The opinion of the court was delivered by: Breyer, District Judge.
In this breach of contract/bad faith lawsuit plaintiff contends that
defendants breached plaintiffs health insurance contract by, among other
things, failing to pay for cosmetic surgery to correct the effects of an
earlier illness. Defendants now move for summary judgment. After
carefully considering the papers submitted by the parties, and' having
had the benefit of oral argument, defendants' motion for summary judgment
is GRANTED in part and DENIED in part.
In June 1991 plaintiff was diagnosed with nephritis, a kidney condition
which results in body swelling and weight gain from fluid retention.
Plaintiff gained approximately 50 pounds as a result of the condition.
She received medical treatment, including chemotherapy and home nursing
care, until the Spring of 1992. She eventually lost all of the weight she
had gained, but was left with excessive skin laxity and bulging
consistent with fat deposits. She also suffered tissue damage, which
caused a dramatic change in her anatomical shape so that she could no
longer wear her normal clothing. She suffered extreme embarrassment
because of the condition of her legs/thighs and wore long pants and
skirts to conceal her disfigurement.
Plaintiffs physicians were concerned that she might have a recurrence
of the disease. Accordingly, for the next few years she utilized
"conservative" methods in an effort to regain her pre-disease shape and
body contour. When her condition did not improve, and she felt surgery
would not be a risk to her health, she consulted with a plastic surgeon,
Dr. Maxwell. Dr. Maxwell performed an inner thigh lift and ultrasound
assisted liposuction on her in August 1996. Plaintiff prepaid for the
procedure and did not seek pre-certification from defendant Celtic Life
Insurance Company ("Celtic"), her health insurer.
Plaintiff subsequently filed a complaint with the California Department
of Insurance on May 29, 1997. Her complaint explained that she had had
trouble obtaining her receipts from her plastic surgeon who had gone on
indefinite medical leave, but that she expected Celtic to shortly deny
her claim for the surgeon's fee as it had done with the anesthesiology
fee. In response to her Department of Insurance complaint, Celtic wrote
plaintiff on August 11, 1997 with a further explanation of its denial and
requested that plaintiff provide it with her medical records. She
responded to Celtic's letter and advised that her physicians at Stanford
(who treated her nephritis) and with whom she discussed her cosmetic
surgery would confirm the damage to plaintiff's skin laxity and tissue
movement. She also advised that she has photographs taken before and
after her illness which demonstrate the damage caused by her illness.
On October 10, 1997, after receipt of plaintiffs medical records,
Celtic forwarded plaintiffs appeal for an outside, independent medical
review. On October 30, 1997, Celtic sent plaintiff a letter explaining
that the outside medical review found that her surgery was not covered by
Other miscellaneous claims
On October 22, 1997, plaintiff appealed the denial of claims for
physical therapy and acupuncture services. By letter dated Nov. 13, 1997,
Celtic agreed to pay for the physical therapy, but with respect to the
remaining items it stated that she had not indicated precisely what
benefit issues relate to those items. Celtic said it would be happy to
review those claims if plaintiff provided the relevant details. Plaintiff
responded with further details by letter dated December 4, 1997.
On January 17, 1998, plaintiff wrote Celtic regarding her claim for
acupuncture services. She then filed a complaint with the California
Department of Insurance about payment for those services. Celtic
responded to her by letter dated May 18, 1998. Plaintiff promptly
responded with a letter of her own, dated June 2, 1998.
The request for a lower body lift pre-certification
On April 9, 1999, plaintiff faxed and mailed a letter to Celtic
requesting preauthorization for a surgeon in Kansas to perform a lower
body lift to correct the physical damage caused by her nephritis. She had
received notice that her Celtic policy was due to expire on May 1, 1999
due to Celtic's withdrawal from the California market. Celtic's
administrator received the mail copy on April 17, 1999. On May 3, 1999,
Celtic's administrator denied the pre-authorization request on the ground
that the policy expired on May 1, 1999.
On August 30, 1999, plaintiffs attorney sent a demand letter to Celtic
regarding all of plaintiffs claims. Celtic responded that plaintiff had
completed all of her administrative procedures regarding the Dr. Maxwell
surgery as of October 30, 1997. In an October 21, 1999 telephone
conversation between Celtic and plaintiffs attorney, Celtic suggested
that plaintiff submit a statement of medical necessity from her
physician. Plaintiff did so on January 13, 2000. Celtic. forwarded the new
information, along with the old, for an outside independent medical
review. By letter dated March 13, 2000, Celtic again denied
the claim for the surgery performed by Dr. Maxwell.
Plaintiff filed this lawsuit in April 2000 in state court. She makes
claims for breach of contract, breach of the implied covenant,
negligence, and emotional distress against Celtic and its plan
administrator, Healthplan Services ("Healthplan"). Defendants removed the
case to this Court in December 2000 after plaintiff's response to
interrogatories revealed that the amount in controversy requirement was
satisfied. Defendants now move for summary judgment.
I. Summary Judgment Standard
Summary judgment is proper when "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law." Fed.
R.Civ.P. 56(c). An issue is "genuine" only if there is a sufficient,
evidentiary basis on which a reasonable fact finder could find for the
nonmoving party, and a dispute is "material" only if it could affect the
outcome of the suit under governing law. See Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A
principal purpose of the summary judgment procedure "is to isolate and
dispose of factually unsupported claims." Celotex Corp. v. Catrett,
477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "Where the
record taken as a whole could not lead a rational trier of fact to find
for the non-moving party, there is no `genuine issue for trial.'"
Matsushita Etec. Ind. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct.
1348, 89 L.Ed.2d 538 (1986).
"In considering a motion for summary judgment, the court may not weigh
the evidence or make credibility determinations, and is required to draw
all reasonable inferences in a light most favorable to the non-moving
party." Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). An inference
may be drawn in favor of the non-moving party, however, only if the
inference is "rational" or "reasonable" under the governing substantive
law. See Matsushita, 475 U.S. at 588, 106 S.Ct. 1348.
In determining whether to grant or deny summary judgment, it is not a
court's task "to scour the record in search of a genuine issue of triable
fact." Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (internal
quotations omitted). Rather, a court is entitled to rely on the nonmoving
party to identify with ...