
    Clifford Jearold NESSEIM and Mary Lou Nesseim, Plaintiffs, v. MAIL HANDLERS BENEFIT PLAN, Defendant.
    No. Civ. 92-1010.
    United States District Court, D. South Dakota, N.D.
    April 3, 1992.
    Monte R. Walz, Davenport, Evans, Hur-witz & Smith, Sioux Falls, S.D., for plaintiffs.
    Frank Petramalo, Jr., Gordon & Barnett, Washington, D.C., for defendant.
   MEMORANDUM OPINION

BATTEY, District Judge.

NATURE AND PROCEDURAL HISTORY

This matter comes before the Court on a complaint for preliminary injunction, expedited trial, and declaratory judgment. The complaint was filed March 13, 1992. Plaintiffs Clifford Jearold Nesseim and Mary Lou Nesseim are insureds under a health benefits plan issued by defendant Mail Handlers Benefit Plan (MHBP), a plan authorized by the Federal Employees Health Benefits Act (FEBH), 5 U.S.C. §§ 8901-8913. The complaint for injunctive and declaratory relief requests a pre-certification under the health benefits plan for high dose chemotherapy accompanied by autolo-gous bone marrow transplant (HDCT-ABMT) for Mary Lou Nesseim because of the onset of her having metastatic breast cancer which has spread to the lymph nodes.

By agreement of counsel, a hearing on the preliminary injunction was waived and the parties agreed to submit the matter to the Court in the form of cross motions for summary judgment under Fed.R.Civ.P. 56. The Court issued a briefing schedule, to which the parties have promptly responded. The Court heard oral argument on April 3, 1992, and the matter is now ready for the Court’s resolution. The Court has examined all matters submitted, including affidavits, verified complaint, and memorandum briefs of each party.

The Court compliments the attorneys for both parties for their prompt and expeditious responses which enable this matter to be brought before the Court consistent with the serious, impending medical needs of Mary Lou Nesseim.

FINDINGS OF FACT

1. Plaintiff Clifford Jearold Nesseim is a federal employee employed by the Internal Revenue Service. Both he and his wife, Mary Lou Nesseim, reside in Aberdeen, South Dakota.

2. Plaintiffs are insureds under a health benefits plan authorized by the Federal Employees Health Benefits (FEHB) Act, 5 U.S.C. §§ 8901-8913.

3. The Court has jurisdiction of this case pursuant to the FEHB Act and 28 U.S.C. § 1332 in that diversity jurisdiction exists between the parties. The principal place of business of defendant is Rockville, Maryland, and is deemed to be a Maryland citizen for diversity purposes. The National Postal Mail Handlers Union, a division of LIUNA, AFL-CIO, has entered into Contract No. 1146 with the Office of Personnel Management (OPM) to provide a health benefits plan pursuant to the Federal Employees Health Benefits Act. This plan is known as the “Mail Handlers Benefit Plan (MHBP),” and is underwritten by the Continental Assurance Company of Chicago, Illinois, under Agreement No. L-35489. MHBP is one of many similar type of health benefit plans which is managed by OPM.

4. Plaintiffs, as enrolled in the MHBP, is entitled to such health care benefits, for both of them to which they be entitled under the terms and conditions of the health benefit plan.

5. On October 22, 1991, Mary Lou Nes-seim was diagnosed as having advanced metastatic breast cancer which has spread to the lymph nodes. Her physician and oncologist has admitted a treatment program of standard chemotherapy. This standard chemotherapy has failed to eliminate the cancer. Based upon the recommendation of Mary Lou Nesseim’s physicians, it is recommended that she undergo a treatment known as high dose chemotherapy, accompanied by autologous bone marrow transplant (HDCT-ABMT).

6. The Court finds that HDCT-ABMT is an expensive medical procedure. The procedure requires an in-hospital commitment, at which time the patient’s bone marrow is “harvested” from the patient and preserved so that the patient is able to receive vastly increased doses of chemotherapy and radiation therapy which would otherwise destroy the bone marrow and cause the patient’s death. Once the. treatment is completed, the patient’s bone marrow is then reintroduced into the patient. Because of the expensive nature of the procedure, it is required to receive a pre-certifi-cation by the patient’s health carrier to the effect that such treatment is covered by the terms of the insurance under the health benefit plan.

7. The Court finds that HDCT-ABMT is a logical extension of conventional chemotherapy treatment for cancer, including breast cancer, and has been accepted by the medical community and the courts as constituting a generally accepted medical treatment for breast cancer which cannot be cured through the smaller doses of standard chemotherapy.

8. By letter dated December 20, 1991, plaintiffs requested that the plan grant the pre-certification required in order to permit the administering of the HDCT-ABMT treatment.

9. On January 8, 1992, MHBP notified plaintiffs that the request for pre-certification under the plan had been denied based upon the defendant’s interpretation of the plan agreement which it was claimed excluded coverage for HDCT-ABMT. (Exhibit 1).

10. The notification by MHBP as to the reasons for the denial of coverage were stated in its letter of January 8, 1992, in part as follows:

I direct your attention to page 16 of the 1992 MHBP brochure (a copy of which is attached) which describes the Plan’s “Bone Marrow Transplants” coverage.
It states in pertinent part as follows:
Benefits for autologous bone marrow transplants are limited to patients with acute leukemia in remission, resistant non-Hodgkins lymphomas, resistant or recurrent neuroblastoma.
Breast cancer patients fall outside this coverage list. You also will note that on page 17 of the brochure states the Plan excludes “any transplant not listed as covered.” Furthermore, on page 11 under the heading “General Exclusions,” the brochure states that When services or supplies have been excluded under a single benefit category, all charges associated with such services or supplies, otherwise shown as covered under other benefit categories, are also excluded. Based on this provision, the Plan excludes any high dosage chemotherapy charges associated with a non-covered autologous bone marrow transplant. In sum, charges for autologous bone marrow transplant with high dosage chemotherapy plainly are excluded from MHBP coverage in 1992. (For your information, identical provisions were included in the 1991 MHBP brochure which applies to charges incurred in that year).

11.On January 21, 1992, plaintiffs appealed the plan’s decision to OPM. The appeal was pursuant to 5 C.F.R. § 890.105 requesting reconsideration of the denial by MHBP based upon four grounds:

1. The proposed treatment was part and parcel of Mrs. Nesseim’s chemotherapy, which is covered by the policy;
2. The Mail Handlers policy language concerning chemotherapy and the purported exclusion of high dose chemotherapy with autologous bone marrow transplant was ambiguous, and as such, should be construed in favor of the insured;
3. A reasonable person reviewing the policy would reasonably expect coverage for all forms of chemotherapy treatment and would not be alerted to the purported exclusion which is in a different part of the policy dealing with organ transplants and uses undefined medical and technical terms; and
4.On basic equity it would be unconscionable to deny Mrs. Nesseim life-saving treatment.

12. On February 27, 1992, OPM notified plaintiffs that their appeal was denied. (Exhibit 2). OPM, in its decision to deny plaintiffs’ appeal, adopted the interpretation of MHBP in its letter of January 8, 1992. OMP’s letter stated in part:

[T]he Mail Handlers 1992 brochure (i.e., their contract with OPM) is unequivocal: “Benefits for autologous bone marrow transplants are limited to patients with acute leukemia in remission, resistant non-Hodgkins lymphomas, resistant or recurrent neuroblastoma, or advanced Hodgkins disease.” Breast cancer patients fall outside this coverage list. You also will note that on page 17 the brochure states that the Plan excludes “any transplant not listed as covered.” Furthermore, on page 11 under the heading “General Exclusions,” the brochure states that “When services or supplies have been excluded under a single benefit category, all charges associated with such services or supplies, otherwise shown as covered under other benefit categories, are also excluded.”

13. The Court finds that in 1990 and in years prior thereto, the plan’s provisions for bone marrow transplant were different from those listed in the 1992 contractual statements of the 1992 plan. Thus, the 1992 plan represented a change in the plan benefits drafted by MHBP and approved by OPM.

The Court has not addressed other matters contained in the respective statement of facts by the parties for the reason that the Court finds them not material to the consideration of the issues in this case.

DISCUSSION

A. Jurisdiction

The complaint alleges jurisdiction under 5 U.S.C. § 8901 et seq. and diversity jurisdiction.

Defendant disputes diversity jurisdiction, but advances no authority with respect to its position. In any event, the Court does have jurisdiction under 5 U.S.C. § 8912. Plaintiff also is entitled to pursue the action under 5 C.F.R. § 890.107.

B. Standard of Review

Defendant urges the Court to adopt the standard of review set forth in 5 U.S.C. § 706(2)(A). It is plaintiffs’ position that the standard of review under 5 U.S.C. § 706 does not apply because plaintiffs’ argument is based upon construction and interpretation of the benefit plan — a contract document — which this Court is empowered to review without giving deference to OPM’s interpretation. Plaintiffs thus urge the Court to apply a de novo review to the decision of OPM that the contract in question does not provide coverage for HDCT-ABMT. This Court finds that under either standard, plaintiffs’ summary judgment motion is granted.

In examining the posture of this case, and specifically the letter from Mail Handlers dated January 8, 1992, and the letter from OPM which concurred in the decision of Mail Handlers Benefit Plan, the Court notes that OPM did nothing more than simply affirm Mail Handlers Benefit Plan’s interpretation of the contract. No independent agency review was made. There is no proof whatsoever of an independent agency review which, if completed, would be reviewed, by this Court under the arbitrary, capricious, or in violation of law standard of 5 U.S.C. § 706(2)(A). The facts indicate that OPM did nothing more than confirm the defendant’s interpretation of its own policy.

This case is not one necessarily challenging the legality of OPM’s decision. The dispute is with the plan carrier, Mail Handlers Benefit Plan, which is not an administrative agency. Thus, while OPM’s agency decisions are tested under 5 U.S.C. § 706(2)(A), this Court does not believe that the decisions of the plan carrier are entitled to the same due deferences afforded government agencies. This Court’s conclusion in that respect is not without precedent. See, e.g., Montz v. Federal Employees Health Management, Blue Cross, Blue Shield & Service Benefit Plan, Civ. 90-4647 (E.D.La.) (unreported), 1992 Westlaw 46394. This case appears to be one of first impression in this circuit. The Court believes that the “rubber stamp” decision of OPM dated February 27, 1992, on what was essentially the Mail Handlers Benefit Plan’s own interpretation should not be dealt with due deference under section 706(2)(A). It appears to this Court that the determination of the meaning of contract terms, including the broad responsibility for interpretation of contracts is best suited to be resolved by a court. See, e.g., Maloley v. R.J. O’Brien & Assoc., Inc., 819 F.2d 1435, 1441 (8th Cir.1987) (proper to consider a standard which turns on practical policy considerations of the comparative qualifications of courts and agencies); First Nat’l Bank in Sioux Falls v. Na tional Bank of South Dakota, 667 F.2d 708 (8th Cir.1981). The challenge in this case is not a challenge to the legality of OPM’s decision, but to the health plan carrier’s denial of a claim based upon its own interpretation of its liability. When Congress enacted the Federal Employees Health Benefit Program, this Court doubts that it intended that the health carrier’s interpretation of its own contract should be entitled to the same deference that an agency decision would be given in the interpretation of its own regulations.

Alternatively, this Court need not divine what would be the Eighth Circuit rule under this de novo review analysis since the Court finds that under 5 U.S.C. § 706(2)(A), the actions of the OPM were arbitrary, capricious, and contrary to law. The preemptory response by OPM of February 27, 1992, adopting what this Court finds to be an invalid interpretation of the contract constitutes a violation of the heightened standard set forth in section 706(2)(A).

C. Contract Provisions

Exhibit 3 contains photocopies of portions of the 1992 Mail Handlers Benefit Plan (with certain statements highlighted). This plan is identical to the 1991 plan. The contentions of the parties center around pages 11 (General Exclusions); page 16 (Surgical Benefits — Organ transplants, bone marrow transplants); page 17 (what is not covered) and page 21 (other medical benefits — chemotherapy, x-ray, or radium treatment).

The inclusion of the photocopy is provided in order to permit the examination of the structure of the contract. The structure of the contract itself provides insight into this Court's decision that the terms are ambiguous. The Court finds that the structure is calculated to confuse and mislead. It would have been simple to provide a statement in the contract such as “High dose chemotherapy with bone marrow transplant is not covered.” While the Court is mindful of the rule that the complete contract must be examined for thorough analysis, nonetheless a reasonable person — indeed a sophisticated person— would readily conclude that under the Other Medical Benefits, coverage for chemotherapy included at page 21 would cover both low dose and high dose chemotherapy with its concomitant allogenic or autolo-gous bone marrow transplant. In the real world of medicine, high dose chemotherapy and autologous bone marrow transplant cannot exist one without the other in the treatment of cancer patients.

Defendant urges that chemotherapy treatment provided on page 21 is taken away on pages 16 and 17 under the Surgical Benefits section of the policy. Examining the structure of pages 16 and 17, bone marrow transplants are defined under the major heading of Organ Transplants/Donor Expenses. Thus, even a careful reading of the bone marrow exclusionary language would be thought to refer to organ transplants. In the ordinary sense, autologous bone marrow transplants reasonably would not be thought of as an “organ transplant.”

The contract is ambiguous. As such, it is to be construed against the defendant.

Having thus concluded that summary judgment for plaintiff is warranted under this decision, the Court need not address the other issues raised by plaintiff.

An order granting plaintiff’s motion for summary judgment and denying defendant’s motion for summary judgment will be filed separately.

EXHIBIT 1

EXHIBIT 2

EXHIBIT 3

Hospital Outpatient Care Emergency Treatment Diagnostic Procedures Chemotherapy, X-ray or Radium Treatment Hemodialysis, Peritoneal Dialysis Nursing Care Services Durable Medical Equipment Prosthetic Appliances Rabies Shots Ocher Medical Benefits continued The Plan pays for the following when charges, as shown below, are incurred in lieu of hospital admission and when billed by the outpatient department of a hospital or an out-of-hospital facility such as a medical-, cancer-, dialysis-, or surgi-center or clinic. (This benefit does not apply to related professional fees.) • Services and supplies provided on the day of surgery and in connection with surgery, for other than the surgical procedure — 100% of actual charges. • Services and supplies, including drugs ordered by a doctor and supplied or administered by the hospital or doctor, for chemotherapy and radiation therapy for the treatment of cancer— 75% of actual charges. • Services and supplies for hemodialysis and peritoneal dialysis, including coverage for services and supplies related to home dialysis — 75% of actual charges. High Option and Standard Option pay the following: For Accidental Injury — The Plan pays 75% of actual charges for covered services and supplies furnished to an outpatient in connection with emergency treatment or surgery performed within 72 hours of an accident. This benefit is payable instead of any other benefit under the Plan. For Illness — After a $50 deductible per visit, the Plan pays 75% of actual charges for covered services and supplies furnished to an outpatient in connection with initial emergency treatment of illness or surgery performed within 72 hours of the onset of the illness. Services must be rendered in a hospital emergency room or urgent care center. Charges for either initial or follow-up treatment rendered in a doctor's office will be paid under the Doctors’ Visit Out-of-Hospital benefit. This benefit is payable instead of any other benefit under the Plan. For diagnostic X-ray, laboratory procedures, and machine diagnostic tests related to a covered illness or injury (except for conditions listed on page 11 and below), benefits will be paid at 75% of the reasonable and customary charge for High Option and at 70% of the reasonable and customary charge for Standard Option. The Plan pays 75% of actual charges for doctors’ outpatient services, laboratory and X-ray services rendered for chemotherapy, X-ray or radium treatment for treatment of cancer, and for prescription drugs for chemotherapy ordered by a doctor and billed by a doctor, hospital or pharmacy for treatment of cancer (also see Hospital Outpatient Care above). This benefit is payable instead of any other benefit under this Plan. The Plan pays 75% of actual charges for doctors' outpatient services, laboratory and X-ray services rendered for hemodialysis and peritoneal dialysis (also see Hospital Outpatient Care above). Included in this benefit are services and supplies related to home dialysis. This benefit is payable instead of any other benefit under this Plan. The Plan pays up to S50 per 8-hour shift, after a $50 deductible per person per calendar year, for the services of a registered graduate nurse (R.N.) or the services of a licensed practical nurse (L.P.N.), if recommended by a doctor. For less than an 8-hour shift, the Plan will pay benefits on a pro-rata basis. The fran pays actual charges, after a $50 deductible per item, for the rental (or purchase, at the Plan's option, if less expensive), of Durable Medical Equipment (see Definitions) when recommended by a doctor. The Plan will also pay for necessary repair or adjustments to purchased equipment. The Plan pays actual charges, after a $50 deductible per item, for a Prosthetic Appliance (see Definitions) when recommended by a doctor. The Plan pays in full for rabies shots and related services. 21 
      
      . Jurisdiction of courts. The district courts of the United States have original jurisdiction ... of a civil action or a claim against the United States founded on this chapter....
     
      
      . Section 890.107 ... an action to recover on a claim for health benefits should be brought against the carrier of the health benefits plan. An action to review the legality of OPM’s regulations under this part or of a decision made by OMP [sic] should be brought against the Office of Personnel Management, Washington, D.C. 20415. However, an enrollee's dispute of an OPM decision solely because it concurs in a health plan carrier’s denial of a claim is not a challenge to the legality of OPM’s decision. Therefore, any subsequent litigation to recover on the claim should be brought against the carrier, not against OPM.
     
      
      .The standard applying for the review of agency decisions made under the Administrative Procedures Act. Section 706, scope of review. To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall—
      CD ...
      (2) Hold unlawful and set aside agency action, findings, and conclusions found to be—
      (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
     