Suter v. The Carpenter Health and Welfare Trust Fund of St. Louis
OPINION AND MEMORANDUM IT IS HEREBY ORDERED that the decision of the defendant is reversed and this matter is remanded with instructions to reopen the administrative record and allow plaintiffs an out-of-time appeal. IT IS FURTHER ORDERED that Count I of defendant's Counterclaim is dismissed without prejudice. Signed by Magistrate Judge Frederick R. Buckles on 9/28/2012. (NCL)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
MICHAEL SUTER, et al.,
THE CARPENTERS’ HEALTH AND
WELFARE TRUST FUND OF
Case No. 4:10CV1855 FRB
OPINION AND MEMORANDUM
This matter is before the Court for decision following a
trial before the Court without a jury.
All matters, including all
pretrial matters, trial, entry of final judgment, and determination
of all post-trial matters, are pending before the undersigned
Magistrate Judge, with consent of the parties,
pursuant to 28 U.S.C. § 636(c).
Plaintiffs Michael Suter and Candice Suter brought this
action in the Associate Division of the 21st Judicial Circuit
Court, St. Louis County, Missouri, alleging that The Carpenters’
Health And Welfare Trust Fund Of St. Louis (also “defendant” or
“Fund”) wrongfully denied health care benefits.
On October 1,
2010, defendant removed the matter to this Court, alleging that
this Court has jurisdiction over plaintiffs’ claims inasmuch as
they arise under the civil enforcement provision of the Employee
Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132(a)(3).
On October 8, 2010, defendant filed an Answer and a two-count
individuals under the Plan.
Count II of the Counterclaim was
dismissed by this Court on June 17, 2011.
In Count I of the
counterclaim, defendant seeks a declaration that, if the plaintiffs
receive money from a third party based on an act or omission that
plaintiffs will hold such money as trustees of the Settlement Trust
for the benefit of the Fund.
The parties do not dispute that The
Carpenters’ Health and Welfare Plan (“Plan”) is an employee benefit
plan governed by ERISA.
Michael Suter is an employee participant
in the Plan, and his wife Candice Suter and their children, A.S.
and G.S., are eligible dependents.
Michael Suter and Candice Suter filed individual motions
for summary judgment on Count I of defendant’s Counterclaim.
November 3, 2011, this Court granted Candice Suter’s motion for
summary judgment, but denied Michael Suter’s motion for summary
On December 5, 2011, a non-jury trial was held before the
Candice Suter testified for the plaintiffs, and Fund
employee Carolyn Perez, Benefits Plans Assistant Administrator,
testified for defendant.
Michael Suter neither
Each party has submitted a post-trial brief,
to which responses have been filed.
The matter is now ripe for
adjudication. Pursuant to Rule 52(a) of the Federal Rules of Civil
Procedure, from the testimony and evidence adduced at trial, the
undersigned makes the following findings of fact and conclusions of
FINDINGS OF FACT
The Plan is a multi-employer, jointly trusteed, employee
bargaining agreement between the union representing carpenters
The Fund is a trust established to receive employer
contributions made pursuant to a collective bargaining agreement
and to hold those funds in trust for the exclusive purpose of
providing medical benefit payments to or for covered individuals
under the terms of the Plan Document, and is managed, administered
and directed by its trustees.
The Plan and the Fund were, at all times relevant to this
promulgated by the Department of Labor.
discretionary authority to interpret the Plan terms.
Plaintiff Michael Suter is a union carpenter and member
of Local Union 097.
At all times relevant to this litigation, plaintiff
Michael Suter had worked sufficient hours in covered employment to
meet the “hours requirement” for eligibility under the Plan.
At all times relevant to this litigation, plaintiff
Candice Suter, as the wife of Michael Suter, and G.S. and A.S., as
the children of Michael Suter, were eligible for coverage under the
Plan as dependents of plaintiff Michael Suter.
The Plan Document and Summary Plan Description provided
that the Plan was not obligated to pay benefits to a covered person
potential third party liability claim.
The Plan includes an exception to that provision: if the
covered person complies with the terms of the Plan’s Subrogation
Reimbursement document, assigning the proceeds of any third party
recovery, without any deduction whatsoever, from any third party up
to the amount paid to or on behalf of the covered person in
connection with the injury or incident, then the Plan will pay
benefits to the covered person for services related to an injury or
sickness related to a potential third party liability claim.
Michael Suter was involved in a motor vehicle accident in
April of 2004.
Following that accident, Michael Suter sought medical
treatment and incurred medical bills.
The medical treatment providers submitted claims for
their services to the Fund.
Based upon the diagnostic codes used by the providers in
those claims to describe the services rendered to Michael Suter as
a result of the accident, the Fund denied the claims.
The Fund sent Michael Suter Explanation of Benefits
(“EOB”) forms advising of the denials and offering various reasons
therefor. Some of the EOBs specified “Reason Code” D04 (“Diagnosis
consistant [sic] with an injury - please submit accident detail
(Id. at 025).
Michael Suter signed the Agreement on January 3,
2005, and Debra Suter signed it on December 28, 2004.
On January 4, 2005, Fund employees Lesa Davis and Sharon
Friedrich of the Claims Department communicated by email.
Davis advised that Michael Suter’s Subrogation Agreement had been
received, and instructed Ms. Friedrich to process any claims which
had previously been denied, reversed or “pended.” (Defendant’s
Candice Suter testified that Michael Suter’s 2004 motor
vehicle accident led to a civil lawsuit which she believes was
Candice Suter testified that no money was paid to her in
settlement, but that she believes there was money paid to Michael
The Plan’s Summary Plan Description contains a Right of
Offset and Recovery (also “ROR”) provision which provided that the
Fund had the right to recover any amounts that were erroneously
paid or overpaid by offsetting such amounts by reducing future
benefits due to either the person on whose behalf the payments were
made, or any member of that person’s family also covered under the
In April of 2009, a telephone conversation occurred
between Attorney Gregory Fenlon and Fund employee Vicky Caravia.
(Defendant’s Exhibit S). During that conversation, Gregory Fenlon
advised that Michael Suter’s April 27, 2004 motor vehicle accident
case had been turned over to him and was close to settling, and
requested the Fund’s total lien amount.
Gregory Fenlon further
advised Vicky Caravia that Michael Suter’s injuries related to the
motor vehicle accident were head and knee, and stated that Michael
Suter’s ending date of treatment was December 31, 2005.
Vicky Caravia indicated that Michael Suter had knee
surgery on March 1, 2006, and that she was therefore including that
claim in the total lien amount.
Vicky Caravia wrote to Gregory Fenlon on April 7, 2009
notifying him of the total lien amount, stated that reimbursement
was expected 30 days following settlement, and attached a report of
subrogation-related claims indicating which of Michael Suter’s
claims the Fund had deemed related to the motor vehicle accident.
The amount of the claims defendant deemed related to the accident
On June 25, 2009, Carolyn Perez wrote a letter to Michael
Suter advising him that the Plan had elected to enforce its rights
of offset and recovery to satisfy a subrogation lien in the amount
of $3,364.23, and that, “[e]ffective August 1, 2009, the Plan will
offset all payable charges to satisfy your Subrogation Lien amount
You will be responsible for all charges incurred
until the lien is paid in full.”
(Defendant’s Exhibit U).
The June 25, 2009 letter stated that Michael Suter could
contact Ms. Perez with any questions or comments, but the letter
contained no information regarding appeal rights.
Carolyn Perez testified that she sent the June 25, 2009
letter to Michael Suter because she believed that Michael Suter was
not going to comply with the terms of the Subrogation Agreement.
communications via telephone and letters that occurred earlier.
When Carolyn Perez wrote the June 25, 2009 letter, she
was aware that there was a dispute between Michael Suter and the
Fund as to whether all of the claims applied to the lien were
actually related to Michael Suter’s motor vehicle accident.
testified that she did not hear from
Michael Suter regarding the June 25, 2009 letter.
Carolyn Perez testified that the Fund got a late start in
implementing the ROR, and on September 15, 2009, the Fund sent an
additional letter to Michael Suter stating that “due to lack of
response to our previous letters” the Plan had decided to enforce
the ROR provision to satisfy the Subrogation Lien in the amount of
The letter stated “[e]ffective immediately the Plan
will offset all payable charges to satisfy your Subrogation Lien in
the amount of $3,364.23.
Please note the Right Off Set and
responsible for all charges incurred until the lien is paid in
(Defendant’s Exhibit V-2).
The September 15, 2009 letter stated that Michael Suter
could contact Ms. Perez with any questions or comments, but the
letter contained no information regarding appeal rights.
Commencing in September of 2009 and ending by October of
2010, the Plan did not pay approximately 57 claims filed in
conjunction with care received by either Michael Suter, Candice
Suter, G.S., or A.S.
By October of 2010, the Fund had recovered the full
amount of the Subrogation Lien.
One of the denied bills related to services rendered to
Michael Suter on March 1, 2010 by a dentist named Dr. John W.
Probst in the amount of $52.00.
The remainder of the denied bills related to services
rendered to either Candice Suter, G.S. or A.S.
For each denial, the Fund sent a written notice addressed
to Michael Suter at the address he shares with Candice Suter, G.S.,
Each written notice was in the form of an EOB, which is
a preprinted form filled in with the relevant information.
relevant information included the name of the patient, the service
provider’s name, the claim number, the claim status, the paid date,
the date of service and description of the service received, the
charges incurred, and the amounts not covered.
The EOBs also
included a section called “Reason Code” and a key purporting to
describe the reason codes provided.
The Fund’s policy was to send denial notices only to the
member rather than to the person whose claim had been denied.
Candice Suter testified that Michael Suter would not
necessarily share such notices with her.
Candice Suter had primary medical coverage through her
employment as of October of 2010.
The Plan sets out a procedure to be followed in instances
where a settlement is less than the total amount of a subrogation
That procedure requires the member to file an appeal
the matter to an appeals committee which determines
whether the Plan can accept a settlement that is insufficient to
satisfy the lien.
CONCLUSIONS OF LAW
Under ERISA, a plan participant may bring a civil action
to “recover benefits due to him under the terms of his plan, to
enforce his rights under the terms of the plan, or to clarify his
rights to future benefits under the terms of the plan.”
Although ERISA itself does not specify the appropriate
standard of review, the United States Supreme Court has held that
a reviewing court should use a de novo standard of review, unless
the plan grants the
administrator the 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 the plan administrator possesses such discretionary powers,
the district court reviews the administrator’s decision for abuse
Green v. Union §. Ins. Co., 646 F.3d 1042, 1050
Company, 360 F.3d 921, 924 (8th Cir. 2004); Cash v. Wal-Mart Group
Health Plan, 107 F.3d 637, 640-41 (8th Cir. 1997).
administrator’s decision must stand unless it was arbitrary and
Green, 646 F.3d at 1050.
The district court shall
“reasonable; i.e., supported by substantial evidence.”
F.3d at 924. Substantial evidence means “such relevant evidence as
Id. (citing Consolidated Edison Co. v. N.L.R.B., 305
U.S. 197, 229 (1938)).
If substantial evidence is found, the
Administrator’s decision should be upheld even if a different,
reasonable interpretation exists.
Cash, 107 F.3d at 641.
There is a dispute between the parties regarding, inter
subrogation lien were related to the accident.
plaintiffs contend that Michael Suter’s March 1, 2006 knee surgery,
which was included in the subrogation lien amount, was not related
to the accident. Indeed, the record indicates that, although Vicky
Caravia was specifically notified that Michael Suter ceased his
included his March 1, 2006 knee surgery in the total lien amount
because she had been told that Michael Suter sustained a knee
injury in the accident.
It is unclear whether this decision was
reasonable, especially because there is no indication that Vicky
Caravia investigated whether the surgery was actually related to
the accident even though she had been told that Michael Suter had
ceased his accident-related medical treatment months earlier.
The undersigned first addresses the threshold issue of
whether the plaintiffs exhausted their administrative remedies.
Before bringing suit for denial of claims under an employee benefit
plan, claimants must exhaust administrative remedies.
originates in 29 U.S.C. § 1133, which
In accordance with regulations of the secretary, every
employee benefit plan shall (1) 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, and
a reasonable opportunity to any
whose claim for benefits has been
a full and fair review by the
named fiduciary of the decision
29 U.S.C. § 1133.
beneficiaries exhaust their contractual remedies prior to bringing
suit, federal courts have universally construed § 1133 to require
Brown v. J.B. Hunt Transportation Services, Inc., 586
F.3d 1079, 1084 (8th Cir. 2009).
If a claimant fails to pursue and
requires, his claim for relief is barred.
Id. (internal citations
This judicially-created exhaustion requirement serves
information about a claim for benefits, to compile an adequate
record, and to make a reasoned decision, giving a reviewing court
Id. (quoting Back v.
“a factual predicate upon which to proceed.”
circumstances, however, such as when an ERISA-governed plan fails
to adequately provide participants with the notice and review
required by § 1133, the participants are relieved of their duty to
exhaust their administrative remedies.
Id. (internal citations
One of the purposes of § 1133 is to provide claimants
administrative review, or to appeal to the federal courts.
586 F.3d at 1086 (internal citations omitted).
“To the extent the
statute is ambiguous, § 1133’s disclosure requirements should be
construed broadly, because ERISA is remedial legislation and should
be liberally construed to effectuate Congress’s intent to protect
Id. (citing Starr v. Metro Sys., Inc., 461 F.3d
1036, 1040 (8th Cir. 2006)).
provides, inter alia, that the plan administrator shall provide a
claimant with written notice which shall set forth in a manner
calculated to be understood by the claimant:
The specific reason or reasons for the
(ii) Reference to the specific plan provisions
on which the determination is based;
A description of any additional
material or information necessary for the
information is necessary; [and]
(iv) A description of the plan’s review
procedures and the time limits applicable to
such procedures, including a statement of the
claimant’s right to bring a civil action under
section 502(a) of the Act following an adverse
benefit determination on review[.]
29 C.F.R. § 2560.503-1(g); Chorosevic v. MetLife Choices,
requirement is to provide claimants with enough information to
prepare adequately for further administrative review or an appeal
to the federal courts.”
Id. (quoting DuMond v. Centex Corp., 172
F.3d 618, 622 (8th Cir. 1999)).
“[I]f a claim is wholly or
partially denied, the plan administrator shall notify the claimant
reasonable period of time, but not later than 90 days after receipt
of the claim by the plan, unless the plan administrator determines
processing the claim.”
29 C.F.R. § 2560.503-1(f)(1).
The Regulations further provide that, in sending notice
required by ERISA, the plan administrator “shall use measures
reasonably calculated to ensure actual receipt of the material by
plan participants, beneficiaries and other specified individuals.”
29 C.F.R. § 2520.104b-1(b). These regulations “establish extensive
requirements to ensure full and fair review of benefit denials.”
Aetna Health Inc. v. Davila, 542 U.S. 200, 220 (2004).
In the case at bar, plaintiffs contend that defendant did
not act in accordance with 29 C.F.R. § 2520.104b-1 in sending the
regardless of the identity of the person whose claim for benefits
Plaintiffs also contend that the EOBs all contained
confusing and misleading information.
In response, defendant
admits that “the EOBs could have been more precise and specific,”
(Docket No. 70 at 5), but contends that all of the EOBs addressed
to Michael Suter were mailed to the address he admittedly shared
with Candice Suter, G.S. and A.S. Defendant also contends that the
EOBs clearly stated the name of the patient to whom the claim
The undersigned first addresses the June 25, 2009 and
September 15, 2009 letters from Carolyn Perez addressed to Michael
These letters qualify as denial notices for purposes of
benefits, the June 25, 2009 letter clearly expressed the Plan’s
intention to deny Michael Suter future benefits to satisfy the
Fund’s lien of $3,364.23, and the September 15, 2009 letter clearly
expressed the Plan’s intention to deny the future benefits of
Michael Suter and all of his family members to satisfy the Fund’s
lien of $3,364.23.
These are clear repudiations of benefits.
Eighth Circuit has held that a before-the-fact repudiation of
benefits qualifies as a denial notice.
Union Pacific R. Co. v.
Beckham, 138 F.3d 325, 330 (8th Cir. 1998); Janssen v. Minneapolis
Auto Dealers Ben. Fund, 447 F.3d 1109, 1114-15 (8th Cir. 2006)
The letters therefore should have included notice
of a method and reasonable opportunity for full and fair review.
29 U.S.C. § 1133; 29 C.F.R. § 2560.503-1.
However, neither letter
mentioned the right to appeal, nor explained the proper appeals
The undersigned therefore determines that, while the
letters qualify as denial letters for purposes of ERISA, neither
letter satisfies the requirements of 29 U.S.C. § 1133 and 29 C.F.R.
Janssen, 447 F.3d at 1115 (In order to comply with
ERISA, an initial denial letter must include an explanation of the
The record also contains written notices regarding 57
individual claims that were applied towards defendant’s subrogation
For each of these 57 claims, the Fund provided written
notice in the form of EOBs.
All of the EOBs were addressed to
Michael Suter and mailed to him at the address he shares with
Candice Suter, G.S. and A.S.
Of the 57 EOBs sent, only one related
to a claim for benefits related to care rendered to Michael Suter.
The remaining EOBs related to claims for benefits for care rendered
to either Candice Suter, G.S., or A.S.
As plaintiffs contend, the Regulations provide that, when
sending denial notices, the plan administrator shall “use measures
reasonably calculated to ensure actual receipt of the material by
plan participants, beneficiaries, and other specified individuals.”
29 C.F.R. § 2520.104b-1.
A measure “reasonably calculated to
beneficiaries, and other specified individuals” would presumably
include addressing the denial notice to the person to whom the
claim for benefits pertained.
The Regulations also specify that,
if a claim for benefits is wholly or partially denied, the plan
administrator shall notify “the claimant” of the adverse benefits
29 C.F.R. § 2560.503-1(f)(1).
With the exception
of the single dental claim by Michael Suter, the “claimant” for the
remainder of the 57 denied claims was either Candice Suter, G.S. or
A.S., and yet the notices were sent only to Michael Suter.
Scibelli v. Prudential Ins. Co. of America, 666 F.3d 32, 43 1st
Cir. 2012) (noting that sending notice to the claimant’s employer
rather than to the claimant did not procedurally comply with the
requirement of 29 C.F.R. § 2560.503-1 that the plan administrator
send adverse benefit notices to the claimant).
In addition, even
if the EOBs had been addressed to the claimant to which they
pertained, the undersigned notes that they are all undated.
(Defendant’s Exhibit X).
This leaves the undersigned unable to
reasonable period of time, but not later than 90 days after receipt
of the claim by the plan” as required by 29 C.F.R. § 2560.5031(f)(1).
The foregoing is especially troubling given Candice
Suter’s uncontroverted testimony that she never received any of the
In addition, all of the EOBs contained conflicting,
confusing, and misleading information.
Each EOB includes a “Claim
Status” section, and on each EOB the claim status is denoted, in
all-capital letters, as “PAID,” and even includes a “Paid Date”
section that indicates the date on which the claim was paid.
(Defendant’s Exhibit X). This information directly conflicted with
the remainder of the information provided on the EOBs.
On all of
the EOBs, below the section that included the claim status and the
paid date there is a grid indicating various information, including
Covered/Discount” amount, an “Allowable Amount”, the deductible,
the co-pay, a section marked “Reason Code,” the total amount paid,
responsibility. (Defendant’s Exhibit X). All of the EOBs included
calculations on this grid, and indicated a dollar amount in the
directly conflicts with the information appearing directly above
the grid indicating that the claim had been paid and the date on
which it had been paid.
While the EOBs were not required to
include a lengthy, reasoned opinion, they were required to be
29 U.S.C. § 1133(1).
While it may be that the
perspective, the claim was “paid” towards its subrogation lien, §
calculated to be understood by the participant.
plan interpretations devised for litigation cannot be used to
buttress the rationale provided at the time of the denial.
Hartford Life and Acc. Ins. Co., 414 F.3d 994, 999-1000 (8th Cir.
conceded when it stated that the EOBs “could have been more precise
and specific” (Docket No. 70 at 5), the EOBs were undated, and they
Plaintiff’s argument that the EOBs failed to comply with § 1133 is
violation of § 1133 is not an award of benefits from this Court,
administrative record and allow an out-of-time appeal.
F.3d at 1086 (collecting cases holding that the appropriate remedy
for a violation of § 1133 is to remand to the plan administrator to
contemplated by § 1133).
Remand is especially appropriate in this
case given the sparse factual record before the Court.
plaintiff Michael Suter, defendant seeks a declaration that, if he
receives money from a third party based on an act or omission that
caused injuries for which the Fund paid benefits, that he will hold
such money as trustee of the Settlement Trust for the benefit of
However, given that the decision to deny benefits should
including a re-opening of the administrative record, finding for
either party on Count I of defendant’s Counterclaim would not be
Therefore, for all of the foregoing reasons,
IT IS HEREBY ORDERED that the decision of the defendant
is reversed and this matter is remanded with instructions to reopen the administrative record and allow plaintiffs an out-of-time
Counterclaim is dismissed without prejudice.
Frederick R. Buckles
UNITED STATES MAGISTRATE JUDGE
Dated this 28th day of September, 2012.
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