The opinion of the court was delivered by: THOMAS C. PLATT
Joseph Scalamandre has brought this lawsuit, as Executor under the Last Will and Testament of the late Carolee Scalamandre, alleging violations of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. Specifically, Mr. Scalamandre challenges, under 29 U.S.C. § 1132, the denial of health benefits by defendants Oxford Health Plans (N.Y.), Inc., Oxford Health Insurance, Inc., and Oxford Health Plans, Inc. (hereinafter referred to collectively as "Oxford") for expenses incurred in connection with a procedure known as High Dose Chemotherapy with Autologous Bone Marrow Transplant ("HDC/ABMT") performed on Mrs. Scalamandre by physicians at Montefiore Medical Center.
After a five-day trial, during which the Court heard the testimony of the principal actors at Oxford, among others, and having evaluated the witnesses' credibility, the exhibits received in evidence, including the operative documents evidencing Mrs. Scalamandre's medical benefits contract, and the parties' proposed findings of fact and legal contentions, the Court finds that plaintiff is entitled to judgment in his favor.
A. THE MEDICAL BENEFITS CONTRACT
In 1991, plaintiff Joseph Scalamandre and the late Carolee Scalamandre were husband and wife living together in Freeport, New York. Joseph Scalamandre was and still is vice president of Peter Scalamandre & Sons, Inc., a corporation incorporated and existing under the laws of the State of New York.
In October of 1989, Oxford issued a medical benefits contract to Peter Scalamandre & Sons, Inc., that covered Carolee Scalamandre. Called the "Freedom Plan," this medical benefits contract emphasizes the fact that it offers broad health care coverage while allowing its members to receive health care from the doctor, hospital, or health care provider of their choice. The Oxford Freedom Plan Member Handbook at 3.
The operative documents constituting the medical benefits contract are plaintiff's Exhibit 4 in Evidence, The Oxford Freedom Plan Member Handbook (hereinafter The Handbook) and Plaintiff's Exhibit 5 in Evidence, the Oxford Group Enrollment Agreement - New York (hereinafter the "Group Enrollment Agreement").
The Group Enrollment Agreement is the contract, effective January 1, 1990, between Oxford Health Plans (NY), Inc. and plaintiff's corporation and employer, Peter Scalamandre & Sons, Inc. It specifies that Oxford Health Plans (NY), Inc. "shall provide and/or arrange for medical and hospital services" in accordance with the terms and provisions of the Group Enrollment Agreement and the other contracts issued in conjunction therewith to members enrolled thereunder. The Group Enrollment Agreement, in essence, delineates the legal duties and responsibilities of Oxford Health Plans (NY), Inc. and Peter Scalamandre & Sons, Inc., including inter alia, the costs of coverage. It is undisputed that both Mr. and Mrs. Scalamandre were members enrolled under the Group Enrollment Agreement through Peter Scalamandre & Sons, Inc.
The Handbook, which is not merged into the Group Enrollment Agreement but is incorporated therein, details the legal obligations between Oxford and plaintiff. It consists of fifty-eight consecutively numbered, printed pages in a bound booklet, divided into four parts: (1) a Plan Summary, (pp. 5 - 11), including instructions on how to use the Freedom Plan, (p. 4); (2) an HMO Group certificate, (pp. 12 - 29); (3) a Supplemental Freedom Plan Certificate, (pp. 31 - 56); and (4) instructions on how to file an Oxford claim form, (p. 57). It is the terms of the Supplemental Freedom Plan certificate and certain provisions in the Plan Summary which plaintiff claims Oxford breached.
In the first part of the instructions section, The Handbook summarizes "How to Use the Freedom Plan" by stating:
You also may seek medical care outside of the Oxford HMO. This allows you to visit any physician, specialist, hospital or health care provider for medical attention. Coverage will be provided by an Oxford subsidiary company, Oxford Health Insurance, Inc. Non-HMO coverage will be similar to conventional insurance - all charges are subject to fee schedule limitations, and benefits will be paid after the applicable deductible and coinsurance requirements are met.
On the third page of the Plan Summary and instructions, all insureds are specifically advised that:
Even if you choose to seek medical care from non-Oxford providers, you must still comply with Oxford's Medical Review Guidelines. If you are advised by your physician to undergo elective surgery or be admitted to the hospital, you must first contact Oxford for pre-authorization. We recommend at least 14 days advance notice. Certain procedures require a second opinion. An Oxford Health Services coordinator will notify you at the time you call for pre-authorization if a second opinion is required. The second opinion will be rendered by a board certified specialist designated by Oxford. This specialist has met all of Oxford's credentialling requirements and has no financial stake in Oxford or the recommended procedure . . . Failure to obtain authorization in advance or failure to comply with Oxford's medical review guidelines will result in reduced or denied benefits.
Part 4 of the Supplemental Freedom Plan Certificate provides with respect to "Pre-Determination of Medical Treatment":
For the maximum benefits that are described in DETERMINATION OF BENEFITS (and that are later referred to as 'Medical Director-Certified Benefits' or simply, 'Certified Benefits') to be payable, charges for certain Non-HMO Expenses must be submitted to and certified by the Medical Director, in the following manner.
1. With respect to any Hospital confinement, Certified Benefits will be payable for all Covered Expenses incurred during the period of confinement that occurs under any of the following circumstances:
a) for any non-emergency Hospital confinement, if, at least 14 days in advance of any such confinement, a statement of the reason for and the anticipated period of Hospital confinement is submitted to and certified by the Medical Director;
Id. at 46. The Supplemental Freedom Plan Certificate also specifically provides under "Supplemental Medical Expense Benefits: Covered Expenses":
Covered Expenses are the following charges, and benefits payable for such charges are subject to all the terms of this Certificate.
6. Charges for the following medical services and supplies:
Id. at 49. It further lists 44 specific non-covered expenses, none of which is applicable here. Id. at 50 - 52. Moreover, the Supplemental Freedom Plan Certificate lists 28 separate surgical procedures when a second opinion is "necessary," none of which is applicable here. Id. at 37 - 38. Finally, it states that a "Non-certified Occurrence" is:
Each instance in which the Medical Director was not contacted but should have been contacted in accordance with the terms of PRE-DETERMINATION OF MEDICAL TREATMENT.
B. MRS. SCALAMANDRE'S ILLNESS
In 1988, Carolee Scalamandre contracted metastatic breast cancer, which gradually spread to her lymph nodes, lungs and liver. Her treating physician, Ronald Bash, M.D., treated Mrs. Scalamandre by administering rapid sequencing of chemotherapy every three weeks. By July of 1991, her estimated life expectancy was only eight weeks. In an effort to extend this period, Dr. Bash recommended that Mrs. Scalamandre see Peter H. Wiernik, M.D., the chairman of the Department of Medical Oncology at the Albert Einstein College of Medicine,
to explore the possibility of undergoing HDC/ABMT. Upon this recommendation, Mrs. Scalamandre was examined by Dr. Wiernik, who confirmed that HDC/ABMT might indeed be the best treatment for Mrs. Scalamandre.
HDC/ABMT is often an effective method of treating metastatic breast cancer. The response of cancer cells to chemotherapy is proportional to the dose applied, so in order to achieve favorable results in the treatment of breast cancer it is often necessary to employ high dose chemotherapy. Beyond certain doses, however, chemotherapy can destroy the patient's bone marrow and in turn impair the immune system and make the patient vulnerable to the most minute infections. Therefore, in order to be able to employ high dose chemotherapy without endangering the patient, an Autologous Bone Marrow Transplant is performed, where the surgeon surgically extracts about one liter of bone marrow from the patient's lower back, preserves the bone marrow, administers the high dose chemotherapy, and then intravenously introduces the preserved bone marrow back into the patient. Ideally, within a few weeks the bone marrow regenerates while the cancer has been eradicated due to the high dose chemotherapy.
As a prerequisite to HDC/ABMT, it is ordinarily necessary for the patient to have a bone marrow biopsy in order to determine whether or not the bone marrow is healthy and free of cancer. If the biopsy reveals that the bone marrow is healthy and free of cancer, the patient may proceed with the HDC/ABMT.
In the case at bar, Mrs. Scalamandre entered Montefiore Medical Center on July 8, 1991 on an outpatient basis to have the bone marrow biopsy performed. The biopsy showed that the cancer had not spread to Mrs. Scalamandre's bone marrow, so that it was possible to proceed with the HDC/ABMT. Mrs. Scalamandre was scheduled to enter Montefiore Medical Center sometime around July 25, 1991 to begin the procedure.
Before receiving the bone marrow biopsy, the Comptroller of Peter Scalamandre & Sons, Inc., Martin McCarthy, attempted to ensure that the expenses would be covered under the Freedom Plan. As noted above, HDC/ABMT is not specifically excluded as a "non-covered expense" under the Freedom Plan. The Handbook at 50 - 52. Moreover, the treatment is a high dose form of chemotherapy, and chemotherapy is ...