Matt Scwabe – Davenport, IA
According to court records and personal reports:
On July 9, 1991, Matt Scwabe was accidentally shot by a friend, leaving him a quadriplegic. As a result, Matt’s medical needs were extensive. Every two to four hours, he needed attention: catheterization, suctioning of his breathing tube, adjustment of the breathing equipment, medication, bowel care, tube feeding–what some hospitals consider acute care.
Confident that that their health plan would abide by the plan’s promise of 100% coverage for doctor-ordered home nursing, Matt’s family brought him home after nearly a year of hospitalization and rehabilitation. Soon after, they received a letter from a lawyer who represented their health plan, it read:
"…In the Company’s opinion, Matthew is now custodial. Therefore, we are not required to provide in-home nursing services. However, we are not terminating the benefit now, but rather are decreasing nursing services over a period of time until the benefit is terminated…"
As the hours of nursing care were reduced, Matt’s mother, Mary Peterson, slept by her son’s bedside with an alarm clock set to go off every few hours. She soon would have to provide all of Matt’s care, 24 hours a day, seven days a week. "It was like we were on death row," Matt’s stepfather, Clair Peterson said. "Every two weeks they’d cut away four more hours of care for Matt. With each passing day, with each passing minute, our family was being pushed closer to zero hour. And we could not find out who made this decision, and why. Who was responsible? Who was ‘The Company?’"
The Petersons sought help from their Congressman, Rep. Jim Leach, who contacted the Iowa Insurance Division. A staff attorney responded to Leach’s inquiry:
"This (health) plan is self-insured and subject to the provisions of ERISA. Consequently, our division could not be of assistance to Matthew even though we would like to be. This case illustrates how ERISA prevents our division from being of service to our bosses–the people of Iowa."
In a written plea to their health plan, the Petersons begged company officials to reconsider their decision "When we hit zero hours, you have effectively chained Mary to Matthew for the rest of her life and told her to do what you’d never ask a nurse to do: pull 24-hour shifts the rest of her life."
The Petersons filed a lawsuit and argued that all medical evidence indicated that Matt needed skilled nursing care–the kind their health plan seemed to guarantee–just to stay alive. Without it, he would die.
Their health plan’s defense was based largely on its assertion that Matt needed only custodial care–care that is not designed to improve the patients condition–which was not covered. Interestingly, the company’s definition of custodial care was not inserted into the policy until 14 months after Matt’s accident and just 15 days before the case went to trial.
Because of ERISA, the Petersons did not have the option of a jury trial, and the case was heard by Judge Charles R. Wolf, in Davenport’s US District Court.
In a May 29 letter to the court, the health plan’s attorney described to Judge Wolf how ERISA protected the firm from the Petersons’ claims of bad faith (a point that the judge said "added nothing" to the discussion of why benefits were being denied) and that the Petersons’ health plan required them to settle disputes through arbitration. The attorney quoted from this provision at length, but failed to mention that this language had been inserted into the plan on May 28, the previous day.
After several weeks of trial, Judge Wolf sided with the Petersons, ordering their health plan to "pay in full all of Matthew’s necessary costs of care to the present date." However because of ERISA, the Petersons were not entitled to any punitive damages: the company responded with an appeal.
"It was amazing to see the lengths to which our health plan was going to avoid its obligation," Mary Peterson said. "I naively thought there was some kind of integrity behind the promises they had made."
