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Walker v. Regence Blue Cross Blue Shield of Oregon

United States District Court, S.D. Texas, Galveston Division

June 16, 2017

KIRSTIN WALKER, Individually and as Next Friend for LW, a Minor
v.
REGENCE BLUE CROSS BLUE SHIELD OF OREGON, ET AL.

          OPINION AND ORDER

          John R. Froeschner United States Magistrate Judge.

         On June 6, 2017, this action was tried to this Court by consent from Parties. Having now considered the evidence and the applicable law, the Court issues this Opinion and Order.

         Kirstin Walker, individually and as next friend for L.W., her minor son, filed suit against, inter alia, Regence Blue Cross Blue Shield of Oregon (Regence) in an effort to recover benefits under her health benefit Plan.

         The unembellished, undisputed background facts can be briefly stated. At all pertinent times Kirsten was an employee of Banfield Pet Hospital and a beneficiary of its health care plan with Regence, which covered her and her family. Kirsten's minor son was born with birth defects which caused the loss of his immune system. As a result, even any minor illness can prove life threatening to L.W. On the two occasions material to this litigation, L.W. was taken to Memorial Herman Hospital in Katy, Texas, which is close to Kirsten's residence. On each occasion the decision was made to “life flight” L.W. to Memorial Herman Hospital in downtown Houston for the necessary emergency medical treatment he needed. Under the circumstances, Kirsten was, quite understandably, given no option to chose which air ambulance service provider would be utilized. The air ambulance charges were timely sent to Regence for payment. Regence's processing of those claims is the crux of this action's resolution.

         THE PLAN

         The “Plan” consists of two parts: the “contract” for Medical Management International, Inc. d/b/a Banfield Pet Hospital and the “booklet” for Banfield Pet Hospital. Certain Plan provisions are at play.

         The Plan, after the deductible has been met, pays 80% of the “allowed amount” of the provider's charges and a beneficiary is responsible for the remaining 20% of that amount. The allowed amount of benefits paid under the Plan to a provider of services varies in accordance to the “category” status of the provider. Category 1 and 2 providers are those with a contract with Regence or another Blue Cross or Blue Shield organization (participating providers) that caps the payment amount and insulates a beneficiary from liability for any balance, except the beneficiary's 20% share of the allowed amount. Category 3 providers are ones without a covered contract (non-participating providers) and Regence pays them what the plan administrator determines is a reasonable amount for their services and the beneficiary is responsible for the balance due the provider plus her 20% share of the allowed amount.

         All air ambulance services, when found necessary, are covered by the Plan and governed by the 80/20 split of the “allowed amount.”

         As to non-participating providers, the Plan includes an “Exceptions” paragraph which reads, in pertinent part, as follows:

In some exceptions cases, We may pay claims from non-participating Providers . . . based on the Provider's billed charge, such as in situations where a Member did not have reasonable access to a participating provider as determined by Us . . . In any of the exceptions situations, the Member may be responsible for the difference between the amount that the non-participating Provider bills and payment We will make for the Covered Services (emphasis added).

         THE RELEVANT CLAIMS

         There are two air ambulance claims' “Explanations of Benefits” (EOB) that were sent from Regence to Kirstin that are involved in this litigation. The EOBs indicate that the service provider, Memorial Herman Hospital Systems, was a Category 1 provider. The Court, however, believes this to be erroneous. The administrative record contains a “Task Note” which memorializes a telephone conversation between a Regence investigator and an employee with Blue Cross Blue Shield Texas (BCBSTX)[1] which indicates “that this ambulance company is not contracted with them.” Based upon that entry, the Court finds that the air ambulance provider involved was a non-participating provider.

         The February 23, 2013, Claim

         The total ambulance charges from Memorial Herman for the February 23, 2013, services were $5, 625.00. Originally, on March 17, 2013, the EOB indicates that Regence identified and treated Memorial Herman as a Category 1 provider and determined that Kirstin had no responsibility for any unpaid balance and that her share of the claim was only $200.25. On May 12, 2013, Regence reprocessed the claim and, treating Memorial Herman as a Category 3 provider, determined Kirstin's responsibility to be $4, 416.42; this reprocessed claim appears to be based upon one proper interpretation of the Plan. However, following inquiries from Kirstin, Regence again reprocessed the claim and on June 23, 2013, it determined Kirstin's responsibility to be $1, 125.00; this calculation appears to have been done in accordance with the “Exceptions” provision of the Plan with Regence agreeing to pay the claim “based upon the provider's billed charge” and it, too, would be a proper discretionary interpretation of the Plan. Nevertheless, on July 7, 2013, Regence reprocessed the claim once again and determined Kirstin's ...


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