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Your ERISA Watch – Fifth Circuit Holds that Anthem Did Not Abuse Its Discretion in Denying Coverage for Bariatric Surgery

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This week’s notable decision is Rittinger v. Healthy All. Life Ins. Co., No. 17-20646, __F.3d__, 2019 WL 391771 (5th Cir. Jan. 31, 2019), a case involving the denial of coverage for bariatric surgery and follow-up surgery for complications.  The Fifth Circuit reversed the district court’s determination in favor of Rittinger and found that Anthem did not abuse its discretion in the handling of Rittinger’s appeals.  This is yet another case where the standard of review makes all the difference.  As the court explained, “[A]lthough not the paragon of procedural propriety, Anthem satisfied the very low, very deferential abuse-of-discretion standard.”  Because the court found that Rittinger is not entitled to any damages, the court dismissed her cross-appeal to determine the exact dollar amount of damages she is owed.

The facts of this case are as follows:  Rittinger was a beneficiary of an ERISA-covered plan offered by Health Alliance Life Insurance Company and administered by Anthem Blue Cross Blue Shield.  Rittinger underwent bariatric surgery, and unfortunately, complications arose that required a follow-up surgery and intensive care.  Anthen denied preauthorization for both surgeries on the basis that bariatric or weight loss surgery is an exclusion in the health plan.  The relevant provision provides:

[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. 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.

An exception to this exclusion is for conditions that include excessive nausea/vomiting.  None of Rittinger’s preauthorization information mentioned excessive nausea/vomiting.

Rittinger’s husband emailed Anthem stating he would like to file an appeal for her hospitalizations.  Anthem treated the email as a first-level appeal, gathered more information from her surgeons, obtained an independent peer review, and again denied coverage.  Rittinger then hired an attorney who filed a second-level appeal including records which showed that Rittinger suffered from GERD and esophagitis, which is linked to nausea and vomiting, and she underwent surgery to address these problems.  Anthem convened a five-person “Grievance Advisory Panel” to address the second-level appeal and the Panel concluded that the surgery was excluded from coverage.

Rittinger filed suit.  On abuse of discretion review, the district court found that Anthem did not abuse its discretion when it treated Mr. Rittinger’s email as a first-level appeal but that it did abuse its discretion in denying the second-level appeal.  The district court believed that Anthem’s construction of the plan’s terms directly contradicted their plain meaning and the evidence linking Rittinger’s GERD/esophagitis to nausea and vomiting was entitled to more weight.

The Fifth Circuit affirmed the district court’s determination that Anthem did not abuse its discretion when it treated Mr. Rittinger’s email as a first-level appeal.  Though the plan’s grievance procedures do not supply an email address where appeals can be directed, the statement of “I would like to file an appeal” was naturally and reasonably read as a request to appeal.

On Anthem’s application of the plan terms, the court found that GERD/esophagitis and nausea/vomiting as two different things.  These could be partially overlapping categories.  The court put forward the following analogy:

Perhaps Paragraph 33 is best interpreted like Thanksgiving and holidays—as creating a Venn diagram of categories where GERD/esophagitis and excessive nausea/vomiting have some overlap. But we are not asking what is the best construction of Paragraph 33. We are asking whether Anthem’s construction was so egregiously wrong that it flouts the plan’s plain language and constitutes an abuse of discretion.

The court found the medical records contain a dearth of mention of nausea or vomiting.  Though affidavits from friends and a doctor’s letter supported that Rittinger suffered from nausea and vomiting, the court found that Anthem cleared “the low, more-than-a-scintilla threshold.”  Anthem did not have to credit Rittinger’s post-surgery letters over her pre-authorization documentation and Anthem’s consulting physician’s opinion.

This is what troubles me the most about this decision.  The whole point of the appeals process is to be able to perfect the claim and provide information that the administrator deemed lacking in its initial review.  Anthem characterized Rittinger’s appeal evidence as “self-serving” (like its denial of claims?) but there’s no doubt that her conditions of GERD/esophagitis causes nausea and vomiting.  If one is to be bound by the inadequacy of her medical records, how can an appeal ever be won if a court will permit an insurance company to pay such short shrift to legitimate appeal evidence?

Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.

Attorneys’ Fees

First Circuit

Host v. First Unum Life Ins. Co., No. CV 13-11578-GAO, 2019 WL 343255 (D. Mass. Jan. 28, 2019) (Judge George A. O’Toole, Jr.).  The court previously granted Plaintiff’s motion for remand so that Unum could conduct a more thorough review of his application for benefits.  Unum denied the claim on remand and Plaintiff is appealing the denial.  The court found that Unum’s subsequent determination on remand that Plaintiff was not eligible for disability benefits does not disqualify him from receiving attorneys’ fees.  The court granted the motion to the extent that Plaintiff is entitled to some award of fees but the court denied without prejudice the determination of what a reasonable award should be pending the outcome of Plaintiff’s appeal from the second denial of benefits.  “Assessing the value to him of the remand opportunity may well be affected by his success or not in obtaining benefits as a result of his appeal.”

Breach of Fiduciary Duty

Sixth Circuit

Furwa, et al v. Operating Engineers Local 324 Health Care Plan, et al., No. 18-12392, 2019 WL 367179 (E.D. Mich. Jan. 30, 2019).  The court denied the trustees’ motion for reconsideration on the basis that ERISA required them to stop accepting certain health care contributions for union members.  The court found that the trustee’ interpretation of the trust agreement does not insulate them from a breach of fiduciary duty claim.  The court declined to stay the injunction pending appeal but did modify it.  “Prior to a decision on class certification, the preliminary injunction issued on December 3, 2018, shall apply solely to the named Plaintiffs, and, for the duration of the litigation, the Health Care Plan is to keep, in escrow, all contributions made by Plaintiffs’ employers on Plaintiffs’ behalf.”

Seventh Circuit

Bell v. Pension Committee of ATH Holding Company, LLC, No. 115CV02062TWPMPB, 2019 WL 387214 (S.D. Ind. Jan. 30, 2019) (Judge Tanya Walton Pratt).  The court denied Defendants’ motion for summary judgment on all claims.  It found a genuine issue of disputed fact exists as to the prudence of the Pension Committee’s process, so it did not determine whether the substantive funds offered met ERISA’s prudent fiduciary standard.  The court determined that the excessive fee claim is valid:  “The element of damages goes hand-in-hand with the reasonableness of the fees—if Defendants breached their fiduciary duty by failing to ensure the Plan paid reasonable fees, that breach necessarily shrunk Plaintiffs’ investment by overpaying on administrative and investment fees.”

Class Actions

Sixth Circuit

Jammal v. Am. Family Ins. Co., No. 17-4125, __F.3d__, 2019 WL 348716 (6th Cir. Jan. 29, 2019) (Before: BOGGS, CLAY, and ROGERS, Circuit Judges).  On interlocutory appeal under 28 U.S.C. § 1292(b), the court reversed the district court’s determination that the insurance agents are employees for purposes of qualifying for ERISA benefits.  The court held that the district court incorrectly applied “the Darden factors relating to (1) the skill required of an agent and (2) the hiring and paying of assistants.”  The Agent Agreement, which states unambiguously that the agents are independent contractors, also swings the balance in favor of independent-contractor status.  Judge Clay filed a dissenting opinion.

Disability Benefit Claims

Fourth Circuit

Vetter v. American Airlines, Inc. Pilot Long-Term Disability Plan, No. PWG-16-2833, 2019 WL 398679 (D. Md. Jan. 31, 2019) (Judge Paul W. Grimm).  The court previously determined that the Plan’s decision not to award benefits before May 3, 2012, or after July 23, 2012, was not supported by substantial evidence and therefore an abuse of discretion.  The court granted Defendant’s motion for reconsideration in part, and found that Plaintiff was not entitled to benefits before May 3, 2012, which is the date that the elimination period ended.  The court denied reconsideration of its decision finding that Plaintiff was entitled to benefits after July 23, 2012.

Discovery

Ninth Circuit

Baird, et al. v. Blackrock Institutional Trust Company, N.A., et al., No. 17CV01892HSGKAW, 2019 WL 365845 (N.D. Cal. Jan. 30, 2019) (Magistrate Judge Kandis A. Westmore).  The court concluded that Mr. Strofs was not sufficiently prepared to discuss three topics at the Rule 30(b)(6) deposition and granted Plaintiffs an additional two hours to conduct the Rule 30(b)(6) deposition.  The three topics include:  “(n) concerns the entity, entities, and/or persons responsible for establishing, monitoring, and/or amending the CTI Plan Documents under which Defendant BTC manages and administers the BlackRock CTIs’ assets;” “(p) concerns the terms of the documents under which Defendant BTC manages and administers the assets of the BlackRock CTIs;” and “(r) concerns the terms of any agreements between the Blackrock CTIs and Defendant BTC.”

ERISA Preemption

Eleventh Circuit

Goss v. Aetna, Inc., No. 1:18-CV-02298-SCJ, __F.Supp.3d__, 2019 WL 386405 (N.D. Ga. Jan. 31, 2019) (Judge Steve C. Jones).  The court denied Plaintiff’s motion to remand the case to Gwinnett County Superior Court.  The court rejected all of Plaintiff’s arguments, including:  (1) the Optum Defendants failed to comply with Georgia Superior Court Rule 4.2 prior to removal; (2) the Optum Defendants failed to properly and timely consent to removal; and (3) there was no federal question in Plaintiff’s operative complaint at the time of the removal sufficient to invoke ERISA preemption.  Though Plaintiff ultimately withdrew the ERISA claim in the first amended complaint, the state law claims still rest on the same or similar allegations based entirely on her ERISA plan.  Specifically, that her insurance benefits were being fraudulently paid to Optum.

Exhaustion of Administrative Remedies

Second Circuit

Jordan v. Verizon Corp., No. 17 CIV. 9197 (LGS), 2019 WL 340715 (S.D.N.Y. Jan. 28, 2019) (Judge Lorna G. Schofield).  In this lawsuit brought by the pro se plaintiff alleging misconduct in connection with a 2004 settlement agreement with Verizon and Verizon’s improper denial of employee benefits, the court dismissed the Complaint.  “The Complaint’s de facto ERISA claim is dismissed for failure to exhaust administrative remedies. The breach of contract claim based on Verizon’s failure to perform an exit interview is barred by the statute of limitations. Insofar as Plaintiff’s contract claims relate to Verizon’s fraud and misrepresentation when negotiating the Agreement, they are dismissed under the doctrine of res judicata.”

Medical Benefit Claims

Fifth Circuit

Rittinger v. Healthy All. Life Ins. Co., No. 17-20646, __F.3d__, 2019 WL 391771 (5th Cir. Jan. 31, 2019) (Before HIGGINBOTHAM, GRAVES, and WILLETT, Circuit Judges).  See Notable Decision summary above.

Sixth Circuit

A.G. by & through N.G. v. Cmty. Ins. Co., No. 1:18-CV-300, 2019 WL 340471 (S.D. Ohio Jan. 28, 2019) (Judge Timothy S. Black).  The court granted Defendant’s partial motion to dismiss the class action complaint.  Anthem’s interpretation that Blue Ridge is a wilderness camp, and therefore excluded under the Plan, is not arbitrary and capricious.  “Because the Plan equally covers mental health services and medical/surgical services at residential treatment centers, the Court cannot find that the Plan’s blanket exclusion of services at ‘wilderness camps’ is a treatment limitation in violation of the Parity Act.”

Ninth Circuit

Todd R., et al. v. Premera Blue Cross Blue Shield of Alaska, No. C17-1041JLR, 2019 WL 366225 (W.D. Wash. Jan. 30, 2019) (Judge James L. Robart).  The court concluded that Lillian R.’s residential treatment was medically necessary and covered under the Plan.  Her initial admission to Elevations qualifies as an “inpatient treatment stay” under the sixth risk listed in Premera’s Medical Policy.  “[A]lthough Lillian R. ultimately reached points in her treatment when she was ready to try out her new skills in a less structured and real life environment, which included short stints at home, these experiences were not inconsistent with her need to return to Elevations’ structured setting and continued around-the-clock behavioral care until she was medically ready for a complete discharge from the program.” (internal quotations omitted).

Pension Benefit Claims

Second Circuit

Bellevue v. 1199SEIU Health Care Employees Pension Fund, No. 17 CIV. 7430 (KPF), 2019 WL 400638 (S.D.N.Y. Jan. 31, 2019) (Judge Katherine Polk Failla).  Plaintiff alleged violations of Sections 502(a)(1)(B), 503(a)(2), and 502(a)(3) of ERISA for Defendants’ failure to include certain overtime compensation he received between 2004 and 2013 in his pension benefit calculations.  The court granted Defendants’ motion for summary judgment.  The court determined that the hospital defendants are not ERISA fiduciaries and had no duty to notify Plaintiff of the Plan’s overtime exclusion, and they did not breach their obligations to provide the Fund with requested information.  The court also determined that the Fund defendants did not breach their fiduciary duties by failing to safeguard and account for employer contributions and they did not violate ERISA disclosure obligations.

Mack v. Verizon Commc’ns Inc., No. 18-135, __F.App’x__, 2019 WL 366695 (2d Cir. Jan. 30, 2019) (PRESENT: JACOBS, RAGGI, LOHIER, JR., Circuit Judges).  The court affirmed the grant of summary judgment in favor of Defendant on the pro se plaintiff’s claim that she was entitled to pension plan benefits.  “The pension plan expressly requires 10 years of service after age 22 before an employee is eligible to receive benefits. A year of service is 1,000 completed hours of service worked during a calendar year, with 45 hours of service attributed to each week the employee completes one or more hour of service. Mack turned 22 in 1970, so her pre–1970 hours do not count toward eligibility. Mack completed 9 years of service from 1970 to 1978. But the record before us on appeal shows that in 1979 Mack worked no more than 20 weeks, equivalent to 900 hours of service: 100 hours short of the 1,000 hours required for a year’s credit. Even if Mack’s unused leave time—paid as wages after she was fired—is counted as completed hours of service (which we do not decide), her 1979 social security statement indicates that she earned, at most, 20 weeks’ worth of wages. And the hours Mack worked in excess of 1,000 hours from 1970 to 1978 cannot count toward her hours of service in 1979 because they were not earned during the calendar year 1979.”

Fourth Circuit

Mauldin v. Leggett & Platt, Inc., No. 6:17-CV-02650-DCC, 2019 WL 401612 (D.S.C. Jan. 31, 2019) (Judge Donald C. Coggins, Jr.).  The court determined that Defendant did not abuse its discretion in denying Plaintiff’s claim for stock option benefits under a Deferred Compensation Program Plan governed by ERISA.  “It is undisputed that Plaintiff’s options expired on December 29, 2015. He failed to exercise his options and failed to pay the exercise price during the following 30 days; thus, Plaintiff’s claim for benefits should be denied under the plain language of the Plan.”

Provider Claims

Ninth Circuit

County of Monterey DBA Natividad Medical Center v. Blue Cross of California DBA Anthem Blue Cross, et al., No. 17-CV-04260-LHK, 2019 WL 343419 (N.D. Cal. Jan. 28, 2019) (Judge Lucy H. Koh).  In this dispute over Anthem’s processing of Plaintiff’s trauma claims, the court granted Anthem’s motion to dismiss without prejudice.  The court found that the Complaint fails to plead factual allegations with specificity, “including the specific claims, dates, explanations of benefits, and the ERISA plan provisions at issue.”  The Complaint also insufficiently alleges standing.  Plaintiff should allege the specific language of the assignment itself because whether an assignee has the standing to sue under ERISA depends on whether the claims at issue fall within the scope of the assignment.

 Eleventh Circuit

Griffin v. Gen. Elec. Co., No. 18-10046, __F.App’x__, 2019 WL 350739 (11th Cir. Jan. 28, 2019) (Before JORDAN, BRANCH, GRANT, Circuit Judges).  The court affirmed the district court’s dismissal of the pro se doctor’s complaint alleging gender and racial discrimination under Section 1557 of the Affordable Care Act, 42 U.S.C. § 18116.  GE brought the same or similar challenges to other non-minority providers who brought claims against it.

Retaliation Claims

Third Circuit

Brenton v. F.M. Kirby Center for The Performing Arts, No. CV 17-89, 2019 WL 367051 (M.D. Pa. Jan. 30, 2019) (Judge Malachy E. Mannion).  In order to cut money from the budget, Defendant consolidated Plaintiff’s position with her assistant’s position and did not select Plaintiff for the newly created position.  The court found that there was no direct or circumstantial evidence that Plaintiff was targeted for termination due to her benefits eligibility under the company’s 403(B)-plan in violation of Section 510 of ERISA.  The court explained that establishing a prima facie case under Section 510 is not the same as establishing the elements of a Title VII retaliation claim.

Statute of Limitations

Seventh Circuit

Bell v. Pension Committee of ATH Holding Company, LLC, No. 115CV02062TWPMPB, 2019 WL 387214 (S.D. Ind. Jan. 30, 2019) (Judge Tanya Walton Pratt).  “The three-year statute of limitations on Plaintiffs’ Money Market Fund claim would begin when Plaintiffs had actual knowledge of the process Defendants used to determine the Plan would offer the Money Market Fund instead of alternative funds. The Plaintiffs’ Money Market Fund claim is not time-barred because, although the participants received disclosures of the nature of the investment options offered, they were not informed of how those options were chosen nor that there may lower cost or higher yield alternatives that the Plan did not offer. Accordingly, the Court cannot grant summary judgment to Defendants on Plaintiffs’ Money Market Fund claims based on ERISA’s statute of limitations.”

Statutory Penalties

Seventh Circuit

Bell v. Pension Committee of ATH Holding Company, LLC, No. 115CV02062TWPMPB, 2019 WL 387214 (S.D. Ind. Jan. 30, 2019) (Judge Tanya Walton Pratt).  The court denied Defendants’ motion for summary judgment on Plaintiff’s 29 U.S.C. § 1024(b)(4) claim.  “Plaintiffs’ Second Amended Complaint alleges Plaintiff Bell sent a letter to the Pension Committee on October 5, 2015, requesting information, and her request went unanswered. The complaint alleges she sent a second letter on October 27, 2015, which also went unanswered.”  In rejecting the argument that Plaintiff did not address the proper recipient identified in the SPD, the court explained that “[t]he Pension Committee cannot avoid its statutory obligation to furnish plan information to participants by designating a third party and directing requests to that party.”

Subrogation/Reimbursement Claims

Sixth Circuit

P&G Health & Longterm Disability Plan v. Molinary, No. 1:18-CV-283, 2019 WL 358936 (S.D. Ohio Jan. 29, 2019) (Judge Timothy S. Black).  Plaintiff alleged that Defendant began working for another employer while he was still receiving short-term disability benefits under the Plaintiff’s disability plan.  Defendant repaid only $1,000 of the overpayment, leaving a balance due of $7,520.94.  The court granted Plaintiff default judgment in its favor on its claims of breach of contract, unjust enrichment, breach of fiduciary duty/ERISA trust, and constructive trust.  In addition to the unpaid benefits, the court awarded Plaintiff $481.88 in costs, plus post judgment interest at the statutory rate.

Withdrawal Liability & Unpaid Contributions

Second Circuit

Bricklayers Insurance and Welfare Fund, et al., v. Job Opportunities For Women, Inc., No. 16-CV-6935 (PKC)(JO), 2019 WL 343243 (E.D.N.Y. Jan. 28, 2019) (Judge Pamela K. Chen).  “For the reasons stated herein, Plaintiffs’ motion for summary judgment is granted in part and denied in part. Based on Defendants’ concessions, Plaintiffs’ motion is granted as to (1) Defendant Ignazio Minucci’s liability for breach of fiduciary duty; (2) Defendant JOW’s liability for unpaid contributions and unremitted dues checkoffs; and (3) Plaintiffs’ entitlement to at least $32,063.16 in compensatory damages.  The following claims shall proceed to trial: (1) breach of fiduciary duty (against Defendant Sue Minucci); (2) state law conversion (against the Minucci Defendants); and (3) damages in excess of $32,063.16 (against all Defendants). The Court shall calculate the amount of interest and liquidated damages owed to Plaintiffs at the conclusion of the proceedings.”

Fourth Circuit

Trustees of The National Automatic Sprinkler Industry Welfare Fund v. A & M Fire Protection, LLC, No. CV PX-18-1779, 2019 WL 398674 (D. Md. Jan. 31, 2019) (Judge Paula Xinis).  “Plaintiffs’ Motion for Default Judgment is GRANTED. Judgment in the amount of $112,873.65 SHALL BE ENTERED against Defendant A&M Fire Protection, LLC, for unpaid contributions, liquidated damages, interest, and attorneys’ fees and costs, plus additional contributions, liquidated damages, costs, interest, and reasonable attorneys’ fees that became due from the date this action was filed and through the date of judgment.”

Fifth Circuit

Boards of Trustees of The Texas Carpenters and Millwrights Health and Welfare Fund v. Refined General Contractors, LLC, No. 5:18-CV-00465-XR, 2019 WL 369144 (W.D. Tex. Jan. 30, 2019) (Judge Xavier Rodriguez).  The court granted Plaintiffs’ motion for default judgment and awarded “Plaintiffs the sum of $71,262.40, including the delinquency sum, interest, and liquidated damages, but excluding attorney fees and costs.”  Plaintiffs can file an application for fees within 14 days of judgment.

New Orleans Employers International Longshoremen’s Assoc. v. Maritime Security, Inc., No. CV 17-7430, 2019 WL 342440 (E.D. La. Jan. 28, 2019) (Judge Jay C. Zainey).  The court granted Plaintiff’s motion as to the issue of withdrawal liability.

Seventh Circuit

Trustees of Suburban Teamsters of N. Illinois Pension Fund v. E Co., No. 18-2273, __F.3d__, 2019 WL 348770 (7th Cir. Jan. 29, 2019) (Before Easterbrook, Barrett, and Scudder, Circuit Judges).  The court held that fund’s notice of withdrawal liability did not violate defendants’ due process rights.

Eighth Circuit

Patt v. H & S Contracting, Inc., No. CV 18-2592 (DWF/LIB), 2019 WL 413558 (D. Minn. Feb. 1, 2019) (Judge Donovan W. Frank).  The court granted Plaintiffs’ Motion for Entry of Judgment in the amount of $21,061.22 against Defendant H & S Contracting, Inc.

Nesse v. Lakewest Excavating LLC, No. CV 18-703 (PAM/SER), 2019 WL 337608 (D. Minn. Jan. 28, 2019) (Judge Paul A. Magnuson).  Lakewest is liable to the Funds in the amount of $16,450.05 for unpaid contributions and liquidated damages for the period of January 2018 through September 2018, and is liable to the Funds in the amount of $6,578.72 for the Funds’ reasonable attorneys’ fees and costs incurred in pursuing the delinquent contributions.

Tenth Circuit

Bricklayers and Trowel Trades International Pension Fund (IPF) v. The Denver Marble Company, No. 16-CV-02065-RM, 2019 WL 399228 (D. Colo. Jan. 31, 2019) (Judge Raymond P. Moore).  The Court denied without prejudice Plaintiffs’ Renewed Motion for Entry of Default Judgment and for an Award of Attorneys’ Fees and Non-Taxable Costs.

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