necessary. CIGNA's psychiatrist determined plaintiff did not meet the criteria
for additional treatment. Levine said he would appeal the determination but
failed to provide CIGNA with any supporting medical records.
In October 2001, plaintiff informed CIGNA that Community was suing
him for payment, and CIGNA conceded that plaintiff was denied due process and
told plaintiff to have Community send his chart for review. CIGNA determined
on review that it would not cover plaintiff's inpatient treatment through December
11. On appeal, CIGNA again denied plaintiff's claim because plaintiff's chart
clearly indicated that the last few days he was at Community he had day passes
to go out and look for housing. Plaintiff sued CIGNA in state court, and CIGNA
removed the action to federal court. Plaintiff claimed breach of contract, negligent
and intentional infliction of emotional distress, bad faith, and sought overdue
payments with interest under New York insurance law. CIGNA filed a motion for
summary judgment on the grounds it was not liable for plan benefits, that the
emotional distress claims were based on state law and thus were pre-empted by
ERISA, and the denial of benefits was neither arbitrary nor capricious.
The U.S. District Court for the Northern District of New York granted
CIGNA's motion for summary judgment. The court first addressed plaintiff's breach
of contract claim and noted that the plan was the contract under which plaintiff
was seeking damages and Lockheed Martin and the plan members were the only parties
to that contract. CIGNA was not a party to the plan but was a party to the agreement
to provide claims administrator services for Lockheed Martin. The court determined
that the plain language of the CIGNA services contract states that it was for
the benefit of CIGNA and Lockheed Martin "and not for any other person." Because
plaintiff was not a party to the contract, the court granted CIGNA summary judgment
on the breach of contract claim.
The court then turned to plaintiff's emotional distress claims.
On the intentional infliction of emotional distress claim, the court determined
plaintiff failed to allege that CIGNA's conduct went beyond the bounds of decency,
was intended to cause the plaintiff distress, and that there was a causal link
between CIGNA's conduct and plaintiff's distress. Even if the facts are viewed
in a light most favorable to plaintiff, the complaint failed to allege facts
sufficient to support the claim. The court also determined that state law claims
of emotional distress are pre-empted by ERISA as a matter of law. The court
also rejected plaintiff's claim for negligent infliction of emotional distress
because plaintiff failed to allege any physical or mental injuries that were
caused by CIGNA's actions.
Plaintiff sought overdue payments and interest pursuant to N.Y. Ins. Law � 5106, but the court rejected
that claim on the ground that � 5106 only applies to claims for no-fault personal
On plaintiff's bad faith claim, the court determined that the complaint
did not contain a bad faith claim, but plaintiff's opposition to CIGNA's summary
judgment motion contained what could constitute a bad faith claim. Plaintiff
argued CIGNA acted in bad faith by refusing the coverage and in handling plaintiff's
appeals. Plaintiff's bad faith claim was based on a state law claim of improper
processing of a healthcare claim, said the court, and is pre-empted by ERISA.
Any allegation of bad faith denial of the healthcare claim was also pre-empted
Community Gen. Hosp., Inc. v. Zebrowski, No. 5:03-CV-249
(N.D.N.Y. Aug. 2, 2004).