LeCates v. Blue Cross of Idaho, Inc.

Filing 31

MEMORANDUM DECISION AND ORDER denying 16 Defendant's Motion for Summary Judgment; granting 22 Defendant's Motion to Strike; granting 23 Plaintiff's Motion for Summary Judgment. The parties are to meet and confer, and submit a proposed judgment consistent with the Courts Order by 9/23/2016. Signed by Judge Candy W. Dale. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

BROOKS LECATES,
Case No. 3:15-cv-00072-CWD
Plaintiff,
MEMORANDUM DECISION AND
ORDER

v.
BLUE CROSS OF IDAHO, a
corporation licensed to do business in
the state of Idaho,
Defendants.

INTRODUCTION
Before the Court are cross motions for summary judgment filed by Plaintiff
Brooks LeCates and Defendant Blue Cross of Idaho, as well as Blue Cross’s evidentiary
motion asking the Court to strike the affidavits LeCates submitted in opposition to Blue
Cross’s motion for summary judgment. (Dkt. 16, 22, 23.) The motions are fully briefed,
and the Court heard oral argument from the parties on August 29, 2016.
LeCates seeks payment of benefits due under his health insurance plan for
hospitalization and medical treatment he received for injuries sustained in a motorcycle
accident. Blue Cross contends LeCates failed to exhaust his administrative remedies
MEMORANDUM DECISION AND ORDER - 1

under the terms of the Plan, and for that reason, argues the Complaint should be
dismissed with prejudice. LeCates contends he exhausted all required administrative
remedies, or alternatively, that further pursuit of such remedies would have been futile.
As to the merits, Blue Cross and LeCates differ over the interpretation of the “illegal act
exclusion” Blue Cross applied and upon which it based its denial of benefits
determination.
After carefully considering the parties’ written memoranda, relevant case law, and
the parties’ arguments, the Court will grant Blue Cross’s motion to strike; deny Blue
Cross’s motion for summary judgment; and grant LeCates’s motion for summary
judgment.
FACTS 1
1.

Plan Terms
LeCates is an eligible dependent of an enrollee in a group health plan sponsored

by Gritman Medical Center (“Gritman”). That group plan, titled “ASC Preferred Blue
Master Group Plan,” was effective January 1, 2014, through December 31, 2014. (Dkt.
16-7 at 35 –112.) 2 It is subject to the Employee Retirement Income Security Act
(ERISA), 29 U.S.C. §§ 1001, et seq. See Compl. ¶ 3.
Gritman is identified as the Plan Administrator, and benefits under the Plan are
paid by Gritman. (Dkt. 16-7 at 85.) According to the Plan, Gritman is the “sole fiduciary
of the Plan, [and] has all discretionary authority to interpret the provisions and control the

1
2

The facts are taken from the administrative record submitted by Blue Cross. (Dkt. 16.)
The Administrative Record contains several duplicate copies of the Plan. The most legible copy is cited.

MEMORANDUM DECISION AND ORDER - 2

operation and administration of the Plan…. All decisions made by the Plan
Administrator…shall be final and binding on all parties.”
Blue Cross is defined as a nonprofit mutual insurance company, hired by Gritman,
to act as the third party Contract Administrator to perform claims processing and other
administrative services as outlined in the Plan. (Dkt. 16-7 at 78.) The Plan states that Blue
Cross, as the Contract Administrator, is “not an insurer of health benefits under this Plan,
is not a fiduciary of the Plan and does not exercise any of the discretionary authority and
responsibility granted to the Plan Administrator. The Contract Administrator is not
responsible for Plan financing and does not guarantee the availability of benefits under
this Plan.” Id.
The Plan provides for various benefits but also contains certain exclusions in the
“Exclusions and Limitations Section.” (Dkt. 16-7 at 90 – 16-7 at 94.) Specifically, the
Plan states:
A. General Exclusions and Limitations
There are no benefits for services, supplies, drugs or other
charges that are:
****
AL. For the treatment of injuries sustained while committing
a felony, voluntarily taking part in a riot, or while engaging in
an illegal act or occupation, unless such injuries are the result
of a medical condition or domestic violence.
(Dkt. 16-7 at 92.) (emphasis added).
Under the terms of the Plan, Blue Cross was responsible for processing claims for
benefits in accordance with the Administrative Services Agreement between Blue Cross
and Gritman. (Dkt. 16-7 at 96.) In addition, Blue Cross was vested with authority and
MEMORANDUM DECISION AND ORDER - 3

discretion to determine eligibility for coverage under the terms of the Plan, and to
determine the amount of benefits owed on covered claims. (Dkt. 16-7 at 109.)
The Plan contains a section outlining the inquiry and appeals procedures in
Section XV. (Dkt. 16-7 at 102.) Participants who wish to formally appeal a post-service
claim decision by Blue Cross, who acts on behalf of the Plan Administrator, may do so
through the following process:
1. A written appeal must be sent to the Appeals and Grievance
Coordinator within one hundred eighty (180) days after receipt of notice of
Adverse Benefit Determination. This written appeal should set forth the
reasons why the Participant contends BCI’s decision was incorrect. Any
written comments, documents or other relevant information may be
submitted with the appeal.
2. After receipt of the written appeal, all facts, including those
originally used in making the initial decision and any additional
information that is sent or that is otherwise relevant, will be reviewed by a
BCI Medical Director, or physician designee if the appeal requires medical
judgment. BCI shall mail a written reply to the Participant within thirty
(30) days after receipt of the written appeal. If the original decision is
upheld, the reply will list the specific reasons for denial and the specific
provisions on which the decision is based.
****
4. If the original decision is upheld upon reconsideration, the
Participant may send an additional written appeal to the Appeals and
Grievance Coordinator requesting further review. This appeal must set forth
the reasons for requesting additional reconsideration and must be sent
within sixty (60) days of BCI's mailing of the initial reconsideration
decision. A BCI Medical Director who is not subordinate to the Medical
Director or physician designee who decided the initial appeal, will issue a
final decision after consideration of all relevant information, if the appeal
requires medical judgment. A final decision on the appeal will be made
within thirty (30) days of its receipt. If the appeal does not require medical
judgment, a BCI Vice President who did not decide the initial appeal will
issue the decision.

MEMORANDUM DECISION AND ORDER - 4

(Dkt. 16-7 at 103.) (Emphasis added.) “A Participant must first exhaust BCI’s
internal grievance and appeal process. Exhaustion of that process includes
completing all levels of appeal.” (Dkt. 16-7 at 104.)
Elsewhere, the Plan outlines the appeals process in plain language in the section
titled, “Rights of Plan Participants.” (Dkt. 16-7 at 111.) In that section, the Plan states
that, if a claim for benefits is denied, “you will receive a written explanation of the reason
for the denial. If you do not agree with the denial, you have the right to ask the Plan
Administrator to review the claim. If you are not satisfied with the result of such a
review, you may file suit in a state or federal court.” (Dkt. 16-7 at 111.)
2.

The Accident and Claims Process
LeCates, a 22-year-old male, was injured on April 12, 2014, when he was riding

his road bike (motorcycle), lost control, and hit a fence. (Dkt. 16-3 at 22.) According to
the Accidental Injury Questionnaire LeCates completed, LeCates lost control of the
motorcycle when he hit soft gravel on a corner while traveling on Highway 12 near
Lenore, Idaho. 3 (Dkt. 16-6 at 20.) He suffered serious injuries 4 and required extensive
medical treatment at St. Joseph Regional Medical Center in Lewiston, Idaho. (Dkt. 16-3
at 22 – 24.) The treating physician's report indicates LeCates “does drink quite heavily.”
(Dkt. 16-3 at 24.) According to the laboratory report, tests taken at the time of his

3

Hospital records indicate LeCates estimated his speed at the time of the accident was 70 miles per hour. (Dkt. 16-3
at 22.) LeCates disputes how fast he was travelling, and there is no other evidence of LeCates’s speed other than in
the hospital records. Also absent from the record is the speed limit applicable to the portion of the highway LeCates
was traveling. Additionally, the Court notes that the hospital records indicate LeCates slowed the motorcycle to 40
miles per hour but still lost control. (Dkt. 16-4 at 4.)
4
LeCates suffered a facet fracture at C6-7 on the right side, a chip fracture of C2 on the right side, and a 1x2 cm.
epidural hematoma requiring a craniotomy. (Dkt. 16-3 at 25.)

MEMORANDUM DECISION AND ORDER - 5

admission to the emergency room indicated a blood alcohol serum level of .104. (Dkt.
16-3 at 32.) 5
Blue Cross initially paid benefits to medical care providers following LeCates’s
inquiry about why his providers’ bills were going unpaid. But, on April 16, 2014, Blue
Cross notified LeCates in writing that benefits for his inpatient stay at the hospital
beginning April 12, 2014, were denied based upon the illegal act exclusion in the policy.
(Dkt. 16-3 at 17.)
On or about May 26, 2014, LeCates received Explanation of Benefits statements
denying $45,841.01 in medical charges submitted by St. Joseph Regional Medical
Center. (Dkt. 16-3 at 42-43). In contrast to Blue Cross’s April 16, 2014 letter, the EOB
noted the reason for the denial was that the services were not medically necessary and not
eligible for coverage.
On July 17, 2014, LeCates 6 submitted an appeal of the April 16, 2014 denial. (Dkt.
16-3 at 14.) LeCates asserted Blue Cross did not review all available information, and
could not have made a determination that LeCates’s injuries were the result of an illegal
act. LeCates did not submit additional documents nor did he identify what documents
should have been reviewed.
On July 28, 2014, Blue Cross acknowledged receipt of LeCates’s request for
reconsideration of his claim for medical benefits. (Dkt. 16-3 at 11.) The letter requested a
signed authorization form to allow LeCates’s representative to appeal the claim decision
5

LeCates disputes the accuracy of the test and the testing method used, but does not dispute that the laboratory test indicated a
blood alcohol serum level of .104.
6
LeCates had retained counsel, and counsel submitted the letter on his behalf.

MEMORANDUM DECISION AND ORDER - 6

on his behalf. LeCates submitted the authorization form on July 31, 2014. (Dkt. 16-3 at
10.) By letter dated August 7, 2014, Blue Cross informed LeCates it had received the
appeal and the signed authorization form as of August 4, 2014, and that it was reviewing
the appeal. Blue Cross indicated that, unless it needed additional information, a response
would be sent within 30 days from the date it received the signed authorization form.
(Dkt. 16-3 at 9.)
Blue Cross sent a second denial letter dated September 2, 2014, responding to
LeCates’s appeal requesting reconsideration of his claim for services from April 12,
through April 16, 2014. (Dkt. 16-3 at 1-2.) Blue Cross indicated it was upholding its
denial under the illegal act exclusion, stating as follows:
Mr. LeCates’ policy does not require that he be cited or found
guilty in a court of law, only that he be engaged in an illegal
act. Mr. LeCates' medical records provided by St. Joseph
Regional Medical Center, included hospital admittance tests
immediately following his single motorcycle crash. These
medical records included a blood alcohol serum level of .104,
which support that he was over the legal limit for alcohol at
the time of the accident. It is illegal to drive while under the
influence; therefore, he was engaged in an illegal act, under
the terms of his policy.
(Dkt. 16-3 at 1-2.) Blue Cross indicated previously approved claims for medical services
rendered were being adjusted and reversed. The letter further explained that, once the
claims were adjusted, LeCates would receive a new EOB, that new appeal rights would
become available, and that LeCates “may submit a second appeal requesting further
review” within 180 days from the date of the new EOB. (Dkt. 16-3 at 2.)

MEMORANDUM DECISION AND ORDER - 7

A new EOB dated September 8, 2014, indicated additional claims previously
approved were denied. (Dkt. 16-7 at 113 – 118.) According to the EOB, the appeal
procedures involved writing a letter with supporting documentation contesting the denial
of benefits. Upon receipt of a decision upholding the initial decision, the EOB explained
the plan participant “may have the right to file a second appeal. An external review
process may be available to you following completion of the internal review process.
Under Section 502(a) of the Employment retirement Income Security Act, you may also
have the right to file a civil action following the exhaustion of the complete appeals
process.” (Dkt. 16-7 at 118.)
LeCates did not file any further appeals, and instead filed a complaint in this Court
on March 5, 2015. (Dkt. 1). On March 25, 2015, Blue Cross notified Gritman of the
Complaint. (Dkt. 16-6 at 27.) In an email response dated April 6, 2015, Gritman indicated
it had received the materials Blue Cross sent to it regarding the denial of benefits and that
it agreed with Blue Cross’s denial of LeCates’s claims for benefits. (Dkt. 16-7 at 32.)
LeCates’s suit against Blue Cross seeks benefits due under the Plan pursuant to
Section 502(a)(1)(B) of ERISA (29 U.S.C. § 1132(a)(1)(B)), and for an award of any
equitable remedies available under Section 502(a)(3) (29 U.S.C. § 1132(a)(3)).
DISPOSITION
1.

Motion to Dismiss for Failure to Exhaust Administrative Remedies
Blue Cross asserts that, following receipt of the adverse benefit decision on April

16, 2014, the Plan required LeCates to file a written appeal. Blue Cross acknowledges
LeCates did so on July 17, 2014. Blue Cross argues, however, the Plan required LeCates
MEMORANDUM DECISION AND ORDER - 8

to file a second level appeal before he could file suit. In contrast, LeCates argues he
exhausted his available administrative remedies, because he received not one, but two
denial letters dated April 16, 2014, and September 2, 2014. LeCates argued at the hearing
that a second level appeal, which would have been submitted after receipt of the
September 2, 2014 denial letter, was discretionary based upon the interpretation of the
Plan language. Alternatively, LeCates argues further appeals would have been futile,
because the September 8, 2014 EOB proffered the same reason for denial of his claims as
proffered in both the April 16 and September 2 letters, and he had no further information
to submit.
A.

Legal Standard

Although Blue Cross moves for summary judgment, the defense of “failure to
exhaust nonjudicial remedies should be raised in a motion to dismiss, or be treated as
such if raised in a motion for summary judgment.” Ritza v. Int'l Longshoremen's and
Warehousemen's Union, 837 F.2d 365, 368–69 (9th Cir. 1988), overruled on other
grounds in Albino v. Baca, 747 F.3d 11162 (9th Cir. 2014). A defendant may raise the
exhaustion defense early in the case, on an incomplete record, via an unenumerated Fed.
R. Civ. P. 12(b) motion “as a matter of abatement.” Wyatt v. Terhune, 315 F.3d 1108,
1119 (9th Cir. 2003); Payne v. Peninsula School Dist., 653 F.3d 863, 881 (9th Cir. 2011)
(discussing unenumerated Rule 12(b) motions in context of IDEA).
To resolve a Rule 12(b) motion raising failure-to-exhaust issues, “the court may
look beyond the pleadings and decide disputed issues of fact.” Wyatt, 316 F.3d at 1119–
20. In such instances, the court “has a broad discretion as to the method to be used in
MEMORANDUM DECISION AND ORDER - 9

resolving the factual dispute.” Ritza, 837 F.2d at 369. However, the court “must assure
that [the plaintiff] has [had] fair notice of his opportunity to develop the record.” Wyatt,
315 F.3d at 1120, n. 14.
Distinguishing unenumerated Rule 12(b) motions from motions brought
specifically under Rule 12(b)(6) and 56, Ritza further explained that “no presumptive
truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts
will not preclude the trial court from evaluating for itself the merits of [the] claims.”
Ritza, 837 F.2d at 369 (internal citations and punctuation omitted). Even so, because
failure to exhaust is an affirmative defense, a defendant bears the burden of persuasion.
Wyatt, 315 F.3d at 1119.
“ERISA itself does not require a participant or beneficiary to exhaust
administrative remedies in order to bring an action under [section] 502 of ERISA, 29
U.S.C. § 1132.” Vaught v. Scottsdale Healthcare Corp. Health Plan, 546 F.3d 620, 626
(9th Cir. 2008). However, based on both the text of ERISA and its legislative history, the
Court of Appeals for the Ninth Circuit held that “federal courts have the authority to
enforce the exhaustion requirement in suits under ERISA, and that as a matter of sound
policy they should usually do so.” Amato v. Bernard, 618 F.2d 559, 568 (9th Cir. 1980).
The Ninth Circuit has consistently held that, before bringing suit under Section 502, an
ERISA plaintiff claiming a denial of benefits “must avail himself or herself of a plan’s
own internal review procedures before bringing suit in federal court.” Diaz v. United
Agric. Employee Welfare Benefit Plan & Trust, 50 F.3d 1478, 1483 (9th Cir. 1995). See

MEMORANDUM DECISION AND ORDER - 10

also Hixon v. Hewitt Associates, No. 1:12–cv–00489–EJL–REB, 2013 WL 2338111, at
*3 (D. Idaho May 28, 2013) (applying the exhaustion requirement in an ERISA case).
A plaintiff may be excused from the exhaustion requirement provided the plaintiff
provides support for the excuse. “[B]are assertions of futility are insufficient to bring a
claim within the futility exception, which is designed to avoid the need to pursue an
administrative review that is demonstrably doomed to fail.” Diaz, 50 F.3d at 1485
(emphasis added). A plan’s refusal to pay does not, by itself, show futility. Foster v. Blue
Shield of Ca., 2009 WL 1586039, at *5 (C.D. Cal. June 3, 2009).
For example, in Diaz, the Ninth Circuit found insufficient the plaintiff’s argument
that “defendants ha[d] demonstrated by their continued refusal to pay that they ha[d] no
intention of doing so.” 50 F.3d at 1485-86. The court noted that the plaintiff’s futility
argument was “really circular, for defendants’ current denial is pegged entirely to
[Plaintiffs’] failure to have pursued the administrative route .... In this instance
[Plaintiffs’] own delinquency in pursuing an internal appeal prevented the possibility of
an administrative look at the merits, and the record contains nothing but speculation to
suggest that the administrators would have reached a preconceived result in that respect.”
50 F.3d at 1485-86.
Courts generally require that a plaintiff asserting futility proffer facts and
circumstances indicating why administrative review would be futile. For example, in A.F.
v. Providence Health Plan, 2016 WL 81796 at *7 (D. Or. Jan. 7, 2016), the court
considered evidence of the insurer’s policy refusing to pay for certain benefits prior to a
certain date; similarly situated plaintiffs who had been denied benefits after exhausting
MEMORANDUM DECISION AND ORDER - 11

the appeals process; and testimony from the insurance company’s representative that
plaintiffs had exhausted their internal remedies as sufficient for establishing futility.
In addition to the futility exception, a second exception to the exhaustion
requirement exists. The Courts of Appeal for the Eleventh, Seventh, and Second Circuits
apply a narrow exception, exempting from the general exhaustion requirement those plan
participants who “reasonably interpret” an ERISA plan not to require exhaustion and, as a
result, fail to exhaust administrative remedies prior to filing suit in federal court.
Kirkendall v. Halliburton, Inc., 707 F.3d 173, 180 (2nd Cir. 2013). See also Watts v.
BellSouth Telecomms., Inc., 316 F.3d 1203, 1209–10 (11th Cir. 2003) (“If a plan claimant
reasonably interprets the relevant statements in the summary plan description as
permitting her to file a lawsuit without exhausting her administrative remedies, and as a
result she fails to exhaust those remedies, she is not barred by the court-made exhaustion
requirement from pursuing her claim in court.”); Gallegos v. Mount Sinai Med. Ctr., 210
F.3d 803, 810 (7th Cir. 2000) (same, on estoppel grounds).
The reasonableness of the plan participant’s interpretation “must be judged from
the perspective of the average plan participant.” Watts, 316 F.3d at 1207 (citing 29 U.S.C.
§ 1022(a) “The summary plan description ... shall be written in a manner calculated to be
understood by the average plan participant.”); cf. Lee v. Blue Cross/Blue Shield of Ala.,
10 F.3d 1547, 1551 (11th Cir. 1994); (ambiguities in the summary plan description and
plan construed against the drafter); Bergt v. Ret. Plan for Pilots Employed by Markair,
Inc., 293 F.3d 1139, 1145-46 (9th Cir. 2002) (same); Hansen v. Cont'l Ins. Co., 940 F.2d
971, 982 (5th Cir. 1991) (same)).
MEMORANDUM DECISION AND ORDER - 12

The Second Circuit explained the rationale behind this exception to the exhaustion
requirement is to encourage plan descriptions to be written “in a manner calculated to be
understood by the average plan participant,” so they are “sufficiently accurate and
comprehensive to reasonably apprise such participants and beneficiaries of their rights
and obligations under the plan.” Kirkendall, 707 F.3d at 180 (quoting 29 U.S.C.
§ 1022(a)). Exempting from the general exhaustion requirement those plan participants
who “reasonably interpret” their ERISA plan not to impose an exhaustion requirement
will have the effect of encouraging employers and plan administrators to clarify their plan
terms, and consequently lead more employees to pursue benefits claims through their
plan’s claims procedure in the first instance. Watts, 316 F.3d at 1209.
B.

Analysis

Based upon the parties’ arguments and the persuasive authority from the Eleventh,
Second, and Seventh Circuits, the Court finds LeCates reasonably interpreted the Plan to
not require a second level of appeal. 7 The Court finds the Plan terms are ambiguous as to
whether LeCates was required to pursue a second level of appeal before filing suit.
Section XV begins with the language that a plan participant who “wishes” to formally
appeal “may do so” through the process explained in Section XV. The first step in the
appeal process is described in mandatory terms in subsection C(1): “[a] written appeal
must be sent” within 180 days after receipt of notice of an Adverse Benefits
Determination. Both parties agree LeCates filed the first level of appeal on July 17, 2014,
7

Blue Cross refers to the process described in Section XV(C)(4) of the Plan as a “second level of appeal.” Mem. at
9. (Dkt. 16-1 at 9.) Accordingly, the Court will use the same terminology; however, by doing so, the Court does not
intend to imply that an additional level of appeal was required, as explained herein.

MEMORANDUM DECISION AND ORDER - 13

which effectively appealed the April 16, 2014 denial of his claims for benefits. 8 Blue
Cross mailed a reply dated September 2, 2014, upholding its denial of LeCates’s claims
for benefits.
In contrast, the second level appeal process is couched in discretionary language.
The Plan in Section XV(C)(4) indicates that, if the original decision is upheld, the plan
participant “may” send an additional written appeal. Elsewhere in the Plan, in the section
entitled “Rights of Plan Participants,” the Plan indicates that, if the plan participant is not
satisfied with the reasons given for the denial, “you may file suit in a state or federal
court.” There is no mention of a requirement to send a second appeal letter upon receipt
of the denial of benefits letter. Although the Plan in Section XV(D) indicates that a
participant “must” exhaust the internal grievance and appeal process, which includes
completing “all levels of appeal,” the Court finds the Plan terms cannot reasonably be
read to require the filing of a second level appeal before a lawsuit may be filed.
The use of language such as “may” and “should” and “wish,” given their plain and
ordinary meaning, indicates a plan participant has the opportunity to participate in a
voluntary, rather than mandatory, second level review procedure. Gallegos, 210 F.3d at
810. Moreover, in both the section titled Rights of Plan Participants, and in the section
describing the appeal process, the second level appeal is not described as a prerequisite to
filing suit. Here, Blue Cross’s September 2, 2014 letter upholding its decision on

8

At the hearing, Blue Cross’s counsel admitted the April 16, 2014 notice triggered the first step in the appeal
process. Blue Cross provided no explanation as to the effect, if any, of the notice in the May 26, 2014 EOB, which
denied benefits on the grounds the services provided were not medically necessary.

MEMORANDUM DECISION AND ORDER - 14

reconsideration was reasonably understood by LeCates as terminating the internal review
process.
LeCates’s understanding is further supported by the granting of additional appeal
rights in the September 2, 2014 letter. The letter explained “new” appeal rights would
become available, and LeCates “may” submit a second appeal within 180 days from the
date of the newly issued EOB. The issuance of a new EOB on September 8, 2014, the
granting of an additional 180 days from the date of the newly issued EOB, and the use of
discretionary language, are all contradictory to the language in the Plan in Section
XV(C)(4). There, the Plan indicates that an additional written appeal “may” be sent
within 60, not 180, days. The 180 day period applies, per the Plan language, to a first
level appeal, which LeCates already had filed. The fact LeCates’s attorney filed suit
within the 180 day period 9 illustrates even he interpreted the discretionary language to
mean LeCates had the opportunity to file either another appeal or a lawsuit within that
180 day time period. That LeCates’s attorney was confused is not surprising. Even the
Court was left scratching its figurative head upon its review of the record. On the one
hand, Blue Cross seeks to hold LeCates to a mandatory second level of appeal when, on
the other hand, even Blue Cross did not follow its own internal procedures and confused
the issue in the September 2, 2014 letter. 10

9

180 days from the September 8, 2014, EOB would have been Saturday, March 7, 2015. Plaintiff would have had
until Monday, March 9, 2015, within which to file his appeal with Blue Cross. LeGras v. AETNA Life Ins. Co., 786
F.3d 1233, 1238-39 (9th Cir. 2015) (where the 180 day time limit imposed by the plan fell on a Saturday, the court
held the appeal was timely when the plaintiff mailed the appeal on the first weekday following the weekend).
LeCates filed this lawsuit on March 5, 2015.
10
LeCates, in his memorandum in opposition to Blue Cross’s motion for summary judgment, interpreted the
September 2, 2014 letter as “renewing the number of appeals required prior to bringing suit,” creating an endless
appeals process. Mem. at 4. (Dkt. 17.)

MEMORANDUM DECISION AND ORDER - 15

In conjunction with the letters he received, the Court finds LeCates’s interpretation
of the Plan is reasonable. It is apparent that LeCates and his attorney believed they had
pursued the avenues available to LeCates and concluded he could bring his claims in this
Court, and needed to file a complaint within 180 days of September 8, 2014. A natural
reading of the plain language of the Plan, together with the September 2, 2014 letter, is
that further administrative review was optional. Nowhere does the Plan explicitly state
that pursuit of both a first level and second level appeal is required before a claim may be
taken to court. See Watts, 316 F.3d at 1209 (explaining that the failure to clearly state
pursuit of administrative remedies is required before bringing suit led the claimant to
reasonably conclude exhaustion was not necessary). 11
LeCates is not barred by the exhaustion requirement from pursuing his claims in
this Court.
2.

Motion to Strike
Before turning to the merits of the cross motions for summary judgment, the Court

first will address Blue Cross’s motion to strike. LeCates introduced the affidavits of D.
Timothy Anstine and Josh E. Buessing, experts who explain the various testing
techniques used to determine blood alcohol concentration. (Dkt. 19, 20.) Blue Cross
11

The court in Watts noted that the discretionary language was a “simple drafting problem to remedy,” suggesting
that the plan under review could have contained a statement that “No action at Law or in Equity shall be brought to
recover under this PLAN document until the appeal rights herein provided have been exercised and the PLAN
benefits requested in such appeal have been denied in whole or in part.” Watts, 316 F.3d at 1208 (quoting Springer
v. Wal-Mart Associates’ Group Health Plan, 908 F.3d 897, 900 (11th Cir. 1990)). The court noted also that it did not
mean “to imply that the reasonableness of a claimant's interpretation is to be judged solely by the contents of the
summary plan description. It may well be that interpreting the document as Watts did would not have been
reasonable if the letter announcing the denial of her claim had informed her that she had to exhaust all of her
administrative remedies before she could file a lawsuit. We do not have that question before us, because the denial
letter Watts received did not contain that information.” Similarly, the September 2, 2014 letter LeCates received did
not inform LeCates he was required to pursue another level of appeal before he could file suit.

MEMORANDUM DECISION AND ORDER - 16

argues the evidence is improper, because in an ERISA matter, the Court and the parties
are limited to an examination of the administrative record. LeCates argues Blue Cross
failed to engage in any meaningful investigation, and that if it had, the information in the
affidavits would have been discovered.
The Ninth Circuit adheres to the general rule that a district court may review only
the administrative record when considering whether the plan administrator abused its
discretion, but may admit additional evidence on de novo review. Abatie v. Alta Health &
Life Ins. Co., 458 F.3d 955, 970 (9th Cir. 2006). The Court may, “in its discretion,
consider evidence outside the administrative record to decide the nature, extent, and
effect on the decision-making process of any conflict of interest; the decision on the
merits, though, must rest on the administrative record once the conflict (if any) has been
established, by extrinsic evidence or otherwise.” Id.
Here, LeCates seeks to introduce the affidavits in support of the decision on the
merits, not with respect to the effect on the decision-making process of any conflict of
interest. Accordingly, the Court may not, and will not, stray from the administrative
record. 12

12

The Court notes further that the information contained within the affidavits is irrelevant. At the hearing, both
parties were asked whether consideration of the affidavits was integral to deciding either motion; both parties
conceded it was not.

MEMORANDUM DECISION AND ORDER - 17

3.

Motions for Summary Judgment
A.

Standard of Law

LeCates brings his claim against Blue Cross 13 pursuant to ERISA’s civil
enforcement provision. See 29 U.S.C. § 1132(a)(1)(B). Section 1132 provides that a
“civil action may be brought ... by a participant ... to recover benefits due to him under
the terms of his plan [or] to enforce his rights under the terms of the plan.” Id.
Summary judgment is appropriate only when there is no genuine issue of material
fact, so that the dispute may be decided solely on legal grounds. Fed. R. Civ. P. 56. “[A]
denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo
standard unless the benefit plan gives the administrator ... discretionary authority to
determine eligibility for benefits.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101,
115 (1989). The Plan in this case gives the administrator discretion to determine
eligibility, and therefore the Court will review the decision to deny benefits for abuse of
discretion. Id.
But, if the plan administrator is also the funding source, or insurer, for an ERISA
plan, that conflict of interest must be weighed as a factor in determining whether there is
an abuse of discretion. Tremain v. Bell Indus., Inc., 196 F.3d 970, 976 (9th Cir. 1999).
Tremain v. Bell Indus., Inc., 196 F.3d 970, 976 (9th Cir. 1999). A conflict of interest

13

The Court notes LeCates did not sue Gritman, the Plan Administrator as defined in the Plan. Blue Cross is the
Contract Administrator. Neither party disputes that Blue Cross is a proper defendant here. See Cyr v. Reliance
Standard Life Ins. Co., 642 F.3d 1202, 1206 (9th Cir. 2011) (en banc) (holding that defendants in actions brought
under Section 1132(a)(1)(B) should not be limited to plans and plan administrators; LifeCare Mgt. Servs. LLC v. Ins.
Mgt. Adm’rs., Inc. 703 F.3d 835, 845 (5th Cir. 2013) (where “a [Third Party Administrator] exercises control over a
plan’s benefits claims process, and exerts that control to deny a claim by incorrectly interpreting a plan in a way that
amounts to an abuse of discretion, liability may attach,” citing Cyr, 642 F.3d at 1207).

MEMORANDUM DECISION AND ORDER - 18

exists in such circumstances because, while the administrator is responsible for
administering the plan so that those who deserve benefits receive them, the administrator
also “has an incentive to pay as little in benefits as possible to plan participants because
the less money the insurer pays out, the more money it retains in its own coffers.” Abatie
v. Alta Health & Life Ins. Co., 458 F.3d 955, 966 (9th Cir. 2006) (citation omitted).
To determine whether an administrator operates under a conflict of interest, the
beneficiary must provide “material, probative evidence, beyond the mere fact of the
apparent conflict, tending to show that the fiduciary’s self-interest caused a breach of the
administrator’s fiduciary obligations to the beneficiary.” Friedrich v. Intel Corp., 181
F.3d 1105, 1109 (9th Cir. 1999). If the beneficiary makes such a showing, the second step
shifts the burden to the plan, which is then required to produce evidence showing that
“the conflict of interest did not affect the decision to deny benefits.” Id. If the plan does
not meet its burden, the decision to deny benefits is reviewed de novo by the district
court. Id.
The parties do not dispute that the abuse of discretion standard applies. However,
LeCates contends a conflict of interest exists, requiring the Court to weigh the conflict as
a factor in determining whether Blue Cross’s decision was arbitrary and capricious. Here,
Gritman is the plan administrator and the funding source, not Blue Cross. At the hearing,
LeCates asserted the agreement between Gritman and Blue Cross contained a reinsurance
provision, requiring Blue Cross to shoulder some portion of the funding, which in turn
constitutes a conflict of interest for Blue Cross. Yet, LeCates did not point to support in

MEMORANDUM DECISION AND ORDER - 19

the record for that assertion, and the Court has not unearthed evidence of the existence or
the terms of such an agreement.
Reviewing Gritman’s role, the only evidence in the record of Gritman’s
involvement was Blue Cross’s email to it on March 25, 2015, and Gritman’s email
response dated April 6, 2015. In that email, Gritman indicated it had received the
materials Blue Cross sent regarding the denial of benefits and that it agreed with Blue
Cross’s denial of LeCates’s claims. There is no evidence of bad faith or improper
motivation inherent in the email exchange.
Nonetheless, where, as in this case, the Plan gives the administrator discretion, and
the administrator has a conflict of interest, the Court “is instructed to judge its decision to
deny benefits to evaluate whether it is reasonable.” Salomaa v. Honda Long Term
Disability Plan, 642 F.3d 666, 675 (9th Cir. 2011). See also Stephan v. Unum Life Ins.
Co. of Am., 697 F.3d 917, 929 (9th Cir. 2012) (quoting Conkright v. Frommert, 559 U.S.
506, 521 (2010)); Day v. AT&T Disability Income Plan, 698 F.3d 1091, 1096 (9th Cir.
2012)). Reasonableness does not mean the Court would make the same decision.
Salomaa, 642 F.3d at 675. The Court is to judge the reasonableness of the plan
administrator’s decision skeptically when the administrator has a conflict of interest. Id.
Even without such skepticism, deference to the plan administrator’s judgment does not
mean the Plan prevails in every case. Id.
The test for abuse of discretion in a factual determination is whether the Court is
left with a “definite and firm conviction that a mistake has been committed,” and the
Court may not substitute its view for that of the fact finder. Id. at 676. To make that
MEMORANDUM DECISION AND ORDER - 20

determination, the Court considers “whether application of the correct legal standard was
(1) illogical, (2) implausible, or (3) without support in inferences that may be drawn from
the facts in the record.” Stephan, 697 F.3d at 929 (internal quotation marks omitted);
Salomaa, 642 F.3d at 676.
B.

Analysis

Turning now to the Plan provision upon which Blue Cross relied in denying
LeCates’s claim for benefits, the Court applies contract principles derived from state law,
but is guided by the policies expressed in ERISA and other federal labor laws.
Richardson v. Pension Plan of Bethlehem Steel Corp., 112 F.3d 982, 985 (9th Cir. 1997).
The Ninth Circuit requires terms in an ERISA plan to be interpreted “‘in an ordinary and
popular sense as would a [person] of average intelligence and experience.’” Gilliam v.
Nevada Power Co., 488 F.3d 1189, 1194 (9th Cir. 2007) (quoting Richardson v. Pension
Plan of Bethlehem Steel Corp., 112 F.3d 982, 985 (9th Cir. 1997)). More specifically, the
Ninth Circuit directs the Court to “first look to explicit language of the agreement to
determine, if possible, the clear intent of the parties. The intended meaning of even the
most explicit language can, of course, only be understood in the light of the context that
gave rise to its inclusion.” Gilliam, 488 F.3d at 1194 (quoting Armistead v. Vernitron
Corp., 944 F.2d 1287, 1293 (6th Cir. 1991)). When a plan is ambiguous, the Court is
permitted to examine extrinsic evidence to determine the intent of the parties. Id.
Each provision in an agreement must be construed consistently with the entire
document such that no provision is rendered nugatory. Id. But, when a plan is ambiguous,
the Court must examine extrinsic evidence to determine the intent of the parties. Id. If,
MEMORANDUM DECISION AND ORDER - 21

after applying the normal principles of contractual construction, the insurance contract is
fairly susceptible of two different interpretations, the rule of construction requiring the
interpretation most favorable to the insured will be adopted. Blankenship v. Liberty Life
Assur. Co. of Boston, 486 F.3d 620, 625 (9th Cir. 2007). However, the rule requiring
interpretation most favorable to the insured in the event of ambiguous terms will apply
except where the plan: (1) grants the administrator discretion to construe its terms, (2) is
the result of a collective-bargaining agreement, or (3) is self-funded. Blankenship, 486
F.3d at 625. Here, because the Plan grants the administrator discretion to construe its
terms, the rule does not apply and the Court must be guided by whether Blue Cross
abused its discretion. Id.
Blue Cross argues the plain meaning of the illegal act exclusion in the Plan
supports its interpretation that LeCates was engaged in an illegal act at the time of the
accident. Blue Cross cites several cases which have held similar plan provisions are not
ambiguous and which found that driving with more than the legal limit of blood alcohol
was an illegal activity within the policy terms. For example, in Tourdot v. Rockford
Health Plans, Inc., 439 F.3d 351 (7th Cir. 2006), the court examined a plan provision
excluding payment for medical services if the accident resulted from the commission of
“any illegal act.” At the time of the accident, the plaintiff’s blood alcohol level measured
by a Breathalyzer test showed a BAC of 0.10g/dL. A later blood test administered in the
emergency room showed the plaintiff’s blood-alcohol level to be 0.14 g/dL. The plaintiff
was cited for inattentive driving.

MEMORANDUM DECISION AND ORDER - 22

Referring to Wisconsin law, Rockford Health Plans denied coverage on the basis
of the illegal act exclusion. Wisconsin law in effect at that time considered a person
operating a motor vehicle with a blood-alcohol concentration above .10 g/dL in violation
of the law. Wis. Stat. Ann. § 885.235(1) (West 2006). The court in Tourdot held the
illegal act provision was not ambiguous, and that the plaintiff’s operation of his
motorcycle while intoxicated fell within the illegal act exclusion. Tourdot, 439 F.3d at
354. See also Sisters of the Third Order of St. Francis v. Swedishamerican Group Health
Benefit Trust, 901 F.2d 1369, 1372 (7th Cir. 1990) (finding an exclusion for expenses
“incurred while engaged in any illegal or criminal enterprise or activity” unambiguous
and that injuries sustained while drunk driving fell within the exclusion when the plaintiff
was driving with more than twice the lawful level of alcohol in his blood); Folks v. Kirk
Paper Corp. Medical & Dental Ben. Plan, 1999 WL 16326 *3 (N.D. Cal. 1999) (finding
the plan did not abuse its discretion in denying the plaintiff’s claim for benefits for
medical expenses incurred as a result of driving while intoxicated under a plan provision
excluding coverage for engaging in “an assault or other illegal act,” and the plaintiff was
convicted of drunk driving and vehicular manslaughter); SGI/Argis Employee Ben. Trust
Plan v. Canada Life Assur. Co., 151 F.Supp.2d 1044, 1048 (E.D. Ark. 2001) (finding that
insured was engaged in an illegal act when an unchallenged blood alcohol test taken
ninety minutes after the accident showed an alcohol level of .344%, more than three
times the legal limit).
Blue Cross cites several of the above examples in support of its argument that the
illegal act exclusion in the Plan is not ambiguous and the Court should uphold Blue
MEMORANDUM DECISION AND ORDER - 23

Cross’s interpretation of the exclusion here. However, in Bekos v. Providence Health
Plan, 334 F.Supp.2d 1248, 1256 (D. Or. 2004), the federal district court in Oregon found
the phrase, “other illegal act,” 14 when read in the context of the plan as a whole, was
ambiguous because it did not specify the level of offense and it did not specify whether
any official action, such as a citation, was required to trigger its application. The court
held that a reasonable person could read the phrase as requiring a conviction by a
governmental authority to trigger the exclusion. Id. LeCates argues the Court should find
the illegal act exclusion here ambiguous for the same reasons the court did in Bekos.
The Court finds none of the cases cited by either LeCates or Blue Cross
particularly persuasive as argued by the parties. The parties argue the Plan language here
is either ambiguous or not ambiguous, relying upon similar plan language in the cases
cited above. However, the Court finds an analysis comparing plan language and phrasing
misplaced. Instead, the Court adopts the logic applied in Tourdot and SGI/Argis, based
upon the definition of “alcohol concentration” under Idaho law.
Idaho law considers it unlawful for any person who is “under the influence of
alcohol…or any combination of alcohol, drugs and/or any other intoxicating substances,
or who has an alcohol concentration of 0.08, “as defined in subsection (4) of this section,
or more, as shown by analysis of his blood, urine, or breath, to drive or be in actual
physical control of a motor vehicle….” Idaho Code § 18-8004(1)(a). Subsection (4)
defines what constitutes a blood alcohol concentration of .08:
14

The plan excluded medical coverage for services if they: “relate to any condition sustained as a result of
engagement in an illegal occupation, the commission or attempted commission of an assault or other illegal act, a
civil revolution or riot, duty as a member of the armed forces of any state or country, or a war or act of war which is
declared or undeclared.”

MEMORANDUM DECISION AND ORDER - 24

an evidentiary test for alcohol concentration shall be based upon a
formula of grams of alcohol per one hundred (100) cubic centimeters
of blood, per two hundred ten (210) liters of breath or sixty-seven
(67) milliliters of urine. Analysis of blood, urine or breath for the
purpose of determining the alcohol concentration shall be performed
by a laboratory operated by the Idaho state police or by a laboratory
approved by the Idaho state police under the provisions of approval
and certification standards to be set by that department, or by any
other method approved by the Idaho state police.
Idaho Code § 18-8004(4). Persons having an alcohol concentration of less than .08 as
defined in subsection (4), “as shown by analysis of his blood, urine or breath, by a test
requested by a police officer shall not be prosecuted for driving under the influence of
alcohol” except as provided in the statute. Idaho Code § 18-8004(2).
To meet Idaho Code § 18-8004(4)’s laboratory standards, the Idaho State Police
has enacted several administrative rules governing blood collection and alcohol testing at
an approved laboratory. See IDAPA 11.03.01.13. Specifically, any blood sample tested
must contain at least 10 milligrams of sodium fluoride per cubic centimeter of blood plus
an appropriate anticoagulant, and the results of an analysis on blood for alcohol
concentration “shall be reported in units of grams of alcohol per one hundred (100) cubic
centimeters of whole blood.” IDAPA 11.03.01.013.02. (emphasis added.)
An in-depth review of the case law yields the realization that Idaho law is unique
in its definition of “blood alcohol concentration.” For example, in Tourdot, the court
looked to state law to determine whether the term “illegal act” had a plain meaning. 439
F.3d at 354. The court held that an illegal act does have a plain meaning, in that it refers
to any activity contrary to law. Id. The court then asked whether the plaintiff’s activities
fell within that classification. Id. Under Wisconsin law at the time, any person with a
MEMORANDUM DECISION AND ORDER - 25

blood-alcohol concentration above 0.10g/dL who operated a motor vehicle violated the
law. Under Wisconsin law, alcohol concentration was defined simply as “the number of
grams of alcohol in 100 milliliters of a person's blood or the number of grams of alcohol
in 210 liters of a person's breath.” Wis. Stat. Ann. § 885.235(1)(a) (West 2006). The
plaintiff was administered a Breathalyzer test at the scene of the accident, indicating a
BAC of 0.10g/dL. Blood was later taken at the hospital. Wisconsin law did not provide a
statutory reference as to what type of blood test was required.
Similarly, in SGI/Argis, the court looked to Texas law regarding what constituted
legal intoxication such that the illegal act exclusion in the policy would apply. 15 Similar
to Wisconsin, Texas simply defined a person with an alcohol concentration of 0.1% to be
legally intoxicated, and that alcohol concentration means “the number of grams of
alcohol per 100 milliliters of blood.” SGI/Argis, 151 F.Supp.2d at 1048. The plaintiff’s
BAC, determined by a blood test ninety minutes after the crash, was .344%. The plaintiff
was not charged with or convicted of illegal activity. The court concluded the illegal act
exclusion was not ambiguous, and that the insured was engaged in an illegal act at the
time of the accident. Id. at 1049. Specifically, the court noted there was no proof
attacking the credibility or reliability of the blood test; no evidence challenging the
accuracy of the blood test; and, no evidence to suggest that the insured’s blood alcohol
level was not in excess of the legal limit at the time of the accident. Id. at 1048.
Here, applying the same logic as the courts in Tourdot and SGI/Argis, the Court
finds the illegal act exclusion in the Plan must be read in light of Idaho law. In that
15

Although the case was brought in the Eastern District of Arkansas, the accident occurred in Texas.

MEMORANDUM DECISION AND ORDER - 26

context, the Court finds the exclusion for expenses incurred “for the treatment of injuries
sustained while…engaging in an illegal act” unambiguous, because the phrase “engaging
in an illegal act” refers to acts that the Idaho legislature has deemed contrary to law.
Tourdot, 439 F.3d at 354. A conviction is not required. SGI/Argis, 151 F.Supp.2d at
1048.
But, the Court finds Blue Cross abused its discretion in concluding that LeCates,
under the facts present in the record, was ineligible for benefits under the illegal act
exclusion. The Court recognizes Idaho considers drunken driving against the law, as does
Wisconsin and Texas and every other state in the United States. But, Idaho sees fit to
regulate what type of blood test can be used to support a finding of blood alcohol
concentration greater than 0.08. Illegal intoxication is defined as a blood alcohol
concentration of .08 grams of alcohol per 100 centimeters of whole blood. Further, the
sample must contain at least 10 milligrams of sodium fluoride per cubic centimeter of
blood plus an appropriate anticoagulant. And finally, an approved laboratory must test the
blood.
The blood test conducted on LeCates does not meet the definition of unlawful
activity defined by Idaho law, and therefore does not fall within the definition of illegal
intoxication for the purposes of driving under the influence. Importantly, in neither
Tourdot, SGI/Argis, nor any of the other cases upon which Blue Cross relies in
interpreting similar illegal act exclusions in the context of driving while intoxicated, do
state legislatures require a specific type of blood test. Idaho, however, has chosen to

MEMORANDUM DECISION AND ORDER - 27

precisely define what constitutes a blood alcohol concentration of .08 or more, and
requires the blood test to be taken on whole blood, not serum blood.
The denial letter specifically stated Blue Cross relied upon the blood test results
from the blood taken at the hospital as support for its conclusion LeCates was over the
legal limit for blood alcohol concentration, or intoxicated, at the time of the accident. But,
the blood serum test result does not meet the legal requirement to support a conclusion of
illegal intoxication under Idaho law. Nonetheless, Blue Cross made its determination
without any other support in the record. The facts and evidence relied upon by Blue Cross
here do not adequately support the inference made by Blue Cross that LeCates was
engaged in an illegal act—i.e. driving while intoxicated as defined by Idaho law. 16
Unlike in SGI/Argis, LeCates was not three times over the legal limit such that an
inference could be made based upon a serum blood test that LeCates met the legal
requirement for a finding of intoxication under Idaho law. In fact, there is no evidence
Blue Cross noted the difference, or was even aware of the difference, between test results
using whole, versus serum, blood. Nor was a second, independent test, such as a
breathalyzer, administered to confirm the blood test results like in Tourdot.
There is no evidence Blue Cross considered the facts and circumstances of the
accident, which would have been contained in the police report. Blue Cross never

16

Despite the Court’s findings here, the Court is not implying that a serum blood test could never be used to support
a determination that an insured was over the legal limit for alcohol. Both parties attempted to submit information
about the difference between a blood alcohol test using serum, versus whole, blood, either by expert testimony
submitted by affidavit, or case law. (see Dkt. 19, 20, 29.) Yet, Blue Cross’s investigation, and its denial letter, makes
no mention of the difference. Nor did Blue Cross consider a conversion factor, or rely upon its own medical expert
to make a determination that the serum blood test could be considered equivalent to a whole blood test based upon
the facts under consideration.

MEMORANDUM DECISION AND ORDER - 28

requested a copy of the report. 17 Yet, even the plan administrator in Sisters, faced with an
insured with more than twice the lawful level of alcohol in his blood, had before it its
insured’s plea of guilty to driving under the influence. Sisters, 901 F.2d at 1372 (noting
that the plaintiff pleaded guilty and had a blood alcohol level of .211). Similarly, the plan
administrator in Folks requested a copy of the police report, the contact information of
the investigating officer, and court pleadings, all of which unequivocally indicated Mr.
Folks was intoxicated. Folks, 1999 WL 16326 at *1. Additionally, Mr. Folks plead guilty
to a criminal complaint, which specifically charged him with having a blood alcohol
content of .13. Id. at n.1.
The facts in the administrative record here, considered as a whole, do not support
Blue Cross’s factual determination that LeCates was engaged in an illegal act. Other than
the test results of one aspect of the routine metabolic panel administered in the
emergency room, there is no other evidence in the record to support Blue Cross’s
determination LeCates was driving while intoxicated. 18 None of the physicians’ notes
mentioned LeCates smelled of alcohol or was incoherent due to intoxication at the time
of admission. To the contrary, the physical exam notes indicate LeCates was able to
answer the physician’s questions, described his primary complaint as a right sided
headache and pain, denied suffering from chest pain, denied neck pain, and he was “very

17

The police report is not in the record, but it was alluded to by Plaintiff’s counsel in Plaintiff’s memorandum in
support of his motion for summary judgment. (Dkt. 23-1 at 3) (“[A]bsent from the record are facts that the first
officer to the scene believed alcohol was a factor in the accident….Instead, the record is clear where the officer’s
report stated affirmatively that alcohol was not a factor in the accident and Plaintiff was only issued a traffic citation
for failure to maintain a lane.”). The report is not in the record, and assertions and representations by counsel
contained within the brief do not satisfy Fed. R. Civ. P. 56(c).
18
That LeCates had been drinking is undisputed. But, for Blue Cross to deny benefits under the illegal act exclusion,
there must be more evidence of the nature discussed herein.

MEMORANDUM DECISION AND ORDER - 29

alert, oriented x3 and could provide a history.” (Dkt. 16-4 at 4-5.) Additional medical
notes indicated: “this is an awake male…oriented to person and place. Speech is
appropriate.” (Dkt. 16-4 at 7.) Under the facts, it appears Blue Cross ignored evidence in
LeCates’s favor, and inconsistent with engaging in an “illegal act” under Idaho law.
When it comes to driving under the influence as defined under Idaho law, “illegal”
must be proven by evidence beyond a reasonable doubt. While the Court does not
necessarily find that such an evidentiary standard applies to Blue Cross, the sole piece of
evidence or fact relied upon here is not even indisputable. Yet, Blue Cross ascribes
“illegal” to the circumstances under which LeCates was driving his motorcycle without
any definitive facts or evidence that would comport with Idaho law, or with the types of
other, corroborating evidence considered by the plan administrators in Sisters, Folks,
Tourdot, and SGI/Argis. In other words, Blue Cross must have more before it ascribes the
moniker “illegal” to its insured’s conduct and denies benefits on that basis. 19
In this respect, it is worth noting that Blue Cross appears not to have followed its
own review process. The review process indicates that, after receipt of the written appeal,
“all facts, including those originally used in making the initial decision and any additional
information that is sent or that is otherwise relevant, will be reviewed….” (emphasis
added.) Yet Blue Cross failed to request the police report, which undoubtedly would have
been relevant. Instead, Blue Cross seized solely upon the serum blood test performed as a
19

At the hearing, Blue Cross attempted to change course and argued it could have denied LeCates’s claim under the
illegal act exclusion on the grounds LeCates was speeding at 70 miles per hour at the time of the accident. However,
the administrative record consists of what the insurer had when it denied the claim. Blue Cross had no evidence
LeCates was speeding---it did not have evidence of the applicable speed limit or any traffic citation charging
LeCates with traveling at excessive speed. Further, the denial letter made no mention of LeCates’s speeding. Blue
Cross’s additional arguments therefore have not been considered.

MEMORANDUM DECISION AND ORDER - 30

matter of course upon LeCates’s admission to the emergency room. Even in other cases
where the insured was clearly intoxicated, the plan administrator requested outside
information, such as court pleadings and police reports. 20
The evidence Blue Cross had before it is not the type of substantial, reliable
evidence indicating LeCates was engaged in an illegal act under Idaho law at the time he
suffered his injuries. Instead, the evidence in the administrative record here is in contrast
to the overwhelmingly strong evidence of illegal intoxication in Tourdot and SGI/Argis,
as well as in the other cases cited by Blue Cross. Accordingly, the Court finds Blue
Cross’s determination does not rest upon sufficient facts to support the inference it made,
and therefore constitutes an abuse of discretion. Based upon the evidence of record as a
whole, the Court is left with the firm conviction that a mistake was committed in this
case.

20

Perhaps that information could have been reviewed had Blue Cross made it clear that, under a second level appeal,
such evidence would be requested and considered. In other words, had Blue Cross’s appeals process been more
understandable and less ambiguous, as discussed herein, LeCates would have been asked to submit additional
information, such as the police report.

MEMORANDUM DECISION AND ORDER - 31

CONCLUSION
Having considered all of the circumstances of this case and the evidence in the
administrative record, the Court concludes Blue Cross abused its discretion in denying
LeCates’s claim for medical benefits. Blue Cross’s denial of benefits relied solely upon a
blood test administered at the hospital which would not have supported a finding of
illegal intoxication absent other, more compelling indicators of LeCates’s level of
intoxication at the time of the accident. Further, Blue Cross failed to obtain a copy of the
police report, and did not consider other evidence in the record in LeCates’s favor, which
included the physicians’ reports of LeCates’s demeanor upon admission to the hospital.
The appropriate remedy is for the Plan to provide LeCates with medical benefits.

MEMORANDUM DECISION AND ORDER - 32

ORDER
NOW THEREFORE IT IS HEREBY ORDERED:
1)

Defendant’s Motion for Summary Judgment (Dkt. 16) is DENIED.

2)

Defendant’s Motion to Strike Affidavits (Dkt. 22) is GRANTED.

3)

Plaintiff’s Motion for Summary Judgment (Dkt. 23) is GRANTED.

4)

The parties are to meet and confer, and submit a proposed judgment
consistent with the Court’s Order by September 23, 2016.

DATED: September 16, 2016

_________________________
Honorable Candy W. Dale
United States Magistrate Judge

MEMORANDUM DECISION AND ORDER - 33