Opinion
Civil Action No. 01-1115, Section "M" (Judge Little)
September 5, 2002
MEMORANDUM RULING
Before the court is a motion to dismiss [Doc. No. 41] plaintiffs' claims. This motion is filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure ("FRCP") by CaseNewHolland, Inc., Connecticut General Life Insurance Company, and CNH Health and Welfare Plan. Plaintiffs John Bailey and Linda Bailey oppose the motion. For the reasons set forth below, the motion to dismiss is GRANTED.
I. BACKGROUND
On or about 29 August 2000, plaintiff Linda Bailey suffered a stroke which left her partially paralyzed. As the wife of John Bailey, a retiree from CaseNewHolland, Inc. ("CNH"), Mrs. Bailey was entitled to insurance benefits from the CNH Health and Welfare Plan (the "Plan") which covered her husband. To facilitate her rehabilitation from the stroke, Mrs. Bailey began daily physical therapy sessions. Initially, these sessions were covered through the Plan without incident. In March of 2001, the Baileys were informed by their physical therapist that their insurer was no longer paying for Mrs. Bailey's treatments. A CNH representative explained to Mr. Bailey that the Plan allowed for a maximum of sixty physical therapy treatments annually. The representative also told Mr. Bailey the Plan would pay for physical therapy his wife received through 25 March 2001, but that no additional sessions would be covered.
On 4 May 2001, the Baileys filed suit against CIGNA and CNH Global for damages resulting from the defendants' failure to pay for all of Mrs. Bailey's therapy sessions. This action was originally filed in the Fourth Judicial District Court for the Parish of Quachita, State of Louisiana. Defendants filed a Notice of Removal on 18 June 2001, and, shortly thereafter, the case was removed to federal court. This court received the matter by way of reassignment on 25 June 2001.
The plaintiffs' original complaint asserted state law claims which were preempted by ERISA. That case was dismissed with prejudice pursuant to FRCP 12(b)(6). The court granted plaintiffs leave to amend their complaint to state a cause of action under ERISA.
An amended complaint was filed with this court on 4 March 2002. Although the amended complaint makes no reference to any ERISA provision, plaintiffs are bringing an action to recover benefits due under the terms of the Plan pursuant to 29 U.S.C. § 1132 (a)(1)(B). Plaintiffs allege they enrolled in an employee welfare benefit plan that provided unlimited physical therapy treatments according to the summary plan description. Defendants, insisting that plaintiffs' Plan imposed a sixty-visit-per-year limit upon physical therapy treatments, have refused to pay for physical therapy visits in excess of this limit. Plaintiffs seek to recover the outstanding costs of physical therapy as well as attorney's fees, costs, and prejudgment interest. In the instant motion, defendants argue plaintiffs are not entitled under the plain language of the Plan to the benefits they claim, so plaintiffs fail to state any claim upon which relief can be granted.
Section 1132(a)(1)(B) states in full "A civil action may be brought by a participant or beneficiary 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."
II. STANDARD OF REVIEW
For the purposes of a motion to dismiss under Rule 12(b)(6), all material allegations in the plaintiff's complaint must be taken as true and construed in the light most favorable to the plaintiff. Kaiser Aluminum Chem Sales. Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982). A Rule 12(b)(6) dismissal is proper only if it appears to a certainty that the plaintiff would not be entitled to relief under any set of facts that could be proven. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 1 L.Ed.2d 80 (1957). A complaint may be dismissed if it fails to allege an element of a claim necessary to obtain relief.Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995). Conclusory allegations or legal conclusions, as opposed to factual conclusions, will not prevent the court's granting of a motion to dismiss. Id.
Defendants have styled their motion before the court as a motion to dismiss or, in the alternative, as a motion for summary judgment. Defendants have moved for these alternative forms of relief, apparently, because defendants have submitted with their motion several exhibits, including copies of a Summary Plan Description ("SPD") and an Enrollment Guide. The submission of evidence extraneous to plaintiffs' complaint "would ordinarily require the Court to convert the motion to dismiss into a motion for summary judgment." Home v. Time Warner Operations, Inc., 119 F. Supp.2d 624, 627 n4 (S.D. Miss. 1999) (citing FRCP 12(b)). Plaintiffs did not attach any documents to their amended complaint, although plaintiffs did submit copies of the same Enrollment Guide and SPD with their memorandum in opposition to defendants' motion to dismiss. In addition, plaintiffs make several references to a "summary plan description" provided by defendants in the amended complaint.
Defendants also include an affidavit by a CNH employee and an Eligibility Guide. Only the Enrollment Guide and the SPD will be considered for purposes of this motion.
Plaintiffs submitted other documents as well, none of which will be considered here.
Although the Fifth Circuit has not ruled on this particular procedural issue, there is authority supporting the district court's discretion "to consider a pertinent document that the plaintiff fails to attach to the complaint, but that the defendant attaches to [the] motion to dismiss without converting the motion to a motion for summary judgment." Id. (quoting 5 Charles A. Wright Arthur R. Miller, Federal Practice and Procedure, § 1327, 762-63 (1990) and noting a "recent trend in other circuits" permitting courts to consider such documents on motions to dismiss). In particular, a district court should be able to consider a document unattached to a plaintiff's complaint when the authenticity of the document is not challenged. Id. (citing Beddall v. State Street Bank Trust Co., 137 F.3d 12, 17 (1st Cir. 1998). In their claim, plaintiffs challenge the interpretation, not the authenticity, of the Enrollment Guide and SPD. This court, therefore, will evaluate the defendant's motion under Rule 12(b)(6) and will consider the Enrollment Guide and SPD in that analysis.
III. ANALYSIS
Plaintiff sues under 29 U.S.C. § 1132 (a)(1)(B) of ERISA to recover benefits owed to them under the Plan. The SPO states:
The Claims Administrator has been delegated full and final authority and discretion to [m]ake all final determinations under each plan including eligibility for benefits [and] [i]nterpret and construe all of the terms and provisions of each plan.
Exhibit A (SPD) p. 48. Because the Plan expressly vests the claims administrator with the discretion to construe the terms of the Plan, the applicable standard of review is whether the administrator abused its discretion by denying plaintiffs' claim for benefits. Rhorer v. Raytheon Engineers Constructions, Inc., 181 F.3d 634, 639 (5th Cir. 1999) (citing Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 111-12 (1989)). The administrator's denial of benefits may not be altered unless it is arbitrary and capricious. Meditrust Fin. Servs. v. Sterling Chems., 168 F.3d 211, 214-15 (5th Cir. 1999).
The Fifth Circuit generally applies a two-part test to determine whether an ERISA plan administrator has abused its discretion in denying a claim for benefits. Id. at 639 (citing Spacek v. Maritime Assoc., ILA Pension Plan, 134 F.3d 283, 292-93 (5th Cir. 1998)). The court first must determine "the legally correct interpretation of the plan, and whether the administrator's interpretation accords with the proper legal interpretation." Id. (citations omitted). If the administrator's interpretation corresponds to the proper legal interpretation, there has been no abuse of discretion, and the inquiry ends. If the court finds, however, that the legal interpretation of the plan is incorrect, "the court must then determine whether the administrator's interpretation constitutes an abuse of discretion." Id. at 639-640 (citations omitted).
As a preliminary matter, the court must decide which of the two documents the claims administrator was interpreting when it denied Mr. Bailey's claim. Although both parties refer to a "summary plan description," they appear to mean two different documents. According to the plaintiffs, the SPD describes a Non-Network Plan covering physical therapy with the Plan paying "80% of RC after deductible." Amended Complaint, ¶ 11. The SPD offered by defendants, however, describes the Non-Network Plan as paying for "80% of covered expenses . . . 60 visits per year maximum" for physical therapy. Exhibit A (SPD), p. 22. Plaintiffs' complaint and memorandum opposing the motion to dismiss indicate the document plaintiffs call the "summary plan description" is in fact the Enrollment Guide received by Mr. Bailey in the fall of 2000. Defendants point out there is a difference between an Enrollment Guide and SPD under ERISA and, more importantly, assert the SPD is the relevant document for determining the plaintiffs' benefits under the Plan.
"RC" stands for "reasonable and customary charges." Reasonable and customary charges are defined as "comparable to charges made for similar services . . . provided to patients of similar circumstances and health condition in a geographic area." Exhibit B (Enrollment Guide), p. 8.
ERISA imposes a duty upon administrators of employee benefit plans to furnish "to each participant covered under the plan and to each beneficiary who is receiving benefits under the plan a summary plan description." 29 U.S.C. § 1021 (a)(1). The SPD must be "accurate, comprehensive, [and] easy to understand." Hansen v. Continental Insurance Co., 940 F.2d 971, 980 (5th Cir. 1991). See also 29 U.S.C. § 1022 (a). The SPD is binding upon the plan administrator. Hansen, 940 F.2d. at 982. Thus, if a conflict arises between the SPD and the terms of the policy itself, the SPD governs. Id.
A document provided to a beneficiary is an SPD if the document "contains all or substantially all categories of information required" under Section 1022 and Department of Labor Regulations found at 29 C.F.R. § 2520.102-3. Hicks v. Fleming Companies, Inc., 961 F.2d 537, 538 (5th Cir. 1992). The contents of the SPD are governed by Section 1022(b).
That provision requires an SPD to contain
The name and type of administration of the plan; in the case of a group health plan . . . whether a health insurance issuer . . . is responsible for the financing or administration (including payment of claims) of the plan and (if so the name and address of such issuer; the name and address of the person designated as agent for the service of legal process, if such person is not the administrator; the name and address of the administrator; names, titles and addresses of any trustee or trustees (if they are persons different from the administrator); a description of the relevant provisions of any applicable collective bargaining agreement; the plan's requirements respecting eligibility for participation and benefits; a description of the provisions providing for nonforfeitable pension benefits; circumstances which may result in disqualification, ineligibility, or denial or loss of benefits; the source of financing of the plan and the identity of any organization through which benefits are provided; the date of the end of the plan year and whether the records of the plan are kept on a calendar, policy, or fiscal year basis; the procedures to be followed in presenting claims for benefits under the plan including the office at the Department of Labor through which participants and beneficiaries may seek assistance or information regarding their rights under this Act and the Health Insurance Portability and Accountability Act of 1996 with respect to health benefits that are offered through a group health plan . . . and the remedies available under the plan for the redress of claims which are denied in whole or in part . . . .29 U.S.C. § 1022 (b). DOL regulations "extend and amplify" the statutory requirements. Hicks, 961 F.2d at 540 (referring to 29 C.F.R. § 2520.103-3). in particular. Section 2520.102-3 distinguishes between information that must be included in SPDs for employee pension benefit plans and employee welfare benefit plans. Id. See also 29 C.F.R. § 2520.102-3 (j)-(k).
The essential inquiry is whether the Enrollment Guide Mr. Bailey received in the fall of 2000 qualifies as an SPD under 29 U.S.C. § 1022 (a). After reviewing the relevant statutory language and the document provided to Mr. Bailey, the court concludes that the Enrollment Guide does not qualify as an SPD.
The Enrollment Guide does not qualify as an SPD because it does not conform to ERISA and DOL regulations. The Enrollment Guide contains none of the information required of an SPD by Section 1022(b) and Section 2520.102-3. The document provides a summary of benefit plan options, contact numbers for beneficiaries with questions, and enrollment instructions, but this information does not make the document an SPD. There is no information regarding the plan administration, eligibility requirements, circumstances resulting in disqualification or loss of benefits, or procedures for presenting claims. The Enrollment Guide is completely lacking in the information required of an SPD.
The Fifth Circuit has adopted a bright-line test for determining whether a document provided to an ERISA plan beneficiary qualifies as an SPD. Hicks, 961 F.2d at 542. According to this test, a document is an SPD under ERISA if it "contains all or substantially all categories of information required under 29 U.S.C. § 1022 (b) and the DOL's regulations at 29 C.F.R. § 2520.102-3." Id. To adopt a rule permitting a document to qualify as an SPD, despite the omission of statutorily and regulatory mandated information, "would set a trap for the unwary employer who circulates benefit information in writing." Id. In addition, a more permissive standard could discourage employers from distributing information to employees about their benefit plans. Id.
The Fifth Circuit has acknowledged that a document containing "substantially all" of the required information could qualify as an SPD.Id. 17. Such a document may be an SPD "if a plan sponsor intends a document to be [an] SPD . . . and includes in the document most information required under ERISA and its regulations, but, perhaps due to inadvertence, omits some small item of required information." Id. Even under this more lenient standard, the plaintiffs' Enrollment Guide does not qualify as an SPD. The Enrollment Guide does not contain substantially all of the required information. Without this information, the Enrollment Guide cannot be considered an SPD, and it cannot have a binding effect upon the claims administrator.
Having concluded that the SPD, not the Enrollment Guide, contains the actual terms subject to the claims administrator's interpretation, the court must determine whether the denial of the plaintiffs claim for benefits corresponded to the proper legal interpretation of the Plan or was an abuse of discretion. According to the "Non-Network Plan" information in the SPD, short-term rehabilitation, which includes physical therapy, is covered up to a maximum of 60 visits per year. Exhibit A (SPD), p. 22. When denying the plaintiffs' claim, the administrator interpreted the physical therapy coverage terms exactly as they appear in the SPD. This denial was not an abuse of discretion. See Gosselink v. American Telephone Telegraph, Inc., 272 F.3d 722, 727 (5th Cir. 2001) (finding an administrator abuses its discretion if it interprets an ERISA plan provision "in a manner that directly contradicts the plain meaning of the plain language.").
The ERISA provisions compelling plan administrators to provide SPDs were intended to ensure that plan beneficiaries had access to important information. Excluding from the definition of an SPD any document that does not conform to the requirements of the ERISA provision and DOL regulations can have a harsh effect upon plan beneficiaries who rely upon the terms outlined in such documents. That harshness is illustrated by the result in this case. It is unfortunate that the information in the Enrollment Guide relied upon by Mr. Bailey was misleading and inconsistent with the terms contained in the SPD. The Enrollment Guide cannot be used to obligate the Plan to provide the coverage to which the plaintiffs believe they are entitled.
IV. CONCLUSION
For the reasons discussed above, the defendants' motion to dismiss is GRANTED. Alexandria, Louisiana