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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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 13 14 15 16 17 ----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. 18 19 20 ----oo0oo---Plaintiff Dina Miller (“Miller”) brings this action 21 against defendant UnitedHealthcare Insurance Company (“United”) 22 alleging that defendant violated the Employee Retirement Income 23 Security Act (“ERISA”), 29 U.S.C. § 1132(a), when it failed to 24 pay Aviation West Charters, LLC (“Aviation West”) for ambulatory 25 services provided to M.M., Miller’s minor child. 26 court is defendant’s Motion for summary judgment and Motion to 27 strike Miller’s declaration. 28 1 Before the 1 I. Factual and Procedural Background 2 M.M. is covered by an employer-sponsored health benefit 3 plan sponsored by McClone Construction Company (“the Plan”), for 4 which United is the insurer and claims administrator. 5 Stalinski Decl., Ex. A, the Plan (Docket No. 24-1).) 6 offers emergency and non-emergency ambulatory services. 7 (See The Plan While on vacation in La Paz, Mexico, M.M. broke her 8 right leg and was subsequently taken to a Mexican hospital. From 9 the hospital, M.M.’s family called and spoke with M.M.’s primary 10 care physician as well as an orthopedic surgeon in Seattle, 11 Washington, and arranged for M.M. to be transported back to 12 Seattle. 13 an air ambulance service, requested pre-authorization from 14 defendant for air and ground ambulance service to transport M.M. 15 from Mexico to Seattle Children’s Hospital. 16 Ex. B at 1 (Docket No. 24-1).) 17 Aviation West that somebody would contact them soon to request 18 documents. 19 told that the United system showed that the request had not been 20 categorized as urgent, and that the flight could occur at any 21 time between January 10 and August 10, 2014. 22 West explained the urgency of the request and stated that the 23 flight needed to leave that day. 24 representative stated that she would put the request “on a rush” 25 and that a case manager would review the request that day. 26 Aviation West later called back once more and was again told that 27 the request had not been submitted as urgent. 28 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.) 2 (Id.) Aviation The United (Id.) (Id.) Aviation 1 flight needed to leave that day. 2 representative explained that a case manager had been assigned 3 and would contact Aviation West to request records. 4 representative then stated that United closed at 6 p.m., and 5 explained that “[i]f it’s that severe and the patient needs to go 6 to an emergency room, then it’s best that you take [her] to the 7 emergency room.” 8 9 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 10 Seattle, at a cost of $495,925. 11 (Docket No. 24-2).) 12 M.M. was immediately taken to the emergency department. 13 M.M.’s family “wished to proceed with the planned intramedullary 14 fixation,” and M.M. immediately received this treatment. 15 (Stalinski Decl., Ex. D at 203 Upon arrival at Seattle Children’s Hospital, (PX032.) (Id.) Aviation West submitted a reimbursement claim for 16 emergency transportation, which United denied.1 17 Decl., Ex. C at 1-2 (Docket No. 24-1).) 18 three internal appeals from the denial of this claim as M.M.’s 19 authorized representative, which United denied. 20 PX21.) 21 which United also denied. 22 Aviation West initiated a lawsuit against United, seeking to 23 recover benefits due under the Plan and ERISA as M.M.’s purported 24 assignee. 25 (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 26 27 28 1 United first issued a partial payment of $11,677.03 but then reversed itself and sought to recoup the amount. (PX009.) 3 1 Aviation West lacked standing to bring the action. 2 July 24 Mot. for Summ. J. (Docket No. 23).) 3 filed a motion to intervene as plaintiff. 4 the court granted United’s motion for summary judgment along with 5 Miller’s motion to intervene. 6 plaintiff, Miller is seeking recovery of benefits under 29 U.S.C. 7 § 1132(a)(1)(B), as well as prejudgment interest and reasonable 8 attorneys’ fees under 29 U.S.C. § 1132(a)(3) and § 1132(g)(1). 9 II. (See Def.’s Miller subsequently On August 24, 2017, (Docket Nos. 46, 47.) As the new Standard of Review 10 The court must first address the argument regarding 11 what standard of review to apply to the administrator’s denial of 12 Aviation West’s claim for benefits. 13 discretion to the administrator to interpret the terms of the 14 plan and determine benefits eligibility, the administrator’s 15 denial of benefits is subject to abuse of discretion review. 16 Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); 17 Abatie v. Alta Health & Life Ins., 458 F.3d 955, 962-64 (9th Cir. 18 2006). 19 that United had discretion to “[i]nterpret Benefits under the 20 Policy,” “[i]nterpret the other terms, conditions, limitations 21 and exclusions set out in the Policy,” and “[m]ake factual 22 determinations related to the Policy and its Benefits.” 23 (Stalinski Decl., Ex. A at 44.) When an ERISA plan grants See Here, it is undisputed that the Plan explicitly stated 24 Plaintiff contends that the application of California 25 Insurance Code § 10110.6 voids provisions that purport to grant 26 discretion to insurance companies.2 27 28 2 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 4 1 discretionary clause in the Plan is therefore void, and thus 2 abuse of discretion review is inapplicable and de novo review 3 should be applied instead. 4 of law provision explaining that Virginia law will apply to any 5 disputes involving the terms of the Plan. 6 A at 40.) 7 inapplicable. (Stalinski Decl., Ex. Thus California Insurance Code § 10110.6 is 8 9 However, the Plan contains a choice Plaintiff also argues that de novo review should apply because defendant engaged in a flagrant procedural violation of 10 ERISA that “shifts the standard of review from abuse of 11 discretion to de novo.” 12 Specifically, plaintiff points to United’s failure to grant 13 Aviation West’s request for an independent external review and 14 its determination that the claim denial did not involve medical 15 judgment. 16 type so egregious as to shift the standard of review from abuse 17 of discretion to de novo. 18 have “failed to comply with virtually every applicable mandate of 19 ERISA.” 20 III. Motion to Strike 21 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 22 record. 23 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. 24 25 26 27 In reviewing a denial of ERISA benefits under the abuse 28 5 1 of discretion standard, the court is limited to the evidence that 2 was reviewed by the administrator at the time the denial decision 3 was made. 4 1469, 1471 (9th Cir. 1993) (abrogated on another ground by 5 Abatie, 458 F.3d 955) (“Permitting a district court to examine 6 evidence outside the administrative record would open the door to 7 the anomalous conclusion that a plan administrator abused its 8 discretion by failing to consider evidence not before it.”); 9 Abatie, 458 F.3d at 971 (“review is limited to the record before See Taft v. Equitable Life Assurance Soc’y, 9 F.3d 10 the plan administrator.”) 11 themselves previously objected to certain interrogatories, 12 arguing that “[i]n an ERISA action for unpaid benefits, a court’s 13 review is generally limited to the administrative record.” 14 (Westerfeld Decl., Ex. A, Pl.’s Resp. to Interrog. 15 35-1).) 16 In fact, plaintiff’s attorneys (Docket No. While the court may, in its discretion, consider 17 evidence beyond the administrative record to determine the nature 18 of a conflict of interest, the decision on the merits “must rest 19 on the administrative record once the conflict (if any) has been 20 established.” 21 interest, the review of the administrative record may be 22 “informed by the nature, extent, and effect on the decision- 23 making process” of the conflict. (Id.) However, if there is a conflict of Abatie, 458 F.3d at 967. 24 Here, the defendant acted as both the claims 25 administrator and the funding source for benefits, and therefore 26 there was a clear conflict of interest. 27 Summ. J. at 10.) 28 evidence outside of the administrative record to determine the (Def.’s July 24 Mot. for Accordingly, the court is permitted to look to 6 1 nature of this conflict, but the court cannot look at any 2 evidence outside of the record in order to reach its decision 3 regarding whether the administrator abused its discretion in 4 denying Aviation West’s claim.3 5 plaintiff attempts to use her declaration as evidence that 6 defendant’s decision qualified as an abuse of discretion or was 7 otherwise incorrect, it is inadmissible. 8 IV. Accordingly, to the extent Motion for Summary Judgment 9 If required to make a final determination on the basis 10 of the record presently before it, the court would be in a 11 difficult position. 12 ambulance service to be for an emergency, it was obligated to pay 13 the cost of transportation “to the nearest Hospital where 14 Emergency Health Services could be performed.” 15 Ex. A at 47.) 16 authorizing United to scrutinize the reasonableness of the bill 17 submitted or to pay anything less than the full amount of the 18 bill. 19 by failing to find the transportation was an emergency, it would 20 have no choice but to order United to pay the full amount of the 21 bill. 22 $495,925 for a flight from La Paz, Mexico to Seattle, Washington 23 under the circumstances amounted to highway robbery.4 24 25 26 27 (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 3 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 7 4 28 Under the Plan, if United found the air 1 On the other hand, if the court concludes United did 2 not abuse its discretion, it runs the risk of saddling Miller 3 with such an exorbitant bill. 4 has paid this bill or that she is liable to pay it, and counsel 5 at oral argument could shed no light on this question. 6 cannot imagine how anyone, except under extreme duress, would 7 agree to pay such a sum. 8 West may seek to recover it from Miller, and in the opinion of 9 the court such result would be unconscionable. 10 Miller does not allege that she The court However, it does appear that Aviation In reviewing United’s denial letter, it appears to the 11 court that United may have had some of the same concerns. 12 stated that coverage was not approved because “[e]mergent 13 transportation for a serious medical condition or symptom 14 resulting from an injury is to the nearest facility. 15 of non-emergent transportation, the pre-service request was 16 received however did not allow for UHC initiation and direction 17 for non-emergent air ambulance transportation.” 18 Decl., Ex. C at 201.) 19 denial, it could reasonably be inferred that United did not deem 20 the issue to be whether there was an emergency, but rather 21 whether the transportation was to the nearest facility. 22 Alternatively, United appears to be stating that if it was not an 23 emergency, Aviation West did not follow the proper procedures for 24 obtaining pre-authorization, as required by the Plan. 25 Decl., Ex. A at 13, 17.) 26 27 28 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. 8 1 to the nearest facility may well have been motivated by the 2 excessiveness of the amount claimed and a feeling that 3 transportation to a closer facility may have been cheaper. 4 Unfortunately, however, as the court reads the plan, there is no 5 provision for United to pay only the amount it would have cost to 6 transport M.M. to any closer facility. 7 United has not suggested what that would have cost. 8 faced with the uncomfortable choice of either paying the 9 exorbitant amount presented in the bill or paying nothing at all. Indeed, to this day, United was 10 Under the circumstances, it appears that United opted to pay 11 nothing. 12 From United’s statement in its denial letter, the court 13 can certainly see why plaintiff also would not have understood 14 that the issue was whether or not there was an emergency. 15 plaintiff and Aviation West fully understood that, plaintiff now 16 alleges, there were other facts they would have presented to 17 United which would have been part of the record. 18 in plaintiff’s declaration, which has been stricken in this 19 proceeding, she states that after arriving at the hospital in La 20 Paz, she contacted doctors in M.M.’s primary-care group in 21 Seattle and was put in touch with specialists at Seattle 22 Children’s Hospital. 23 specialists that the Mexican doctors planned to perform a 24 procedure that involved placing M.M.’s leg in traction and 25 drilling holes into it. 26 disagreed with this proposed plan and informed plaintiff that 27 M.M. required, as soon as possible, a procedure called flexible 28 intramedullary nail fixation. (PX042 ¶ 11.) (Id. ¶ 12.) Specifically, Plaintiff informed those The Seattle specialists (Id. ¶ 13.) 9 Had The Mexican hospital 1 lacked the medical technology and equipment needed to perform 2 this recommended procedure. 3 Hospital agreed to admit M.M. and perform this surgery. 4 (Id. ¶ 14.) Seattle Children’s Although this evidence is outside of the record and 5 cannot be considered by the court here, it is information that, 6 had United asked about or received during the administrative 7 process, would have likely impacted its decision regarding 8 whether or not M.M. required emergency services. 9 The plan administrator has a duty to engage in a 10 meaningful dialogue with the claimant about her claim. 11 Booton v. Lockheed Med. Ben. Plan, 110 F.3d 1461, 1463 (9th Cir. 12 1997) (“[W]hat [29 C.F.R. § 2560.503–1(g)] calls for is a 13 meaningful dialogue between ERISA plan administrators and their 14 beneficiaries.... [I]f the plan administrators believe that more 15 information is needed to make a reasoned decision, they must ask 16 for it.”). 17 reason for the denial must be stated in reasonably clear 18 language, with specific reference to the plan provisions that 19 form the basis for the denial.” 20 further explained that “[b]y requiring that an administrator 21 notify a claimant of the reasons for the administrator’s 22 decisions, the [ERISA] statute suggests that the specific reasons 23 provided must be reviewed at the administrative level.” 24 458 F.3d at 974. 25 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 26 plan administrator if the specific reasoning was not reviewed at 27 the administrative level and the record is not sufficiently 28 developed. See Mongeluzo v. Baxter Travenol Long Term Disability 10 1 Ben. Plan, 46 F.3d 938, 944 (9th Cir. 1995). 2 believes that if the plan administrator had the opportunity to 3 consider the information in plaintiff’s declaration, it is likely 4 that United may have come to a different conclusion on whether 5 the air transportation was for an emergency. 6 Here, the court As the Ninth Circuit has explained, “an ERISA plan 7 cannot rely on a lack of information to support its denial of 8 benefits when it fails to inform the beneficiary about the 9 missing information so that the beneficiary can provide it.” 10 Booton, 110 F.3d at 1464. 11 insurance company, familiar with the terms of its Plan and the 12 applicable ERISA laws, which is in a better position to know what 13 information it needs in order to make a reasoned decision. 14 Moreover, United was on notice that the doctors in Seattle had 15 communicated with plaintiff prior to M.M.’s transport because the 16 medical records, which United did have access to throughout the 17 administrative process, indicated that the doctor in Seattle had 18 previous conversations with M.M.’s parents. 19 (explaining that M.M.’s family “wished to proceed with the 20 planned intramedullary fixation,” indicating that prior 21 conversations had occurred regarding treatment).) 22 As between the parties, it is the (See PX032 A reasonable administrator in that situation should 23 have appreciated that the doctors in Seattle would have 24 information regarding whether or not an emergency existed, and 25 would have contacted those doctors, or at the very least invited 26 the claimant to supply that information. 27 administrator did not, the court will remand this matter to the 28 administrator to give United a fair opportunity to consider the 11 Because the plan 1 information that would have been developed had United followed 2 through and sought it out in the first instance. 3 The court expresses no opinion as to what additional 4 information shall be received or how the plan administrator 5 should decide any issue on remand, except to note that nothing in 6 this Order should be construed to prevent the parties from 7 negotiating a compromise of this claim if it should be deemed 8 within the plan administrator’s authority to do so. 9 10 IT IS THEREFORE ORDERED that defendant’s Motion for summary judgment be, and the same hereby is, DENIED. 11 12 IT IS FURTHER ORDERED that defendant’s Motion to strike be, and the same hereby is, GRANTED. 13 This action is hereby REMANDED to the plan 14 administrator for further proceedings consistent with this Order. 15 Dated: November 15, 2017 16 17 18 19 20 21 22 23 24 25 26 27 28 12

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