HUERTH v. ANTHEM INSURANCE COMPANIES INC. et al

Filing 93

Judge Rya W. Zobel: MEMORANDUM OF DECISION entered denying 74 Motion for Judgment as a Matter of Law; granting 77 Motion for Summary Judgment. Huerth's claims against MHC are REMANDED to state court. Judgment will be entered accordingly. (Urso, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

CIVIL ACTION NO. 15-13568-RWZ

RICHARD J. HUERTH
v.
ANTHEM INSURANCE COMPANIES INC., et al.

MEMORANDUM OF DECISION
June 26, 2017

ZOBEL, S.D.J.
Plaintiff Richard J. Huerth resided at and received care at Milton Health Care,
LLC (“MHC”), a skilled nursing facility (“SNF”) in Milton, Massachusetts, from 2007 to
2016. Beginning in 2013, when Huerth’s health insurance plan switched claim
administrators to Anthem Blue Cross Blue Shield, 43 claims for services he received at
MHC were denied.
In this action, Huerth brings a claim for benefits under the Employee Retirement
Income Security Act of 1974 (“ERISA”) against the following “Plan Defendants”: Anthem
Insurance Companies, Inc., Anthem UM Services, Inc. (together, “Anthem”), and his
employer-sponsored health care plan, the Verizon Medical Expense Plan for New York
and New England Associates (the “Verizon plan”). He also brings six state law claims
against MHC. MHC moves for judgment as a case stated against Huerth. See Docket

# 69. Huerth moves for judgment as a case stated against all defendants. See Docket
# 74. The Plan Defendants move for summary judgment on the administrative record.
See Docket # 77.
I.

Background
The facts underlying this case are set forth in this court’s February 3, 2016,

Memorandum and Order on the Plan Defendants’ motion to dismiss. See
Memorandum and Order, Huerth v. Anthem Ins. Cos., No. 15-cv-13568-RWZ (D. Mass.
Feb. 3, 2016), ECF No. 47. I repeat only those facts necessary to frame the issues
here.
In 1974, Huerth suffered an injury during an accident that left him paralyzed from
the waist down. At the time, he was working for New England Telephone (now
Verizon), where he continued to work until 1997, at which point he accepted early
retirement. His early retirement package included lifetime health insurance under an
ERISA-covered and Verizon-sponsored plan. After his retirement, Huerth lived on his
own until 2005, when he moved into a SNF in Norwood, Massachusetts. On October
22, 2007, Huerth moved from that SNF to MHC.
From October 22, 2007, until December 31, 2012, Huerth’s medical expenses
from his care at MHC were paid in full by Empire Blue Cross Blue Shield (“Empire”),
which was then the claims administrator of the Verizon plan. However, on January 1,
2013, Verizon switched claims administrators from Empire to Anthem Blue Cross Blue
Shield, the trade name of Anthem Insurance Companies, Inc. Anthem UM Services,
Inc., provided “utilization management” (“UM”) review services — processes to help

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determine which services are medically necessary under a plan — for Anthem
Insurance Companies, Inc.
Between August 2013 and July 2015, Anthem denied 43 claims for services
billed by MHC. As relevant here, MHC filed first and second level appeals for claims
related to benefits provided in February, March, and May 2013. These appeals were all
ultimately denied.
On November 4, 2014, MHC filed an action against Huerth in Norfolk County
Superior Court, seeking payment for services rendered for which Anthem denied
coverage. Huerth filed a complaint against MHC and the Plan Defendants in Norfolk
Superior Court on September 14, 2015. The Plan Defendants removed this action on
October 14, 2015, and filed a Motion to Dismiss on October 23, 2015. See Docket ##
1, 14. On February 3, 2016, this court allowed in part and denied in part the Plan
Defendants’ motion, allowing only Huerth’s claim for benefits under ERISA to go
forward. See Docket # 47.
II.

Claim Against the Plan Defendants
Huerth’s remaining claim against the Plan defendants is for benefits under

ERISA § 502(a)(1)(B). See 29 U.S.C. § 1132(a)(1)(B).
A.

Standard of Review

In his initial Memorandum in Support of Motion for Judgment as a Case Stated,
Huerth states that “the parties expressed their intent to have this District Court resolve
. . . his one remaining claim against the Plan Defendants on a case-stated basis.”
Docket # 75, at 9. The Plan Defendants, however, explicitly maintain that they “did not
agree to resolve Plaintiff’s remaining ERISA claim against them on a case-stated basis”
3

and instead urge the court to decide the case as a motion for summary judgment on the
administrative record. Docket # 84, at 4. In response, Huerth asserts that “[i]t was the
understanding of counsel for Mr. Huerth that all parties agreed to proceed with resolving
this matter by means of motions for judgment as a case stated.” Docket # 89, at 4 n.3.
Nevertheless, he states that practically, “the difference between the two procedural
vehicles is negligible,” id. at 4, and that “[g]iven the nature of summary judgment
proceedings in an ERISA action, the case stated model ends up with the same result
for all intents and purposes with regard to Mr. Huerth’s claims against the Plan
Defendants,” id. at 4 n.4. Given the parties’ largely compatible positions, I resolve this
case as cross-motions for summary judgment.
“[I]n an ERISA case where review is based only on the administrative record
before the plan administrator and is an ultimate conclusion as to disability to be drawn
from the facts, summary judgment is simply a vehicle for deciding the issue. . . . This
means the non-moving party is not entitled to the usual inferences in its favor.” Orndorf
v. Paul Revere Life Ins. Co., 404 F.3d 510, 517 (1st Cir. 2005) (citations omitted); see
also Gent v. CUNA Mut. Ins. Soc'y, 611 F.3d 79, 82–83 (1st Cir. 2010).1 The level of
deference given to the administrator depends on the terms of the plan. See Gent, 611
F.3d at 83. “[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 or fiduciary
discretionary authority to determine eligibility for benefits or to construe the terms of the
plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). When a plan

1

Both Huerth and the Plan defendants agree that if the sum m ary judgm ent standard is
used, then this is the applicable standard. See Docket # 84, at 4; Docket # 89, at 4.

4

gives the administrator discretion, then the administrator’s decision is reviewed for
abuse of discretion. McDonough v. Aetna Life Ins. Co., 783 F.3d 374, 379 (1st Cir.
2015).
Here, Huerth and the Plan Defendants agree that “the express terms of the Plan
give discretionary authority to the Plan Defendants.” Docket # 83, at 11; see also
Docket # 78, at 18. Accordingly, their decision is reviewed for abuse of discretion.
McDonough, 783 F.3d at 379. “A court that undertakes abuse of discretion review in an
ERISA case must determine whether the claims administrator's decision is arbitrary and
capricious or, looked at from another angle, whether that decision is reasonable and
supported by substantial evidence on the record as a whole.” Id.
B.

Discussion

Huerth maintains that the care he received was “medically necessary” under the
Anthem UM Guideline, and he was therefore wrongfully denied coverage. The Plan
Defendants argue that for the exhausted claims, Anthem’s determinations were
reasonable and supported by substantial evidence, that Huerth did not exhaust his
administrative remedies for the remaining claims, and that even if the futility exception
applied to the unexhausted claims, the denial of these claims was not arbitrary and
capricious.
1.

Anthem’s Clinical UM Guideline

Under the Anthem Clinical UM Guideline applicable during the time Huerth’s
claims arose (CG-MED-31H), “[s]killed nursing facility (SNF) services are medically
necessary when ALL of the following criteria in Section A are met and one or more of

5

the criteria in Section B are met:” AR2 ANTHEM-0000397.
Section A:
1.

2.

3.

4.

5.

2

The individual requires skilled nursing or skilled rehabilitation
services that must be performed by, or under the supervision
of, professional or technical personnel; and
The individual requires these skilled services on a daily basis;
(note: if skilled rehabilitation services are not available on a
7-day-a-week basis, an individual whose inpatient stay is
based solely on the need for skilled rehabilitation services
would meet the “daily basis” requirement when he/she needs
and receives those services at least 5 days a week); and
As a practical matter, the daily skilled services can be provided
only on an inpatient basis in a skilled nursing facility (SNF)
setting; and
SNF services must be furnished pursuant to a physician's
orders and be reasonable and necessary for the treatment of
an individual's illness or injury (i.e., be consistent with the
nature and severity of the individual's illness or injury, his
particular medical needs and accepted standards of medical
practice[)]; and
Initial admission and subsequent stay in a SNF for skilled
nursing services or rehabilitation services must include
development, management and evaluation of a plan of care as
follows:
a.
The involvement of skilled nursing personnel is
required to meet the individual's medical needs,
promote recovery and ensure medical safety (in
terms of the individual's physical or mental
condition); and
b.
There must be a significant probability that
complications would arise without skilled
supervision of the treatment plan by a licensed
nurse; and
c.
Care plans must include realistic nursing goals
and objectives for the individual, discharge plans
and the planned interventions by the nursing
staff to meet those goals and objectives; and
d.
Updated care plans must document the outcome
of the planned interventions; and
e.
There must be daily documentation of the

“AR” refers to the Adm inistrative Record filed with this court. See Docket # 61.

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individual's progress or complications.
Section B:3
3.

...
6.

Complex medication regimen
a.
The individual must have a complex range of
new medications (including oral medications)
following a hospitalization where there is a high
probability of adverse reactions or a need for
changes in the dosage or type of medication.
b.
Documentation required to authorize initial
admission and extensions must include the
individual's unstable condition, medication
changes and continuing probability of
complications.
OR
Wound care (including decubitus/pressure ulcers)
NOTE: Skilled nursing facility placement solely for the purpose
of wound care should be rare.
All of the following criteria must be met:
a.
Wound care must be ordered by a physician;
and
b.
The individual must require extensive wound
care (e.g.,, packing, debridement or irrigation of
multiple stage II, or one or more stage III or IV
wounds); and
c.
Skilled observation and assessment of a wound
must be documented daily and should reflect
any changes in wound status to support the
medical necessity for continued observation.

Id. at 0000397–98. The Clinical Guideline also provides the following under the
heading “Not Medically Necessary”:
A skilled nursing facility (SNF) setting is considered not medically
necessary when any one of the following is present:
1.
2.

3

Services do not meet the medically necessary criteria above;
or
The individual's condition has changed such that skilled

Only the subsections relevant to this case are included.

7

3.

4.

5.
6.
7.

medical or rehabilitative care is no longer needed; or
Physical medicine therapy or rehabilitation services in which
there is not a practical improvement in the level of
functioning within a reasonable period of time; or
Services that are solely performed to preserve the present
level of function or prevent regression of functions for an
illness, injury or condition that is resolved or stable; or
The individual refuses to participate in the recommended
treatment plan; or
Care is initially or has become custodial; or
The services are provided by a family member or another
non-medical person. When a service can be safely and
effectively self-administered or performed by the average
non-medical person without the direct supervision of a
nurse, the service cannot be regarded as a skilled service.

Id. at 0000399. After this section, the Guideline provides “examples of services that do
not require the skills of a licensed nurse or rehabilitation personnel and are therefore
considered to be not medically necessary in the skilled nursing facility setting unless
there is documentation of comorbidities and complications that require individual
consideration.” Id.
In denying Huerth’s February and March 2013 claims, Anthem UM Services
wrote:
We cannot approve your request for continued stay in a Skilled Nursing
Facility. This is considered not medically necessary. Information given to us
shows that you are not making progress with your physical therapy. Other
care that you are getting can be done by people who do not have medical
training. This is not skilled care. Your care is considered custodial. We
based this decision on the health plan clinical guideline titled: Skilled Nursing
Facility Services (CG-MED-31).
AR ANTHEM 0001725. Subsequent letters from Anthem UM Services similarly cited
the Skilled Nursing Facility Services Clinical Guideline and included that Huerth’s care
“is not skilled care,” “is custodial in nature,” or is “not medically necessary.” See, e.g.,
AR ANTHEM 0001512, 0001725, 0001729, 0001732–33 0001748, 0001752–53,
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0002215.
Huerth asserts that, inter alia, the following assessments from MHC demonstrate
that he requires skilled nursing care: (1) An August 15, 2013, letter stating that “he is a
physical assist with bathing, and limited assist with grooming . . . . He requires Skilled
Nursing care for wound care, pain management, colostomy care, subrapubic [catheter],
and contractures.” AR ANTHEM 0003888; (2) A November 14, 2013, letter including
that “Huerth’s nursing notes clearly indicate daily dressing changes to the unstageable
wound in February, 2013 and May, 2013. Daily skilled nursing care by a professional
nurse was most certainly warranted to make observations of the wound for signs and
symptoms of drainage and infection. This skilled observation could not have been
performed by a lay person in another setting.” AR ANTHEM-004139; (3) A sworn
statement from a nurse practitioner, submitted to Norfolk County Probate and Family
Court in support of a petition for appointment of a conservator or other protective order
that stated “Huerth was admitted to Milton Health Care on 10/22/2007 with diagnoses of
spinal cord injury, paraplegia . . . stage IV [wound] on buttocks, anemia, depression,”
and that his “condition has not improved significantly since admission in 2007.” Plaintiff
Exhibit 22; (4) 2015 orders from Huerth’s physician which included that Huerth needed
to be assessed “for pain every shift,” checked “for bleeding & bruising every shift,” and
that Huerth’s wounds should be “measure[d] and stage[d] . . . and document[ed] in
wound book every week.” Plaintiff Exhibit 22; and (5) A letter from Huerth’s treating
physician stating that Huerth has wounds being treated twice a day and that he

9

“requires regular injury monitoring as well as lab work.” Docket # 89-1.4 Accordingly,
Huerth claims, in addition to meeting the criteria of Section A, he qualifies for SNF care
under conditions 3 (“Complex medication regimen”) and 6 (“Wound care”) of Section B.
The Plan Defendants, on the other hand, contend that the record shows that
Huerth did not meet certain necessary criteria to qualify for SNF services. They claim
that the “the medical records show that Milton’s services did not include ‘a plan of care’
consisting of ‘discharge plans,’ let alone ‘realistic nursing goals and objectives for
Plaintiff,” and so Huerth does not meet all of the criteria for Section A. Docket # 78, at
20. Further, the Plan Defendants argue that Huerth did not meet all of the necessary
criteria for either condition 3 or 6 in Section B. The Plan Defendants also maintain that
the “care concerning Plaintiff’s suprapubic catheter and self-managing colostomy . . .
are plainly custodial under the terms of Anthem’s clinical guidelines.” Id. at 21.
To be sure, Huerth makes a strong argument that he meets at least most of the
criteria for medically necessary SNF services under Sections A and B of the Clinical
Guideline. The record reveals that Huerth required and received extensive care on a
daily basis. See, e.g., AR ANTHEM-0001342–58; AR ANTHEM-0001364–1441; AR
ANTHEM-0004139–40. This care included, inter alia, suprapubic catheter care, wound
measurement and staging, and as of April 2013, “irrigat[ing] the buttock wound with
normal saline, apply[ing] polysporin powder, pack[ing] with calcium alginate and
cover[ing] with foam pro-vail 6x6 daily.” Id. at 0004140; see also id. at 0001346. To
someone unversed in Anthem’s Clinical UM Guideline, such care may sound like an

4

Huerth m aintains that “[t]his letter either is, or should be, contained in the adm inistrative
record.” Docket # 89, at 9 n.7.

10

appropriate candidate for SNF services.
However, the issue here is whether the Plan Defendants’ decision is “arbitrary
and capricious or, looked at from another angle, whether th[e] decision is reasonable
and supported by substantial evidence on the record as a whole.” McDonough, 783
F.3d at 379. Given the strict and manifold criteria in the Clinical UM Guideline, I cannot
say the Plan Defendants abused their discretion. For example, Section A includes that
“[c]are plans must include realistic nursing goals and objectives for the individual,
discharge plans and the planned interventions by the nursing staff to meet those goals
and objectives.” AR ANTHEM-0000398. Section B(6), “Wound Care,” requires that
“[s]killed observation and assessment of a wound . . . be documented daily and should
reflect any changes in wound status to support the medical necessity for continued
observation.” Id. at 0000379. And under the “Not Medically Necessary” heading, the
Guideline provides that a SNF setting is not medically necessary when “[s]ervices . . .
are solely performed to preserve the present level of function or prevent regression of
functions for an illness, injury or condition that is resolved or stable.” Id. at 0000399.
The Plan Defendants could have reasonably determined that under the Clinical UM
Guideline, Huerth’s services did not qualify for a SNF setting.
Indeed, the Anthem Guideline is structured such that someone requiring longterm care who seeks to qualify for a SNF faces a high hurdle. By its own terms, the
plan describes a SNF as “an institution . . . that mainly provides inpatient skilled
nursing and related services to individuals requiring convalescent and rehabilitative
care.” Id. at 0000397 (emphasis added). Apparently in accordance with this definition,
the Guideline includes several, specific criteria to qualify for SNF services, and the Plan
11

administrators have discretion to “[i]nterpret the Plans based on their provisions and
applicable law and make factual determinations,” id. at 0000122. Whether the Plan
Defendants’ decision was the best interpretation of this stringent Clinical Guideline, it
was not arbitrary and capricious.
2.

Conflict of Interest

Huerth claims that “the Plan Defendants suffered from a structural conflict of
interest when they denied coverage,” which undermines the reasonableness of their
decisions. Docket # 75, at 25. He initially argues that such a conflict arose because
“[t]he Anthem entities were delegated the discretion to decide . . . claims while at the
same time having to pay such claims if they were covered.” Id. Then, in his reply to the
Plan Defendants’ opposition, Huerth points to the Verizon Summary Plan Description
(“SPD”), which states that the Plan Administrator is the Chairperson of the Verizon
Employee Benefits Committee, and the Plan Sponsor is Verizon Communications, Inc.
See AR ANTHEM-0000149. He then explains that Verizon is the entity that both pays
the benefits covered under the plan and ultimately resolves disputes over claims.
Specifically the SPD provides under the heading “Plan Funding,” that “[e]xcept for
certain HMO benefits, an insurance company does not finance the Medical Plan and
the Alternate Choice Plan, nor are Plan benefits guaranteed under a contract of
insurance.” Id. at 0000152. Rather, Verizon “has the discretion to pay claims out of the
general assets of the Company, and certain benefits are currently funded through a
trust.” Id. The SPD also states that “[i]f the Verizon Benefits Center is unable to
resolve the disagreement, Verizon has formal appeal procedures in place for Employee
Retirement Income Security Act of 1974 (ERISA) covered plans.” Id. at 0000123. For
12

benefits claims, the “Verizon Claims Review Committee (VCRC) . . . has delegated its
authority to finally determine claims to the claims administrators for Benefit claims.” Id.
at 0000128. Huerth contends, “[t]his structural conflict is so obvious as to need no
further elaboration; if there is any dispute over coverage for a particular claim, the
decision reverts back to Verizon itself, the same entity that pays the benefits in
question.” Docket # 89, at 7.
“[A] conflict [of interest] exists whenever a plan administrator, whether an
employer or an insurer, is in the position of both adjudicating claims and paying
awarded benefits.” Denmark v. Liberty Life Assurance Co. of Bos., 566 F.3d 1, 7 (1st
Cir. 2009) (citing Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111–15 (2008)). When a
conflict of interest exists, “that conflict must be weighed as a ‘facto[r] in determining
whether there is an abuse of discretion.’” Firestone Tire & Rubber Co., 489 U.S. at 115
(alteration in original) (quoting Restatement (Second) of Trusts § 187, cmt. d (1959)). A
structural conflict of interest “should prove more important (perhaps of great
importance) where circumstances suggest a higher likelihood that it affected the
benefits decision . . . . It should prove less important (perhaps to the vanishing point)
where the administrator has taken active steps to reduce potential bias and to promote
accuracy, for example, by walling off claims administrators from those interested in firm
finances, or by imposing management checks that penalize inaccurate decisionmaking
irrespective of whom the inaccuracy benefits.” Glenn, 554 U.S. at 117.
Here, Huerth initially suggests that the structural conflict is within the Anthem
entities but then says it is within Verizon. In his opposition to the Plan Defendants’
motion for summary judgment, Huerth claims that “[t]he Plan Defendants are simply
13

one and the same, and the fiction of different corporate entities changes nothing in
substance.” Docket # 83, at 20. Based on his arguments and the SPD itself, it is
unclear whether a structural conflict does indeed exist, and if so, within which entity (or
entities). However, even assuming a structural conflict existed, it would not change the
outcome here. Both sides agree that Verizon sponsors the plan, and that, at least in
this case, Anthem made the benefits determination. See Docket # 84, at 6–7; Docket #
89, at 6–7. Huerth’s argument is that because “the Verizon Plan Administrator has
delegated (but not abdicated) its authority to render benefits determinations, like those
rendered in Mr. Huerth’s case, to entities such as Anthem Blue Cross Blue Shield,” no
actual “firewall between the Verizon Plan Administrator and the Anthem entities” exists.
Docket # 89, at 6–7. Whatever the merits of this argument in the theoretical sense,
under the circumstances of this case, any such conflict would not affect the conclusion
that no abuse of discretion occurred. See Glenn, 554 U.S. at 117.
3.

The Plan Defendants’ Reasoning

Finally, Huerth contends that the “Plan Defendants’ denial of coverage in the
instant matter was haphazard and insufficient under the law of this Circuit, rendering
their decision an abuse of discretion.” Docket # 75, at 25. He claims that “the Plan
Defendants simply issued pro forma denials of his claims for benefits,” which does not
constitute “a reasoned denial.” Docket # 83, at 13.
Under ERISA, “every employee benefit plan shall . . . provide adequate notice in
writing to any participant or beneficiary whose claim for benefits under the plan has
been denied, setting forth the specific reasons for such denial, written in a manner
calculated to be understood by the participant.” 29 U.S.C. § 1133(1). “Though the
14

claims administrator must give particular reasons for the denial of benefits, . . . it need
not spell out ‘the interpretive process that generated the reason for the denial.’”
Stephanie C. v. Blue Cross Blue Shield of Mass. HMO Blue, Inc., 813 F.3d 420, 426
(1st Cir. 2016) (citations omitted) (quoting Gallo v. Amoco Corp., 102 F.3d 918, 922 (7th
Cir. 1996)). Accordingly, “[t]he denial letter need not detail every bit of information in
the record; it must have enough information to render the decision to deny benefits
susceptible to judicial review.” Orndorf, 404 F.3d at 526. Further, “an ERISA benefits
determination must be a reasoned determination, and ‘[a] benefits determination cannot
be “reasoned” when the [claims] administrator sidesteps the central inquiry.’”
McDonough, 783 F.3d at 380 (alterations in original) (quoting Colby v. Union Sec. Ins.
Co. & Mgmt. Co. for Merrimack Anesthesia Assocs. Long Term Disability Plan, 705
F.3d 58, 67 (1st Cir. 2013)).
Here, Anthem's denial letters contained the reasons for denying Huerth’s
benefits. For example, in the letter denying Huerth’s claims for February and March
2013, Anthem UM wrote:
We cannot approve your request for continued stay in a Skilled Nursing
Facility. This is considered not medically necessary. Information given to
us shows that you are not making progress with your physical therapy.
Other care that you are getting can be done by people who do not have
medical training. This is not skilled care. Your care is considered
custodial. We based this decision on the health plan clinical guideline
titled: Skilled Nursing Facility Services (CG-MED-31).
AR ANTHEM-0001725. When denying the request for care after the first level appeal,
Anthem UM explained:
There is a lack of needs to be performed by a professional nurse or
therapist. Per the health plan clinical guidelines: Skilled Nursing Care and
Custodial Care, to qualify for treatment in this type of health care facility the
15

member must require each day multiple assessments of vital signs and
body systems and other skilled needs (medical care, therapies, etc. from a
licensed professional). General care and supervision is not considered a
skilled need.
Id. at 0001732–33. These letters provided sufficient information to permit review. Cf.
Stephanie C., 813 F.3d at 426. Nor did the Plan Defendants sidestep the “central
inquiry.” Rather, they evaluated Huerth's conditions, compared them to the Clinical
Guideline, and determined that the conditions did not meet all of the necessary criteria.
4.

Exhaustion

The Plan Defendants maintain that because Huerth exhausted his administrative
remedies only for his February, March, and May 2013 claims, summary judgment
should be entered in their favor for the remaining claims for failure to exhaust. Huerth
argues that pursuing administrative appeals would have been futile.
“Before a plaintiff asserts an ERISA claim . . . he first must exhaust his
administrative remedies.” Madera v. Marsh USA, Inc., 426 F.3d 56, 61 (1st Cir. 2005).
However, exhaustion is not required “in those instances where it would be futile for [a
plaintiff] to do so.” Id. at 62. “For [the futility] exception to apply, . . . those in pursuit
must show that the administrative route is futile . . . . A blanket assertion, unsupported
by any facts, is insufficient to call this exception into play.” Drinkwater v. Metro. Life Ins.
Co., 846 F.2d 821, 826 (1st Cir. 1988).
To the extent Huerth’s conditions are the same as they were during February,
March, and May 2013, then exhaustion likely was futile. However, even if his failure to
exhaust is excused, the Plan Defendants did not act arbitrarily and capriciously in
denying the non-exhausted claims for the reasons above. To the extent there was a

16

change in Huerth’s conditions that may have affected his benefits determination, then
he should have exhausted these claims. For those denials based on lack of medical
necessity, Anthem explained the reasons for its decision, with specific references to
Huerth’s condition. See, e.g., AR ANTHEM 0002676–77, 0003523, 0003561–62,
0003591–92, 0003621–22, 0003649–50, 0003673–74. Huerth offered no proof that his
conditions changed such that his eligibility for SNF would have been affected, or that if
any change occurred from his previous claims, that Anthem would not have seriously
considered his arguments had he exhausted his administrative remedies. See Madera,
426 F.3d at 63 (explaining, at the summary judgment stage, that “there [was] no proof
that it would have been futile for [plaintiff] to exhaust his administrative remedies”).5
Accordingly, Huerth’s Motion for Judgment as a Case Stated (Docket # 74)
which as explained above, is being treated as a motion for summary judgment against
the Plan Defendants, is DENIED. The Plan Defendants’ Motion for Summary Judgment
(Docket # 77) is ALLOWED.
III.

Claims Against MHC
Huerth brings six state-law claims against MHC, which at all times relevant to this

case was a Massachusetts limited liability company with a principal place of business in
Massachusetts. In the Plan Defendants’ Notice of Removal, they include that “[t]his
Court has supplemental jurisdiction over Plaintiff’s state law claims against Milton
(Counts I through VI against Milton in the Verified Complaint) pursuant to 28 U.S.C.
§ 1367 because those claims ‘form part of the same case or controversy’ as the claims

5

This court held at the m otion to dism iss phase that Huerth’s com plaint adequately
pleaded futility. See Docket # 47, at 6. However, at the sum m ary judgm ent phase, m ore than pleading is
required for failure to exhaust to be excused based on futility. See Madera, 426 F.3d at 63.

17

over which the Court has original jurisdiction.” Docket # 1, at ¶ 11. However, “[i]t is
black-letter law that a federal court has an obligation to inquire sua sponte into its own
subject matter jurisdiction.” McCulloch v. Velez, 364 F.3d 1, 5 (1st Cir. 2004).6
Under 28 U.S.C. § 1367, district courts have supplemental jurisdiction over
“claims that are so related to claims in the action within [this court’s] original jurisdiction
that they form part of the same case or controversy under Article III of the United States
Constitution. Such supplemental jurisdiction shall include claims that involve the joinder
or intervention of additional parties.” 28 U.S.C. § 1367(a). “State and federal claims
are part of the same ‘case or controversy’ for the purposes of section 1367(a) if they
‘“derive from a common nucleus of operative fact” or “are such that [they] . . . would
ordinarily be expected to [be] tr[ied] . . . in one judicial proceeding.”’” Allstate Interiors &
Exteriors, Inc. v. Stonestreet Const., LLC, 730 F.3d 67, 72 (1st Cir. 2013) (alterations in
original) (quoting Penobscot Indian Nation v. Key Bank of Me., 112 F.3d 538, 564 (1st
Cir. 1997)). “The jurisdictional question is determined from what appears on the
plaintiff's claim, without reference to any other pleadings.” Ortiz-Bonilla v. Federación
de Ajedrez de P.R., Inc., 734 F.3d 28, 34 (1st Cir. 2013).
Although Huerth’s federal claim against the Plan Defendants is certainly related
to his state law claims against MHC, I am not persuaded that “they form part of the
same case or controversy” for the purposes of supplemental jurisdiction. The claims
Huerth brings against MHC are for violation of Massachusetts General Laws chapter

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On Novem ber 12, 2015, Huerth filed a m otion to rem and to state court on the basis that
MHC “did not consent to rem oval within the statutorily required tim e period.” Docket # 27, at 1; see
Docket # 28, at 3. This m otion did not raise the issue of lack of subject m atter jurisdiction over MHC. The
m otion was denied on February 4, 2016. See Docket # 49.

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93A, conversion, negligence, breach of contract, promissory estoppel/equitable
estoppel/reasonable reliance, and abuse of process. Docket # 1-1, at 21–28. The 93A
claim is based on the process MHC used when seeking to transfer Huerth to another
facility; the conversion claim is based on MHC’s gaining control over a number of
Huerth’s Social Security Disability Insurance checks; the negligence and breach of
contract claims are based on how MHC sought benefits for Huerth’s care at MHC; the
promissory estoppel/equitable/reasonable reliance claim is based on representations
made to Huerth in connection with MHC seeking benefits for Huerth’s care; and the
abuse of process claim is based on MHC’s initiation of conservatorship and
transfer/discharge proceedings against Huerth. To be sure, at least some of these
claims arose because the Plan Defendants denied coverage for Huerth’s care at
Anthem. Nevertheless, these claims arguably derive from a distinct set of facts from
those that form Huerth’s federal claim against the Plan Defendants.
Even assuming, however, that I had the power to hear Huerth’s claims against
MHC, I would decline to do so in this situation. See Ruhrgas AG v. Marathon Oil Co.,
526 U.S. 574, 585 (1999) (“[D]istrict courts do not overstep Article III limits when they
decline jurisdiction of state-law claims on discretionary grounds without determining
whether those claims fall within their pendent jurisdiction.”). “[D]istrct courts may
decline to exercise supplemental jurisdiction over a claim” under the following
circumstances:
(1) the claim raises a novel or complex issue of State law,
(2) the claim substantially predominates over the claim or claims over which
the district court has original jurisdiction,
(3) the district court has dismissed all claims over which it has original
jurisdiction, or
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(4) in exceptional circumstances, there are other compelling reasons for
declining jurisdiction.
28 U.S.C. § 1367(c). Here, were I to retain jurisdiction, Huerth’s six claims against
MHC, which raise various questions of state law, would predominate over his single
ERISA claim against the Plan Defendants. This is particularly so given the disposition
of his one federal claim. Accordingly, given the nature and number of state law claims
here, a remand of Huerth’s claims against MHC is the more appropriate course of
action. These claims are remanded to Norfolk Superior Court for lack of subject matter
jurisdiction.
IV.

Conclusion
Huerth’s Motion for Judgment as a Case Stated against the Plan Defendants

(Docket # 74) is DENIED. The Plan Defendants’ motion for summary judgment (Docket
# 77) is ALLOWED. Huerth’s claims against MHC are REMANDED to state court.
Judgment will be entered accordingly.

June 26, 2017

/s/Rya W. Zobel

DATE

RYA W . ZOBEL
SENIOR UNITED STATES DISTRICT JUDGE

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