                                                                         F I L E D
                                                                United States Court of Appeals
                                                                        Tenth Circuit
                    UNITED STATES CO URT O F APPEALS
                                                                     February 15, 2007
                                 TENTH CIRCUIT                      Elisabeth A. Shumaker
                                                                        Clerk of Court


 D O N N A J. H O LLIN G SH EA D ,

               Plaintiff-Appellant,                      No. 05-6276
          v.                                            W .D. of Okla.
 BLUE CRO SS AN D B LUE SHIELD                   (D.C. No. CIV-04-1640-W )
 OF O KLAHOM A, doing business as
 B LU ELINCS H M O ,

               Defendant-Appellee.



                            OR D ER AND JUDGM ENT *


Before T AC HA , Chief Judge, T YM KOVICH, and GORSUCH, Circuit Judges.


      This case asks us to interpret an insurance plan’s organ transplant policy.

The plan’s express exclusion denies any benefit for transplants of “more than one

organ of the same type.” Here, Donna J. Hollingshead underwent a liver

transplant. Unfortunately, within seventeen days, her transplanted liver failed and

she required a second liver transplant to survive. Her insurance company refused

payment for this second transplant based on the exclusion and Hollingshead now



      *
         This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
seeks reimbursement. The district court denied Hollingshead’s claim based on the

exclusion. Because we cannot escape the conclusion that “one organ” means “one

organ,” we affirm.

                                   I. Background

      Defendant Blue Cross and Blue Shield of O klahoma (Blue Cross) is a

health maintenance organization doing business as BlueLincs HM O.

Hollingshead worked for the Cushing Hospital A uthority, a municipal hospital,

and had an insurance policy (Plan) with BlueLincs through her work. She was

diagnosed with primary sclerosing cholangitis (PSC) in 1984. PSC is a

progressive liver disease that results in cirrhosis and liver failure. In 2002,

Hollingshead was in the end stages of liver disease secondary to PSC.

      As a result of the advanced PSC, Hollingshead would have died without a

liver transplant. The Plan expressly allowed a liver transplant when the claimant

is facing death within eighteen months, fitting Hollingshead’s condition. Blue

Cross pre-approved and pre-certified the transplant and it was performed at the

University of Nebraska M edical Center (UNM C) on October 20, 2002.

Hollingshead was released from the hospital on October 25 in “excellent

condition.” A plt. Supp. App. II at 449. Nevertheless, the new liver ceased to

function effectively eleven days after her release and she received a second

transplant on November 6, 2002— seventeen days after her initial transplant. Blue

Cross denied coverage for this second transplant because a Plan exclusion holds

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that “no Benefits will be provided for . . . [m]ore than one organ of the same

type.”

         Hollingshead internally appealed Blue Cross’s decision arguing that the

October 20 surgery was not an organ transplant but instead a “failed attempt at a

transplant,” and that only the November 6 operation constitutes an organ

transplant. 1 During Blue C ross’s review, it considered a w ritten letter by Richard

Gilroy, M .B.B.S., an associate of U NM C’s Organ Transplantation Program. Dr.

Gilroy wrote that three percent of liver transplants do not function and a

retransplant is mandatory in those situations; otherwise the patient will die. He

continued, “we consider this [retransplant] part of the original transplantation

process.” Aplt. Supp. App. II at 485. After a review by two comm ittees, Blue

Cross affirmed the denial of Hollingshead’s claim.

         Hollingshead filed suit against Blue Cross in Oklahoma state court under

the Employee Retirement and Income Security Act (ERISA ) enforcement

provision, 29 U.S.C. § 1132(a)(1)(B), which governs the Plan, to recover benefits




         1
         Hollingshead was informed by Blue Cross that the second liver transplant
would not be covered by the Plan on November 4, 2002— two days before her
surgery. Aplt. Supp. App. II at 316. On the same day, Hollingshead’s daughter
asked for an expedited review of the decision. On November 5, Blue Cross sent
Hollingshead a letter explaining the denial of the claim. On November 7, 2002, a
day after the surgery, Blue Cross’s appeals comm ittee affirmed the denial of the
claim. A second appeals committee also reviewed and affirmed the denial of the
claim.

                                          -3-
for the second liver transplant operation. Blue Cross removed the case to the U.S.

District Court for the W estern District of Oklahoma.

      Blue Cross filed a motion for judgment on the administrative record and the

district court decided that the insurance plan unambiguously excluded coverage

for more than one organ of the same type. Accordingly, the district court denied

relief to Hollingshead and entered judgment for Blue Cross.

      Hollingshead appeals the district court’s order.

                                    II. Analysis

      The question on appeal is whether the Plan is ambiguous. If it is,

Hollingshead makes four related arguments under ERISA that would provide

coverage for her second transplant:

      (1) an entire body of O klahoma insurance law is preserved under ERISA’s

“savings clause,” and this saved state insurance law trumps the terms of the Plan

document, requiring coverage for the second surgery;

      (2) the Tenth Circuit has already issued a decision “saving” a principle of

Oklahoma insurance law, showing that state common law principles of insurance

interpretation and application are to be applied in ERISA cases;

      (3) Blue Cross did not carry its burden to support its denial of benefits with

substantial evidence, as required of an administrator operating under an inherent

conflict of interest, and its denial was therefore arbitrary and capricious; and




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       (4) federal common law mirrors state insurance law, and requires coverage

in this case.

       Hollingshead further maintains that Blue Cross’s interpretation of the Plan

is not reasonable because the second liver transplant was w ithin the known failure

rate of initial liver transplants, within the “standard of care” for liver transplants,

deemed by the medical community to be part of the initial transplant, and required

for her to live.

       Blue Cross contends that since the second organ exclusion is unambiguous,

we need not reach these questions of contract interpretation under state law.

       A. Standard of Review

       W e review the grant of summary judgment de novo, applying the same

standards as the district court. Fought v. UNUM Life Ins. Co. of Am., 379 F.3d

997, 1002 (10th Cir. 2004) (per curiam). “It is a basic rule of insurance law that

the insured carries the burden of showing a covered loss has occurred and the

insurer must prove facts that bring a loss within an exclusionary clause of the

policy.” Pitman v. Blue Cross & Blue Shield of Okla., 217 F.3d 1291, 1298 (10th

Cir. 2000).

       “[A] denial of benefits challenged under § 1132(a)(1)(B) [ERISA ] is to be

reviewed under a de novo standard unless the benefit plan gives the administrator

or fiduciary discretionary authority to determine eligibility for benefits or to

construe the terms of the plan.” Fought, 379 F.3d at 1002–03 (quoting Firestone

                                           -5-
Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)); see also Geddes v.

United Staffing Alliance Emple. M ed. Plan, 469 F.3d 919, 923 (10th Cir. 2006);

Adam son v. U NU M Life Ins. C o. of Am., 455 F.3d 1209, 1212 (10th Cir. 2006). In

such case, the court “applies an ‘arbitrary and capricious’ standard to a plan

administrator’s actions.” Fought, 379 F.3d at 1003. Hollingshead does not

challenge Blue Cross’s contention that, as the Plan’s administrator, it thereby has

discretion to interpret the Plan. 2

       Under the arbitrary and capricious standard, Blue Cross’s interpretation of

the Plan will stand if it was “reasonable and made in good faith.” Id. Our cases

require that Blue Cross’s interpretation must be: “(a) as a result of reasoned and

principled process (b) consistent with any prior interpretations by the plan

administrator (c) reasonable in light of any external standards and (d) consistent

with the purposes of the plan.” Id. (quotation omitted). In reviewing the denial

of benefits under the arbitrary and capricious standard, the court is “limited to the

‘administrative record’–the materials compiled by the administrator in the course

of making his decision.” Id. (quotation omitted).

       The standard of review over the denial of benefits changes when, as here,

the plan administrator is under an inherent conflict of interest. Id. at 1003, 1006.

A plan administrator is under an inherent conflict of interest when it “is both the

       2
        The Plan states, “BlueLincs HM O, as claims administrator, is hereby
granted authority to interpret the terms and conditions of the Group M aster
Agreement and to determine its benefits.” Aplt. Supp. App. I at 55, 110.

                                         -6-
insurer and the administrator of the plan.” Pitman, 217 F.3d at 1295–96. W here

the plan administrator is under a conflict of interest, a reviewing court

“undertake[s] a ‘sliding scale’ analysis, where the degree of deference accorded

the Plan Administrator is inversely related to the ‘seriousness of the conflict.’”

Allison v. U NU M Life Ins. C o. of Am., 381 F.3d 1015, 1021 (10th Cir. 2004).

      W hen the plan administrator operates under an inherent conflict of interest,

we require the administrator “to establish by substantial evidence that the denial

of benefits was not arbitrary and capricious.” Fought, 379 F.3d at 1005. In such

a case, “[t]he district court must take a hard look at the evidence and arguments

presented to the plan administrator to ensure that the decision was a reasoned

application of the terms of the plan to the particular case, untainted by the

conflict of interest.” Id. at 1006.

      W e now turn to Hollingshead’s appeal with this framew ork in mind.

      B. Is the Plan’s Language Ambiguous?

      Under even the most exacting standard of review , Blue Cross’s decision to

deny Hollingshead’s claim must be affirmed because of the Plan’s unambiguous

terms. W e have held that where an employee benefit plan’s written terms

unambiguously govern what benefits are due “under the terms of the plan,” 29

U.S.C. § 1132(a)(1)(B), they are determinative as a matter of law. Admin. Com m .

of the Wal-M art Assocs. Health & Welfare Plan v. Willard, 393 F.3d 1119, 1123

(10th Cir. 2004) (“In interpreting an ERISA plan, the court examines the plan

                                          -7-
documents as a whole and, if unambiguous, construes them as a matter of law.”).

In this case, if the Plan’s terms clearly, plainly, and conspicuously dictate a

certain outcome, Blue Cross could not be arbitrary and capricious in following

that direction.

      In reviewing the terms of the Plan, we find no ambiguity in its organ

transplant provisions. “Ambiguity exists w hen a plan provision is reasonably

susceptible to more than one meaning, or where there is uncertainty as to the

meaning of the term.” Willard, 393 F.3d at 1123 (quotation omitted). In

construing the terms of an ERISA plan, language is given “its common and

ordinary meaning as a reasonable person in the position of the [plan] participant,

not the actual participant, would have understood the words to mean.” Id.

      The Plan provides, in relevant part,

      c. Liver Transplants.
      Benefits will be provided for a liver transplant, provided the
      Subscriber:
      1) has end-stage liver disease with a life expectancy of 18 months or
       less due to any of the following conditions: . . .
      c) primary scherosing cholangitis; . . .
      2) has normal kidney function;
      3) has no concurrent extrahepatic malignancy (including extrahepatic
      extension or primary hepatocellular carcinoma, HIV infection or
      AIDS; and
      4) is psychologically stable and has a supportive social environment.

      ***

      1. In addition to the Exclusions set forth elsewhere in this
      Contract/A greement, no Benefits will be provided for the following



                                          -8-
      organ or tissue transplant or Bone M arrow Transplants or related
      services: . . .
      h. M ore than one organ of the same type, with the exception of a
      double-lung transplant done at one time. A heart-only, lung-only, or
      heart/lung transplant will be considered the same type organ.

Aplt. Supp. App. II at 289–92 (emphasis added).

      W e find the exclusion is not reasonably susceptible to more than one

interpretation, and no uncertainty exists as to the meaning of any term. The

clause providing “no Benefits will be provided for the . . . organ . . . transplant

[of]. [m]ore than one organ of the same type” unequivocally means that

Hollingshead is entitled to payment of only one liver transplant.

      Hollingshead offers no convincing rebuttal to the plain meaning of the

exclusion. Instead, she suggests that the “insurance contract is supposed to be

read as a whole” and that the Plan “made the liver transplant a covered loss.”

Aplt. Reply Br. at 1. By this argument, Hollingshead implies that the Plan

entitles her to a successful liver transplant. But that is not how the policy reads

and, under general contract law principles, “words cannot be written into the

agreement imparting an intent wholly unexpressed when it was executed.” Blair

v. M etropolitan Life Ins. Co., 974 F.2d 1219, 1221 (10th Cir. 1992).

      W e are strained to find any ambiguity in the policy’s language. According

to W ebster’s Third New International Dictionary, to “transplant” means to “to

transfer (an organ or tissue) from one body or part of a body to another.” Under

this definition, Hollingshead received a transplant on October 20, 2002 when her

                                          -9-
liver w as removed and a donor’s liver w as transferred in its place. The surgery

received on November 6, 2002 would constitute a new, second transplant.

Furthermore, it is incontrovertible that Hollingshead received an “organ of the

same type” on November 6 as it w as also a liver transplant.

       W e are aware that the October 20 transplant failed prematurely leaving

Hollingshead no choice but to undergo the second surgery. W e commiserate for

her unfortunate situation. Nevertheless, the Plan recognizes organ failure as an

unavoidable possibility with transplant surgery and specifically contracts around

it. As Hollingshead concedes, liver transplants have a known failure rate of

around three percent. The Plan contemplates this failure rate and unequivocally

denies claims for these additional transplants. After all, the only cognizable

reason for the Plan’s exclusion is to disclaim coverage in these few cases of organ

failure.

       Additionally, under the Plan, transplants are only authorized if the recipient

can demonstrate optimal transplant conditions. For example, the Plan requires the

patient to have (1) normal kidney function, (2) no concurrent extrahepatic

malignancy, and (3) a psychologically stable and supportive social environment.

These conditions support the conclusion that Blue Cross intended to give

beneficiaries only one opportunity for the same organ transplant.

       If the Plan w ished to approve more than one liver transplant, Blue Cross

certainly knew how to construct such a term. The Plan specifically crafts an

                                         -10-
exception to the exclusion for a “double-lung transplant done at one time.”

Accordingly, the Plan does not prevent coverage for both lungs to be replaced in

the event of a double-lung transplant failure. No such exception exists for liver

transplants.

         Finally, while some members of the medical community may consider a

second, early re-transplantation of a new liver part of the original transplant, w e

read the Plan’s language under common parlance, not medical lexicon. See

Willard, 393 F.3d at 1123. “O ne” organ cannot mean “two” organs in ordinary

usage.

         Accordingly, the record makes clear that Hollingshead received “[m]ore

than one organ of the same type” and so Blue Cross’s decision to exclude

coverage for the second transplant was supported by substantial evidence and its

denial of her claim was reasonable. Fought, 379 F.3d at 1003. Although we have

deep sympathy for Hollingshead’s predicament, unfortunately the law precludes

us from granting her relief.

         C. ERISA ’s Saving C lause

         Because we hold that the Plan’s terms unambiguously deny coverage for

more than one liver transplant, we need not address Hollingshead’s argument

regarding ERISA ’s savings clause.




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                          III. Conclusion

For the foregoing reasons, we AFFIRM the order of the district court.

                                       Entered for the Court,

                                       Timothy M . Tymkovich
                                       Circuit Judge




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