Mintz v. Blue Cross of California (Torts)
Filed April 16, 2009, Second District, Div. Eight
Cite as B207405

Administrator not a "stranger" to the insurance contract

Judge David Mintz (Mintz) was a member of PERS Choice, a health insurance plan issued and funded by the California Public Employees’ Retirement System (CalPERS) through contracts with third-party administrators: Blue Cross of California and Medco.

Under the plan, when a claim for benefit is denied, a member has various appeal rights.

A member’s appeal rights include written objection to blue cross, request for reconsideration, and second-level review by another physician advisor among others. In case of dissatisfaction with Blue Cross’s response, the member may appeal with CalPERS or ask for an administrative hearing. A member may also resort to court processes only if appeal process has been exhausted.

The plan also provided for provisions involving experimental or investigational treatments. Any issue regarding such provisions should be dealt with by Blu Cross upon request for an independent external review.

When Mintz was treated for radio frequency ablation (RFA) and claimed under the plan, Blu Cross denied the same on the ground that it was investigational hence, not covered.

In its statement of denial, Blu Cross informed Mintz that its clinical reviewer, Dr. Williams determined that RFA of lung tumors “is deemed investigational and not medically necessary for a 47 year old like him.

Blu Cross notified Mintz of his right to file an appeal but not his right to ask for an independent external review.

Mintz, in his second complaint, sought for damages by alleging breach of contract, tortious breach of the implied covenant of good faith and fair dealing, intentional interference with contract rights, reckless infliction of emotional distress, negligent interference with contract rights, and negligence against Blu Cross and Well Point, Inc., its owner and operator.

Blue Cross demurred on the second complaint. The trial court sustained the same but Mintz did not amend his complaint. Consequently, the it was dismissed with prejudiced.

On appeal, Mintz contended that the trial court erred in sustaining Blu Cross’s demurrer alleging intentional and negligent interference with contract rights, reckless infliction of emotional distress, and negligence.

The appeal court decided the case in this manner:

1. Blu Cross as plan administrator was not a “stranger” to a contract between Mintz and CalPERS. Consequently, Blu Cross could not be held liable for interference with the contract.


2. Blu Cross’s failure to advise Mintz of his right to independent review did not amount to reckless infliction of emotional distress. The omission was not “so extreme and outrageous as to go beyond all possible bounds of decency”.
   
   Moreover, the alleged failure to approve medical procedure as deemed experimental or investigational did not give rise to a claim for intentional infliction of emotional distress.


3. The trial court erred in sustaining demurer to claim that Blu Cross was negligent in refusing to cover the procedure which was the only way of saving Mintz’s life.
   
   Blu Cross as a third party claims administrator owed Mintz to make coverage decisions in such a manner as to protect him from physical harm resulting from its administration of benefits under the plan.

Considering the foregoing discussion, the order of dismissal was reversed and remanded to the trial court to vacate its order sustaining Blu Cross’s demurrer to Mintz’s negligence action.