Court Reverses Denial of Benefits Decision Because of SPD
Shelby County Healthcare Corp, d/b/a Regional Medical Center v. The Majestic Star Casino, LLC group Health Benefit Plan, 2008 WL 782642 (WD Tenn.) has demonstrated that even though the SPD gives the Plan the final decision to accept or deny medical claims, discretion does not apply to the Plan’s TPA.Damon Weatherspoon, a plan participant of the Majestic Star Casino LLC Group Health Benefit Plan was involved in a single vehicle accident and sustained over $400,000 in medical expenses at the Regional Medical Center. Reports indicated that Weatherspoon had violated Mississippi law by driving under the influence, driving without a valid Mississippi driver’s license and driving without insurance.
Pursuant to the SPD, the TPA to the Plan, Benefit Administrative Systems, Ltd. (”BAS”) rejected coverage for any injuries and/or illnesses arising out of “the commission or attempted commission of an illegal act.” BAS denied payment of Weatherspoon’s claims on the basis that “the insured went off the road and hit a tree. He is uninsured, has no driver’s license, and was cited for driving under the influence, all of which are illegal acts in the State of Mississippi.”
As Regional appealed BAS’s denial of Weatherspoon’s claims, the matter was heard by Sixth Circuit of the Western District of Tennessee for review. Regional alleged that BAS made the final decision to deny Weatherspoon’s claims and because Majestic was almost entirely uninvolved with the final decision and BAS was not given discretionary to interpret the plan language and decide eligibility of plan benefits, the court reviewed the decision under the de novo standard.
Regional then argued that since the term “illegal acts” was not clearly defined in the Plan, and because there was no connection between Weatherspoon’s injuries and the illegal acts of which he was accused, the claims should have been paid. Majestic referred to the Seventh Circuit decision, Tourdot v. Rockford Health Plans, Inc. (7th Cir. 2006), and argued that the “illegal act” terminology was common sense meaning and that there was an apparent connection between Weatherspoon’s act and his injures. The Court sided with Majestic determining “illegal acts” evidently includes any act opposing the law, however sided with Regional on the cause of injuries. In the Court’s evaluation, the Plan clearly requires that the injury and/or illness “arise” from the “commission or attempted commission of an illegal or criminal act”. Regional argued that Weatherspoon’s driving without a license and without insurance did not cause his injuries.
In regards to Weatherspoon driving under the influence, since he was not charged with driving under the influence, there were no blood test results, and the only substantiation BAS had to deny claims was the accident report filed where the officer at the scene had only suspected an influence of alcohol.
The Court concluded that a police officer’s suspicion, without considerable evidence did not provide sufficiency for the denial of claims. The Court reversed the Plan’s denial and ordered payment of Weatherspoon’s medical claims to Regional.