STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HEALTH OPTIONS, INC., )

)

Petitioner, )

)

vs. ) Case No. 00-3480

)

DEPARTMENT OF INSURANCE, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a final hearing was held in this case on October 11, 2000, by video teleconference between West Palm Beach and Tallahassee, Florida, before Claude B. Arrington, a duly-designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Daniel Alter, Esquire

Bunnell, Woulfe, Kirschbaum, Keller, and McIntyre, P.A.

888 East Las Olas Boulevard, Suite 400 Post Office Drawer 030340

Fort Lauderdale, Florida 33303

For Respondent: William Fred Whitson, Esquire

Department of Insurance Division of Legal Services

200 East Gaines Street 612 Larson Building

Tallahassee, Florida 32399-0333

STATEMENT OF THE ISSUE

Whether the subject Endorsement to an HMO benefit contract language is ambiguous and, if so, whether the subject subscriber is entitled to additional benefits because of the ambiguity.

PRELIMINARY STATEMENT

Petitioner is a duly-licensed health maintenance organization (HMO) that is subject to regulation by Respondent. On December 31, 1999, T. C., an eligible dependent 1/ of a subscriber, suffered an injury that required surgery. T. C. required physical therapy rehabilitation services on an outpatient basis after he was released from the hospital on January 10, 2000, and he continued to require rehabilitation services after April 13, 2000. Petitioner asserted that T. C. exhausted his physical therapy rehabilitation benefits on

April 13, 2000, and it declined to provide such benefits for services received by T. C. after that date.

At issue in this proceeding is whether an endorsement (Endorsement) to Petitioner's benefits contract in September 1999 created an ambiguity and, if so, whether the existence of that ambiguity entitles T. C. to rehabilitation benefits beyond April 13, 2000. If it is determined that T. C. is entitled to rehabilitation services beyond April 13, 2000, it must also be determined how long he will be entitled to such services.

On April 26, 2000, T. C.'s mother appealed Petitioner's denial of coverage April 13, 2000, to the Statewide Subscriber and Provider Assistance Panel (Panel) pursuant to Petitioner's contract and to Section 408.7056, Florida Statutes.

On June 12, 2000, the Panel found the Endorsement relied upon by Petitioner to decline benefits beyond April 13, 2000, to be ambiguous and recommended that Respondent require Petitioner to pay rehabilitation benefits for T. C. for an additional period of 30 days beyond April 13, 2000.

Thereafter the mother sought clarification of the Panel's findings and recommendations.

On July 6, 2000, the Panel adopted an amended recommendation that reaffirmed its initial finding that the Endorsement is ambiguous and recommended that Respondent require Petitioner to provide benefits for T. C. through July 6, 2000.

In addition, the Panel recommended that Respondent require Petitioner to continue coverage of benefits beyond July 6, 2000, so long as it was determined that continued therapy would result in significant improvement for T. C.

On July 24, 2000, Respondent adopted the Panel's amended recommendation and ordered Petitioner to provide benefits to T.

C. consistent therewith. Petitioner timely challenged Respondent's order, the matter was referred to the Division of Administrative Hearings pursuant to Section 120.574, Florida

Statutes, and this proceeding followed. Pursuant to Section 120.574(2)(f), Florida Statutes, a Final Order is to be entered by the Administrative Law Judge.

At the final hearing, the parties offered 10 Joint Exhibits, each of which was accepted into evidence. In addition, the parties stipulated to certain facts, which have been accepted by the undersigned and incorporated as findings in this Final Order to the extent the stipulated are found to be relevant to the issues presented. Petitioner presented the testimony of Michael Sutton, the product manager for the subject benefits contract. 2/ Respondent presented the testimony of

T. C.'s mother.

A Transcript of the proceedings was filed on October 26, 2000. Each party filed a Proposed Recommended Order [sic], which has been duly considered by the undersigned in the preparation of this Final Order.

FINDINGS OF FACT

1. At all times pertinent to this proceeding, T. C. was enrolled as a participant in the group HMO contract issued by Petitioner to a construction company for the benefit of its employees and their eligible dependents.

2. The HMO contract consisted of a Group Health Services Agreement, a Member Handbook, and any endorsements to either document. The Member Handbook and an Endorsement to the Member

   Handbook in September 1999 are the documents pertinent to this proceeding. In those documents, Petitioner is referred to as HOI.

3. Prior to September 1999, paragraph 1.08 of the schedule of benefits section of the Member Handbook (page 42) provided, in pertinent part, as follows.

   1.08 Short-term physical, speech, or other therapies designed to correct functional defects which remain after a catastrophic illness or crippling injury, . . . when medically appropriate for the treatment of a Condition, provided that significant improvement of the Member's Condition, as determined by the Medical Director of HOI, is expected within two months from the first date of treatment. This benefit is limited to a maximum of two months of treatment per Member per Calendar Year.

   
   

4. The subject HMO contract was amended in September 1999 by the Endorsement styled "Endorsement: Rehabilitation Services (85999.459/99SR)" 3/ provided, in pertinent part, as follows:

   All prior references to short-term physical, speech, or other therapies in the Group Health Services Agreement and/or Member Handbook and any Endorsement attached thereto is [sic] hereby deleted and replaced with the following new subsection entitled Rehabilitation Services:

   
   

   Rehabilitation Services

   Prescribed short-term inpatient and outpatient rehabilitation services [are] limited to the therapy categories listed below.

   
   

   In order to be covered: (1) HOI must review, for coverage purposes only, a

   Rehabilitation Plan submitted or authorized by the Member's 4/ Primary Care Physician;

   (2) HOI must agree that he Member's Condition 5/ is likely to improve significantly within 62 days from the first date such services are to be rendered; (3) such services must be provided to treat functional defects which remain after an illness or injury; and (4) such services must be Medically Necessary 6/ for the treatment of a Condition.

   
   

   Rehabilitation Plan means a written plan, describing the type, length, duration, and intensity of rehabilitation services to be provided to a Member with rehabilitation potential. Such a plan must have realistic goals which are attainable by the Member within a reasonable length of time and must be likely to result in significant improvement within 62 days from the first date such services are to be rendered. The Rehabilitation Plan must be renewed every 30 days.

   
   

   Outpatient

   Outpatient rehabilitation services are limited per Member per Condition to the number of Medically Necessary rehabilitation services which are received by the Member within the consecutive 62-day period which immediately follows the first date that the Member begins such services. Outpatient rehabilitation services are limited to the therapy categories listed below:

   
   

   Speech Therapy: . . .

   Physical/Occupational Therapy: Services of a Physical Therapist or Occupational Therapist or Massage Therapist for the purpose of aiding in the restoration of normal physical function lost due to illness, injury, stroke or a surgical procedure while this coverage was in force. In order for Physical Therapy, Occupational Therapy, or massage therapy to be covered under this provision, such services must be

   part of an approved Rehabilitation Plan and provided by a provider licensed to render such services.

   Cardiac Therapy: . . . Inpatient

   Rehabilitation services of the therapy

   categories described above provided during a covered inpatient confinement will be covered for the duration of the confinement.

   
   

5. T. C. was injured in a fall on December 31, 1999. He sustained a fracture of his left proximal humerus with neurovascular compromise. He underwent surgery to reduce the fracture at St. Mary's Medical Center in West Palm Beach where he remained hospitalized until his discharge on January 10, 2000.

6. Upon discharge, his physicians recommended and prescribed a Rehabilitation Plan which provided for physical therapy on Tuesdays and Thursdays of each week. This Rehabilitation was reviewed and approved by Petitioner, effective January 31, 2000. T. C. began receiving rehabilitation services on Thursday, February 10, 2000, from a provider known as Pediatric Therapy.

7. On or about March 24, 2000, Petitioner notified T. C.'s family and Pediatric Therapy that additional physical therapy would not be covered after that date.

8. On Friday, March 24, 2000, T. C.'s mother telephonically filed an expedited grievance with Petitioner

   requesting coverage for additional physical therapy. As part of her request, she informed Petitioner that although Petitioner's authorization period began on January 31, 2000, T. C. did not commence treatment at Pediatric Therapy until February 10, 2000. Thus, approximately ten days of the authorized period were not utilized. She further informed Petitioner that he had not completed treatment and continued to require physical therapy.

   Upon review of his treatment dates in relation to the authorization period and consideration of the information provided by his mother, Petitioner approved coverage for a further period of rehabilitation services from Tuesday, March 28, 2000, to April 13, 2000, the date the 62-day period

   starting February 10, 2000, expired.

   
   

9. Petitioner declined coverage for rehabilitation services beyond April 13, 2000, on the basis that the benefits for outpatient therapy under the contract had been exhausted. In its correspondence to T. C.'s mother, Petitioner stated that it was relying on paragraph 1.08, page 42, of the HMO contract. The reference to this provision was an error because the provision had been replaced and superseded by the Endorsement.

   There was no evidence that T. C.'s family suffered any prejudice because of the erroneous reference in the denial correspondence.

10. The operative language at issue in this proceeding is the language set forth in the Endorsement.

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction of the parties to and the subject of this proceeding. Sections 120.57(1), 120.574, and 408.7056(14) Florida Statutes.

12. Section 408.7056, Florida Statutes, establishes a panel to hear grievances involving managed care entities (including HMOs) and subscribers who receive health care benefits from such entities and, pertinent to this proceeding, provides as follows:

    (7) After hearing a grievance, the panel shall make a recommendation to the agency or the department which may include specific actions the managed care entity must take to comply with state laws or rules regulating managed care entities.

    
    

    * * *

    
    

    (9) No later than 30 days after the issuance of the panel's recommendation . . . the agency or the department may adopt the panel's recommendation or findings of fact in a proposed order or an emergency order, as provided in chapter 120, which it shall issue to the managed care entity. The agency or department may issue a proposed order or an emergency order, as provided in chapter 120, imposing fines or sanctions, including those contained in ss. 641.25 and

    641.52. The agency or the department may reject all or part of the panel's recommendation. . . .

    
    

    * * *

    1. Any information which would identify a subscriber or the spouse, relative, or guardian of a subscriber and which is contained in a report obtained by the Department of Insurance pursuant to this section is confidential and exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I of the State Constitution.

    2. A proposed order issued by the agency or department which only requires the managed care entity to take a specific action under subsection (7) is subject to a summary hearing in accordance with s. 120.574, unless all of the parties agree otherwise. If the managed care entity does not prevail at the hearing, the managed care entity must pay reasonable costs and attorney's fees of the agency or the department incurred in that proceeding.

    (15)(a) Any information which would identify a subscriber or the spouse, relative, or guardian of a subscriber which is contained in a document, report, or record prepared or reviewed by the panel or obtained by the agency pursuant to this section is confidential and exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I of the State Constitution. . . .

    
    

13. There is no meaningful dispute as to the general standards for interpreting insurance contracts. If the relevant policy language is susceptible to more than one reasonable interpretation, one providing coverage and the other limiting coverage, the policy is ambiguous. In the event of an ambiguity, the contract should be construed against the insurance company as the drafter of the contract. Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29 (Fla. 2000); Weldon V. All

    American Life Ins. Co., 605 So. 2d 911 (Fla. 2d DCA 1992); and

    
    

    Blue Shied v. Woodlief, 359 So. 2d 883 (Fla. 1st DCA 1978).

    
    

14. Notwithstanding the general principles of construction, it is inappropriate to put a strained or unnatural construction on a policy to create an uncertainty or ambiguity. Federated Mutual Ins. Co. v. Germany, 712 So. 2d 1245, 1248 (Fla. 5th DCA 1998).

15. The following limitation set forth in the Endorsement, standing alone, is clear and unambiguous:

    Outpatient rehabilitation services are limited per Member per Condition to the number of Medically Necessary rehabilitation services which are received by the Member within the consecutive 62-day period which immediately follows the first date that the Member begins such services.

    
    

16. Respondent's primary argument is that the requirement that approval of a Rehabilitation Plan be renewed every 30 days implies that rehabilitation services will be provided beyond "the 62-day period which immediately follows the first date that the Member begins such services," thereby creating an ambiguity. Respondent further argues that the Endorsement is ambiguous because, unlike the language it replaced, the Endorsement does not specify that coverage for outpatient rehabilitation services are short-term. These arguments are not persuasive.

17. A plain reading of the Endorsement is that outpatient rehabilitation services are limited to those provided pursuant

to a Rehabilitation Plan during a limited period of time, namely, the 62-day period which immediately follows the first date that the Member begins such services. Prior to Petitioner's being responsible for coverage of rehabilitation services, a Rehabilitation Plan must be submitted to and approved by Petitioner. The plan itself will determine when the rehabilitation services are to begin. If, as here, the provision of outpatient rehabilitation services was not to begin immediately upon approval of the rehabilitation plan, Petitioner has the clear right under its contract to require that the Rehabilitation Plan be renewed every thirty days from the date of its initial approval of the Rehabilitation Plan even if rehabilitation services have not yet begun pursuant to the Rehabilitation Plan or have been provided for less than thirty days. Petitioner's right to renew the Rehabilitation Plan every thirty days has no bearing on its clear limitation of coverage.

19. It is concluded that the Endorsement is not ambiguous.

Respondent's arguments to the contrary are rejected.

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that Petitioner is not liable for coverage of

T. C.'s outpatient rehabilitation therapy after April 13, 2000.

DONE AND ORDERED this 18th day of December, 2000, in

Tallahassee, Leon County, Florida.

CLAUDE B. ARRINGTON

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 18th day of December, 2000.

ENDNOTES

1 The eligible dependent, a male, was fourteen years old at the time of his injury. He will be referred to by his initials, T. C., to protect his privacy and to comply with Subsections (13) and (15) of Section 408.7056, Florida Statutes.

2 Mr. Sutton is employed by Petitioner's parent corporation, Blue Cross and Blue Shield of Florida.

3 Michael Sutton testified without contradiction that the Endorsement was in response to a legislative mandate that the minimum rehabilitation period for HMO contracts be changed from two calendar months (which he described as being two 30-day periods) to a minimum of 62 days.

4 The term "Member" is defined in section II, paragraph CC of the Member Handbook to mean any subscriber or dependent. T. C. is a Member within the meaning of this endorsement.

5 The term "Condition" is defined in section II, paragraph H of the Member Handbook to mean a covered disease, illness, ailment, injury, bodily malfunction, or pregnancy of a Member.

6 The term "Medically Necessary" is defined in section II, paragraph Z of the Member Handbook. There is no dispute that the services received by T. C. met that definition.

COPIES FURNISHED:

Daniel Alter, Esquire

Bunnell, Woulfe, Kirschbaum, Keller, and McIntyre, P.A.

888 East Las Olas Boulevard, Suite 400 Post Office Drawer 030340

Fort Lauderdale, Florida 33303

William Fred Whitson, Esquire Department of Insurance Division of Legal Services

200 East Gaines Street 612 Larson Building

Tallahassee, Florida 32399-0333

Honorable Bill Nelson

State Treasurer and Insurance Commissioner Department of Insurance

The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300

Daniel Y. Sumner, General Counsel Department of Insurance

The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing one copy of a Notice of Appeal with the agency clerk of the Division of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the appellate district where the party resides. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed.

Docket for Case No: 00-003480

Orders for Case No: 00-003480