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MIDPOINT SERVICE PROVIDER v. CONNECTICUT GENERAL LIFE INS.

March 28, 2001

MIDPOINT SERVICE PROVIDER, INC., PLAINTIFF,
v.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: James C. Francis IV, U.S. Magistrate Judge

MEMORANDUM AND ORDER

The plaintiff, Midpoint Service Provider, Inc. ("Midpoint"), filed this case as a breach of contract action in New York State Supreme Court, New York County. The defendant, Connecticut General Life Insurance Company ("CGLIC"), removed it to this Court pursuant to 28 U.S.C. § 1441. Because Midpoint's claim arises under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., there is federal question jurisdiction. See Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 62-64 (1987). The primary issue raised is whether, pursuant to an insurance policy issued by CGLIC, Midpoint's charges exceed the reasonable and customary fees for services rendered.

The parties consented to proceed before me for all purposes pursuant to 28 U.S.C. § 636(c), and I granted Midpoint's request to try the case solely on the papers submitted to the Court. This opinion constitutes my findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

Background

At all relevant times, Midpoint was a licensed home health care agency and a pharmacy. (Joint Pretrial Order ("PTO") at 3).*fn1 In May, June, and July 1998, Midpoint provided intravenous (IV) immunoglobulin therapy — which included drugs, nursing services, and medical supplies — to Robert Paulson at his home. (PTO at 3). Specifically, Mr. Paulson was treated with 30 grams of Gammagard per day for five consecutive days on three separate occasions. (PTO at 3). For the three treatments, Midpoint billed CGLIC, Mr. Paulson's insurance carrier, $28,408.03; $28,235.34; and $28,277.98 for a total of $84,871.35. (Compl. ¶¶ 1, 8; Midpoint Invoice covering treatment of Robert Paulson from May 4-9, 1998, June 1-5, 1998, and July 5-10, 1998 ("May Midpoint Invoice," "June Midpoint Invoice," and "July Midpoint Invoice," collectively the "Midpoint Invoices"), attached as Exh. C to Affidavit of Abraham Wax dated Aug. 8, 2000 ("Wax Aff."), included in Admin. Rec.). The great majority of the costs billed are attributable to Gammagard. (May Midpoint Invoice at 4; June Midpoint Invoice at 1; July Midpoint Invoice at 3). Of the total, Midpoint has collected $38,700.04, leaving $46,171.31 unpaid. (Compl. ¶¶ 10-11; Explanation of Benefits ("EOB") dated July 7, 1998, covering treatment received by Mr. Paulson in May and June 1998 ("July 7, 1998 EOB"); EOB dated Nov. 24, 1998, covering treatment received in May and June 1998 ("Nov. 24, 1998 EOB"); EOB dated Nov. 30, 1998, covering treatment received in July 1998 ("Nov. 30, 1998 EOB") (collectively the "EOBs"), attached as Exh. D to Wax Aff.).*fn2

Mr. Paulson assigned all claims against CGLIC to Midpoint, and on February 8, 1999, Midpoint filed suit in state court for the remaining balance. (Compl. ¶ 5). On March 22, 1999, the action was removed to federal court. (Notice of Removal dated March 22, 1999).

On October 19, 1999, the defendant submitted a survey of 80 health care providers in New York City completed by Dianna Talento. (Dianna Talento's Report dated October 19, 1999 ("1st Talento Rep."), included in Admin. Rec.). Ms. Talento had questioned them about availability of home-based IV therapy and, in particular, price information for Gammagard treatment in 1998. Of those 80 providers, 10 offered such treatment and gave her pricing information for the relevant time period.*fn3 Some time after October 19, 1999, the parties sought an administrative review of the claims based on additional evidence submitted by both the plaintiff and the defendant. After communicating with the plaintiff, the defendant directed Ms. Talento to complete another report that discussed several issues raised by the plaintiff and included price information for an additional IV therapy provider identified by Midpoint. (Report dated May 11, 2000 ("2nd Talento Rep."), included in Admin. Rec.).

Based on, among other documents, the plaintiff's responses to interrogatories, the two surveys submitted by Ms. Talento, and correspondence between the parties' attorneys, the claim service manager for CGLIC denied any additional payment to the plaintiff, finding that the payments received by Midpoint were reasonable and customary. (Letter dated June 6, 2000, from Helen Garde ("1st Garde letter") included in Admin. Rec.). Thereafter, the plaintiff and the defendant again submitted supplementary evidence, including a declaration from Ms. Talento that contained information about two more IV therapy providers, raising the number of agencies contacted who provide IV therapy to 13. (Declaration of Dianne Talento dated Sept. 14, 2000 ("Talento Decl."), included in Admin. Rec.). The claims service adjustor again refused any additional payment. (Letter dated September 15, 2000, from Helen Garde ("2nd Garde letter") included in Admin. Rec.).

Discussion

A. Standard of Review

A denial of benefits by an ERISA plan administrator is reviewed de novo by the court, "unless the benefit plan gives the administrator . . . discretionary authority to determine eligibility for benefits or to construe terms of the plan," in which case the denial is reviewed under the more deferential "arbitrary and capricious standard." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113-16 (1989); see also Miller v. United Welfare Fund, 72 F.3d 1066, 1070 (2d Cir. 1995).

Mr. Paulson's insurance policy with CGLIC excludes expenses "to the extent that they are more than Reasonable and Customary Charges." (Group Insurance Plan (the "Plan") at 52, included in Admin. Rec.). The policy further states that,

A charge will be considered as Reasonable and Customary if:

• it is the normal charge made by the provider for a similar ...

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