Dorato v. Blue Cross of Western New York, Inc.
George Dorato (plaintiff) sued Blue Cross of Western New York (defendant), also known as HealthNow, Inc., doing business as Blue Cross & Blue Shield of Western New York, after his health insurance benefits for a herniated disk were denied. Dorato's workers' compensation claim, which alleged a work-related injury, resulted in a $80,000 Section 32 settlement agreement, although his claim was officially 'disallowed' by the Workers' Compensation Board. HealthNow denied benefits citing a contract exclusion for injuries where payment is available under Workers' Compensation Law, arguing the settlement constituted such payment. Dorato moved for summary judgment, seeking a de novo review and asserting collateral estoppel, and also moved to amend his complaint to recharacterize his claims under ERISA. The court applied an 'arbitrary and capricious' standard of review to HealthNow's decision, noting the contract's discretionary authority. The court found that collateral estoppel did not apply due to lack of identical issues and HealthNow's inability to participate in the WCB proceedings. Ultimately, the court granted HealthNow's motion for summary judgment, ruling that their interpretation of the contract's exclusion was rational and not arbitrary or capricious. Dorato's motions were consequently denied as futile.