Tawater v. Healthcare Service Corporation

Filing 38

ORDER: IT IS ORDERED that BCBSMT's 12 Motion to Dismiss is DENIED IN PART and GRANTED IN PART. IT IS FURTHER ORDERED that Harris's claim for equitable relief under ERISA § 502(a)(3) is DISMISSED WITH PREJUDICE. Signed by Judge Brian Morris on 12/3/2018. (ACC)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
GREAT FALLS DIVISION

JENNIFER TAWATER,

CV 18-47-GF-BMM

Plaintiff,
vs.
ORDER
HEALTH CARE SERVICE
CORPORATION, a MUTUAL
LEGAL RESERVE CORPORATION,
d/b/a/ BLUE CROSS BLUE SHIELD
OF MONTANA,
Defendants.

INTRODUCTION

Jennifer Tawater filed a Complaint against Health Care Services Corporation

d/b/a Blue Cross and Blue Shield of Montana (“BCBSMT”) on February 26, 2018.
(Doc. 1.) Tawater alleges underpayment of medical benefits under an employee
welfare benefit plan (“the Plan”) administered by BCBSMT. Id. at 2. The
Employee Retirement Income Security Act of 1974 (“ERISA”) governs the Plan.
BCBSMT filed the instant Motion to Dismiss on April 30, 2018. (Doc. 12.)
The Court conducted a motion hearing on June 25, 2018. (Doc. 35.) The Court
requested both parties submit supplemental briefing on the effect that assignment
1

under the Plan has on Tawater’s standing to sue BCBSMT. Id. Tawater filed her
supplemental brief on July 6, 2018. (Doc. 36.) BCBSMT filed its brief on July 16,
2018. (Doc. 37.)
BACKGROUND
Tawater was admitted to Mercy Medical Center in Williston, North Dakota
on July 9, 2014. (Doc. 27 at 7.) The attending emergency room physician
determined that Tawater needed to be transferred to Trinity Hospital in Minot,
North Dakota. Id. Guardian Flight, Inc. (“Guardian”) transported Tawater from
Williston to Minot on July 10, 2014. (Doc. 28-2 at 2.) Guardian is an out-ofnetwork medical transport provider. (Doc. 13 at 3.) Guardian billed Tawater
$43,881.92 for the transport from Williston to Minot. (Doc. 28-3 at 2.)
The Plan administered by BCBSMT insured Tawater at all relevant times.
(Doc. 13 at 4.) The Plan required Tawater to submit her transport claim to
BCBSMT “no later than 12 months from the date of service.” (Doc. 13-1 at 50.)
BCBSMT sent Tawater’s father an Explanation of Benefit (“EOB”) on July 28,
2014. (Doc. 28-3 at 2.) The EOB indicated that the total allowed amount for the
transport under the Plan was $13,222.44. Id. The EOB noted that Tawater
remained responsible to Guardian for the unpaid amount of $30,659.48. Id.
Tawater signed Guardian’s transport agreement before the transport on July
10, 2014. (Doc. 28-2 at 2.) The transport agreement assigned Tawater’s right of
2

payment to Guardian. Id. Tawater’s transport agreement with Guardian states, in
pertinent part, as follows: “I request that payment of authorized Medicare,
Medicaid or other insurance benefits to be made on my behalf to Guardian Flight. I
assign Guardian Flight all right, title and interest in all benefit plans from which
my dependents or I are entitled to recover.” Id.
The Plan permitted Tawater to assign her right of payment to a medical
provider. The Plan’s assignment provision reads as follows:
All Plan benefits are payable to a Participant, Qualified Beneficiary or
Alternate Recipient, whichever is applicable. All or a portion of the benefits
payable by the Plan may, at the Covered Person’s option and unless the
Covered person requests otherwise in writing not later than the time of filing
the claim, be paid directly to the health care provider rendering the service,
if proper written assignment is provided to the Plan. No payments will be
made to any provider of services unless the Covered Person is liable for such
expenses.
(Doc. 13-1 at 106.)
The Plan likewise established a statute of limitations period. The Plan’s
limitations provision provides as follows:
No action at law or equity will be brought to recover on the Plan prior to the
expiration of sixty (60) days after proof of loss has been filed in accordance
with the requirements of the Plan, nor will such action be brought at all
unless brought within three (3) years from the expiration of the time within
which proof of loss is required by the Plan.
Id. (emphasis added).

3

The July 28, 2014, EOB explained that Tawater or her authorized
representative could “appeal the decision within 180 days from the receipt” of the
EOB if Tawater disagreed with the “denial or partial denial of a claim.” (Doc. 29-3
at 3.) Guardian filed a timely appeal of BCBSMT’s adverse benefit determination
on September 15, 2014. (Doc. 28-4 at 2.) BCBSMT denied Tawater’s appeal on
October 24, 2014. (Doc. 29-6 at 2.) Tawater, through her counsel, subsequently
sent BCBSMT a letter restating Tawater’s appeal on February 1, 2017. (Doc. 28-9
at 2.) BCBSMT denied Tawater’s February 1, 2017, appeal as untimely. (Doc. 2810 at 2.)
LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of a
complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The Court “must
take all allegations of material fact as true and construe them in the light most
favorable to the nonmoving party” when evaluating a Rule 12(b)(6) motion. Kwan
v. Sanmedica Int’l, 854 F.3d 1088, 1096 (9th Cir. 2017) (quoting Turner v. City &
County of San Francisco, 788 F.3d 1206, 1210 (9th Cir. 2015)). The complaint
must allege sufficient facts to state a plausible claim for relief to survive a motion
to dismiss. Taylor v. Yee, 780 F.3d 928, 935 (9th Cir. 2015).
Federal courts generally view “with disfavor” Rule 12(b)(6) dismissals.
Rennie & Laughlin, Inc. v. Chrysler Corp., 242 F.3d 208, 213 (9th Cir. 1957). “A
4

case should be tried on the proofs rather than the pleadings.” Id. The Court may
consider documents on a motion to dismiss “whose contents are alleged in the
complaint and whose authenticity no party questions, but which are not physically
attached to the [plaintiff’s] pleading.” Branch v. Tunnell, 14 F.3d 449, 454 (9th
Cir. 1994).
I.

Statute of Limitations Provision
BCBSMT argues that Tawater filed her Complaint after the Plan’s three-

year statute of limitations period had expired. (Doc. 13 at 10.) The Plan required
Tawater to appeal her adverse benefit determination within 180 days of receiving
the EOB. (Doc. 34 at 10.) Tawater alleged that she received the EOB in July 2014.
Id.
BCBSMT argues that the Plan required Tawater “to provide notice that she
contested the determination” by January of 2015. Id. BCBSMT claims that
Tawater’s statute of limitation period expired three years after this notice—in
January of 2018. Id. BCBSMT contends that Tawater’s filing of her Complaint in
February of 2018—one month after the limitations period had expired—bars
consideration of her claims. Id.
Tawater agrees that the Plan provides a three-year statute of limitations
period to file a complaint. (Doc. 27 at 28.) Tawater notes, however, that the Plan’s
statute of limitation period accrues at “the expiration of the time within which proof
5

of loss is required.” Id. (citing Doc. 13-1 at 106) (emphasis added). Tawater
interprets “the expiration of the time within which proof of loss is required,” as
used in the Plan, as “no later than 12 months after the date of service.” (Doc. 27 at
28) (citing Doc. 13-1 at 50).
Guardian transported Tawater on July 10, 2014. (Doc. 27 at 28.) Tawater
contends that the Plan allowed her to file her proof of loss until July 10, 2015. Id.
Tawater contends that the expiration of this July 10, 2015, date in which to file her
proof of loss triggered the running of the Plan’s three-year statute of limitations
period. Id. at 28-29. Tawater contends, under this interpretation, that the statute of
limitations period should have expired on July 10, 2018. Id. at 29. Tawater argues
that she timely filed her Complaint on February 26, 2018. Id.
A claimant generally must file her claim within the statute of limitations
period. Heimeshoff v. Hartford Life & Acc. Ins. Co., 571 U.S. 99, 105 (2013).
Statutes of limitations generally “begin to run when the cause of action accrues—
that is when the plaintiff can file suit and obtain relief.” Id. (quoting Bay Area
Luandry and Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., 522 U.S.
192, 201 (1997) (internal quotations omitted). ERISA specifies a statute of
limitations period for certain types of claims.
For example, ERISA § 413 provides the following deadline to file a breach
of fiduciary duty claim:
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No action may be commenced under this subchapter with respect to a
fiduciary’s breach of any responsibility, duty, or obligation under this part,
or with respect to a violation of this part, after the earlier of— (1) six years
after (A) the date of the last action which constitute a part of the breach or
violation, or (B) in the case of an omission the latest date on which the
fiduciary could have cured the breach or violation, or (2) three years after
the earliest date on which the plaintiff had actual knowledge of the breach or
violation; except that in the case of fraud or concealment, such action may
be commenced not later than six years after the date of discovery of such
breach or violation.
29 U.S.C. § 1113. ERISA fails to prescribe a statute of limitations period,
however, for a cause of action seeking recovery of benefits under Section
502(a)(1)(B). Heimeshoff, 571 U.S. at 105.
This omission requires the Court to “determine the applicable limitation
period.” Felton v. Unisource Corp., 940 F.2d 503, 510 (9th Cir. 1991). A court
should apply the most “analogous state statutes of limitations” available unless
these state limitations would “frustrate or significantly interfere with federal
policies.” Reed v. United Transp. Union, 488 U.S. 319, 327 (1989). Health plans
governed by ERISA constitute contracts. Montana law provides claimants an eightyear statute of limitations period to bring a cause of action based on a contract.
Mont. Code Ann. § 27-2-202 (2017).
ERISA likewise fails to establish explicitly when a cause of action accrues
under § 502. ERISA requires “plans to provide certain presuit procedures for
reviewing claims after participants submit proof of loss (internal review).”
Heimeshoff, 571 U.S. at 105 (citing 29 U.S.C. § 1133). The Supreme Court
7

determined that a cause of action accrues under ERISA § 502 when the
administrator issues a final denial pursuant to the terms of the plan. Id.
The law permits parties, nonetheless, to contract around any applicable
statutory statute of limitations period and accrual date. See Heimeshoff, 571 U.S. at
106-107; Order of United Commercial Travelers of America v. Wolfe, 331 U.S.
586, 608 (1947). A court ordinarily should enforce a contractual statute of
limitations and accrual provisions as written to the extent that the provisions
remain reasonable. Heimeshoff, 571 U.S. at 106-107; Wolfe, 331 U.S. at 608. As a
general matter, a statute of limitations period of three years to bring a claim under
ERISA proves reasonable. See, e.g., Heimeshoff, 571 U.S. at 109-10. Thus, the
Plan’s three-year statute of limitations agreed by BCBSMT and Tawater
supersedes Montana’s eight-year statute of limitations period for contracts
contained in Montana Code Annotated § 27-2-202. The Plan’s three-year statute of
limitations period likewise controls over any statutory six-year or three-year statute
of limitations period in which to bring an ERISA cause of action for breach of
fiduciary duty.
Neither BCBSMT nor Tawater contest the reasonableness of the Plan’s
three-year statute of limitations provision. BCBSMT and Tawater offer competing
interpretations, however, of the triggering event for the running of the statute of
limitations under the Plan. BCBSMT contends that a cause of action accrues under
8

the Plan once the 180-day internal appeal period has expired. (Doc. 34 at 10-11.)
Tawater counters that no cause of action accrues until after the expiration of the
twelve-month period in which a participant must file her claim with BCBSMT.
(Doc. 27 at 28.)
The Plan provides that “[c]laims must be submitted no later than 12 months
from the date of service.” (Doc. 13-1 at 50.) The Plan affords a participant 180
days from the issuance of the adverse benefit determination to file an internal
appeal of the denial of benefits. Id. at 56. A cause of action accrues on “the
expiration of the time within which proof of loss is required by the Plan.” Id. at
106. The Plan fails to define the term “proof of loss.” The Plan remains ambiguous
as to whether “proof of loss” refers to Tawater’s receipt of the air ambulance
transport claim itself or the expiration date of the 180-day internal appeals process.
The Court must construe the ambiguous language in the Plan against
BCBSMT. Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 62 (1995).
Guardian transported Tawater on July 10, 2014. (Doc. 28-2 at 2.) The Plan allowed
Tawater until July 10, 2015, to file her air transport claim with BCBSMT. (Doc.
13-1 at 50.) Tawater’s interpretation results in the timely filing of her Complaint
on February 26, 2018, as she had until July 10, 2018—three years after the
deadline for filing her transport claim with BCBSMT—to bring a cause of action
pursuant to the Plan. BCBSMT remains free to resolve this apparent ambiguity in
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the Plan’s language regarding the proper interpretation of the statute of limitations
period. BCBSMT may attempt to develop this statute of limitations defense
through further discovery and the filing of a motion for summary judgment
pursuant to Rule 56.
II.

Tawater’s ERISA Claims
Tawater raises three causes of action under ERISA. Tawater first seeks to

recover healthcare benefits under § 502(a)(1)(B). (Doc. 1 at 19-21.) Tawater next
raises a cause of action based on an alleged breach of fiduciary duty by BCBSMT
under §§ 502(a)(2) and (3). Id. at 24-25. Tawater also seeks equitable relief under §
502(a)(3). Id. at 22-24. Tawater ultimately alleges that the amount paid by
BCBSMT remains inadequate under the Plan as it did not constitute the Usual,
Customary, and Reasonable (“UCR”) rate for air ambulance services. Id. 2, 12-14.
Tawater contends that BCBSMT routinely has applied one of the least favorable
reimbursement methodologies available under the Plan for air ambulance services.
Id. at 13.
A. Statutory Standing under ERISA
BCBSMT contends that Tawater’s assignment of her right to payment to
Guardian divested her of standing to bring her ERISA claim. (Doc. 37 at 7.) An
alleged lack of statutory standing under ERISA presents a question regarding the
merits of the claim properly raised on a motion to dismiss. Vaughn v. Bay
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Environmental Management, Inc., 567 F.3d 1021, 1024 (9th Cir. 2009) (citing
Lanfear v. Home Depot, Inc., 536 F.3d 1217, 1221-22 (11th Cir. 2008). Section
502(a) of ERISA “demonstrates Congress’s care in delineating the universe of
plaintiffs who may bring certain civil actions.” Harris Tr. & Sav. Bank v. Salomon
Smith Barney, Inc., 530 U.S. 238, 247 (2000).
A party may bring a civil action pursuant to ERISA “by a participant,
beneficiary, or fiduciary . . .” or “by the Secretary . . ..” 29 U.S.C. §§ 1132(a)(3),
(5). ERISA defines “participant” as “any employee or former employee of an
employer, or any member or former member of an employee organization, who is
or may become eligible to receive a benefit of any type from an employee benefit
plan which covers employees of such employer or members of such organization,
or whose beneficiaries may be eligible to receive any such benefit.” 29 U.S.C. §
1002(7). ERISA defines “beneficiary” as a “person designated by a participant, or
by the terms of an employee benefit plan, who is or may become entitled to a
benefit thereunder.” 29 U.S.C. § 1002(8).
A health care provider does not qualify as a “beneficiary” under ERISA. DB
Healthcare, 852 F.3d at 874. A health care provider “cannot bring claims for
benefits on its own behalf.” Spinedex, 770 F.3d at 1289. A provider stands
authorized, however, to bring a derivative claim by “relying on its patients’
assignments of their benefits.” Id. A provider possess standing under ERISA if at
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the “time of the assignment, Plan beneficiaries had the legal right to seek payment
directly from the Plan for charges” by the provider. Id. at 1291.
A BCBSMT health plan insured Tawater. (Doc. 13-1 at 1.) NorthWestern
Energy, her father’s employer, provided the Plan. (Doc. 1 at 4.) Tawater qualifies
as a beneficiary under the Plan. 29 U.S.C. § 1002(8). Tawater likewise qualifies as
a participant under the Plan. 29 U.S.C. § 1002(7). Tawater assigned her right of
payment to Guardian on July 10, 2014. (Doc. 28-2 at 2.) At the time of assignment,
Tawater possessed a legal right to seek payment directly from BCBSMT for the
cost of Guardian’s transport. See Spinedex, 770 F.3d at 1291.
The Plan allowed Tawater’s assignment of her right of payment to Guardian.
(Doc. 13-1 at 106.) Tawater’s assignment of her right of payment, however, did not
automatically divest her of standing under ERISA. The Plan further provided the
following regarding assignment:
[a]ll or a portion of the benefits payable by the Plan may, at the Covered
Person’s option and unless the Covered person requests otherwise in writing
no later than the time of filing the claim, be paid directly to the health care
provider rendering the service, if proper written assignment is provided to
the Plan.”
Id.
BCBSMT notified Tawater on July 28, 2014, that BCBSMT had paid
$13,222.44 of Tawater’s transport claim. (Doc. 28-3 at 2.) Nothing in the
Complaint alleges that Tawater provided BCBSMT with “proper written
assignment” of Tawater’s right of payment to Guardian. See (Doc. 13-1 at 106.)
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Nothing in the Complaint alleges that BCBSMT directly paid Guardian the amount
allowed under the Plan for Tawater’s transport claim.
Tawater’s mere assignment of her right of payment to Guardian fails to
extinguish her status as a beneficiary or participant under the Plan absent
BCBSMT’s receipt of proper written assignment. Tawater’s assignment to
Guardian does not divest her of standing under ERISA at the motion to dismiss
phase of the instant litigation. BCBSMT remains free to develop further this issue
through discovery and the filing of a motion for summary judgment pursuant to
Rule 56.
B. Exhaustion of Administrative Remedies
Standing alone proves insufficient to bring a claim under ERISA. An ERISA
claimant must exhaust her administrative remedies before bringing her claims in
federal court. Vaught v. Scottsdale Healthcare Corp. Health Plan, 546 F.3d 620,
626 (9th Cir. 2008). Tawater contends that exhaustion of administrative remedies
constitutes an affirmative defense “typically not resolved upon a motion to
dismiss.” (Doc. 27 at 15.) Tawater further contends that either she or her
authorized representatives “pled exhaustion beyond a mere speculative level.”
(Doc. 27 at 15.)
1. Exhaustion as an Affirmative Defense

13

The Ninth Circuit initially treated a motion to dismiss for failure to exhaust
administrative remedies as an unenumerated motion to dismiss. Bilyeu v. Morgan
Stanley Long Term Disability Plan, 683 F.3d 1083, 1088 (9th Cir. 2012). An
unenumerated motion to dismiss allows the Court “to look beyond the pleadings
and decide disputed issues of fact.” Id. The Ninth Circuit since has called into
question whether a party properly raises a failure to exhaust defense as an
unenumerated motion to dismiss in Albino v. Baca, 747 F.3d 1162, 1166 (9th Cir.
2014) (en banc).
The Ninth Circuit determined in Albino that “a failure to exhaust is more
appropriately handled under the framework of the existing rules than under an
‘unenumerated’ (that is, non-existent) rule.” Albino, 747 F.3d at 1162 (citation
omitted). The Ninth Circuit reasoned that in the “rare event” where the failure to
exhaust administrative remedies “is clear on the face of the complaint, the
defendant may move for dismissal under Rule 12(b)(6).” Id. The Ninth Circuit
noted, however, that where the failure to exhaust proves unclear on the face of the
complaint the “defendants must produce evidence proving a failure to exhaust in
order to carry their burden.” Id. Rule 56 entitles the defendant to judgment as a
matter of law if the undisputed evidence shows a failure to exhaust administrative
remedies. Id. 

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Albino dealt with exhaustion of administrative remedies under the Prison
Litigation Reform Act (“PLRA”). Id. at 1166. District courts have agreed that the
Ninth Circuit’s reasoning in Albino applies to failure to exhaust in the ERISA
context. See, e.g., Russell v. CVS Caremark Corporation, 2017 WL 1090677, at *3
(D. Ariz. March 23, 2017); Norris v. Mazzola, 2016 WL 1588345, at *6 (N. D.
Calif. April 20, 2016). The Northern District of California and the District of
Arizona reasoned that the Ninth Circuit in Albino “implicitly overruled prior cases
such as Biyeu.” Russell, 2017 WL 1090677 at *3 (referencing Norris, 2016 WL
1588345 at *6). The Court agrees with the Northern District of California and the
District of Arizona. An alleged failure to exhaust administrative remedies
constitutes an affirmative defense under ERISA. See Russell, 2017 WL 1090677 at
*4. A motion to dismiss “based on a failure to exhaust in the ERISA context must
be treated as ordinary Rule 12(b)(6) motions in which disputed issues of fact
cannot be resolved and all reasonable inferences must be drawn in the plaintiff’s
favor.” Russell, 2017 WL 1090677 at *3.
2. Exhaustion of Remedies in Tawater’s Complaint
“ERISA itself does not require a participant or beneficiary to exhaust
administrative remedies in order to bring an action under § 502 of ERISA.”
Vaught, 546 F.3d at 626. The Ninth Circuit has adopted a “prudential exhaustion
requirement.” Id. This requirement generally forces a claimant to “exhaust
15

available administrative remedies” before filing an ERISA claim in federal court.
Barboz v. California Ass’n of Professional Firefighters, 651 F.3d 1073, 1076 (9th
Cir. 2011). The Court possesses the “authority to enforce the exhaustion
requirement in suits under ERISA, and as a matter of sound policy [the Court]
should usually do so.” Amato v. Bernard, 618 F.2d 559, 568 (9th Cir. 1980).
The Court should intercede, however, when exhausting administrative
remedies would be futile or the remedy would be inadequate. Winterberger v.
General Teamsters Auto Truck Drivers and Helpers Local Union 162, 558 F.2d
923, 925 (9th Cir. 1977). The Court also must intercede “where a plan fails to
establish or follow reasonable claims procedures as required by ERISA.” Vaught,
546 F.3d at 626. “[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 v. United Agr.
Employee Welfare Ben. Plan and Trust, 50 F.3d 1478, 1485 (9th Cir. 1995).
The Court must draw all reasonable inferences in Tawater’s favor. Tawater
plead the following in her Complaint:
23. To the best of her ability, Plaintiff and her authorized representatives
challenged the “Adverse Benefit Determination,” which left her with a
balance due of approximately $30,659.48.
24. Despite appeals concerning the underpayment, Defendant BCBSMT
refused to pay the proper amount for the emergency services and
impermissibly shifted the risk under its health contract to Plaintiff, so that
she was left owing approximately 70% of the provider’s charges.
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26. Defendant has denied Plaintiff’s claim for appropriate and correct
payment, and Plaintiff is deemed to have exhausted all administrative
remedies, pursuant to relevant Department of Labor regulations and the
Patient Protection and Affordable Care Act. Accordingly, this case is ripe for
adjudication, or alternatively, given Defendant’s practice of underpaying
emergency air ambulance transports, pursuing further internal administrative
remedies is futile.
(Doc. 1 at 5-6.) Tawater’s failure to exhaust her administrative remedies remains
unclear from the face of the Complaint. BCBSMT must produce evidence that
proves that Tawater failed to exhaust her administrative remedies. See Albino, 747
F.3d at 1162; Russell, 2017 WL 1090677, at *3-4. A Rule 56 motion for summary
judgment, rather than a Rule 12(b)(6) motion to dismiss, represents the appropriate
vehicle for BCBSMT to produce such evidence.
C. Joinder of Guardian
Tawater requests, as a practical matter, that “the most judicially economical
route” would be for Tawater to seek leave to join Guardian as an additional
plaintiff pursuant to Rule 19. (Doc. 36 at 3.) An entity must be joined as a party
when the Court deems it necessary to the litigation. Fed. R. Civ. P. 19. An entity
proves necessary if (1) in that entity’s absence, the court cannot accord complete
relief among existing parties; or (2) that entity claims an interest relating to the
subject of the action and is so situated that disposing of the action in the entity’s
absence may either impair or impede the entity’s ability to protect the interest or
17

leave an existing party subject to a substantial risk of incurring double, multiple, or
otherwise inconsistent obligations because of the interest. Fed. R. Civ. P. 19(a).
Guardian’s presence does not prove necessary to the instant litigation. The
Court can afford complete relief to Tawater without adding Guardian to the
litigation. Tawater’s status as a beneficiary or a participant of the Plan affords her
standing to bring this action. 29 U.S.C. §§ 1002(7), (8). Guardian also lacks an
interest in the action that “is so situated that disposing of the action in [Guardian’s]
absence” will “either impair or impede” Guardian’s “ability to protect the interest.”
Fed. R. Civ. P. 19(a).
Guardian asserts an interest in being paid for its transport of Tawater.
Tawater’s presence as the only plaintiff in this litigation would not defeat
Guardian’s interest in being paid. Moreover, Guardian filed suit against BCBSMT
in this Court on July 9, 2018. See Guardian Flight, Inc. v. Health Care Service
Corporation, No. CV 18-98-GF-BMM. Joinder of Guardian as a party to the
instant litigation proves unnecessary.
D. Breach of Fiduciary Duty Claim
BCBSMT contends that Tawater’s breach of fiduciary duty claim “fails as a
matter of law because it is based solely on his individual benefits determination.”
(Doc. 13 at 12.) BCBSMT contends that Tawater failed to plead any “facts

18

regarding a larger, systematic breach of fiduciary obligations or alleged how the
relief she seeks would benefit the plan as a whole.” Id.
Tawater argues that she stated a claim upon which relief may be granted
under ERISA §§ 502(a)(2) and (3). (Doc. 27 at 29.) Tawater claims that she seeks
to “change how her plan fiduciaries administer her plan.” Id. at 30. Tawater further
contends that she seeks to compel BCBSMT to act in accordance with its
obligation under 29 U.S.C. § 1104 when selecting the “most favorable
methodology” for resolving air ambulance transport claims presented by Tawater
and other Plan participants. Id.
“A fiduciary’s mishandling of an individual benefit claim does not violate
any of the fiduciary duties defined in ERISA.” Amalgamated Clothing & Textile
Workers Union, AFL-CIO v. Murdock, 861 F.2d 1406, 141 (9th Cir. 1988) (citing
Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142 (1985)). “Individual
beneficiaries may bring fiduciary actions against the plan fiduciaries, but they must
do so for the benefit of the plan and not their individual benefit.” Cinelli v. Security
Pacific Corp., 61 F.3d 1437, 1445 (9th Cir. 1995) (citing Farr v. US West, 58 F.3d
1361, 1364 (9th Cir. 1995)).
BCBSMT cites to Smith v. William C. Earhart Co, Inc., 2008 WL 1743443,
at *8 (D. Mont. Apr. 15, 2008), a case where the district court dismissed the
plaintiffs’ claim for breach of fiduciary duties because it was based on a denial of
19

individual benefits rather than for the plan’s benefit. The district court in Smith
determined that the plaintiffs had failed to allege that the relief sought would
benefit the plan as a whole. 2008 WL 1743443 at *8. The district court concluded
that the plaintiffs had failed to state a breach of fiduciary duty claim under §
502(a)(2) of ERISA. Id.
Tawater’s claim proves distinguishable from the plaintiffs’ claim in Smith.
Tawater pleads several claims that allege a larger, systematic breach by BCBSMT
rather than an isolated incident inflicted upon Tawater. See (Doc. 1 at ¶¶ 31-33, 47,
55, 59-60, 63-67, 77-78, 96-98, 114.) Tawater alleges, for example, that BCBSMT
has an “established and implemented a policy to underpay claims for air
ambulance transport . . .” even though BCBSMT’s plans provide payment
methodologies more favorable to ERISA plan participants. (Doc. 1 at ¶ 31.)
Tawater also alleges that BCBSMT’s application of the Plan’s air ambulance
methodologies “results in a significant portion of the cost of emergency healthcare
being shifted back onto the ERISA participants.” Id. at ¶ 33.
Tawater contends that BCBSMT “has orchestrated a policy to unduly
hamper the processing of claims in violation of its fiduciary obligations” pursuant
to 29 U.S.C. § 1104. Id. at ¶ 77. Tawater next alleges that BCBSMT has admitted
that “it does not use the most favorable payment methodology in resolving the
claims of participants.” Id. at ¶ 98. And finally, Tawater alleges that BCBSMT
20

“has administered the Plan in such a manner as to unduly obstruct the processing
of valid claims. Id. at ¶ 114. The relief sought by Tawater would benefit all
members of the Plan. Tawater sufficiently has stated a claim for breach of
fiduciary duty pursuant to § 502(a)(2) to survive a Rule 12(b)(6) motion.
E. Equitable Relief Claim
BCBSMT requests that the Court dismiss Tawater’s claim for equitable
relief. (Doc. 13 at 13.) BCBSMT contends that Tawater’s claim for equitable relief
under § 502(a)(3) duplicates her claim for recovery of benefits under §
502(a)(1)(B). Id. at 14. Tawater contends that Federal Rule of Civil Procedure
8(a)(3) authorizes her to plead alternative forms of relief. (Doc. 27 at 31.)
“A pleading that states a claim for relief must contain . . . a demand for relief
sought, which may include relief in the alternative or different types of relief.” Fed.
R. Civ. P. 8(a)(3). A plaintiff may plead § 502(a)(1)(B) and § 502(a)(3) “as
alternative—rather than duplicative—theories of liability.” Moyle v. Liberty Mut.
Retirement Ben. Plan, 823 F.3d 948, 961 (9th Cir. 2016). Alternative claims made
pursuant to § 502(a)(1)(B) and § 502(a)(3) of ERISA “may proceed simultaneously
so long as there is no double recovery.” Id. (citing Forsyth v. Humana, Inc., 114
F.3d 1467, 1475 (9th Cir. 1997)). ERISA essentially permits a plaintiff to raise a
claim under § 502(a)(1)(B) and a claim under § 502(a)(3) when the plaintiff pleads
“distinct remedies.” Moyle, 823 F.3d at 961.
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Tawater requests, under her § 502(a)(1)(B) claim, that the Court enter
“judgment in her favor against Defendant BCBSMT in an amount to be
determined, plus costs, interest, and attorney fees, and any other relief to which
Plaintiff is entitled.” (Doc. 1 at 21.) Tawater requests, under her § 502(a)(3) claim,
“equitable relief as set forth above against Defendant BCBSMT, including
injunctive relief, plus costs, interest, and attorney fees, equitable disgorgement,
declaratory relief, and any other relief to which Plaintiff is entitled.” Id. at 24.
Tawater fashions her second claim as a request for injunctive and
declaratory relief. Id. at 22-24. A decision in Tawater’s favor on her claim for
injunctive and declaratory relief would afford her the same relief as requested
under Tawater’s § 502(a)(1)(B) claim – a recovery of benefits. See Circle v.
Western Conference of Teamsters Pension Trust, 2017 WL 4102490 at *3 (D. Or.
Aug. 31, 2017). ERISA bars this type of potential duplicative recovery with
separate claims under § 502(a)(1)(B) and § 502(a)(3).
No equitable remedy would be available to Tawater if she prevails on her §
502(a)(1)(B) claims. Moyle, 823 F.3d at 962. Moyle does not permit Tawater to
recover under both statutes. Tawater seeks the same recovery under each claim—
the award of benefits, plus costs, interests and attorney fees. Tawater’s § 502(a)(3)
claim must be denied.
CONCLUSION
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Tawater timely filed her Complaint on February 26, 2018. Tawater
possesses standing to bring her claims under ERISA based on her status as a
beneficiary or a participant of the Plan. 29 U.S.C. §§ 1002(7), (8). Tawater, or her
authorized representative, sufficiently alleged exhaustion of her administrative
remedies in her complaint to survive a motion to dismiss under the Rule 12(b)(6)
standard. Tawater likewise sufficiently alleged that the relief sought under her
breach of fiduciary duty claim would benefit the plan as a whole rather than simply
provide a means to recover her own benefits. ERISA prevents Tawater, however,
from bringing a duplicative claim for the recovery of benefits pursuant to her claim
for injunctive and declaratory relief under § 502(a)(3). BCBSMT remains free to
pursue all denied claims in a motion for summary judgment pursuant to Rule 56.
ORDER
Accordingly, IT IS ORDERED that BCBSMT’s Motion to Dismiss (Doc.
12) is DENIED IN PART and GRANTED IN PART.
IT IS FURTHER ORDERED that Harris’s claim for equitable relief under
ERISA § 502(a)(3) is DISMISSED WITH PREJUDICE.
DATED this 3rd day of December, 2018.

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