STATE OF NORTH CAROLINA



STATE OF NORTH CAROLINA IN THE OFFICE OF

ADMINISTRATIVE HEARINGS

COUNTY OF DAVIDSON 10 INS 6308

Benson D. Stalvey )

Celia S. Stalvey )

Petitioner, )

)

v. ) DECISION

)

NC Blue Cross/Blue Shield )

Catherine Joyner CPC )

Respondent. )

On January 24, 2011, the undersigned conducted an administrative hearing in this case in High Point, NC. At the conclusion of the hearing, the undersigned directed the parties to submit a proposed decision within thirty (30) days of the date of hearing. Counsel for Respondent and the Petitioners timely submitted proposed decisions. The record in the case is now closed.

After considering the record in evidence in this contested case, as well as the proposed decisions and other written material submitted by the parties and the arguments of the parties, the undersigned administrative law judge hereby enters this Decision.

APPEARANCES

For the Petitioner: Benson D. Stalvey

Celia S. Stalvey

373 Ashmoor Lane

Lexington, NC 27295

For the Respondent: Heather H. Freeman

Assistant Attorney General

North Carolina Department of Justice

Post Office Box 629

Raleigh, NC 27602-0629

ISSUES SUBMITTED BY THE PARTIES

Submitted by Petitioner:

1. Did Respondent act erroneously and substantially prejudice Petitioners’ rights by approving surgery for an out-of-network provider but not informing Petitioners what percentage they would pay or not pay?

Submitted by Respondent:

1. Whether Respondent substantially prejudiced the rights of Petitioners and/or acted erroneously by paying charges submitted by an out-of-network provider pursuant to provisions set out in North Carolina State Health (PPO Standard) Plan Benefit Booklet?

RELEVANT STATUTES AND POLICIES

N.C. Gen. Stat. Chapter 135 and N.C. Gen. Stat. Chapter 150B, Article 3; Respondent’s medical policies; North Carolina State Health Standard PPO Plan Benefits Booklet (hereinafter “Benefit Booklet”).

EXHIBITS

For Petitioner: Exhibits 2, 3, 4, 5

For Respondent: Exhibits 1, 2, 6, 7, 8

WITNESSES

For Petitioner: Celia S. Stalvey

For Respondent: Donna Williams

FINDINGS OF FACT

The Findings of Fact are made after careful consideration of the sworn testimony, whether visual and/or audio, of the witnesses presented at the hearing, and the entire record in this proceeding. In making the findings of fact, the undersigned has weighed all the evidence, and has assessed the credibility of the witnesses by taking into account the appropriate factors for judging credibility, including but not limited to the demeanor of the witness; any interests, bias, or prejudice the witness may have; the opportunity of the witness to see, hear, know or remember the facts or occurrences about which the witness testified; whether the testimony of the witness is reasonable; and whether the testimony is consistent with all other believable evidence in the case. From the sworn testimony and the admitted evidence, or the lack thereof, the undersigned makes the following:

1. Respondent is an agency of the State of North Carolina, and offers health care benefits to eligible active and retired employees and their enrolled dependants in accordance with the applicable North Carolina General Statutes, the benefit booklet for Respondent’s preferred provider organization (hereinafter “PPO”) plan, and Respondent’s health care policies.

2. At all times relevant to the issues in this contested case, Petitioners’ daughter, Caroline Stalvey, was a covered dependent of the Respondent’s Standard PPO plan.

3. Blue Cross Blue Shield of North Carolina (BCBSNC) is the claims processing contractor for the State’s PPO plan.

4. Petitioners’ daughter, Caroline Stalvey, is a patient of Dr. Jeffrey S. Jelic, DMD. Petitioners’ daughter sought treatment, in the form of orthognathic surgery, from Dr. Jelic. The surgery was denied by BCBSNC as not medically necessary.

5. Dr. Jelic requested an appeal on March 31, 2009. On April 8, 2009, BCBSNC notified Dr. Jelic and Petitioners that Dr. Jelic’s request for authorization for orthognathic surgery had been approved as medically necessary. BCBSNC notified Petitioners that Dr. Jelic was an out-of-network provider and any claims would be adjudicated in accordance with out-of-network benefits in their policy. (Respondent’s Exhibit 7)

6. Prior to the surgery, Dr. Jelic provided Petitioners with an estimated cost of surgery equal to an approximate amount of $15,000. Dr. Jelic performed the orthognathic surgery on December 23, 2009. Caroline Stalvey’s surgery occurred during the 2009 PPO plan year.

7. After the surgery, Dr. Jelic submitted a claim to BCBSNC for payment totaling $15.848.00.

8. Petitioners were provided an explanation of benefits, which included the amount of the bill for Caroline Stalvey’s surgery, the amount paid by the State Health Plan and amounts applied to the deductible and coinsurance. (Petitioners’ Exhibit 2)

9. Petitioners appealed the payment of the claim as an out-of-network benefit and participated in multiple levels of appeal. On August 19, 2010, a Level II Grievance Review Panel meeting was held for final determination of Petitioners’ request for in-network benefits for Dr. Jelic’s services to Caroline Stalvey. Petitioners appeared at the August 19, 2010 meeting and presented their case to the panel.

10. The benefit booklet is an explanation of the contractual obligations and rights of the parties and contains a section entitled “How the PPO Plan Works” and within that section is a section entitled “Out-Of-Network Benefits”. (Respondent’s Exhibit 1) That section states:

With the PPO Plan, you may choose to receive covered services from an out-of-network provider and benefits will be paid at the lower out-of-network level…. When you see an out-of-network provider, you may be responsible for more of the cost. Out-of-network benefits are generally lower than in-network benefits. In addition, you may be required to pay the difference between the provider’s actual charge and the allowed amount. You eliminate this additional cost by receiving care from in-network providers. The State Health Plan encourages you to discuss the cost of services with out-of-network providers before receiving care so you will be aware of your total financial responsibility.

11. The benefits booklet also contains a section entitled “PPO Standard Plan Summary of Benefits”, which lists various services and the difference in coverage between in-network and out-of-network services. (Respondent’s Exhibit 1) At the beginning of the section it states:

Benefit payments are based on where services are received and how services are billed.

The out-of-network section is marked with an asterisk directing the member to a section at the bottom of each page. In that section, it states:

For out-of-network benefits, you may be required to pay for charges over the allowed amount (emphasis added) in addition to any copayment or coinsurance amount.

12. Donna Williams, Appeals Team Lead for BCBSNC, testified on behalf of Respondent. Mrs. Williams testified that although an in-network provider was available to Caroline Stalvey, the Petitioners chose to go Dr. Jelic, an out-of-network provider, for their daughter’s surgery.

13. Mrs. Williams testified that for the out-of-network services received by Petitioners’ daughter, a member could be required to pay 40% of the allowed amount after the deductible, in addition to any copayment or coinsurance amounts. Petitioners’ daughter’s claim was paid according to the terms of Respondent’s PPO benefit booklet regarding out-of-network benefits.

14. Mrs. Williams testified that the term “allowed amount” was defined in the benefits booklet. Mrs. Williams also testified regarding a section in the benefit booklet entitled, “Understanding Your Share of the Cost”, which discussed member’s share of the cost of benefits and explained coinsurance, deductibles and coinsurance. (Respondent’s Exhibit 1)

15. Mrs. Williams further testified that is the responsibility of members to fully read the benefit booklet and contact Respondent if they have further questions. Mrs. Williams stated that she found no record of service calls made by the Petitioners to Respondent prior to their daughter’s December 23, 2009 surgery.

16. Mrs. Williams testified that the allowed amount cannot be determined until after the claim is submitted by the provider and the claim is processed. Respondent is unable to determine or quote the total amount that a member would be held responsible for when receiving services from an out-of-network provider, prior to receipt of the benefit, submission of the claim by the provider, and processing of the claim.

17. Prior to their daughter’s surgery, Petitioners did not contact Respondent to inquire about coverage for an out-of-network provider or as to the meaning of allowed amount, co-insurance, or copayments. Petitioner Celia Stalvey testified that Dr. Jelic’s office took care of finding out that information. After receiving an estimate by Dr. Jelic for the total cost of surgery equal to approximately $15,000.00, Petitioners did not contact Respondent for an explanation of their potential share of the cost. Petitioner Celia Stalvey also testified that it was Dr. Jelic’s office, and not Respondent, that informed Petitioners that $2,750.00 would be their estimated portion of the surgery. (Petitioner’s Exhibit 3)

18. During cross-examination, Petitioner Celia Stalvey admitted that Petitioners did not research their benefit booklet about their share of the cost until after receipt of the bill. Petitioner Celia Stalvey testified that when they did review the terms of the benefit booklet regarding out-of-network providers, they used an outdated benefit booklet from 2007. Petitioner Celia Stalvey also admitted that Petitioners cited to the 2007 booklet in their Prehearing Statement filed with this Court.

19. Petitioners’ claim that the appeals process was unfair is not properly before this Court.

20. In the Petition for a Contested Case Hearing, the issue submitted by Petitioners was whether Respondent substantially prejudiced Petitioners’ rights, and acted erroneously by approving surgery for an out-of-network provider but not informing Petitioners what percentage they would pay or not pay. However, in Petitioners’ Prehearing Statement, Petitioners stated that the issue was whether payment for out-of network services provided by Dr. Jeffrey S. Jelic was made according to page v of the North Carolina State Health Plan Benefits Booklet. In the Prehearing Statement, filed by Respondent, the stated issue was whether Respondent substantially prejudiced the rights of Petitioners and/or acted erroneously by paying charges submitted by an out-of-network provider pursuant to provisions set out in North Carolina State Health (PPO Standard) Plan Benefit Booklet.

21. Although the parties submitted issues as stated above, the undersigned believes that the determinative issue is whether Respondent calculated or determined the allowed amount incorrectly or arbitrarily and capriciously.

22. There was no evidence presented that the allowed amount was determined incorrectly or arbitrarily and capriciously by Respondent.

23. There was no evidence presented that the total amount paid by the State Health Plan was calculated incorrectly or arbitrarily and capriciously by Respondent.

CONCLUSIONS OF LAW

1. The Office of Administrative Hearings has jurisdiction over this contested case and the parties thereto.

2. Petitioner has the burden of proof in this matter by the greater weight of the evidence regarding the issues presented in this contested case. N.C. Gen. Stat. § 150B-34(a).

3. In N.C. Gen. Stat. Chapter 135, the General Assembly created a State Health Plan for the benefit of its state employees, retired employees and certain of their eligible dependants. Pursuant to N.C. Gen. Stat. Chapter 135, Respondent is to provide comprehensive medical coverage under a group plan and benefits are to be provided under contracts between the Plan and the claims processor.

4. Blue Cross Blue Shield of North Carolina (BCBSNC) is the claims processor for the State’s PPO Plan of which Petitioner’s daughter was a covered dependent.

5. Respondent’s State Health Plan Benefit Booklet for the Standard PPO Plan sets forth the benefits available to members and their dependents.

6. Petitioners did not meet their burden of proof in that they have not shown that Respondent prejudiced their rights, or acted erroneously by paying charges submitted by an out-of-network provider, pursuant to provisions set out in North Carolina State Health (PPO Standard) Plan Benefit Booklet; nor has Petitioner shown that Respondent calculated the allowed amount or the total amount paid by the State Health Plan incorrectly, or arbitrarily and capriciously.

DECISION

Although it is difficult to imagine how Petitioners could have been more diligent in attempting to determine pre-operatively what amount of responsibility they would share, it is the opinion of the undersigned that the Respondent did not err in following the PPO benefits booklet. Accordingly, Petitioners were required to pay, as their share, 40% of the allowed amount after meeting their deductible.

Therefore, based on the foregoing Findings of Fact and Conclusions of Law, the decision of the Respondent to pay Petitioners at an out-of-network level as set out in North Carolina State Health (PPO Standard) Plan Benefit Booklet, and at the total amount paid, is UPHELD.

NOTICE

The Agency that will make the final decision in this contested case is the North Carolina Department Board of Trustees of the North Carolina State Health Plan. The Agency is required to give each party an opportunity to file exceptions to the decision and to present written arguments to those in the Agency who will make the final decision. N.C. Gen. Stat. § 150-36(a). The Agency is required by N.C. Gen. Stat. § 150B-36(b) to serve a copy of the final decision on all parties and to furnish a copy to the parties' attorneys of record and to the Office of Administrative Hearings.

In accordance with N.C. Gen. Stat. § 150B-36 the Agency shall adopt each finding of fact contained in the Administrative Law Judge's decision unless the finding is clearly contrary to the preponderance of the admissible evidence. For each finding of fact not adopted by the agency, the agency shall set forth separately and in detail the reasons for not adopting the finding of fact and the evidence in the record relied upon by the agency in not adopting the finding of fact. For each new finding of fact made by the agency that is not contained in the Administrative Law Judge's decision, the agency shall set forth separately, and in detail, the evidence in the record relied upon by the agency in making the finding of fact.

This14th day of March, 2011.

J. Randall May

Administrative Law Judge

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