Aviation West Charters, LLC v. UnitedHealthcare Insurance Company

Filing 64

MEMORANDUM AND ORDER signed by Senior Judge William B. Shubb on 11/15/17 DENYING defendant's 51 Motion for summary judgment, and GRANTING 57 defendant's Motion to strike. This action is REMANDED to the plan administrator for further proceedings consistent with this Order. CASE CLOSED (Kastilahn, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo---AVIATION WEST CHARTERS, LLC
CIV. NO. 2:16-436 WBS AC
d/b/a ANGEL MEDFLIGHT,
MEMORANDUM AND ORDER RE: MOTION
Plaintiff,
FOR SUMMARY JUDGMENT AND MOTION
TO STRIKE
v.
UNITEDHEALTHCARE INSURANCE
COMPANY,
Defendant.

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----oo0oo---Plaintiff Dina Miller (“Miller”) brings this action

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against defendant UnitedHealthcare Insurance Company (“United”)

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alleging that defendant violated the Employee Retirement Income

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Security Act (“ERISA”), 29 U.S.C. § 1132(a), when it failed to

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pay Aviation West Charters, LLC (“Aviation West”) for ambulatory

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services provided to M.M., Miller’s minor child.

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court is defendant’s Motion for summary judgment and Motion to

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strike Miller’s declaration.

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Before the

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I.

Factual and Procedural Background

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M.M. is covered by an employer-sponsored health benefit

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plan sponsored by McClone Construction Company (“the Plan”), for

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which United is the insurer and claims administrator.

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Stalinski Decl., Ex. A, the Plan (Docket No. 24-1).)

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offers emergency and non-emergency ambulatory services.

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(See
The Plan

While on vacation in La Paz, Mexico, M.M. broke her

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right leg and was subsequently taken to a Mexican hospital.

From

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the hospital, M.M.’s family called and spoke with M.M.’s primary

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care physician as well as an orthopedic surgeon in Seattle,

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Washington, and arranged for M.M. to be transported back to

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Seattle.

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an air ambulance service, requested pre-authorization from

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defendant for air and ground ambulance service to transport M.M.

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from Mexico to Seattle Children’s Hospital.

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Ex. B at 1 (Docket No. 24-1).)

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Aviation West that somebody would contact them soon to request

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documents.

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told that the United system showed that the request had not been

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categorized as urgent, and that the flight could occur at any

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time between January 10 and August 10, 2014.

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West explained the urgency of the request and stated that the

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flight needed to leave that day.

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representative stated that she would put the request “on a rush”

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and that a case manager would review the request that day.

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Aviation West later called back once more and was again told that

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the request had not been submitted as urgent.

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West again explained that the request was urgent and that the

(PX032.)

(PX033.)

On Friday, January 10, 2014, Aviation West,

(Stalinski Decl.,

A United representative told

Aviation West later called back and was

(Id.)

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(Id.)

Aviation

The United

(Id.)

(Id.)

Aviation

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flight needed to leave that day.

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representative explained that a case manager had been assigned

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and would contact Aviation West to request records.

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representative then stated that United closed at 6 p.m., and

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explained that “[i]f it’s that severe and the patient needs to go

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to an emergency room, then it’s best that you take [her] to the

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emergency room.”

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In response, the United

(Id.)

The

(PX043.)

On January 11, 2014, after still not hearing from a
United case manager, Aviation West flew M.M. from Mexico to

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Seattle, at a cost of $495,925.

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(Docket No. 24-2).)

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M.M. was immediately taken to the emergency department.

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M.M.’s family “wished to proceed with the planned intramedullary

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fixation,” and M.M. immediately received this treatment.

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(Stalinski Decl., Ex. D at 203

Upon arrival at Seattle Children’s Hospital,
(PX032.)

(Id.)

Aviation West submitted a reimbursement claim for

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emergency transportation, which United denied.1

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Decl., Ex. C at 1-2 (Docket No. 24-1).)

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three internal appeals from the denial of this claim as M.M.’s

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authorized representative, which United denied.

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PX21.)

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which United also denied.

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Aviation West initiated a lawsuit against United, seeking to

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recover benefits due under the Plan and ERISA as M.M.’s purported

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assignee.

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(Stalinski

Aviation West brought

(See PX15; PX16;

Aviation West then filed a request for external review,
(See PX41.)

On March 1, 2016,

(See First Am. Compl. (Docket No. 13).)
United moved for summary judgment on the basis that

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United first issued a partial payment of $11,677.03 but
then reversed itself and sought to recoup the amount. (PX009.)
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Aviation West lacked standing to bring the action.

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July 24 Mot. for Summ. J. (Docket No. 23).)

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filed a motion to intervene as plaintiff.

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the court granted United’s motion for summary judgment along with

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Miller’s motion to intervene.

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plaintiff, Miller is seeking recovery of benefits under 29 U.S.C.

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§ 1132(a)(1)(B), as well as prejudgment interest and reasonable

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attorneys’ fees under 29 U.S.C. § 1132(a)(3) and § 1132(g)(1).

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II.

(See Def.’s

Miller subsequently
On August 24, 2017,

(Docket Nos. 46, 47.)

As the new

Standard of Review

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The court must first address the argument regarding

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what standard of review to apply to the administrator’s denial of

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Aviation West’s claim for benefits.

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discretion to the administrator to interpret the terms of the

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plan and determine benefits eligibility, the administrator’s

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denial of benefits is subject to abuse of discretion review.

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Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989);

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Abatie v. Alta Health & Life Ins., 458 F.3d 955, 962-64 (9th Cir.

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2006).

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that United had discretion to “[i]nterpret Benefits under the

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Policy,” “[i]nterpret the other terms, conditions, limitations

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and exclusions set out in the Policy,” and “[m]ake factual

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determinations related to the Policy and its Benefits.”

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(Stalinski Decl., Ex. A at 44.)

When an ERISA plan grants

See

Here, it is undisputed that the Plan explicitly stated

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Plaintiff contends that the application of California

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Insurance Code § 10110.6 voids provisions that purport to grant

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discretion to insurance companies.2

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According to plaintiff, the

California Insurance Code § 10110.6 states, in relevant
part, “(a) If a policy, contract, certificate, or agreement
offered, issued, delivered, or renewed, whether or not in
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discretionary clause in the Plan is therefore void, and thus

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abuse of discretion review is inapplicable and de novo review

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should be applied instead.

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of law provision explaining that Virginia law will apply to any

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disputes involving the terms of the Plan.

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A at 40.)

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inapplicable.

(Stalinski Decl., Ex.

Thus California Insurance Code § 10110.6 is

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However, the Plan contains a choice

Plaintiff also argues that de novo review should apply
because defendant engaged in a flagrant procedural violation of

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ERISA that “shifts the standard of review from abuse of

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discretion to de novo.”

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Specifically, plaintiff points to United’s failure to grant

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Aviation West’s request for an independent external review and

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its determination that the claim denial did not involve medical

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judgment.

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type so egregious as to shift the standard of review from abuse

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of discretion to de novo.

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have “failed to comply with virtually every applicable mandate of

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ERISA.”

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III. Motion to Strike

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See Abatie, 458 F.3d at 972.

Assuming these to be violations, they are not of the

Id. at 971.

Under Abatie, the administrator must

The court does not find that here.

Miller’s declaration was not part of the administrative

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record.

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California, that provides or funds life insurance or disability
insurance coverage for any California resident contains a
provision that reserves discretionary authority to the insurer,
or an agent of the insurer, to determine eligibility for benefits
or coverage, to interpret the terms of the policy, contract,
certificate, or agreement, or to provide standards of
interpretation or review that are inconsistent with the laws of
this state, that provision is void and unenforceable.” Cal. Ins.
Code § 10110.6.

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In reviewing a denial of ERISA benefits under the abuse

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of discretion standard, the court is limited to the evidence that

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was reviewed by the administrator at the time the denial decision

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was made.

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1469, 1471 (9th Cir. 1993) (abrogated on another ground by

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Abatie, 458 F.3d 955) (“Permitting a district court to examine

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evidence outside the administrative record would open the door to

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the anomalous conclusion that a plan administrator abused its

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discretion by failing to consider evidence not before it.”);

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Abatie, 458 F.3d at 971 (“review is limited to the record before

See Taft v. Equitable Life Assurance Soc’y, 9 F.3d

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the plan administrator.”)

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themselves previously objected to certain interrogatories,

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arguing that “[i]n an ERISA action for unpaid benefits, a court’s

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review is generally limited to the administrative record.”

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(Westerfeld Decl., Ex. A, Pl.’s Resp. to Interrog.

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35-1).)

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In fact, plaintiff’s attorneys

(Docket No.

While the court may, in its discretion, consider

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evidence beyond the administrative record to determine the nature

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of a conflict of interest, the decision on the merits “must rest

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on the administrative record once the conflict (if any) has been

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established.”

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interest, the review of the administrative record may be

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“informed by the nature, extent, and effect on the decision-

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making process” of the conflict.

(Id.)

However, if there is a conflict of

Abatie, 458 F.3d at 967.

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Here, the defendant acted as both the claims

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administrator and the funding source for benefits, and therefore

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there was a clear conflict of interest.

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Summ. J. at 10.)

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evidence outside of the administrative record to determine the

(Def.’s July 24 Mot. for

Accordingly, the court is permitted to look to

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nature of this conflict, but the court cannot look at any

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evidence outside of the record in order to reach its decision

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regarding whether the administrator abused its discretion in

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denying Aviation West’s claim.3

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plaintiff attempts to use her declaration as evidence that

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defendant’s decision qualified as an abuse of discretion or was

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otherwise incorrect, it is inadmissible.

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IV.

Accordingly, to the extent

Motion for Summary Judgment

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If required to make a final determination on the basis

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of the record presently before it, the court would be in a

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difficult position.

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ambulance service to be for an emergency, it was obligated to pay

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the cost of transportation “to the nearest Hospital where

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Emergency Health Services could be performed.”

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Ex. A at 47.)

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authorizing United to scrutinize the reasonableness of the bill

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submitted or to pay anything less than the full amount of the

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bill.

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by failing to find the transportation was an emergency, it would

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have no choice but to order United to pay the full amount of the

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bill.

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$495,925 for a flight from La Paz, Mexico to Seattle, Washington

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under the circumstances amounted to highway robbery.4

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(Stalinski Decl.,

As the court reads the Plan, there is no provision

Thus, if the court concludes United abused its discretion

Bluntly stated, in the opinion of the court, charging

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Because defendant admits the conflict and explains that
it acted as both the claims administrator and the funding source
for benefits, (Def.’s Mot. for Summ. J. at 10), the court finds
that it need not look outside of the administrative record to
understand the nature of the conflict.
Admittedly, some of this amount was for the medical
services aboard the aircraft, but at oral argument counsel for
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Under the Plan, if United found the air

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On the other hand, if the court concludes United did

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not abuse its discretion, it runs the risk of saddling Miller

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with such an exorbitant bill.

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has paid this bill or that she is liable to pay it, and counsel

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at oral argument could shed no light on this question.

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cannot imagine how anyone, except under extreme duress, would

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agree to pay such a sum.

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West may seek to recover it from Miller, and in the opinion of

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the court such result would be unconscionable.

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Miller does not allege that she

The court

However, it does appear that Aviation

In reviewing United’s denial letter, it appears to the

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court that United may have had some of the same concerns.

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stated that coverage was not approved because “[e]mergent

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transportation for a serious medical condition or symptom

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resulting from an injury is to the nearest facility.

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of non-emergent transportation, the pre-service request was

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received however did not allow for UHC initiation and direction

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for non-emergent air ambulance transportation.”

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Decl., Ex. C at 201.)

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denial, it could reasonably be inferred that United did not deem

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the issue to be whether there was an emergency, but rather

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whether the transportation was to the nearest facility.

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Alternatively, United appears to be stating that if it was not an

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emergency, Aviation West did not follow the proper procedures for

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obtaining pre-authorization, as required by the Plan.

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Decl., Ex. A at 13, 17.)

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United

In the case

(Stalinski

From this statement of the reasons for

(Stalinski

United’s stated concern that the transportation was not
Aviation West acknowledged that only amounted to a little more
than 10 percent. The rest was for use of the aircraft.
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to the nearest facility may well have been motivated by the

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excessiveness of the amount claimed and a feeling that

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transportation to a closer facility may have been cheaper.

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Unfortunately, however, as the court reads the plan, there is no

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provision for United to pay only the amount it would have cost to

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transport M.M. to any closer facility.

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United has not suggested what that would have cost.

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faced with the uncomfortable choice of either paying the

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exorbitant amount presented in the bill or paying nothing at all.

Indeed, to this day,
United was

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Under the circumstances, it appears that United opted to pay

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nothing.

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From United’s statement in its denial letter, the court

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can certainly see why plaintiff also would not have understood

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that the issue was whether or not there was an emergency.

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plaintiff and Aviation West fully understood that, plaintiff now

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alleges, there were other facts they would have presented to

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United which would have been part of the record.

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in plaintiff’s declaration, which has been stricken in this

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proceeding, she states that after arriving at the hospital in La

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Paz, she contacted doctors in M.M.’s primary-care group in

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Seattle and was put in touch with specialists at Seattle

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Children’s Hospital.

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specialists that the Mexican doctors planned to perform a

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procedure that involved placing M.M.’s leg in traction and

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drilling holes into it.

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disagreed with this proposed plan and informed plaintiff that

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M.M. required, as soon as possible, a procedure called flexible

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intramedullary nail fixation.

(PX042 ¶ 11.)

(Id. ¶ 12.)

Specifically,

Plaintiff informed those

The Seattle specialists

(Id. ¶ 13.)
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Had

The Mexican hospital

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lacked the medical technology and equipment needed to perform

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this recommended procedure.

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Hospital agreed to admit M.M. and perform this surgery.

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(Id. ¶ 14.)

Seattle Children’s

Although this evidence is outside of the record and

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cannot be considered by the court here, it is information that,

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had United asked about or received during the administrative

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process, would have likely impacted its decision regarding

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whether or not M.M. required emergency services.

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The plan administrator has a duty to engage in a

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meaningful dialogue with the claimant about her claim.

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Booton v. Lockheed Med. Ben. Plan, 110 F.3d 1461, 1463 (9th Cir.

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1997) (“[W]hat [29 C.F.R. § 2560.503–1(g)] calls for is a

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meaningful dialogue between ERISA plan administrators and their

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beneficiaries.... [I]f the plan administrators believe that more

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information is needed to make a reasoned decision, they must ask

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for it.”).

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reason for the denial must be stated in reasonably clear

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language, with specific reference to the plan provisions that

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form the basis for the denial.”

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further explained that “[b]y requiring that an administrator

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notify a claimant of the reasons for the administrator’s

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decisions, the [ERISA] statute suggests that the specific reasons

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provided must be reviewed at the administrative level.”

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458 F.3d at 974.

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See

“If benefits are denied in whole or in part, the

(Id.)

The Ninth Circuit has

Abatie,

The court has the authority to remand a claim to the

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plan administrator if the specific reasoning was not reviewed at

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the administrative level and the record is not sufficiently

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developed.

See Mongeluzo v. Baxter Travenol Long Term Disability
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Ben. Plan, 46 F.3d 938, 944 (9th Cir. 1995).

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believes that if the plan administrator had the opportunity to

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consider the information in plaintiff’s declaration, it is likely

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that United may have come to a different conclusion on whether

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the air transportation was for an emergency.

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Here, the court

As the Ninth Circuit has explained, “an ERISA plan

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cannot rely on a lack of information to support its denial of

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benefits when it fails to inform the beneficiary about the

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missing information so that the beneficiary can provide it.”

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Booton, 110 F.3d at 1464.

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insurance company, familiar with the terms of its Plan and the

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applicable ERISA laws, which is in a better position to know what

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information it needs in order to make a reasoned decision.

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Moreover, United was on notice that the doctors in Seattle had

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communicated with plaintiff prior to M.M.’s transport because the

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medical records, which United did have access to throughout the

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administrative process, indicated that the doctor in Seattle had

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previous conversations with M.M.’s parents.

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(explaining that M.M.’s family “wished to proceed with the

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planned intramedullary fixation,” indicating that prior

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conversations had occurred regarding treatment).)

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As between the parties, it is the

(See PX032

A reasonable administrator in that situation should

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have appreciated that the doctors in Seattle would have

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information regarding whether or not an emergency existed, and

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would have contacted those doctors, or at the very least invited

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the claimant to supply that information.

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administrator did not, the court will remand this matter to the

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administrator to give United a fair opportunity to consider the
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Because the plan

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information that would have been developed had United followed

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through and sought it out in the first instance.

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The court expresses no opinion as to what additional

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information shall be received or how the plan administrator

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should decide any issue on remand, except to note that nothing in

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this Order should be construed to prevent the parties from

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negotiating a compromise of this claim if it should be deemed

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within the plan administrator’s authority to do so.

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IT IS THEREFORE ORDERED that defendant’s Motion for
summary judgment be, and the same hereby is, DENIED.

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IT IS FURTHER ORDERED that defendant’s Motion to strike
be, and the same hereby is, GRANTED.

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This action is hereby REMANDED to the plan

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administrator for further proceedings consistent with this Order.

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Dated:

November 15, 2017

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