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Palmetto Health v. Nucor Corporation Group Health Plan

United States District Court, D. South Carolina

October 25, 2018

Palmetto Health, Plaintiff,
v.
Nucor Corporation Group Health Plan, Defendant.

          ORDER AND OPINION

          RICHARD MARK GERGEL, UNITED STATES DISTRICT COURT JUDGE.

         The matter is before the Court for review of Defendant Nucor Corporation Group Health Plan's decision to deny a claim for benefits under an insurance policy governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 ("ERISA"). The parties filed a joint stipulation (Dkt. No. 27) and cross-memoranda (Dkt. Nos. 26, 28) in support of judgment pursuant to the court's Specialized Case Management Order for ERISA cases. The parties agree that the court may dispose of this matter consistent with the joint stipulation and memoranda. (Dkt. No. 27.) For the reasons set forth below, the Court affirms the denial of benefits.

         I. Background

         On Sunday, December 7, 2014, Leon T. Jackson was injured in a motorcycle accident and admitted and treated at Palmetto Health Richland from December 7, 2014 through December 20, 2014. At the time of the accident, Mr. Jackson was employed by Nucor Corporation, which is the administrator and sole fiduciary of their self-funded health plan, Defendant Nucor Corporation Group Health Plan ("Group Health Plan"). (Dkt. No. 27-2 at 186, 196 - 197.) Mr. Jackson was a participant in the Group Health Plan. In South Carolina, Nucor contracted with Blue Cross Blue Shield of South Carolina ("BCBSSC") to manage health care and claims administration services for the plan. (Id. at 146 - 147.)

         While at the hospital, Mr. Jackson's blood was collected and tested for alcohol. The test showed that Mr. Jackson had an elevated ethyl alcohol level which, if accurate, was above legal limits. Palmetto Health submitted information to BCBSSC to request coverage for acute care services. In a letter dated December 18, 2018, BCBSSC denied coverage for the requested services because the Health Plan had a policy exclusion for intoxication. Mr. Jackson executed an assignment of benefits and designated Plaintiff Palmetto Health as his authorized representative under ERISA. (Dkt. No. 27-1 at 8, 20.) After Mr. Jackson was discharged, a claim for benefits was submitted to BCBSSC, which was denied based on the same exclusion in the plan. On October 21, 2015, the denial of benefits was upheld on review.

         After the denial, it was discovered that BCBSSC had applied the incorrect plan documents to Palmetto Health's claim for coverage. The operative plan, instead, was the Nucor Corporation Health Plan with an effective date of January 1, 2014, [1] ("2014 Plan") which did not include any policy exclusion for intoxication. (Dkt. No. 27-2.) The 2014 Plan, however, included the following relevant language. First, the 2014 Plan provided discretionary authority to Nucor:

The Group Health Plan Administrator is the sole fiduciary of the Group Health Plan, and exercises all discretionary authority and control over the administration of the Group Health Plan and the management and disposition of Group Health Plan assets. The Group Health Plan Administrator shall have the sole discretionary authority to determine eligibility for Group Health Plan benefits or to construe the term of the Group Health Plan.

         (Dkt. No. 27-2 at 175.) The Plan further stated that it would "not provide benefits" for:

Any condition, disability or expense sustained as a result of being engaged in: an illegal occupation, commission or attempted commission of an assault or other illegal act, intentional or accidental atomic explosion or other release of nuclear energy, whether in peacetime or wartime, participation in a civil revolution or a riot, duty as a member of the armed forces of any state or country or a war or act of war which is declared or undeclared.

         (Id. at 157) (emphasis added).

         On November 13, 2017, Palmetto Health renewed their request for coverage. In support of the request, Palmetto Health argued that the collision was not the result of an "illegal act" as the police report and subsequent blood test did not sufficiently confirm that Mr. Jackson was driving under the influence. Palmetto Health included as evidence: an affidavit from Mr. Jackson; a review of a police report and hospital records; an accident reconstruction report prepared by an individual hired by Mr. Jackson which found that he had not been impaired, and; a payment from the insurance carrier of the other driver.

         On December 18, 2017, BCBSSC denied coverage under the 2014 Plan, relying on the "other illegal act" exclusion since BSBSSC determined that Mr. Jackson had been driving under the influence. In reaching its conclusion, BCBSSC relied on: Palmetto Health's request for coverage; the prior coverage determinations; a traffic collision report prepared by a police officer; a test from the hospital showing an elevated alcohol level; an affidavit from Mr. Jackson stating that he had been charged with driving under the influence but the charge had since been dismissed and expunged; the accident reconstruction; the payment from the other driver's insurance; the 2014 Plan; the administrative record from the prior adverse benefits determination; the affidavit of the medical opinion of Dr. William Harms, BCBSSC Vice President of Medical Affairs, and; an article on the difference between blood drawn for legal and medical purposes. The letter denying coverage discussed Palmetto Health's arguments but found that the evidence indicated that Mr. Jackson had been driving under the influence, an illegal act, which resulted in his injuries. On February 12, 2018, Palmetto Health requested a review of the determination. BCBSSC upheld their determination to deny coverage, relying on the same administrative record and adding Palmetto Health's request for review and an affidavit of an additional doctor working for BCBSSC, Dr. Michael Lawhead.

         Palmetto Health filed a Complaint to review the denial of benefits under ERISA, 29 U.S.C. § 1132(a)(1)(B). (Dkt. No. 1.) The Parties filed cross-motions for judgment. (Dkt. Nos. 26, 28.)

         II. L ...


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