Parkridge Medical Center, Inc. v. CPC Logistics Inc. Group Benefit Plan et al
Filing
31
MEMORANDUM with order to follow;Signed by District Judge Curtis L Collier on 8/2/2013. (AWH, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT CHATTANOOGA
PARKRIDGE MEDICAL CENTER, INC.,
Plaintiff,
v.
CPC LOGISTICS, INC. GROUP BENEFIT
PLAN and UMR,
Defendants.
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1:12-CV-124
Judge Curtis L. Collier
MEMORANDUM
Plaintiff Parkridge Medical Center, Inc. (“Plaintiff”) brings this action against Defendants
CPC Logistics Inc. Group Benefit Plan and UMR (“Defendants”) to recover funds for services
performed for a patient covered under a plan, which itself is under the purview of the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq. The Court issued
a scheduling order in which it deemed all parties to have moved for judgment in their respective
favor on the administrative record (Court File No. 8). Plaintiff filed a memorandum in support of
its claim (Court File No. 21), to which Defendants responded (Court File No. 24). Plaintiff
subsequently replied to Defendant’s response (Court File No. 25). The Court held oral arguments
on Plaintiff’s motion on July 24, 2013, and all parties were in attendance. After considering the
relevant law and the parties’ arguments, the Court will DENY Plaintiff’s motion for judgment on
the ERISA record (Court File No. 21).
I.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
A. The Plan1
Plaintiff rendered medical services to a patient who is the wife of an employee of CPC
Logistics, Inc. and was covered under the CPC Logistics, Inc. Group Benefit Plan (“the Plan”). CPC
Logisitcs is the Plan Administrator and the Plan is self funded. UMR is a Third-Party Administrator
retained “to process claims and handle other duties” (Administrative Record (“AR”) 442). CPC
Logistics conferred onto itself “sole discretion” in determining the “appropriate courses of action
in light of the reason and purpose for which th[e] Plan is established and maintained” (id. at 444).
This includes “full and sole discretionary authority to interpret all plan documents . . . , and make
all interpretive and factual determinations as to whether any individual is entitled to receive any
benefit under the terms of th[e] Plan.”
CPC Logistics did, however, “delegate certain responsibilities to the Third Party
Administrators for this Plan.” As such, the Plan specifies that “[a]ny interpretation, determination
or other action of the Plan Administrator or the Third Party Administrators shall be subject to review
only if a court of proper jurisdiction determines its action is arbitrary or capricious or otherwise a
clear abuse of discretion.” The Plan further states “[a]ccepting any benefits or making any claim
for benefits under th[e] Plan constitutes agreement with and consent to any decisions that the Plan
Administrator or the Third Party Administrators make, in its sole discretion, and further, means that
the Covered Person consents to the limited standard and scope of review afforded under law.”
The Plan provides coverage of “Covered Benefits if services are authorized by a Physician
1
The Court has been provided copies of the Summary Plan Description (“SPD”) for both
2009 and 2010 (see Administrative Record (“AR”) 177, 442). The disputed coverage overlaps those
years and both would be effective for different portions of that coverage. Neither party has pointed
to any distinction between the two that is relevant to the Court’s determination.
2
and are necessary for the treatment of an Illness or Injury, subject to any limits, maximums,
exclusions or other Plan provisions” (id. at 506). “The Plan does not provide coverage for services
if medical evidence shows that treatment is not expected to resolve, improve, or stabilize the
Covered Person’s condition, or if a plateau has been reached in terms of improvement from such
services” (id.).
The Plan defines “Covered Benefit” as “treatment, services, supplies, medicines or facilities
necessary and appropriate for the diagnosis, care or treatment of an Illness or Injury and that meet
clinical Eligibility for Coverage as determined by the Plan” (id. at 551). Although “consideration
is given to the customary practice of providers in the community or field of specialty. . . . [,] the fact
that a provider may prescribe, order, recommend or approve a service, supply, medicine or facility
does not, of itself, make the service a Covered Benefit.” The Plan also excludes experimental or
investigational treatment, defined as “[s]ervices, supplies, medicines, treatment, facilities or
equipment which the Plan determines are Experimental or Investigational, including administrative
services associated with Experimental or Investigational treatment.”
“Experimental or
Investigational” is further defined as
any drug, service, supply, care and/or treatment that, at the time provided or sought
to be provided, is not recognized as conforming to accepted medical practice or to
be a safe, effective standard of medical practice for a particular condition. This
includes, but is not limited to:
•
Items within the research, Investigational or Experimental stage of
development or performed within or restricted to use in Phase I, II , or III
clinical trials (unless identified as a covered service elsewhere);
•
Items that do not have strong research-based evidence to permit conclusions
and/or clearly define long-term effects and impact on health outcomes (have
not yet shown to be consistently effective for the diagnosis or treatment of
the specific condition for which it is sought). Strong research-based evidence
is identified as peer-reviewed, published data derived from multiple, large,
human randomized controlled clinical trials OR at least one or more large
controlled national multi-center population-based studies;
3
•
•
Items based on anecdotal and Unproven evidence (literature consists only of
case studies or uncontrolled trials), ie:, lacks scientific validity, but may be
common practice within select practitioner groups even though safety and
efficacy is not clearly established;
Items which have been identified through research-based evidence to not be
effective for a medical condition and/or to not have a beneficial effect on
health outcomes.
(Id. at 559-60).2
B. Factual Background
Plaintiff rendered medical services to the patient from September 2009 to January 2011. The
patient’s doctor, Dr. Jitendra G. Gandhi, began seeing the patient in 2008. Dr. Gandhi performed
a bone marrow biopsy and a computed tomography (“CT”) scan of the patient’s chest, abdomen, and
pelvis. Dr. Gandhi concluded the patient had idiopathic thrombocytopenic purpura (“ITP”). In
November 2009, the patient began outpatient treatments of Rituxan and intravenous
immunoglobulin, also known as gammaglobulin (“IVIG”). Dr. Gandhi determined the treatment
was medically necessary in order to maintain a stable range of platelets and avoid a splenectomy.
Plaintiff sought precertification from UMR, which Plaintiff contends was received (Court
File No. 21-3, p. 2), and Plaintiff treated the patient. The patient assigned her benefits to Plaintiff,
who was then authorized to recover benefits available under the Plan. The parties disagree whether
this was sufficient under the Plan’s procedures to establish Plaintiff as an authorized representative.
Regardless, Defendants never paid Plaintiff for the care it provided the patient from November 16,
2009 to January 31, 2010. After this time period, the patient was covered under Medicare, and
subsequent treatment has been claimed through that program. The unpaid charges for services
2
“Experimental or Investigational” is defined differently in the 2009 SPD (AR 294-95).
However, the distinctions do not appear to be relevant here, nor has Plaintiff suggested any
distinctions are relevant.
4
rendered in the time period relevant here is $273,560. However, a contractual discount was applied,
and the outstanding balance is $171,140.20.
After Plaintiff initially sought reimbursement from Defendants, UMR sought further
information regarding the patient. Between March and July 2010, UMR sought the patient’s medical
records (AR 8); the patient’s history and assessment, treatment plan, and result of lab tests in both
a letter (AR 11) and in a telephone message (AR 13); and spoke with an employee at Dr. Gandhi’s
office who agreed to forward on the information (AR 793). On July 14, 2010, UMR received
medical records from Dr. Gandhi’s office.
After receiving the records, Dr. Arnold Wax, Board Certified in Oncology and Internal
Medicine, reviewed the claims and determined the gammaglobulin met the plan language as it is “a
standard of care therapy for [ITP]” (AR 151). However, he concluded the Rituxan (rituximab) “does
not meet the plan language, as it is investigational/experimental and is not FDA approved for ITP.”
Typically, Dr. Wax advised, Rituxan is used for “steroid refractory or steroid dependent ITP.” Dr.
Wax noted the “off-label” use was based upon “anecdotal clinical trials that suggest its benefit” and
that the patient “did have benefit for this particular therapy,” but regardless of its benefit the use was
still experimental. Dr. Wax also noted “the records are not convincing that this patient has ITP,”
because her bone marrow study “did not describe megakaryocytic hyperplasia”; her spleen size is
“either at the upper limit of normal or enlarged” and “[b]y definition, patients with ITP do not have
splenomegaly”; and “the indication is not to treat ITP unless the patient’s platelet count drops below
30,000 or the patient is actively bruising, bleeding, or requiring surgery.” He concluded the
treatment was therefore not medically necessary. After Dr. Wax finished his assessment, it was
approved by Jan Deichler, RN, CCM.
5
On July 16, 2010, after reviewing Dr. Wax’s opinion, UMR denied the claims as “not
medically necessary” (AR 147). UMR advised Plaintiff the bone marrow study, the CT scan of the
patient’s spleen, and the patient’s platelet count suggested she did not have ITP. UMR also noted
Rituxan was experimental for ITP and accordingly not covered by the Plan. The letter referred
Plaintiff to the CPC Logistical Master Plan Document or Summary Plan Description (“SPD”) for
information on appeal rights and informed Plaintiff it could seek review under ERISA.
Plaintiff claims it appealed this conclusion, and points to AR 27, where UMR’s log notes
reflect an appeal of claim N15900239 was received in August 2010 (see also Court File No. 24-2,
August 9, 2010 Appeal). However, as UMR demonstrates, claim N15900239 refers to services
rendered between May 10, 2010 and May 31, 2010, outside of the time period at issue in this case.
Another appeal was also submitted for services performed in June 2010.
Plaintiff appealed other
claims denied in the July 16, 2010 determination on October 15, 2010 (AR 38, 40). It submitted
thirty-one pages of records related to the claim at issue. In November 2010, a UMR reviewer stated
the new records were “infusion records” and not “new clinical information” and the original denial
was upheld (AR 40).
On December 21, 2010 Nashville Shared Services Center filed a “formal appeal,” the second
level of appeal, with United Healthcare3 claiming “not all information was received on 2nd level
appeal” and offered further documentation (AR 125). The claim number for this appeal does
correspond to one of the claim numbers from the July 16, 2010 determination and covers December
2009, which is within the time period of claims at issue in this case. Included in the documentation
3
Neither party discusses why Plaintiff sent this appeal to United Healthcare, or how United
Healthcare is involved in this case.
6
was a letter from Dr. Gandhi and documentation of treatment in June 2010, after the time period at
issue here or in the appeal. Dr. Gandhi’s letter did refer to the treatment as medically necessary.
The records indicate the treatment was necessary in June 2010. It also notes the patient’s platelet
count decreased from 51,000 on June 7th to 26,000 on June 28th. Based on peer review by Dr. Don
Hill, Defendants approved the claim for treatment for this period. Dr. Hill concluded the only time
Rituxan and gammaglobulin were appropriate treatments was on June 28, 2010.
In January 2011, in apparent response to the December 2010 appeal, UMR sent Plaintiff’s
claims for a second medical review. Dr. Lee Hartner, Board Certified in Internal Medicine with a
sub-specialty certificate in hematology and a sub-specialty in medical oncology, reviewed the
record. He concluded IVIG and Rituxan were not medically necessary between November 2009 and
October 2010 (AR 110). Dr. Hartner concluded IVIG is only recommended for instances when
“rapid platelet response is needed,” but concluded the “records in this case do not specifically
indicate that this patient met any of those criteria [on which IVIG would be necessary].” He also
concluded, when Rituxan was prescribed in this case, there were ongoing clinical trials, which
suggests its use was experimental or investigational. Deichler reviewed the opinion and provided
a summary, but changed the dates when the procedure was not medically necessary to September
2009 to December 2010. On February 11, 2011, UMR sent Plaintiff a letter confirming its prior
decision (id. at 113). At least one of the claim numbers involved in this denial corresponds with the
claim in the December 21, 2010 appeal.
Following the second denial, Plaintiff sought further information regarding the medical
professional who submitted the opinion, including (1) name and credentials; (2) outline of the
records reviewed and a description of the records that would be necessary to approve the treatment;
7
(3) copies of expert medical opinions; and (4) a copy of the SPD (AR 98-99). On April 1, 2011,
UMR confirmed receipt of Plaintiff’s request (AR 97). On April 13, 2011, UMR sent Plaintiff the
requested materials. However, Plaintiff contends no medical records were enclosed. The letter also
indicates UMR did not have the name of the reviewing physician but noted reviews were completed
by the MES Group, a licensed, URAC-accredited medical review organization. Plaintiff states it
then sought the information again on multiple occasions, but that UMR stated all documentation had
been sent.
Plaintiff filed the instant action on April 13, 2012. Pursuant to the Court’s order (Court File
No. 8), the parties were presumed to have moved for judgment in their favor and the Court submitted
a briefing schedule. Plaintiff submitted its brief on December 31, 2012. Defendant responded on
January 22, 2013, and Plaintiff replied to Defendant’s response on January 29, 2013.
Plaintiff’s complaint lists four counts: (1) violations of the CFR; (2) breach of contract; (3)
promissory estoppel; and (4) negligent misrepresentation. Plaintiff’s brief, however, focuses on the
argument Defendants did not provide a full and fair review of its claim. In support of this argument,
Plaintiff notes it never received all the medical evidence relied on by Defendant in determining the
patient’s treatment was not medically necessary and was experimental.
II.
STANDARD OF REVIEW
ERISA does not itself specify a judicial standard of review. The Supreme Court, however,
has established a challenge to an ERISA plan’s benefits determination “is to be reviewed under a
de novo standard unless the benefit plan gives the administrator or fiduciary discretionary 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 discretionary authority is granted to the Plan
8
Administrator the “arbitrary and capricious standard of review is appropriate.” Borda v. Hardy,
Lewis, Pollard, & Page, P.C., 138 F.3d 1062, 1066 (6th Cir. 1998) (quotation marks and citation
omitted). However, “even when the plan documents confer discretionary authority on the plan
administrator, when the benefits decision ‘is made by a body other than the one authorized by the
procedures set forth in the benefits plan,’ federal courts review the benefits decision de novo.’”
Shelby County Health Care Corp. v. Majestic Star Casino, 581 F.3d 355, 365 (6th Cir. 2009).
The parties dispute whether the Court should apply de novo or arbitrary and capricious
review in this case. As noted above, CPC Logisitcs is the Plan Administrator and the Plan is self
funded. CPC Logistics conferred onto itself “sole discretion” in determining the “appropriate courses
of action in light of the reason and purpose for which th[e] Plan is established and maintained” (AR
444). This includes “full and sole discretionary authority to interpret all plan documents . . . , and
make all interpretive and factual determinations as to whether any individual is entitled to receive
any benefit under the terms of th[e] Plan.”
CPC Logistics did, however, “delegate certain responsibilities to the Third Party
Administrators for this Plan.” This delegation includes “process[ing] claims and handl[ing] other
duties” for the Plan. The Plan provides, however, the Third Party Administrators are not liable under
the Plan because “they are solely claims paying agents for the Plan Administrator.” It also states,
under “Type of Administration” that “UMR provides administrative services such as claim payments
for medical and pharmacy claims.” Important to Defendants’ argument, however, the Plan specifies
that “[a]ny interpretation, determination or other action of the Plan Administrator or the Third Party
Administrators shall be subject to review only if a court of proper jurisdiction determines its action
is arbitrary or capricious or otherwise a clear abuse of discretion.” The Plan further states
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“[a]ccepting any benefits or making any claim for benefits under th[e] Plan constitutes agreement
with and consent to any decisions that the Plan Administrator or the Third Party Administrators
make, in its sole discretion, and further, means that the Covered Person consents to the limited
standard and scope of review afforded under law.”
Defendants argue this provision is sufficient to limit the Court’s discretion to arbitrary and
capricious review. Plaintiff, on the other hand, argues the Plan makes CPC Logistics the sole
fiduciary and Plan Administrator, and accordingly, because the decision was made by UMR, the
Court must review the decision under a de novo standard.
In Majestic Star, the Sixth Circuit held, because the third party who actually performed the
benefits review and determination was not explicitly granted discretionary authority, the decision
should be reviewed de novo. Majestic Star, 581 F.3d at 367. As was the case in Majestic Star, here,
UMR communicated with Plaintiff regarding its claim, issued the decision letter, considered the
appeal, and there is no evidence CPC Logistics was involved in the decision to deny Plaintiff’s
claim. Moreover, the Plan itself does not confer discretionary authority on both CPC Logistics and
UMR, but retains in CPC Logistics “full and sole discretionary authority to interpret all plan
documents” and to make all “interpretive and factual determinations” regarding the availability of
benefits under the Plan (AR 444) (emphasis added). Cf. Lubeski v. Metro. Life Ins. Co., No. 1115404, 2012 WL 5389900, at *4 (E.D. Mich. Nov. 5, 2012) (distinguishing Majestic Star where the
plan documents made it “clear [the third party administrator] is a Plan fiduciary” because the plan
specified administration was to be performed by the third party administrator and conferred
discretionary authority on “other Plan fiduciaries”). Without the provision of the Plan that explicitly
limits review of both CPC Logistic’s and any Third Party Administrator’s decisions to the arbitrary
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and capricious standard, the standard of review in this case would be de novo.
Defendants argue, however, the Plan’s attempt to limit review of UMR’s decisions is
effective. In considering the standard of review for ERISA, the Supreme Court analogized to trust
law because both the language of the statute itself and the legislative history confirm courts should
consider the “principles of trust law” in determining the appropriate standard of review. Firestone
Tire, 489 U.S. at 110-11. The Court cited to the Restatement (Second) of Trusts § 187 (1959), which
states “[w]here discretion is conferred upon the trustee with respect to the exercise of a power, its
exercise is not subject to control by the court except to prevent an abuse by the trustee of his
discretion.” Relevant here, the Court concluded “[c]onsistent with established principles of trust law,
we hold that a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo
standard unless the benefit plan gives the administrator or fiduciary discretionary authority to
determine eligibility for benefits or to construe the terms of the plan.” Id. at 115. This is a
recognition that “‘[t]he extent of the duties and powers of a trustee is determined by the rules of law
that are applicable to the situation, and not the rules that the trustee or his attorney believes to be
applicable, and by the terms of the trust as the court may interpret them, and not as they may be
interpreted by the trustee himself or by his attorney.’” Id. at 112 (quoting 3 W. Fratcher, Scott on
Trusts § 201, at 221) (emphasis omitted). Then where discretion to interpret the Plan is not conferred
on a plan administrator, the Court should interpret the plan itself, under de novo review. The Sixth
Circuit has also recognized de novo review as the “default rule” only to be limited by a grant of
discretion. See Anderson v. Great West Life Assurance Co., 942 F.2d 392, 395 (6th Cir. 1991).
Based on the standard as explained by the Supreme Court, whether Defendants’ attempt to limit the
standard of review was effective would be a close question.
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However, the Court is not required to decide that question in this case. Part of the confusion
in the parties’ arguments, and in general with this case, is the lack of clarity in the claim actually
being made. The distinction between a de novo and arbitrary and capricious standard of review is
a relevant inquiry in a claim for benefits under 29 U.S.C. § 1132(a)(1)(B), which empowers a
“participant or beneficiary” to bring a civil action “to recover benefits due to him under the terms
of his plan.” Large portions of Defendants’ brief focus on this question, and Defendants argue
UMR’s decision to deny benefits was not arbitrary or capricious. Plaintiff, for its part, states in its
brief it “sues under an Assignment of Benefits received from the Patient at the time of her
hospitalization under 29 U.S.C. § 1132(a)(1)(B) which provides that an action may be brought by
a participant or beneficiary to recover benefits due under the terms of the plan.” However,
Plaintiff’s brief states the “issue” as whether “defendants provide[d] a full and fair review of the
claims for treatment provided by PMC to the plan participant from November 16, 2009 to January
31, 2010.” The brief indeed focuses on this point, rather than seeking review of the substantive
decision.
Most important, the complaint does not invoke § 1132(a)(1)(B). Rather, the complaint notes
a number of violations of the CFR provisions relevant to procedures a fiduciary must provide in
reviewing the denial of an ERISA benefits claim. The complaint also states three state law claims
relevant to UMR’s precertification of the patient’s coverage. However, the state law counts disclaim
association with the underlying insurance plan, alleging instead that an independent contract was
formed between the parties.
Although the complaint does not explicitly cite the ERISA provision on which Plaintiff bases
its claim, Plaintiff’s brief submits the argument UMR did not provide a “full and fair review” of its
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claims, which is required by 29 U.S.C. § 1133. The CFR provisions cited in its complaint are also
relevant to this determination, in that 29 C.F.R § 2560.503-1 is the implementing regulation for §
1133. Accordingly, a generous reading of the complaint establishes count one as alleging UMR
denied benefits without “a reasonable opportunity . . . for a full and fair review by the appropriate
named fiduciary of the decision denying the claim” in violation of 29 U.S.C. § 1133.4 At oral
argument, Plaintiff’s counsel conceded the thrust of the complaint is Defendants’ failure to provide
a full and fair review of the denial of Plaintiff’s initial claim for benefits. Such a claim presents a
“legal question of whether the procedure employed by the fiduciary in denying the claim meets the
requirements of § 1133” and is reviewed de novo. McCartha v. Nat’l City Corp., 419 F.3d 437, 444
(6th Cir. 2005); see also Smith v. Columbia Gas of Ohio Grp. Med. Benefits Plan, 624 F. Supp. 2d
844, 858 (S.D. Ohio 2009) (“Although the arbitrary and capricious standard applies to Defendants’
termination of Plaintiff[’s] [] benefits, with respect to Plaintiff[’s] [] 29 U.S.C. § 1133 claim, the
appropriate standard of review is de novo.”). Although the parties dispute the standard of review,
a careful review of the complaint reveals the appropriate standard is de novo.
III.
DISCUSSION
The complaint states four causes of action: (1) violations of the CFR; (2) breach of contract;
(3) promissory estoppel; and (4) negligent misrepresentation. Aside from the first claim, the second
4
Although § 1133 is the substantive requirement, Plaintiff’s action would be brought
pursuant to 29 U.S.C. § 1132(a)(3), which provides “[a] civil action may be brought . . . by a
participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision
of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to
redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.”
See Stuhlreyer v. Armco, Inc., 12 F.3d 75, 78 n.2 (6th Cir. 1993) (“Section 1132(a)(3) allows a party
to bring a civil action for relief when the requirements of § 1133 are not met.”) (citing Tolle v.
Carroll Touch, Inc., 977 F.2d 1129, 1135 (7th Cir.1992)).
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through fourth claims are not ERISA claims.
A. ERISA claim
1. Authorized Representative
Before considering the merits of the claim, the Court must first determine whether Plaintiff
is entitled to make a claim on the patient’s behalf at all. Defendant argues the assignment of
benefits, appointing Plaintiff the patient’s authorized representative, did not comport with the
provisions of the Plan and was thus ineffective.
Generally, health care providers cannot bring civil actions under 29 U.S.C. § 1132 because
they are not “participant[s]” or “beneficiar[ies].” However, a provider may obtain derivative
standing as a beneficiary if it receives an assignment of benefits from a patient who is a participant
in the plan. See Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272, 1277 (6th Cir. 1991).
Moreover, an employee benefit plan must not “preclude an authorized representative of a claimant
from acting on behalf of such claimant in pursuing a benefit claim or appeal of an adverse benefit
determination.” 29 C.F.R § 2560.503-1(b)(4).
However, “a plan may establish reasonable
procedures for determining whether an individual has been authorized to act on behalf of a
claimant.” Id. Here, the Plan provided
[i]f a Covered Person chooses to use an Authorized Representative, the Covered
Person must submit a written letter to the Plan stating the following: The name of the
Authorized Representative, the date and duration of the appointment and any other
pertinent information. In addition, the Covered Person must agree to grant their
Authorized Representative access to their Protected Health Information. This letter
must be signed by the Covered Person to be considered official.
(AR 539).
Defendants argue the letter in this case was insufficient to confer authorized representative
status on Plaintiff because it was a “generic assignment form” and did not identify the duration of
14
the appointment or the “specific claim/request Plaintiff was entitled to pursue.” Moreover, the only
assignment form in the record related to the time period at issue is dated December 1, 2009, after
the November claims in this case. Defendants also point to the Department of Labor’s (“DOL”)
interpretation of when a claimant has successfully authorized a representative. In a FAQ produced
by the DOL related to § 2560.503-1, the DOL states an assignment of benefits is generally not
sufficient to designate an authorized representative because “[a]n assignment of benefits by a
claimant is generally limited to assignment of the claimant’s right to receive a benefit payment under
the terms of the plan.” FAQs About the Benefit Claims Procedure Regulation at B–2, available at
http://www.dol.gov/ebsa/pdf/CAGHDP.pdf. The DOL notes assignments of benefits are not
typically “grants of authority to act on a claimants behalf.” Regardless, the DOL cautions, “the
validity of a designation of an authorized representative will depend on whether the designation has
been made in accordance with the procedures established by the plan, if any.”
The assignment in this case contained sufficient language to comply with the procedures in
the Plan. Although the assignment occurred in the context of an “assignment of benefits,” the form
submitted to UMR stated the patient
hereby appoint[s] the hospital as [her] authorized representative to pursue, if it so
chooses, all administrative remedies, claims and/or lawsuits on [her] behalf and at
the hospital’s election, against any responsible third party, medical insurer, or
employer sponsored medical benefit plan for purposes of collecting any and all
hospital benefits due [her] for the payment of the charges referred to in section 2
above [wherein the patient agreed to pay for the services rendered].
(AR 141). Nothing in the relevant provision of the Plan suggests a form does not constitute a
“written letter” simply because it contains boilerplate language. Moreover, the above-quoted portion
appears to appoint Plaintiff the patient’s authorized representative indefinitely with respect to the
services rendered, “at the hospital’s election.” This is corroborated by the context of the assignment
15
of benefits section, which “irrevocably assign[s] and transfer[s]” all the patient’s rights to benefits
to Plaintiff. With respect to Defendants’ contention the “specific claim/request Plaintiff was entitled
to pursue” was not properly identified by the assignment, the Court notes the assignment is part of
a larger document consenting to outpatient procedures performed “during this outpatient episode of
care.”
One of Defendants’ arguments regarding the appointment of Plaintiff as the patient’s
authorized representative is more troubling: The earliest form in the administrative record is from
December 1, 2009, which postdates a portion of the care for which Plaintiff’s claim was denied, of
which it now argues UMR failed to offer a full and fair review. However, the Court is satisfied
UMR treated Plaintiff as the patient’s authorized representative as to all the claims currently at issue,
and because UMR’s denial letter did not state any such deficiency as a ground for denying the claim,
such treatment is sufficient to waive whatever procedural deficiencies may have occurred. See Harju
v. Olson, 709 F. Supp. 2d 699, 715-16 (D. Minn. 2010) (holding an organization had standing to
request documents and bring administrative claims in part because the denial letter did not contend
it was not an authorized representative, did not invoke any reasonable procedures under § 2560.5031(b)(4), and there was no evidence to show defendants ever attempted to discern whether the
organization had authorization). Further, because the Court concludes Defendants in fact provided
a full and fair review of Plaintiff’s claims, it is not necessary for the Court to determine ultimately
which portions of the November 2009 to January 2010 services Plaintiff was properly authorized
to represent the patient.
Accordingly, the Court concludes Plaintiff is the patient’s authorized representative and may
pursue its claim UMR failed to provide a full and fair review of its denial of Plaintiff’s benefits
16
claims.
2. Violations of the CFR
Plaintiff’s first count alleges violations of 29 CFR § 2560.503-1(g)(1)(v)(B) and (h)(3)(iii)(v). As discussed above, a generous reading of Plaintiff’s complaint reveals it seeks relief pursuant
to 29 U.S.C. § 1132(a)(3) on the ground Plaintiff was not afforded a full and fair review of the denial
of its claim as required by 29 U.S.C. § 1133. Section 1133 provides
[i]n 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
(2) afford a reasonable opportunity to any participant whose claim for benefits has
been denied for a full and fair review by the appropriate named fiduciary of the
decision denying the claim.
See also 29 C.F.R. § 2560.503-1 (implementing regulation).
The “essential purpose” of this statute, as identified by the Sixth Circuit, is “(1) to notify the
claimant of the specific reasons for a claim denial, and (2) to provide the claimant an opportunity
to have that decision reviewed by the fiduciary.” Wenner v. Sun Life Assurance Co. of Can., 482
F.3d 878, 882 (6th Cir. 2007) (emphasis omitted). Courts employ a “substantial compliance” test
to determine whether the requirements of § 1133 have been met, and “‘consider[] all
communications between an administrator and plan participant to determine whether the information
provided was sufficient under the circumstances.’” Id. (quoting Moore v. LaFayette Life Ins. Co.,
458 F.3d 416, 436 (6th Cir. 2006)). Even if the requirements of § 1133 are not met by a particular
communication, “[i]f the communications between the administrator and participant as a whole
fulfill the twin purposes of § 1133, the administrator’s decision will be upheld.” Id.
The complaint alleges the following inadequacies in the review process: After the initial
17
denial of its claim, Plaintiff sought (a) a copy of the SPD; (b) the name and credentials of the
medical professional who reviewed the records, 29 CFR § 2560.503-1(h)(3)(iv); (c) an outline of
the specific records reviewed and a description of records that would be necessary to approve the
treatment, 29 CFR § 2560.503-1(h)(3)(iii), (m)(8); and (d) copies of expert medical opinions secured
by UMR regarding the treatment so the treating physician may respond. Although UMR responded
with a copy of the SPD, Plaintiff claims it failed to provide the other requested information. Plaintiff
sought the information six times to no avail.
The Court’s task is not to determine whether UMR strictly complied with the regulations
mandating certain procedures. Rather, the Court’s task is to determine whether the communications
between Plaintiff and UMR substantially complied with the twin purposes of § 1133.
As an initial matter, many of Plaintiff’s appeals and requests for information relate to denials
not at issue in this case. Plaintiff claims it appealed UMR’s decision with respect to the relevant
time period, and points to AR 27, where UMR’s log notes reflect an appeal of claim N15900239 was
received on August 10, 2010. However, claim N15900239 refers to services rendered between May
10, 2010 and May 31, 2010, outside of the time period at issue in this case. Another appeal was also
submitted for services performed in June 2010. UMR’s denial, however, specifically included the
time period at issue. Additionally, Plaintiff’s formal appeal referenced the denial for some of the
services in the relevant time period (AR 125).
Regardless, UMR’s procedures and communications substantially complied with § 1133.
First, UMR was required to “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.” 29 U.S.C. § 1133. Here,
18
UMR explained its denial in an initial July 15, 2010 letter as follows:
UMR has conducted a thorough review of your charges for claim[s] . . . for dates of
service 11/16/09 - 05/24/10. The review included consultation with Physician
Review network, a licensed, URAC accredited medical review organization, whose
recommendation was considered in the final determination. This letter is to inform
you that the decision was made to deny [the treatment] as not medically necessary
and does not meet plan language. Documentation does not support that this patient
has [ITP]. The patient’s bone marrow study did not describe megakaryocytic
hyperplasia. The patient has been described on CT scan to have a spleen size that
is either at the upper limit of normal or enlarged. By definition, patients with ITP do
not have splenomegaly. In addition, the indication for treatment for ITP is no
platelet counts of 75,000, for which the patient received rituximab, but rather the
indication is not to treat ITP unless the patient’s platelet count drops below 30,000
or the patient is actively bruising, bleeding, or requiring surgery. Therefore, none
of this therapy was indicated or medically necessary and, accordingly, it did not meet
plan language.
(AR 147). Plaintiff appealed at least a portion of the claims denied in this letter and the decision was
upheld.
After Plaintiff filed a second-level appeal in December 2010, UMR again reviewed
Plaintiff’s claim and explained its denial in a February 11, 2011 letter as follows:
UMR has conducted a thorough review of your charges for [claims arising from]
dates of service 09 13 09 - 09 21 09 . . . 12 01 09 . . . 10 22 10 - 10 26 10 . . . 11 15
10 - 11 19 10 . . . 12 14 10 -12 16 10.
The review revealed that IVIG and Rituxan from September 2009 through December
2010 as not medically necessary per the Plan language. This agent is recommended
for use in setting of severe thrombocytopenia or significant bleeding, two situations
in which a rapid platelet response is needed. It can also be used prior to surgery or
any other invasive procedure, particularly those that are unplanned, as relatively
rapid platelet responses are needed in that situation as well. The records in this case
do not specifically indicate that this patient met any of those criteria. Therefore,
based on the provided medical records, IVIG cannot be considered medically
necessary.
Rituxan has been studied in the treatment of relapsed ITP with encouraging results.
At the time of the events in this case, there were open studies testing the safety and
efficacy of Rituxan for the treatment of ITP. Given the existence of ongoing clinical
trials at the time of the events in this case, Rituxan meets the health plan definition
of experimental/investigational therapy []. Given that Rituxan meets the health plan
definition of experimental/investigational, it cannot be considered medically
19
necessary in this case.
This medical decision was made by MES Group, a licensed, URAC-accredited
medical review organization.
(AR 113-14). Another letter was sent from UMR to Plaintiff on March 2, 2011 explaining its denial
for services rendered after the time period relevant here. It included essentially identical language
to the language in the February 11th letter. The letters from UMR to Plaintiff all referred Plaintiff
to the provisions of the SPD regarding Plaintiff’s rights under ERISA providing for review.
On March 21, 2011, Plaintiff’s counsel then sought the information listed above, including
the name and credentials of the medical professional who reviewed the records, an outline of the
records they reviewed, and copies of their medical opinions (AR 98). A UMR Appeals Examiner
received the letter and responded on April 1, 2011, explaining she would send counsel the
information within the week. On April 13, 2011, she forwarded a copy of the 2010 SPD. Her letter
states she also enclosed medical records, although Plaintiff states no such records were enclosed and
the administrative record likewise does not reflect any record enclosures. The letter also stated the
examiner did not have the name of the reviewing physician, but noted the reviews are completed by
MES Group.
Over the course of the next few months, Plaintiff continued to send letters to UMR seeking
the requested information. Those letters are not in the administrative record. Plaintiff also states
UMR responded on July 1, 2011 stating all documentation related to the case had been sent to
Plaintiff. That letter also is not in the administrative record. On August 2, 2011, Plaintiff’s counsel
sent a letter to UMR stating UMR had failed to send the requested information and Plaintiff would
pursue recourse in federal court. Plaintiff notified UMR it would seek compensation for the unpaid
claims as well as penalties under 29 U.S.C. § 1132(c) for the failure to provide the requested
20
information. Plaintiff sent another letter on November 9, 2011 amending its prior letter and
confining the inquiry to three claims between November 16, 2009 and January 31, 2010. It again
advised it would seek recourse in federal court.
The Court concludes UMR provided adequate notice to Plaintiff of its reasons for denial.
As one court observed,
Plaintiff appears to be contending that notice under § 1133 means providing copies
of all the medical evidence upon which the Plan relied in making its determination.
The Court is aware of no authority that would support such a contention. Notice
under § 1133 of the specific reasons for denial has never been interpreted by the
courts to require a Plan to provide the claimant with a copy of the full administrative
record. Neither does notice require a Plan to explain its actions in response to
demands presented by Plaintiff or her counsel.
Dutton v. Unum Provident Corp./Paul Revere Co., 170 F. Supp. 2d 754, 760 (W.D. Mich. 2001).
The record in this case shows UMR properly notified Plaintiff of the grounds for its denial; that is,
the treatment was not medically necessary both because the record under review did not indicate the
patient had ITP and the Rituxan was experimental or investigational.
The Court must also consider the second purpose of § 1133: “[P]rovid[ing] the claimant an
opportunity to have that decision reviewed by the fiduciary.”5 Wenner, 482 F.3d at 882. In order
to have a full and fair review, a beneficiary should “‘know[] what evidence the decision-maker
relied upon, hav[e] an opportunity to address the accuracy and reliability of that evidence, and hav[e]
the decision-maker consider the evidence presented by both parties prior to reaching and rendering
his decision.’” Marks v. Newcourt Credit Grp., Inc., 342 F.3d 444, 461 (6th Cir. 2003) (quoting
Halpin v. W.W. Grainger, Inc., 962 F.2d 685, 689 (7th Cir. 1992)); see also Houston v. Unum Life
5
For the reasons discussed below in the discussion of Plaintiff’s fiduciary duty argument,
UMR is a fiduciary under the Plan.
21
Ins. Co. of Am., 246 F. App’x 293, 300 (6th Cir. 2007) (citing Halpin for this proposition). As
Plaintiff’s complaint and brief focus almost entirely on certain documents it was denied after the
appeals process, this consideration constitutes the thrust of Plaintiff’s ERISA claim.
“[I]n the context of an administrative appeal of an adverse benefits determination,” the Sixth
Circuit has noted,
29 C.F.R. § 2560.503-1(h)(2) outlines the essential procedural requirements for a full
and fair review. These procedural requirements include (1) the allowance of 60 days,
after notification of an adverse benefit determination, in which a claimant may file
an administrative appeal; (2) the opportunity to submit written comments,
documents, records, and other information relating to the claim for benefits; (3) the
right to be provided, upon request and free of charge, reasonable access to and copies
of all documents, records, and other information relevant to the claim for benefits;
and (4) the requirement that the fiduciary take into account all comments,
documents, records, and other information submitted by the claimant relating to the
claim, regardless of whether such information was submitted or considered in the
initial benefit determination.
Balmert v. Reliance Standard Life Ins. Co., 601 F.3d 497, 502 (6th Cir. 2010) (citation omitted).
Plaintiff alleges it did not receive, after request, an outline of the specific records reviewed and a
description of any records that would be necessary in order to approve the treatment. Plaintiff also
argues it was entitled to the actual medical report prepared by the medical professional. Although
Plaintiff cites to 29 C.F.R. § 2560.503-1(h)(3)(iii) and (v),5 neither of these sections requires
disclosure of documents or records.
Rather, they both contain requirements for medical
5
In addition to these regulations, Plaintiff sought this information pursuant to 29 CFR §
2560.503-1(g)(1)(v)(B). However, 29 CFR § 2560.503-1(g)(1)(v)(B) provides “[i]f the adverse
benefit determination is based on a medical necessity or experimental treatment or similar exclusion
or limit, 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.” The letters, as discussed above, adequately explained
the clinical judgment and applied the Plan to the patient’s medical circumstances. This section of
the regulation does not otherwise provide for relevant documentation, as does subsection (h)(2)(iii).
22
professionals, such as limiting what kind of information they may consider and prohibiting them
from being involved in the initial benefits determination. Presumably Plaintiff’s argument it was
entitled to the records is based on 29 C.F.R. § 2560.503-1(h)(2)(iii), which provides for access to
all documents, records, and information relevant to the initial benefits determination. Indeed,
Plaintiff also cites to 29 C.F.R. § 2560.503-1(m)(8), which defines what constitute such “relevant”
materials under 29 C.F.R. § 2560.503-1(h)(2)(iii). See 29 C.F.R. § 2560.503-1(h)(2)(iii) (“Whether
a document, record, or other information is relevant to a claim for benefits shall be determined by
reference to paragraph (m)(8) of this section.”).
In addition to 29 C.F.R. § 2560.503-1(h)(2), Defendant was obligated to abide by the
requirements of 29 CFR § 2560.503-1(h)(3) (“The claims procedures of a group health plan will not
be deemed to provide a claimant with a reasonable opportunity for a full and fair review of a claim
and adverse benefit determination unless, in addition to complying with the requirements of
paragraphs (h)(2)(ii) through (iv) of this section, the claims procedures [abide by enumerated
requirements].”). That section includes another one of the procedural violations alleged here: the
failure to “[p]rovide for the identification of medical or vocational experts whose advice was
obtained on behalf of the plan in connection with a claimant’s adverse benefit determination, without
regard to whether the advice was relied upon in making the benefit determination.” 29 CFR §
2560.503-1(h)(3)(iv).
The weakness in Plaintiff’s case is it did not request the missing information during the
appeals process. The Plan provides for a mandatory first-level appeal and a voluntary second-level
appeal (AR 543-44). Consistent with the regulations, the Plan allows denied beneficiaries access
to a litany of documents and to other information relevant to the initial benefits determination:
23
Covered Persons or their Authorized Representative will be allowed reasonable
access to review or copy pertinent documents, at no charge.
Covered Persons may submit written comments, documents, records and other
information relating to the claim to explain why they believe the denial should be
overturned. This information should be submitted at the same time the written
request for a review is submitted.
....
The review will take into account all comments, documents, records and other
information submitted that relates to the claim. This would include comments,
documents, records and other information that either were not submitted previously
or were not considered in the initial benefit decision. The review will be conducted
by individuals who were not involved in the original denial decision and are not
under the supervision of the person who originally denied the claim.
If the benefit denial was based in whole or in part on a medical judgment, the Plan
will consult with a health care professional with training and experience in the
relevant medical field. This health care professional may not have been involved in
the original denial decision, nor be supervised by the health care professional who
was involved. If the Plan has obtained medical or vocational experts in connection
with the claim, they will be identified upon the Covered Person’s request, regardless
of whether the Plan relies on their advice in making any benefit determinations.
(Id. at 278, 543). Plaintiff did offer new information for consideration during the process related
to the patient’s condition after the time period relevant here. But Plaintiff has pointed to nothing in
or out of the record6 to suggest it sought the missing documentation prior to the March 21, 2011
letter to UMR.
Part of the confusion in this case is the failure of the parties to identify which claims are
relevant to the time period at issue and which appeals correspond to those claims. Even considering
those shortcomings, however, it is clear to the Court both levels of appeal provided by the Plan had
6
Although a district court should typically not receive new evidence in ERISA cases, an
exception to that rule arises when “consideration of that evidence is necessary to resolve an ERISA
claimant’s procedural challenge to the administrator’s decision.” Wilkins v. Baptist Healthcare Sys.,
Inc., 150 F.3d 609, 618 (6th Cir. 1998). Plaintiff has accused Defendant of producing an incomplete
record, but it has not sought discovery or submitted new evidence. As discussed below, the Court
concludes remand would be futile in this case because the Court has sufficient information to find
in Defendant’s favor without the alleged missing materials.
24
been exhausted before the missing documentation was sought for at least some of the claims (see
AR 98) (referring to the February 11, 2011 letter and requesting the missing documentation).
Moreover, Plaintiff seeks relief for claims between November 2009 and January 2010. As noted,
the first time Plaintiff sought the documentation complained-of here was over one year later, on
March 21, 2011. Any claim that did not receive a first or second appeal would have been well
outside of the Plan’s appeal time frame by the time this information was first requested (AR 543)
(requiring an initial appeal be made within 180 days of the initial denial and a second appeal be
made within 60 days of the denial of the first appeal); (id. at 544) (providing at most 60 days to
resolve an initial appeal). Plaintiff has not pointed to or alleged any appeal pending during the time
the information was sought. Indeed, one of the letters in the correspondence between counsel and
UMR, in which the missing documentation was requested, acknowledges the appeals period had
passed (AR 437) (wherein counsel continues to seek the missing documentation and notes “[g]iven
that all levels of appeal directly to the Plan have been exhausted and the Plan continues to rely on
its original adverse benefit determination, the facility has no choice but to pursue this matter in
federal court”).
The Court concludes Plaintiff’s claim must fail because it did not request the information
during the pendency of the appeal period. “A claimant’s failure to fully explore and exercise [its]
procedural rights does not undermine the fundamental fairness of an otherwise full and fair
administrative review process.” Balmert, 601 F.3d at 502. Consistent with this principle, when the
information not provided as required by 29 C.F.R. § 2560.503-1 was only sought after the “final
determination” of the plaintiff’s claim, the plaintiff has not been denied a full and fair review of its
claim. See Maynor v. Hartford Life Grp. Ins. Co., No. 2:07-CV-244, 2009 WL 2601866, at *7 (E.D.
25
Tenn. Aug. 20, 2009) (“If this information had been sought and then denied during the pendency of
her appeal, then this would be a close case. However, the plaintiff did not seek this information at
that time, and she was informed that she could submit any information for the defendants to consider
prior to its final determination. Thus, in terms of her procedural argument, this Court cannot find
that the defendant denied plaintiff a full and fair review by allegedly denying her access to
information after the final determination which she did not seek.”). As the court in Maynor
concluded, if the opportunities for review by the fiduciary had all passed, the documentation
requested post-review could not have caused a failure “to provide the claimant an opportunity to
have that decision reviewed by the fiduciary.” See Wenner, 482 F.3d at 882 (emphasis in original);
see also Balmert, 601 F.3d at 502-03 (denying a full and fair review claim because the plaintiff did
not request the report she claimed she was denied). Indeed, Plaintiff offered new information during
the appeals process, which was considered by UMR. It was not until after UMR concluded the
claims should be denied for a second and final time that Plaintiff sought the information forming the
basis of its ERISA claim. Accordingly, Plaintiff was not denied a full and fair review of its claim.
Admittedly, 29 CFR § 2560.503-1(h)(3)(iv) does not explicitly contain a request
requirement, while 29 CFR § 2560.503-1(h)(2)(iii) does . Subsection (h)(3)(iv) requires “[t]he
claims procedures” of a group health plan to “[p]rovide for the identification of medical or
vocational experts whose advice was obtained on behalf of the plan in connection with a claimant's
adverse benefit determination, without regard to whether the advice was relied upon in making the
benefit determination.” 29 CFR § 2560.503-1(h)(3)(iv). The Court concludes, as have a number
of other district courts, a plan with procedures that “provide[] for” the identification of these experts
upon request satisfies the regulation; the regulations do not require explicit disclosure of those
26
experts in the denial letter. See, e.g., Walker v. Kimberly-Clerk Corp., No. 1:08CV146–SA–JAD,
2010 WL 611007, at *10 (N.D. Miss. Feb. 17, 2010) (“The regulation does not explicitly require
those names to be reported to the claimant, only that a procedure for obtaining the medical
consultant’s identity be available.”); Orr v. Metro. Life Ins. Co., Inc., No. 1:CV-04-0557, 2007 WL
2702929, at *15 (M.D. Pa. Sept. 13, 2007) (“We do not read the regulation, however, to require
explicit disclosure of such individuals in a denial letter.”); Agnew v. Verizon Wireless Short Term
Disability Plan, No. 8:06-2159, 2007 WL 1120411, at *4 (D.S.C. Apr. 13, 2007) (“[T]he claims
procedures of the Plan clearly provided for the identification of medical experts whose advice was
obtained on behalf of the plan in connection with an adverse benefit determination. . . . Therefore,
Agnew’s argument that the Plan did not provide for the identification of medical experts is without
merit.”) (citation omitted); Provencio v. SBC Disability Income Plan, No. SA-05-CA-0032-WWJ,
2006 WL 3927168, at *8 (W.D. Tex. Dec. 6, 2006) (“Provencio reads this regulation as a
requirement that the plan administrator identify the plan’s medical expert directly to the claimant,
before the conclusion of an administrative appeal. The express language of the regulation, however,
merely requires the plan administrator to ‘provide for’ the identification of a medical expert.”); see
also Lafleur v. La. Health Serv. & Indem. Co., 563 F.3d 148, 156 (5th Cir. 2009) (finding the
fiduciary failed to comply with 29 CFR § 2560.503-1(h)(3)(iv) because it did not identify the
medical expert relied upon after the plaintiff “specifically requested” the information prior to the
pendency of the administrative appeal).
Here, as noted above, the Plan provides the following
procedure for obtaining the identification of health care professionals who were retained by UMR
in consideration of a beneficiary’s claim.
If the benefit denial was based in whole or in part on a medical judgment, the Plan
will consult with a health care professional with training and experience in the
27
relevant medical field. This health care professional may not have been involved in
the original denial decision, nor be supervised by the health care professional who
was involved. If the Plan has obtained medical or vocational experts in connection
with the claim, they will be identified upon the Covered Person’s request, regardless
of whether the Plan relies on their advice in making any benefit determinations.
(AR 278, 543). The Plan, therefore, contains procedures by which a denied beneficiary may obtain
the identities of any medical or vocational experts retained “in connection with the claim” regarding
“any benefit determinations.” These procedures satisfy the regulation. Of course, UMR failed to
respond to Plaintiff’s request for documents. It did so, however, after the period for UMR’s review.
These procedures, which call for a request to come before or during the pendency of the appeal,
were not violated by UMR’s failure to provide documentation following its final determination.
Accordingly, UMR did not deprive Plaintiff a “full and fair review” of its claim because the review
period had ended prior to Plaintiff’s request for documentation. See Balmert, 601 F.3d at 502-03;
Maynor, 2009 WL 2601866, at *7.
Moreover, relief for a violation of § 1133 is equitable. 29 U.S.C. § 1132(a)(3). The
appropriate remedy would not be the damages sought by Plaintiff. Rather, at best Plaintiff would
be entitled to a remand to allow Plaintiff to pursue the merits of its claim. See Wenner, 482 F.3d at
883-84 (“A plaintiff denied any benefits at all has no expectation of receiving them unless her claim
is meritorious, and thus returning her to the status quo prior to the § 1133 violation requires only
curing the procedural violation so that she may fairly pursue the merits of her claim.”). Because the
Court concludes UMR substantially complied with the twin purposes of § 1133, remand is not
necessary. See Dutton, 170 F. Supp. 2d at 761 (“[T]he Sixth Circuit noted in Kent that remand
would not be required where it would represent a ‘useless formality.’”) (quoting Kent v. United of
Omaha Life Ins. Co., 96 F.3d 803, 807 (6th Cir. 1996)).
28
3. Fiduciary Duty
Plaintiff also claims in its brief, although not in its complaint, that Defendants breached
fiduciary duties in their failure to provide a “full and fair review” of the claim denial, based on the
inadequacies of the process claimed by Plaintiff and discussed above.
Initially, the Court notes UMR, although not explicitly accorded fiduciary status by the Plan,
did owe Plaintiff a fiduciary duty pursuant to ERISA. “ERISA provides that ‘not only the persons
named as fiduciaries by a benefit plan, see 29 U.S.C. § 1102(a), but also anyone else who exercises
discretionary control or authority over the plan’s management, administration, or assets, see §
1002(21)(A), is an ERISA ‘fiduciary.’” Moeckel v. Caremark RX Inc., 385 F. Supp. 2d 668, 682
(M.D. Tenn. 2005) (quoting Mertens v. Hewitt Assocs., 508 U.S. 248, 251 (1993)). This definition
is “functional . . . and does not turn on formal designations such as who is the trustee.” Smith v.
Provident Bank, 170 F.3d 609, 613 (6th Cir. 1999). Because the definition of an ERISA fiduciary
“includes anyone who ‘exercises any discretionary authority or discretionary control respecting
management of [the] plan or exercises any authority or control respecting management or disposition
of assets,’” UMR is a fiduciary under the Plan. Smith, 170 F.3d at 613 (quoting 29 U.S.C. §
1002(21)(A)); see also id. (“To the extent that Provident delegated duties and powers to Cowen and
Cambron, they personally could become ERISA fiduciaries and be liable under § 1132(a)(2).”).
ERISA requires a “fiduciary [to] discharge his duties with respect to a plan solely in the
interest of the participants and beneficiaries and . . . with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent man acting in a like capacity and familiar
with such matters would use.” 29 U.S.C. § 1104.
However, “[t]o prevail on a
breach-of-fiduciary-duty claim under ERISA, a plaintiff must generally prove that the defendant not
29
only breached its fiduciary duty but also caused harm by that breach.” Maynor, 2009 WL 2601866,
at *5 (citing Kuper v. Iovenko, 66 F.3d 1447, 1459 (6th Cir. 1995)); see also Kuper, 66 F.3d at 1459
(holding § 1104 contains a causation requirement); Pfeil v. State St. Bank & Trust Co., 671 F.3d 585,
596-97 (6th Cir. 2012). But see Chao v. Hall Holding Co., Inc., 285 F.3d 415, 438-39 (6th Cir.
2002) (recognizing Kuper found a causal link requirement in § 1104 but declining to extend that
requirement to violations of § 1106).
Here, because, as discussed above, Plaintiff did not request the omitted information during
the pendency of its appeal before UMR or during its initial determination, there is no causal
connection between UMR’s failure to provide the information and its denial of benefits. See
Maynor, 2009 WL 2601866, at *6 (“It is worth noting that there is no indication in the record that
the plaintiff asked for this information during the pendency of her appeal or prior to the final
decision. . . . The plaintiff has not demonstrated that she is entitled to this information, but more
importantly, she has failed to show a causal connection between the alleged breach and her denial
of benefits.”). Plaintiff’s breach of fiduciary duty claim, to the extent the Court considers a claim
not made in the complaint, thus fails.
4. Attorney’s Fees
Plaintiff seeks attorney’s fees and costs pursuant to 29 U.S.C. § 1132(g)(1), which provides
discretion to the Court to “allow a reasonable attorney’s fee and costs of action to either party.”
Defendants’ only argument opposed to the imposition of attorney’s fees under § 1132(g)(1) is that
Plaintiff is not a “participant, beneficiary, or fiduciary” under the Plan and is therefore precluded
from obtaining such an award. However, as noted above, the Court concludes Plaintiff is validly
acting as the patient’s authorized representative.
30
Moreover, ERISA defines “beneficiary” as “a person designated by a participant . . . who
is or may become entitled to a benefit [under a covered plan].” 29 U.S.C. § 1002(8); see also
Crawford v. Roane, 53 F.3d 750, 754 (6th Cir. 1995) (“[W]e hold that one is a ‘beneficiary’ under
§ 1002(8) only if he has a reasonable or colorable claim for benefits under an ERISA plan . . . .”);
Kennedy v. Conn. Gen. Life Ins. Co., 924 F.2d 698, 700 (7th Cir. 1991) (“[Section] 1132(a)(1)(B)
supplies jurisdiction when a provider of medical services sues as assignee of a participant. ERISA
defines a ‘beneficiary’ as ‘a person designated by a participant . . . who is or may become entitled
to a benefit’ under the plan.”) (quoting 29 U.S.C. § 1002(8)). Plaintiff’s § 1132 action is brought
under § 1132(a)(3)(B) and is an action covered by § 1132(g)(1). Accordingly, Plaintiff may seek
attorney’s fees under § 1132(g)(1).
However, Plaintiff is not entitled to attorney’s fees in this case. Although the Court
previously concluded § 1132(g) did not contain a prevailing party requirement, McKay v. Reliance
Standard Life Ins. Co., 654 F. Supp. 2d 731, 736 (E.D. Tenn. 2009), the Supreme Court
subsequently concluded “a fees claimant must show ‘some degree of success on the merits’ before
a court may award attorney’s fees under § 1132(g)(1),” Hardt v. Reliance Standard Life Ins. Co.,
130 S. Ct. 2149, 2158 (2010). Accordingly, because the Court denies Plaintiff’s claim under § 1133,
an award of attorney’s fees would be inappropriate.
5. Section 1132(c) Damages
For the first time in its brief, Plaintiff seeks statutory damages under 29 U.S.C. § 1132(c),
which provides a plan administrator who fails to provide certain documents required by ERISA or
who refuses to comply with a request for information as required by ERISA will be subject to
statutory damages in the amount of $100 per day. However, as Defendants correctly note, “[i]t is
31
well established that only plan administrators are liable for statutory penalties under § 1132(c).”
Caffey v. Unum Life Ins. Co., 302 F.3d 576, 584 (6th Cir. 2002). ERISA defines “administrator” as
the “plan sponsor” unless otherwise specified in the plan, 29 U.S.C. § 1002(16)(A)(ii), and, where
a plan is maintained by a single employer, the plan sponsor is the employer, 29 U.S.C. §
1002(16)(B)(i). Here, not only is CPC Logistics explicitly defined as the plan administrator in the
Plan (AR 442), but it otherwise meets the definition of plan administrator in ERISA. Because CPC
Logistics is not a defendant in this case, Plaintiff cannot seek statutory damages pursuant to §
1132(c).
The Court notes, however, when a third-party administrator performs all the functions of a
plan administrator some courts have found it liable under § 1132(c). See, e.g., Logan v. Unicare Life
& Health Ins., Inc., No. 05-72928, 2007 WL 1875943, at *4 (E.D. Mich. June 25, 2007) (rejecting
the argument the third-party administrator was not liable because “all of Compsystem’s duties were
performed by MMBM employees, and the decision to not provide Plaintiff with the requested
documents was made by a MMBM employee”); Hill v. Metro. Life Ins. Co., 327 F. Supp. 2d 886,
890 (E.D. Tenn. 2004) (noting the plaintiff’s argument the defendant should be held liable under §
1132(c) because it acted as the plan administrator’s delegate and performed the relevant violations,
but declining to decide the issue because the court need not exercise its discretionary authority to
impose damages). The argument may be more persuasive here, where UMR is explicitly named a
third party administrator in the Plan.
However, even if the Court were to consider UMR an administrator for the purposes of §
1132(c), Plaintiff’s claim would still fail. First, a violation of § 1133 may not serve as the basis for
§ 1132(c), because the former imposes requirements on plans whereas the latter imposes
32
requirements on plan administrators. Stuhlreyer v. Armco, Inc., 12 F.3d 75, 79 (6th Cir. 1993).
Some courts have concluded violations of regulations that themselves impose requirements on plan
administrators, such as 29 CFR § 2560.503-1(g)(1)(v)(B) at issue here, may serve as a basis for §
1132(c) liability. See Kleinhans v. Lisle Savings Profit Sharing Trust, 810 F.2d 618 (7th Cir. 1987)
(concluding a violation of 29 CFR § 2560.503-1(f) (1977) could serve as a basis for § 1132(c)
liability because it imposed a duty on plan administrators). Other courts have concluded no
regulatory violation under § 1133 can serve as a basis for § 1132(c) damages. See Groves v.
Modified Retirement Plan, 803 F.2d 109, 116-18 (3d Cir. 1986) (concluding violations of § 1133’s
implementing regulations cannot serve as bases for § 1132(c) damages because of the penal nature
of § 1132(c) and the fact it only applies to duties imposed “by this subchapter,” not by implementing
regulations); see also Jordan v. Tyson Foods, Inc., 312 F. App’x 726, 735-37 (6th Cir. 2008)
(discussing both Kleinhans and Groves and concluding the regulation at issue in Jordan was not
covered by § 1132(c) regardless, but noting it is unclear whether Kleinhans is still good law in the
Seventh Circuit). Because the Sixth Circuit cast doubt on those decisions holding violations of §
1133’s implementing regulations can serve as the basis for § 1132(c) damages, Jordan, 312 F. App’x
at 735-37, the Court concludes Plaintiff is not entitled to such damages in this case.
Second, as previously discussed, UMR did not violate the regulations.7 Section 1132(c) only
provides damages if an administrator “fails or refuses to comply with a request for any information
which such administrator is required by this subchapter to furnish to a participant or beneficiary.”
The regulations require the missing documents to be provided in order to ensure a full and fair
7
The SPD, which was also requested, was required to be sent to Plaintiff upon request by
29 U.S.C. § 1024(b)(4). However, the SPD was in fact sent within thirty days, as required by §
1132(c).
33
review of a beneficiary’s claim. Plaintiff did not seek the missing documents until after the appeals
period. Because the review period had ended, Plaintiff had been afforded a full and fair review of
its claim and UMR was no longer required to provide the missing documents pursuant to those
regulations. If some other provision of law required UMR to provide the documents and information
after its final determination, Plaintiff has not identified it.
B. State Claims
The parties did not discuss the state claims of breach of contract, promissory estoppel, and
negligent misrepresentation in their briefs. The Court must consider whether these claims are
preempted by ERISA. At oral argument, Plaintiff’s counsel conceded these claims are likely
preempted. The Court will consider the issue regardless, but does so without the benefit of counsel’s
input.
As an initial matter, there are two types of ERISA preemption. Complete preemption is an
exception to the well-pleaded complaint rule and provides a basis for federal court jurisdiction over
state law claims that could have been brought under § 1132. See Loffredo v. Daimler AG, 500 F.
App’x 491, 495 (6th Cir. 2012). The Court need not consider the complete preemption issue
because, although not alleged in the complaint, it appears the Court has an independent basis for
jurisdiction under the diversity statute, 28 U.S.C. § 1332, or supplemental jurisdiction based on
Plaintiff’s ERISA claims, 28 U.S.C. § 1367.
The other type of ERISA preemption, at issue here, is called “express” preemption. Loffredo,
500 F. App’x at 495; Thurman v. Pfizer, Inc., 484 F.3d 855, 860-61 (6th Cir. 2007); see also Conn.
State Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1344 (11th Cir. 2009) (referring to
preemption under § 1144 as “conflict” or “defensive” preemption). ERISA’s preemption provision
34
preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit
plan” governed by ERISA. 29 U.S.C. § 1144(a); see also Thurman, 484 F.3d at 861. “[T]he express
pre-emption provisions of ERISA are deliberately expansive, and designed to ‘establish pension plan
regulation as exclusively a federal concern.’” Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45-46
(1987) (quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981)). A state law
“‘relate[s] to’ a benefit plan ‘in the normal sense of the phrase, if it has a connection with or
reference to such a plan.’” Id. at 47 (quoting Metro. Life Ins. Co. v. Mass., 471 U.S. 724, 739
(1985)).
Considering the “purpose of ERISA preemption was to avoid conflicting federal and state
regulation and to create a nationally uniform administration of employee benefit plans,”
Penny/Ohlmann/Nieman, Inc. v. Miami Valley Pension Corp. (PONI), 399 F.3d 692, 698 (6th Cir.
2005), the Sixth Circuit has recognized three categories of state law that are clearly preempted by
ERISA: “state-law claims that (1) mandate employee benefit structures or their administration; (2)
provide alternate enforcement mechanisms; or (3) bind employers or plan administrators to
particular choices or preclude uniform administrative practice, thereby functioning as a regulation
of an ERISA plan itself,” Thurman, 484 F.3d at 861 (internal quotation marks omitted). The Sixth
Circuit has also acknowledged a fourth category, “those [claims] seeking ‘remedies for misconduct
growing out of the administration of’ an ERISA plan.” Steele v. United Parcel Serv, Inc., 499 F.
Supp. 2d 1035, 1040 (E.D. Tenn. 2007) (quoting Briscoe v. Fine, 444 F.3d 478, 497(6th Cir.2006)
(citing David P. Coldesina, D.D.S. v. Estate of Simper, 407 F.3d 1126, 1136 (10th Cir. 2005)).
“Congress did not intend, however, for ERISA ‘to preempt traditional state-based laws of
general applicability that do not implicate the relations among the traditional ERISA plan entities,
35
including the principals, the employer, the plan, the plan fiduciaries, and the beneficiaries.’” PONI,
399 F.3d at 698 (quoting LeBlanc v. Cahill, 153 F.3d 134, 147 (4th Cir.1998)). Some state laws
affect ERISA plans “in a way that is ‘too tenuous remote or peripheral’ to say that they ‘relate to’
the plan.” Thurman, 484 F.3d at 861 (quoting Shaw v. Delta Air Lines, 463 U.S. 85, 100 n.21
(1983)). The Sixth Circuit requires a court to consider “whether the remedy sought by a plaintiff
is primarily plan-related.” Id.
Here, Plaintiff’s claims relate to an alleged agreement between UMR and Plaintiff. Plaintiff
points to the precertification of the patient by UMR and argues the precertification constitutes an
independent contract between the parties. The complaint specifically disclaims the agreement rises
under the Plan, and states “[t]he Contract arises, not as a result of an insurance contract between
defendants and their insured, but as a result of defendants’ independent promise to PMC for payment
of medical services provided to defendants’ insured.” In the alternative, Plaintiff seeks enforcement
of the agreement on a promissory estoppel theory or damages for negligent misrepresentation.
The question for the Court is, assuming the precertification constitutes any of the torts
claimed by Plaintiff, whether the alleged action by UMR sufficiently “relate[s] to” the Plan that the
claim is preempted by § 1144.
The Court has already concluded UMR acted as a plan fiduciary when it was handling
Plaintiff’s claim. The Court also concluded Plaintiff was, in fact, a beneficiary assigned by the
patient to receive benefits. Plaintiff’s victories on these questions appear to be pyrrhic. Because
UMR was acting as a plan fiduciary, and Plaintiff was acting as a plan beneficiary, Plaintiff’s state
claims “implicate the relations among the traditional ERISA plan entities.” PONI, 399 F.3d at 698.
Congress’s broad preemption mandate conflicts with such a law, and Plaintiff’s claims are therefore
36
preempted. See Hutchison v. Fifth Third Bancorp, 469 F.3d 583, 590 (6th Cir. 2006) (“Most
strikingly, the instant case differs from PONI in that plaintiffs’ claim implicates relations among
traditional ERISA plan entities. Fifth Third is an ERISA plan fiduciary and it is Fifth Third’s
amendment of the plan that is directly challenged, not just implicated, in this suit.”); cf. Kloots v.
Am. Express Tax & Bus. Servs., Inc., 233 F. App’x 485, 488 (6th Cir. 2007) (noting “the district
court’s uncontested determination that defendants are not fiduciaries relative to the ESOP or its
beneficiaries . . . drives much of our analysis”); PONI, 399 F.3d at 699 (concluding a state law claim
was not preempted because it was made against “non-fiduciary service providers”).
To the extent Plaintiff’s complaint separates its claim under the assignment of benefits and
its state law claims, the Court’s conclusion is unaffected by the timing of UMR’s alleged promise.
The Sixth Circuit has stated
[a]ffirmance [of the district court’s ruling] is required [when] plaintiffs seek damages
for the ERISA-regulated actions of an ERISA fiduciary, based on an alleged contract
that the fiduciary entered into before it became a fiduciary with respect to plaintiffs.
ERISA preempts in that situation because the state-law contract claim would bind
fiduciaries to particular choices, thereby functioning as a regulation of the ERISA
plan.
Hutchison, 469 F.3d at 587-88. Such is the claim at issue here. The state law contract claim, and
for that matter, the promissory estoppel claim, attempt to bind the ERISA fiduciary to a particular
choice: to pay Plaintiff for services rendered pursuant to the plan. Binding an administrator to a
choice is one of the three categories the Sixth Circuit has identified as preempted by ERISA. See
Thurman, 484 F.3d at 681. Plaintiff’s claims are therefore preempted by ERISA.
Moreover, the Sixth Circuit has concluded claims similar to these claims are preempted by
ERISA. In Cromwell, 944 F.2d at 1274, the plaintiffs, doing business as a home health care
company, agreed to provide services to a patient covered under an employee plan through her
37
husband’s employment. Prior to agreeing to provide care to the patient, the plaintiffs contacted the
defendant, administrator of the health plan, and verified the patient’s coverage and that the specific
type of care would be covered under the plan. Id. at 1274-75. After receiving assurance of
coverage, the plaintiff provided the needed care to the patient. Id. at 1275. The defendant paid the
plaintiff for care rendered until the patient’s husband was terminated and was no longer eligible for
benefits. Plaintiffs, however, were unaware of this event and defendant did not notify them. Rather,
defendant simply stopped paying plaintiffs’ claims. Id. When plaintiffs inquired why they were not
being paid, defendant informed them there was a dispute regarding the coverage. Sometime
thereafter, defendants paid the patient’s husband the outstanding balance for services, rather than
plaintiffs directly, even though the patient’s husband had signed an assignment of benefits. Id.
The Sixth Circuit concluded a plaintiff’s state law claims of breach of contract, promissory
estoppel, negligent misrepresentation, and breach of good faith were preempted. The court noted
“[i]t is not the label placed on a state law claim that determines whether it is preempted, but whether
in essence such a claim is for the recovery of an ERISA plan benefit.” Id. at 1276. The court
concluded
[a]ppellants’ complaint alleged promissory estoppel, breach of contract, negligent
misrepresentation, and breach of good faith as grounds for the recovery of benefits
from the [defendant’s] plan for health care services rendered to the [patient]. Thus,
appellants’ state law claims are at the very heart of issues within the scope of
ERISA’s exclusive regulation and, if allowed, would affect the relationship between
plan principals by extending coverage beyond the terms of the plan. Clearly,
appellants’ claims are preempted by ERISA.
Id.
This is relevant to the Court’s determination. Plaintiff, although it attempts to separate its
state claims from its ERISA claim and the underlying plan, is claiming UMR precertified the
38
patient’s coverage under the plan, and agreed Plaintiff would be paid pursuant to the plan.
Although the complaint muddles the language, stating both “[Plaintff] accepted and treated the
Patient as a patient represented to be covered under the Plan” and “Defendant made an independent
promise to pay [Plaintiff] for the services rendered,” the filings demonstrate Plaintiff obtained
precertification of benefits coverage and treated the patient accordingly.8 Under Cromwell,
Plaintiff’s attempt to recover benefits for “health care services rendered” goes to the “very heart of
issues within the scope of ERISA’s exclusive regulation.” Cromwell, 944 F.2d at 1276. Plaintiff’s
state claims are therefore preempted.
Cromwell conflicts with the conclusion of a number of other circuits. See, e.g., Franciscan
Skemp Healthcare, Inc. v. Cent. States Joint Bd. Health & Welfare Trust Fund, 538 F.3d 594, 600
(7th Cir. 2008) (disagreeing with Cromwell as “somewhat of an exception to the trend” and
concluding claims of negligent misrepresentation and estoppel were not completely preempted but
declining whether to determine if it was expressly preempted); In Home Health, Inc. v. Prudential
Ins. Co. of Am., 101 F.3d 600, 605 (8th Cir. 1996) (noting the majority of circuits “have concluded
the providers’ state law claims are not preempted by ERISA” and distinguishing Cromwell because
the plaintiff was not seeking benefits as an assignee of a beneficiary); Memorial Hosp. Sys. v.
Northbrook Life Ins. Co., 904 F.2d 236, 246 (5th Cir. 1990) (concluding on similar facts to this case
third party providers’ claims against fiduciaries are not preempted); Cromwell, 944 F.2d at 1283-84
(Jones, J., dissenting) (citing Memorial Hospital as the appropriate analysis). The Court notes,
however, while Cromwell appears to be the minority among the circuits, it does appear to be good
8
However, as discussed below in regard to equitable estoppel, the filings submitted to
demonstrate precertification are ambiguous.
39
law. See McLemore v. Regions Bank, 682 F.3d 414, 425 (6th Cir. 2012) (citing Cromwell as
authority); Steele v. United Parcel Serv, Inc., 499 F. Supp. 2d 1035, 1040 (E.D. Tenn. 2007) (citing
Cromwell as authority but concluding it did not control the issue presented). Accordingly, although
other circuits might disagree, the Court must apply Cromwell and concludes Plaintiff’s state claims
are preempted.
C. Equitable Estoppel
Equitable estoppel, however, is a valid claim under ERISA. See Bloemker v. Laborer’s
Local 265 Pension Fund, 605 F.3d 436, 440 (6th Cir. 2010). Plaintiff’s promissory estoppel
argument could be construed as a claim of equitable estoppel. See id. (“We have recognized that
‘equitable estoppel may be a viable theory in ERISA cases,’ and have treated promissory estoppel
in the same way.”) (quoting Sprague v. Gen. Motors Corp., 133 F.3d 388, 403-04, 403 n.13 (6th Cir.
1998)). Although the complaint appears most naturally to be read as raising a state law promissory
estoppel claim, it could be read as ambiguously raising an ERISA equitable estoppel claim.
In order to establish an equitable estoppel claim, a plaintiff must demonstrate
1) conduct or language amounting to a representation of material fact; 2) awareness
of the true facts by the party to be estopped; 3) an intention on the part of the party
to be estopped that the representation be acted on, or conduct toward the party
asserting the estoppel such that the latter has a right to believe that the former’s
conduct is so intended; 4) unawareness of the true facts by the party asserting the
estoppel; and 5) detrimental and justifiable reliance by the party asserting estoppel
on the representation.
Id. at 442. “[E]stoppel ‘cannot be applied to vary the terms of the unambiguous plan documents.’”
Id. at 443 (quoting Sprague, 133 F.3d at 404).
There are at least two reasons not to apply equitable estoppel in this case. First, the evidence
Plaintiff provides regarding the “promise” to pay for services rendered is unclear. Plaintiff points
40
to UMR’s log notes reflecting a precertification inquiry on November 16, 2009 (AR 2). The notes
do reflect such an inquiry, but the comments also states “no precert req; only for admit” (id.). The
contents of this representation are unknown to the Court, and the parties have not provided any
additional information sufficient to justify application of equitable estoppel.
Second, reliance on the representation must be reasonable. A “party’s reliance can seldom,
if ever, be reasonable or justifiable if it is inconsistent with the clear and unambiguous terms of plan
documents available to or furnished to the party.” Sprague, 133 F.3d at 404. In this case, the Plan
explicitly states the following in regard to “Pre-Service Claim[s]”:
[A Pre-Service Claim] is a claim for a benefit where the Covered Person is required
to get approval from the plan before obtaining the medical care such as in the case
of notification of health care items or service that the Plan requires. If a Covered
Person or provider calls the Plan to find out if a claim will be covered, that is not a
Pre-Service Claim, unless the Plan and this SPD specifically require the person to
call for notification. Giving notification does not guarantee that the Plan will
ultimately pay the claim.
(AR 539) (emphasis in original). The “notification” referred to in this section is defined elsewhere
in the Plan as “a determination by [UMR]9 on behalf of the Plan, with respect to whether a service,
treatment, supply or facility is the most appropriate cost effective treatment for the care and
treatment of an Illness or Injury and meets Clinical Eligibility for Coverage” (id. at 525). The Plan
reiterates that notification does not guarantee coverage in at least one other provision:
Even though a Covered Person provides Notification from [UMR], that does not
guarantee that this Plan will pay for the medical care. The Covered Person still needs
to be eligible for coverage on the date services are provided. Coverage is also subject
to all of the provisions described in this document.
(Id. at 526).
9
The omitted term “Utilization Management Organization” is listed as “UMR Utilization
Management” (AR 525).
41
Plaintiff has pointed to no provision of the Plan that required it to notify UMR before
providing the care.10 As the above-quoted provision indicates, even where notification is required
by the Plan, it provides no guarantee of coverage. Courts have rejected estoppel claims where the
language of the plan conflicts with the alleged misrepresentation. See, e.g., Sprague, 133 F.3d at 404
(“In the face of GM’s clearly-stated right to amend—a right contained in the plan to which the
plaintiffs had access and in many of the summaries they were given—reliance on statements
allegedly suggesting the contrary was not, and could not be, reasonable or justifiable, especially
when GM never told the plaintiffs that their benefits were vested or fully paid-up.”); Combs v. Ky.
Wesleyan Coll., No. 4:05CV-139-JHM, 2008 WL 145253, at *16 (W.D. Ky. Jan. 11, 2008) (holding
reliance on statement promising lifetime coverage was unreasonable in light of provision in SPD
reserving right to amend or terminate the plan); Mack v. Blue Cross/Blue Shield of Minn., 537 F.
Supp. 2d 924, 929 (E.D. Mich. 2008) (holding plaintiff did not reasonably rely on two payments
made to her where “the language of the plan is very clear that Plaintiff’s no-fault insurance takes
primary responsibility for her injuries resulting for a car accident”); Reinert v. Giorgio Foods, Inc.,
15 F. Supp. 2d 589, 597 (E.D. Penn. 1998) (holding equitable estoppel inappropriate where the plan
clearly indicated the third-party administrator had no authority to guarantee benefits).
Accordingly, to the extent Plaintiff raises it, the Court rejects any possible equitable estoppel
claim.
D. Incomplete Administrative Record
The parties agree the administrative record is incomplete. Namely, Plaintiff contends the
10
Notification is required for inpatient hospital stays (AR 526). Plaintiff asserts the patient
in this case was receiving outpatient care.
42
very documents it now faults Defendants for failing to provide in the review process have still not
been provided, as well as some of the letters sent to UMR . When the administrative record is
“factually incomplete” remand is appropriate. Majestic Star, 581 F.3d at 373 (“Remand therefore
is appropriate in a variety of circumstances, particularly where the plan administrator’s decision
suffers from a procedural defect or the administrative record is factually incomplete.”). However,
because here the Court can conclude Plaintiff’s claims fail based on the administrative record before
it, remand is not necessary. Had Plaintiff challenged Defendants’ substantive determination, remand
for an incomplete record may be appropriate. But because Plaintiff’s only ERISA claim is the
failure to provide a full and fair review, and the Court concludes that claim fails because Plaintiff
did not seek the documents at issue until after Defendants’ final determination, remand would be
futile. See Majestic Star, 581 F.3d at 374 (concluding the district court properly determined an
award of benefits was appropriate rather than remand because remand would be “futile”); see also
Loffredo, 500 F. App’x at 496 (Sutton, J.) (concluding allowing amendment of a complaint would
be futile where ERISA exempts the claim at issue from coverage); Kent, 96 F.3d at 807 (“[A]
remand in this case would represent a useless formality.”).
IV.
CONCLUSION
For the foregoing reasons, Court will DENY Plaintiff’s motion for judgment on the ERISA
record (Court File No. 21).
An Order shall enter.
/s/
CURTIS L. COLLIER
UNITED STATES DISTRICT JUDGE
43
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