The president of a company was diagnosed with retinitis pigmentosa, a progressive eye disease that can eventually lead to blindness. At his doctor's direction and under his doctor's supervision, he took 15,000 units a day of a non-prescribed, over-the-counter vitamin A palmitate supplement. Though his vitamin A supplements could not cure his retinitis pigmentosa, they could slow the disease's rate of progression.
The company offered a group long-term disability (LTD) benefits plan governed by the Employee Retirement Income Security Act (ERISA). The plan offered maximum gross benefits of $1,000 a month. The company then purchased a new policy with another plan administrator. This plan offered maximum gross benefits of $6,000 a month. The plan also excluded pre-existing conditions stating:
No LTD benefit will be payable for any Total or Partial Disability that is due to:
6. a Pre–Existing Condition.
Pre–Existing Condition means during the 3 months prior to the Employee's Effective Date of Insurance the Employee received medical treatment, care or services, including diagnostic measures, or took prescribed drugs or medicines for the disabling condition.
If the plan administrator determined that an employee had a pre-existing condition according to the pre-existing condition clause, then the employee was not entitled to the benefits under the plan. The employee was still entitled, however, to the same level of benefits available to the employee under the first plan.
The president's eye condition forced him to stop working. He applied for long-term disability benefits under the second plan. After initially denying his claim, the plan administrator concluded on appeal that he was “Totally Disabled.” Nevertheless, it determined that he was not entitled to the increased amount of $6,000 a month under the second plan because his retinitis pigmentosa constituted a pre-existing condition. According to the plan administrator, his daily use of vitamin A supplements at his doctor's direction qualified as “medical treatment.” Because he received his “medical treatment” during the three-month period prior to the second plan's effective date, the pre-existing condition clause barred full benefits.
The president brought an action against the plan administrator challenging the denial of benefits. The United States District Court for the Eastern District of Missouri denied the plan administrator's motion for summary judgment and granted the president's motion for summary judgment. The district court found that the plan administrator abused its discretion in construing the pre-existing condition clause to apply to the president's taking of supplements. According to the court, plan administrator's broad interpretation of the phrase “medical treatment” was contrary to the plan's plain language and rendered portions of the clause meaningless and internally inconsistent.
The United States Court of Appeals for the Eighth Circuit reversed and remanded. The court held that the administrator did not abuse its discretion in denying benefits by determining that the president's daily use of vitamin A supplements at his doctor's direction qualified as a “medical treatment” under the plan's pre-existing condition clause.
Applying the abuse-of-discretion standard, a court may not disturb an administrator's reasonable interpretation of uncertain terms in a plan. To assess the reasonableness of an administrator's decision a court considers whether the administrator's interpretation (1) is consistent with the plan's goals; (2) renders any of the plan language meaningless or internally inconsistent; (3) conflicts with the substantive or procedural requirements of ERISA; (4) has been followed similarly in the past; and (5) is contrary to the clear language of the policy.
The court held that the administrator did not abuse its discretion in denying benefits by determining that the president's daily use of vitamin A supplements at his doctor's direction qualified as “medical treatment” under plan's pre-existing condition clause. The court refused to construe the Pre–Existing Condition clause to require all “prescribed drugs or medicines” to fall outside of the phrase “medical treatment.” The court reasoned that drawing a sharp distinction between “prescribed drugs or medicines” and “medical treatment” was a virtually impossible task because “prescribed drugs or medicines,” as the words were commonly understood, were forms of “medical treatment.” The dictionary definitions of the words in the pre-existing condition clause supported the conclusion that the ordinary meaning of the phrase “medical treatment” would encompass the president's vitamin A supplements. The supplements were “medical” in the sense that they prevented or alleviated the progression of his retinitis pigmentosa. Further, his daily supplement regimen constituted a “treatment” because it was the “manner,” in fact the only manner, by which he could “care for” his condition. Thus, each day he continued his doctor-recommended regimen, he received medical treatment.
The United States Court of Appeals for the Eighth Circuit reversed the district court’s denial of the plan administrator's motion for summary judgment and grant of the president's motion for summary judgment.
See: Kutten v. Sun Life Assur. Co. of Canada, 2014 WL 3562784 (C.A.8 (Mo.), July 21, 2014) (not designated for publication).
See also Medical Law Perspectives, May 2013 Report: Drugs, Dosage, and Damage: Physician Liability for Prescribing or Administering Medication