STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SHARON LETT,

Petitioner,

vs.

DEPARTMENT OF MANAGEMENT SERVICES, DIVISION OF STATE GROUP INSURANCE,

Respondent.

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) Case No. 02-4560

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RECOMMENDED ORDER

On January 16, 2004, a formal hearing was held pursuant to notice in the above case by Stephen F. Dean, assigned Administrative Law Judge of the Division of Administrative Hearing, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Sharon Lett, pro se

240 Starmount Drive Tallahassee, Florida 32303

For Respondent: Sonja P. Mathews, Esquire

Department of Management Services Office of the General Counsel 4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950 STATEMENT OF THE ISSUE

Whether the surgery to correct complications from non- covered cosmetic surgery are covered under the State of Florida self-insured health plan?

PRELIMINARY STATEMENT

By letter dated September 27, 2002, the Division of State Group Insurance (DSGI) notified Petitioner, Sharon Lett, that her request for pre-approved medical benefits under the State Employees' Preferred Provider Organization health plan had been denied. She was advised that this was a final denial, and she could request a formal hearing on the issue.

Lett made a timely request for a hearing, and the matter was forwarded on November 22, 2002, to the Division of Administrative Hearings to conduct the formal hearing. On December 6, 2002, a formal hearing was noticed for February 14, 2003; Respondent moved to continue that hearing. The matter was eventually reset for hearing on September 22, 2003; however, Respondent also moved to continue that hearing. The formal hearing was re-scheduled for January 16, 2004, and heard as noticed.

At the hearing, Petitioner testified in her own behalf, and introduced Petitioner's Exhibits 1, 2, and 3. Respondent presented the testimony of Dr. Stephen Singer, M.D., and Melody Bartel. Respondent's Exhibits 1 through 7 were introduced and received into the record. The 1986 Benefits Document and the 2000 Benefits Document were filed late at the request of the undersigned, and received into the record as Judge's Exhibits 1 and 2, respectively.

Both parties submitted proposed findings that were read and considered.

FINDINGS OF FACT

1. Sharon Lett, Petitioner, was initially hired by the State of Florida on October 1, 1986, and began participating in the State's self-insured health plan known as the State Employees' Preferred Provider Organization Plan, or State PPO Plan. Pre-existing conditions were covered after 365 days.

2. In June 1985, Lett had bilateral silicone breast implants placed under the pectoral muscles. This occurred before she was covered under any of the state-sponsored health insurance plans.

3. The implant surgery was performed for purely cosmetic reasons.

4. Lett continued to work for the State until her retirement and was covered under the State's health insurance plan. Upon her retirement she continued her coverage under the State PPO Plan.

5. In 1997, while covered by the plan, Lett sought medical intervention for problems related to the implants. She had concerns about the implants leaking and there were indications in the form of "lumps" and x-ray images which indicated the implants were leaking.

6. There are some clinical studies which indicate that leaking implants are a potential health problem.

7. The "lumps" and leakage decrease the ability to properly diagnose breast cancer. For patients who have a higher risk for breast cancer, these difficulties in diagnosis place the implanted patients at greater risk.

8. Lett is diagnosed as being at greater risk for breast cancer. Both of her implants have leaked.

9. Lett sought removal of the implants beginning in 1997. The State's PPO Plan has denied approval of the surgical procedure to remove the implants because the implant surgery was originally for cosmetic purposes. The latest denial was by letter dated September 27, 2002.

10. The Division of State Group Insurance (DSGI) is responsible for the management of the State's group insurance programs, to include the PPO Plan.

11. The State's PPO Plan is administered under contract by Florida Blue Cross and Blue Shield.

12. In support of her latest request for payment for the surgery to remove the implants, Lett provided DSGI the following:

    1. Medical Report of Marguerite Barnett, M.D., (Respondent's Exhibit 4), dated May 23, 2002.

       
       

    2. Clinical Record Progress Notes by Frank

       B. Vasey, M.D., for visit on April 15, 2002.

       
       

13. Lett also provided a diagnostic report by Mary E. Swain, M.D., dated June 1, 2000.

14. The DSGI agrees that the reports of Drs. Barnett and Vasey accurately describe Petitioner's medical condition and accurately identify the etiology of the condition that necessitates the surgery Petitioner seeks.

15. At the time Lett initially enrolled in the State PPO Plan, the benefits document in effect was State of Florida Employees Group Health Self Insurance Plan Benefit Document, as Amended on October 1, 1986.

16. Section VII, Exclusions, of the 1986 Benefits Document provides:

    Services for cosmetic surgery or treatment unless the result of a covered accident as provided in Subsection VIII.A. However, cosmetic surgery is a covered service if it is:

    
    

    1. in connection with the correction of a congenital anomaly for an eligible dependent born while family coverage is in force and performed while the Plan is in force,

       
       

    2. a medically necessary procedure in the correction of an abnormal bodily function, or

       
       

    3. for reconstruction to an area of the body which has been altered by the treatment of a disease, provided such alteration occurred while the insured was covered under the Plan.

    
    

17. Section VIII, Limitations, of the 1986 Benefits Document provides:

    The following limitations shall apply under the Plan:

    A. Cosmetic surgery or treatment necessary for the repair or alleviation of damage to an insured is covered by the Plan if such surgery or treatment is the result of an accident sustained while the insured is covered under the Plan and actually performed while the Plan is in force, except as provided under Section XIII and XIV of this Benefit Document.

    
    

18. Section XIII deals with termination of an insured's coverage and is not applicable here. Section XIV deals with termination of the program and is not applicable here.

19. At the time Lett requested approval for the surgery to remove the implants, the benefits document in effect was State Employees' PPO Plan Group Health Insurance Plan Booklet and Benefit Document effective January 1, 2000 (hereafter, 2000 Benefits Document).

20. The 2000 Benefits Document states regarding services not covered by the plan that cosmetic surgery is not covered unless it is:

    1. A result of a covered accident if the accident happens and the surgery or treatment is performed while the person is covered by this health insurance plan,

       
       

    2. For correction of a congenital anomaly for an eligible dependent born while the employee has family coverage and performed while the dependent is covered by this health insurance plan,

       
       

    3. A medically necessary procedure to correct an abnormal bodily function,

    4. For reconstruction to an area of the body that has been altered by the treatment of a disease, provided the alteration occurred while the person was covered by this health insurance plan,

       
       

    5. For breast reconstructive surgery and the prosthetic devices related to a mastectomy. "Mastectomy" means the removal of all or part of the breast for medically necessary reasons as determined by a licensed physician, and "breast reconstructive surgery" means surgery to reestablish symmetry between the two breast, . . .

       
       

21. Complications resulting from non-covered services, except complications of pregnancy defined on pages 49-50, are excluded from coverage generally. See 2000 Benefit Document, page 31, paragraph 53.

22. It is noted that the 1986 Benefit Document does not have a provision similar to that cited in paragraph 21, above. Under the 1986 Benefit Document, cosmetic surgery would not have been covered, but surgery necessary to address complications from non-covered services was not limited or excluded. The problems suffered by Lett did not arise until after the time limit excluding pre-existing conditions had expired or run.

    CONCLUSIONS OF LAW

    
    

23. The Division of Administrative Hearings has jurisdiction pursuant to Section 120.57, Florida Statutes.

24. Petitioner has the burden of proof to show an entitlement to coverage under the State's health insurance plan(s).

25. There is some dispute over whether Petitioner's condition makes it medically necessary to remove the breast implants. Having reviewed the reports provided from the various doctors, and notwithstanding the testimony of Respondent's expert, it is concluded that surgery to remove the implants is medically necessary because of the leaking implants and the impact of the leakage on Petitioner's health directly and the complications presented by the leakage in diagnosing breast cancer.

26. This raises the legal argument for denying coverage based upon the provisions of paragraph 53 on page 31 of the 2000 Benefit Document which provides that complications resulting from non-covered services, except complications of pregnancy defined on pages 49-50, are excluded from coverage generally.

27. Both the 1986 and 2000 Benefit Documents exclude cosmetic surgery from covered services. The cited provision of the 2000 Benefit Document would exclude complications from cosmetic surgery. However, the 1986 Benefit Document did not have a similar exclusion for complications arising from non- covered services. Therefore, had she presented her claim after pre-existing conditions were covered and prior to the effective date of the 2000 Benefit Document, they would have been addressed under the 1986 benefits agreement. Treatment for the complications that arose from non-covered cosmetic surgery would not have been covered under the terms of the 2000 agreement.

28. The conditions of coverage under the health plan ran from year to year. Each year changes were permitted in the terms of coverage.

29. The narrow legal question is whether Petitioner's situation is governed by the health insurance coverage in effect when she came to work, or the health insurance coverage that went into effect in 2000?

30. The answer is governed by general contract law. An employer can alter the terms of an employment contract prospectively. See Recio v. Kent Security Services, Inc., 727 So. 2d 320, (3d DCA-1999). Each year, the State has the right to alter and frequently does alter the price paid for

    health insurance coverage, co-payments for medical service and drug purchases, and similar terms and conditions. In this case, the State altered the terms of the existing health insurance contract in 2000 to exclude payment for surgery to correct complications from non-covered services. Under general contract law, the employer has the right to change the terms and conditions of insurance benefits provided as "welfare" benefits to employees. The right to change such contracts for retirees has been confirmed also in a line of Employee Retirement Income Security Act (ERISA) cases which have held that welfare benefits to retirees do not vest and are subject to change by the employer. See Messmer v. Xerox Corporation, 139 F. Supp. 2d 398, (2001, US District Court, W.D. New York).

31. Therefore, the State was permitted prospectively to alter the terms and conditions of health coverage annually. The 2000 exclusion is applicable and precludes payment for surgery to correct complications from non-covered services. The decision of the Agency should be confirmed.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions of law it is

RECOMMENDED:

That Petitioner's Petition be dismissed.

DONE AND ENTERED this 27th day of February, 2004, in Tallahassee, Leon County, Florida.

S

STEPHEN F. DEAN

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 27th day of February, 2004.

COPIES FURNISHED:

Sharon Lett

240 Starmount Drive Tallahassee, Florida 32303

Sonja P. Mathews, Esquire Department of Management Services Office of the General Counsel 4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

William Simon, Secretary Department of Management Services 4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

Alberto Dominguez, General Counsel Department of Management Services 4050 Esplanade Way

Tallahassee, Florida 32399-0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 02-004560

Orders for Case No: 02-004560