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Berdeau v. Schaeffler Group USA Inc.

United States District Court, D. South Carolina, Florence Division

May 16, 2019

Jason Berdeau, Plaintiff,
v.
Schaeffler Group, USA Inc. and Blue Cross Blue Shield of South Carolina, Defendants.

          OPINION AND ORDER

          Donald C. Coggins, Jr., United States District Judge

         Pending before this Court are the parties' Cross-Memoranda In Support of Judgment. ECF Nos. 24, 25, 26. Defendants filed Replies to Plaintiff's Memorandum. ECF Nos. 27, 28. Plaintiff Jason Berdeau alleges that he was a participant in his employer's, Schaeffler Group, USA Inc.'s (“Schaeffler”), self-funded health plan (the “Plan”) and that he was entitled to recover benefits pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §1001 et seq. Specifically, Plaintiff alleges that he requested pre-authorization for certain medical procedures and/or services under the Plan and that his pre-authorization request was improperly denied by Defendants as not being medically necessary. Plaintiff alleges a cause of action against both Defendants for recovery of ERISA benefits under 29 U.S.C. § 1132(a)(1)(B) (First Cause of Action).[1]

         The parties entered into and filed a Joint Stipulation agreeing: that Plaintiff exhausted all of his administrative remedies under the Plan, to the contents of the administrative record, to the applicable Plan terms, that the Court should apply an abuse of discretion standard of review as to the determination of medical necessity, and that the Court may dispose of Plaintiff's claim based on the Joint Stipulation, the administrative record and the parties' Memoranda In Support of Judgment. ECF 19.

         The principal issue before this Court is whether the Plan's final claim decision that the medical procedure and/or service for which Plaintiff sought preauthorization was not Medically Necessary was proper under the abuse of discretion standard of review. Based on the arguments contained in the parties' Memoranda in Support of Judgment, the joint stipulation and the administrative record, the Court finds that the Plan's denial of Plaintiff's request for pre-authorization was proper and not an abuse of discretion.

         FINDINGS OF FACT

         The Court makes the following findings of fact pursuant to Federal Rule of Civil Procedure 52 based on the administrative record and the parties' Joint Stipulation:

         1. The Schaeffler Plan

         Plaintiff's employer, Schaeffler, established and/or maintained an ERISA governed, self-funded group health plan for the benefit of its employees. AR 64-152. Schaeffler was both the Plan Sponsor and Plan Administrator and at all times acted as the claims fiduciary retaining the right to make final claim determinations under the Plan. AR 80-81, 127, 129, 136. Schaeffler contracted with Defendant Blue Cross Blue Shield of South Carolina (“BCBSSC”) to provide administrative claims payment services under the Plan. AR 137. BCBSSC provided administrative claims payment services only and did not assume any financial risk or obligation with respect to claims. As an eligible employee, Plaintiff was a participant in the Plan.

         2. Plaintiff's Claim

         On or about February 24, 2017, McLeod Spine Center at McLeod Regional Hospital (“McLeod”) on behalf of Plaintiff, faxed Defendant BCBSSC seeking pre-authorization for an anterior lumbar fusion at ¶ 5/S1, CPT codes 22558, 22845 and 22853. AR 286-92.

         On March 7, 2017, Lena Bretous, M.D., a board-certified medical director at BCBSSC, reviewed Plaintiff's lumbar fusion claim and found that the requested procedure was not medically necessary. AR 319. Dr. Bretous opined:

Deny as not medically necessary the requested lumbar fusion procedure for member with back pain x 2 months with failed pain medications and epidural injections, based on Plan medical criteria, because the member has MRI confirmed no central canal stenosis at ¶ 5-S1 and no spondylolisthesis or rapidly progressive signs of motor loss or cauda equina syndrome; and no failed trial of 6 weeks of physical therapy in the past 6 months as required by Plan medical Policy CAM[2] 701141[3] coverage requirements. The Plan confirmed that member has quit smoking x 6 weeks.

(AR 319) (footnotes not in original).

         On March 7, 2017, McLeod contacted BCBSSC and requested a peer to peer review between Dr. Bretous and McLeod physician, Willie S. Edwards, Jr., concerning the requested lumbar fusion procedure. (AR 822). On March 9, 2017 a telephone peer to peer review took place between Drs. Bretous and Dr. Edwards. (AR 874).

         Contemporaneous notes of this peer to peer conversation by Dr. Bretous stated:

First attempt: spoke to Austin; placed on hold; regarding denied ALIF [anterior lumbar interbody fusion] at L5-S1 for indication of DDD [degenerative disc disease] and HNP [herniated nucleus pulposus] after failed epidural injection, no 6 week trial of PT [physical therapy] and member quit smoking x 6 weeks. Per plan medical policy fusion procedure for symptomatic DDD with HNP. Spoke directly with Dr. Edwards; who analyzed adjacent segment disease above L5 and may not be a good candidate for fusion procedure at level below; member came from a previous PCP [primary care provider] who put member through PT [physical therapy] as well as injection, Dr. Edwards understands reason for denial. Denial upheld on peer to peer.

AR 874.

         On or about March 10, 2017, BCBSSC received a fax request for pre-authorization for the approval of durable medical equipment (“DME”) known as an osteogenesis stimulator E0748 and a lumbar sacral orthosis L0637 from Palmetto Medical Equipment of Florence. AR 646. On that same date, Dr. Bretous conducted a medical review of the DME claim and found that the DME claim was also not medically necessary. (AR 859). Dr. Bretous found:

Deny as not medically necessary the requested bone growth stimulator and back brace for post-operative use because the authorization for the requested lumbar fusion was denied as not medically necessary upon medical review and upheld on peer to peer discussion with the requesting physician. Plan medical policy for lumbar fusion for an indication of severe, symptomatic lumbar degenerative disc disease is considered investigational and not approved for coverage. Therefore, the associated equipment for post-surgical therapy is also denied as not medically necessary.

AR 859.

         On March 10, 2017, BCBSSC wrote Plaintiff, Rakesh P. Chokshi, M.D., and Palmetto Medical Equipment of Florence that Plaintiff's DME claim was denied because it was not medically necessary and investigational. AR 824-35. The letters stated in relevant part:

Deny as not medically necessary the requested bone growth stimulator and back brace for post-operative use because the authorization for the requested lumbar fusion was denied as not medically necessary upon medical review and upheld on peer to peer discussion with the requesting physician. Plan medical policy for lumbar fusion for an indication of severe, symptomatic lumbar degenerative disc disease is considered investigational and not approved for coverage. Therefore, the associated equipment for post-surgical therapy is also denied as not medically necessary.

AR 824.[4]

         On March 29, 2017, BCBSSC wrote Plaintiff, Dr. Edwards and McLeod that the request for pre-authorization for the anterior lumbar interbody fusion had been denied because it was not medically necessary. AR 836-49. These letters stated in relevant part:

[The] Medical Director has reviewed the service request for Spinal procedure 22558, 22845, 22853. We regret that we are unable to authorize the service request scheduled for 03/08/0217 for the following reason:
The clinical and treatment information we received did not meet medical necessity criteria. According to the physician:
Deny as not medically necessary the requested lumbar fusion procedure for member with back pain x 2 months with failed pain medications and epidural injections, based on Plan medical criteria, because the member has MRI confirmed no central canal stenosis at ¶ 5-S1 and no spondylolisthesis or rapidly progressive signs of motor loss or cauda equina syndrome; and no failed trial of 6 weeks of physical therapy in the past 6 months as required by Plan medical policy CAM 701141 coverage requirements. The Plan confirmed that member has quit smoking x 6 weeks.
Medically Necessary/Medical Necessity: healthcare services that a Provider, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing or treating an illness, injury, disease or its symptoms, and that are:
1. In accordance with generally accepted standards of medical practice; 2. Clinically appropriate, in terms of type, frequency, extent, site and duration, and considered effective for the patient's illness, injury or disease; and, 3. Not primarily for the convenience of the patient or Provider and not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient's illness, injury or disease.

AR 836-37, 844-45, 847-48.

         On April 10, 2017, Plaintiff appealed the denial of the lumbar fusion. AR 302-18. On April 26, 2017, a specialty matched, independent external review was conducted on Plaintiff's claim by board certified orthopedic surgeon Ryan Gocke, M.D. AR 1045-47. Dr. Gocke found:

Questions
1. Is there sufficient published peer-reviewed data from well-constructed clinical studies to permit scientific conclusion regarding the durable benefit to health outcomes of the requested anterior lumbar interbody fusion L5-S1?
No
2 Based on the clinical Information provided, have all appropriate conservative treatments been tried for this condition?
No
3. Does the MRI demonstrate appropriate findings that would qualify the member for the requested surgery and if so are the imaging findings consistent with the clinical signs and symptoms?
No
4. Given the unique clinical circumstances of the member and utilizing evidence-based guidelines would the requested services be considered medically necessary and standard of care?
No
Rationale:
Per the review of the submitted clinical documentation, this is a 43-year old patient who is appealing the denial of surgery. The medical records indicate that the patient has multilevel degenerative disc changes. The patient has mild degenerative disc disease at ¶ 4-5 with moderate right and mild left neural foraminal stenosis. However, all appropriate conservative treatments have not been tried for this condition. The patient has not completed physical therapy, activity modifications, or pain management injections. There is not sufficient published peer-reviewed data from well-constructed clinical studies to permit scientific conclusion regarding the durable benefit to health outcomes of the requested anterior lumbar interbody fusion L5-S1 for this patient. The MRI does not demonstrate appropriate findings that would qualify the member for the requested surgery. No. instability is noted. Therefore, given the unique clinical circumstances of the member and utilizing evidence-based guidelines, the requested services would not be considered medically necessary or standard of care.

AR 1045-46.

         On April 26, 2017, Michael Lawhead, M.D., a board certified medical consultant with BCBSSC reviewed Plaintiff's anterior lumbar interbody fusion claim and concurred with Dr. Gocke's findings. AR 301. Dr. Lawhead found:

Deny coverage. Specialty matched independent external review has determined that the patient has not completed physical therapy, activity modifications, or pain management injections. There is not sufficient published peer-reviewed data from well-constructed clinical studies to permit scientific conclusion regarding the durable benefit to health outcomes of the requested anterior lumbar interbody fusion L5-S1for this patient. The MRI does not demonstrate appropriate findings that would qualify the member for the requested surgery. No. instability is noted. Therefore, given the unique clinical circumstances of the member and utilizing evidence-based guidelines, the requested services would not be considered medically necessary or standard of care. The plan agrees.
Medically necessary/medical necessity: health care services that a provider, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing or treating an illness, injury, disease or its symptoms, and that are:
1. In accordance with generally accepted standards of medical or behavioral health practice;
2. Clinically appropriate, in terms of type, frequency, extent, site and duration, and considered effective for the patient's illness, injury or disease;
3. Not primarily for the convenience of the patient, patient, caregiver(s) or provider; and,
4. Not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient's illness, injury or disease.
All requirements of the above-referenced definition must be met in order for a health care service to be deemed medically necessary. The failure of a health care service to meet any one of the above referenced ...

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