Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


April 11, 1984


The opinion of the court was delivered by: LASKER


Plaintiff Irma Skoller is a federal employee who claims she was wrongfully denied benefits under her insurance contract with defendants Blue Cross Association, Blue Shield Association and Blue Cross-Blue Shield of Greater New York (collectively referred to here as "BCBS"). The contract under which Mrs. Skoller and her son Jay, the other named plaintiff, were insured was negotiated pursuant to the Federal Employees Health Benefits Act ("FEHBA"). 5 U.S.C. § 8901 et seq., by the United States Office of Personnel Management ("OPM"), also a named defendant. The contract provided for 100% payment by the insurer for medically necessary hospitalization due to mental illness at a member hospital. Medically necessary treatment for mental illness at non-member hospitals is paid at only 80% of covered services under the 1980 contract and at 70% of covered services under the 1981 contract.

 Defendants move for summary judgment on or dismissal of all causes of action. Plaintiffs cross-move for summary judgment on their second and fifth causes of action.


 The following material facts are undisputed for the purpose of this motion. In December 1980 Jay required hospitalization for mental illness. Mrs. Skoller sought admission for Jay at New York Hospital, Westchester Division. The hospital determined that Jay should be assigned to an intermediate care unit at Westchester Division which BCBS classifies as a non-member unit, and for which Jay's medically necessary treatment would be covered at the 80% level in 1980 and at the 70% level in 1981.

 Rather than the hospital collecting directly from BCBS, it required Mrs. Skoller to pay for treatment directly and in advance. To avoid being directly responsible for these charges, Mrs. Skoller obtained admission for Jay to be treated at High Point Hospital, a non-member hospital of BCBS. Mrs. Skoller received 80% coverage for Jay's hospitalization from December 13, 1980 until January 1, 1981 and 70% coverage from January 1, 1981 until July 1, 1981, the date on which BCBS determined that further in-patient treatment was no longer medically necessary.

 Plaintiffs claim, inter alia, that they should have received full 100% basic benefits for Jay's hospitalization. Defendants, on this motion, contend that plaintiffs must first seek OPM review of their claims of coverage, and alternatively, that all of plaintiffs' claims be either dismissed or summarily adjudged against plaintiffs on the merits.


 A. Primary jurisdiction and exhaustion of administrative remedies.

 BCBS argues that under the doctrines of primary jurisdiction and exhaustion of administrative remedies, plaintiffs must seek OPM review of their claims before resorting to this court. Plaintiffs respond that these doctrines are not jurisdictional, but within the discretion of the trial court, *fn1" and that the appalication of neither is necessary or appropriate in this case.

 The doctrine of primary jurisdiction is applicable if the law clearly requires it; *fn2" if the issue involved is so complex that application of the agency's particular expertise will aid in the court's decision, see, e.g., Far East Conference v. United States, 342 U.S. 570, 96 L. Ed. 576, 72 S. Ct. 492 (1952); if resort to the agency will materially expedite resolution of the dispute; or if uniformity in the application of a legislative scheme is required, see, e.g., Texas & Pacific R. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 51 L. Ed. 553, 27 S. Ct. 350 (1907); and United States v. Philadelphia National Bank, 374 U.S. 321, 10 L. Ed. 2d 915, 83 S. Ct. 1715 (1963). But cf. Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 48 L. Ed. 2d 643, 96 S. Ct. 1978 (1976).

 A fair reading of the enabling legislation and administrative regulations pursuant to the FEHBA leads to the conclusion that the law does not clearly require primary jurisdiction in OPM. The text of 5 U.S.C. § 8902(j) and the Senate Report submitted prior to its enactment show that Congress merely wanted OPM decisions on contract interpretation, when made, to be binding on the insurance carriers with whom OPM contracts.

 Section 8902(j) provides that all contracts must require the carrier to agree to pay claims if OPM decides that the claim comes within the terms of the contract. The legislative history of subdivision (j) shows that Congress' purpose was to assure that OPM contract interpretations in individual cases be binding on the carrier "where [OPM] makes a determination that the covered employee . . . is entitled to the benefit under the terms of the contract." S. Rep. No. 93-511, 93d Cong., 2d Sess., reprinted in 1974 U.S. Code Cong. & Ad. News 2755, 2757 (emphasis added). The statute requires that carriers "agree to pay" claims in individual cases "if [OPM] finds that the employee is entitled thereto under the terms of the contract." 5 U.S.C. § 8902(j) (emphasis added). Nowhere did Congress require that OPM make such a determination; it only required that such determinations be binding if OPM did in fact make them.

 While OPM's own regulations, 5 CFR § 890.105, provide that an employee "may make a written request to OPM . . . for a review to determine whether the plan's denial is in accord with the terms of OPM's contract with the carrier of the plan", the regulatory language is clearly permissive. Moreover, 5 CFR § 890.107 expressly provides for actions at law against the carrier of the health plan to recover on claims for health benefits. In sum, neither Congress nor OPM has manifested any intent to make OPM ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.