Brunelle v. Mid-America Associates, Inc. et al
OPINION and ORDER Granting in Part and Denying in Part without Prejudice Plaintiff's 19 Motion for Judgment on the Administrative Record and Denying without Prejudice Defendants' 21 Motion for Judgment on the Administrative Record. Signed by District Judge Judith E. Levy. (SBur)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
Mid-America Associates, Inc., and
Liberty Union Life Assurance
Case No. 16-cv-13446
Judith E. Levy
United States District Judge
Mag. Judge Elizabeth A. Stafford
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART WITHOUT PREJUDICE PLAINTIFF’S MOTION FOR
JUDGMENT ON THE ADMINISTRATIVE RECORD  AND
DENYING WITHOUT PREJUDICE DEFENDANTS’ MOTION
FOR JUDGMENT ON THE ADMINISTRATIVE RECORD 
This case involves plaintiff Dale Brunelle’s claim for benefits
allegedly owed to him by defendants, pursuant to the terms of his ERISA
benefit plan. Plaintiff and defendants have filed motions for judgment
on the administrative record. (Dkts. 19, 21.)
For the reasons set forth below, plaintiff’s motion is granted in part
and denied in part without prejudice, and defendants’ motion is denied
Plaintiff Dale Brunelle is an employee of Smith Construction
Company, and is enrolled in an employee welfare benefit plan governed
by ERISA, 29 U.S.C. § 1002 et seq. The plan went into effect on June 1,
2014. (Dkt. 15 at 372.) Defendants are insurance companies that “serve
as the benefit administrators and ERISA ‘fiduciaries’ of the medical
portion of [the] Smith Construction employee welfare benefit plan.” (Dkt.
19 at 11; Dkt. 15 at 373 (“The Administrator for the Plan is Mid-America
Associates and Liberty Union Life Assurance Company”).)
The events giving rise to plaintiff’s claim began on or about May 27,
2014, when plaintiff began bleeding uncontrollably from his nose. He
went to the emergency room at Marquette General Hospital on May 31,
2014, where doctors cauterized his nose to stop the bleeding.
treatment was unsuccessful, so plaintiff returned to the emergency room
the following day.
Brunelle was then referred to Superior ENT for treatment. On
June 3, 2014, he was treated at Superior ENT, but the bleeding did not
cease. He returned on June 4, and the doctors attempted a different
treatment with an inflatable balloon, instructing him to return in three
days. However, the new treatment caused plaintiff to begin bleeding
from his eye sockets, so he sought treatment again on June 5, at which
point the physician recommended surgery.
Plaintiff underwent surgery on June 6, 2014.
continued despite the procedure, and on June 11, 2014, plaintiff was
admitted to Marquette General Hospital.
Plaintiff’s treating physician, Dr. Manish Kesliker, consulted with
a hematologist on staff, and determined that plaintiff should be
transferred to another hospital for diagnosis and treatment. (Dkt. 15 at
62.) Dr. Kesliker’s records from June 12, 2014 show that the hematology
department concluded that plaintiff “could not be treated at [Marquette
General] as most of the labs . . . would need to be send-out [sic] labs and
it would take several days to get the results,” which would cause plaintiff
to “be here unneededly.” (Id. at 62–63.) Thus, hematology recommended
plaintiff be transferred, and Dr. Kesliker then contacted the University
of Michigan, which agreed to accept him as a patient.
(Id. at 63.)
Plaintiff’s treating physician also recommended that he be transferred by
air ambulance, instead of ground ambulance.
According to one transfer form, the benefits of the transfer were
“availability of specialized services, facilities, diagnostic equipment,
[and] personnel.” (Dkt. 15 at 67.) Further, the prehospital care report
states that plaintiff needed to be transported “for clotting factor surgery
not available at Marquette General.” (Dkt. 15-1 at 73.) A December 23,
2014 letter from Dr. Kesliker also states that the University of Michigan
was recommended because Marquette General “did not have the
capabilities to get the bleeding to stop,” and the University of Michigan
was “the closest facility to handle this coagulation problem.” (Dkt. 15 at
Records from June 12, 2014 also indicate that Dr. Kesliker believed
air transport should be used to avoid the risks of “traffic and inclement
weather.” (Id.) The December 23, 2014 letter further explains that air
ambulance was used because plaintiff “has a rising INR, hemoglobin had
dropped nearly 2 grams in 18 hours after receiving multiple units of fresh
frozen plasma, and an ambulance ride would take in excess of greater
than 8 hours,” which “increased his risk uneedingly [sic].” (Dkt. 15 at
56.) More specifically, plaintiff’s symptoms indicated that the “risk of
spontaneous bleeding was great,” and he “was at increased risk for severe
anemia, acute MI, flash pulmonary edema, and even death.” (Id.)
After plaintiff was transferred to the University of Michigan
hospital, he was diagnosed with a rare blood disorder, and successfully
treated. On or about November 3, 2014, he filed a claim for medical
benefits. On November 21, 2014, defendants agreed to pay the claim,
except the $57,950 bill for the air ambulance. (Dkt. 15-1 at 53–54.)
In defendants’ first notice of adverse benefits determination, dated
July 20, 2015, the claim for the air ambulance was denied as not
medically necessary. Defendants cited the findings of an independent
physician reviewer to support the determination. (Dkt. 15-1 at 53–57.)
The reviewer, obtained through the Medical Review Institute of America,
Inc., was asked if there was “a specific lab test . . . that could only be
provided by the University of Michigan hospital,” and if the “medical
records submitted meet plan definition of medical necessity for the air
ambulance transfer.” (Id. at 56; Dkt. 15-1 at 78.) The reviewer answered
both questions in the negative, stating that medical necessity had not
been established because plaintiff “was hemodynamically stable, and
there was no indication that ground transport would have placed the
patient’s health in jeopardy.” Further, (1) “[h]is bleeding was controlled”;
(2) “[t]here were no weather considerations that would have been a
contraindication for ground transport”; and (3) “Ann Arbor, MI was not
the closest appropriate facility to treat his condition.” (Id. at 78–79.)
On September 25, 2015, defendants issued a second and final
adverse benefits determination, again concluding the air ambulance was
not medically necessary. (Dkt. 15-1 at 6.) Defendants relied on the
independent physician reviewer reports obtained from the Medical
Review Institute of America, Inc. (also relied on in the first adverse
determination) and Advanced Medical Reviews.
(Id. at 9.)
reviewers were asked nearly identical questions, and gave similar
The second reviewer, obtained through Advanced Medical Reviews,
concluded that the air ambulance was not medically necessary because
“plan language allows for a transfer to the nearest facility,” which was
not the University of Michigan hospital, and therefore the transfer was
not “in accordance with the standards of good medical practice, costeffective, [or] consistent with the [plaintiff’s] diagnosis.”
(Id. at 25.)
Further, the second reviewer stated that the air ambulance was likely
“primarily for the convenience of the member and/or provider,” which was
inconsistent with the definition of medical necessity. (Id.)
Defendants also stated that they took into consideration the June
12, 2014 discharge summary and certification of transfer prepared by Dr.
Kesliker, and the patient choice letter in which plaintiff stated, “I choose
to request services from: U/M.” (Dkt. 15-1 at 8.) Specifically, defendants
concluded that these documents showed the treating physician did not
adequately consider facilities other than the University of Michigan, did
not support the need for transfer to a Level 1 trauma facility, and did not
suggest more than a transfer for convenience. (Id.)
After defendants denied the claim for the air ambulance, plaintiff
appealed the decision and defendants obtained an external review from
an independent review organization, Network Medical Review. (Dkt. 15
This review also determined the air transport was “not
medically necessary as . . . defined in the Plan” because “the nearest
facility capable of providing [appropriate care] was not utilized,” and
plaintiff “was hemodynamically stable and in no immediate danger” at
the time of transport. (Id. at 13–14.)
Following these adverse determinations, plaintiff filed this lawsuit,
arguing defendants acted arbitrarily and capriciously, and seeking past
due medical benefits totaling $57,950, an accounting, and reasonable
attorney fees and costs. (Dkt. 1.)
Both parties agree that defendants’ denial of benefits should be
reviewed under the arbitrary and capricious standard. (Dkt. 21 at 7–8;
Dkt. 19 at 23.) But plaintiff also claims that he is “arguably entitled to
de novo review” because defendants “are also insuring portions of the
benefits,” and Michigan regulations do not permit insurance contracts to
include discretionary clauses. (Dkt. 19 at 23.)
First, plaintiff appears to argue he is entitled to de novo review
because defendant has a conflict of interest. But where a benefit plan
contains a discretionary clause, as is the case here, the “conflict must be
weighed as a factor in determining whether there is an abuse of
discretion,” and itself does not warrant de novo review. Metro. Life Ins.
Co. v. Glenn, 554 U.S. 105, 111 (2008) (citing Firestone Tire & Rubber Co.
v. Bruch, 489 U.S. 101, 115 (1989)); Evans v. UnumProvident Corp., 434
F.3d 866, 876 (6th Cir. 2006).
Next, the Sixth Circuit has held that the Michigan regulations
banning discretionary clauses, MICH. ADMIN. CODE R. 500.2201-2202, are
not preempted by ERISA, at least insofar as the regulations apply to
discretionary clauses in insurance policies. Amer. Council of Life Ins. v.
Ross, 558 F.3d 600, 606–07 (6th Cir. 2009). These regulations define and
prohibit a discretionary clause as “a provision in a form that,” among
other things, “[p]rovides that the insurer’s decision to deny policy
coverage is binding upon a policyholder” or “[p]rovides that or gives rise
to a standard of review on appeal other than a de novo review.” MICH.
ADMIN. CODE R. 500.2201(c).
“Form” is defined and limited to those documents identified in
MICH. COMP. LAWS § 500.2236(1).
And “form” excludes ERISA plan
documents and summary plan descriptions.
Thus, the Michigan
regulation does not apply to this case because the discretionary clause at
issue is contained in the ERISA plan, not a policy document. Hess v.
Metro. Life Ins. Co., 91 F. Supp. 3d 895, 901 (E.D. Mich. 2015); Rose v.
Liberty Life Assurance Co. of Boston, Case No. 15-cv-28, 2016 WL
1178801, at *2–3 (W.D. Ky. Mar. 22, 2016); Markey-Shanks v. Metro. Life
Ins. Co., Case No. 12-cv-342, 2013 WL 3818838, at *6 (W.D. Mich. July
23, 2013). 1
Because plaintiffs’ arguments for the application of de novo review
are unavailing, the Court now turns to established Supreme Court
precedent on the appropriate standard of review in ERISA cases. To
determine the appropriate standard of review, a court “should be ‘guided
by principles of trust law,’” and “[w]here the plan . . . grant[s] ‘the
administrator or fiduciary discretionary authority to determine eligibility
for benefits,’ Firestone [Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115
(1989)], ‘trust principles make a deferential standard of review
appropriate.’” Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111 (2008)
(quoting Firestone, 489 U.S. at 111) (emphasis in original). Because the
ERISA plan in this case contains a discretionary clause, the Court will
apply the arbitrary and capricious standard of review. See Calvert v.
Moreover, as the Sixth Circuit made clear, even though Michigan is permitted “to
remove a potential conflict of interest” through its regulation, it is not the case that
the regulation “will be allowed to dictate the standard of review for all ERISA benefits
claims.” Ross, 558 F.3d at 609. For example, while courts may apply de novo review
in “lawsuits dealing with the meaning of an ERISA plan, it does not follow that they
will do so in reviewing the application of a settled term in the plan to a given benefit
request.” Id. In this case, the terms disputed by the parties are defined in the plan,
and the parties contest only whether the enforcement of those terms was improper.
Thus, even if the regulation were applicable in this case, de novo review would not be
Firstar Fin., Inc., 409 F.3d 286, 291–92 (6th Cir. 2005) (applying
arbitrary and capricious standard of review).
The arbitrary and capricious standard of review is “the least
demanding form of judicial review of administrative action,” and a
decision must be upheld “if it is the result of a deliberate principled
reasoning process, and if it is supported by substantial evidence.” Evans,
434 F.3d at 876 (internal quotations and citations omitted). But the
standard “is not . . . without some teeth,” and “[t]he obligation under
ERISA to review the administrative record . . . inherently includes some
review of the quality and quantity of the medical evidence and the
opinions on both sides of the issues.” Id.
And, as discussed above, a conflict of interest is a factor considered
in determining whether the decision was arbitrary and capricious.
Evans, 434 F.3d at 876. A “conflict of interest exists when the insurer
both decides whether the employee is eligible for benefits and pays those
benefits.” Id. Further, a conflict of interest exists when a professional
insurance company is authorized “both to decide whether an employee is
eligible for benefits and to pay those benefits.” Glenn, 554 U.S. at 114–
Plaintiff argues that defendants acted arbitrarily and capriciously
in denying the claim for the air ambulance. (Dkt. 19.) Defendants argue
that the denial was not arbitrary and capricious, but was based on
substantial evidence. (Dkt. 21.)
Terms of the ERISA Plan
Under plaintiff’s ERISA plan, “covered expenses” are defined, in
relevant part, as “services and supplies” that are “listed as a Covered
Expense in the Plan” and “Medically Necessary as defined by the Plan.”
(Dkt. 15 at 471.)
“Medically Necessary” includes “all care” that, in relevant part, is
“required for reasons other than the convenience of the health care
provider or the comfort or convenience of the patient,” and “provided in a
cost-efficient manner and type of setting appropriate for the delivery of
that service/supply.” (Dkt. 15 at 478.) And “[t]he fact that a doctor
performs or prescribes a procedure or treatment . . . does not mean that
it is medically necessary as defined.” (Id.)
Finally, included in “Covered Services” is Ambulance Service, both
“local ground or air transportation” provided that transport is “to the
nearest hospital or facility that can provide necessary care of an
Emergency Medical Condition or within 48 hours of an injury requiring
immediate emergency care.” (Dkt. 15 at 388.) The transport must also
be “medically necessary.” (Id.) Expressly excluded from coverage is
“Non-emergency ambulance transportation including those for the
convenience of the patient.” (Id.)
Plaintiff argues defendants’ determinations to deny benefits were
arbitrary and capricious, and not supported by substantial evidence.
Defendants argue the contrary.
As described above, defendants relied on the reports of the
independent medical reviewers in denying plaintiff’s claim, plaintiff’s
medical records, and certification of transfer prepared by the treating
physician. But for the reasons set forth below, the independent medical
reviews and defendants’ determinations failed to address or adequately
explain several significant pieces of evidence in the record.
First, the medical records and transfer form prepared by the
treating physician include evidence favorable to both plaintiff and
For example, the record shows that plaintiff may have
needed surgery services not available at Marquette General Hospital, not
just certain lab tests, and the December 23, 2014 letter indicates that
Marquette General Hospital was incapable of diagnosing or treating the
disease and that ground transport could pose serious risks to plaintiff’s
health. Further, plaintiff’s treating physician wrote in the December 23,
2014 letter that the University of Michigan hospital was “the closest
facility to handle this coagulation problem.” (Dkt. 15 at 56.) Nowhere is
any of the evidence favorable to plaintiff addressed by the independent
medical reviewers or defendants.
The adverse determinations may indicate that defendants found
the evidence favorable to plaintiff, such as the December 23, 2014 letter,
unreliable. But defendants must give reasons for why they found them
unreliable, and failed to do so here. And although a “treating physician
does not have to be afforded special deference by an ERISA plan
administrator . . . , neither can [the administrator] arbitrarily refuse to
credit a claimant’s reliable evidence, including the opinions of a treating
physician.” Smith v. Continental Cas. Co., 450 F.3d 253, 262 (6th Cir.
2006) (quoting Black & Decker Disability Plan v. Nord, 538 U.S. 822, 834
(2003)). Thus, defendants’ failure to give reasons for why they rejected
the favorable evidence constitutes “[a]n example of arbitrary and
capricious behavior,” in which a plan administrator “gave greater weight
to a non-treating physician’s opinion [over a treating physician’s opinion]
for no apparent reason.” Goetz v. Greater Ga. Life Ins. Co., 649 F. Supp.
2d 802, 813 (E.D. Tenn. 2009) (quoting Elliott v. Metro. Life Ins. Co., 473
F.3d 613, 620 (6th Cir. 2006)); see also Helfman v. GE Grp. Life Assurance
Co., 573 F.3d 383, 394 (6th Cir. 2009).
Defendants’ error is further compounded by the fact that the
independent medical reviewers were never asked to consider more than
whether plaintiff needed specific lab tests available only at the
University of Michigan hospital and whether the claim satisfied the
definition of “medically necessary.” Thus, the reviewers were arbitrarily
limited in their review of plaintiff’s needs, given that the records indicate
plaintiff may have needed surgery services available only at the
University of Michigan hospital and that it was the closest facility to
treat his coagulation problems.
The reports from the independent medical reviewers are also
insufficient. In particular, their responses to the issue of “medically
necessary” are only five or six sentences, and “the reasoning . . . is
underdeveloped and therefore unclear.” Bailey v. United of Omaha Life
Ins. Co., 938 F. Supp. 2d 736, 748 (W.D. Tenn. 2013). For example, the
reviewer from the Medical Review Institute of America, Inc. did not
explain why the University of Michigan hospital “was not the closest
appropriate facility.” (Dkt. 15-1 at 78.)
Similarly, the Advanced Medical Review report stated that “[t]he
plan language allows for a transfer to the nearest facility that can provide
care as needed,” and concluded the transfer to the University of Michigan
hospital was therefore not cost-effective or consistent with the standards
of good medical practice. (Dkt. 15-1 at 25.) No additional explanation is
Taking all of the above evidence into consideration, defendants
failed to adequately consider and explain the conflicting evidence in the
record. Accordingly, the adverse determinations are not the result of a
deliberate principled reasoning process, and defendants acted arbitrarily
and capriciously in denying plaintiff’s claim. And given the amount of
evidence potentially favorable to plaintiff, defendants’ decision is not
supported by substantial evidence.
Conflict of Interest
Plaintiff argues defendants have a financial conflict of interest,
citing Glenn, 554 U.S. 105, arguing (1) that the “Plan is partially-insured
and is underwritten for excess loss insurance coverage,” and (2) the
internal emails allegedly showing defendants were predisposed not to
pay the claim. (Dkt. 19 at 24–25.)
First, as defendants points out, excess loss insurance coverage is
not relevant to the case at hand. The question is whether defendants
arbitrarily and capriciously determined plaintiff’s air ambulance did not
qualify as a “covered expense” because it was not “medically necessary.”
That said, the conflict of interest identified by the Supreme Court
in Glenn may be present here because defendants make eligibility
determinations and pay out claims. See Glenn, 554 U.S. at 110, 114–15;
Elliott, 473 F.3d at 621. For example, the emails cited by plaintiff include
some evidence to suggest defendants did not want to pay such a large
(See Dkt. 15-1 at 400 (“This bill would be outrageous with
advanced life support . . . none of which this patient required”); 15-1 at
404 (in response to whether the Plan intended to include air ambulance
under the circumstances, “Oh heck no. This air bill $57,950 is almost
twice that of the 4 day U/M hospital stay $22,878!”).)
discussed in detail above, defendants’ conduct in rendering adverse
benefit determinations “consisted of selective deference to opinions and
medical evidence regarding [plaintiff’s] eligibility,” which “renders the
conflict of interest significant.”
Zenadocchio v. BAE Sys. Unfunded
Welfare Ben. Plan, 936 F. Supp. 2d 868, 886 (S.D. Ohio 2013) (citing
Kalish v. Liberty Mut./Liberty Life Assurance Co., 419 F.3d 501 (6th Cir.
And the questions put to the independent reviewers were
improperly narrow given the medical evidence indicating that Marquette
General Hospital was unable to diagnose or treat plaintiff’s condition.
Taken together, this evidence suggests a conflict of interest
influenced the administrative process, especially the questions submitted
to the independent reviewers, and therefore “raise[s] questions about the
thoroughness and accuracy of the benefits determination.” Johnson v.
Conn. Gen. Life Ins. Co., 324 F. App’x 459, 468 n.8 (6th Cir. 2009).
However, the Court need not make a finding on this issue, but if it were
pressed to do so, this factor would likely weigh in favor of plaintiff in this
As set forth above, defendants acted arbitrarily and capriciously
when determining whether to deny plaintiff’s claim for benefits.
Because defendants failed to make sufficient factual findings and it
is unclear from the record whether the claim should be granted, it is
ORDERED that the case shall be remanded for further consideration.
Javery v. Lucent Techs., Inc. Long Term Disability Plan for Mgmt. or LBA
Emps., 741 F.3d 686, 699–700 (6th Cir. 2014) (citing Williams v. Int’l
Paper Co., 227 F.3d 706, 715 (6th Cir. 2000)).
Accordingly, plaintiff’s motion for judgment on the administrative
record (Dkt. 19) is GRANTED IN PART and DENIED IN PART
Defendants’ motion for judgment on the administrative record (Dkt.
21) is DENIED WITHOUT PREJUDICE.
IT IS SO ORDERED.
Dated: August 21, 2017
Ann Arbor, Michigan
s/Judith E. Levy
JUDITH E. LEVY
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on August 21, 2017.
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