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C.N.S., INC. v. CONNECTICUT GEN. LIFE INS. CO.

June 23, 1998

C.N.S., INC., d/b/a COMMUNITY NURSING SERVICES, INC. and SUNRISE NURSING SERVICES, INC., Plaintiffs,
v.
CONNECTICUT GENERAL LIFE INSURANCE CO. and ALLIED SIGNAL CORP., Defendants.



The opinion of the court was delivered by: PLATT

MEMORANDUM AND ORDER

 PLATT, District Judge.

 Before this Court are cross-motions for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the reasons set forth herein, the parties' motions are granted in part and denied in part.

 BACKGROUND

 Defendant AlliedSignal, Inc. ("Allied") established medical and other benefit plans for its employees and retirees. One of those plans was the AlliedSignal Retiree Medical Plan (the "Plan"), the terms of which were stated in a document entitled Summary Plan Description ("SPD"). Gloria Steiner was a beneficiary under the Plan. In 1994, 1995 and 1996, Mrs. Steiner received nursing services from C.N.S., Inc. d/b/a Community Nursing Services ("CNS") in her Huntington home. *fn1" In return for all services Mrs. Steiner received from CNS, she assigned CNS her right to benefits under the Plan.

 In general, the Plan provided benefits for medical practitioners under contract with the Plan (called network benefits) and also provided benefits for other practitioners, not under contract with the Plan (called out-of-network benefits). CNS was not a network provider under the Plan, and the rights it obtained from Mrs. Steiner were rights to out-of-network benefits available under the terms of the Plan.

 The Plan gave the plan administrator full discretionary authority and power . . . to determine eligibility for Plan benefits, to interpret and construe the terms and provisions of the Plan, [and] to determine questions of fact and law. . . . The Plan also authorized the plan administrator to delegate its responsibilities to others, including the discretionary authority to interpret Plan terms and to determine eligibility for benefits.

 The SPD identified Allied as the Plan administrator. Pursuant to the SPD, Allied delegated certain tasks to defendant Connecticut General Life Insurance Company ("CGLIC"), including the administration of claims made for benefits under the terms of the Plan. For out-of-network benefits, the SPD provided that the Plan would pay eighty percent of the reasonable and customary rate for private duty nursing only if the nursing was both recommended by a physician and essential for the necessary care and treatment of an injury or illness. The SPD authorized the Plan administrator to regard charges as reasonable and customary if they: (1) were the normal charge used by the particular nursing service; and (2) did not exceed the normal charge made by most nursing services in the locality where the patient lived.

 The Plan identified a nurse as an R.N., L.P.N., or L.V.N., other than a member of the patient's family, who performs professional nursing services at the direction of a physician. While the Plan covered professional nursing services, it did not pay a benefit for custodial care, which the Plan defined as not skilled or marked by watching and protecting, rather than seeking to cure.

 In March 1995, the Plan, acting through CGLIC, agreed to pay CNS for its covered services at a rate of $ 55 per hour. During the litigation brought by CNS, plaintiffs' attorney and CGLIC affirmed the agreement to pay the $ 55 rate, while retaining the right to contest the balance. From approximately March 1995 through February 1997, the Plan paid CNS at the $ 55 rate for those nursing services that the Plan regarded as covered under the terms of the Plan.

 On January 3, 1997, this Court ordered the parties to perform an expedited claim procedure so that CNS and Mrs. Steiner (who was then a plaintiff) would exhaust the Plan's remedies before seeking judicial relief. The Court set deadlines for the parties to exchange documentation, submit proof in support of their claims, and to appeal and respond from any denial of the claim. The parties complied with the Court's schedule.

 Having considered CNS's submissions and other evidence, the Plan representative, Karen Welz, approved parts of the claim and denied parts. Plaintiff appealed from the partial denial and, on March 17, 1997, the Plan denied plaintiff's appeal.

 DISCUSSION

 A. Summary Judgment ...


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