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MARLENE HARSH vs. DEPARTMENT OF ADMINISTRATION, 88-005648 (1988)

Court: Division of Administrative Hearings, Florida Number: 88-005648 Visitors: 24
Judges: STUART M. LERNER
Agency: Department of Management Services
Latest Update: Apr. 18, 1989
Summary: State employee did not meet burden of showing that state should be estopped from denying insurance coverage based on promissory estoppel
88-5648

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS


MARLENE HARSH, )

)

Petitioner, )

)

vs. ) CASE NO. 88-5648

) DEPARTMENT OF ADMINISTRATION, )

)

Respondent. )

)


RECOMMENDED ORDER


Pursuant to notice, a formal hearing was conducted in this case on March 31, 1989, in Fort Lauderdale, Florida, before Stuart M. Lerner, a duly designated Hearing Officer of the Division of Administrative Hearings.


APPEARANCES


For Petitioner: Robert Orovitz, Esquire

12th Floor One Datran Center 9100 South Dadeland Blvd.

Miami, Florida 33156


For Respondent: Stan Danek, Esquire

435 Carlton Building Tallahassee, Florida 32399-1550


INTRODUCTION


By letter dated September 20, 1988, the Department of Administration informed Marlene Harsh of its intent to deny a claim for benefits she had made under the State of Florida Group Health Insurance Plan to cover certain expenses incurred as a result of the hospitalization of her daughter. On or about October 10, 1988, Harsh submitted a petition to the Department in which she requested a hearing on the matter. The case was referred to the Division of Administrative Hearings for the assignment of a hearing officer on November 17, 1988.


At hearing, Harsh presented her own testimony as well as that of Peg Mitchell, the Assistant Business Manager of the hospital where Harsh's daughter had been treated. William Seaton, the State Benefits Administrator, was the Department's lone witness. The Department also offered six exhibits into evidence, all of which were admitted. Harsh did not offer any exhibits into evidence.


On April 10, 1989, Respondent filed its proposed findings of fact and conclusions of law. All of Respondent's proposed findings of fact, with the exception of proposed finding of fact 11 which has been rejected because it is unnecessary, have been accepted and incorporated in this Recommended Order in substance, although not necessarily repeated verbatim. Harsh has not submitted

any post-hearing pleadings. No transcript of the March 31, 1989, hearing has been filed.


FINDINGS OF FACT


Based on the evidence and stipulations received at hearing, the Hearing Officer makes the following findings of fact:


  1. Marlene Harsh is now, and has been at all times material herein, an employee of the State of Florida enrolled in the State Group Health Insurance Plan with family coverage.


  2. The benefits of the Plan and its limitations and exclusions are set forth in a Benefit Document, a copy of which is furnished to the personnel office of every state agency. Subsection VII. L. of the Benefit Document excludes the following services and supplies from the Plan's coverage:


    Services and supplies provided by a specialty institution or residential facility except as provided in accordance with Subsection II. G.


    Subsection II. G. provides as follows:


    Covered Specialty Institution or Residential Facility Services:

    Eighty percent (80%) of the reasonable charge by a licensed specialty institution or residential

    facility for covered inpatient rehabilitative services related to alcoholism or drug addiction shall be paid by the Plan, subject to the following:

    1. coverage shall only include an insured

      employee and requires that employee's treatment in such institution be requested by the employing agency and approved by the

      Department of Administration;

    2. payment shall not be made for more than thirty-one (31) inpatient days of treatment during any calendar year;

    3. payment for room and board shall be as provided under Paragraph II. A. 1


  3. Enrclled employees are not given their own individual copies of the Benefit Document. Instead, they receive a brochure which summarizes in an easily understood fashion the provisions of the Plan, including the exclusion contained in Subsection VII. L. of the Benefit Document relating to speciality institutions. Harsh received a copy of this brochure prior to incurring the medical expenses at issue in the instant case, but failed to read it and therefore was unaware of its contents.


  4. The State of Florida has contracted with Blue Cross/ Blue Shield to administer the Plan. Among Blue Cross/Blue Shield's contractual responsibilities is the issuance of Pre-admission and Hospital Stay Certifications at the request of insured employees seeking elective hospital admission for themselves or their covered dependents. In performing this task, Blue Cross/Blue Shield simply determines the appropriateness of the setting for treatment and, if appropriate, a reasonable length of stay, without making any determination as to whether the costs associated with the stay will be covered

    by the Plan or will be subject to its limitations and exclusions. Blue Cross/ Blue Shield representatives, acting on instructions given by William Seaton, a State of Florida employee who holds the position of State Benefits Administrator, routinely so advise those requesting Pre-admission and Hospital Stay Certification when they issue the requested Certification.


  5. Mary Merkel is Harsh's daughter. In the spring of 1987, Harsh was told by Jennifer Burke, a counselor at the Starting Place, a facility run by the Florida Department of Health and Rehabilitative Services, that Merkel was suffering from depression and was in need of treatment. Following Burke's advice, Harsh sought to have her daughter, who was 15 or 16 years of age at the time, admitted to CPC Fort Lauderdale Hospital, which is a specialty institution. Before doing so, however, Harsh asked Burke, who was a former employee of the Hospital, to find out for her whether the cost of her daughter's hospitalization would be covered by her insurance. Burke agreed to make such an inquiry on Harsh's behalf. She told Harsh that she would speak with someone from the Hospital and have that person contact Harsh.


  6. Tim Paquette is the Hospital's admitting coordinator. It is his responsibility to verify that patients seeking admission to the Hospital are covered by insurance. When providing information to Paquette or representatives of other health care providers, insurors typically give a disclaimer that they are not guaranteeing payment by disclosing such information, a practice which was followed in the instant case. See Section 90.406, Florida Statutes. ("Evidence of the routine practice of an organization, whether corroborated or not and regardless of the presence of eyewitnesses, is admissible to prove that the conduct of the organization on a particular occasion was in conformity with the routine practice").


  7. According to the credible testimony of Peg Mitchell, the Hospital's Assistant Business Manager and its records custodian, the Hospital's records reflect that Paquette telephoned Blue Cross/ Blue Shield and was advised that Harsh was insured under the State Group Health Insurance Plan which afforded her 80%/31-day coverage with respect to charges by specialty institutions. The records themselves, however, were not offered into evidence and neither Paqette, the Blue Cross/Blue Shield employee to whom he spoke, nor anyone who overheard their conversation testified at hearing.


  8. Harsh subsequently received a telephone call from Paquette's colleague, Steve Barlow. Barlow told Harsh that she was "covered" and that her daughter could be admitted "right away." A "lady" from Blue Cross/Blue Shield also contacted Harsh concerning this matter and, to use the words employed by Harsh, "said it was all right."


  9. Harsh's vague account of this conversation was the only evidence adduced at hearing regarding what was said, other than the evidence concerning Blue Cross/ Blue Shield's routine business practices. The latter evidence establishes that Harsh was told, in conformity with this practice, that no determination had been made as to whether her daughter's hospitalization was within the scope of her insurance coverage. See Section 90.406, Florida Statutes.


  10. Based on her conversations with Barlow and the "lady" from Blue Cross/Blue Shield, Harsh erroneously believed that her insurance would pay for her daughter's hospitalization at CPC Fort Lauderdale Hospital. She therefore had her daughter admitted to the hospital at 6:30 a.m. on April 2, 1987. The admitting diagnosis was depression. Had Harsh known that her daughter's stay at

    the hospital would not be covered by her insurance she would not have had her admitted.


  11. On April 3, 1987, Blue Cross/ Blue Shield sent Harsh a Pre-admission and Hospital Stay Certification letter which read as follows:


    Thank you for cooperating with the Preadmission and Hospital Stay Certification component of your health insurance coverage. As you know, this is one mechanism which enables us to work together to monitor health care costs and make available high quality care. It should be noted that Preadmission Certification is only a determination of the appropriateness of the location of service and does not necessarily indicate that coverage is available under your benefit contract, or that payment will be made by Blue Cross and Blue Shield of Florida for the services provided. All services rendered are still subject to the limitations and exclusions stated in your benefit contract.


    Your physician indicated your admission to the hospital was of an urgent or emergency nature. While Preadmission Certification does not apply to an admission of this type, the HOSPITAL STAY CERTIFICATION component of your benefit package does apply. Based on the medical information obtained on your admission, your stay in the hospital is CERTIFIED FOR 06 DAYS. If your stay should warrant additional days in the hospital, beyond the certified days, your hospital and/or physician will contact Blue Cross and Blue Shield of Florida, and we will review your condition based on medical criteria established by physicians in your community area, for an extension of the approved days.


    Your physician and hospital have been notified of this certification.

    However, the certification in this letter is valid only if you are eligible for benefits under your benefit contract on the dates that the services are rendered and maintain such eligibility until such services have been completed. We appreciate your efforts in containing the cost of quality health care.

  12. On April 27, 1987, Blue Cross's/ Blue Shield sent Harsh a second Pre- admission and Hospital Stay Certification letter. It read as follows:


    Thank you for cooperating with the Preadmission and Hospital Stay Certification component of your health insurance benefit coverage. The hospital admission has been CERTIFIED FOR 021 DAYS. While the initial days assigned to your hospital stay may have been less than those noted here your condition warranted additional inpatient days in the hospital. This letter is being sent to you for your records should you have any questions on the Hospital Stay Certification component of your health insurance benefit package.

    Your physician and hospital have been notified of the total number of days certified for your admission. However, this certification is valid only if you are eligible for benefits under your benefit contract on the days that services are rendered and maintain such eligibility until the services are completed. ALL SERVICES RENDERED ARE STILL SUBJECT TO THE LIMITATIONS AND EXCLUSIONS STATED IN YOUR BENEFIT CONTRACT.


    We appreciate your efforts in containing the cost of quality health care.


    Harsh received both of these letters, but did not review them carefully. Had she done so she would have realized, as the letters clearly stated, that Blue Cross/ Blue Shield, was not representing to her that "coverage [was] available under [her] benefit contract or that payment [would) be made by Blue Cross/Blue Shield of Florida for the services provided" her daughter at the Hospital.

    Harsh made no effort following her receipt of these letters to verify that she had such coverage and that Blue Cross/Blue Shield would therefore pay for the services provided her daughter.


  13. Merkel was discharged from CPC Fort Lauderdale Hospital on April 30, 1989. Harsh was billed by the Hospital $9,003.83 for her daughter's stay. She has unsuccessfully sought to have Blue Cross/Blue Shield pay the bill.


    CONCLUSIONS OF LAW


  14. The Department of Administration has been delegated by the Legislature the authority to "initiate and supervise" the State Group Health Insurance Plan. Section 110.123(5)(a), Fla. Stat.


  15. Pursuant to this legislative delegation of authority, the Department has prepared a Benefit Document setting forth the benefits, limitations and exclusions of the Plan. Furthermore, in accordance with Section 110.123(5)(c), Florida Statutes, it has contracted with Blue Cross/Blue Shield to act as its agent in administering the Plan.

  16. Subsection VII. L. of the Benefit Document provides that services and supplies furnished by a specialty institution in connection with the treatment of an eligible dependent are not covered by the Plan. CPC Fort Lauderdale Hospital is a speciality institution. Therefore, the services and supplies it provided Harsh's daughter are excluded from the Plan's coverage.


  17. Harsh does not contend otherwise. Instead, she argues that the Department should be estopped from denying coverage under Subsection VII. L. because of pre-admission representations purportedly made by Blue Cross/Blue Shield personnel that her insurance would pay for such services and supplies.


  18. As a general rule, the doctrine of estoppel may be used defensively to prevent a forfeiture of insurance coverage, but not affirmatively to create or extend coverage. An exception to the general rule is made where the doctrine of promissory estoppel applies, that is, where there has been a representation regarding future conduct rather than an existing fact. Under such circumstances, insurance coverage may be created or extended where the failure to do so would result in fraud or other injustice. "Such injustice may be found where the promisor reasonably should have expected that his affirmative representations would induce the promisee into action or forbearance substantial in nature, and where the promisee shows that such reliance thereon was to his detriment." Crown Life Insurance Company v. McBride, 517 So.2d 660, 661-62 (Fla. 1987).


  19. The burden of proving that the doctrine of promissory estoppel should apply to extend or create insurance coverage is on the party seeking the benefit of such coverage. "Before an estoppel can be raised there must be certainty and the facts necessary to constitute it cannot be taken by argument or inference, nor supplied by intendment. They must be clearly and satisfactorily proved." Jarrad v. Associates Discount Corporation, 99 So.2d 272, 277 (Fla. 1957). This is particularly true where the doctrine is sought to be invoked against the state. See Department of Environmental Regulation v. C.P. Developers, 512 So.2d 258, 262 (Fla. 1st DCA 1987) ("equitable estoppel may be invoked against the state only in rare situations").


  20. Harsh did not meet this burden in the instant case. She failed to make a sufficient showing that any Blue Cross/Blue Shield representative, acting on behalf of the State of Florida, had indicated to her, either directly or through an agent of the Hospital, without giving any disclaimer, that her insurance would pay for the services and supplies provided to her daughter at CPC Fort Lauderdale Hospital. Absent clear and satisfactory proof that such an unequivocal promise had been made, Harsh's estoppel argument, and thus her claim for benefits based thereon, must be rejected.


RECOMMENDATION

In view of the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Administration enter a final order

denying the instant petition filed by Marlene Harsh.

DONE and ENTERED this 18th day of April, 1989 in Tallahassee, Florida.


STUART M. LERNER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675


Filed with the Clerk of the Division of Administrative Hearings this 18th day of April, 1989.


COPIES FURNISHED:


Robert Orovitz, Esquire

12th Floor One Datran Center 9100 South Dadeland Boulevard Miami, Florida 33156


Stan Danek, Esquire

435 Carlton Building Tallahassee, Florida 32399-1550


Adis Villa, Secretary Department of Administration

435 Carlton Building Tallahassee, Florida 32399-1500


Augustus D. Aikens, Jr., Esquire General Counsel

435 Carlton Building Tallahassee, Florida 32399-1550


Docket for Case No: 88-005648
Issue Date Proceedings
Apr. 18, 1989 Recommended Order (hearing held , 2013). CASE CLOSED.

Orders for Case No: 88-005648
Issue Date Document Summary
Jul. 07, 1989 Agency Final Order
Apr. 18, 1989 Recommended Order State employee did not meet burden of showing that state should be estopped from denying insurance coverage based on promissory estoppel
Source:  Florida - Division of Administrative Hearings

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