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