We had a good result from the Utah Supreme Court recently in Quaid v. U.S. Healthcare, 2007 UT 27, ___ P.3d ___ (2007). You can find it in this website’s library here. Our clients were Bob and Sue Quaid and their adopted son Skylar. Skylar was born in New York with serious heart problems. His birth parents put him up for adoption within a few months after his birth and when the Quaids found out about his situation, they made arrangements to take Skylar in. The Quaids are remarkable folks. They have 15 children, all but one or two are, like Skylar, adopted and have special needs. Bob had health benefits through his employer here in Utah, the Loren Cook Company, which sponsored a self funded medical plan. Skylar’s birth parents had benefits for him through an Aetna HMO in New York. Payment of Skylar’s medical expenses initially fell through the cracks because the Loren Cook plan had coordination of benefits language stating that if a person had coverage through a disability extension from another insurer, the Loren Cook plan would be secondary to the benefits provided through the other plan’s disability extension. There was no question Skylar was disabled when he left New York and came to Utah and the Aetna policy had a disability extension provision. However, benefits were available through the Aetna plan only if he obtained his treatment through the Aetna HMO network in New York. The Quaids weren’t willing to leave Skylar there. They brought him out to Utah and he received intensive medical treatment for his conditions. The Loren Cook plan denied those claims and, due to their size, the Quaids applied for and received Medicaid coverage to the tune of several hundred thousand dollars. We argued that the Loren Cook plan was obligated to reimburse those medical expenses for two separate reasons. First, we asserted that the refusal of the Loren Cook plan to offer Skylar the same level of coverage as it provided to the Quaids’ other children violated the mandated coverage requirements for adopted children contained in ERISA and COBRA at 29 U.S.C. §1169. Second, we asserted that there was no coverage through the Aetna HMO at all once the birth parents relinquished their rights as parents of Skylar. At that point he became a stranger to the Aetna policy, literally assumed a new identity, and had no rights to benefits under the Aetna policy. The trial court ruled against the Quaids but the Utah Supreme Court reversed. In an opinion written by Justice Parrish, three justices felt sufficient grounds existed to order the Loren Cook plan to pay benefits because Skylar had no coverage under the Aetna policy once his birth parents relinquished their rights in the adoption process. As a result, the Loren Cook plan was obligated to provide primary rather than secondary coverage. In a concurring opinion written by Justice Nehring, two justices agreed with the result but also stressed that ERISA’s coverage mandate for adopted children and their new parents provided a separate compelling basis for the Loren Cook plan to pony up. The two concurring justices were also troubled about the cost shifting of Skylar’s significant medical expenses by the Loren Cook company from itself to state and federal taxpayers. A final note about Skylar. When the Quaids adopted him, his physicians in both New York and Utah told Bob and Sue that Skylar’s heart and other problems were so grave they should not expect he would be with them for the long term. But Skylar pulled through and he’s an integral part of the Quaid family today, much loved and with many siblings.
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Don Levit 11/17/2008 01:47 PM
Brian: Thanks for providing this very interesting case. It seems to me that the decision would be a "slam dunk" (go Rockets, beat the Jazz)! Can you share with us why the district court ruled otherwise? Because the Loren Cook plan was self-funded, did that have anything to do with their contesting the claim? I am curious what the relationship is like now between Bob Quaid and his employer? Don Levit
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Brian S. King 11/17/2008 01:47 PM
Hi Don-- My apologies for not responding to your comment sooner. First, sorry about your Rockets. But we're having a fun ride with the Jazz right now. We'll see how they do against the Spurs. The district court ruled against us based on its reading of the statute. Loren Cook argued that they treated Skylar no differently than his siblings would have been treated if they had been adopted with coverage through the birth parents' HMO: they would have denied the siblings any coverage too. I was quite surprised when we lost at the trial court level because we have always felt this was a strong case and our trial judge has an excellent reputation for brains, hard work, and objectivity. But you never know when you put these cases in the hands of a judge or jury. Sometimes you lose some strong cases that you can't believe you lost and win some relatively weak ones. Like the great majority of my cases, we are doing this on a contingent fee. It's been in the litigation process since about 2000 or 2001. We've got a lot of time and costs in it that the firm would have just absorbed if we'd lost. It's a true entrepreneurial endeavor. Given that, it's a wonder why the business community doesn't like contingent fee lawyers more. As for the self-funded angle, I'm not sure that had too much to do with things. Loren Cook had stop loss insurance and I know that the Plan and the stop loss insurer have some sort of arrangement to allocate the loss between them but I'm not privy to the details on that. I don't know who, as between the Loren Cook company and the stop loss insurer, is the decision maker about how the case was defended. Finally, as for the relationship between Bob and Loren Cook, the company closed the plant they had here in Utah sometime in 2001 or 2002 and Bob was laid off. I don't think Loren Cook hassled Bob about him pursuing his claim. That is both to its credit and a reflection of the fact that ERISA specifically makes it unlawful to take any puniitive action against a plan participant who takes legal action to enforce their rights under ERISA. Thanks for your interest Don!
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