Appeal from the United States District Court for the Western District of Washington. D.C. No. CV-92-00581-WLD. William L. Dwyer, District Judge, Presiding.
Before: Donald P. Lay,*fn* Stephen S. Trott and Thomas G. Nelson, Circuit Judges. Opinion by Judge T.g. Nelson.
T.G. NELSON, Circuit Judge:
Costco Wholesale Group Benefits Program (the "Plan") and Concept Administrators, Inc. (the "Plan Administrator"), appeal the district court's summary judgment in favor of Donna Cole Winters in her action seeking reimbursement from the Plan for medical expenses related to a gamete intrafallopian transfer ("GIFT") procedure. The Plan is an employee welfare benefit plan subject to regulation under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. We reverse and remand.
FACTS AND PRIOR PROCEEDINGS
As a Costco employee, Winters was a participant in the company's self-insured ERISA health benefits plan. Winters filed a timely claim for reimbursement of expenses related to a GIFT procedure performed on December 17, 1990. The procedure involves retrieving eggs from the patient's ovaries and placing the eggs, along with sperm, in the patient's fallopian tube.
Section 6.8 of the health plan excludes "charges not reasonably necessary for the diagnosis and treatment of Illness or Injury." Section 6.31 of the plan excludes from coverage "charges in connection with in-vitro fertilization." There is no mention of GIFT procedures. Section 14.9 provides that "the Plan Administrator has the absolute discretion and authority to construe disputed or seemingly inconsistent provisions of the Plan and to make all decisions regarding eligibility and/or entitlement to coverage or benefits."
Winters' claim was denied by Concept Administrators, Inc., Costco's third-party claims administrator, as a charge in connection with in-vitro fertilization. The denial was affirmed by Costco*fn1 with advice from Ethix Northwest, a consulting firm to health benefits providers.
Winters subsequently filed a case against the Plan and the Plan Administrator, challenging the denial of benefits in state court. The defendants removed the case to the district court. Both sides moved for summary judgment. The district court granted Winters summary judgment under ERISA, determining that she is entitled to reimbursement for the expenses of the GIFT procedure performed on December 17, 1990.
The court concluded that "under the 'plain and ordinary meaning' of IVF as provided by the dictionary and medical text sources, the administrator's decision cannot stand because it conflicts with that meaning and therefore constitutes an abuse of discretion. GIFT, unlike IVF, involves in vivo - specifically, intrafallopian - fertilization of the egg." (Emphasis added.) The court found it unnecessary to address Winters' argument that the standard of review should be less deferential in view of the Plan Administrator's conflict of interest, because Winters "prevails even under the more deferential abuse of discretion standard."
Alternatively, the court explained that "if the 'plain and ordinary meanings' of IVF and GIFT set out above were not used, then 'IVF' - the term used in the plan - would have to be deemed ambiguous." Noting that defendants' own expert testified in his deposition that the policy "may be ambiguous" with respect to the GIFT procedure and that this could create confusion, the court observed that the rule of contra proferentem would result in the ambiguity being resolved in Winters' favor. The Plan and the Plan Administrator (collectively referred to as "Costco") timely appeal.