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COURT OF APPEALS DECISION DATED AND RELEASED DECEMBER 17, 1996 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62(1), Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 96-0908
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT III
ANGELA M. MCEVOY, by
her Guardian
ad Litem, STEPHANIE L.
FINN, and
SUSAN MCEVOY,
Plaintiffs-Appellants,
v.
GROUP HEALTH
COOPERATIVE
OF EAU CLAIRE,
Defendant-Respondent.
APPEAL from a judgment
of the circuit court for Eau Claire County:
ERIC J. WAHL, Judge. Reversed
and cause remanded for further proceedings.
Before Cane, P.J.,
LaRocque and Myse, JJ.
CANE, P.J. Angela M. McEvoy and Susan McEvoy (McEvoy)
appeal a summary judgment granted to Group Health Cooperative of Eau Claire
(Group Health) dismissing McEvoy's lawsuit because its complaint stated a cause
of action in medical malpractice, subject to ch. 655, Stats., and McEvoy had failed to follow the relevant
statutory procedures.[1] On appeal, McEvoy argues that because its
claim against Group Health is a cause of action for bad faith, rather than
malpractice, the court erred when it granted summary judgment. Group Health argues that McEvoy states a
claim for malpractice because its medical director, Stuart R. Lancer, M.D.,
made medical decisions as to how to best treat Angela's condition.[2] Because we conclude that McEvoy's complaint
states a valid cause of action for bad faith, we reverse the judgment and
remand for further proceedings.
The relevant facts of
this case are not disputed. Group
Health is a health maintenance organization (HMO) that provides group policy
insurance coverage to its subscribers.
Group Health also employs its own staff physicians who work at Group
Health clinics in Eau Claire. In order
for medical expenses to be covered, subscribers must receive care from Group
Health clinics and physicians. However,
if Group Health physicians cannot sufficiently treat a patient, Lancer may
approve a health care plan developed by Group Health physicians that requires
treatment by physicians outside the Group Health network. If treatment is provided by outside
physicians at Group Health's direction, medical expenses are covered by Group
Health up to the policy limits.
On or about September 9,
1991, thirteen-year-old Angela M. McEvoy was treated by Lawrence McFarlane,
M.D., a Group Health physician.[3] Because McFarlane believed Angela suffered
from an eating disorder, he referred her to Systems Counseling, an Eau Claire
clinic under contract to provide services for Group Health, for evaluation and
counseling. He also admitted Angela to
Sacred Heart Hospital for an evaluation by a psychiatrist. Angela was Group Health's first insured to
require treatment for anorexia nervosa, and Group Health had no protocol for
the treatment of anorexia.
Treatment in Eau Claire
was unsuccessful. After speaking with
Systems Counseling and the psychiatrist, McFarlane consulted with Lancer
regarding Angela's treatment, and Lancer agreed to hospitalize Angela as an
inpatient for acute care. Lancer
approved a two-week hospitalization at the University of Minnesota Hospital, a
non-Group Health provider, and decided to review the plan at the end of the two
weeks. Angela was admitted to the
University of Minnesota eating disorders program on November 15, 1991.
At the end of the two
weeks, Lancer approved coverage for a seven-day extension of Angela's stay at
the hospital. He continued to monitor
Angela's progress by speaking with her doctors, and having his subordinates
speak with her doctors. Lancer approved
insurance coverage several times for extensions of Angela's inpatient
care. After six weeks of inpatient
care, Lancer, whose primary duties were medical management and administration,
decided to discontinue coverage for Angela's treatment at the University of
Minnesota Hospital. Against the
recommendations of Angela's treating physicians, Angela was discharged from the
hospital on December 31, 1991. At
this time, Angela had seventy days of insurance coverage remaining for
inpatient care.
Angela relapsed during
her outpatient treatment at Systems Counseling. After Group Health approved coverage for Angela to see an eating
disorder specialist who recommended inpatient treatment, Lancer decided to
readmit her to the University of Minnesota Hospital. She was readmitted on February 27, 1992, and discharged on May 6,
1992, into the Midelfort Clinic's eating disorders program.
We review a summary
judgment according to the standard of review set forth in § 802.08, Stats.
Millers Nat'l Ins. Co. v. City of Milwaukee, 184 Wis.2d
155, 164, 516 N.W.2d 376, 378 (1994).
According to § 802.08(2), summary judgment "shall be rendered 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 is entitled to a judgment as a
matter of law."
We reverse the trial
court if we determine that the trial court incorrectly decided a legal
issue. Millers, 184
Wis.2d at 164, 516 N.W.2d at 378. The
dispositive issue on appeal is whether Group Health's decision to deny
insurance benefits to McEvoy formed the basis for a bad faith claim. Whether the trial court correctly read
McEvoy's pleadings as a medical malpractice claim is a question of law which we
review de novo. See United
Capitol Ins. Co. v. Bartolotta's Fireworks Co., 200 Wis.2d 284, 297,
546 N.W.2d 198, 203 (Ct. App. 1996).
The court decided that
McEvoy's claim was a malpractice claim subject to the provisions of ch. 655, Stats.
According to the relevant statute, "[A]ny patient or the patient's
representative having a claim or any spouse, parent or child of the patient
having a derivative claim for injury or death on account of malpractice
is subject to this chapter."
Section 655.007, Stats.
(emphasis added). Because the language
of the statute is unambiguous, we interpret this statute for its plain
meaning. See In re P.A.K.,
119 Wis.2d 871, 878-79, 350 N.W.2d 677, 681-82 (1984). Section 655.007 says that ch. 655 is
applicable to all claims for medical malpractice. However, we are not persuaded that ch. 655 applies to bad faith
claims against health insurers.
The issue in this case
is Group Health's failure to authorize and pay for Angela's treatment pursuant
to her mother's health insurance plan.
Group Health asserts that Lancer's decisions regarding Angela's
treatment were medical and, therefore, subject to ch. 655, Stats.
However, the fact that Lancer has a medical background does not mean
that any and all legal challenges to his insurance coverage decisions
constitute medical malpractice claims.
Lancer neither met nor treated Angela as a physician. During the time that the bad faith is
alleged to have occurred, Angela was not even being treated by Group Health
physicians. Instead, she was treated at
the University of Minnesota Hospital and at Systems Counseling by non-Group
Health physicians.
Although Lancer is a
medical doctor, and Group Health does employ a staff of physicians, the
decisions Lancer made with regard to Angela's treatment were administrative
insurance coverage decisions, rather than medical decisions. The following notation concerning Group Health's
dealings with the University reflects Lancer's role in the administrative
decision to deny insurance coverage:
12/27/91 [Lancer] OK'ed [coverage] thru Wed. Jan 1st 1992 will be Angela's last day. ...
NO MORE EXTENSIONS. [Lancer] doesn't
want to talk to them anymore. No
excuses. Discharge, or no payment.
We
interpret these remarks as those of an HMO administrator, rather than a
treating physician. Lancer acted in a
purely administrative or case management capacity for Group Health when he
decided to deny insurance coverage to Angela for further inpatient treatment at
the University of Minnesota Hospital.
Therefore, the court erred when it decided, as a matter of law, that
McEvoy's bad faith claim against Group Health was a malpractice action, subject
to ch. 655, Stats.
McEvoy argues that its
claim against Group Health is for the HMO's bad faith in denying coverage for
Angela's inpatient hospitalization. A
cause of action for bad faith against an insurer is recognized in
Wisconsin. See Anderson v.
Continental Ins. Co., 85 Wis.2d 675, 685-86, 271 N.W.2d 368, 374
(1978). To prove a claim for bad faith,
the plaintiff "must show the absence of a reasonable basis for denying
benefits of the policy and the defendant's knowledge or reckless disregard of
the lack of a reasonable basis for denying the claim." Id. at 691, 271 N.W.2d at
376. We have reviewed the complaint and
are satisfied that McEvoy asserted a bad faith claim against Group Health.
We conclude that McEvoy's complaint stated a
bad faith claim against Group Health, and the court erred when it granted
summary judgment. We therefore reverse
and remand for further proceedings.
By the Court.—Judgment
reversed and cause remanded for further proceedings.
Not recommended for
publication in the official reports.
[1]
Specifically, Group Health asserts that McEvoy did not comply with §
655.445, Stats.:
Request for mediation in conjunction with court action. (1) Commencing
action, request and fee.
Beginning September 1, 1986, any person listed in s. 655.007 having a
claim or a derivative claim under this chapter for bodily injury or death
because of a tort or breach of contract based on professional services rendered
or that should have been rendered by a health care provider shall, within 15
days after the date of filing an action in court, file a request for mediation.
...
....
(3) No court proceedings before mediation. For actions filed under sub (1), no discovery may be made and no trial, pretrial conference or scheduling conference may be held until the expiration of the mediation period under s. 655.465(7).
[2] Group Health also argues that McEvoy is trying to frame its claim as a bad faith claim to circumvent the prohibition of punitive damages in medical malpractice actions. We agree that punitive damages are not available in an action for medical malpractice. See Lund v. Kokemoor, 195 Wis.2d 727, 734, 537 N.W.2d 21, 23 (Ct. App. 1995). However, because McEvoy's recovery of punitive damages is not the dispositive issue in this case, we do not address it.