Adan v. Kaiser Foundation Health Plan, Inc.

Filing 37

ORDER by Judge Haywood S. Gilliam, Jr. GRANTING IN PART AND DENYING IN PART DEFENDANTS 15 MOTION TO DISMISS. Case Management Statement due by 3/27/2018; Case Management Conference set for 4/3/2018 02:00 PM in Oakland, Courtroom 2, 4th Floor. (ndrS, COURT STAFF) (Filed on 3/6/2018)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 JACQUELINE ADAN, 7 Plaintiff, 8 v. 9 KAISER FOUNDATION HEALTH PLAN, INC., 10 11 United States District Court Northern District of California Case No.17-cv-01076-HSG ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS Re: Dkt. No. 15 Defendant. 12 Pending before the Court is Defendant Kaiser Foundation Health Plan, Inc.’s motion to 13 14 dismiss Plaintiff Jacqueline Adan’s Complaint. Dkt. No. 15. For the reasons set forth below, the 15 Court GRANTS IN PART and DENIES IN PART Defendant’s motion.1 16 I. BACKGROUND Plaintiff brings this putative class action under the Employee Retirement Income Security 17 18 Act of 1974, 29 U.S.C. §§ 1001 et seq. (“ERISA”). For purposes of this motion, the Court takes 19 the following allegations to be true. 20 A. 21 Defendant is California’s “largest health plan,” and provides coverage for “approximately Factual Allegations 22 8 million California residents,” including Plaintiff. Dkt. No. 1 (Complaint or “Compl.”) ¶ 6. 23 Plaintiff “was and is covered” by a group policy issued by Defendant to her private employer. Id. 24 ¶ 25. The policy is an employee benefit plan within the meaning of ERISA. Id. ¶ 2. A document 25 called the Evidence of Coverage (“EOC”) sets forth the terms and condition of plan members’ 26 coverage. Id. ¶ 7. 27 1 28 The Court finds this matter appropriate for disposition without oral argument and the matter is deemed submitted. See Civil L.R. 7-1(b). 1 Plaintiff was previously “morbidly obese,” and so “embarked on an aggressive weight loss 2 program and lost a massive amount of weight.” Id. ¶ 26. As a result, she was “left with 3 disfiguring excess skin hanging from her arms, legs, and torso.” Id. ¶ 27. Plaintiff’s case centers 4 on her attempts to obtain from Defendant coverage of surgery that would remove her excess skin 5 (“excess skin surgery”). 6 1. Defendant’s Internal Guidelines for Excess Skin Surgery 7 Plaintiff asserts that under California law, Defendant is required to cover plastic surgery 8 when it is meant “to improve function or to create a normal appearance, to the extent possible.” 9 See id. ¶ 1 (quoting Cal. Health & Safety Code § 1367.63(c)(1)(A)(B)) (internal quotation marks and brackets omitted) (original emphasis); see also id. ¶¶ 11-13. Defendant’s plastic surgeons 11 United States District Court Northern District of California 10 have developed guidelines “to determine when plastic surgery is deemed ‘medical’ and covered or 12 ‘cosmetic’ and excluded” by a member’s health plan. Id. ¶ 15. Defendant’s guidelines have 13 “deemed excess skin surgery cosmetic and excluded” from coverage, with one exception: “a 14 panniculectomy (a removal of excess skin and fat from the lower abdomen) but only if the amount 15 of hanging skin is extreme and causing functional problems.” Id. ¶ 16 (original emphasis). In 16 keeping with these guidelines, Defendant’s surgeons have “refused to authorize excess skin 17 surgery if doing so will only create a normal appearance.” Id. ¶ 17. 18 19 2. Plaintiff’s Attempts at Obtaining Coverage for Excess Skin Surgery Plaintiff first attempted to address her excess skin issues in April 2015, when she met with 20 her primary care physician under Defendant’s health plan, Dr. Yap. Id. ¶ 28. Dr. Yap informed 21 Plaintiff that excess skin surgery was “cosmetic” and therefore not covered, and referred her to 22 Defendant’s cosmetic department, where she would pay out-of-pocket for any services she 23 received. Id. Plaintiff alleges that Defendant “did not provide [her] with written or electronic 24 notice regarding Dr. Yap’s denial of her request for excess skin surgery.” Id. ¶ 29. 25 In July 2015, Plaintiff met with Dr. Salim at Defendant’s San Francisco location, following 26 Dr. Yap’s referral. Id. ¶ 30. She sought a type of excess skin surgery known as a “circumferential 27 body lift.” Id. Dr. Salim informed Plaintiff that neither he nor any of Defendant’s practitioners 28 performed that type of surgery. Id. He advised Plaintiff regarding certain “marginally beneficial” 2 1 surgeries he could perform “at Plaintiff’s cost,” but concluded that her “excess skin issues were 2 much more extensive.” Id. Plaintiff alleges that Defendant “did not provide [her] with written or 3 electronic notice regarding Dr. Salim’s denial of her request for excess skin surgery.” Id. ¶ 31. Plaintiff next “requested authorization to go outside of Kaiser’s physician network” to 4 obtain the surgery. Id. ¶ 32. Defendant denied Plaintiff’s request on April 21, 2016, “stating that 6 ‘appropriate care is available within the plan,’” and referring Plaintiff to its Redwood City Plastic 7 Surgery Department “for further evaluation.” Id. In Redwood City, Plaintiff met with Dr. Kim, 8 who also told Plaintiff that she did not perform circumferential body lifts, “but that Dr. Salim at 9 Kaiser San Francisco might.” Id. ¶ 33. Plaintiff alleges that Defendant “did not provide [her] with 10 written or electronic notice regarding Dr. Kim’s denial of her request for excess skin surgery.” Id. 11 United States District Court Northern District of California 5 ¶ 34. 12 Through Dr. Yap, Plaintiff again requested authorization to go outside of Defendant’s 13 network to obtain a circumferential body lift. Id. ¶ 35. Defendant denied the request on July 1, 14 2016 because it had “qualified medical professionals in Plastic Surgery to provide your care and 15 services in plan.” Id. ¶ 35. That month, Plaintiff “took matters into her own hands and had a 16 circumferential body lift performed by Dr. Joel Beck, a physician outside of Kaiser’s network,” 17 for $16,000 at her own cost. Id. ¶ 36. After Plaintiff’s surgery, Defendant “affirmed its denial of 18 Plaintiff’s request to go outside of its physician network,” again stating that “appropriate care is 19 available within the plan.” Id. ¶ 37. 20 After Dr. Beck’s out-of-network surgery, Plaintiff sought another “out-of-plan” referral 21 from Defendant to “address excess skin issues involving her arms, legs, and breasts.” Id. ¶ 38. 22 Defendant denied her request. Id. 23 Plaintiff then sought another referral from Dr. Yap to address the issues involving her 24 arms, legs, and breasts. Id. ¶ 39. Dr. Yap referred Plaintiff to Dr. Smith in Defendant’s Walnut 25 Creek location, who advised her “that her health plan did not cover the requested excess skin 26 surgery because the excess skin in Plaintiff’s legs and arms was not life-threatening.” Id. ¶¶ 39- 27 40. Defendant “did not provide Plaintiff with written or electronic notice regarding Dr. Smith’s 28 denial of her request for excess skin surgery.” 3 1 In November 2016, Plaintiff again went out-of-network and had an “upper body circumferential 2 lift and had excess skin removed by Dr. Beck.” Id. ¶ 42. She paid $18,000 for the surgery, which 3 Defendant did not cover. Id. 4 3. Defendant’s Internal Grievance Procedures 5 The EOC contains two sections related to Defendant’s internal grievance procedures—one 6 for post-service claims and appeals, in which a member seeks reimbursement for services already 7 received, and one for all other grievances. See Dkt. No. 33-1 (“EOC”) at 50, 53.2 Because 8 Plaintiff challenges Defendant’s response to her request for coverage of excess skin surgery before 9 she received certain services, the Court turns to the latter. In a section titled “Dispute Resolution,” the EOC states describes a “grievance” as “any 10 United States District Court Northern District of California 11 expression of dissatisfaction expressed by you or your authorized representative through the 12 grievance process.” Id. at 53. Among the reasons why a plan member might file a grievance: 13 “[y]ou received a written denial of Services that require prior authorization from the Medical 14 Group and you want us to cover the Services”; “[y]our treating physician has said that Services are 15 not Medically Necessary and you want us to cover the Services”; and “[y]ou were told that 16 services are not covered and you believe that the Services should be covered.” Id. at 54. A grievance may be filed “orally or in writing,” and “must explain your issue, such as the 17 18 reasons why you believe a decision was in error or why you are dissatisfied about Services you 19 received.” Id. A member may file a grievance by filing a designated form in person, by mail, or 20 online, or by calling the Member Service Contact Center. Id. The policy dictates that members 21 will receive a resolution letter within 30 days, and if the decision is adverse, the “letter will 22 explain why and describe your further appeal rights.” Id. at 55. In the event that a grievance “has not been satisfactorily resolved by your health plan,” or 23 24 2 25 26 27 28 Although Plaintiff did not attach the EOC to the Complaint, the Court may nevertheless consider the EOC in resolving this motion because “a document not appended to a complaint ‘may be incorporated by reference into a complaint if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff’s claim.’” Sizemore v. Pac. Gas & Elec. Ret. Plan, 989 F. Supp. 2d 987, 989 (N.D. Cal. 2013) (quoting U.S. v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003)). Plaintiff seeks to recover benefits allegedly owed to her under the EOC as well as a clarification of her rights under that plan, see Compl. ¶¶ 46-51, which is sufficient to show that it forms the basis of her claim. 4 1 “has remain unresolved for more than 30 days,” the EOC lays out two forms of external review. 2 First, plan members may call the California Department of Managed Health Care, which regulates 3 health care service plans, for assistance. See id. at 56. Members “may also be eligible for an 4 Independent Medical Review (IMR),” which consists of “an impartial review of medical decisions 5 made by a health plan related to the medical necessity of a proposed service or treatment,” among 6 other things. Id. Plan members “must exhaust our internal grievance procedure before [requesting 7 an IMR] unless we have failed to comply with the grievance procedure” detailed in the EOC. See 8 id. A plan member who decides not to request an IMR “may give up the right to pursue some 9 legal actions against us.” Id. Finally, in a section titled “Additional Review,” the EOC states: “You may have certain 10 United States District Court Northern District of California 11 additional rights if you remain dissatisfied after you have exhausted our internal claims and 12 appeals procedure, and if applicable, external review.” Id. at 57. As relevant here, the EOC states 13 that where a plan is subject to ERISA, members “may file a civil action under section [1132(a)] of 14 ERISA.” Id. 15 B. 16 Plaintiff filed the Complaint on March 1, 2017. Dkt. No. 1. On April 27, 2017, Defendant 17 filed this motion to dismiss. Dkt. No. 15 (“Mot.”). Plaintiff filed her opposition on May 11, 2017, 18 Dkt. No. 20 (“Opp.”), and Defendant replied on May 18, 2017, Dkt. No. 24 (“Reply”). 19 II. 20 Procedural History LEGAL STANDARD Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain 21 statement of the claim showing that the pleader is entitled to relief[.]” A defendant may move to 22 dismiss a complaint for failing to state a claim upon which relief can be granted under Federal 23 Rule of Civil Procedure 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the 24 complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” 25 Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 26 12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to relief that is plausible on 27 its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible 28 when a plaintiff pleads “factual content that allows the court to draw the reasonable inference that 5 1 the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 2 In reviewing the plausibility of a complaint, courts “accept factual allegations in the complaint as 3 true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. 4 St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nonetheless, Courts do not 5 “accept as true allegations that are merely conclusory, unwarranted deductions of fact, or 6 unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). 7 And even where facts are accepted as true, “a plaintiff may plead herself out of court” if she 8 “plead[s] facts which establish that [she] cannot prevail on [her] . . . claim.” Weisbuch v. Cnty. of 9 Los Angeles, 119 F.3d 778, 783 n.1 (9th Cir. 1997) (quotation marks and citation omitted). 10 III. Plaintiff alleges two causes of action under ERISA. First, she brings a claim under 29 11 United States District Court Northern District of California DISCUSSION 12 U.S.C. § 1132(a)(1)(B) “to recover benefits due and to enforce and clarify her rights to the 13 benefits at issue.” Compl. ¶ 47. Second, she brings a claim under 29 U.S.C. § 1132(a)(3), 14 alleging that Defendant breached its fiduciary duties when it “systematically” violated California’s 15 reconstructive surgery law and “improperly denied requests for excess skin surgery,” and when it 16 failed to follow reasonable claims procedures. See id. ¶¶ 54-56. The Court considers each claim 17 in turn. 18 19 20 A. Plaintiff’s Failure to Exhaust Her Administrative Remedies Is Clear from the Face of the Complaint, Thus Precluding Her Section 1132(a)(1)(B) Claim. Defendant argues that Plaintiff’s first cause of action under section 1132(a)(1)(B) should 21 be dismissed without prejudice due to her failure to exhaust administrative remedies. See Mot. at 22 4. The Court agrees, and begins by addressing the parties’ requests for judicial notice. 23 1. 24 Because the parties seek judicial notice of materials which are more properly considered on a motion for summary judgment, their requests are denied. 25 Both parties filed requests for judicial notice in support of, inter alia, their positions on the 26 question of exhaustion. See Dkt. No. 16 (Defendant’s request for judicial notice); Dkt. No. 21 27 (Plaintiff’s). Both requests are denied. 28 As relevant to the exhaustion issue, Defendant attempts to file “four letters from Kaiser to 6 1 Plaintiff . . . and the History of Requests for [Plaintiff].” Dkt. No. 16, Ex. A. Defendant reasons 2 that these documents “are subject to judicial notice because they are documents which Plaintiff 3 cites and upon which she relies in her Complaint and because they contain facts which ‘can be 4 accurately and readily determined from sources whose accuracy cannot reasonably be 5 questioned.’” Dkt. No. 16 at 2 (citing Fed R. Evid. 201). Defendant further contends that “these 6 documents are part of the administrative record . . . and their authenticity cannot reasonably be 7 questioned.” Id. (citing cases). Defendant appears to conflate the doctrines of incorporation by reference and judicial 8 9 notice. In any event, a document outside the pleadings cannot be incorporated by reference where it is not “reference[d] extensively” in the complaint or “integral to [the plaintiff’s claim].” See 11 United States District Court Northern District of California 10 Ritchie, 342 F.3d at 908. Here, Defendant proffers some of its written responses to Plaintiff’s 12 grievances. Plaintiff, however, does not refer to these responses—or even to her formal 13 grievances—extensively in the Complaint. Nor are these administrative denials integral to her 14 claim in the same way that the EOC is. See M.O.R.E., LLC v. U.S., No. 12-cv-03609-JST, 2015 15 WL 5093621, at *3 (N.D. Cal. Aug. 28, 2015) (“The incorporation by reference doctrine ‘is a 16 narrow exception aimed at cases interpreting, for example, a contract. It is not intended to grant 17 litigants license to ignore the distinction between motions to dismiss and motions for summary 18 judgment.”) (quoting Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir. 1998)). Consideration of 19 these letters would be more appropriate on a motion for summary judgment, after both parties 20 have had the opportunity to create a complete record—not at the motion to dismiss stage.3 Moreover, judicial notice is only appropriate where a fact is “not subject to reasonable 21 22 dispute because it: (1) is generally known . . . or (2) can be accurately and readily determined from 23 sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). Although 24 3 25 26 27 28 It is true that Bilyeu v. Morgan Stanley Long Term Disability Plan indicates that courts may treat motions to dismiss predicated on a plaintiff’s failure to exhaust as an “unenumerated motion to dismiss,” and thus “may look beyond the pleadings and decide disputed issues of fact.” 683 F.3d 1083, 1088 (9th Cir. 2012). Since deciding Bilyeu, however, the Ninth Circuit has made clear that unenumerated motions to dismiss are disfavored. See Albino v. Baca, 747 F.3d 1162, 1168-71 (9th Cir. 2014) (en banc). The question is thus whether the failure to exhaust “is clear on the face of the complaint,” warranting dismissal under Rule 12(b)(6). Id. at 1166 (describing such a situation as a “rare event”). 7 1 Defendant contends that the accuracy and authenticity of the contents of its letters to Plaintiff 2 “cannot reasonably be questioned,” see Dkt. No. 16 at 2, Rule 201 contemplates judicial notice of 3 facts “that only an unreasonable person would insist on disputing”—for example, those found in 4 an “almanac, dictionary, calendar or similar source.” See Walker v. Woodford, 454 F. Supp. 2d 5 1007, 1022 (S.D. Cal. 2006) (citing U.S. v. Jones, 29 F.3d 1549, 1553 (11th Cir. 1994)) (internal 6 quotation marks omitted). The letters proffered by Defendant are not such a source. Accordingly, Defendant’s request for judicial notice is denied. Plaintiff’s request for 7 8 judicial notice of an additional letter between her and Defendant, see Dkt. No. 21, Ex. 1, is denied 9 for similar reasons.4 10 2. United States District Court Northern District of California 11 Substantively, Plaintiff first contends that she was not required to exhaust her claims 12 13 Plaintiff was required to exhaust the administrative remedies set forth in the EOC before filing this action. before bringing this action. See Opp. at 3. This argument plainly fails. It is settled that “an ERISA plaintiff claiming a denial of benefits ‘must avail himself or 14 15 herself of a plan’s own internal review procedures before bringing suit in federal court.’” See 16 Vaught v. Scottsdale Healthcare Corp. Health Plan, 546 F.3d 620, 626 (9th Cir. 2008) (quoting 17 Diaz v. United Agric. Emp. Welfare Benefit Plan & Trust, 50 F.3d 1478, 1483 (9th Cir. 1995)). 18 This exhaustion requirement “is a creation of the federal courts . . . and is not written into the 19 statute,” and so is properly construed as a “prudential rather than jurisdictional requirement.” 20 Mack v. Kuckenmeister, 619 F.3d 1010, 1020 (9th Cir. 2010) (citing Vaught, 546 F.3d at 626). 21 “[A] claimant need not exhaust when the plan does not require it,” however. Spinedex Physical 22 Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1299 (9th Cir. 2014). To 23 determine whether a plan requires exhaustion, a court looks to whether it “contains language 24 which could reasonably be read as making optional the administrative appeals process.” See id.; 25 see also id. at 1298 (citing concern that “[w]here plan documents could fairly be read as 26 27 28 4 Both Plaintiff and Defendant seek judicial notice of the EOC (or excerpts thereof). See Dkt. No. 16, Ex. B (Defendant); Dkt. No. 21, Ex. 2 (Plaintiff). This request is denied as moot, since the EOC is incorporated by reference into the Complaint. 8 1 suggesting that exhaustion is not a mandatory prerequisite to bringing suit, claimants may be 2 affirmatively misled by language that appears to make the exhaustion requirement permissive 3 when in fact it is mandatory as a matter of law”). 4 The EOC expressly requires exhaustion of Defendant’s internal procedures. In the section 5 on Dispute Resolution, it makes clear that claimants “may have certain additional rights if you 6 remain dissatisfied after you have exhausted our internal claims and appeals procedure, and if 7 applicable, external review.” EOC at 57 (emphasis added). One of those “additional rights” is a 8 civil suit under section 1132(a) of ERISA. See id. The EOC also states that failure to seek an 9 IMR may result in waiving “the right to pursue some legal actions against us.” Id. at 56. Such language could only “reasonably be read” as describing a mandatory internal review process that 11 United States District Court Northern District of California 10 ERISA plaintiffs must exhaust before bringing their claims in federal court. See Spinedex, 770 12 F.3d at 1299. Consistent with the general rule, see Vaught, 546 F.3d at 626, the Court finds that 13 Plaintiff was required to exhaust her administrative remedies before filing this action. 14 Plaintiff’s arguments to the contrary are not persuasive. For example, she contends that 15 “there is no requirement in the EOC . . . that [she] must exhaust [Defendant’s] internal grievance 16 procedures through appeal as a precondition to bringing suit under ERISA.” Opp. at 3 (original 17 emphasis). But in describing Defendant’s Dispute Resolution procedures, the EOC states the 18 following: 19 20 21 We will send you an acknowledgment letter within five days after we receive your grievance. We will send you a resolution letter within 30 days after we receive your grievance. If you are requesting Services, and we do not decide in your favor, our letter will explain why and describe your further appeal rights. 22 Id. at 55 (emphasis added). Later, the EOC describes two possible methods of external review: 23 contacting the California Department of Managed Health Care and seeking an IMR. See id. at 56. 24 Again, the section on IMRs expressly states that claimants “must exhaust our internal grievance 25 procedure before you may request [an IMR],” and that failure to request an IMR may result in the 26 waiver of certain rights. See id. Critically, it is after describing the internal grievance procedures 27 and the avenues for external review that the EOC describes “Additional Review,” which provides 28 that claimants may be able to bring an ERISA action in federal court “after [they] have exhausted 9 1 [their] internal claims and appeals procedure and, if applicable, external review.” See id. at 57 2 (emphasis added). The only fair reading of the EOC is that a plaintiff can bring a suit under 3 ERISA only after exhausting all levels of Defendant’s administrative processes.5 Plaintiff’s last argument on this point is that even if the language in the EOC regarding 4 ERISA did apply to her, “the permissive language of the subsection, e.g., a claimant who exhausts 6 ‘may have additional rights’ under ERISA, does not establish that exhaustion of a primary or 7 secondary appeal is a sufficient and/or ‘mandatory prerequisite to bringing suit’ under ERISA.” 8 Opp. at 4 (quoting Spinedex, 770 F.3d at 1298). The Court disagrees. While Spinedex did hold 9 that an ERISA plan’s unclear language could render exhaustion permissive, see 770 F.3d at 1299, 10 there is nothing unclear about the EOC’s language. The provision’s “permissive language” has to 11 United States District Court Northern District of California 5 do with the uncertainty of the outcome of further proceedings under ERISA, not whether Plaintiff 12 was required to exhaust. 13 3. 14 It is clear from the face of the Complaint that Plaintiff failed to exhaust her administrative remedies. Relying largely on materials outside the Complaint, Plaintiff next contends that even if 15 16 exhaustion of her claims were required, it is adequately alleged. See Opp. at 7-8. The Complaint, 17 however, entirely fails to allege exhaustion. Plaintiff simply makes no allegations relating to 18 Defendant’s dispute resolution procedures. Rather, the Complaint largely focuses on her 19 interactions with different doctors, all of whom informed her either that the excess skin surgery 20 she sought was not covered or not available. See Compl. ¶¶ 28, 30, 33, 40. These interactions do 21 not amount to filing a grievance. The EOC makes clear that a claimant challenging Defendant’s 22 denial of coverage for a certain procedure “can file a grievance orally or in writing,” and “must 23 explain your issue, such as the reasons why you believe a decision was in error or why you are 24 25 26 27 28 5 This also disposes of Plaintiff’s suggestion that, because “she never made a post-service claim,” she was not required to exhaust, because an “examination of the complete EOC shows” that the EOC’s reference to ERISA was relevant only to Post-Service Claims and Appeals. See Opp. at 4. In fact, as is evident from the face of the EOC, the requirement that claimants exhaust Defendant’s internal claims and appeals procedures before filing an ERISA action also applied in the Dispute Resolution context, when claimants like Plaintiff sought coverage before obtaining services. See EOC at 57. 10 1 dissatisfied about Services you received.” EOC at 54. The EOC then sets forth the “[s]tandard 2 procedure” for filing a grievance: claimants can (1) complete a “Complaint or Benefit 3 Claim/Request form at a Member Services office”; (2) mail their grievance to a Member Services 4 office; (3) call the Member Service Contact Center; or (4) complete the online grievance form. 5 See id. Plaintiff makes no allegations that she completed any of those procedures, and nowhere 6 does the EOC state that a personal communication with a doctor is an adequate means of 7 submitting a claim. 8 Plaintiff also makes three references to “seeking authorization” from Defendant to go outside of Defendant’s physician network to obtain excess skin surgery. See Compl. ¶¶ 32, 35, 38. 10 Here again, she fails to plead exhaustion. She alleges that her first request for authorization to go 11 United States District Court Northern District of California 9 outside of Defendant’s physician network was denied on April 21, 2016, because “appropriate 12 care [was] available within the plan.” Id. ¶ 32. She makes no allegation that she filed a grievance 13 challenging that decision, nor does she allege that Defendant resolved the grievance in a manner 14 adverse to her interests. Plaintiff also fails to allege that she attempted to exercise any appeal 15 rights (i.e., through one of the two forms of external review described in the EOC) before filing 16 this ERISA action. 17 Her allegations regarding her second authorization request are similarly deficient. She 18 alleges that this request was denied on July 1, 2016, because the plan “ha[d] qualified medical 19 professionals in Plastic Surgery to provide your care and services in plan.” Id. ¶ 35. Before that 20 decision was “affirmed” on August 6, 2016, see id. ¶ 37, Plaintiff elected to “[take] matters into 21 her own hands” and obtain the surgery from an out-of-network physician at her own cost, see id. ¶ 22 36. Notwithstanding Plaintiff’s failure to allege facts showing she engaged in Defendant’s 23 internal dispute resolution process, Plaintiff also concedes in the Complaint that she paid for care 24 from an out-of-network physician, even though Defendant’s denial made clear that care was 25 available within her plan. See id. Although the fact that Defendant subsequently “affirmed its 26 denial” of Plaintiff’s request might suggest that Plaintiff was in the midst of Defendant’s internal 27 review process, the Complaint itself alleges that Plaintiff effectively abandoned Defendant’s 28 dispute resolution process before exhausting it. 11 1 Finally, Plaintiff fails to plead exhaustion as to her third authorization request. Following 2 the surgery for which she paid out-of-pocket, she again sought an out-of-network referral for 3 additional excess skin surgery. Compl. ¶ 38. Defendant denied the request. Id. Again, Plaintiff 4 makes no allegations that she engaged in Defendant’s dispute resolution process. 5 6 7 This is, therefore, one of the rare cases in which the plaintiff’s failure to exhaust is evident from the face of the Complaint. See Albino, 747 F.3d at 1166. 4. 8 9 10 United States District Court Northern District of California 11 Plaintiff’s argument that her claim should be deemed exhausted fails because she never submitted a “claim” as defined in the relevant regulation. Plaintiff also argues that her claim should be “deemed exhausted” because Defendant failed to comply with reasonable claims procedures. See Opp. at 4. The Court disagrees. Every ERISA plan is required “to establish and maintain reasonable procedures governing 12 the filing of benefits claims, notification of benefit determinations, and appeal of adverse benefit 13 determinations” (i.e., “claims procedures”). 29 C.F.R. § 2560.503-1(b); see also 29 U.S.C. § 14 1133(a) (stating that “every employee benefit plan shall provide adequate notice in writing to any 15 participant or beneficiary whose claim for benefits under the plan has been denied, setting forth 16 the specific reasons for such denial, written in a manner calculated to be understood by the 17 participant”). In keeping with this principle, plan administrators are generally required “to provide 18 a claimant with written or electronic notification of any adverse benefit determination,” which 19 should include, inter alia, why the benefit was denied and the relevant plan provisions. See 29 20 C.F.R. § 2560.503-1(g)(1). Where a plan fails “to establish or follow claims procedures consistent 21 with the requirements of this section, a claimant shall be deemed to have exhausted the 22 administrative remedies under the plan and shall be entitled to pursue any available remedies 23 under” section 1132 of ERISA. Id. § 2560.503-1(l)(1); see also Bilyeu, 683 F.3d at 1088-89 24 (citing regulation). 25 Plaintiff argues at length that her claim under section 1132(a)(1)(B) should be “deemed 26 exhausted” for Defendant’s failure to follow reasonable claims procedures. See Opp. at 6. 27 Specifically, she cites allegations in the Complaint detailing her “numerous encounters with 28 Kaiser physicians—including her primary care physician, Dr. Yap, and plastic surgeons Drs. 12 1 Salim, Smith and Kim—who each advised her that her requests for excess skin surgery . . . were 2 not covered under her health plan.” See id. (citing Compl. ¶¶ 28, 30, 33, 40). In each case, 3 Plaintiff alleges that Defendant “did not provide [her] with written or electronic notice regarding 4 [the doctor’s] denial for excess skin surgery.” See Compl. ¶¶ 29, 31, 34, 41. 5 But whether Defendant complied with “reasonable claims procedures” as to these doctors’ 6 representations is beside the point, because the allegations in the Complaint establish that Plaintiff 7 never submitted a claim within the meaning of the regulation. As defined in the regulation, “a 8 claim for benefits is a request for a plan benefit or benefits made by a claim in accordance with a 9 plan’s reasonable procedure for filing benefit claims.” 29 C.F.R. § 2560.503-1(e) (emphasis added). As previously discussed, Plaintiff fails to sufficiently plead that she complied with the 11 United States District Court Northern District of California 10 claim procedures set forth in the EOC. See EOC at 54. Nor does she plead any facts showing that 12 those procedures were unreasonable. 13 14 15 16 Accordingly, Plaintiff cannot show that her claims should be deemed exhausted. 5. Plaintiff fails to plead sufficient facts showing that engaging in the administrative process would have been futile. Last, Plaintiff argues that “[a]ny further attempts . . . to exhaust, with respect to any other 17 claim or issue (e.g., excess skin issues involving [her] arms, legs or breasts) would plainly have 18 been futile,” given the “total disconnect between what Kaiser physicians were telling Adan about 19 her prospects for coverage and what Kaiser was telling Adan in response to her requests to go out 20 of plan.” See Opp. at 8. The Court disagrees. 21 “[D]espite the usual applicability of the exhaustion requirement, there are occasions when 22 a court is obliged to exercise its jurisdiction and is guilty of an abuse of discretion if it does not, 23 the most familiar examples perhaps being when resort to the administrative route is futile or the 24 remedy inadequate.” Vaught, 546 F.3d 620, 626-27 (quoting Amato v. Bernard, 618 F.2d 559, 25 568 (9th Cir. 1980)). But “bare assertions of futility are insufficient to bring a claim within the 26 futility exception, which is designed to avoid the need to pursue an administrative review that is 27 demonstrably doomed to fail.” Diaz, 50 F.3d at 1485 (citing cases). 28 Plaintiff has failed to plead facts that would allow the Court to draw the inference that 13 1 administrative review of her request for an out-of-network referral for excess skin surgery for her 2 arms, legs, and breasts would have been futile. While Plaintiff alleges that Dr. Smith advised her 3 that her health plan did not cover the surgery, she pleads no facts alleging that she even initiated 4 the grievance process to challenge that decision, instead stating that she subsequently went outside 5 of Defendant’s network to pay for the surgery out-of-pocket. See Compl. ¶¶ 40, 42. Plaintiff, in 6 other words, abandoned the administrative process twice. Diaz is instructive on this point. There, 7 the plaintiffs sued for medical benefits allegedly owed to them by an ERISA plan. See Diaz, 50 8 F.3d at 1480. Despite receiving several denial letters—all of which included instructions on how 9 to appeal—the plaintiffs elected not to appeal, instead attempting to discuss the matter with the employer’s on-site representative. Id. at 1482. In affirming the district court’s dismissal for 11 United States District Court Northern District of California 10 failure to exhaust, the Ninth Circuit rejected the plaintiffs’ arguments that “it would have been 12 ‘futile’ for them to demand administrative review because [the] defendants [had] demonstrated by 13 their continued refusal to pay that they [had] no intention of doing so.” Id. at 1485. The court 14 further held that it was the plaintiffs’ “own delinquency in pursuing an internal appeal [that] 15 prevented the possibility of an administrative look at the merits.” Id. at 1486. The same is true 16 here, where Plaintiff’s “delinquency” prevented Defendant from undertaking administrative 17 review of the merits of her claim. 18 The Court further notes that in denying Plaintiff’s requests to obtain surgery from an out- 19 of-network physician, Defendant consistently stated that the care Plaintiff sought was available 20 within her health plan. See Compl. ¶¶ 32, 35, 37. Perhaps recognizing that in most circumstances 21 this would preclude a futility argument, Plaintiff attempts to minimize Defendant’s statements that 22 excess skin surgery was available within her health plan by pointing to the “total disconnect” 23 between Defendant and its physicians on this question, and the “dysfunctional and circular nature” 24 of Defendant’s administrative review process. See Opp. at 8. Such an argument might carry more 25 weight had Plaintiff exhausted the process even once. As alleged, however, Plaintiff failed to 26 appeal two denials, see Compl. ¶¶ 32-34, 38, and went out-of-network before Defendant had a 27 chance to review another denial on appeal, see id. ¶¶ 35-37. There is therefore no basis to excuse 28 Plaintiff’s failure to exhaust on grounds of futility. 14 Because this is one of the rare cases in which a failure to exhaust is evident from the face 1 2 of the Complaint, see Albino, 747 F.3d at 1166, Plaintiff’s claim under section 1132(a)(1)(B) is 3 dismissed without prejudice. See Beyene v. Coleman Sec. Servs., Inc., 854 F.2d 1179, 1180 (9th 4 Cir. 1988) (“If a failure to exhaust is found, the proper disposition is dismissal without 5 prejudice.”). 6 IV. 7 CONCLUSION For the foregoing reasons, the Court GRANTS IN PART Defendant’s motion. Plaintiff’s 8 claim under 29 U.S.C. § 1132(a)(1)(B) is DISMISSED WITHOUT PREJUDICE due to her 9 failure to exhaust administrative remedies. What remains is Plaintiffs’ claims under 29 U.S.C. § 1132(a)(3), and as to these claims the 11 United States District Court Northern District of California 10 Complaint and the motion to dismiss or stay briefing create more questions than they answer. The 12 Court accordingly SETS a case management conference for April 3, 2018 at 2:00 p.m. In addition 13 to the standard case management conference topics, the parties should address in their joint CMC 14 statement and be prepared to discuss at the hearing the following topics: (1) the estimated time 15 necessary for Plaintiff to exhaust the claim underlying the dismissed cause of action; (2) the basis 16 for Plaintiff’s theory that she may pursue broad, generalized, purportedly class-wide relief under 17 ERISA’s catch-all provision, 29 U.S.C. § 1132(a)(3); (3) whether those claims must or should in 18 any event be stayed pending exhaustion, given Plaintiff’s apparent theory that under section 19 1132(a)(3) she may seek such relief on behalf of a putative class; and (4) whether it would be 20 productive for the parties to renew their ADR efforts earlier than the October 2018 deadline 21 contained in their initial stipulation. 22 23 IT IS SO ORDERED. Dated: 3/6/2018 24 25 HAYWOOD S. GILLIAM, JR. United States District Judge 26 27 28 15

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