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Rittinger v. Healthy Alliance Life Insurance Co.

United States District Court, S.D. Texas, Houston Division

September 14, 2017




         Pending before the Court are Defendants' Motion for Summary Judgment (Doc. No. 46) and Plaintiff's Motion for Summary Judgment (Doc. No. 75). After considering the filings and applicable law, the Court finds that the motions should each be granted in part and denied in part.

         I. BACKGROUND

         This case arises under the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq. Plaintiff Karen Rittinger is a beneficiary, through her husband, of an employee health plan governed by ERISA and offered by Defendant Healthy Alliance Life Insurance Company (HALIC), which does business as Anthem Blue Cross Blue Shield. (Doc. No. 47 at 1-3.) HALIC underwrites the plan, while Defendant Anthem UM Services, Inc., a separate entity, conducts “utilization management review services” for HALIC. (Id. at 3 n.2.)

         On October 15, 2014, Rittinger underwent a laparoscopic surgical procedure known as a “Roux-en-Y gastric bypass” (“RYGB”). (Doc. No. 47 at 6; Doc. No. 76 at 9.) Complications necessitated follow-up surgery on October 18 and intensive care thereafter. (Doc. No. 47 at 7; Doc. No. 69 at 12.) Defendants denied preauthorization for the surgery, though the denial was not issued until October 20. (Doc. No 47 at 6.) As Defendants' denial of coverage explained, “We cannot approve coverage for weight loss surgery (bariatric surgery) or hospital care after this surgery. Bariatric or weight loss surgery is an exclusion in your health plan contract.” (App. 628.)[1] A weight loss surgery that Rittinger had received in 1983, the insertion of a “Molina Band, ” figured in Defendants' denial of coverage. As Defendants explained in their initial denial letter, they construed the October 15 procedure as a simple repetition of the 1983 procedure. (Id.)

         The crucial language defining the bariatric surgery exclusion is Paragraph 33 in the plan's Health Certificate of Coverage (“Certificate”):

[The plan does not cover] … bariatric surgery, regardless of the purpose it is proposed or performed. This includes but is not limited to Roux-en-Y (RNY), Laparoscopic gastric bypass surgery or other gastric bypass surgery (surgical procedures that reduce stomach capacity and divert partially digested food from the duodenum to the jejunum, the section of the small intestine extending from the duodenum), or Gastroplasty, (surgical procedures that decrease the size of the stomach), or gastric banding procedures. Complications directly related to bariatric surgery that result in an Inpatient stay or an extended Inpatient stay for the bariatric surgery, as determined by Us, are not covered. This exclusion applies when the bariatric surgery was not a Covered Service under this plan or any previous one of Our Plans, and it applies if the surgery was performed while the Member was covered by a previous carrier/self-funded plan prior to coverage under this Certificate. Directly related means that the Inpatient stay or extend Inpatient stay occurred as a direct result of the bariatric procedure and would not have taken place in the absence of the bariatric procedure. This exclusion does not apply to conditions including but not limited to: myocardial infarction; excessive nausea/vomiting; pneumonia; and exacerbation of co-morbid medical conditions during the procedure or in the immediate post-operative time frame. (App. 82.)

         Paragraph 33's exclusion of complications directly related to bariatric surgery was Defendants' basis for denying coverage of the October 18 procedure, along with another provision generally excluding care for complications from non-covered procedures. (App. 84 ¶ 62.)

         On November 21, 2014, Rittinger's husband, Erwin Rittinger, wrote an email to Defendants that set forth a plan to appeal the denial and to submit documents in support. (Doc. No. 76 at 12; App. 567.) Defendants treated the email itself as a formal appeal, acknowledging it as such in a letter dated November 25. (Doc. No. 47 at 7-8; App. 243-44.) A letter from Rittinger's surgeons dated December 2 was submitted to Defendants, and Defendants had one follow-up call with Rittinger or her husband on December 8. (App. 17, 590.) Defendants also obtained an independent peer review by Dr. Julie Kim, a doctor with specialties in general surgery and bariatric surgery. (App. 14-16.) Dr. Kim's review examined the medical care that Rittinger received from October 18 onwards. (App. 14.) The review, conducted on December 18, concluded that the October 18 surgery was due to complications from the initial surgery on October 15 and thus was not covered. (App. 14.) It does not appear that Dr. Kim independently evaluated the denial of coverage for the October 15 surgery. The day after Dr. Kim completed her review, Defendants again denied coverage for Rittinger's surgeries. (App. 19-21.)

         In April 2015, Rittinger engaged counsel for a second internal appeal, filing extensive materials about her medical history and the October 2014 surgeries. (Doc. No. 76 at 12-13; App. 247-582.)[2] Rittinger argued, among other points, that the exclusion in Paragraph 33 contained an exception for “excessive nausea/vomiting” that applied to her RYGB surgery on October 15. (App. 265-66.) She supplied records showing that she had long suffered from Gastroesophageal Reflux Disease (GERD), that her condition caused frequent nausea and vomiting, and that she underwent surgery to address these problems. (App. 247-56.)

         Defendant Anthem UM Services then convened a “Grievance Advisory Panel” (GAP) to consider Rittinger's appeal. (Doc. No. 47 at 9-10.) Though Rittinger's appeal addressed the initial October 15 surgery and all the care for her complications that followed (App. 247), the GAP's review appeared to focus on the October 18 surgery and subsequent care. (App. 216-18; App. 583-85.) The GAP applied the exclusion in Paragraph 33 and once again denied coverage, explaining its decision to Rittinger in a letter on May 20, 2015. (App. 216-18.) This review yielded Defendants' final decision and exhausted Rittinger's administrative remedies. (App. 217.)

         This lawsuit followed. Rittinger has brought five claims for relief against Defendants.[3](Doc. No. 1.) Count I of her complaint seeks a declaratory judgment that her procedures were covered by her plan and that HALIC is obligated to pay for past and future medical costs. This claim is based on ERISA § 502(a)(1)(B) and § 502(a)(3). 29 U.S.C. § 1132. (Doc. No. 1 at 21- 22.) Count II, based on the same statutory provisions, seeks a declaratory judgment that Paragraph 33 of the Certificate is invalid and unenforceable. (Id. at 23-24.) Count III, likewise based on the same statutory provisions, alleges breach of the contract to provide benefits. In addition to the denial of benefits, Rittinger also alleges here that Defendants breached the contract “by flagrantly disregarding Plaintiff's internal appellate rights.” (Id. at 24-25.) Count IV, alleging violations of Missouri insurance law, has been voluntarily dismissed. (Doc. Nos. 35 & 40.) Finally, Count V, based on ERISA § 502(a)(3), alleges that Defendants breached their fiduciary duty in various ways: failure to provide required coverage; failure to investigate; failure to consider Rittinger's internal appeals properly; and others. In connection with this claim, Rittinger asks for an additional civil penalty under ERISA § 502(1)(1)(A). (Doc. No. 1 at 27-28.) In connection with all claims, Rittinger seeks attorney fees under ERISA § 502(g). (Id. at 22- 28.)


         a. ERISA

         ERISA § 502(a)(1)(B) authorizes a plan beneficiary to bring a civil action “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). ERISA § 502(a)(3) authorizes a beneficiary to bring a civil action “(A) to enjoin any practice which violates any provision of this subchapter or 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.” 29 U.S.C. § 1132(a)(3).

         ERISA regulations require employee benefit plans to have “a procedure by which a claimant shall have a reasonable opportunity to appeal an adverse benefit determination to an appropriate named fiduciary of the plan, and under which there will be a full and fair review of the claim and the adverse benefit determination.” 29 C.F.R. § 2560.503-1(h)(1). Subsequent provisions describe the features that the review must have in order to be “full and fair.” Among other requirements, the plan must “[p]rovide for a review that takes into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.” § 2560.503-1(h)(2)(iv).

         b. Summary Judgment

         In ERISA cases, standard summary judgment rules apply. Burell v. Prudential Ins. Co. of Amer., 820 F.3d 132, 136 (5th Cir. 2016). Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. § 56(a). A genuine dispute of material fact exists when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment should be granted against a party “who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In gauging the existence of genuine disputes, the court must view the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in its favor. Carmona v. Southwest Airlines Co., 604 F.3d 848, 854 (5th Cir. 2010).

         c. Abuse of Discretion

         The Supreme Court has observed that “the validity of a claim to benefits under an ERISA plan is likely to turn on the interpretation of terms in the plan at issue, ” and so de novo review of the plan's interpretation is generally appropriate. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). It recognized, however, that sometimes a plan “gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Id. If the plan confers such discretionary authority, then decisions are reviewed for abuse of discretion. Clayton v. ConocoPhillips Co., 722 F.3d 279, 290 (5th Cir. 2013).

         Abuse of discretion review “is the functional equivalent of arbitrary and capricious review.” Anderson v. Cytec Industries, Inc., 619 F.3d 505, 512 (5th Cir. 2010). “A decision is arbitrary if it is made without a rational connection between the known facts and the decision, ” and a decision to deny benefits “must be supported by substantial evidence.” Id. (cleaned up). “Substantial evidence is more than a scintilla, less than a preponderance of relevant evidence, and is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Corry v. Liberty Life Assurance Co. of Boston, 499 F.3d 389, 398 (5th Cir. 2007) (citation omitted). This review is deferential. It “need not be particularly complex or technical; it need only assure that the administrator's decision fall somewhere on a continuum of reasonableness--even if on the low end.” Burell, 820 F.3d at 140 (quotation omitted). To reach that low end, there must nevertheless be “some concrete evidence in the administrative record that supports the denial of the claim.” Vega v. Nat'l Life Ins. Servs., Inc., 188 F.3d 287, 302 (5th Cir. 1999) (en banc), overruled on other grounds by Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008).

         When reviewing an administrator's interpretation of plan terms, a court first determines whether the administrator's interpretation is “legally correct.” LifeCare Mgmt. Servs. LLC v. Ins. Mgmt. Adm'rs Inc., 703 F.3d 835, 841 (5th Cir. 2013) (citation omitted). In assessing the correctness of the administrator's interpretation, the court should consider whether the administrator gave the plan a “uniform construction, ” whether it is a “fair reading of the plan, ” and whether “unanticipated costs” result from different interpretations. Id. The “most important factor” is whether the reading is fair. Id. If the administrator's interpretation is incorrect, the court should then consider whether it constitutes an abuse of discretion. Id. (citing Gosselink v. Amer. Tel. & Tel., Inc., 272 F.3d 722, 726 (5th Cir. 2001), for various factors the court should weigh). A reading that “directly contradicts the plain meaning of the plan language” constitutes an abuse of discretion. Id.

         When reviewing benefits decisions, “courts generally cannot consider evidence outside the administrative record.” Anderson, 619 F.3d at 515-16. “If the claimant submits additional information to the administrator, and requests the administrator to reconsider its decision, that additional information should be treated as part of the administrative record.” Estate of Bratton v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 215 F.3d 516, 521 n.5 (5th Cir. 2000). The court may sometimes look beyond the administrative record--for instance, to evidence of the administrator's decisions in other cases, or for expert opinion to aid the court's understanding of medical concepts--but not as a matter of course. Id. at 215.

         III. ANALYSIS

         The central issue in this case is whether Defendants abused their discretion in their internal appeals process, either by inappropriately categorizing communications with Rittinger and her husband as a formal appeal or by improperly denying coverage once Rittinger had fully added to the administrative record. Rittinger also seeks relief based on other theories, however, which the Court addresses before considering Defendants' alleged abuses of discretion.

         a. Breach of Fiduciary Duty

         Defendants argue that Count V of Plaintiff's Complaint, breach of fiduciary duty, is duplicative of Count III, her denial of benefits claim. Count V seeks the same relief as Count III, reimbursement for medical bills and costs, so Defendants assert that it should be dismissed. (Doc. No. 47 at 21-23.) Defendants cite Varity Corp. v. Howe, 516 U.S. 489, 510-15 (1996), which said that ERISA fiduciary duty claims are just a “safety net, ” available only when other ERISA provisions will not grant relief. (Doc. No. 47 at 22.) Defendants also cite, as illustration, Rusch v. United Health Group, Inc., 2013 WL 3753947, at *11 (S.D. Tex. July 15, 2013). In Rusch, the court dismissed a fiduciary duty claim as duplicative because its substance was nothing more than a denial of benefits claim. Id.

         Rittinger does not address Defendants' duplication argument in her Response (Doc. No. 69), nor in the filings for her own summary judgment motion. (Doc. Nos. 76 & 79.) Defendants urge the Court to view her lack of response as a concession, sufficient to rule for Defendants on this point. (Doc. No. 74 at 10.) The Court also observes that the relief sought in Count V duplicates the relief sought in Count III and that the conduct constituting breach alleged in Count V is covered by the other counts. (Doc. No. 1 at 22-28.) Accordingly, dismissal of Count V is appropriate.[4]

         b. Facial ...

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