Union Labor Life Ins. Company v. Pireno

PETITIONER: Union Labor Life Ins. Company
RESPONDENT: Pireno
LOCATION: Suffolk County Court

DOCKET NO.: 81-389
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 458 US 119 (1982)
ARGUED: Apr 27, 1982
DECIDED: Jun 28, 1982

ADVOCATES:
B. Barry Grossman - on behalf of the United States as amicus curiae
Susan M. Jenkins - on behalf of the Respondent
T. Richard Kennedy - on behalf of the Petitioners

Facts of the case

Question

Media for Union Labor Life Ins. Company v. Pireno

Audio Transcription for Oral Argument - April 27, 1982 in Union Labor Life Ins. Company v. Pireno

Warren E. Burger:

We will hear arguments first this morning in Union Labor Life Insurance Company against Pireno and the consolidated case.

Mr. Kennedy, I think you may proceed whenever you're ready.

T. Richard Kennedy:

Mr. Chief Justice and may it please the Court:

These consolidated actions arise from a health insurance company's use of peer review in the State of New York.

Specifically my client, Union Labor Life Insurance Company, referred certain claims for reimbursement for chiropractic treatment to a peer review committee of the Petitioner New York State Chiropractic Association.

The referrals were necessary because the company in its experience was not familiar with the type of treatment rendered or the medical necessity of that treatment.

And since the policy specifically limits the coverage to treatment that is medically necessary and fees which are reasonable and customary within a particular community, it was necessary for my client to obtain professional advice from the peer review committee of the chiropractic association.

Now, these terms of the policy which I mentioned are approved by the superintendent of insurance of the State of New York under extensive regulation of insurance in our state.

Peer review, chiropractic peer review, arose in the early 1970's at the time that New York State insurance law was amended to require health insurance companies to provide to policyholders reimbursement for chiropractic treatment as well as medical treatment.

And therefore it became necessary for the companies to honor all claims for chiropractic treatment and to obtain the professional advice which I had mentioned.

Respondent Alexander Pireno, a licensed chiropractor in the State of New York, brought this action in 1976 under the Sherman Act, alleging conspiracy in restraint of trade in the peer review arrangement between the insurance company and the peer review committee of the state chiropractic association.

After two years of extensive discovery in the case, it became obvious that the only activity of the peer review committee was advising the insurance company as to whether the treatment rendered was medically necessary or as to whether the fees charged were within the range of reasonable and customary charges in the particular community; and that Union Labor Life Insurance Company was using that advice in determining the amount of reimbursement to be provided to its policyholders in connection with their claims for chiropractic treatment.

Therefore, it became obvious that the Pireno claim was simply that the company was using this advice to interpret its policy and he was disputing the company's interpretation of the policy insofar as the amount of benefits to be provided to the insured.

What language in the policy was being interpreted?

T. Richard Kennedy:

Justice White, there were specific terms in the policy that limited the extent of the coverage.

One of the limitations was that the treatment had to be medically necessary, and another was that the extent of reimbursement would only be for usual and customary fees and charges and reasonable charges within the community.

And are those two things precisely what the peer review committee's attention would be addressed to, the question, were the services necessary; and secondly, were the charges usual and customary?

T. Richard Kennedy:

Those were the usual questions, Your Honor.

There were additional questions.

For example, the company does not provide reimbursement if the treatment is beyond the scope of the chiropractor's license to practice.

Furthermore, if the treatment is the result of a job-related accident or injury there is no coverage.

And sometimes it might be necessary for the company to obtain professional advice in respect to those matters.

But those... would that aspect be the business of insurance?

T. Richard Kennedy:

Yes, Your Honor.

As long as it's the interpretation of the policy and relates to the extent of the insurer's obligations to the insured, we say it is the business of insurance.

Now, we therefore moved for summary judgment in the district court and that motion was granted.

The district court held that, since peer review served to determine the precise extent of the insurance company's obligations to the policyholders and since it determined, it helped to determine, the rights of the insured under the policy, that this was what this Court has held the core of the business of insurance.

And this Court so held that in the National Securities case and in the Royal Drug case decided in 1979.

The court held also, the district court held also here, that this--

In your view, are they in effect appraisers in terms of the value of the services?