United States District Court, E.D. Louisiana
ORDER & REASONS
ELDON E. FALLON, District Judge.
Before the Court are Defendants Humana Health Benefit Plan of Louisiana, Inc., Humana Inc., and Humana Health Plan, Inc.'s (collectively "Humana") (1) Motion for Partial Summary Judgment on Plaintiffs' Procedural Violation Claim (Rec. Doc. 164); (2) Motion for Partial Summary Judgment for Dismissal of ERISA Claims Time Barred by Contractual Limitations Period (Rec. Doc. 167); (3) Motion for Partial Summary Judgment based on Improper Defendant (Rec. Doc. 168); (4) Motion for Partial Summary Judgment as to Plaintiffs' ERISA 502(c) Claims (Rec. Doc. 170); and (5) Motion for Partial Summary Judgment Based on Plaintiffs' Failure to Exhaust Administrative Remedies (Rec. Doc. 171). Having considered the applicable law and the parties' memoranda, the Court now issues this Order & Reasons.
This case arises out of alleged underpayment for medical services. The Center for Restorative Breast Surgery, LLC ("Center") performs post-mastectomy breast reconstruction medical services, and St. Charles Surgical Hospital ("St. Charles") provides hospital services in connection with those procedures. Both the Center and St. Charles provided these services to patients who were participants in Humana's Employee Retirement Income Security Act ("ERISA") plan. The ERISA plan permits patients to obtain services from out-of-network providers, such as the Center and St. Charles, and in turn Humana calculates and pays reimbursements to the providers of those services. In calculating the reimbursement, they consider the reasonable and customary rate.
The Center and St. Charles filed this action in the Civil District Court for the Parish of Orleans seeking benefits on behalf of their patients and seeking reimbursements, on their own behalf, for services they had provided to patients covered by Humana (collectively "the Plaintiffs"). On November 17, 2010, Humana removed to this Court on the basis that the Center and St. Charles' claims were preempted by ERISA. (Rec. Doc. 1). On December 12, 2010, the Center and St. Charles sought remand (Rec. Doc. 9), which the Court denied on March 22, 2011 (Rec. Doc. 22). Humana then filed a Motion to Dismiss on April 15, 2011, and while it was pending, the Center and St. Charles filed a Motion for Leave to Amend their Complaint. (Rec. Doc. 33). On July 20, 2011, the Court granted the Center and St. Charles' Motion for Leave to Amend their Complaint and denied Humana's Motion to Dismiss the original complaint. (Rec. Doc. 45).
In their amended complaint, the Center and St. Charles assert claims against Humana under ERISA and state law. (Rec. Doc. 46). With respect to their ERISA claims, the Center and St. Charles seek recovery as assignees of their patients, asserting that Humana breached its fiduciary duty of loyalty and care, failed to provide full and fair review, and violated the claims procedures. The Center and St. Charles seek recovery on their own behalf and assert state law claims of detrimental reliance, fraud, negligent misrepresentation, breach of contract, and unjust enrichment, for which the Center and St. Charles seek recovery on their own behalf. They also claim Humana violated the Louisiana Unfair Trade Practices Act ("LUTPA") and the Louisiana Insurance Code. In response to the amended complaint, Humana filed a Motion to Dismiss the above-listed claims (Rec. Doc. 49). After that motion had been fully briefed by the parties (Rec. Docs. 49, 53, 56, 60), the Court stayed the proceedings on October 12, 2011 on the joint motion of the parties (Rec. Doc. 61). On September 9, 2013, the Court lifted the stay on the motion of the Center and St. Charles. (Rec. Doc. 63). At the request of the parties, the Court continued the Motion to Dismiss the Amended Complaint.
On March 27, 2014, the Court granted Humana's Motion to Dismiss in part and denied it in part. (Rec. Doc. 65). Specifically, it concluded that the Center and St. Charles had sufficiently alleged their ERISA, detrimental reliance, fraud, negligent misrepresentation, and breach of contract claims, but not their unjust enrichment, LUTPA, and Louisiana Insurance Code claims. The Court denied Humana's Motion for Reconsideration. (Rec. Doc. 80). On July 7, 2014, Plaintiffs filed a Motion for Leave to File an Amended Exhibit 1 to the Amended Complaint in order to add patients to their Complaint. (Rec. Doc. 81). The Court granted Plaintiffs' leave on July 10, 2014.
To date, Plaintiffs bring this suit on behalf of themselves and as assignees of 109 patients. Fifty-four (54) of those patients were members of employee group health plans governed by ERISA. The parties indicated to the Court that disposition of the ERISA claims would inform the disposition of the non-ERISA claims, so the Court bifurcated the proceedings and ordered the parties to proceed with the ERISA claims while staying the non-ERISA claims. (Rec. Doc. 117). While the Court initially ordered the parties to submit their briefs regarding the ERISA claims on February 23, 2015, Humana relayed to the Court that it wished to file a number of dispositive motions that would resolve many of the ERISA claims. The Court thus converted the February 23, 2015 briefing deadline into the deadline for the parties to submit dispositive motions. (Rec. Doc. 158). Humana subsequently filed six (6) motions for summary judgment related to the ERISA claims.
II. PRESENT MOTIONS
Plaintiffs recently filed a Motion for Leave to Conduct Supplemental Discovery and ask the Court to withhold disposition of these motions for partial summary judgment until discovery is complete. (Rec. Doc. 241-1 at 10). Plaintiffs, however, fail to articulate how additional discovery will inform disposition of these motions, particularly since these cases are all governed by ERISA, and this Court's review is limited to the administrative record. Although some additional information is required to effectuate this Order & Reasons, the incomplete record is not due to any alleged failure by the Defendants to provide complete discovery responses. Rather, the Court is unable to discern the precise nature of Plaintiffs' claims on behalf of each patient, including the facts and dates relevant to those claims. This information should be within Plaintiffs' possession, as they are the masters of their own claims. The Court will seek to rectify this problem by requiring Plaintiffs to submit additional materials, as specified throughout this Order & Reasons, and a detailed chart setting forth each patient's ERISA claims. First, the Court will dispose of those dispositive motions before the Court.
A. The Standard
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed.R.Civ.P. 56(c)). "Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, 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 the party will bear the burden of proof at trial." Id. When considering a motion for summary judgment, the district court "will review the facts drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986). The court must find "[a] factual dispute [to be] genuine' if the evidence is such that a reasonable jury could return a verdict for the nonmoving party [and a] fact [to be] material' if it might affect the outcome of the suit under the governing substantive law." Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir. 1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
B. Motion for Partial Summary Judgment on Plaintiff's Procedural Violation Claim (Rec. Doc. 164)
1. Parties' Arguments
Humana asks this Court to grant summary judgment on Plaintiffs' claims for full and fair review, set forth in Count III of the Amended Complaint, and Plaintiffs' claims for procedural violations, set forth in Count V of the Amended Complaint (collectively referred to as the "Procedural Violation Claims"). (Rec. Doc. 164 at 2). Humana contends that Section 503of ERISA outlines the requirements relating to benefit plan claims procedures but does not provide any remedial provisions, so a plaintiff seeking redress for alleged Section 503 violations must link that violation to the appropriate, private remedial provision contained in Section 502(a) of ERISA. (Rec. Doc. 164-2). In support of this proposition, Humana cites Parkridge Med. Ctr. Inc. v. CPC Logistics, Inc. Group Benefits, a case where the district court inferred that the plaintiff's procedural claims arose under Section 502(a)(3). No.12-124, 2013 WL 3976621, at *17 (E.D. Tenn. Aug. 2, 2013) (Collier, J.). Here, Humana argues that Plaintiffs' Procedural Violation Claims are properly asserted under Section 502(a)(3), and since Plaintiffs are also seeking to recover under Section 502(1)(B), they are barred from simultaneously asserting these Procedural Violation Claims. (Rec. Doc. 164-2 at 4-5). Humana states that "it is well settled law in this circuit that a potential beneficiary, even if ultimately unsuccessful, suing to recover benefits under section 502(a)(1)(B), may not utilize the catchall' provision of section 502(a)(3)." (Rec. Doc. 164-2 at 5) (quoting Met Life Ins.Co. v. Palmer, 238 F.Supp.2d 831, 835 (E.D. Tex. 2002)) (internal quotations omitted). Humana goes on to state that "[w]hile some courts have relaxed rules of pleading such that they will permit a plaintiff to plead Section 502(a)(1)(B) and Section 502(a)(3) claims simultaneously, the law is clear that those claims may not be simultaneously maintained on the merits, and that the extraneous Section 502(a)(3) claim should be dismissed on summary judgment." (Rec. Doc. 164-2 at 6).
Plaintiffs oppose the motion and distinguish the facts from Parkridge, averring that "[t]he [ Parkridge ] court did not hold that there was any legal requirement that any and all procedural claims and full and fair review claims must be brought under [Section 502(a)(3)] instead of [502(a)(1)(B)]." (Rec. Doc. 200 at 4). Plaintiffs contend that they do not seek recovery under Section 502(a)(3) for their Section 503 claims, as "the Fifth Circuit does not mandate that a claim under 29 U.S.C. § 1133 seek relief under 29 U.S.C. § 1132(a)(3)." (Rec. Doc. 200 at 5). Fifth Circuit precedent, Plaintiffs maintain, rather permits Plaintiffs to seek relief under Section 503 and Section 502(a)(1)(B). (Rec. Doc. 200 at 5-6). Plaintiffs cite Robinson v. Aetna Life Ins. Co., 442 F.3d 389 (5th Cir. 2006) as support for this proposition.
Humana replies and avers that the Parkridge court determined that procedural violations claims arise under Section 502(a)(3) because such claims are equitable. (Rec. Doc. 213 at 2) (quoting Parkridge, 2013 WL 3976621, at *17). Humana further contends that other courts have reached this conclusion. Humana avers that "[t]he overall point here is this: Plaintiffs' Procedural Violation Claim is not an independent cause of action through which they can obtain relief above and beyond [w]hat they are seeking in their Section 502(a)(1)(B) benefit claim." (Rec. Doc. 213 at 5).
Plaintiffs filed a sur-reply and argue that Parkridge should be limited to the facts of that case, because there, the Parkridge plaintiff did not expressly invoke a specific ERISA section in his Complaint. Thus, Plaintiffs argue the district court was compelled to make its own finding that plaintiff's Section 503 claim arose under Section 502(a)(3). Plaintiffs maintain that Robinson demonstrates how a Section 503 claim can form the basis for an award under Section 502(a)(1)(B). (Rec. Doc. 233 at 1). Plaintiffs argue that they "have asserted violations of ERISA Section 503 that go beyond merely seeking benefits that should have been paid, but were not." (Rec. Doc. 233 at 3). Plaintiffs point to the following claims as examples of allegations that cannot be fully remedied by the "mere award of benefits that should have been paid in the first instance":
Defendants have made allowable fee determinations without valid or appropriate data to support reduced payments, made fee determinations on claims submitted by the subscribers listed in Exhibit 1 that were not for the same or similar services, systematically and knowingly underpaid all claims for out-ofnetwork services, made fee determinations that reduced the stated percentage of Plaintiffs' charges without valid data to support such determinations, and retaliated against their subscribers in some cases by unjustifiably down coding the complex procedures performed and paying for a less complex procedure. Plaintiffs have also alleged that Defendants engaged in fraudulent conduct and other conduct that also qualifies as a breach of fiduciary obligations.
(Rec. Doc. 233 at 5). Plaintiffs go on to aver that "[u]nless and until the Court rules that these practices are in violation of ERISA and orders a halt to these practices, the Defendants will continue in their wayward conduct." (Rec. Doc. 233 at 5).
2. Law and Analysis
Count III of Plaintiffs' Complaint alleges that Humana failed to provide a full and fair review under ERISA, and Count V alleges that Humana failed to comply with the claims procedures defined by federal law, all in violation of 29 U.S.C. § 1133 or Section 503 of ERISA. (Rec. Doc. 46 at 15-18). Plaintiffs contend that they bring their Section 503 claims under Section 502(a)(1)(B), but Section 502(a)(1)(B) provides no cause of action for Section 503 claims. Rather, "Section 1132(a)(3) [502(a)(3)] allows a party to bring a civil action for relief when the requirements of § 1133 are not met." Stuhlreyer v. Armco, Inc., 12 F.3d 75, 78 n.2 (6th Cir. 1993). See also Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1135 (7th Cir. 1992) ("If a participant does not receive the notice and review that he or she is entitled under Section 503, the participant may bring a civil enforcement action under Section 502(a)(3) and (e) of ERISA."). Indeed, the remedy for a violation of Section 503 is equitable in nature and not monetary, as urged by the Plaintiffs. See Krauss v. Oxford Health Plans, Inc., 517 F.3d 614, 630 (2d Cir. 2008) ("A full and fair review concerns a beneficiary's procedural rights, for which the typical remedy is remand for further administrative review."); Levi v. RSM McGladrey, Inc., No. 12-8787, 2014 WL 4809942, at *10 (S.D.N.Y. Sept. 24, 2014) ("To the extent that Plaintiff intends to allege a claim directly under section 1133, based on the alleged noncompliance, such a claim would not provide Plaintiff with access to any of the monetary redress he seeks."); Smith v. Champion Int'l Corp. 220 F.Supp.2d 124, 129 (D. Conn. 2002) ("[T]he usual remedy for a violation of § 1333 would be equitable in nature, such as remanding plaintiffs' claims for benefits to the LTD Plans administrator or fiduciary for a full and fair review'").
Humana cites Parkridge Med. Ctr. Inc. v. CPC Logistics, Inc. Group Benefits as support for the proposition that all of Plaintiffs' Section 503 claims fall under Section 502(a)(3), but Plaintiffs argue that the case does not apply because the plaintiff in that case did not specify under which ERISA section she brought her Section 503 claims. Plaintiffs' argument rings hollow, as the Parkridge court deduced that the claims fell under Section 502(a)(3) because a plan participant can only bring Section 503 claims under Section 502(a)(3). Parkridge Med. Ctr. Inc. v. CPC Logistics, Inc. Group Benefits, No. 12-124, 2013 WL 3976621, at *25 (E.D. Tenn. Aug. 2, 2013) ("Although § 1133 is the substantive requirement, Plaintiff's action would be brought pursuant to 29 U.S.C. §1132(a)(3)...."). As noted above, other courts have applied this principle, and crucially, this Court was unable to find a single court that has held that a plan participant could bring a claim for Section 503 violations under Section 502(a)(1)(B). Indeed, Plaintiffs failed to cite a single case that stood for this proposition.
Humana seeks refuge in the Fifth Circuit's opinion in Robinson v. Aetna Life Ins. Co ., but this reliance is misplaced because the Fifth Circuit never spoke to the issue of whether a beneficiary could use Section 502(a)(1)(B) to pursue a Section 503 claim. In that case, the Fifth Circuit overruled the district court's granting of summary judgment in favor of the plan administrator and granted summary judgment in favor of the plan beneficiary. 443 F.3d at 396. The Fifth Circuit first found that the plan did not substantially comply with Section 503, the procedural violation, and then held that the plan administrator abused its discretion by terminating the beneficiary's benefits, the substantive violation. While Plaintiffs are correct in their claim that the Fifth Circuit did not mandate that the beneficiary pursue his procedural violation claim under section 502(a)(3), this is because the Fifth Circuit did not speak to the procedural posture of the pleadings at all. Rather, the Fifth Circuit remanded the case to the District Court to determine damages ( Id. at 396), and the District Court ultimately awarded the beneficiary an amount that the District Court found to constitute "the past benefits owed to him under the plan." Robinson v. Aetna Life Ins. Co ., No. 04-371, Rec. Doc. 42 at 1 (Aug. 16, 2006 W.D. Tex.). Such an outcome, rather than providing support for Plaintiffs' position, signals to the Court that the thrust of the Fifth Circuit's decision was focused on the wrongful denial of benefits under Section 502(a)(1)(B), the substantive violation, and not on a finding as to how to plead a Section 503 claim.
Now that the Court has determined that Plaintiffs' Section 503 claims are before the Court under Section 502(a)(3), it is next necessary to determine whether Plaintiffs can maintain these claims while simultaneously pursuing their claims under Section 502(a)(1)(B). The Court concludes that they cannot. The Supreme Court has stated that Section 502(a)(3) serves as a "safety net, offering appropriate equitable relief for injuries caused by violations that [Section] 502 does not elsewhere adequately remedy." Vanity Corp. v. Howe, 516 U.S. 489, 512 (1996). The Supreme Court noted that "where Congress elsewhere provided adequate relief for a beneficiary's injury, there will likely be no need for further equitable relief, in which case such relief normally would not be appropriate." Id. at 513. The Fifth Circuit followed this reasoning in Tolson v. Avondale Industries, Inc. 141 F.3d 604, 610-11 (5th Cir. 1998). Adopting the District Court's analysis, the Fifth Circuit held that because the plaintiff "has adequate relief available for the alleged improper denial of benefits through his right to sue the Plans directly under Section 1132(a)(1), relief through the application of Section 1132(a)(3) would be inappropriate." Id. at 610. Indeed, the Fifth Circuit found that the Tolson plaintiff's attempt to maintain his breach of fiduciary duty claim under Section 1132(a)(3) was "woefully unavailing." Id . See also Rohorer v. Raytheon Engineers & Constructors, Inc., 181 F.3d 634, 639 (5th Cir. 1999) ("[B]ecause § 1132(a)(1)(B) affords [Plaintiff] an avenue for legal redress, she may not simultaneously maintain her claim for breach of fiduciary duty [under § 1132(a)(3)].")
This understanding of the remedial provisions of ERISA is widespread. "[F]ederal courts have uniformly concluded that, if a plaintiff can pursue benefits under the plan pursuant to Section (a)(1), there is an adequate remedy under the plan which bars a further remedy under Section(a)(3)." Larocca v. Borden, Inc., 276 F.3d 22, 28 (1st Cir. 2002); see also Conley v. Pitney Bowes, 176 F.3d 1044, 1047 (8th Cir. 1999); Katz v. Comprehensive Plan of Group Ins., 197 F.3d 1084, 1087-89 (11th Cir. 1999); Forsyth v. Humana, Inc., 114 F.3d 1467, 1475 (9th Cir. 1997); Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 615 (6th Cir. 1998); Coyne & Delany Co. v. Blue Cross & Blue Shield of Va., 102 F.3d 712, 715 (4th Cir. 1996).
The Sixth Circuit, sitting en banc, recently reaffirmed this position in Rochow v. Life Ins. Co. of North America and rejected the appellant's position that he was entitled to a remedy under both Section 502(a)(1) and 502(a)(3). In its determination, the Sixth Circuit found that the appellant's claimed injuries were indistinguishable, and he could therefore not seek an equitable remedy under Section 502(a)(3) when he was awarded benefits under Section 502(a)(1). 780 F.3d 364, 375 (6th Cir. 2015). The court noted:
A claimant can pursue a breach-of-fiduciary-duty claim under § 502(a)(3), irrespective of the degree of success obtained on a claim for recovery of benefits under § 502(a)(1)(B), only where the breach of fiduciary duty claim is based on an injury separate and distinct from the denial of benefits or where the remedy afforded by Congress under § 502(a)(1)(B) is otherwise shown to be inadequate.
Id. at 372. (emphasis added). The Sixth Circuit thus held that "[d]espite Rochow's attempts to obtain equitable relief by repackaging the wrongful denial of benefits claim as a breach-offiduciary duty claim, there is but one remedial injury and it is properly and adequately remedied under § 502(a)(1)(B)." Id.
The same is true here. Plaintiffs' claims to recover plan benefits constitute the predominate cause of action in this suit. Moreover, Plaintiffs' Procedural Violations Claims are based on injuries that are indistinguishable from the denial of benefits. In other words, Plaintiffs' claims that Humana failed to provide a full and fair review (Count III of Complaint, Rec. Doc. 46) and that Humana violated claims procedures (Count III of Complaint, Rec. Doc. 46) are essentially claims to pursue benefits owed under the plan. While Plaintiffs aver in their sur-reply that the mere awarding of benefits will not provide recourse for these Procedural Violation injuries, Plaintiffs fail to articulate how these injuries are distinct from Plaintiffs' insufficient benefit payments. For instance, Plaintiffs assert that "Plaintiffs will be left to deal with concerns as to how the Defendants' wrongful practices interfered with their physicianpatient relationships and future impact of such interference on their medical practice and hospital, " but this statement describes an amorphous injury and does not specify another, suitable remedy that would cure this amorphous injury. (Rec. Doc. 233 at 4). Rather, the Court finds that the payment of plan benefits will provide an adequate remedy, as the Procedural Violation Claims all resulted in alleged underpayment to Plaintiffs and is the injury upon which the claims rest. Plaintiffs therefore cannot simultaneously sustain these separate claims under 502(a)(3).
Accordingly, IT IS ORDERED that Humana's Motion for Partial Summary Judgment on Plaintiffs' Procedural Violation Claims (Rec. Doc. 164) is GRANTED.
C. Humana's Motion for Partial Summary Judgment for Dismissal of ERISA Claims Time Barred by Contractual Limitations Period (Rec. Doc. 167)
1. Parties' Arguments
Humana asks this Court to grant summary judgment on eight (8) of the total claims asserted on behalf of the 54 ERISA patients, arguing that those claims are contractually timebarred. (Rec. Doc. 167-9 at 3). The eight (8) claims involve five (5) different ERISA patients. (Rec. Doc. 167-9 at 4). Humana avers that all of the relevant ERISA plans included language that required beneficiaries to bring lawsuits within one (1) year and 180 days or 545 days after a final determination of a timely filed appeal. (Rec. Doc. 167-9 at 4-12). Humana therefore argues that because Plaintiffs amended their complaint on July 7, 2014 to add these claims, these eight (8) claims are contractually time barred because that date fell after the one (1) year and 180 day limit. Humana argues that the "Supreme Court has held that the courts must give effect to an ERISA plan's limitations provision unless it determines either that the period is unreasonably short or that a controlling statute prevents the limitations provision from taking effect." (Rec. Doc. 167-9 at 14) (citing Heimeshoff v. Hartford Life & Acc. Ins. Co., 134 S.Ct. 605, 612 (2013)). Here, Humana contends the one (1) year and 180 day limitations provision is reasonable because the Fifth Circuit has held that a 120 day provision was reasonable, and the Supreme Court found a one-year provision reasonable. (Rec. Doc. 167-9 at 15).
Plaintiffs oppose the motion. Plaintiffs concede that the applicable contractual period is one (1) year and 180 days, but Plaintiffs argue that since the Court stayed the case from October 11, 2011 until September 5, 2013, this period should be excluded from the time needed to file suit. (Rec. Doc. 201 at 4). Plaintiffs argue that the Court should consider this time as "equitable tolling, " as outlined by the Supreme Court in Heimeshoff. (Rec. Doc. 201 at 3-4). With this period excluded, Plaintiffs argue that they timely filed their claims. (Rec. Doc. 201 at 4). Plaintiffs further argue that the exhibits offered by Humana fail to establish that the contracts were in effect when Plaintiffs received treatment from the Center and St. Charles. Finally, Plaintiffs maintain that if the Court finds that summary judgment is appropriate on those claims, the Court should only grant summary judgment for their Section 502(1)(a)(B) claims and not for the allegations of improper practices. (Rec. Doc. 201 at 7)
Humana replies with leave of Court and notes that "Plaintiffs do not contest the fact that all 8 claims are time barred by the clear terms of the policies." (Rec. Doc. 210 at 1). Humana contends that equitable tolling under Heimeshoff is inapplicable to this case, as the Heimeshoff Court explained that equitable tolling would only be appropriate when the administrator's conduct causes the beneficiary to miss the filing deadline. (Rec. Doc. 210 at 3). Further, Humana argues that the stay did not prevent the patients from pursuing their claims themselves, as the stay only applied to the Center and St. Charles. (Rec. Doc. 210 at 4). Humana states that it is "notable" that "Plaintiffs still waited nearly a year after the stay was lifted to add these 8 claims to their suit, " indicating that Plaintiffs were not contemplating adding these claims within one (1) year and 180 day timeframe. (Rec. Doc. 210 at 5). In response to Plaintiffs' allegations that the exhibits did not show that the policies were in effect during the treatment periods, Humana attached copies of the policies. (Rec. Doc. 210 at 5).
Plaintiffs filed a sur-reply and assert that they voluntary agreed to stay the litigation in October 2011 to pursue a global resolution arising out of Humana's conduct, including those claims already filed and those claims that had not yet been filed. (Rec. Doc. 231 at 1-2). Accordingly, Plaintiffs contend that the stay applied to those claims that they had not yet been formally added to this litigation. (Rec. Doc. 231 at 2). Plaintiffs also dispute Humana's allegation that Plaintiffs conceded that they asserted the claims after the contractual time period, as the stay served to toll or suspend the contractual time period. (Rec. Doc. 231 at 2). Plaintiffs contend that "contrary to Defendants' assertion, the Heimeshoff Court never limited the application of the equitable estoppel doctrine in ERISA cases to situations only involving the plan administrator's dilatory conduct during the internal review process." (Rec. Doc. 231 at 3). Rather, the stay "constitutes the type of extraordinary circumstances and conduct that warrant application of equitable estoppel to defeat their contractual limitations defense." (Rec. Doc. 231 at 4).
2. Law and Analysis
The parties concede that the contractual statute of limitations requires the beneficiaries to file their suit within one (1) year and 180 (days) or 545 days from the date Humana made a final determination of a timely filed appeal; however, the issue here is whether this Court's stay served to toll that period. "Absent a controlling statute to the contrary, a participant and a plan may agree by contract to a particular limitations period, even one that starts to run before the action accrues, as long as the period is reasonable." Heimeshoff, 134 S.Ct. at 610. The parties do not dispute that the 545 day contractual time-limitation was reasonable. In Heimeshoff, the Supreme Court stated that "[t]o the extent the participant has diligently pursued both internal review and judicial review but was prevented from filing suit by extraordinary circumstances, equitable tolling may apply." Id. at 615. The Court does not find that this language limits equitable tolling to those instances where the plan administrator's specious conduct during the internal review process caused delay. Rather, the Court can exercise its equitable powers whenever such exceptional circumstances arise, though the Court recognizes that it should "sparingly" extend such relief. Irwin v. Dep't of Veteran Affairs, 498 U.S. 89, 95 (1990). "Generally, a litigant seeking equitable tolling bears the burden of establishing two elements: (1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way." Pace v. DiGuglielmo, 544 U.S. 408, 418 (2005).
On October 12, 2011, the parties asked the Court to stay the proceedings so they could seek a global resolution of the case and avoid expending significant resources on the discovery that is required in a case like this. (Rec. Doc. 58 & 59). Both parties sought the stay, and it was intended to benefit both parties, allowing them to pursue a settlement without the expensive and demanding costs of litigation. Almost two years later, on September 6, 2013, the Court lifted the stay in response to Plaintiffs' motion. These facts demonstrate that the Plaintiffs, on behalf of the five patients, diligently pursued the rights of the five patients, as Plaintiffs filed suit and then engaged in settlement negotiations that would have encompassed those five patients' claims.
The Court also finds that these facts present the "extraordinary circumstance" necessary to apply equitable tolling. The Plaintiffs suspended all litigation while they pursued a settlement with Humana, and as this suspension was intended to benefit both parties, it would be unjust if the five patients' statute of limitations tolled while they were unable to file an amended complaint and join the suit. While Humana is correct that these five patients could have brought their own suits and were not individually subjected to the stay, the stay sought a global resolution that would have applied to their claims, so it would have been senseless for those five patients to have filed suit during that time. Moreover, such filings would have undermined the purpose of the stay, which was not intended to spawn separate but related suits, but rather was intended to foster an environment where the parties could reach a settlement. The Court thus finds that it would be inequitable to dismiss these eight (8) claims and will deny summary judgment.
IT IS ORDERED that Humana's Motion for Partial Summary Judgment for Dismissal of ERISA Claims Time Barred by Contractual Limitations Period (Rec. Doc. 167) is DENIED.
D. Humana's Motion for Partial Summary Judgment Based on Improper Defendant (Rec. Doc. 168)
1. Parties' Arguments
Humana seeks summary judgment on four patients' claims, arguing that the final discretionary authority associated with those patients' plans is vested in the Plan Administrator and/or Plan Sponsor, so Plaintiffs cannot bring suit against Humana because Humana merely serves as the third party administrator. (Rec. Doc. 168-2 at 1). Humana contends that under Fifth Circuit precedent in Lifecare Management Services LLC v. Insurance Management Services LLC, "a party may only be held liable for payments of claims if it exercises actual control' over the benefits or claims process.'" (Rec. Doc. 168-12 at 4) (quoting 703 F.3d 835, 845 (5th Cir. 2013). These four patients, Humana argues, had plans which provided for the employer to have final discretionary authority, so Humana is not the proper defendant. (Rec. Doc. 168-12 at 6-11).
Plaintiffs oppose the motion and argue that Humana misconstrues the Fifth Circuit's holding in Lifecare. Plaintiffs maintain that the Fifth Circuit ultimately found the third party administrator liable in Lifecare, holding that a third party administrator could be held liable when the third party administrator exercised more control than what the documents provided. (Rec. Doc. 203 at 3). Plaintiffs contend the same is true for these four patients and that there remains a question of fact as to the level of control Humana exerted over these four plans. (Rec. Doc. 203 at 3). Plainitffs thus conclude that these claims are not ripe for summary judgment because "as in the Lifecare case, the facts establish that the level of Defendant's involvement in the claims process is significant and controlling." (Rec. Doc. 203 at 10).
Humana replies with leave of Court and contests Plaintiffs characterization of Lifecare, arguing that whether a party exercises actual control of plan administration is not a factual inquiry and that the Court's analysis is limited to the plan documents. (Rec. Doc. 215 at 1-2). Plaintiffs filed a sur-reply and reassert their disagreement with Humana's interpretation of Lifecare. Plaintiffs contend that "[t]he Fifth Circuit ruled that the third-party administrator could be held liable for nonpayment of the claim, despite contract language that stated the third-party administrator did not have final authority." (Rec. Doc. 220 at 3).
2. Law and Analysis
Humana argues that summary judgment is appropriate for these four patients' claims because Humana is not the proper defendant, as Humana merely served as the third party administrator, and the plan documents did not vest Humana with actual control over the claims processes. A third party administrator "may be held liable only if it exercises actual control' over the benefits claims process." Lifecare Management Services LLC, 703 F.3d at 844. "The proper party defendant in an action concerning ERISA benefits is the party that controls administration of the plan and that if an entity or person other than the named administrator takes on the responsibilities of the administrator, that entity may also be liable for benefits." Id. at 845 (quoting Gomez-Gonzalez v. Rural Opportunities, Inc., 626 F.3d 654, 665 (1st Cir. 2010)) (internal quotations omitted). "Where a [third party administrator] exercises control over a plan's benefits claims process, and exerts that control to deny a claim by incorrectly interpreting a plan in a way that amounts to an abuse of discretion, liability may attach." Id.
In Lifecare, the Fifth Circuit relied on this framework to analyze whether a third party administrator exercised actual control over the claims process. The Fifth Circuit proceeded with this analysis by looking to the plan documents, but the Fifth Circuit also highlighted facts outside of the record. Specifically, the Fifth Circuit emphasized the fact that the third party administrator had admitted it did not refer routine claims to the plan administrator. Id. The Fifth Circuit also stressed that the third party administrator was tasked with determining whether claims were considered "routine" and with interpreting the plan's terms to administer claims. Id. Based on these facts, the Fifth Circuit held that the third party administrator was a proper defendant and distinguished the facts from "those cases in which administrators were found not liable for performing only non-discretionary functions." Id. In its holding, the Fifth Circuit noted that the case would have been different if the plans had not afforded the third party administrator the power to deny claims it deemed routine; if the third party administrator would have had to refer all disputed claims to the plan administrator; or if the administrative record had included evidence that the third party administrator had to apply the plan administrator's interpretation of plan terms. Id. at 846. With this context, the Court now turns to the language of each patient's plan.
a. R.P. Bryan
Patient R.P. Bryan was a member of a self-funded plan, hereto referred to as "the Plan, " sponsored by her employer, North Oaks Health System, and Humana served as the Plan's third party administrator. Under the Plan, North Oaks Health System is defined as the "Plan Administrator." (Rec. Doc. 168-8 at 5). The Plan "uses a two-level appeals process for all adverse determinations." (Rec. Doc. 168-6 at 36). Under the Plan,
Humana will make the determination on the first level of appeal. If the claimant is dissatisfied with the decision on the first level of appeal, or if Humana fails to make a decision within the time frame indicated below, the claimant may appeal to the Plan Administrator. A first and second level appeal must be made by a claimant ...