Wesson v. Jane Phillips Medical Center & Affiliates Employee Group Health Care Plan, Premium Plan et al
Filing
69
OPINION AND ORDER by Judge James H Payne (pll, Dpty Clk)
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OKLAHOMA
SUSAN WESSON,
)
)
Plaintiff,
)
)
v.
)
)
1. JANE PHILLIPS MEDICAL
)
CENTER &AFFILIATES EMPLOYEE
)
GROUP HEALTHCARE PLAN,
)
PREMIUM PLAN;
)
and
)
2. JANE PHILLIPS MEDICAL CENTER, )
)
Defendants.
)
Case No. 09-CV-561-JHP-FHM
OPINION & ORDER
Before the Court in ERISA1 is Plaintiff’s Opening Brief on the Merits, Plaintiff’s
Response Brief, and Plaintiff's Reply Brief;2 and the Opening Brief of Defendants Jane Phillips
Medical Center and Jane Phillips and Affiliates Employee Group Health Care Plan, the Response
Brief of Defendants Jane Phillips Medical Center and Jane Phillips and Affiliates Employee
Group Health Care Plan, and the Reply Brief by Defendants Jane Phillips Medical Center and
Jane Phillips and Affiliates Employee Group Health Care Plan.3 For the reasons cited herein,
Defendant JPMC’s final determination denying medical benefits is AFFIRMED. Plaintiff’s
claim for Breach of Fiduciary Duty is DENIED.
1
The parties have stipulated that this case is governed by ERISA. Joint Status Report at 3,
Docket No. 26.
2
Docket No.’s 42, 50, and 56.
3
Docket No.’s 43, 48, and 57.
1
BACKGROUND
A. Policy Coverage and Provisions
Throughout 2005 and 2008, the relevant years in this case, Plaintiff was an employee of
Defendant Jane Phillips Medical Center (“JPMC”) and was a participant in JPMC's group health
plan (“Plan”).4 The Plan is a self-funded employee health plan with funds coming from both
employee contributions and employer contributions made by Defendant JPMC.5 In April 2005,
Plaintiff underwent a Roux-en-Y gastric bypass weight loss surgery to treat obesity.6 The 2005
bypass surgery was covered by the Plan and benefits were paid to the extent of the Plan’s maximum
lifetime treatment coverage of $15,000 for morbid obesity.7 The relevant Plan language regarding
maximum lifetime treatment coverage reads:
Morbid Obesity – The Plan covers obesity treatment if such treatment is deemed
Medically Necessary and diagnosed as a condition in which an individual is obese
as defined by the National Heart, Lung, and Blood Institute, and its guidelines of
1998 if the following criteria is met: (1) A body mass index of 40 or over 35 if the
patient has other existing co-morbid diagnosis (as determined by the Body Mass
Index table). (2) The patient is evaluated by a surgeon, psychiatrist and nutritionist.
(3) The patient selects a surgeon with experience in gastric bypass surgery
procedures. (4) A plan of treatment is submitted by the surgeon to case management
for review. Treatment of complications (to include other organs), as a result of
obesity services(s) will not be covered by this Plan. See your Plan Supervisor for a
4
See generally Administrative Record, Docket Nos. 32, 37, 64. The Administrative Record has
been submitted to the Court at Docket No.’s 32, 37, and 64 and is labeled “Wesson
Administrative Record” (Admin. Rec.) 1 - 180.
5
Plaintiff’s Opening brief at 2, Docket No. 42.
6
See Admin. Rec. at 18-19.
7
Id. 15-16, 105.
2
copy of the institute’s guidelines as well as the Medical Exclusions and Limitations
in this booklet for more information.
Payment under this benefit will be limited to: Lifetime Maximum of $15,000.8
In 2008 Plaintiff experienced health problems, such as depression, lack of appetite, acid
reflux, inability to keep solid foods down, and weight loss.9 Plaintiff sought treatment for these
symptoms from her doctors and ultimately underwent two dilation procedures and a surgery to repair
an area of gastric stricture.10 The operative note from the July 2008 surgery states that the operation
performed was a “[t]akedown of the gastrojejunostomy with reconstruction.”11
B. Administrative Adjudication of Plaintiff’s Claim.
Plaintiff sought coverage for these 2008 doctor visits and medical procedures by submitting
health insurance claims to the Plan.12 Plaintiff’s initial claim was denied by Plan Supervisor BMI
HealthPlans, Inc. (BMI).13 Plaintiff sought review of the initial decision, with Plan supervisor BMI
receiving the request for review on September 15, 2008.14 Plaintiff’s request for review included no
supporting supplemental information.15
On October 8, 2008 BMI issued its decision, confirming the denial of Plaintiff’s claim, citing
8
Id. at 105.
9
Id. at 18-19.
10
See id. at 55-57, 69-70.
11
Id. at 65.
12
See id. 3-13.
13
See id. at 18-20, 163-80.
14
See id. at 18-20, Defendants’ Opening Brief at 3, Docket No. 43.
15
See id.
3
that Plaintiff’s claim exceeded the Plan’s $15,000 lifetime limit for medical services connected with
morbid obesity based on its determination that the 2008 procedures resulted from a complication of
the original 2005 gastric bypass.16 The denial letter advised Plaintiff of her right to appeal the
decision to the Plan Administrator and the procedure for pursuing that appeal.17 The letter
specifically stated that Plaintiff must submit any supplemental material supporting her claim along
with her notice of appeal.18
On January 9, 2009, Plaintiff initiated an appeal to Plan administrator JPMC.19 Plaintiff
disagreed with BMI’s determination that the 2008 procedures resulted from a complication of the
original 2005 gastric bypass, arguing instead that the gastric obstruction was caused by stress and
the resulting chronic acid reflux.20 With her notice of appeal, Plaintiff submitted multiple articles
supporting her contention.21
Defendant JPMC gathered all of Plaintiff’s appeal materials and the medical records related
to the 2008 surgeries and submitted them to HealthReview, L.L.C., an independent medical review
company.22 Notably absent from the records was any record of the 2005 procedure. A registered
nurse from HealthReview, L.L.C. reviewed the materials submitted by JPMC and concluded that
16
See id. at 50.
17
Id.
18
Id.
19
Id. at 52-53.
20
See id. at 57.
21
See id. at 23-48.
22
Id. at 83.
4
Plaintiff’s 2008 surgeries were the result of complications arising from the 2005 procedure.23
Defendant JPMC then submitted the materials to AllMed Healthcare Management (AllMed)
for further independent medical review.24 The independent review, by Dr. Skip Freedman, stated that
he reviewed all submitted material and concluded that “[t]his surgery was done for a condition that
was a result of the prior gastric bypass procedure.”25 Lacking any records from Plaintiff’s 2005
procedure, Dr. Freedman’s report assumed that Plaintiff’s 2005 surgery was a vertical banded
gastroplasty, rather than the Roux-en-Y gastric bypass Plaintiff actually received.26 Based on Dr.
Freedman’s report, Defendant JPMC affirmed the denial of Plaintiff’s claim.27 On August 31, 2009,
having exhausted all administrative remedies, Plaintiff filed her claim in this court.28
C. Relevant Procedural Background
In her Complaint, Plaintiff states claims for (1) enforcement of ERISA benefits under the
plan, and (2) breach of fiduciary duty.29 The initial Administrative Record was filed with this court
on April 23, 2010.30 On September 30, 2011, this Court granted partial summary judgment in favor
of Defendant BMI, finding that Defendant BMI was a non-fiduciary third-party administrator of the
23
Id. at 83, 87.
24
Id. at 79-80.
25
Id. at 79-80.
26
Id. at 79.
27
Id. at 89.
28
See id. at 89; see generally Complaint, Docket No. 2.
29
See id. at 6-7.
30
See Docket No. 32.
5
plan and was therefore not subject to suit for either recovery of benefits under ERISA or for breach
of fiduciary duty.31 As such, JPMC is liable for any of BMI’s actions that may have contradicted
ERISA law and/or resulted in a breach of JPMC’s fiduciary duties.32 The case is fully briefed
pursuant to an ERISA schedule and properly before the Court.
DISCUSSION
A. Standard of Review
Here, it is uncontested that the language of the plan clearly gives JPMC ultimate authority
to determine eligibility benefits and construe the terms of the plan.33 The law is quite clear on this
point: “If the plan grants discretionary authority to the administrator or fiduciary, the exercise of that
authority will be set aside only if it is arbitrary or capricious.”34
The Court accepts Plaintiff’s contention that JPMC’s position as both the final arbiter of
Plaintiff’s claims and the payor of those claims creates an inherent conflict of interest.35 However,
such conflicts do not necessitate a change in the standard of review.36 Rather, the existence of a
conflict is merely a factor the Court should consider in a “combination of factors” analysis.37 Finally,
31
See Opinion and Order at 7, Docket No. 68.
32
See id. at 3-4, n.4, Docket No. 68 (citing Geddes v. United Staffing Alliance Emp. Med. Plan,
469 F.3d 919, 926 (10th Cir.2006).
33
Plaintiff’s Opening Brief at 11, Docket No. 42.
34
Nance v. Sun Life Assurance Co. of Canada, 294 F.3d 1263, 1267-68 (10th Cir.2002) (citing
Chambers v. Family Health Plan Corp., 100 F.3d 818, 825 (10th Cir.1996)).
35
See Plaintiff’s Opening Brief at 11-12, Docket No. 42.
36
Holcomb v. Unum Life Ins. Co. of America, 578 F.3d 1187, 1192-93 (10th Cir.2009).
37
Id.
6
because JPMC bears ultimate responsibility for the benefits determination, the Court’s focus is on
JPMC’s final determination of benefits, weighing the apparent conflict of interest and holding JPMC
accountable for any procedural errors committed by BMI.
B. Defendants’ Review of Plaintiff’s Claims
In analyzing Defendants’ review of Plaintiff’s claims, the Court first reviews Plaintiff’s
allegations regarding BMI’s failure to comply with the requirements of ERISA in its explanation
of benefits (EOB) and claim denial letters.38 The Court reviews the ultimate decision of JPMC under
the arbitrary and capricious standard, weighing as a factor any conflict of interest raised by JPMC
being both a plan administrator and claims payor.
1. Initial BMI Review
Plaintiff alleges that the EOB forms notifying Plaintiff of the initial denial of benefits are
inadequate under ERISA procedure.39 “In notifying a claimant of its initial denial, a plan
administrator must state both ‘[t]he specific reason or reasons for the adverse determination’ and ‘[a]
description of any additional material or information necessary for the claimant to perfect the claim
and an explanation of why such material or information is necessary.’”40
ERISA procedure requires that an administrator’s reason for denial “must be stated in
reasonably clear language.”41 In assessing whether or not an administrator failed to meet this or any
38
See Plaintiff’s Supplemental Response to BMI-Healthplans Amended Administrative Record
(Plaintiff’s Supplemental Response) at 4, Docket No. 65.
39
Id. at 2-3.
40
Metzger v. UNUM Life Ins. Co. of America, 476 F.3d 1161, 1168, n.4, (10thCir.2007)(citing 29
C.F.R. § 2560.503-1(g)).
41
Gilbertson, 328 F.3d at 635 (citing Booton v. Lockheed Medical Benefit Plan, 110 F.3d 1461,
1463 (9th Cir.1997).
7
other procedural requirement, the Court looks for “substantial compliance” with ERISA procedure,
with particular focus on the purpose of the procedural requirement.42 The intent of the requirement
at issue is very clearly to provide a claimant with enough information to understand and challenge
a claim denial.
The Court first questions whether or not BMI’s initial determination clearly stated the
specific reason or reasons for the claim denial as required by ERISA. The initial EOB form letters
received by Plaintiff state only that the type of service rendered was “Weight Control PI” and that
Plaintiff’s claims exceed the maximum plan allowance.43 The letters do not, however, clearly state
what plan allowance has been exceeded. Further, not all of the EOB letters deny Plaintiff’s claims.44
Defendant argues that these are sufficient to clearly convey the specific reason for denial of
Plaintiff’s claims so that Plaintiff could understand and challenge the denial.45 Plaintiff disagrees,
arguing that she could not reasonably anticipate from the plain language of the EOB letters that the
denial was predicated on the weight control/morbid obesity allowance and that further confusion
arises when one considers that BMI had paid for doctor visits related to the Plaintiff’s “Weight
Control PI” procedures and surgery but denied claims for the actual procedures.46
Plaintiff’s argument is undercut by the information presented in her initial appeal letter to
42
Id. at 634-35.
43
Id. at 163-80.
44
See id. at 171-74.
45
See Reply by Defendants to Plaintiff’s Supplemental Response at 2, Docket No. 66.
46
See Plaintiff’s Supplemental Response at 7-8, Docket No. 65. See also Admin. Rec.at 163-170;
175-80; but see id. at 171-74.
8
BMI.47 In it she states: “I understand the need to limit benefits for bariatric coverage due to the
different available methods and that there are some individuals that would abuse the benefit in the
event that one was not successful.”48 This letter demonstrates that Plaintiff understood that the
claims were denied under the Plan’s limitation of benefits for procedures related to morbid obesity
treatment, and Plaintiff was able to perfect an appeal of that decision. As a result, the Court finds
that BMI was substantially compliant with ERISA procedures with regard to the initial denial
notices.
2. Plaintiff’s Request for Review to BMI
Plaintiff also alleges that the notification provided by BMI’s October 8, 2008 denial letter
regarding her request for review was “woefully inadequate,” as BMI did not provide an evidentiary
basis for its conclusion that Plaintiff’s 2008 procedures were the result of complications from her
2005 operation.49 The Court recognizes that Plaintiff is entitled by statute to a “full and fair review”
of any denial of benefits.50 In order to permit such a review, a notice of decision must include:
(i) The specific reason or reasons for the adverse determination;
(ii) Reference to the specific plan provisions on which the determination is based;
(iii) A description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or information
is necessary;
(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
47
See Admin. Rec. at 19-20.
48
Id. at 19.
49
Plaintiff’s Opening Brief at 14-15, Docket No. 42, Plaintiff’s Supplemental Response to BMIHealthplan’s Amended Administrative Record at 10, Docket No. 65.
50
29 U.S.C. §1133.
9
review.51
Further, if the adverse benefit determination is based on an exclusion or limit, the
administrator must provide either an explanation of the scientific or clinical judgment for the
determination, applying the terms of the plan to the claimant’s medical circumstances, or a statement
that such explanation will be provided free of charge upon request.52 These requirements ensure that
a full and fair review is conducted by the administrator, enable the claimant to adequately prepare
for further administrative review, and make it possible for the reviewing authority to perform the
task of reviewing that denial.53
The October 8, 2008 letter states that (a) the reviewer relied on the claims previously
processed in order to come to its decision, that (b) the reviewer’s clinical judgment was that the
procedures were the result of complications arising from a previous bariatric surgery, and that (c)
plan language, provided in the letter, specifically barred claims related to complications arising from
the surgery. Although not particularly informative, it comports with the notice requirements of 29
C.F.R. §2560.503-1(g) in that it (a) states the specific reason for the adverse determination,
including the evidence used to come to that determination (b) references the specific plan language
on which the determination was based, and (c) explained the clinical judgment of the reviewer by
applying specific terms of the plan to Plaintiff’s 2008 medical procedures based on the information
contained in the claims for benefits.
Plaintiff also contends that BMI failed to inform her of what documentation or other
51
29 C.F.R. § 2560.503-1(g)(1)(i)-(iv).
52
29 C.F.R. § 2560.503-1(g)(v)(B).
53
See Halpin v. W.W. Grainger, Inc., 962 F.2d 685, 693 (7thCir.1992).
10
evidence she might consider submitting.54 Plaintiff is correct in asserting that section (g)(1)(iii)
requires that a denial of benefits notification must include: “[a] description of any additional material
or information necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary.”55 However, Plaintiff does not claim that BMI did not provide
her with the information necessary to perfect an appeal. Plaintiff argues that BMI failed to tell her
what documents might be helpful in making her case for a claim.56 This is not what is required by
the statute. BMI notified Plaintiff of, and Plaintiff submitted, all the appropriate materials necessary
to perfect an appeal to Plan Administrator JPMC. The statute requires nothing more.
Addressing Plaintiff’s protestations that BMI’s notice failed to provide a “meaningful
dialogue” between a claimant and the claims administrator as required by the statute,57 the Tenth
Circuit, adopting the language of the Ninth Circuit, set out the elementary nature of this exchange:
In simple English, what this regulation calls for is a meaningful dialogue between
ERISA plan administrators and their beneficiaries. If benefits are denied . . . the
reason for the denial must be stated in reasonably clear language, . . . if the plan
administrators believe that more information is needed to make a reasoned decision,
they must ask for it. There is nothing extraordinary about this: it's how civilized
people communicate with each other regarding important matters.58
54
Plaintiff’s Supplemental Response to BMI-Healthplan’s Amended Administrative Record at
10, Docket No. 65.
55
29 C.F.R. § 2560.503-1(g)(1)(iii).
56
See Plaintiff’s Response Brief at 12, Docket No. 50 (“[N]or does BMI anywhere in that letter
identify or suggest to [Plaintiff] what documents or evidence she might submit on appeal that
might be helpful to support her claim for benefits”).
57
Gilbertson v. Allied Signal, Inc. 328 F.3d 625, 635 (10thCir.2003).
58
Id.(citing Booton v. Lockheed Medical Benefit Plan, 110 F.3d 1461, 1463 (9th Cir.1997)).
11
The BMI denial letter sets out that Plaintiff’s claim was denied because the 2008 procedures
and surgeries were found to be the result of complications from the 2005 obesity surgery. Further,
Plaintiff was informed that she could submit supplemental material if she wished. However, the plan
administrators apparently did not believe they needed more information to make a reasoned decision
on appeal and therefore did not ask for it. Nothing more is needed to establish the “meaningful
dialogue” contemplated by the statute.
Finally, Plaintiff also alleges that BMI’s October 8, 2008 denial letter failed to inform
Plaintiff she was entitled to be represented in pursuing her claims and failed to describe additional
material that was needed to perfect her claim.59 The statutory basis cited by Plaintiff supporting her
contention is 29 C.F.R. §2560.503-1(c)(3), which reads:
(3) To the extent that a plan offers voluntary levels of appeal (except to the extent
that the plan is required to do so by State law), including voluntary arbitration or any
other form of dispute resolution, in addition to those permitted by paragraph (c)(2)
of this section, the claims procedures provide that:
***
(iii) The claims procedures provide that a claimant may elect to submit a benefit
dispute to such voluntary level of appeal only after exhaustion of the appeals
permitted by paragraph (c)(2) of this section;
(iv) The plan provides to any claimant, upon request, sufficient information relating
to the voluntary level of appeal to enable the claimant to make an informed judgment
about whether to submit a benefit dispute to the voluntary level of appeal, including
a statement that the decision of a claimant as to whether or not to submit a benefit
dispute to the voluntary level of appeal will have no effect on the claimant's rights
to any other benefits under the plan and information about the applicable rules, the
claimant’s right to representation, the process for selecting the decisionmaker, and
the circumstances, if any, that may affect the impartiality of the decisionmaker, such
as any financial or personal interests in the result or any past or present relationship
with any party to the review process;
Section (c)(2) of 29 C.F.R. §2560.503-1, referenced above, states that a claims procedure
59
Plaintiff’s Response Brief at 12, Docket No. 50
12
will be deemed reasonable if:
“[t]he claims procedures do not contain any provision, and are not administered in
a way, that requires a claimant to file more than two appeals of an adverse benefit
determination prior to bringing a civil action under section 502(a) of the Act.”
Reading these two statutory sentences in conjunction, one can clearly see that section (c)(3)
addresses the reasonableness and delineates the standards for a voluntary appeals process outside
the maximum two mandatory appeals allowed under 29 C.F.R. §2560.503-1(c)(2). As such, the
“upon request” standards regarding notification of a claimant’s right to representation outlined in
section (c)(3) are inapplicable to the instant case, as Plaintiff is seeking relief in this Court based on
her mandatory appeals, rather than an additional voluntary appeal or arbitration process. Plaintiff
offers no other statutory language that purports to require notice of a right to representation.
Ultimately, the October 8, 2008 denial letter notified Plaintiff as to the basis of BMI’s
findings and provided Plaintiff with adequate notice from which she could perfect an appeal to the
plan administrator. Consequently, the Court finds that BMI substantially complied with ERISA
notification requirements with regard to the October 8, 2008 review and denial letter.
3. JPMC Appeal
It is uncontested that the language of the plan gives JPMC the ultimate authority to determine
eligibility benefits and construe the terms of the plan.60 “If the plan grants discretionary authority
to the administrator or fiduciary, the exercise of that authority will be set aside only if it is arbitrary
or capricious.”61 Under the arbitrary and capricious standard, the Court’s inquiry is limited to
60
Plaintiff’s Opening Brief at at 11, Docket No. 42.
61
Nance v. Sun Life Assurance Co. of Canada, 294 F.3d 1263, 1267-68 (10th Cir.2002) (citing
Chambers v. Family Health Plan Corp., 100 F.3d 818, 825 (10th Cir.1996)).
13
whether the claims decision was “reasonable and made in good faith.”62 The Court will not
substitute its own judgment for that of the plan administrator unless the administrator’s actions are
without any reasonable basis.63 The Court recognizes that the instant Defendant both determines and
pays benefits, creating an inherent conflict of interest in this case. The Court weighs that conflict
accordingly in its analysis.64
Plaintiff’s alleges that JPMC failed to rely on substantial evidence in making the
determination to deny her claim.65 Lack of substantial evidence supporting the claims decision is one
indicia that a plan administrator’s decision is arbitrary and capricious.66 “Substantial evidence is
such evidence that a reasonable mind might accept as adequate to support the conclusion reached
by the decisionmaker.”67 “Substantiality of the evidence is based upon the record as a whole.”68 In
determining whether the evidence in support of the administrator's decision is substantial, the Court
must take into account anything in the record, including conflicts of interest, that fairly detracts from
its weight.69
62
Geddes v. United Staffing Alliance Employee Medical Plan, 469 F.3d 919, 929 (10th Cir.2006)
(internal citations omitted).
63
Id.
64
See Holcomb v. Unum Life Ins. Co. of America, 578 F.3d 1187, 1192-93 (10th Cir.2009)
(embracing a combination-of-factors method of review).
65
See Plaintiff’s Opening Brief at 19-21, Docket No. 42; Plaintiff’s Supplemental Response to
BMI-Healthplan’s Amended Administrative Record at 10, Docket No. 65.
66
Caldwell v. Life Ins. Co. of North America, 287 F.3d 1276, 1282 (10th Cir.2002).
67
Id. (internal quotations omitted).
68
Id.
69
Id. (internal quotations omitted).
14
Here the Administrative Record shows that JPMC first contacted HealthReview, L.L.C.
to perform an independent review of Plaintiff’s claim, specifically stating “I am particularly
interested to know if he/she can comment on whether a person who had not had the bypass
procedure would have experienced the same stricture issue under the stressful circumstances.”70 An
initial nurse’s review of the claims stated that the 2008 claims were the result of complications from
the 2005 surgery.71 It was then that JPMC sent the claims to Dr. Skip Freedman at AllMed for
further independent review.72
JPMC does admit that the nurse’s findings were secondary considerations to Dr. Freedman’s
report, and it was Dr. Freedman’s report on which it primarily based its decision to refuse benefits.73
Dr. Freedman was specifically asked to issue a report on the following question: “Were the patient’s
problems with gastric outlet stricture resulting from her previous gastric bypass or is this a nonrelated condition?”74 During the preparation of his report, Dr. Freedman was admittedly lacking the
medical records related to Plaintiff’s 2005 bariatric surgery.75 Lacking those records, Dr. Freedman
70
Admin. Rec. 83-87. Plaintiff alleges these are merely hearsay statements, and were not
available to Plaintiff until after filing of this suit. Plaintiff’s Response Brief at 8, Docket No. 50.
The record indicates that the Plan Administrator relied on this evidence to some degree, before
requesting further physician review, therefore it is relevant to the Court’s inquiry. As the emails
were used in the determination of the final appeal, JPMC was not required to produce them to
Plaintiff until after the review was complete. See Metzger, 476 F.3d 1161.
71
Admin. Rec. at 83.
72
Id. at 85.
73
Reply Brief by Defendants Jane Phillips Medical Center & Affiliates Employee Group
Healthcare Plan and Jane Phillips Medical Center at 6-7, Docket No. 57.
74
Admin. Rec. at 79-80.
75
Id.
15
incorrectly includes in his report that the 2005 surgery was “presumably a vertical banded
gastroplasty.”76 Plaintiff argues that Dr. Freedman’s presumption that Plaintiff underwent a vertical
banded gastroplasty, rather than the Roux-en-Y procedure she actually received, makes the evidence
provided by Dr. Freedman’s report less than substantial.77 The Court tends to agree.
A very cursory review of Dr. Freedman’s citations reveals that a “vertical banded
gastroplasty” is not a “gastric bypass” at all.78 In making the presumption that Plaintiff’s 2005
surgery was a vertical banded gastroplasty, Dr. Freedman wholly ignores the question presented to
him by JPMC: “Were the patient’s problems with gastric outlet stricture resulting from her previous
gastric bypass or is this a non-related condition?”79 This mistake is further complicated by the fact
that Dr. Freedman ultimately concludes that the 2008 surgery “was done for a condition that was
the result of the prior gastric bypass procedure.”80
The fact that Dr. Freedman apparently remained unaware of the actual procedure performed
in 2005, despite being informed of the basic nature of the procedure in the question presented by
JPMC, causes the Court to question Dr. Freedman’s diligence in preparing the report. Further, Dr.
Freedman’s faulty presumption that Plaintiff underwent a vertical banded gastroplasty, followed by
reference to a gastric bypass in his conclusion demonstrates either loose language in reference to
76
Id.
77
Plaintiff’s Opening Brief at 20-21, Docket No. 42.
78
See Admin. Rec.. at 80 (“Van Gemert WG, Van Wersh MM, Greve JW, Soeters PB. Revisional
Surgery after failed vertical banded gastroplasty:restoration of vertical banded gastroplasty or
conversion to gastic bypass. Obesity Surg 1998 Feb; 8(1):21-8") (emphasis in citation added).
79
Id. at 79-80 (emphasis added).
80
Id. (emphasis added).
16
varying bariatric procedures or ignorance of the procedures in general. Such imprecision in a field
that demands precision is unacceptable. As such, the Court cannot find that this report, standing by
itself, is “evidence that a reasonable mind might accept as adequate to support the conclusion
reached by the decisionmaker.”81
However, Dr. Freedman’s report was not the only evidence available to JPMC in making the
determination on Plaintiff’s claims. The Administrative Record before JPMC also included the
informal response by the HealthReview, L.L.C. nurse and, more importantly, the operative notes and
medical records related to Plaintiff’s 2008 procedures and surgery. Review of the 2008 medical
records reveals that Plaintiff was having some dysfunction with the Silastic ring, a medical device
implanted during her 2005 procedure, which required the first two dilation procedures.82 Further,
Plaintiff’s 2008 operative note reveals that her surgery required a "[t]akedown of the
gastrojejunostomy with reconstruction."83 Like the Silastic ring, the gastrojejunostomy is not a
natural occurring phenomenon, but a surgical creation.84 The gastrojejunostomy was created during
Plaintiff’s 2005 procedure, and the fact that it required reconstruction in 2008 is indicative that
Plaintiff’s health problems were related in some fashion to the 2005 surgery.85
Ultimately, because Plaintiff would have neither the Silastic ring, nor the gastrojejunostomy
absent the 2005 surgery, it is reasonable to conclude that none of the 2008 procedures would be
81
Id. (internal quotations omitted).
82
Id. at 74-75.
83
Id. at 65.
84
See Response Brief of Defendants Jane Phillips Medical Center and Jane Phillips & Affiliates
Employee Group Healthcare Plan at 10-11, Docket No. 48.
85
See id.
17
necessary but for the 2005 procedure. Because the 2008 procedures and surgery were specifically
to correct problems related to the 2005 operation, the 2008 procedures and surgery can reasonably
be considered treatment for complications stemming from the 2005 procedure. The complete and
reasonable nature of this evidence also greatly diminishes Plaintiff’s argument that JPMC’s role as
final arbiter and claims payor influenced its adverse determination of Plaintiff’s claims in this
instance. As such, the conflict weighs little in the Court’s “combination of factors” review.
Finally, Plaintiff’s allegations that JPMC did not consider that Plaintiff’s condition may
have been brought on by stress and that JPMC ignored the medical “evidence” she provided during
the BMI review are without merit.86 JPMC does not contest Plaintiff’s contention that the
complications may have been caused by stress.87 The “evidence” submitted by Plaintiff, consisted
of six articles of varying credibility, discussing esophageal damage and strictures caused by stressrelated gastroesophageal reflux disease (GERD).88 None of the articles presented discuss whether
or not GERD could create the gastric outlet stricture from which Plaintiff was suffering or that such
a gastric outlet stricture could result in the absence of a prior gastric bypass procedure.
The articles point out that GERD can result in esophageal strictures, among other esophageal
problems.89 Despite admittedly suffering from this damaging condition, Plaintiff’s medical records
86
Plaintiff’s Opening Brief at 16, 20, Docket No. 42.
87
See Response Brief of Defendants Jane Phillips Medical Centerand Jane Phillips & Affiliates
Employee Group Healthcare Plan at 11, Docket No. 48.
88
See Admin Rec. at 23-48, 58 (articles include Esophogeal Stricture; The Effect of Life Stress on
Symptoms of Heartburn; Stress and Heartburn: a Biobehavioral Perspective; Diagnosis of
Gastroesophageal Reflux Disease and Heartburn; Stress, Sickness, and Divorce; The Serious
Consequences of GERD).
89
Id.
18
indicate that her esophageal function was normal.90 The fact that Plaintiff’s GERD had not impacted
her otherwise normal esophageal tissue severely undercuts her position that her GERD alone, rather
than GERD in combination with complications related to the previous bariatric surgery, resulted in
Plaintiff’s gastric outlet strictures. As such, the articles were, at best, wholly irrelevant to Plaintiff’s
claims, and, at worst, serve to dispute Plaintiff’s theory of injury. JPMC’s failure to explicitly note
the articles in its determination letter does not detract from its full and fair review of Plaintiff’s
claims.
The law is clear: the Court cannot substitute its own judgment for that of the plan
administrator unless the administrator’s actions are without any reasonable basis.91 The Court finds
that the 2008 medical records and operative notes, along with the HealthReview, L.L.C. nurse’s
opinion, Dr. Freedman’s ultimate conclusion that the 2008 surgeries were the result of complications
from a prior gastric bypass procedure, and the reasonable inferences that can be drawn from
Plaintiff’s relatively normal esophageal health in spite of the GERD discussed in the submitted
articles constitute substantial evidence that Plaintiff’s 2008 procedures and surgery were related to
complications arising from Plaintiff’s 2005 gastric bypass procedure. This accumulation of evidence
offered JPMC a reasonable basis for its determination that Plaintiff’s claims were barred by the
Plan’s exclusion of treatment for complications resulting from obesity services. Further, the Court
finds no competent evidence or argument that Plaintiff did not receive a full and fair review of her
claims for the 2008 procedures and surgery. Finally, the Court finds, based on the evidence, that
90
Id. at 61-62 (medical records include drawings with notations “eso. -normal;” “stomach
normal”).
91
Geddes, 469 F.3d at 929 (internal citations omitted).
19
JPMC’s determination would likely be the same regardless of any conflict of interest. As Plaintiff
received a full and fair review of her claims, and Defendant JPMC had a reasonable basis for denial
of Plaintiff’s claims, the Court finds that Defendant JPMC’s denial of Plaintiff’s 2008 claims was
not arbitrary and capricious.92
C. Breach of Fiduciary Duty
Plaintiff’s Complaint includes an allegation that “[i]n the denial of benefits for the 2008
surgery and related expenses, [ ]JPMC [ ] breached their fiduciary duties to [Plaintiff].”93 Although
this Court’s findings above refute this claim in principal, Plaintiff also alleges in her briefing that
JPMC breached its fiduciary duty because it failed to segregate employee contributions to the Plan
into an interest-bearing trust account separate from JPMC’s general operating account.94 Plaintiff’s
argument that JPMC places employee contributions in its general operating account is specifically
refuted by the affidavit of JPMC Chief Financial Officer Michael Moore, therefore all that is at issue
is whether or not JPMC is required to keep employee contributions in a separate, interest-bearing,
trust account.95 Party argument on both sides of this issue is notably sparse.
Although ERISA §404(a)(1) states that Plan assets “shall be held for the exclusive purposes
92
Even if the Court were to accept Plaintiff’s contention that JPMC’s review was based solely on
Dr. Freedman’s report, after its thorough review of the record, the Court is convinced that JPMC
would arrive at its previous conclusion denying benefits even after thorough consideration of all
relevant evidence. Consequently, remand to JPMC for further review is unnecessary and
inappropriate. See Rekstad v. U.S. Bancorp, 451 F.3d 1114, 1121 (10thCir.2006) (citing Quinn v.
Blue Cross & Blue Shield Ass'n., 161 F.3d 472, 478 (7th Cir.1998)).
93
Complaint at 7, Docket No. 1
94
Plaintiff’s Opening Brief at 23, Docket No. 42.
95
See Plaintiff’s Response Brief at 13-14, Docket No. 50; but see Affidavit of Michael Moore at
1-2, Docket No. 48-1.
20
of providing benefits to participants in the plan and their beneficiaries,” nothing in the statute states
that such funds must be segregated into separate interest-bearing trust accounts. The Tenth Circuit
has also not addressed whether or not ERISA employee contributions to healthcare plans must be
segregated into interest bearing trust accounts, and Plaintiff has offered no other case law to support
her allegation. In fact, JPMC’s decision not to segregate plan funds into a separate trust account
appears to comport with standard industry practice with regard to welfare plans, including healthcare
plans like the one at issue here.96
The Second Circuit, in Nechis v. Oxford Health Plans, Incorporated has addressed this issue
to some degree. In Nechis, the Circuit Court upheld a district court finding that a plan administrator
had no obligation to segregate the plan premiums from the general operating account.97 Nechis, an
individual unable to seek money damages under §502(a)(2), sought equitable restitution under
§503(a)(3).98 The Circuit Court stated that a constructive trust or equitable lien requiring equitable
restitution is imposed “when, ‘in the eyes of equity,’ a plaintiff is ‘the true owner’ of funds or
property, and the money or property identified as belonging in good conscience to the plaintiff [can]
clearly be traced back to particular funds or property in the defendant's possession.”99 The Second
Circuit found that Nechis was not a “true owner”in this sense, as “the monies upon which Nechis
seeks to impose a trust are premiums paid for health care coverage, which Oxford [Health Plans
96
See, e.g., Eric D. Chason, Redressing All Fiduciary Breaches Under Section 409(a), 83
TEMPLE L.REV. 147, 150-51 (2010) (“While welfare plans may be ‘fiduciary relationships,’ the
relationship is often not one ‘with respect to property’ because benefits are paid directly from the
employer's general assets rather than a segregated trust fund”)
97
See Nechis, 421 F.3d 96, 103-04 (2nd Cir.2005) (internal citations and quotations omitted).
98
Id.
99
Id.
21
Inc.] is under no obligation to segregate.”100
As in Nechis, the instant Plaintiff apparently seeks to impose a constructive trust on
employee contributions to the Plan that would obligate it to segregate employee contributions to the
Plan into a separate, interest-bearing trust account.101 However, as in Nechis, the instant Plaintiff
paid monies into the Plan for health coverage, and such monies cannot, in good conscience, be
considered as still belonging to Plaintiff.102 As such, these employee contributions are analogous to
the plan premiums at issue in Nechis and are similarly not subject to an equitable lien or constructive
trust that would obligate JPMC to segregate the funds into an interest-bearing trust account.
Ultimately, in order for an ERISA plaintiff to prevail on a breach of fiduciary duty claim
under ERISA §409, “there must be a showing of some causal link between the alleged breach and
the loss plaintiff seeks to recover.”103 In other words, JPMC cannot be liable for breaching its
fiduciary duty unless Plaintiff can demonstrate both that JPMC breached its fiduciary duty and that
losses to the Plan or ill-gotten profit to the fiduciary accrued in relation to that breach.104
Because, JPMC is not obligated to segregate Plan premiums as Plaintiff contends, Plaintiff
100
Id.
101
See Plaintiff’s Opening Brief at 23, Docket No. 42 (“E. The Plan Administrator Breaches its
Fiduciary Duty to Plan Beneficiaries by Failing to Maintain Employee Contribution in a
Separate Interest-Bearing Trust Account, or Other Prudent Investment, and Instead Comingles
Employee Contributions With General Operating Funds”).
102
See Nechis, 421 F.3d 96 at 103-04
103
Holdeman v. Devine, 572 F.3d 1190, 1193 (10th Cir.2009) (internal quotations and citations
omitted).
104
Holdeman v. Devine, No. 2:02-CV-00365 PGC, 2007 WL 3254969, *11 (D.Utah 2007).
22
cannot demonstrate a breach of any duty. Further, Plaintiff has offered no competent evidence that
this alleged breach resulted in losses to the Plan, denial of Plaintiff’s benefits, or ill-gotten gains to
JPMC. As Plaintiff has failed to offer evidence supporting either prong of the standard set forth by
the Circuit, Plaintiff’s claim for breach of fiduciary duty based on JPMC’s failure to segregate
employee contributions from its general operating funds must be DENIED.
CONCLUSION
For the reasons cited herein, Defendant JPMC’s final determination denying medical benefits
payable to Plaintiff Wesson is hereby AFFIRMED. Plaintiff’s claim for breach of fiduciary duty
is DENIED. A separate Judgment is filed herewith.
23
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