(Transcribed from the original, received November 9, 1998)

Always First in Health Plans

3200 Highland Avenue
Downers Grove, IL 60515-1282
(630) 241-7900

November 5, 1998

Mr. R. James Martin
501 Sycamore Lane, #327
Euless, Texas 76039

Dear Mr. Martin:

Your letter of September 13, 1998 addressed to JC has been referred to me for response. Although your September 13 letter does not specifically indicate that it is an appeal letter, First Health has elected to treat it as such. In that regard, First Health will be providing you with a separate letter containing the results of First Health's review of your appeal. This letter will address the issues you raise in your letter.

Preliminary, it is important to note that I will be referring to the Metromedia Restaurant Group ("MRG") Plan document as "The Plan." The document which MRG provides to its employees entitled "MRG Salaried Flexible Benefits Plan" is a synopsized version of the larger Plan document, which I refer to below as the "Synopsis." I will make reference to both of these documents below.

In the opening paragraph of your September 13 letter, you accuse First Health of being "grossly tardy" in its investigation of any pre-existing conditions which could affect coverage for claims made under the Plan. You cite section 7.11 of the Plan in support of this accusation. It is my understanding that First Health first made inquiries regarding any potential pre-existing condition in the first quarter of 1996. Inquiry letters were sent to you as well as to your treating physician. These letters requested that First Health be provided with the names of prior physicians who had treated you, the conditions for which you were treated, and the identity of any medications you had taken or were taking. It took until August 1998, or over two and a half years after the initial request, before you provided First Health with sufficient documentation to allow it to make its determination that there was non pre-existing condition. Once the documents were received, First Health made its conclusion quickly. Section 7.11 of the Plan to which you refer makes no reference whatsoever to a time limitation in which First Health must make its determination. Section 7.11 informs the participant that the Plan will not pay benefits for any medical expenses incurred at any time preceding the effective date of participant's coverage under the Plan. Only after the participant has been covered continuously for one year will this provision not apply. First Health's investigation regarding any pre-existing condition which you may have had at the time you first joined the Plan was begun well within the one year time frame. Further, although you have clearly been employed by MRG for more than a year, First Health's investigation could not be completed until you, as the Plan participant, had complied with the terms of the Plan document and provided First Health with the necessary documents to render its decision. That it took two and a half years was beyond First Health's control. First Health is dependent on the participant and his providers to provide the information promptly.

In numbered paragraph two of your letter, you ask about the definition of "medical necessity." The definition can be found in the Plan on pages 51-52. To assure that you have complete information, I will provide you here with the excerpts from the Synopsis relating to "medical necessity," a concept in the Plan which is a threshold requirement which must be met for a service to be covered by the Plan. The Synopsis provides:

About Your Medical Benefits

All benefits under this plan must satisfy some basic conditions. The following conditions are commonly included in health benefit plans but are often overlooked or misunderstood.

Medical Necessity

The plan provides benefits only for covered services and supplies that are medically necessary for the treatment of a covered illness or injury . Also, the treatment must not be experimental/investigational . Synopsis at page 15.
The Synopsis defines medically necessary (medical necessity) as:

Services or supplies which the plan administrator determines, in the exercise of its discretion, are generally acceptable by the national medical professional community as being safe and effective in treating a covered illness or injury , consistent with the symptoms or diagnoses, furnished at the most appropriate medical level and not primarily for the convenience of the patient, a health care provider or anyone else.

Because a health care provider has prescribed, ordered or recommended a service or supply does not, in itself, mean that it is medically necessary as defined above. Synopsis at page 36
These provisions inform the participant that unless a specified treatment or service is medically necessary, benefits will not be paid. As stated in your Synopsis, the fact that your provider orders or prescribes a particular treatment or procedure does not guarantee that the treatment or procedure will be paid under the Plan unless medical necessity has been established.

Numbered paragraph 2 from your letter also cites to sections 7.12.R and 7.12.OO of the Plan, stating that in submitting information to First Health , Dr. did not violate these provisions. First, I am not sure what information you are referring to when you refer to the information Dr. submitted. I am also confused by your reference to these sections of the Plan. Section 7.12.R relates to educational charges not being an eligible expense under the MRG Plan. I do not understand this section's relevance to your situation.

Your reliance on section 7.12.OO of the Plan is even more confusing. This section refers to removal of breast implants and other prosthetic implants as not being eligible expenses under the MRG Plan. Again, I do not understand the relevance of this section to your situation.

On page two of your letter, you rely on section 7.14.G of the Plan in accusing First Health of acting in an arbitrary and capricious manner. First, this section makes no reference to such a phrase. Therefore, I'm not sure what you are inferring by its use herein, though we categorically deny that First Health has acted in an arbitrary or capricious manner in connection with your claims. You are correct in your statement that Title 29 of the United States Code generally governs the way the MRG Plan is administered. However, you are incorrect in your assertion that the Texas Administrative Code is also governing. Please refer to ERISA (ss) 514(a) which contains the preemption clause. Section 514(a) preempts all state laws as those laws relate to employee benefit welfare plans administered under ERISA. This includes any and all state laws purporting to regulate coverage or the payment of benefits under these plans.

On page two of your letter you further accuse First Health of providing other Plan participants with "eligible expense determinations." We are not sure what you are referring to. If you can provide me with these determinations, perhaps I will be able to respond to your point.

With regard to your assertion that section 7.18.D of the Plan has not been complied with, I again refer you to the separate letter First Health will be sending that reflects the results of First Health's review of the appeal of your claim denials. If, after reviewing this letter you still have questions, please let First Health know which specific denials you need additional information on and First Health will be happy to review your requests.

On page two of your letter, you have accused First Health's medical staff of not being "current on medical literature." I can assure you that First Health's physicians and nurses have and use the most current literature available in the medical community. This includes Conn's Current Therapy . First Health's medical personnel also have access to a variety of other reference manuals to assist them in their jobs. They do not rely on just one reference guide. First Health employees a staff of highly qualified individuals whose primary function is to acquire all the latest medical literature, data and research regarding illnesses and diseases and to ensure that this material is made available to our medical personnel. In addition, First Health's National Medical Policy Committee meets regularly to discuss current events in medical technology and to make changes in its Medical Policy as warranted. First Health's Medical Policy is continually being updated to reflect developments in treatments and procedures.

In numbered paragraph 3 of you letter you also request information on a variety of subjects. I will respond by referencing each numbered item.

1. Covered CPT Procedure Codes: Current Procedural Terminology ("CPT")Codes are codes that refer to specific medical services rendered. It is not possible in the abstract to say what CPT Codes may be covered by a Plan, and what codes may not be covered. For example, as stated above, there is a general requirement that a medical service be medically necessary in order to be covered. A claim for the removal of an appendix would list the CPT Code as 44960. As a general matter, this service would not be medically necessary if the Plan participant were suffering from tonsillitis, but it would be if the participant were suffering from a ruptured appendix. Thus, one cannot say that any particular CPT Code is "covered" or "not covered," since the coverage depends upon the context in which the services are rendered.

First Health necessarily relies on the treating physicians to provide accurate and appropriate CPT codes when submitting a claim. If you would like to learn more about how CPT codes are used, you could visit a medical library or contact your physician.

2. Related CPT Procedure Codes : I am not sure exactly what you are referring to. In addition to the CPT Codes (provided in the text entitled Physician's Current Procedural Terminology ), First Health recognizes and uses a number of other nationally recognized publications including The HCPCS Level II National Codes , a publication which, among other things, identifies recognized federal government codes for non-CPT related services such as durable medical equipment. HCPCS is an acronym for the H CFA (Health Care Financing Administration) C ommon P rocedure C oding S ystem. The system is a uniform method for health care providers and medical suppliers to report professional services, procedures and supplies. HCPCS employs three levels in its coding system. Level I is the AMA's CPT text. One most often encounters HCPCS when dealing with the Medicare program. Again, if you would like to learn more about HCPCS and other related texts, you could visit a medical library or contact your physician.

3. Local Codes For Adjunct Treatments: Again, I am not sure what you are referring to in this request. If you are referring to the Level III codes found in HCPCS, First Health recognizes these codes.

4. Covered ICD-9 Diagnosis Codes: The International Classification of Diseases - CM 9th Revision ("ICD-9") is just one of several texts First Health utilizes in identifying diagnoses. Other recognized texts include DSM-4 which correlates to the ICD-9 codes and is used in identifying mental and nervous disorders.

As us true with CPT Codes, it is not possible to determine in the abstract whether a particular ICD-9 diagnosis will be "covered" by a Plan. Again, to use the example given above, some services (such as appendix removal) may be covered if the diagnosis were a ruptured appendix, but not if the diagnosis were tonsillitis.

5. Description of the Diagnosis : I do not understand what you are asking for here. If you are requesting information regarding the symptoms of a particular illness or disease with which you are afflicted, or the diagnosis which has been assigned to an illness or disease, this is an issue between you and your treating physician.

6. Plan Policy (and attendant sub-requests): Your Plan document and the Synopsis will provide you with the information you are seeking in this request. With regard to your request for information concerning First Health's Medical Policy, this policy is proprietary and will not be provided.

7. Appeal Process (and Attendant sub-requests): The appeals procedure available to Plan participants can be found in your Plan document. Also, please refer to pages 27-28 of the Synopsis which outlines the procedure for filing an appeal with the Plan.

Finally, I would like to respond to some of the comments and allegations which you make in your August 5, 1998, e-mail memo to Ms. Linda Farina of MRG. First, you profess amazement that First Health has not pursued other avenues with regard to your medical records and their relationship to pre-existing conditions. You are incorrect in your statement that First Health has "signature authorization" to obtain information from other insurance companies and other plan administrators. Medical records are considered confidential in nature and generally not available to a third party administrator without specific authorization from the patient.

You also assert that First Health was in contact with your spouse's health plan, LabCorp, and you imply that First Health should have already had information about any pre-existing condition. Once your participation in the MRG Plan began, it became your responsibility to provide the Plan with requested information. By your voluntary participation in the Plan, you have agreed to cooperate fully with the Plan and provide any materials requested which are necessary to properly and fairly adjudicate claims filed by you or in your behalf. I can assure you that First Health more than meets its requirements in conducting due diligence. I know of no basis for your statement that First Health and LabCorp have "aggressively undertaken EOB correspondence for current claims."

Last, and in conjunction with your demand for documentation (addressed above), you identify a number of diagnoses you claim to have been afflicted with and you request Plan information on each of the diseases/illnesses. Though there are a limited number of specific illnesses, diseases or injuries referenced in the Plan, the Plan does not, as a general matter, reference specific diagnoses. Instead, it speaks generally in terms of services covered or excluded. Importantly, too, and as repeatedly mentioned above, the Plan contains the general requirement that a service be determined to be medically necessary in order to be covered. This general language applies to those diagnoses not specifically referenced. Of course (and even more generally), to determine whether a claim will be covered under the Plan, it is necessary to review all of the terms, conditions and exclusions of the Plan.

You may contact me at the above address if you have further questions.

Very truly yours,

(illegible scrawl)

Margaret B. Jones
Director & Associate Counsel
First Health Group Corp.