Malan v. Benefit Administrative Systems, LLC et al

Filing 16

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Defendant Benefit Administrative Systems' ("BAS") Motion to Set Aside Default 13 , is GRANTED.. Signed by District Judge John A. Ross on 06/20/18. (KKS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

IRENE MALAN,
Plaintiff,
vs.
BENEFIT ADMINISTRATIVE SYSTEMS,
LLC, et al.,
Defendants.

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Case No. 4:17-CV-2543-JAR

MEMORANDUM AND ORDER
This matter is before the Court on Defendant Benefit Administrative Systems’ (“BAS”)
Motion to Set Aside Default. (Doc. 13.) The motion is fully briefed and ready for disposition.
(Docs. 14, 15.) For the following reasons, the motion will be granted.
Background
This case concerns the denial of medical benefit coverage for an emergency surgery to
remove Plaintiff Irene Malan’s gallbladder. Plaintiff alleges the following in her complaint
(Doc. 1): On May 18, 2016, she was admitted to the hospital for acute gallbladder inflammation.
Two days later, her gallbladder was removed. On June 22, 2016, a little more than a month after
the surgery, Plaintiff went to the emergency room for severe abdominal pain. She was diagnosed
with sepsis related to the gallbladder surgery, treated with antibiotics, and sent home. On July
11, 2016, Plaintiff returned to the emergency room with severe abdominal pain. A CT scan
showed a peritoneal abscess and sepsis. Doctors performed emergency surgery to drain the
abscess and remove infected tissue. During the procedure, doctors also removed a previously
installed lap band system, which had become infected following the gallbladder surgery.

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Plaintiff’s benefits claim for the second surgery was denied under plan language that excluded
coverage for charges related to the “care, treatment, surgery, any drugs or supplies that are
primarily for obesity, weight reduction or dietary control.” (Doc. 1 at ¶ 19.) Plaintiff’s surgeon
wrote a letter to BAS, representing that the lap band removal was a medical necessity after it
became infected following the unrelated gallbladder removal. On this basis, Plaintiff argues that
the surgery was a result of the gallbladder surgery, not the lap band system, and that therefore
Defendants improperly denied her claim.
On October 9, 2017, Plaintiff filed suit against her employer Solon Gershman, Inc., and
BAS, which acted as a third-party administrator of the Solon Gershman employee health
insurance plan. (Doc. 1.) On October 13, 2017, a request for waiver of service summons was
delivered by certified mail to BAS. (Doc. 14 at 1.) When BAS did not timely respond, Plaintiff
sent an alias summons, which was delivered to BAS on November 30, 2017. (Id.) On January 3,
2018, the Clerk entered a default against BAS. (Doc. 11.) It was not until March 29, 2018—
more than five months after Plaintiff filed her complaint and nearly three months after the entry
of default—that BAS’s counsel entered his appearance and filed this motion to set aside default.
(Docs. 12, 13.)
BAS asks the Court to set aside the default, representing that its delay in responding was
the result of an internal administrative oversight and that allowing the case to proceed would not
prejudice Plaintiff. (Doc. 13.) Likewise, BAS asserts that it has a meritorious defense—it lacks
sufficient authority to be liable for the denial of Plaintiff’s medical claim. (Id.) Plaintiff
responds that BAS failed to respond not once but twice—to the request for waiver of service and
to the alias summons. (Doc. 14.) That said, Plaintiff has not sought a formal order of default.
Instead, Plaintiff responds that, if the Court grants BAS’s motion to set aside the default, it

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should also accept BAS’s claim that it lacked sufficient authority as a judicial admission that
triggers a lower de novo standard of review applied to the denial of her claims. (Doc. 14.) In its
reply, BAS notes that it must prove its affirmative defense before the Court adopts a de novo
standard and that the judicial admission Plaintiff proposes would actually relieve BAS of any
liability. (Doc. 15.)
Legal standard
The Court is mindful of the strong policy underlying the Federal Rules of Civil Procedure
favoring decisions on the merits rather than resolution of cases through default judgment. See
United States on behalf of Time Equip. Rental & Sales, Inc. v. Harre, 983 F.2d 128, 130 (8th
Cir.1993). A court may set aside a default that was the result of “mistake, inadvertence, surprise,
or excusable neglect.”

Fed.R.Civ.P. 55(c), 60(b).

When determining whether neglect is

excusable, courts consider “the danger of prejudice to the [movant], the length of the delay and
its potential impact on judicial proceedings, the reason for the delay, including whether it was
within the reasonable control of the movant, and whether the movant acted in good faith.”
Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 395 (1993).
Discussion
BAS asserts that Plaintiff’s waiver request and alias summons were both received by
lower-level personnel who failed to promptly forward the documents to upper-level
management. (Doc. 13 at 2.) The Court finds the significant passage of time between the filing
of Plaintiff’s complaint and BAS’s response concerning but accepts BAS’s representation and
concludes that the oversight is excusable. Plaintiff fails to allege any concrete prejudice and the
Court notes that the only filing in this case—other than Plaintiff’s complaint—relates to BAS’s

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default. Likewise, there has been no procedural or judicial action which might be upset by
setting aside the default. Both Plaintiff and BAS appear to the Court to be acting in good faith.
The Court further concludes that it would be premature to grant Plaintiff’s request that
the Court treat BAS’s proposed defense as a judicial admission.

Plaintiff may assert the

argument at a later time if the issue is presented.
Accordingly,
IT IS HEREBY ORDERED that Defendant Benefit Administrative Systems’ (“BAS”)
Motion to Set Aside Default (Doc. 13), is GRANTED.

Dated this 20th Day of June, 2018.

________________________________
JOHN A. ROSS
UNITED STATES DISTRICT JUDGE

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