Marcello v. Healthsource CV-98-291-JD 05/19/99 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Valerie R. and David R. Marcello

v. Civil No. 98-291-JD

Healthsource New Hampshire, Inc.

O R D E R

Valerie and David Marcello brought a declaratory judgment

action in state court seeking coverage from Healthsource New

Hampshire, Inc. for the costs of treatments for an in vitro

fertilization procedure. Healthsource removed the suit to this

court and has moved for summary judgment (document no. 16). For

the reasons that follow, summary judgment is granted in

Healthsource's favor.

Background

Valerie and David Marcello are insured through a group

health plan with Healthsource New Hampshire, the Group Subscriber

Agreement ("GSA"), provided by Mr. Marcello's employer, Nashua

Corporation. While some fertility treatment is covered by the

GSA, in vitro fertilization is specifically excluded. Mrs.

Marcello sought treatment for infertility due to a diseased

fallopian tube. After she underwent an unsuccessful intra­

uterine insemination ("IUI") procedure, which was covered by the GSA, her treating doctors recommended that she consult with an

infertility specialist and she was referred to Dr. Merle Berger

of Boston IVF (in vitro fertilization).

Healthsource initially denied coverage for Mrs. Marcello's

consultation with Dr. Berger citing the policy's exclusion of IVF

procedures as a non-covered service. The Marcellos challenged

the decision through the appeals process and finally discussed

the problem with Healthsource's corporate counsel. When the

purpose of the referral to Dr. Berger was later clarified by the

referring physician as a new patient consultation not limited to

IVF, Healthsource reversed its determination and coverage was

provided for the initial consultation. Subseguently,

Healthsource denied several reguests for payment for other

services that were later paid after the Marcellos disputed the

denials.

Dr. Berger recommended IVF. The IVF procedure involves

preliminary treatment that is also used for an IUI procedure

including fertility drugs and specially processed sperm. Mrs.

Marcello underwent an IVF procedure in the fall of 1997. First,

Dr. Berger prescribed drug therapy to enhance fertility. Next,

the eggs were retrieved and were combined in the laboratory with

her husband's specially processed sperm. After fertilization,

the embryos were transferred back to Mrs. Marcello, but the

2 procedure was ultimately unsuccessful. Healthsource denied

coverage for the costs of the preliminary treatment and drug

therapy as well as for the actual egg retrieval and fertilization

procedure.

The Marcellos, represented by counsel, brought a declaratory

judgment action in state court asking that Healthsource be

compelled "to carry out the terms and provisions of the

Marcellos' health insurance policy in good faith" and "to provide

the Marcellos' [sic] with the medically necessary treatment they

reguire for infertility and/or reimbursement for the medically

necessary treatment they sought in accordance with the Group

Subscriber Agreement." The action was removed by Healthsource to

this court on grounds that the claims for benefits under the

Healthsource plan were governed by the Employee Retirement Income

Security Act ("ERISA"),

, et seg. Thereafter,

the Marcellos' counsel withdrew, and the Marcellos continued

their suit, proceeding pro se.

Standard of Review

Summary judgment is appropriate only if the "pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

3 is entitled to judgment as a matter of law." Fed. R. Civ. P.

56(c). The moving party bears the initial burden of informing

the court of the basis for the motion. See Celotex Corp. v.

Catrett,

(1986). If the moving party meets

its threshold obligation, the nonmoving party must establish

specific facts, with appropriate record references, showing that

there is a genuine dispute of material fact as to each issue for

which the nonmoving party bears the burden of proof at trial.

See id.; Anderson v. Liberty Lobby, Inc.,

(1986). For summary judgment analysis, the court construes the

record in the light most favorable to the nonmoving party and

indulges all reasonable factual inferences in its favor. See

Pilgrim v. Trustees of Tufts College,

(1st Cir.

1997). Thus, summary judgment will be granted when there is no

dispute as to any material fact and the moving party is entitled

to judgment as a matter of law. See Terry v. Baver Corp.,

(1st Cir. 1998).

Discussion

Healthsource moves for summary judgment asserting that the

Marcellos' state law claims are preempted by ERISA, and that to

the extent the Marcellos intend a claim under ERISA, the benefits

they seek were properly denied. In response, the Marcellos do

4 not address the preemption issue, apparently accepting that their

claim must be brought under ERISA, but argue that Healthsource's

denial was improper.

A. Preemption

"ERISA provisions 'shall supercede any and all State laws

insofar as they may now or hereafter relate to any [ERISA]

employee welfare benefit plan.'" Demars v. Cigna Corp., No. 98-

1962,

(1st Cir. April 6, 1999) (guoting

(a)). Both state statutory provisions and common

law are state laws for purposes of preemption. Unum Life Ins.

Co. v. Ward, No. 97-1868,

*6 n.l (U.S. April 20,

1999). An employee welfare benefit program under ERISA is "any

plan, fund, or program . . . established or maintained by an

employer . . . for the purpose of providing for its participants

or their beneficiaries, through the purchase of insurance or

otherwise, . . . benefits in the event of sickness, accident,

disability, death or unemployment."

(3). A

state law is deemed to relate to an ERISA welfare benefit plan,

for purposes of preempting a state law claim, if in order to

prevail on her claim, the plaintiff "would need to prove the

existence of, or specific terms of, the [plan]." Demars,

.

5 The plaintiffs do not contest ERISA preemption of their

claims. The record presented for summary judgment supports the

conclusion that the Healthsource plan provided by Nashua

Corporation is an employee welfare benefit plan. New Hampshire's

declaratory judgment law, RSA § 491:22, has been found to be

superseded by ERSIA and not exempt. See, e.g., Tracv v.

Principal Fin. Group,

(D.N.H. 1996); see

also Webster v. ITT-Hartford Life, No. 97-373-JD, slip op. at 9

(D.N.H. Nov. 2, 1998); Patuleia v. Sun Life, 95-358-M, slip op.

at 4-5 (D.N.H. Jan. 19, 1996); Schuyler v. Protective Life Ins.,

No. 92-192, slip op. at 9, (D.N.H. July 23, 1993). The court

will not reexamine ERISA preemption of claims brought under RSA §

491:22 or examine preemption of any other state law that might be

implicated by the plaintiffs' complaint, when the plaintiffs have

not challenged preemption and the record is not developed in that

regard. Accordingly, the plaintiffs' claims are governed by the

provisions of ERISA.

B. Claim for Benefits

An individual beneficiary may bring an action pursuant to

ERISA "to recover benefits due to him [or her] under the terms of

his [or her] plan,"

(a)(1)(B), or for

appropriate eguitable relief from a breach of fiduciary duty, §

6 1132(a)(3). No compensatory or other damages are recoverable

under either § 1132(a)(1)(B) or § 1132(a)(3). See, e.g., Conners

v. Maine Med. Ctr., No. 98-273-P-C,

(D. Me.

March 3, 1999); Pall v. Chinet Co.,

(D. Me.

1998); Andrews-Clarke v. Travlers Ins. Co.,

(D. Mass. 1997). Actions challenged under either section are to

be reviewed de novo "unless the benefit plan gives the

administrator or fiduciary discretionary authority to determine

eligibility for benefits or to construe the terms of the plan."

Terry,

; see also Varitv Corp. v. Howe,

(1996); Firestone Tire and Rubber Co. v. Bruch, 48

, 115 (1989) .

In this case, the plaintiffs contend that the defendant

improperly denied coverage for drug therapy and services that

were performed as part of the IVF procedure. They argue that the

preliminary treatment should be covered, even when it is

prescribed as part of an excluded IVF procedure, because the same

treatment is covered when prescribed for other procedures such as

IUI. The plaintiffs also argue that because the exclusion of IVF

procedures does not explicitly list the preliminary treatment,

the exclusion should be not be construed to exclude that

treatment. Since the defendant has not demonstrated, or even

claimed, that the reguisite discretionary authority was given to

7 the plan administrator or fiduciary, the decision to deny

benefits is reviewed under a de novo standard for summary

judgment.

Federal common law is used to interpret the provisions of an

ERISA benefit plan. Morals v. Central Beverage Corp.,

, 711 (1st Cir. 1999) . A plan is construed using "common-

sense canons of contract interpretation" that are derived from

general state law principles. Rodriquez-Abreu v. Chase Manhattan

Bank, N .A . ,

(1st Cir. 1993). Unambiguous plan

language is interpreted according to its plain meaning taken in

context. Smart v. Gillette Co. Long-Term Disability Plan,

(1st Cir. 1995) (guotation omitted). "'Contract

language is usually considered ambiguous where an agreement's

terms are inconsistent on their face or where the phraseology can

support reasonable differences of opinion as to the meaning of

the words employed and obligations undertaken.'"

(guoting

Fashion House, Inc. v. K Mart Corp.,

(1st

Cir. 1989)).

The applicable exclusion in the GSA policy provides in

pertinent part:

The following are items and services that are deemed not Medically Necessary under this Group Subscriber Agreement and are not Covered Services, without regard to whether they are ordered or prescribed by a physician (but this list is not all-inclusive): (5) Fertility. (a) In vitro (test tube) fertilization, rr

The exclusion clearly and explicitly exempts IVF from coverage

but does not define the scope of the excluded service. The

plaintiffs point to other exclusions in the GSA that include

lists of excluded services that further define a more general

exclusion. For example, under the exclusion for "Weight Control"

the GSA lists, among other things, "Surgical procedures and

associated care for the treatment of obesity . . . ." Because

the "Fertility" exclusion lists IVF, but does not list related

services or "associated care" as in some of the other exclusions,

the plaintiffs contend the exclusion should be interpreted not to

exclude services and treatment merely related to the IVF

procedure.

To the extent the scope of the IVF exclusion is unclear or

ambiguous in the context of the GSA, the ambiguity raises a

factual guestion that reguires consideration of extrinsic

evidence to discern the parties' intent. Smart,

-

79. Ambiguities or omissions are generally not construed against

the insurer in the ERISA context. See Rodriquez-Abreu,

; Mauser v. Raytheon Co., No. 97-10215,

(D. Mass. April 20, 1999).

The defendant offers the affidavit of Dr. Peter J. Mahar, the Medical Director for Healthsource and a physician licensed in

New Hampshire, to explain and define the IVF procedure excluded

in the GSA. Dr. Mahar defined the IVF procedure as:

In vitro fertilization ("IVF") involves giving fertility drugs to enhance and orchestrate a woman's ovulation, removing eggs from a woman's ovaries, collecting and cleaning her partner's sperm, mixing the sperm and eggs in the laboratory and, if fertilization occurs, returning the embryo(s) to the woman's uterus to develop naturally.

Mahar affidavit at 5 3. The plaintiffs do not dispute Dr.

Mahar's definition of IVF, and do not offer a contrary definition

of an IVF procedure to support their narrow interpretation of the

IVF exclusion. Given Dr. Mahar's undisputed definition of IVF,

including the preliminary treatment, the GSA exclusion of IVF

also excluded coverage for treatments necessary for an IVF

procedure.

The plaintiffs also argue that because the IUI procedure,

which is covered, uses the same preliminary treatment as the IVF

procedure, the preliminary treatment should be covered for both.

Based on the record presented for summary judgment, the

preliminary treatment would not have been prescribed for Mrs.

Marcello except as part of the IVF procedure, and would not have

been medically necessary but for the planned IVF procedure.

Since the treatment leading up to Mrs. Marcello's IVF procedure

cannot be separated from the IVF procedure itself, the only

10 reasonable interpretation of the exclusion is to exclude coverage

of the preliminary treatment as part of the IVF procedure.

Accordingly, benefits for the treatments preliminary to the IVF

procedure were properly denied.

In their objection to summary judgment, the plaintiffs also

contend that Massachusetts residents who work at Nashua

Corporation, who are insured under the same plan, and who pay the

same premiums as they do are entitled to coverage for IVF

procedures under Massachusetts law. The plaintiffs argue that

they should be entitled to the same coverage for the same

premiums. Although the plaintiffs say that the defendant's

corporate counsel, Sharon Hecker, told them about different

coverage for Massachusetts residents, the plaintiffs have not

included any evidence in support of their contention. See Fed.

R. Civ. P. 56(c) and (e). In addition, the plaintiffs did not

raise the issue of different treatment in their complaint. To

the extent that any claim might exist alleging discrimination

based on the state of a beneficiary's residence, such a claim has

neither been pled nor sufficiently developed in the record to be

considered in opposition to the defendant's motion for summary

judgment.

11 Conclusion

For the foregoing reasons, the defendant's motion for

summary judgment (document no. 16) is granted. The clerk of

court is directed to enter judgment accordingly and to close the

case.

SO ORDERED.

Joseph A. DiClerico, Jr. District Judge

May 19, 1999

cc: Valerie R. Marcello, pro se David R. Marcello, pro se William D. Pandolph, Esguire

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