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Demoss v. Metropolitan Life Insurance Co.

March 29, 1985


On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil Nos. 82-2070 and 83-1210). Donald E. Ziegler, District Judge.

Author: Sloviter

Before ALDISERT, Chief Judge, SLOVITER, Circuit Judge, and STAPLETON, District Judge.*fn*


SLOVITER, Circuit Judge.

Plaintiff Louis DeMoss is a psychologist practicing under the name of Park Counseling Service in Greensburg, Pennsylvania, who had treated a number of employees employed nearby by defendant Volkswagen of America, Inc. (VWoA). The hourly employees, through their union, negotiated for health care benefits set forth in the Auto National Accounts Program. Blue Cross/Blue Shield of Michigan (Blue Cross), designated as the Control Plan, was charged with developing an Administrative Manual describing the scope and level of such benefits. The collective bargaining agreement provides for issuance of an insurance policy by Metropolitan Life Insurance Company (Metropolitan) covering such benefits. The salaried employees of VWoA are provided coverage identical to that provided to the hourly employees under a separate Metropolitan policy.

Metropolitan had been paying employee claims for psychological counseling and treatment until early 1982, when VWoA asked Blue Cross whether such services were covered. Under the contract, Blue Cross is charged with the interpretation of the scope and level of benefits described in the Administrative Manual. Blue Cross advised VWoA that under the Auto National Accounts Program such claims were covered only if rendered under the direction of a psychiatrist or rendered through an approved facility. Plaintiff was not an "approved facility" as defined under the relevant VWoA plans.

In February 1982, Metropolitan sent letters to employees of VWoA who claimed benefits for services rendered by plaintiff advising them that under the group plan "psychologists are not recognized as payable providers and Park Counseling does not appear to be an approved facility." The employees were advised that the claims presented would be paid but that "in the future charges from psychologists or Park Counseling Service will not be considered." DeMoss asserts that the letters were defamatory and that they caused many clients to stop patronizing his counseling service. He filed separate complaints against VWoA in the United States District Court for the Western District of Pennsylvania based on diversity of citizenship and against Metropolitan in the Court of Common Pleas of Westmoreland County, claiming libel and tortious interference with prospective contractual relations. Metropolitan removed the action against it to the same district court, based on diversity of citizenship, and both actions were heard by the same district judge. The district court granted summary judgment for defendants and DeMoss appeals.

The court based its decision for Metropolitan on the Pennsylvania Unfair Insurance Practices Act, 40 Pa. Stat. Ann. § 1171 (Purdon Supp. 1984). that Act requires an insurer to "promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim." 40 Pa. Stat. Ann. § 1171.5(a)(10)(xiv). Furthermore, the Act absolves an insurer of any liability for any statement made in compliance with the Act. It provides, "There shall be no liability on the part of an no cause of action of any nature shall arise against . . . any insurer . . . for any statement made by them in complying with this act or for providing information pertaining thereto." 40 Pa. Stat. Ann. § 1171.6. Since the letters about which plaintiff complains were written in compliance with the statute, they could not form the basis of either a libel claim or a claim for interference with prospective contractual relations.

Moreover, a cause of action for interference with prospective contractual relations under Pennsylvania law requires that plaintiff show, inter alia, the absence of privilege or justification on the part of defendant, Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 412 A.2d 466, 471 (1979), and that defendant had the intent to cause harm to plaintiff by interfering with his prospective contractual dealings, see Glenn v. Point Park College, 441 Pa. 474, 272 A.2d 895, 899 (1971); Birl v. Philadelphia Electric Co., 402 Pa. 297, 167 A.2d 472, 474 (1960). It is conceded that the VWoA plans are employee welfare plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) which requires that a plan administrator notify each participant of the specific reasons for denial of a claim for benefits. 29 U.S.C. § 1133. Since both the Pennsylvania statute and ERISA required Metropolitan to inform the employee claimants of the basis of the action taken or to be taken with regard to their claims, there was ample justification for the letters. Plaintiff has made no showing of intent to cause harm, instead acknowledging that he had no facts to support such a conclusion, see App. at 363. Even if it were enough to show, as plaintiff contends, that defendants' acts were improper, see Yaindl v. Ingersoll-Rand Co., 281 Pa. Super. 560, 422 A.2d 611, 622 n. ll (1980), compliance with the statutory mandate cannot be deemed an impropriety.

Plaintiff claims, however, that defendants' actions were improper because 40 Pa. Stat. Ann. § 767 et seq. (Purdon Supp. 1984), requires reimbursement for his services. That statute provides, inter alia, that :

Whenever a policy, contract, or certificate provides for reimbursement for any psychologically necessary service which is within those areas for which the psychologist is licensed pursuant to the act of March 23, 1972 (P.L. 136, No. 52), referred to as the Psychologists License Act, the insured, or any other person covered by the policy, contract or certificate, shall be entitled to reimbursement for such service whether the service is performed by a physician or a psychologist operating within those areas for which he is licensed.

40 Pa. Stat. Ann. § 768.

The district court did not comment upon plaintiff's contention in this regard, and we cannot tell from the record before us whether this claim was pressed by plaintiff in response to the motion for summary judgment. In any event, plaintiff has not claimed a private right of action under this statute and has not sought to enjoin the operation of the plans as violative of the Pennsylvania Act, but instead seeks only to use the Act to demonstrate the impropriety of the letters to sustain his claim for "damages for injuries sustained to his business and to his professional reputation." Appellant's Brief at 4. Since Metropolitan accurately notified the employees with regard to the existing provisions of the plan, as it was required to do, we reject plaintiff's attempt to mount a collateral attack upon the plan based on the Act. Hence, we do not need to reach the contention of the appellees that that Act gives rise to no private cause of action or that it is pre-empted by ERISA.

The district court ruled that the action against VWoA is premised solely on Metropolitan's allegedly libelous letters to the employees of VWoA, and that therefore VWoA was entitled to summary judgment on the same basis as was Metropolitan. We agree that the privilege Metropolitan enjoyed under Pennsylvania law for those letters extends as ...

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