United States District Court, D. Arizona
ORDER
Honorable Susan M. Brnovich United States District Judge
Pending
before the Court are Cross-Motions for Summary Judgment.
Defendants Cerner Corporation and the Health Exchange
Incorporated filed a joint Motion for Summary Judgment and
corresponding Statement of Facts on April 10, 2019. (Doc. 67,
“DMSJ”; Doc. 68 “DSOF”.) Plaintiff
United Air Ambulance filed its own Motion for Summary
Judgement and Statement of Facts later that day. (Doc. 73,
“PMSJ”; Doc. 74, “PSOF”.) Both
Plaintiff and Defendants responded to the opposing motion for
summary judgment and corresponding statement of facts. (Doc.
83, “Defendants' Resp.”; Doc. 84,
“Resp. to PSOF”; Doc. 88, “Plaintiff's
Resp.”; Doc. 89, “Resp. to DSOF”.)
Likewise, both Plaintiff and Defendants filed Replies. (Doc.
90, “Defendants' Reply”; Doc. 91,
“Plaintiff's Reply”.) Oral argument was held
on November 18, 2019. The Court considers the parties
respective pleadings and enters the following Order:
I.
BACKGROUND
K.M., a
twenty-three-month-old child with an extremely rare bowel
disorder, was rushed to the Phoenix Children's Hospital
(“PCH”) emergency room (“ER”) on the
morning of March 21, 2017. (PSOF ¶ 12.) After treatment
in the ER, K.M.'s parents faced a decision: (1) admit the
child to PCH for continued treatment of the emergent
condition afflicting their son, “a possible line
infection, ” or (2) depart on a pre-arranged air
ambulance flight to Boston Children's Hospital
(“BCH”) to address the underlying medical
condition which PCH could not treat and under which K.M. had
long suffered. They chose the latter. This case is about who
pays for that flight. More precisely, this case concerns
whether Cerner Corporation (“Cerner”) and its
fellow defendants abused their discretion in approving the
medical necessity of K.M.'s flight at the
pre-authorization stage but later denying United Air
Ambulance's (“UAA”) claim.
A.
K.M.'s Medical Needs
PCH was
familiar with K.M.'s medical conditions-short bowel
syndrome, secondary to necrotizing enterocolitis in early
infancy and parenteral nutrition associated liver disease
(“PNALD”)-when he arrived at the ER on March 21,
2017. (PSOF ¶ 1.) PCH physicians attempted to address
K.M.'s complicated medical problems many times in the
past, but multiple surgical treatments had largely failed to
improve his condition. (PSOF ¶ 3.) The physicians
believed, but could not confirm, that a lack of intestinal
musculature complicated K.M's condition and stymied
PCH's attempted treatment. (PSOF ¶ 5.) Lacking the
required specialized diagnostic equipment, K.M.'s doctors
referred him to BCH, one of the few hospitals with the
equipment needed to properly diagnose and treat him. (PSOF
¶ 6.) Cerner approved a second opinion from Dr. Tom
Jaksic at BCH for a duodenal mobility study that required
inpatient admission. (Doc. 82-1 at 67.)
The
problem was getting there. Because K.M. was completely
reliant on parenteral nutrition and suffered severe
peristomal erosion around the central line supplying him
vital nutrients, he needed hourly dressing changes to prevent
further erosion and possible infection. (PSOF ¶ 4; Doc.
82-1 at 69, “Dr. Carey Letter”) Dr. Andrew Carey,
the Associate Medical Director at BCH's Center for
Advanced Intestinal Rehabilitation supported transport to BCH
by air ambulance, concluding that “the degree of
peristomal erosion and the frequency of dressing changes
required to prevent further skin breakdown and soiling of his
sterile central venous line site” made
“commercial air flight . . . not appropriate for this
patient.” (Dr. Carey Letter.) K.M.'s condition was
both rare and serious.[1] Dr. Carey continued:
Recent pathology suggests a segmental absence of intestinal
musculature . . . an incredibly rare diagnosis [that]
requires the use of antroduodenal and colonic manometry to
detect for abnormalities in peristalsis. This testing
requires inpatient level of care and is only available at a
select group of centers, of which Boston Children's
Hospital is one. . . . Failure to seek further diagnostic
testing will result in ongoing limitations in his ability to
advance enteral nutrition which will accommodate progression
of his liver disease. Progressive PNALD represents a major
source of mortality in patients with intestinal failure and
requires specialized care to reduce risk of death.
(Id.) Dr. David Notrica, a pediatric surgeon at PCH,
corroborated Dr. Carey's medical opinion and
recommendations. (Doc. 82-1 at 73.) He affirmed K.M.
“needs an evaluation at [BCH] . . . as soon as
possible, and will need medical transport to get
there.” (Id.) With physicians at both PCH and
BCH concluding that ground transportation was inadequate and
instead recommending travel by air ambulance, K.M.'s
parents arranged transport with UAA.[2]
On the
day of his scheduled flight, K.M. experienced what both
parties consider a “medical emergency” and was
taken to the PCH ER for treatment. (PSOF ¶ 12; Doc. 82
at 47.) PCH treated K.M. for a “possible line
infection” and potential sepsis. (PSOF ¶ 13.) As
Dr. Carey and Dr. Notrica previously established, PCH could
not treat K.M.'s underlying condition. (PSOF ¶¶
11-14.) PCH could, however, successfully address K.M.'s
most pressing medical needs-the line infection and possible
sepsis. (See DSOF ¶¶ 44-45.) Both
K.M.'s pediatric gastroenterologist and ER physician thus
recommended that K.M. be admitted at PCH and not take the UAA
flight. (Id.; PSOF ¶ 13.) But fearing another
opportunity to fly K.M. by air ambulance for treatment at BCH
would not come, K.M.'s mother signed K.M. out of the PCH
ER against medical advice. (PSOF ¶¶ 11-14.) Upon
arrival in Boston, BCH directly admitted K.M. and
successfully treated his gastrointestinal conditions. (PSOF
¶ 15.)
B.
The Plan
Defendant
Cerner is a health care technology company that offers
insurance coverage for employees. (DSOF ¶ 3.) Through
its legal subsidiary and third-party benefits administrator,
Defendant The Health Exchange, Inc. d/b/a Cerner HealthPlan
Services (“CHPS”), Cerner offers a comprehensive
benefits package called the Wraparound Benefits
Plan.[3] (DSOF ¶ 9.) Among other offerings,
the Wraparound Benefits Plan provides medical insurance
coverage to Cerner employees and beneficiaries under a
component plan, the Healthe Options Component Plan
(“the Plan”). (DSOF ¶ 10.) Both plans are
governed by the Employee Retirement Security Act of 1974
(“ERISA”). (DSOF ¶ 12.) K.M. is a covered
beneficiary under the Plan. (DSOF ¶ 11.) The Plan names
Cerner as fiduciary and plan administrator as defined by
ERISA and grants Cerner “the exclusive power and
authority, in its sole discretion, to construe and interpret
the Plan, to determine all questions of Plan coverage and
eligibility for benefits, the methods of providing or
arranging for such benefits and all other related
matters.” (DSOF ¶ 14.) In turn, Cerner delegates
administration and payment of claims to CHPS. (DSOF ¶
15.) Cerner and CHPS thus maintain a close working
relationship. (See DSOF ¶¶ 27-32.) In
return for its services, Cerner pays CHPS a monthly
administration fee on a per employee covered basis and
provides funds to be paid out by CHPS on a weekly basis.
(DSOF ¶¶ 29-31.) CHPS operates out of a
Cerner-owned building in a commercial building campus that
Cerner also calls home. (DSOF ¶ 27.) Employees at CHPS
maintain email accounts with Cerner and CHPS. (PSOF ¶
56.)
The
Plan covers ambulatory travel, including by air ambulance, in
specific circumstances. (DSOF ¶¶ 16-17.) Generally,
the Plan reimburses transportation by air ambulance in
medical emergencies when ground transportation is not
appropriate either because a patient needs treatment
immediately or because nearby facilities cannot offer
appropriate treatment. (See DSOF ¶ 16.) In
relevant part, the Plan reads:
Coverage
is provided for air ambulance transport for medical
emergencies in the following circumstances:
• The Participant requires transport to a hospital or
from one hospital to another because the first hospital does
not have the required services and/or facilities to treat the
Participant; and ground transportation is not medically
appropriate because of the distance involved,
• Or because the Participant has an unstable condition
requiring medical supervision and rapid transport
(Id.) The provision requires a provider notify
Cerner “except in life threatening
circumstances.” (Id.) The Plan does not define
“medical emergencies.” (See Doc 68-4 at
51-59.) The Plan also explicitly disclaims coverage in a
range of other circumstances. This provision, titled
“Services Not Covered, ” reads in part:
Any treatment, confinement, or service which is not
recommended by, or any operation which is not performed by,
an appropriate professional provider; Examination by a
Doctor, related laboratory tests, x-rays and vaccines
performed in the absence of specific symptoms on the part of
the Participant (except as may be specifically provided
herein).
(DSOF ¶ 17.)
C.
The Claims Process
To be
compensated, a provider of services must file a claim with
Cerner. The claims process here entailed navigating seven
layers of review. (See DSOF ¶¶ 18-26.)
Broadly speaking, this claim passed through two main
categories of review: preauthorization and claim processing.
The Plan allows health care providers to request
preauthorization for providing a service to a Plan
beneficiary.[4] (DSOF ¶ 17.) When denied, a
preauthorization request may be appealed twice. (DSOF ¶
19.) The first appeal is evaluated by CHPS, the second by
Cerner itself. Specifically, if CHPS denies a providers'
initial appeal, the dispute is elevated to one of two Cerner
personnel charged with handling second level appeals- Bogorad
and Dr. David Nill review final claims on appeal among their
other responsibilities. (DSOF ¶ 23.) Regardless of
whether a preauthorization request is approved or denied, a
provider must file a formal claim for benefits. (DSOF ¶
20.) Like preauthorization requests, claims may be appealed
twice if denied. (DSOF ¶ 21.) Similarly, claim appeals
are first reviewed by CHPS, then by Cerner. (DSOF
¶¶ 21-23.)
To
insulate the process from conflicts, Cerner and CHPS have
some procedural safeguards. The first claim appeal accords no
deference to the original decision. (DSOF ¶ 24.)
Instead, decisions are made “by an individual who did
not decide the initial claims, and who is not a subordinate
of anyone that decided the initial claim.”
(Id.) The second appeal follows the same procedures.
(DSOF ¶¶ 24-26.) At both appeal levels, the
reviewer can consider new information submitted by a claimant
and consult a health care professional experienced in the
relevant area if necessary. (DSOF ¶¶ 24-26.) If
denied after a second appeal, a claimant may request an
“External Review.” (DSOF ¶ 26.) Denial of a
claim after a second appeal, or, if an external review is
requested, confirmation of denial by an external reviewer,
renders a claim judgment final. Once a final adverse benefits
decision has been rendered and a provider exhausts all
remedies available under the Plan, the provider may bring a
civil action under ERISA.
In this
case, UAA submitted both a preauthorization request and filed
a formal claim, following the procedures detailed above. This
process began with a series of initial inquiries with CHPS by
K.M.'s AHH case manager. (DSOF ¶ 35.) On February 9,
2017, K.M.'s AHH case manager asked CHPS if the Plan
covered K.M.'s travel expenses for a second opinion at
BCH. (Id.) Eleven days later, AHH confirmed that
BCH's services were medically necessary, but not covered
because they were not emergent. The next day, February 21,
2017, UAA called CHPS to inquire into covered costs for air
ambulance. (DSOF ¶ 39.) Quoting the Plan language,
supra, UAA was told the Plan only covered travel by
air ambulance, like that requested, in “medical
emergencies” and any coverage was subject to the terms
of the Plan. (DSOF ¶¶ 39-40.) On February 28, 2017,
CHPS followed-up on the previous phone call and provided AHH
written confirmation that coverage for air ambulance was not
covered for K.M.'s second opinion at BCH. (DSOF ¶
41.) Despite this, UAA transported K.M. to Boston on March
21, 2017, (PSOF ¶ 14.), and sent CHPS a preauthorization
request later that day. (DSOF ¶ 46.) That request was
denied on March 24, 2017 for the reasons previously given.
UAA appealed on April 24, 2017; CHPS upheld the denial on May
15, 2017. (Doc. 82-7 at 82.) This May 15 appeal denial again
quoted the Plan ...