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FOR IMMEDIATE NEWS RELEASE NEWS RELEASE # 18 FROM: CLERK OF THE SUPREME COURT OF LOUISIANA

The Opinions handed down on the 4th day of April, 2006 , are as follows:

BY KNOLL, J. :

2005-C -0979

KATHLEEN PUMPHREY v. THE CITY OF NEW ORLEANS C/W DARLENE RIZZUTO v. THE CITY OF NEW ORLEANS C/W FRED FARVE, JR. v. THE CITY OF NEW ORLEANS C/W MICHAEL RICKS AND VIVIAN RICKS v. THE CITY OF NEW ORLEANS C/W BARBARA ELLIS v. THE CITY OF NEW ORLEANS C/W HERBERT CRAIG v. THE CITY OF NEW ORLEANS C/W A. RAY PIATTOLY v. THE CITY OF NEW ORLEANS C/W PATRICK MURPHY v. THE CITY OF NEW ORLEANS C/W IGNATIUS JAMES v. THE CITY OF NEW ORLEANS (Parish of Orleans) For the foregoing reasons, we reverse the judgment of the court of appeal and render declaratory judgment in favor of defendant, the City of New Orleans. REVERSED.

04/04/2006

SUPREME COURT OF LOUISIANA NO. 05-C-979 KATHLEEN PUMPHREY VERSUS THE CITY OF NEW ORLEANS Consolidated with DARLENE RIZZUTO VERSUS THE CITY OF NEW ORLEANS Consolidated with FRED FARVE, JR. VERSUS THE CITY OF NEW ORLEANS Consolidated with MICHAEL RICKS and VIVIAN RICKS VERSUS THE CITY OF NEW ORLEANS Consolidated with BARBARA ELLIS VERSUS THE CITY OF NEW ORLEANS Consolidated with HERBERT CRAIG VERSUS THE CITY OF NEW ORLEANS

Consolidated with A. RAY PIATTOLY VERSUS THE CITY OF NEW ORLEANS Consolidated with PATRICK MURPHY VERSUS THE CITY OF NEW ORLEANS Consolidated with IGNATIUS JAMES VERSUS THE CITY OF NEW ORLEANS ON WRIT OF CERTIORARI TO THE COURT OF APPEAL FOURTH CIRCUIT, PARISH OF ORLEANS

KNOLL, Justice This civil case addresses the legal question of whether La. Rev. Stat. 33:3062(B) exempts the City of New Orleans with regard to its self-funded employee health care insurance plan from the penalty provisions of La. Rev. Stat. 22:657(A). Plaintiffs filed individual suits seeking penalties and attorneys fees for non-payment and/or untimely payment of insurance benefits, which were due and payable to plaintiffs, under the City of New Orleans's self-funded employee health care plan. After consolidation of these suits, the City of New Orleans ("City") filed a petition for declaratory judgment in all of the consolidated cases seeking a declaration that La. Rev. Stat. 33:3062(B) exempted the City with regard to its self-funded health plan from the penalty provisions of La. Rev. Stat. 22:657(A). The district court entered

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judgment against the City holding La. Rev. Stat. 33:3062 does not exempt the City or its health plan from the provisions of La. Rev. Stat. 22:657. The court of appeal affirmed. We granted writ primarily to resolve the alleged conflict between La. Rev. Stats. 22:657(C) and 33:3062(B) to determine whether La. Rev. Stat. 33:3062(B) exempts the City's health plan from the penalty provisions of La. Rev. Stat. 22:657(A). Pumphrey v. City of New Orleans, 05-0979 (La. 12/16/05), __ So.2d __. For the following reasons, we find the provisions of La. Rev. Stat. 33:3062(B) clearly and explicitly exempt the City's health plan from the penalty provisions of La. Rev. Stat. 22:657(A) and render declaratory judgment in favor of the City. FACTS AND PROCEDURAL HISTORY On January 1, 1978, the City became self-insured as to health care coverage for its employees and contracted with various vendors for administrative services in connection with its health care and hospitalization plan. The City offered as a benefit to its employees, retirees, and their dependants, the option of participating in the City's self-funded health care plan or participating in its preferred provider organization (PPO) health care plan. In March 1991, the City entered into a contract with Total Benefits Services ("Total") to administer its health care plan, and then in November 1991, the City entered into a contract with Group Insurance Administration of Louisiana ("Group") to secure medical service discounts through the use of Group's preferred provider network and to manage the PPO health care program. At all times relevant herein, the City has maintained a self-funded health care plan for the benefit of its employees, retired employees, and their families. This consolidated matter arises out of multiple Petitions for Damages brought on behalf of eligible participants in the City's self-funded health care plan.1 The

Kathleen Pumphrey v. City of New Orleans, No. 93-158, CDC for the Parish of Orleans, Div. "G", 04-CA-889; Darlene Rizzuto v. City of New Orleans, No. 93-159, CDC for the Parish of 3

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plaintiffs, Kathleen Pumphrey, Darlene Rizzuto, Fred Farve, Jr., Michael and Vivian Ricks, Barbara Ellis, Herbert Craig, A. Ray Piattoly, Patrick Murphy, and Ignatius James, are seeking penalties and attorneys fees for non-payment and/or untimely payment of insurance benefits, which were due and payable to plaintiffs, under the plaintiffs' participation in the City's self-funded employee health care plan, in accordance with La. Rev. Stat. 22:657. Plaintiffs alleged more than thirty days had elapsed from the date upon which the plaintiffs submitted written notice and proof of claim on covered medical bills to the City's self-funded health care plan. Plaintiffs further contended the City had arbitrarily and capriciously delayed payment of benefits due or had arbitrarily and capriciously paid claims beyond thirty days after submission. Additionally, plaintiffs alleged the City breached its fiduciary duty of good faith and fair dealings and its contractual duties to the plaintiffs as a result of its arbitrary and capricious failure to pay claims. As a result of the City's actions, the plaintiffs alleged they suffered mental anguish and pain and suffering, all of which entitled them "to recover damages as are reasonable in the premises." After filing her petition for damages, plaintiff, Darlene Rizzuto, filed a petition for declaratory judgment on March 26, 1993, to determine whether the penalty and attorney fees provision of La. Rev. Stat. 22:657 applies to the City and its self-funded health care plan. The Fourth Circuit in Rizzuto v. City of New Orleans, 94-1016 (La.
Orleans, Div. "C", 04-CA-890; Fred Farve, Jr. v. City of New Orleans, No. 93-160, CDC for the Parish of Orleans, Div. "A", 04-CA-891; Michael Ricks and Vivian Ricks v. City of New Orleans, No. 93-161, CDC for the Parish of Orleans, Div. "H", 04-CA-892; Barbara Ellis v. City of New Orleans, No. 93-162, CDC for the Parish of Orleans, Div. "D", 04-CA-893; Herbert Craig v. City of New Orleans, No. 93-163, CDC for the Parish of Orleans, Div. "A", 04-CA-894; A Ray Piattoly v. City of New Orleans, No. 93-164, CDC for the Parish of Orleans, Div. "C", 04-CA-895; Patrick Murphy v. City of New Orleans, No. 93-165, CDC for the Parish of Orleans, Div. "J", 04-CA-896; and Ignatius James v. City of New Orleans, No. 93-2970, CDC for the Parish of Orleans, Div. "G", 04-CA-897. All suits were filed on January 5, 1993, except James v. City of New Orleans, which was filed on February 19, 1993. All petitions are identical except for the names of the plaintiffs. The divisions cited herein reflect the division letters stamped on the original petitions as filed. Notably, in the Order to Consolidate, the divisions do not correspond with the division letter stamp, but are listed as follows: Pumphrey, Div. "G"; Rizzuto, Div. "I"; Farve, Div. "M"; Ricks, Div. "H"; Ellis, Div. "N"; Craig, Div. "M"; Piattoly, Div. "I"; Murphy, Div. "J"; James, Div. "G". 4

App. 4 Cir. 1/19/95), 650 So.2d 341, affirmed the district court's declaratory judgment rendered in favor of plaintiff, which held that the provisions of La. Rev. Stat. 22:657 apply to the City, a political subdivision of the State of Louisiana, with regard to it self-funded health care plan. The Rizzuto court found the broad based language of La. Rev. Stat. 22:657 mandates the imposition of penalties on any entity, including "corporation and other organization," which fails to timely pay health benefits with the only exclusion for "collectively bargained union welfare plans other than health and accident plans." 94-1016 at p. 4, 650 So.2d at 343. The court noted that although La. Rev. Stat. 22:657(C) sets forth an illustrative list of included entities within its provisions, the list is not exhaustive, and when the Legislature included the State of Louisiana as one of the entities within the provisions, the court found the broad-based language also included a self-funded health care plan run by a political subdivision of the State. Id., at pp. 4-5, 650 So.2d at 343. Relying on a definition of "organization" that includes "government or governmental subdivision or agency," the court concluded the State's political subdivisions are bound by La. Rev. Stat. 22:657 because political subdivisions were not specifically excluded and the State of Louisiana was specifically included. Id., at p. 5, 343-44. Subsequently, the City and all the plaintiffs filed a joint motion to consolidate, which was granted on July 20, 1998, by order signed by the district court. After consolidation of the cases, the City filed the petition for declaratory judgment at issue in this case, seeking a declaration that La. Rev. Stat. 33:3062 exempts the City with regard to its health care plan from the penalty provisions of La. Rev. Stat. 22:657. The district court found in plaintiffs' favor, reasoning: The Fourth Circuit upheld the applicability of La. R.S. 22:657 to the City's health plan in Rizzuto v. City of New Orleans, 94-[1016] (La.
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App. 4 Cir. 1/19/95), 650 So.2d 341. Rizzuto clearly held that La. R.S. 22:657 does apply to the City's health plan and that the City violated the statute. Consequently, the court in Rizzuto ordered the City to pay the proper penalties and attorney's fees. The original text of La. R.S. 22:657 did not include the term "selfinsurers." However, "self-insurers" was added to both the heading and subsection C in the 1979 amendment to the statute. This amendment reveals the legislature's intent that self-funded health insurance plans are to be controlled by La. R.S. 22:675. La. R.S. 22:657 has been amended twice since the enactment of La. R.S. 33:3062; neither amendment repealed subsection C. It is clear that the wording of the text in La. R.S. 22:657, the actions of the legislature, as well as the jurisprudence, contradict the position of the City. Accordingly, this Court finds that La. R.S. 33:3062 does not exempt the City from the provisions of La. R.S. 22:657. The Court of Appeal affirmed the district court's decision in an unpublished opinion, finding the law of the case doctrine precluded its reconsideration of the appeal: The City contends, as it did in Rizzuto, that the trial court erred when it held that the provisions of La. R.S. 22:657 apply to the City with regard to its self-funded health care plan. This Court has previously decided that issue [in] Rizzuto. In Rizzuto, this court affirmed the trial judge's holding that La. R.S. 22:657 applied to the City's self-funded health care plan. In Kiefer v. Southern Freightways, Inc., 95-2037, p. 5 (La.App. 4 Cir. 12/27/96), 686 So.2d 1041, 1046, this Court dealt with the issue of whether a defendant should be barred by the "law of the case" doctrine from re-urging an argument in an appeal which was presented, and ultimately rejected, in a previous appeal even though not all parties were in the appeal at issue were parties in the prior appeal. *** In the present appeal, the law of the case doctrine is being applied "against" the City and the City was, of course, a party at the time of our decision in the previous appeal. The City had a full opportunity to present its argument in the previous appeal. Thus, this court has already decided the exact issue in one of the consolidated cases; the same ruling applies and should be adopted to all of the cases concerning the instant appeal. This Court granted the City's writ application to determine whether La. Rev. Stat. 33:3062 exempts the City with regard to its health plan from the penalty provision of La. Rev. Stat. 22:657(A) and to resolve the alleged conflict between the provisions of La. Rev. Stat. 33:3062(B) and La. Rev. Stat. 22:657(C).
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LAW AND ANALYSIS Before we engage in any statutory interpretation, however, we examine first the law of the case doctrine and its applicability in the present case. Law of the Case Doctrine In Day v. Campbell-Grosjean Roofing & Sheet Metal Corp., 256 So.2d 105, 107 (La. 1972), this Court explained with Justice Tate as organ for the Court: With regard to an appellate court, the `law of the case' refers to a policy by which the court will not, on a subsequent appeal, reconsider prior rulings in the same case. This policy applies only against those who were parties to the case when the former appellate decision was rendered and who thus had their day in court. Among reasons assigned for application of the policy are: the avoidance of indefinite relitigation of the same issue; the desirability of consistency of the result in the same litigation; and the efficiency, and the essential fairness to both parties, of affording a single opportunity for the argument and decision of the matter at issue. Nevertheless, the law-of-the-case principle is applied merely as a discretionary guide: Argument is barred where there is merely doubt as to the correctness of the former ruling, but not in cases of palpable former error or so mechanically as to accomplish manifest injustice. Further, the law-of-the-case principle is not applied so as to prevent a higher court from examining the correctness of the ruling of the previous court. Preliminarily, we observe the principle of law of the case has no bearing upon our decision today. Pitre v. Louisiana Tech University, 95-1466 (La. 5/10/96), 673 So.2d 585, 589. Under this doctrine, courts of appeal generally refuse to reconsider their own rulings of law on a subsequent appeal in the same case. Id.; Garrison v. St. Charles Gen. Hosp., 03-0423, p. 1 (La. 4/25/03), 845 So.2d 1047, 1047 (per curiam). However, this principle is not applied to prevent a higher court from examining the correctness of the ruling of an intermediate appellate court as it "merely expresses the practice of courts generally to refuse to reopen what has been decided, not a limit to their power." Messinger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 740, 56 L.Ed. 1152 (1912). The law of the case doctrine must never be applied as a restraint on the

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power and authority of the court in developing law and, therefore, must never be employed if such would restrain the development of law. As this Court is not bound by the doctrine, we further find the court of appeal erred in its discretionary application of the doctrine in the present case. Based on our reading of the court of appeal's earlier disposition in the Rizzuto case in conjunction with a review of the record in Rizzuto submitted as an exhibit in the present case, the only issue resolved by the Rizzuto court was the correctness of the district court's finding plaintiff was entitled to a declaration that La. Rev. Stat. 22:657 applied to the City's health plan. No discussion of the La. Rev. Stat. 33:3062 exemption was had, and therefore, the Rizzuto court did not rule on the issue in this case, i.e., the applicability of La. Rev. Stat. 33:3062(B) to exempt the City's health plan from the penalty provision of La. Rev. Stat. 22:657(A). Under these circumstances, we find the court of appeal clearly erred in applying the law of the case doctrine. We look now to a discussion of the merits of this case, i.e., the application of the La. Rev. Stat. 33:3062(B) exemption. Statutory Construction We begin by noting the application of La. Rev. Stat. 33:3062(B) as an exemption from La. Rev. Stat. 22:657(A)'s penalty provision is an issue of first impression for this Court. We do acknowledge this Court in Caraway v. Royale Airlines, Inc., 579 So.2d 424, 429 (La. 1991), found the City of Bossier City was liable for penalties and attorney fees under La. Rev. Stat. 22:657(A), holding the record supported the conclusion the City of Bossier City was without just and reasonable grounds in failing to pay benefits to plaintiff under its health plan. However, we find it evident the Caraway court did not consider the exemption from

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the penalty provisions of La. Rev. Stat. 22:657(A) contained in La. Rev. Stat. 33:3062(B).2 Therefore, we turn to a discussion of the provisions at issue in this case. La. Rev. Stat. 22:657 provides, in pertinent part: A. All claims arising under the terms of health and accident contracts issued in this state, except as provided in Subsection B, shall be paid not more than thirty days from the date upon which written notice and proof of claim, in the form required by the terms of the policy, are furnished to the insurer unless just and reasonable grounds, such as would put a reasonable and prudent businessman on his guard, exist. The insurer shall make payment at least every thirty days to the assured during that part of the period of his disability covered by the policy or contract of insurance during which the insured is entitled to such payments. Failure to comply with the provisions of this Section shall subject the insurer to a penalty payable to the insured of double the amount of the health and accident benefits due under the terms of the policy or contract during the period of delay, together with attorney's fees to be determined by the court. Any court of competent jurisdiction in the parish where the insured lives or has his domicile, excepting a justice of the peace court, shall have jurisdiction to try such cases. C. Any person, partnership, corporation or other organization, or the State of Louisiana which provides or contracts to provide health and accident benefit coverage as a self-insurer for his or its employees, stockholders or any other persons, shall be subject to the provisions of this Section, including the provisions relating to penalties and attorney fees, without regard to whether the person or organization is a commercial insurer provided, however, this Section shall not apply to collectively bargained union welfare plans other than health and accident plans. La. Rev. Stat. 33:3062 provides: A. The governing authority of any municipality, parish, school board, or interlocal risk management agency authorized pursuant to R.S. 33:1341, et seq., hereafter referred to in this Part as the "governing authority", may contract for any type of insurance protection for itself or its officers
Interestingly, the Caraway plaintiffs filed suit on February 20, 1987, for recovery of health insurance benefits due to plaintiffs under the City of Bossier City's health and hospitalization insurance, which covered plaintiff at the time of her surgery on July 30, 1986. During the course of the surgery, potentially life-threatening complications arose. Medical expenses from the surgery and treatment of the complications totaled $78,165.65. The City of Bossier City plan paid $1166 in benefits, the amount it alleged it was responsible for as secondary plan under its non-duplication of benefits provision. On July 14, 1986, the City of Bossier City plan had agreed to extend coverage as a secondary plan. Ironically, La. Rev. Stat. 33:3062 became effective on July 14, 1986. Notably, the Caraway court did not find the City of Bossier City liable under La. Rev. Stat. 22:657(C), but rather found liability under the general penalty provision of La. Rev. Stat. 22:657(A). Specifically, even though effective, the Caraway court did not address La. Rev. Stat. 33:3062 or its exemption. 9
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and employees including self insurance or shared risk programs, provided the term of coverage of such insurance does not exceed ten years, and such governing authority may make such advance payments of the cost of such insurance as it shall deem appropriate. B. A governing authority participating in a program of self-insurance or shared risk shall not constitute an insurance company or an insurer under the laws of this state, and the development and administration of such a program shall not constitute doing an insurance business. An agreement or contract entered into by any such governing authority providing for the creation and maintenance of self-insurance or shared risk programs shall not be deemed to constitute insurance as defined by R.S. 22:5, nor shall such a program be subject to the provisions of Chapter 1 of Title 22 of the Louisiana Revised Statutes of 1950. In resolving the issue of whether La. Rev. Stat. 33:3062 may be applied as an exemption in the instant situation, we must keep certain principles of judicial interpretation of statutes in mind. The fundamental question in all cases of statutory interpretation is legislative intent and the ascertainment of the reason or reasons that prompted the Legislature to enact the law. In re Succession of Boyter, 99-0761, p. 9 (La. 1/7/00), 756 So.2d 1122, 1128. The rules of statutory construction are designed to ascertain and enforce the intent of the Legislature. Id.; Stogner v. Stogner, 983044, p. 5 (La. 7/7/99), 739 So.2d 762, 766. Legislation is the solemn expression of legislative will, and therefore, interpretation of a law involves primarily a search for the Legislature's intent. La. Rev. Stat.

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