Owen v. Premera Blue Cross

Filing 34

ORDER of the Court re 18 and 27 Cross MOTIONS for Summary Judgment. The Court requests one supplemental brief from each party within ten days of this Order; signed by Judge Ronald B. Leighton. (DN)

HONORABLE RONALD B. LEIGHTON

1
2
3
4
5
6

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

7
8
9
10
11
12
13
14

ANNA SUSAN OWEN, an individual,
Plaintiff,
v.

CASE NO. 3:18-cv-05292-RBL
ORDER REQUESTING
SUPPLEMENTAL BRIEFING

PREMERA BLUE CROSS, a
Washington non-profit corporation, and
THE UNIVERSITY OF PUGET
SOUND WELFARE AND FLEXIBLE
BENEFITS PLAN, an ERISA-qualified
plan,
Defendant.

15
16
17
18
19
20
21
22
23

In this ERISA action, Plaintiff Anna Susan Owen and Defendant Premera Blue Cross
have submitted cross motions for summary judgment. Dkt. ##18, 27. Premera argues that the
Court should apply the abuse of discretion standard of review based on a provision in the
University of Puget Sound’s Benefits Plan granting Premera discretion to decide coverage
eligibility. See Dkt. #18, at 5. Owen contends that de novo review is appropriate for a variety of
reasons. However, the Court’s research has revealed two other compelling bases for applying the
de novo standard that neither party has addressed.

24

ORDER REQUESTING SUPPLEMENTAL BRIEFING - 1

1

First, Washington State regulatory law provides that “[n]o contract [for health services]

2

may contain a discretionary clause.” WAC 284-44-015; WAC 284-44-010. While no court

3

appears to have applied this regulation to invalidate a discretionary clause, one court has stated

4

that it “clearly prohibits discretionary clauses in the health care services context.” Osborn by &

5

through Petit v. Metro. Life Ins. Co., 160 F. Supp. 3d 1238, 1246 (D. Or. 2016); see also

6

Bourland v. Hartford Life & Acc. Ins. Co., No. C13-6056 BHS, 2014 WL 4748218, at *1 n.1

7

(W.D. Wash. Sept. 24, 2014). In addition, several courts have held that a nearly identical

8

regulation voiding discretionary clauses in disability insurance policies is not preempted by

9

ERISA, making de novo review mandatory for such policies. See Murray v. Anderson Bjornstad

10

Kane Jacobs, Inc., No. C10-484 RSL, 2011 WL 617384, at *3 (W.D. Wash. Feb. 10, 2011)

11

(upholding and applying WAC 284-96-012); Landree v. Prudential Ins. Co. of Am., 833 F. Supp.

12

2d 1266, 1274 (W.D. Wash. 2011) (following Murray). If WAC 284-44-015 is similarly not

13

preempted by ERISA, it would seem applicable to the Plan at issue here, which clearly provides

14

health benefits.

15

Second, one Western District of Washington court has held that that binding Independent

16

Review Process, which is statutorily mandated in Washington, negates the discretion that a plan

17

may grant to the administrator. K.F. ex rel. Fry v. Regence Blueshield, No. C08-0890RSL, 2008

18

WL 4223613, at *2 (W.D. Wash. Sept. 10, 2008); see also Rush Prudential HMO, Inc. v. Moran,

19

536 U.S. 355, 384-86 (2002) (holding that state regulations may alter the standard of review in

20

ERISA cases). Consequently, the court applied a de novo standard to both the administrator’s

21

decisions and the IRO’s decision. Fry, WL 4223613, at *2. Owen utilized the IRO process after

22

exhausting her other appeals so the reasoning from Fry may apply here.

23
24

ORDER REQUESTING SUPPLEMENTAL BRIEFING - 2

1

Because these issues have not been raised by either party and have not been addressed

2

extensively in case law, the Court grants both parties the opportunity to submit one supplemental

3

brief each within ten days of this Order. Each brief should be no more than six pages in length.

4

Each brief should address both issues, especially the application of WAC 284-44-015.

5

IT IS SO ORDERED.

6
7

Dated this 1st day of April, 2019.

8

A

9

Ronald B. Leighton
United States District Judge

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

ORDER REQUESTING SUPPLEMENTAL BRIEFING - 3