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Bael v. United Healthcare Services, Inc.

United States District Court, E.D. Louisiana

January 8, 2019


         SECTION I

          ORDER & REASONS


         Before the Court are cross motions for summary judgment[1] filed by plaintiff Sunshine Van Bael (“Van Bael”) and defendant United Healthcare Services, Inc. (“United Healthcare”). For the following reasons, Van Bael's motion for summary judgment is denied, United Healthcare's motion for summary judgment is also denied, and Van Bael's benefit claims are remanded for further administrative review in accordance with this order.


         This action arises out of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq. Van Bael is an assistant professor at Tulane University (“Tulane”).[2] As a Tulane employee, Van Bael is insured by an employee welfare benefit healthcare plan (the “Plan”) sponsored and administered by Tulane.[3]United Healthcare is the Plan's claims administrator; it “handle[s] the day-to-day administration of the Plan's coverage as directed by [Tulane].”[4]

         According to Van Bael, she has been treated for occipital neuralgia, which she describes as a headache disorder, since 2015.[5] The present action arises out of three claims denials. Van Bael alleges that United Healthcare wrongfully denied her coverage for two procedures intended to treat her occipital neuralgia, occipital nerve blocks and Iovera cryoneurolysis, as well as a prescription for a medication called Gralise-all in violation of ERISA.[6] Van Bael and United Healthcare both move for summary judgment.

         Van Bael argues that she is entitled to summary judgment because United Healthcare failed to establish and maintain reasonable claims procedures and that its denial of coverage for the foregoing claims was arbitrary and capricious. On the other hand, United Healthcare argues that Van Bael's claims fail as a matter of law, because she failed to exhaust her administrative remedies and it did not abuse its discretion.


         “Standard summary judgment rules control in ERISA cases.” Vercher v. Alexander & Alexander Inc., 379 F.3d 222, 225 (5th Cir. 2004). Hence, summary judgment is proper when the Court determines that there is no genuine dispute of material fact. See Fed. R. Civ. P. 56. “[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party seeking summary judgment need not produce evidence negating the existence of a material fact; it need only point out the absence of evidence supporting the other party's case. Id.; see also Fontenot v. Upjohn Co., 780 F.2d 1190, 1195 (5th Cir. 1986).

         Once the party seeking summary judgment carries its burden, the nonmoving party must come forward with specific facts showing that there is a genuine dispute of material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The showing of a genuine issue is not satisfied by creating “‘some metaphysical doubt as to the material facts,' by ‘conclusory allegations,' by ‘unsubstantiated assertions,' or by only a ‘scintilla' of evidence.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted).

         Instead, a genuine issue 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). “Although the substance or content of the evidence submitted to support or dispute a fact on summary judgment must be admissible . . ., the material may be presented in a form that would not, in itself, be admissible at trial.” Lee v. Offshore Logistical & Transp., LLC, 859 F.3d 353, 355 (5th Cir. 2017) (citations omitted). The party responding to the motion for summary judgment may not rest upon the pleadings but must identify specific facts that establish a genuine issue. Anderson, 477 U.S. at 248. The nonmoving party's evidence, however, “is to be believed, and all justifiable inferences are to be drawn in [the nonmoving party's] favor.” Id. at 255; see also Hunt v. Cromartie, 526 U.S. 541, 552 (1999).

         “[A] denial of benefits challenged under [ERISA] 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). If the ERISA plan vests the administrator or fiduciary with discretionary authority to determine eligibility for a plan's benefits or to interpret the plan's provisions, however, a denial of benefits is reviewed for an abuse of discretion. Ellis v. Liberty Life Assurance Co. of Boston, 394 F.3d 262, 269 (5th Cir. 2004). The Plan grants both Tulane and United Healthcare discretionary authority to interpret the terms of the Plan and determine a member's eligibility for benefits in accordance with those terms.[7] Both parties agree that the abuse of discretion standard governs the Court's review.[8]


         “[C]laimants seeking benefits from an ERISA plan must first exhaust available administrative remedies under the plan before bringing suit to recover benefits.” Bourgeois v. Pension Plan for Emps. of Santa Fe Int'l Corp., 215 F.3d 475, 479 (5th Cir. 2000). “This requirement is not one specifically required by ERISA, but has been uniformly imposed by the courts in keeping with Congress' intent in enacting ERISA.” Hall v. Nat'l Gypsum Co., 105 F.3d 225, 231 (5th Cir. 1997); see also Medina v. Anthem Life Ins. Co., 983 F.2d 29, 33 (5th Cir. 1993) (“[W]e have fully endorsed the prerequisite of exhaustion of administrative remedies in the ERISA context.”).

         The parties dispute whether Van Bael has exhausted her administrative remedies. The Plan provides, in relevant part:

If you disagree with either a pre-service request for Benefits determination or post-service claim determination, you can contact us in writing to formally request an appeal. . . . Your first appeal request must be submitted to us within 180 days after you receive the denial of a pre-service request for Benefits or the claim denial.[9]
If you are not satisfied with the first level appeal decision, you have the right to request a second level appeal. Your second level appeal request must be submitted to us within 60 days from receipt of the first level appeal decision.[10]
After you exhaust the appeal process, if we make a final determination to deny Benefits, you may choose to participate in our voluntary external review program. You may also choose to participate if we have agreed to waive the requirements of the first and second level appeals process which are described above.[11]

         Van Bael admittedly has not filed a second level appeal or requested an external review with respect to any of her claims. Therefore, according to United Healthcare, she has not exhausted her administrative remedies.[12] In response, Van Bael argues that the language in the summary plan description makes clear that both the second level appeal and external review are permissive levels of review and not required for exhaustion purposes.[13]

         However, the Court need not decide which levels of review are mandatory under the Plan or whether Van Bael actually exhausted her administrative remedies because the ERISA regulation governing claims procedures provides:

[I]n the case of the failure of a plan to establish or follow claims procedures consistent with the requirements of this section, a claimant shall be deemed to have exhausted the administrative remedies available under the plan and shall be entitled to pursue any available remedies under section 502(a) of [ERISA] on the basis that the plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim.

29 C.F.R. § 2560.503-1(l)(1). Van Bael argues that United Healthcare has failed to establish or maintain reasonable claims procedures, thereby “extinguish[ing]” the exhaustion requirement.[14]

         When determining whether an administrator has complied with ERISA's procedural requirements, the Fifth Circuit applies a “substantial compliance” rule:

ERISA does not require strict compliance with its procedural requirements, mandating only that plan administrators “substantially comply” with the statute and accompanying regulations. See Lacy v. Fulbright & Jaworski, 405 F.3d 254, 256-57 (5th Cir. 2005). “Technical noncompliance with ERISA procedures will be excused so long as the purpose of section 1133 has been fulfilled, ” Robinson v. Aetna Life Ins., 443 F.3d 389, 393 (5th Cir. 2006), which is “to afford the beneficiary an explanation of the denial of benefits that is adequate to ensure meaningful review of that denial, ” Wade [v. Hewlett-Packard Dev. Co. LP Short Term Disability Plan], 493 F.3d [433, ] 539 [(5th Cir. 2007)].

Baptist Memorial Hospital-DeSoto Inc. v. Crain Auto., 392 Fed.Appx. 288, 293 (5th Cir. 2010). Specifically, § 1133 of ERISA provides:

         In 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.

29 U.S.C. § 1133. “The ERISA regulations promulgated by the Department of Labor ‘provide insight into what constitutes full and fair review.'” Shedrick v. Marriott Int'l, Inc., 500 Fed.Appx. 331, 338 (5th Cir. 2012) (quoting Lafleur v. La. Health Serv. & Indemnity Co., 563 F.3d 148, 154 (5th Cir. 2009)).

         “In assessing whether the administrator has ‘substantially complied' with the applicable procedural requirements, the court must ‘consider[ ] all communications between an administrator and plan participant to determine whether the information provided was sufficient under the circumstances.'” Crain, 392 Fed.Appx. at 293 (quoting Wade v. Hewlett-Packard Dev. Co. LP Short Term Disability Plan, 493 F.3d 533, 539 (5th Cir. 2007), abrogated on other grounds, 560 U.S. 242 (2010)). “Whether the plan administrator substantially complied with the notice requirements is a question of law.” Id. Guided by this “substantial compliance” framework, the Court must first determine whether United Healthcare failed to establish or follow claims procedures in accordance with § 2560.503-1. If so, then Van Bael may be deemed to have exhausted her administrative remedies.

         Van Bael first argues that United failed to establish and maintain a reasonable claims procedure by repeatedly requiring her counsel, Jennifer Martinez (“Martinez”), to submit a designated representative form.[15] According to Van Bael, United required Martinez to submit the form on three separate occasions-“[i]nstead of responding to actual document requests, notices of non-compliances and general status letters.”[16]

         Pursuant to § 2560.503-1(b)(3) and (4), a claims procedure will not be deemed reasonable if it is “administered in a way[ ] that unduly inhibits or hampers the initiation or processing of claims” or it “preclude[s] 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.” However, “a plan may establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant.” § 2560.503-1(b)(4).

         The administrative record reflects the following series of events: On October 20, 2017, Martinez's assistant, Dena Daigle (“Daigle”), sent United Healthcare a letter requesting documents related to “the denial of [Van Bael's] Iovera treatment and Gralise prescription.”[17] No. claim numbers or dates of service were provided. The letter included two authorization forms-one medical authorization form and one notarized insurance authorization form, both executed by Van Bael.[18] On November 14, 2017, Martinez sent a letter to follow up on her October 20, 2017 letter, claiming that she had not received a response.[19]

         On November 21, 2017, United Healthcare responded to Daigle, acknowledging the request for documents sent on Van Bael's behalf.[20] The letter stated, “[P]ursuant to applicable regulations, we require you to submit written authorization from the member authorizing you to receive the member's documents. The authorization must also sufficiently identify the claim(s) for which you receive authorization. The member authorization form included in your request did not meet the necessary criteria.” United Healthcare attached a blank copy of its own “designation of authorized representative” form and noted that “the timeframe within which we will respond to your request will begin with our receipt of the authorization from the patient.”[21]

         On December 12, 2017, Martinez sent United Healthcare another request for documents.[22] However, this letter does not mention the Gralise prescription. Instead, it references “claims bearing the dates of 8/21/17 and 10/4/17-11/4/17 and regarding services requested” by Dr. Jose Posas (“Dr. Posas”). Martinez did not specify the nature of the services in the letter, but a review of the record reveals that the dates relate to the occipital nerve blocks and cryoneurolysis procedures performed and recommended, respectively, by Dr. Posas.[23] Martinez attached United Healthcare's authorization form, but it was only partially completed.[24] On December 20, 2017, United Healthcare sent Martinez another letter reiterating its criterion that the form specify the claim or claims for which the representative has received authorization.[25]

         On January 2, 2018, Martinez sent United Healthcare a letter styled “Second Request for Documents/Claim Files.”[26] The letter referenced two claim numbers and included exhibits, but there was no attached completed authorization form-despite United Healthcare's December 20th letter and the incomplete form that was submitted on December 12th. Based on two explanations of benefits attached to the letter, the claim numbers refer to a service performed by Dr. Khan on January 18, 2017 and two services performed by Dr. Posas on August 21, 2017.[27]

         On January 16, 2018, United Healthcare sent a letter to Dr. Khan-not Martinez: “Attached is a copy of a letter sent to Sunshine Van Bael regarding your document requests.”[28] The letter to Van Bael, dated the same day, includes attachments represented by United Healthcare, in its letter, to be “the information UnitedHealthcare used in making the determination.”[29] It refers to only one claim, although it attaches what United Healthcare calls an “appeal letter” from Martinez, dated January 2, 2018 (the letter Martinez sent on that date requesting documents with respect to two claims).[30]

         On March 2, 2018, Martinez faxed United Healthcare a 33-page appeal letter that referenced all three claim denials (the “appeal”).[31] The only claim number listed is associated with an occipital nerve block procedure, and the claim number relates to the procedure performed on August 21, 2018 by Dr. Posas. The appeal letter included an extensive number of attachments (over 700 pages)-but no completed authorization form.

         On March 5, 2018, United Healthcare sent a letter to Martinez's firm: “State and federal regulations require written authorization from the patient for you to submit an appeal or request on their behalf. Because your request didn't include a complete authorization, we can't process it at this time. Once you send us a current authorization meeting the following requirements, we will work on your request.”[32]The letter then lists the ...

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