The opinion of the court was delivered by: Hillman, District Judge
This case involves Plaintiff's claims that Defendant New Jersey Bricklayers and Allied Craftsman Health Fund ("BAC Fund") breached the terms of its insurance plan ("BAC Plan") by failing to pay benefits for medical treatment provided to certain covered individuals and that Defendant Gary J. Mercandante breached his fiduciary duties by failing to properly administer claims under the BAC Plan.*fn1 An eleven-day bench trial was held in November 2007 with supplemental submissions thereafter. The Court now issues this Opinion in accordance with Federal Rule of Civil Procedure 52(a)(1).*fn2
Plaintiff, Frank A. Briglia, is a board certified pediatrician, who specializes in caring for technology dependant chronic care patients. From 1999 through the present, Dr. Briglia has served as the Director of Specare Center for Special Healthcare Needs ("Specare"). Additionally, from 2003 through the present, Dr. Briglia has served as Medical Director of the Ventilator-Dependent Unit at Wanaque Pediatric Rehabilitation Center ("Wanaque").
Among the patients Dr. Briglia provided care to through Specare were Dominique H. and Paul K.,*fn3 both of whom were covered under the BAC Plan through their parents. Dominique H. and Paul K.'s respective medical conditions required that they be kept on mechanical ventilators. Given the cost of treating ventilator dependant children in a hospital, both received in-home care, which is more cost-effective.
The BAC Plan is a self-insured employee welfare benefit plan, as defined in 29 U.S.C. § 1002(1). Mr. Mercandante is the Administrative Manager for the BAC Fund. Over the years the BAC Fund has employed a number of third-party administrators. Prior to 2002, the BAC Fund's third-party administrator was Union Labor Life Insurance Company ("ULLICO"). Beginning in January 2002, Horizon Blue Cross/Blue Shield ("Horizon") took over as third-party administrator. Under the terms of the BAC Plan, in order to be covered, all home health care benefits had to be coordinated though the third-party administrator. The BAC Plan also expressly provides that changes to or discontinuation of the BAC Plan "will not affect you or your beneficiary's right to any benefit to which you have already become entitled."
During the course of his treatment of Dominique H. and Paul K., Dr. Briglia billed for his services using, inter alia, the following CPT codes:*fn4 94657 for Ventilator Management; 94770 for End Tidal CO2 Monitoring; 94762 for Pulse Oximetry; and 99374 for Care Plan Oversight. While ULLICO was the BAC Plan's third-party administrator, Dr. Briglia never had difficulty obtaining payment for his services using these codes. Mr. Mercandante and the Fund were aware that ULLICO reviewed and paid Dr. Briglia's claims for services to Dominique H. and Paul K. From time to time, ULLICO would deny one of Dr. Briglia's claims for lack of information. Dr. Briglia would then have additional information regarding the claims provided to ULLICO and the claims would ultimately be paid.
Dr. Briglia first began treating Dominique H. in 1999, and continued treating her until her death in May 2007. During that time, Dr. Briglia was in daily contact with either Dominique H.'s parents or her home care nurses regarding her medications, ventilator settings, oxygen levels, end-tidal CO2 recordings, and seizures. Dr. Briglia coordinated Dominique H.'s home health care, including her nursing care, durable equipment, diet, and medication. He was also responsible for reading and interpreting the data collected by the durable medical equipment in Dominique H.'s home, and using this information to determine treatment strategy.
In 2001, Dominique H.'s father, Todd, received a letter from the BAC Fund indicating that its third-party administrator would change from ULLICO to Horizon beginning January 1, 2002. After receiving this notice, Todd received confirmation from Mr. Mercandante that the benefits under the BAC Plan would remain the same and that only the third-party administrator of the Plan would be changing.
After Horizon began administering the BAC Plan, the payment of Dr. Briglia's claims became inconsistent. Todd contacted Mr. Mercandante on June 24, 2002 to express concern that Dr. Briglia's bills were not being paid as they had been before Horizon became the third-party administrator. Around that time, Todd engaged an attorney to represent him in connection with the BAC Fund's payment for his daughter's medical services. Thereafter, Todd received a letter that the BAC Fund was denying coverage for his daughter's treatment, and that an independent medical review was being conducted by Horizon. It is unclear whether such a review was ever conducted. The BAC Fund then disputed that it was the primary carrier, asserting that the insurance of Todd's wife and Medicaid were responsible for coverage. During this period, Dr. Briglia's bills were not being paid by the BAC Fund, although he continued to provide treatment.
Due to the refusal of the BAC Fund and Horizon to pay for Dominique H.'s care, Dr. Briglia submitted the claims to AmeriHealth, Dominique H.'s mother's carrier, the secondary carrier. These claims were submitted the same as they had been to the BAC Fund. AmeriHealth paid the claims in 2003 that the BAC Fund and Horizon had refused to. When the secondary carrier changed to Aetna/Coresource, Dr. Briglia submitted his claims to that entity, and his bills were initially paid. After approximately four to six months, Aetna/Coresource, discovered that the BAC Plan was the primary insurance and denied any further payment.
Dr. Briglia first began treating Paul K. in September 2000, and continued treating him until his condition no longer warranted use of a ventilator in or around March 2004. Dr. Briglia coordinated Paul K.'s total home health care, including nursing care, durable equipment, diet, and medication. He was in contact with Paul K.'s mother, Debra Grasso, every day and was available at any time to coordinate Paul K.'s treatment and care. Although Paul K.'s treatment had been fully covered when ULLICO served as the BAC Plan's third-party administrator, the Fund stopped paying Dr. Briglia's bills in January 2002 when Horizon took over as third-party administrator.
Horizon enrolled Paul K. in its case management program administered by Care Advantage. The case manager requested a letter of medical necessity from Dr. Briglia, which he provided. Dr. Briglia also provided additional documentation explaining the need for Paul K.'s care, although he did not allow Horizon to conduct a complete audit of all of Paul K.'s medical records.
Ms. Grasso contacted Horizon on numerous occasion in late 2002 and early 2003 to resolve her son's claims. Horizon subsequently informed Dr. Briglia that all of his claims were covered and payable at one hundred percent. For the period from July 2002 until November 2002, Paul K.'s claims were paid in full, without bundling, for all charges under CPT Codes 94657, 94762, 94770, and 99374.
Following this period, Horizon refused to release payments for Paul K.'s claims, even though payment had been approved by a Horizon investigator, Joyce Johnson. When Ms. Grasso contacted Ms. Johnson about Horizon's failure to release payment, Ms. Johnson advised her that the claims should have been paid. Dr. Briglia continued to treat Paul despite not being paid.
In determining plan coverage and how claims were to be billed, the BAC Fund Plan Administrator, Mr. Mercandante, relied exclusively upon the BAC Fund's third-party administrators, ULLICO and Horizon. Mr. Mercandante was responsible to the BAC Fund's Board of Trustees, and dealt with them directly on appeals by the BAC Fund's plan participants. Horizon, as the BAC Fund's third-party administrator, reviews and pays claims for BAC Fund participants using the BAC Fund's monies. In making the determination to deny the claims and appeals of Dominique H. and Paul K., the BAC Fund and Mr. Mercandante also relied exclusively upon the advice of Horizon.
The Fund never issued a written denial of coverage regarding Paul K. Although the Fund did issue such a letter regarding Dominique H.'s claims, it did not contain a reason for the denial or cite to the applicable portion of the Plan under which the denial was made. The decisions by the BAC Fund to deny coverage was made solely on the recommendations of Horizon. The Fund did not perform any independent analysis or review in adopting Horizon's recommendations. Horizon did not advise the BAC Fund of the rationale for its recommendations or the ...