Donre v FSM National Government Employees' Health Insurance Plan [2018] FMSC 21; 21 FSM R. 592 (Pon. 2018) (12 June 2018)

FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2014-011

FRANKLIN HADLEY DONRE, )
)
Plaintiff, )
)
vs. )
)
FEDERATED STATES OF MICRONESIA )
NATIONAL GOVERNMENT EMPLOYEES’ )
HEALTH INSURANCE PLAN, a/k/a MICARE )
and the FEDERATED STATES OF MICRONESIA, )
)
Defendants. )
_____________________________________________ )

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Beauleen Carl-Worswick
Associate Justice

Trial: February 7, 2018
Decided: June 12, 2018

APPEARANCES:

For the Plaintiff: Salomon M. Saimon, Esq.
Directing Attorney
Micronesian Legal Services Corporation
P.O. Box 129
Kolonia, Pohnpei FM 96941

For the Defendants: Craig D. Refner, Esq.
Abigail Avoryie, Esq.
Chief of Litigation and
Assistant Attorney General
FSM Department of Justice
P.O. Box PS-157
Palikir, Pohnpei FM 96941

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HEADNOTES

Civil Procedure Injunctions

When a claim for injunctive relief is contingent on a claim for declaratory relief that has been dismissed, the court will not consider the injunctive relief claim. Donre v. FSM Nat’l Gov’t Employees’ Health Ins. Plan, 21 FSM R. 592, 594 n.1 (Pon. 2018).

Administrative Law Judicial Review
A person adversely affected or aggrieved by agency action is entitled to judicial review thereof in the FSM Supreme Court, which must hold unlawful and set aside agency actions and decisions found to be: 1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; 2) contrary to constitutional right, power, privilege, or immunity; 3) in excess of statutory jurisdiction, authority, or limitations, or a denial of legal rights; 4) without substantial compliance with the procedures required by law; or 5) unwarranted by the facts. Donre v. FSM Nat’l Gov’t Employees’ Health Ins. Plan, 21 FSM R. 592, 595 (Pon. 2018).

Evidence Burden of Proof
Preponderance of the evidence is not evidence to a "moral certainty" or "clear and convincing evidence." As a standard of proof, preponderance of the evidence means that the facts asserted by the plaintiff are more probably true than false. Donre v. FSM Nat’l Gov’t Employees’ Health Ins. Plan, 21 FSM R. 592, 595 (Pon. 2018).

Administrative Law Judicial Review
The standard of review of an agency decision is to determine whether the action was lawful. Donre v. FSM Nat’l Gov’t Employees’ Health Ins. Plan, 21 FSM R. 592, 596 (Pon. 2018).

Insurance Coverage
When the medical insurance coverage excludes treatment of injuries that are attributable to the member’s own intemperate use of drugs or alcohol and when the insured was extremely intoxicated and admittedly under the heavy influence of sakau, the court will consider whether the plaintiff, despite his intoxication, would have fallen from the ridge since if the fall would have occurred even if the insured was not drunk, then the insured’s injuries should have been covered because the denial of insurance benefits was attributed to his intoxication. Donre v. FSM Nat’l Gov’t Employees’ Health Ins. Plan, 21 FSM R. 592, 596-97 & n.3 (Pon. 2018).

Evidence Burden of Proof
In a civil case, the plaintiff has the burden of proving each element of his cause of action by a preponderance of the evidence, and if he fails to do so, judgment will be entered against him. Donre v. FSM Nat’l Gov’t Employees’ Health Ins. Plan, 21 FSM R. 592, 597 (Pon. 2018).

Contracts Breach
A contract is a promise between two parties for the future performance of mutual obligations, which the law will enforce in some way. For a promise to be enforceable, there must be an offer and an acceptance, definite terms, and consideration for the promise (that which the performance is exchanged for), and when one party fails to perform their promise, there is a breach of contract. Donre v. FSM Nat’l Gov’t Employees’ Health Ins. Plan, 21 FSM R. 592, 597 (Pon. 2018).

Contracts Breach
A material breach of contract justifies the injured party’s halt of performance under the contract. Whether a breach is material is a question of fact depending on several factors, particularly where the breach deprives the injured party of the contract’s benefits. Donre v. FSM Nat’l Gov’t Employees’ Health Ins. Plan, 21 FSM R. 592, 597 (Pon. 2018).

Contracts Breach; Insurance Claims and Benefits

When the insurer’s denial of insurance benefits was lawful, the insured does not have a breach of contract claim. Donre v. FSM Nat’l Gov’t Employees’ Health Ins. Plan, 21 FSM R. 592, 598 (Pon. 2018).

Insurance; Torts Breach of Implied Covenant of Good Faith
Breach of an implied covenant of good faith and fair dealing is a common law cause of action. It is a tort claim that arises out of a contractual relationship between the parties, and it rests on the premise that whenever a party’s cooperation is necessary for the performance of a contractual promise, there is a condition implied that the cooperation will be given. Donre v. FSM Nat’l Gov’t Employees’ Health Ins. Plan, 21 FSM R. 592, 598 (Pon. 2018).

Insurance Coverage; Torts Breach of Implied Covenant of Good Faith
When, because of the insured’s misconduct, the insurer was not obligated to cooperate by extending medical coverage to the insured, the insured’s cause of action for breach of implied covenant of good faith and fair dealing is void. Donre v. FSM Nat’l Gov’t Employees’ Health Ins. Plan, 21 FSM R. 592, 598 (Pon. 2018).

Civil Procedure Dismissal; Insurance Claims and Benefits
When the insured’s remaining claims are all based on the insurer’s denial of insurance coverage and when that denial was lawful, the insured’s remaining claims will be dismissed. Donre v. FSM Nat’l Gov’t Employees’ Health Ins. Plan, 21 FSM R. 592, 598 (Pon. 2018).

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COURT’S OPINION

BEAULEEN CARL-WORSWICK, Associate Justice:

I. BACKGROUND

The Summons and Complaint were filed in this matter on February 5, 2014. The plaintiff, Franklin Hadley Donre (herein "Donre"), sets forth the following causes of action: 1) appeal of decision of administrative agency, 2) violations of regulations, 3) breach of contract, 4) due process, 5) equal protection, 6) civil rights violations, 7) declaratory and injunctive relief, and 8) breach of implied covenant of good faith and fair dealings.

An Answer was entered on February 17, 2014 by the defendants, Federated States of Micronesia National Government Employees Health Insurance Plan, a/k/a MiCare, and the Federated States of Micronesia (herein "MiCare"). An Order entered on August 18, 2016 dismissed Donre’s claim for declaratory relief.^[1]

Trial in this matter was held on February 7, 2018. Salomon Saimon, Esq., of the Micronesian Legal Services Corporation, appeared on behalf of the plaintiff. Craig D. Refner, Esq., and Abigail Avoryie, Chief of Litigation and Assistant Attorney General with the FSM Department of Justice, appeared on behalf of the defendant MiCare.

At Trial, the court received the testimony of plaintiff Franklin Hadley Donre, Dr. Raymund Almeda from the Pohnpei State hospital who was the attending physician on the night of the incident, and Davelyn Welles, Comptroller for MiCare. After consideration of the testimony of the witnesses and the evidence on record, the court makes the following determination.

II. FINDINGS OF FACTS

The plaintiff Franklin Hadley Donre is employed by the Pohnpei State Government as a teacher at Saladak elementary school. Donre is enrolled under the MiCare Health Insurance Plan, where regular scheduled premium payments are made in exchange for medical insurance coverage.

On March 22, 2013, Donre consumed both Pohnpeian sakau and alcohol with an individual named Jackson Dano at various locations in Madolenihmw and U villages. In all, along with Dano, the plaintiff consumed two (2) $5 bottles of sakau, a bottle of Vodka (80 proof), one (1) beer, and a mixed drink (Donre does not recall what type of drink it was). At Trial, the plaintiff admitted that he was intoxicated.

After the consumption of alcohol and sakau, Donre headed home to Dolonier, in Nett village. On his way home, Donre stopped in Metipw, in U village, to relieve himself. While standing on what was described as a ridge on the side of a river, Donre fell, sustaining serious injuries. The incident occurred between 10:00 p.m. – 11:00 p.m.

At Trial, the plaintiff testified that he was partially immobile immediately after the fall, and is currently unable to climb or run, and walks with a permanent limp. Dr. Raymund Almeda of the Pohnpei State Hospital treated the plaintiff at the Emergency Room on the night of the incident, and stated that Donre sustained a serious cut across his head, looked drowsy, and appeared to be intoxicated.

As a result of his treatment for his injuries, the Pohnpei State Hospital recommended that Donre receive further treatment in the Philippines. A request for coverage was sent on March 31, 2013 from the Pohnpei State Government to MiCare for off-island treatment in the Philippines for the plaintiff’s injuries, however, the request was denied. A grievance was filed by Donre on April 11, 2013, and a formal rejection letter by MiCare was issued on April 22, 2013 by MiCare.

On May 6, 2013, an administrative hearing for the denial of insurance coverage was held. On August 6, 2013, counsel for the plaintiff received the decision of the Board upholding the rejection of the plaintiff’s claim by the MiCare administration. The Summons and Complaint in this matter was then filed on February 5, 2014.

III. STANDARD OF REVIEW

A person adversely affected or aggrieved by agency action is entitled to judicial review thereof in the FSM Supreme Court. The reviewing court shall hold unlawful and set aside agency actions and decisions found to be: 1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; 2) contrary to constitutional right, power, privilege, or immunity; 3) in excess of statutory jurisdiction, authority, or limitations, or a denial of legal rights; 4) without substantial compliance with the procedures required by law; or 5) unwarranted by the facts. Ruben v. FSM, 15 FSM R. 508, 513 (Pon. 2008).

Preponderance of the evidence is not evidence to a "moral certainty" or "clear and convincing evidence." As a standard of proof, "preponderance of the evidence has been held to mean that "the facts asserted by the plaintiff are more probably true than false." FSM Telecomm. Corp. v. Worswick, 9 FSM R. 6, 12 (Yap 1999); see also Burch v. Reading Co., 240 F.2d 547, 579 (3d Cir. 1957).

IV. CONCLUSIONS OF LAW

Appeal of Decision of Administrative Agency and Violation of Regulations

a) Intoxication of the Plaintiff

The court will consider the first two causes of action jointly. These claims are brought pursuant to 17 F.S.M.C. 111 and Part 9.5 of the MiCare Regulations. The standard of review of an agency decision is to determine whether the action was lawful. Michelsen v. FSM, 5 FSM R. 249, 254 (App. 1991).

Also, § 9.5 of the MiCare Regulations governs the right to Judicial Review. This section states "The aggrieved person may make further appeal according to the procedures set forth in the Title 17 FSM § 111."^[2]

Section 7.3 of the MiCare Regulations lists excluded medical conditions that are not eligible for medical insurance coverage. Specifically applicable to the present matter, is section 7.3(r) which excludes "treatment of injuries which are attributable to the member’s own misconduct, negligence, intemperate use of drugs or alcohol, direct participation in the commission of a crime, violation of law or ordinance, and unnecessary exposure to health hazards."

Here, there is no doubt that Donre was extremely intoxicated on the night of the incident. As noted supra, Donre, along with Jackson Dano, had consumed two (2) $5 bottles of sakau, a bottle of Vodka (80 proof), one (1) beer, and a mixed drink within a four (4) hour span. At trial, the plaintiff admitted that he was "sakaula."^[3]

Although no blood and alcohol test was performed on the plaintiff, Dr. Raymund Almeda, the attending physician who treated Donre, testified that Donre was drunk. Dr. Almeda’s observation was based on the plaintiff’s, height, weight, the amount of alcohol consumed within the four (4) hour period, his inability to answer questions, and his overall appearance and demeanor. The medical report on Donre’s injuries indicated that Donre was under the influence of alcohol. Based on the evidence, the court concludes that the plaintiff was intoxicated on March 22, 2013.

b) Fall Despite Not Being Intoxicated

An important issue that the court will consider is whether the plaintiff, despite his intoxication, would have fell from the ridge. If the fall would have taken place, even if Donre was not drunk, then MiCare should have covered his injuries, because the denial of insurance benefits was attributed to his intoxication.

In a letter dated April 22, 2013, Nena S. Nena, Administrator of MiCare, attributed the denial of coverage with the plaintiff’s intoxication. The letter indicated: "The plaintiff was denied insurance coverage because he had consumed sakau and alcohol excessively that contributed substantively to his ability to control his mobility and therefore fell under a bridge that cause the injury to his head."

Davelyn Welles, Comptroller for MiCare, testified that MiCare relies on the medical report submitted by the hospital with each insurance claim to determine if alcohol was involved. Welles also stated that alcohol related referrals are routinely denied. According to Welles, if alcohol was a contributing factor to Donre’s fall, his injuries would not be insured.

In the present matter, the plaintiff raised the argument of falling despite not being intoxicated during oral closing arguments. However, this issue was not raised, argued, or proven during the plaintiff’s case in chief. Had the plaintiff proven that a reasonable or ordinary non-intoxicated person would have fell at the same location, then alcohol would not be a contributing factor to the fall, and MiCare would be obligated to provide coverage.

Nonetheless, the issue of the plaintiff falling whether or not he was intoxicated was only alluded to during closing arguments and was never developed during trial. Accordingly, the court finds that the MiCare Board’s action in denying the plaintiff insurance coverage was lawful.

In a civil case, the plaintiff has the burden of proving each element of his cause of action by a preponderance of the evidence, and if he fails to do so, judgment will be entered against him. Jano v. Fujita, 16 FSM R. 323, 327 (Pon. 2009); Tulensru v. Wakuk, 10 FSM R. 128, 132 (App. 2001).

c) Plaintiff’s Misconduct

Because Donre’s intoxication is attributed to his injury, the court concludes that his injury was a result of misconduct, under section 7.3(r) of the MiCare regulations.^[4] The fact that the plaintiff consumed an excessive amount of alcohol impaired his cognitive ability to prevent falling off of the ridge.

At trial, Dr. Almeda testified that an intoxicated person in a similar state as the plaintiff would have fallen, due to the amount of alcohol consumed. Based on the conclusion that Donre was intoxicated, and the fact that it was not proven that a non-intoxicated person would have fallen off of the ridge, the court finds that the defendant’s misconduct was the cause of his injuries. Accordingly, the plaintiff’s first two (2) causes of action are without merit.

Breach of Contract and Breach of Implied Covenant of Good Faith and Fair Dealings

A contract is a promise between two parties for the future performance of mutual obligations, which the law will enforce in some way. For the promise to be enforceable, there must be an offer and an acceptance, definite terms, and consideration for the promise (that which the performance is exchanged for). When one party fails to perform their promise, there is a breach of contract. Ponape Constr. Co. v. Pohnpei, 6 FSM R. 114, 123 (Pon. 1993); Goyo Corp. v. Christian, 12 FSM R. 140, 146 (Pon. 2003).

A breach of contract which is material justifies a halt in performance under the contract by the injured party. Whether a breach is material is a question of fact depending on several factors, particularly where the breach deprives the injured party of the benefits of the contract. Panuelo v. Pepsi Cola Bottling Co. of Guam, 5 FSM R. 123, 128 (Pon. 1991).

Here, under Donre’s breach of contract claim, the Complaint argues that the parties have an agreement, which the plaintiff fulfilled, and the defendant failed to perform. Although not specifically stated in the Complaint or at Trial, the court will infer that the breach that the Donre is claiming is MiCare’s failure to provide insurance coverage for his injuries. Because MiCare’s denial of insurance benefits was lawful, Donre does not have a breach of contract claim.

Breach of an implied covenant of good faith and fair dealing is a common law cause of action, which is a tort claim that arises out of a contractual relationship between the parties. The implied covenant of good faith and fair dealing rests on the premise that whenever a party's cooperation is necessary for the performance of a contractual promise, there is a condition implied that the cooperation will be given. Phillip v. Marianas Ins. Co., 12 FSM R. 301, 307 (Pon. 2004).

The plaintiff’s cause of action for breach of implied covenant of good faith and fair dealing is also void on the same basis as the breach of contract claim. Under the holding in Phillip, MiCare was not obligated to cooperate by extending medical coverage to Donre because of Donre’s misconduct.

Other Claims

The plaintiff’s remaining claims for due process, equal protection, and civil rights violations are all based on MiCare’s denial of insurance coverage.^[5] Because the court finds that the denial was lawful, Donre’s remaining claims are dismissed.

V. CONCLUSION

The plaintiff’s Complaint in this matter is HEREBY DISMISSED. The Clerk of Court shall enter judgment in favor of the defendant.

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^[1] Because the claim for injunctive relief is contingent on the claim for declaratory relief, which has since been dismissed, the court will not consider Donre’s claim for injunctive relief.

^[2] 17 F.S.M.C. 111(2) states "A person adversely affected or aggrieved by agency action is entitled to judicial review thereof in the Supreme Court of the Federated States of Micronesia. The Court shall conduct a de novo trial of the matter and may receive in evidence any or all of the record from the administrative hearing that is stipulated to by the parties."

^[3] Sakaula is a Pohnpeian term which means that someone is under the heavy influence of sakau.

^[4] MiCare Regulations section 7.3(r) states "treatment of injuries which are attributable to the member’s own misconduct, negligence, intemperate use of drugs or alcohol, direct participation in the commission of a crime, violation of law or ordinance, and unnecessary exposure to health hazards."

^[5] The plaintiff’s claims for declaratory relief was dismissed by an Order entered on August 18, 2016.