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August 2, 2004.

ANTHONY E. ZEBROWSKI, Defendant. ANTHONY E. ZEBROWSKI, Defendant/Third-Party Plaintiff, v. UNIVERA HEALTHCARE, First Third-Party Defendant. ANTHONY E. ZEBROWSKI, Defendant/Third Party Plaintiff, v. CIGNA BEHAVIORAL HEALTH, INC., Second Third-Party Defendant.

The opinion of the court was delivered by: NEAL McCURN, Senior District Judge


This action began as a simple collection matter in Syracuse City Court. Community General Hospital ("Community") sued Anthony E. Zebrowski, defendant/third-party plaintiff in this action, for the unpaid balance on medical services rendered to him. See Affidavit of Kevin G. Horbatiuk (Dec. 30, 2003), exh. A thereto. It has mushroomed into a federal case, however, potentially implicating a federal statute, the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Id. at ¶ 2(b).


  A. Factual

  Plaintiff Zebrowski "was a covered member of the Employee Welfare Benefit Plan ("the Plan") provided by Lockheed Martin for the benefit of his [sic] qualified employees." Affidavit of Jeffrey A. Harr (Dec. 30, 2003), at ¶ 3. This was a self insured managed health care plan. Lockheed's Plan specifically excluded from coverage "services and supplies which are not medically necessary for the diagnosis or treatment of a disease or injury[.]" Id., exh. A thereto at 19 (emphasis in original).

  The second third-party defendant, CIGNA Behavioral Health Inc. ("CIGNA") was not a party to the Plan. It had a separate agreement with Lockheed Martin wherein it was "the claim administrator of the mental health insurance piece[]" of the Plan ("the CIGNA Agreement"). Id., and exh. B thereto. Under the terms of that Agreement, Lockheed delegated to CIGNA "the sole authority to make determinations on behalf of [Lockheed Martin] with respect to benefit payments under the Plan and to pay such benefits." Id. at ¶ 3(b) (emphasis added).

  "On November 17, 1998 Zebrowsk[i] was admitted to Community . . . with a diagnosis of major depression with severe recurrent psychotic features." Id. at ¶ 4 (citations omitted), and exh. C thereto at 0302; see also Affidavit in Opposition to Motion for Summary Judgement by Second Third Party Defendant Anthony E. Zebrowski (Jan. 21, 2004), at ¶ II(3). Because Zebrowski's "thought processing remain[ed] impaired[,]" and, among other things, he "had to be placed in 4-pt [four point] restraints after [he] became violent and attacked staff[,]" CIGNA authorized additional inpatient care through November 24, 1998. Harr Aff., exh. C. thereto at 0303; see also id. at 0279; and Affidavit of Anthony E. Zebrowski (Jan. 20, 2004) at ¶ III(4) (citation omitted).

  One day later, on November 25, 1998, Zebrowski's treating physician Dr. Levine was notified that Zebrowski's wife did not want him to return home. That news threw Zebrowski into a "real depression." Harr Aff., exh. C thereto at 0279 and 0303. In Dr. Levine's opinion, at that point Zebrowski could not "be trusted to be on his own[.]" Id. at 0303. Dr. Levine also noted that Zebrowski had "a history of 3 real serious attempts [at suicide]." Id. In light of the foregoing, in the discharge summary Dr. Levine stated that "[i]t was clear to [him] that this puts this man [Zebrowski] in severe risk and [Levine] could not in good conscious discharge [Zebrowski] without adequate housing and a follow-up plan in place." Id. at 0216; see also Zebrowski Aff. at ¶ II(5) (citation omitted).

  Despite the foregoing, Mr. Harr, CIGNA's Assistant Vice President, Compliance and Performance and Improvement, avers that "[c]linical documentation at that . . . time did not meet [CIGNA's] level of care guidelines for further inpatient care." Harr. Aff. at ¶ 8 (emphasis added). Nonetheless, CIGNA authorized one more day of inpatient care, through November 26, 1998, "based upon Dr. Levine's concern that Zebrowsky [sic] may harm himself over the Thanksgiving weekend." Id. (citations omitted); see also id., exh. C thereto at 0304, 0279 and 0280.

  Once Zebrowski found alternative housing on his own, he was discharged on December 11, 1998. Id., exh. C thereto at 0216. In the interim, however, CIGNA determined that after the one additional inpatient day it authorized, November 26, 1998, it would not provide Zebrowski coverage for any further inpatient stay, i.e. it was not "medically necessary." Id. at 0305. This was based upon the assessment by CIGNA's psychiatrist, Dr. Karauysuf, who found that Zebrowksi did not meet CIGNA's criteria for such a stay. More specifically, Dr. Karauysuf stated that CIGNA could not authorize any more inpatient care in the absence of such symptoms as violent threats and behavior, suicidal threats and behavior and psychosis." Id. Dr. Levine conceded that Zebrowski did not meet any of these criteria. Id. at 0305 and 0280. In advising Dr. Levine that CIGNA would not provide inpatient coverage beyond November 26, 1998, CIGNA further advised him of its "expedited appeals process[,]" and Levine stated that he "definitely want[ed] to exercise [that] right[.]" Id. at 0305; and Zebrowski Aff. at ¶ II(9) (citations omitted). Levine did not do that, however, because he thought it would be "a waste of his time[.]" Id. at 0305. Levine did agree to send Zebrowski's chart to CIGNA for a "retro" review because he was not releasing Zebrowski yet. Id. at 0305. There was no appeal at that time however because CIGNA never received any of Zebrowski's medical records. Id. at 0280.

  On December 4, 1998, while still at Community, Zebrowski contacted CIGNA himself questioning its denial of coverage for his stay there beyond November 26, 1998. Id. at 0280. Zebrowski was advised that at that point the only way for an appeal was if Community sent CIGNA his records, but again, that was never done. Id. Slightly over a year later, on December 14, 1999, CIGNA received a letter from Dr. Levine requesting an appeal. Id. at 0025 and Zebrowski Aff. at ¶ III(4). Evidently CIGNA never responded to that request. Zebrowski Aff. at ¶ III(4).

  Several years later, according to Zebrowski he again contacted CIGNA on August 15, 2001, requesting that it pay his hospital bill in its entirety. Zebrowski Aff. at ¶ III(1). A couple of months later, on October 24, 2001, Zebrowski called CIGNA to inform it that he was being sued by Community for payment. Harr Aff., exh. C thereto at 0100. Even though there had been no appeal process earlier because Zebrowski's chart was never sent to CIGNA, it agreed that he "did not get due process[.]" Id. at 0100 and 0321. Thus, even though this matter was "very old[,]" CIGNA told Zebrowski that if Community would send his chart, then CIGNA would undertake a "standard review." Id. Its review would be limited to 14 of the 23 days of Zebrowski's inpatient stay for which CIGNA had declined coverage, i.e. November 27, 1998 — December 11, 1998 Id. 0100-0101.

  On appeal, as it had previously, CIGNA stated that Zebrowski met its criteria for inpatient stay through December 3, 1998, but not after that. Id. at 0322; and Zebrowski Aff. at ¶ III (7). CIGNA denied coverage after that date through Zebrowski's actual discharge date of December 11, 1998. Id. During the next level of the appeal process CIGNA adhered to its prior decision, but it provided additional reasoning.

  CIGNA justified its denial by noting that on December 4th-7th, and on the 10th, Zebrowski was out on day passes. Id. at 0327. He also had two day passes on December 8th. Id. Zebrowski was out on supervision during that time, driving his car, and looking for housing. Id. Zebrowski acknowledges that he engaged in those activities while out on the day passes. Zebrowski Aff. at ¶ II(8).

  Not surprisingly, CIGNA observed that "[i]t was plainly documented in the hospital record that [plaintiff's] stay was extended to allow him to look for housing, per the discharge summary." Harr Aff., exh. C thereto at 0327. CIGNA thus concluded that plaintiff "was not meeting the . . . medical necessity guidelines in effect at the time on 12/4 or any of the subsequent hospital days." Id. Moreover, CIGNA further noted that because plaintiff "was simply awaiting appropriate housing, authorization of inpatient level of care [wa]s specifically excluded." Id. (citation omitted). On the basis of the foregoing, CIGNA found that it was not "medically necessary" for plaintiff to remain in Community's inpatient unit from November 27 — December 11, 1998. Accordingly, CIGNA held steadfast in its initial decision that it had no obligation to provide coverage during that time.

  B. Procedural

  The City Court collection matter between Community and plaintiff, mentioned earlier was discontinued by stipulation on November 4, 2002. Horbatiuk Aff., exh. E thereto. In early February 2003, also in Syracuse City Court, Zebrowski commenced an action as a third-party plaintiff against Univera Healthcare,*fn1 as the first third-party defendant, and against CIGNA as the second third-party defendant. Shortly thereafter CIGNA removed the case to this court. Id., exh. B thereto. On July 23, 2003, pursuant to Fed.R.Civ.P. 41(a)(1), the parties agreed to "stipulate to dismiss this action in its entirety and ...

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