Abdilnour v. Blue Cross of Idaho Health Service Inc

Filing 54

ORDER denying 45 Motion for Protective Order; granting 48 Motion to Compel. Idaho Blue Cross shall produce documents from categories 6-8 within seven days from the date of this order. Further, reasonable expenses, including fees, will be awar ded to Abdilnour on both motions. Abdilnour shall file the requested amount with a supporting affidavit on or before 6/2/2021. Signed by Judge Donald W. Molloy. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (dle)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
LOUIE ABDILNOUR,

Case No. 1:17-cv-00412-DWM

Plaintiff,
vs.

ORDER

BLUE CROSS OF IDAHO HEALTH
SERVICE, INC., an Idaho insurance
corporation,
Defendant.

INTRODUCTION
This action arises under the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1132(a)(1)(B). The plaintiff, Louie Abdilnour, is a resident of
North Dakota who was insured under his employer’s ERISA-qualified healthcare plan.
That plan was administered by the defendant, Blue Cross Blue Shield of Idaho (“Idaho
Blue Cross”). While insured, Abdilnour was twice taken by air ambulance from one
North Dakota hospital to another. Idaho Blue Cross paid a small portion of the costs of
these flights but determined Abdilnour owed the remainder. Abdilnour has exhausted his
administrative remedies and seeks full payment of the costs of the flights and an award of
attorneys’ fees and costs. On the present motions, Idaho Blue Cross’s seeks a protective
order for documents related to Blue Cross Blue Shield of North Dakota (“North Dakota
Blue Cross”), (Doc. 45), and Abdilnour seeks the production of documents from Idaho
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Blue Cross, (Doc. 48). For the reasons explained below, Idaho Blue Cross’s motion for a
protective order is denied and Abdilnour’s motion to compel is granted. Having
reviewed the briefs, oral argument on the motions is not necessary.
BACKGROUND
I.

Factual Background

Abdilnour was employed by Albertsons, LLC, and insured under the Albertson’s
LLC Health & Welfare Plan (“the Plan”). (Doc. 36 at ¶ 3(a).) It is undisputed that the
Plan is an ERISA-qualified healthcare plan, (Doc. 37 at ¶ 4; Doc. 44 at ¶ 4), but the
parties dispute whether the terms of the Plan provided Abdilnour with “full medical
coverage,” (Doc. 44 at ¶ 4). Idaho Blue Cross is an employee welfare benefit insurer and
fiduciary operating in Idaho. (Doc. 36 at ¶ 3(b).)
On April 3, 2015, Abdilnour was admitted to the hospital in Williston, North
Dakota as a result of medical distress. (Doc. 37 at ¶ 11.) An air ambulance took
Abdilnour to the hospital in Bismarck, North Dakota, where he was treated. (Id. at
¶¶ 15–16.) On May 7, 2015, Abdilnour again experienced medical distress and was again
admitted to the Williston hospital. (Id. at ¶¶ 18–19.) An air ambulance then took
Abdilnour to the hospital in Sanford for treatment. (Id. at ¶¶ 21–22.)
Abdilnour subsequently received Explanation of Benefit Statements (“EOBs”)
regarding the air ambulance transports. (Doc. 36 at ¶ 3(e).) According to Abdilnour, the
EOBs indicated that Idaho Blue Cross would pay very little of the transportation costs
because the air ambulance provider was not “in network.” (Doc. 37 at ¶¶ 24–25.)
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Abdilnour alleges that Idaho Blue Cross improperly outsourced the reimbursement rate
determination to North Dakota Blue Cross. (Id. at ¶¶ 28–30.)
II.

Procedural Background

Abdilnour internally appealed the processing and payment of the air transport
claims, and Idaho Blue Cross upheld its determination. (Id. at ¶ 37; Doc. 44 at ¶ 37.)
Abdilnour filed suit in the District of Idaho in October of 2017, (Doc. 1), and the suit was
stayed in January of 2019 so that the administrative appeals process could be completed,
(Doc. 25). The stay was lifted in March of 2020, (Doc. 27), and the case was reassigned.
After a status conference, Abdilnour filed an amended complaint alleging one
claim under ERISA and seeking full reimbursement for the air transports. (Doc. 37 at
¶ 61.) Abdilnour ultimately seeks to compel Idaho Blue Cross to pay $86,740, less any
payments made under the Plan; an accounting of all benefits Idaho Blue Cross paid to
date, disclosure of protocols regarding those benefits, and all costs and fees associated
with pursuing the accounting; disclosure of all documents related to relationship between
Idaho Blue Cross and North Dakota Blue Cross regarding the setting of reimbursement
rates like those at issue here; and an award of attorneys’ fees and costs. (Id. at 10.)
During discovery, Abdilnour provided notice to Idaho Blue Cross that he intended
to serve a third-party subpoena on North Dakota Blue Cross. (See Doc. 45-1, Ex. A.)
The subpoena sought production of five categories of documents:
1.
All contracts, agreements, or correspondence relating to the role of
[North Dakota Blue Cross] in the administration of [Abdilnour’s] claim for
air ambulance transports on April 3, 2015 and May 7, 2015 (the “air
ambulance transports”);
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2.
All documentation explaining the steps that [North Dakota Blue Cross]
took to establish the rate of reimbursement used for Mr. Abdilnour’s air
ambulance transports . . . ;
3.
All documentation evidencing the authority by which [North Dakota
Blue Cross] was operating in setting the reimbursement rate determination for
Mr. Abdilnour’s air ambulance transports. . . ;
4.
All documentation concerning the involvement of [North Dakota Blue
Cross] in the administration of Mr. Abdilnour’s claim for benefits, and the
resolution of his administrative appeal by order of remand dated January 30,
2019 and in the decision by Blue Cross of [the Plan] dated February 22, 2019,
including, without limitation, all correspondence, electronic mail, documents,
drafts, or memoranda regarding Mr. Abdilnour’s claims;
5.
Any agreements establishing a “home plan-host plan” billing
arrangement between [North Dakota Blue Cross] and [the Plan].
(Id. at 4 (citing Ex. A at 8).)
Abdilnour also sought documents from Idaho Blue Cross related to rate
reimbursement determinations:
6.
The [Idaho Blue Cross] fee schedule or reimbursement policy for air
ambulance transports within the State of Idaho and outside the State of Idaho;
7.
The [Idaho Blue Cross] reimbursement policy for air ambulance
transports for the Albertson’s employee benefits plan either by individual
regions or states, or nationally if one exists;
8.
Any [Idaho Blue Cross] interpretative documents for the term
“Maximum Allowance.”
(Doc. 53 at 6.)
Idaho Blue Cross has since moved for a protective order under Federal Rule of
Civil Procedure 26(c) for the documents sought from North Dakota Blue Cross on the
basis that the subpoena improperly seeks evidence outside the administrative record and
no exception to the general prohibition on discovery outside the administrative record is
implicated. (Doc. 45.) Abdilnour responds that the Court should review Idaho Blue
Cross’s benefit determination de novo, which would allow the Court to look beyond the
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administrative record. Abdilnour has the better position.
Abdilnour has also filed a motion to compel documents in requests 6–8 from Idaho
Blue Cross. (Doc. 48.) For the reasons explained below, Abdilnour also has the better
position concerning requests 6–8.
LEGAL STANDARD
Under Rule 26(c)(1), “[a] party or any person from whom discovery is sought may
move for a protective order in the court where the action is pending.” “The court may,
for good cause, issue an order to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense” by forbidding certain discovery
or otherwise limiting it. Rule 26(c)(1). A handful of district courts within the Ninth
Circuit have determined “that while a party may lack standing to quash a subpoena
served on a nonparty under Rule 45, that party may move for a protective order to restrict
the scope of discovery under Rule 26 if it believes its own interests are jeopardized by the
nonparty subpoenas.” S.R.L. v. Full Speed Ahead, Inc., 2010 WL 11527270, *1 (W.D.
Wa. Jan. 4, 2010) (collecting cases).
Consistent with Federal Rule of Civil Procedure 26(b)(1) and 29 C.F.R.
§ 2560.503-1(h) and (m)(8), a claimant in an ERISA case is entitled to discovery of all
relevant, non-privileged documents considered in an adverse benefits determination. See
also 47 C.F.R. § 147.136

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ANALYSIS
I.

Standard of review

The parties agree that the Plan granted Idaho Blue Cross the discretion to
administer the Plan and determine payments. (See Doc. 45-1 at 2 (citing Doc. 37 at ¶ 6).)
Therefore, Idaho Blue Cross is correct that the general rule is that the Court should apply
abuse of discretion review and limit that review to the administrative record. See Abatie
v. Alta Health & Life Ins. Co., 458 F.3d 955, 969–70 (9th Cir. 2006) (en banc). However,
the general rule is not absolute. Abdilnour argues both that Idaho Blue Cross had a
conflict of interest while evaluating his claim and that Idaho Blue Cross committed
significant procedural violations. If Idaho Blue Cross had a conflict of interest while it
evaluated Abdilnour’s claim, the Court may consider extra-record evidence to “decide the
nature, extent, and effect of any conflict of interest on the decision-making process.” Id.
at 970. Similarly, if Idaho Blue Cross exercised its discretion in a way that violated
ERISA’s procedures, the court may review evidence outside the record so that “the court
may, in essence, recreate what the administrative record would have been had the
procedure been correct.” Id. at 973.
II.

Protective order

As a preliminary matter, Abdilnour seems to conflate Idaho Blue Cross’s alleged
transgressions; according to him, Idaho Blue Cross had a conflict of interest related to his
claims, which in turn violated ERISA procedures and deprived Abdilnour of a full and
fair review of his claims. (Doc. 46 at 8.) However, under Abatie, a conflict is treated
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differently from a procedural violation at the actual merits determination stage. Compare
458 F.3d at 970 (“[T]he decision on the merits, though, must rest on the administrative
record once the conflict (if any) has been established, by extrinsic evidence or
otherwise.”) with id. at 973 (“[T]he court may take additional evidence when the
irregularities have prevented full development of the administrative record.. . . [to], in
essence, recreate what the administrative record would have been had the procedure been
correct.”).
That distinction will likely be important later on, but on the present motions all that
matters is that the Court may consider evidence outside the administrative record to some
degree. Idaho Blue Cross argues that the requested documents cannot be considered via
Abdilnour’s conflict of interest argument because Idaho Blue Cross did not both fund and
administer the Plan. (See Doc. 45-1 at 7.) But Abdilnour does not claim that is the
nature of the alleged conflict. Rather, Abdilnour claims that the conflict arose because
Idaho Blue Cross failed to act as a fiduciary when it coordinated with North Dakota Blue
Cross and the Idaho Blue Cross litigation team to deny Abdilnour’s request for
reimbursement during the review process. (Doc. 46 at 8.) The excerpts of the
administrative record include references to North Dakota Blue Cross and a North Dakota
district court case in which Blue Cross legal counsel was apparently involved. (See Docs.
47-1, 47-2, 47-3.)
Given that the Abdilnour’s subpoena request directed at North Dakota Blue Cross
asks for documentation related to North Dakota Blue Cross’s alleged involvement in
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determining the reimbursement rate, and the references in the record plausibly support
that belief at this stage, a protective order is not warranted. Cf. Burke v. Pitney Bowes
Inc. Long-Term Disability Plan, 544 F.3d 1016, 1028 n.15 (9th Cir. 2008) (“Whether to
permit discovery into the nature, extent, and effect of the Plan’s structural conflict of
interest is also a matter within the district court’s discretion.”) Abdilnour does not allege
a structural conflict of interest, but the reasoning from Burke is applicable to the sort of
fiduciary-administrator conflict of interest Abdilnour alleges.
Further, it is possible that these records could be disclosed and ultimately not used
during the review of the merits of Abdilnour’s claim, particularly if further discovery
demonstrates, as Idaho Blue Cross argues, there was no conflict. Additionally, Abatie
makes clear that the Court may consider evidence outside the record if it should have
been included in the development of the administrative record. See 458 F.3d at 973.
Under § 1133(2) of ERISA, a claimant must be afforded a “full and fair” review of his
claim; this means the claimant is entitled to review of his adverse benefits determination.
Here, there is evidence in the record to support an inference that North Dakota Blue
Cross was involved in the reimbursement rate determination, (see Docs. 47-1, 47-2),
which Abdilnour claims was adverse to him. Thus, the documents Abdilnour seeks
related to North Dakota Blue Cross likely should have been included in the
administrative record and are discoverable.
III.

Motion to Compel

Abdilnour seeks responses to requests 6–8 on the basis that the requested
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documents should have been included in the administrative record. (See Doc. 48 at 8–9.)
As explained above, this is a permissible basis for discovery outside the record. See
Abatie, 458 at 973; see also Chacko v. AT&T Umbrella Benefit Plan No. 3, 2020 WL
2078304, *1 (E.D. Cal. Mar. 16, 2020) (citing Crosby v. La. Health Serv. & Indem. Co.,
647 F.3d 258, 263–64 (5th Cir. 2011) with approval). Consequently, the documents
requested in categories 6–8 are discoverable.
IV.

Harm to Idaho Blue Cross

Neither party contemplates the spirit of the Rule 26(c), which permits the Court to
enter a protective order “for good cause to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense.” Relying on S.R.L., 2010 WL
11527270, at *1, Idaho Blue Cross essentially argues that the “good cause” justifying a
protective order is that allowing discovery beyond the record jeopardizes its interests
because the Court cannot consider such evidence. (See Doc. 45-1 at 5, 8.) However,
Idaho Blue Cross does not actually identify any oppression, undue burden, or expense
that will come from the disclosure of such information—nor could it, since North Dakota
Blue Cross is the entity subject to production, not Idaho Blue Cross. (See Doc. 53 at 10–
11) (admitting that Idaho Blue Cross does not possess requested documents from
categories 1–5 of Abdilnour’s request).) And, because such information seems
discoverable under Abatie, Idaho Blue Cross cannot persuasively argue there is good
cause in preserving the administrative record as-is.
Similarly, Idaho Blue Cross does not identify any prejudice it will suffer from the
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production of requested documents 6–8. Rather, Idaho Blue Cross makes the argument
that these items are not discoverable because they are outside the administrative record.
However, for the reasons explained above, because certain exceptions to the general
prohibition on extra-administrative record evidence are implicated, these documents are
discoverable. Further, there is no guarantee these documents will be considered on the
merits.
CONCLUSION
Although Abdilnour seeks information outside the administrative record, that
information is discoverable because it may speak to a conflict of interest or procedural
violation on the part of Idaho Blue Cross. Accordingly,
IT IS ORDERED that Idaho Blue Cross’s motion for a protective order, (Doc. 45),
is DENIED.
IT IS FURTHER ORDERED that Abdilnour’s motion to compel, (Doc. 48), is
GRANTED. Idaho Blue Cross shall produce documents from categories 6–8 within
seven days from the date of this order.
IT IS FURTHER ORDERED that reasonable expenses, including fees, will be
awarded to Abdilnour on both motions. Fed. R. Civ. P. 26(c)(3), 37(a)(5). Abdilnour
shall file the requested amount with a supporting affidavit on or before June 2, 2021.
DATED this 20th day of May, 2021.

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