Opinion
Case No. 2:98-CV-892 TS.
August 13, 2004
This matter is before the court on Defendant's Motion for Summary Judgment, Plaintiffs' Motion for Summary Judgment and Defendant's Motions to Strike.
I. INTRODUCTION
In this ERISA case, Plaintiffs appeal Defendant's denial of Jason Haymond's claims for health insurance benefits for expenses incurred by his now-deceased wife, Heather. Defendant denied the claims based on the pre-existing condition exclusion. Plaintiffs contend that the denial was arbitrary and capricious because Ms. Haymond did not receive treatment for her chronic cystic fibrosis for the 90 days prior to the date her coverage started and therefore, the pre-exiting exclusion does not apply to her. The court finds that the denial was not arbitrary and capricious.
II. UNDISPUTED FACTS
Defendant, Eighth District Electrical Benefit Fund, (the Fund), is an employee welfare benefit plan that provides health and welfare benefits within the scope of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. The Fund is self-funded through participating employee and employer contributions. The Fund does not exist to make a profit, but only to provide medical and similar benefits to its participants. The Board of Trustees of the Eighth District Electrical Benefit Fund (the Board) is the Plan Administrator. If a claim is denied, a Plan Participant may appeal the denial to the Board.
By reason of his employment, Plaintiff Jason Haymond was a Plan Participant in the Fund from March 1996 through 1998. Mr. Hammond had been married to Heather Larsen Hammond (hereinafter Ms. Hammond) in 1990 and 1991. They later divorced. They remarried on September 14, 1996. Before their re-marriage, although they had a child together, they maintained separate households. Ms. Haymond became eligible for benefits under the Plan when she re-married Jason Haymond. However, there was a pre-existing conditions limitation as follows:
PRE-EXISTING CONDITIONS During the first 12 months the Participant is covered under the Plan, the Comprehensive Major Medical Benefits payable will be limited to an amount not exceeding $5,000 for all Covered Charges incurred resulting from a bodily injury or sickness, for which the Participant received care or treatment, within 90 days immediately preceding the effective date of coverage.
Def.'s Ex. B.
Under the Plan, the limitations on coverage established by the above-quoted Pre-Existing Conditions provision of the Summary Plan Description (SPD) would apply to any condition for which Ms. Haymond received care or treatment during the period of June 16, 1996, through September 13, 1996, the 90 days preceding her marriage.
The SPD provides for written notice of a decision on a claim. Pl.'s Ex. C at 92. It provides that if a claim is denied, the claimant may appeal that denied claim to the Board of Trustees. Id. The SPD further provides that the Board will conduct a full and fair review of the appealed claim and its decision on review shall be final and binding. Id. at 94. It does not provide for any right to reconsideration after such final and binding decision on review is issued.
At age five, Ms. Hammond was diagnosed with cystic fibrosis (CF). CF is a genetic disease primarily affecting the respiratory and gastrointestinal systems and causes many medical problems. The Haymonds were aware of the pre-existing coverage limitation and knew that Ms. Haymond's CF would not be covered if she received treatment for CF during the 90-day period prior to re-marriage.
Plaintiffs submitted claims to Defendant related to medical treatment or supplies for the care of Heather Haymond's CF, during the period of September 14, 1996, to September 13, 1997, when Heather Hammond died. Defendant denied such claims to the extent they exceeded $5,000, based upon the Pre-Existing Conditions provision of the SPD.
In March 1997, Jason Haymond filed an appeal of the denial of the claims with the Board. His March 21, 1997, letter requesting review included the following assertions:
[Heather] was diagnosed with cystic fibrosis when she was approximately five years old. Since that time she has received treatment on and off as needed, sometimes going several years without treatment, and sometimes going as short as a few months. This is typical treatment for patients with cystic fibrosis. This can also be verified with Heather's medical record which was provided upon request to Debbie Skinner in the benefits office.
. . . Heather did not receive any treatment for at least 90 days prior to our marriage. This is certainly not unusual, considering her past medical history. She was denied based on information which was misinterpreted. This information was a prescription for oxygen usage that was faxed to Heather's mother's office. . . . This prescription for oxygen was never requested by Heather and certainly not used.
[Heather's mother] knew that Heather was planning a trip to Sacramento, and on a previous trip, Heather did not feel good and needed to use oxygen. Because she was out of state, it was very difficult to obtain a prescription to use oxygen. Heather's mother was simply trying to assist her daughter in the event that she would have the same needs in Sacramento. Heather did not go on the trip due to obligations at home, and therefore the oxygen prescription was unnecessary.
This is the only basis that the administrator's office has used to deny Heather's benefits related to cystic fibrosis. There is certainly a difference between Heather's mother requesting a copy of a prescription for her own peace of mind, and Heather actually receiving treatment.
Def. Ex. D. at 3-4 (underlined emphasis in original).
On April 17, 1997, Defendant's Board of Trustees considered Jason Haymond's appeal at a regularly scheduled meeting of the Board of Trustees, held in Denver, Colorado. Jason Haymond was notified that he could appear at the meeting, either personally or by designee, but he did not do so. The Board considered documents which had been submitted in relation to the claim. See Pl.s' Ex. A, at 1-25.
The Board of Trustees decided to deny Jason Haymond's claim based on that administrative record. That record included the following:
(A) An April 10, 1996, letter from Dr. Marshall, Heather's treating physician, stating that Heather Haymond was experiencing "significant problems" and was prescribed nightly feedings through an NG tube. Said letter states that, without such nightly feedings, "Heather will undoubtedly begin to lose weight, which in turn endangers her health and life."
(B) A May 3, 1996, prescription prepared by Dr. Marshall, prescribing 150 milligrams of Zantac twice per day.
(C) A Staff Note dated May 7, 1996, stating: "Call received from Heather today. She has decided to pursue care from an MD closer to her. She may be moving. How to request and transfer records discussed. She will phone us to release records when she has new MD address. We will release her from our care at this point. Dr. Marshall notified."
(D) May 22, 1996, office visit notes prepared by Heather's medical providers, that state in part: "started colistin a couple days ago," "continues to use pulmozyme," "CPT by Jason 1-2 Xs per day," and "D-nase usually each day."
(E) An August 14, 1996, prescription for oxygen for Heather Larsen (Haymond), with a fax cover letter addressed to Kathleen Kresser, Heather's mother. The prescription notes it is "for out of state use."
(F) A September 24, 1996, Staff Note stating that Heather called to request refills of many of her prescriptions to treat CF — about 10 days following the 90-day period.
(G) Dr. Marshall's claim for treating Heather on September 25, 1996.
(I) A December 5, 1996, letter that Dr. Marshall submitted to Duke University Medical Center in connection with an application for a lung transplant, describing Heather Haymond's condition as "severe." It states in part: "She has had fairly rapidly progressive downhill course over the past couple of years, as you can see from the enclosed pulmonary infection test." Said letter also describes Heather Haymond as "fairly late in the course of her disease." Dr. Marshall also says: "a preliminary inquiry suggests that her newly acquired health insurance would cover a transplant . . . I realize that she is fairly late in the course of her disease, but unfortunately until recently she was not emotionally or financially prepared to explore the transplant option.
(J) Jason Haymond's March 21, 1997, letter in support of his appeal to the Board.
Def.'s Ex. D.
These medical records reflect that Heather Haymond received treatment shortly before the 90-day period and shortly after the 90-day period. The Board concluded that, given her medical history, the severity of her disease, and the filing of prescriptions immediately before and immediately after the 90-day period, that she did not forego treatment during the period. Based upon this information, the Board found that Heather Haymond received medical care and treatment, including prescriptions and oxygen during the 90-day period. In making this decision, the Board was aware, from Jason Haymond's appeal letter, of his claim that Heather Haymond did not receive any care or treatment for her cystic fibrosis within the 90-day period prior to their remarriage.
In addition to the foregoing, Plaintiffs submitted the following: A document called a Claims History-Inquiry, sent by Medicaid claims. Pl.s' Ex. A, at 10. It shows that Heather filled four prescriptions with a beginning date of May 30, 1996, and three with a beginning date of June 1, 1996. A copy of a faxed prescription for Heather for Oxygen dated April 15, 1996, noting it is "for out of state use." Id. at 12. The fax cover letter shows it faxed to Heather's mother. It is not clear if these two documents were in the administrative record at the time that the Board made its decision. These documents support the Board's position.
Mr. Haymond's appeal letter claims that Heather did not request the oxygen prescription and that it was requested only by her mother for her mother's own peace of mind. However, Mr. Haymond gave nothing to the Board from Heather or her mother to support his assertion. Similarly, he submitted no evidence from Heather's treating physician, Dr. Marshall, or other medical providers that she could have, or did, forego treatment in the form of the prescriptions she filled immediately before the 90-day period, especially when she filled them again immediately after the 90-day period. There is nothing in the administrative record from Heather Haymond herself upon which to base the position that she did not receive care or treatment for CF during the 90-day period.
On May 13, 1997, the Board sent Mr. Haymond a written denial of his appeal. On September 13, 1997, Heather Haymond died.
On November 6, 1997, after the Board had denied Mr. Hammond's final appeal, Claims Management Inc., (CMI) wrote the Fund saying it was representing Mr. Haymond and requesting more information. On February 20, 1998, CMI wrote the Fund again and attached a letter from a Dr. Maddock repeating Mr. Haymond's assertions regarding the oxygen prescription being obtained for a planned trip and never being filled and opining that, as result of those alleged facts, Heather did not "receive care or treatment with O2 from 6/16/96 to 9/14/96 for cystic fibrosis." Pl.'s Ex. A at 32. Dr. Maddock does not state any bases of personal knowledge for the facts he asserts. Neither does he state that he ever reviewed the entire administrative record before the Board, or any other of Heather Hammond's medical records.
After this case began, Mr. Haymond's deposition was taken. In support of his Motion for Summary Judgment, Plaintiffs rely on the CMI letters, Dr. Maddock's letter and his own deposition testimony, none of which were before the Board when it made its decision.
III. CONCLUSION AND ORDER
A. Standard of Review
Summary judgment is appropriate only if "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In reviewing the motion, the court views "the evidence in the light most favorable to the nonmovant." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
The parties agree that Defendant bears the burden of proving that a limitation or exclusion, in this case the pre-existing condition exclusion, applies. Blair v. Metropolitan Life insurance Co., 974 F.2d 1219, 1221 (10th Cir. 1992).
The Summary Plan Description (SPD) provides, in the "Settlement of Disputed Claims" section appearing on as follows:
Any dispute as to eligibility, type, amount or duration of benefits under the Plan or any amendment or modification thereof shall be resolved by the Board of Trustees or designated committee thereof under and pursuant to the Restated Rules and Regulations of the Trust Agreement, and the Board of Trustees shall have complete discretion to construe, interpret and apply all terms and provisions of the Restated Rules and Regulations and the Trust Agreement in resolving any dispute. The Board of Trustees' findings and determination of the dispute shall be final and binding upon all parties to the dispute.
Def.'s Ex. B at 91-92.
The parties agree that the SPD gives the Board discretion to interpret the plan and to determine eligibility, and therefore, the court applies the "arbitrary and capricious" standard to a review of its decision to deny the claims.
When a beneficiary challenges a denial of ERISA benefits under § 1132(a)(1)(B) and the plan confers discretion on the plan administrator to determine eligibility and to construe the plan's terms, as here, the reviewing court applies an arbitrary and capricious standard. Kimber v. Thiokol Corp., 196 F.3d 1092, 1097 (10th Cir. 1999). "When reviewing under the arbitrary and capricious standard, . . . [t]he [administrator's] decision will be upheld unless it is not grounded on any reasonable basis. The reviewing court need only assure that the administrator's decision fall[s] somewhere on a continuum of reasonableness — even if on the low end." Id.Cirulis v. UNUM Corp. 321 F.3d 1010, 1013 (10th Cir. 2003) (footnote omitted).
Whether an ERISA benefits decision is arbitrary and capricious is a legal conclusion. Caldwell v. Life Ins. Co. of North America, 287 F.3d 1276, 1282 (10th Cir. 2002).
B. Motions to Strike
Defendant filed two Motions to Strike. In its Motion to Strike Portions of Plaintiffs' Memorandum, Defendant seeks to strike portions of Plaintiffs' Memorandum referring to certain exhibits and those exhibits. The exhibits are the CMI letters, Dr. Maddock's letter, (Pl.'s Ex. A at 26 through 33) and Plaintiffs' Ex. D. (Dep. of Jason Haymond). Defendant seeks to strike those exhibits and the portions of Plaintiffs' Memorandum that refer to those exhibits because they are not part of the administrative record, and therefore, immaterial. In addition, Defendant contends that they lack foundation and constitute inadmissible hearsay.
Plaintiffs contend that because the exhibits were provided to the plan administrator before this case was filed, they must be considered part of the "administrative record." In support, Plaintiffs cite the Fifth Circuit case, Vega v. National Life Insurance Services, Inc., 188 F.3d 287, (5th Cir. 1999). The court finds Vega is not controlling or persuasive. Tenth Circuit law is controlling in this district, and it is clear: "In reviewing a plan administrator's decision under the arbitrary and capricious standard, `the federal courts are limited to the `administrative record' — the materials compiled by the administrator in the course of making his decision.'" Fought v. UNUM Life Ins. Co. of America, 357 F.3d 1173, 1180 (10th Cir. 2004) (quoting Hall v. Unum Life Ins. Co. of Am., 300 F.3d 1197, 1201 (10th Cir. 2002)).
Further, as pointed out by Defendant, Vega involved the application of the abuse of discretion standard of review, not the arbitrary and capricious standard. Under the abuse of discretion standard there are unusual cases in which such evidence may be admitted. See Hall, supra, 300 F.3d at 1202 (adopting standard for abuse of discretion case for allowing additional evidence in unusual cases).
In Chambers v. Family Health Plan Corp., 100 F.3d 818, 824 (10th Cir. 1996), the Tenth Circuit affirmed the decision of a magistrate judge to limit the courts' decision under an arbitrary and capricious standard to evidence presented to the Plan Administrator "prior to its final decision."
Plaintiffs contend that he presented medical records to the Fund to show that it was not unusual for Ms. Hammond to go months, or even years, without obtaining medical care or treatment. In support of his argument that he provided such records to the Fund, he cites his March 21, 1997 letter. However, such records are not in the administrative record. Plaintiffs do not include any such medical records in the additional material that he seeks to add to the administrative record. Thus, the court is not called upon to rule upon whether the administrative record should include material that was allegedly part of the record at the time of the Board's decision, but that was not included in the administrative record as produced by Defendant.
Accordingly, the court will grant Defendant's Motions to Strike and will limit its review to matters before the Board at the time it made its decision. Thus, the court will not consider the CMI letters, Dr. Maddock's letter, (Pl.'s Ex. A at 26 through 33) or Plaintiffs' Ex. D. (Dep. of Jason Haymond), or the portions of Plaintiffs' Memorandum reiterating those materials.
The court notes that even if those matters were considered, it would make no difference because they lack even the most rudimentary foundation, namely setting forth a basis for either Mr. Haymond's or Dr. Maddock's personal knowledge of the care and treatment that Ms. Haymond did, or did not, receive during the time in question. Further, the medical records submitted by Plaintiffs, set forth in footnote 2, supra, support the Board's decision.
Defendant also filed a Motion to Strike Portion of Affidavit seeking to strike paragraphs 4, 5, 6 and 7 of Plaintiffs' attorney's affidavit as lacking in foundation and irrelevant. The court finds that the Affidavit generally sets forth the circumstances of CMI's involvement and its attempted submission of the Dr. Maddock letter some months after the final denial of the claim. The Affidavit is not submitted for the truth of the assertions in the underlying documents. Instead, it is submitted to show the sequence of their submission to the Defendant and as support of their position that the additional documents should be considered part of the relevant "administrative record." For the reasons stated above, the court has ruled as a matter of law, that when "reviewing a plan administrator's decision under the arbitrary and capricious standard, the federal courts are limited to the administrative record — the materials compiled by the administrator in the course of making his decision." Fought, supra (internal quotations omitted). However, the sequence of events set forth in the Affidavit are relevant to whether or not the material was, or was not, before the Board when it made its final and binding decision. The court will deny Defendant's Motion to Strike Portions of Affidavit.
C. Motions for Summary Judgment
Defendant moves for summary judgment on Jason Haymond's claims based upon the pre-existing condition exclusion. Defendant moves to dismiss the claims of the other Plaintiffs as derivative of Mr. Haymond's claims and therefore subject to the same limitation. Plaintiffs move for summary judgment that the Board's decision to deny the claim on the basis of the exclusion applies is arbitrary and capricious.
Having considered the entire record, the court finds that the Board's decision was grounded on a reasonable basis. The evidence in the administrative record was that Ms. Hammond had a severe disease that was described in December 1996 as having "a fairly rapid downhill course over the past couple of years." Immediately before the period, she was having nightly feeding by tube. She filled her prescriptions before the period, and immediately after the period re-filled her prescriptions, including for the tube feeding. Plaintiffs do not dispute the fact that a prescription for oxygen for Ms. Hammond was obtained in August 1996. Instead, he merely claims by letter that Ms. Hammond did not request it and that she did not use it.
It was not unreasonable for the Board to discount Mr. Haymond's claim that the admitted prescription was not used, since the claim was made by an individual without personal knowledge and the record was devoid of any such representation by the persons, such as Ms. Hammond, her mother or Ms. Hammond's health care providers, who did have personal knowledge of the prescription. Indeed, it is not possible for Mr. Haymond to represent from his own personal knowledge what treatment or care she received in the period. He can only represent what she told him. In the absence of any evidence from Ms. Haymond, or any of her medical providers, that she could have, or did, forego treatment during the period in question, it was not unreasonable for the Board to assume, based on the administrative record before it, that, during the period, she was using the prescriptions she obtained immediately before the period and continued the nightly tube feeding.
Because Plaintiffs have not identified the records he says he gave the Fund to support his claim that Ms. Hammond had previously gone periods without care or treatment, there is no evidence that the Board failed to gather or to examine relevant evidence. Caldwell, 287 F.3d at 1282. Accordingly, the Board's decision that the exclusion applied is not arbitrary and capricious because it is based on substantial evidence in the administrative record before the Board when it made its decision. Therefore, the court will deny Plaintiffs' Motion for Summary Judgment and grant Defendant's Motion for Summary Judgment.
D. Derivative Claims
In addition to Mr. Haymond, there are several other named Plaintiffs who are the medical providers who furnished medical treatment or supplies for the care of Ms. Haymond's CF. They seek to recover payment for such treatment or supplies from Defendant. However, their claims are co-extensive with the rights of Ms. Haymond's estate. Haymond v. Eighth District Elec. Benefit Fund, 36 Fed. Appx. 369, n. 1 (10th Cir. May 28, 2002) (unpublished Order). As such, their claims must dismissed.
IV. ORDER
Based on the foregoing, it is therefore
ORDERED that Defendant's Motion to Strike Portions of Plaintiffs' Memorandum is GRANTED. It is further
ORDERED that Defendant's Motion to Strike Portions of Affidavit is DENIED. It is further
ORDERED that Plaintiffs' Motion for Summary Judgment is DENIED. It is further
ORDERED that Defendant's Motion for Summary Judgment is GRANTED and judgment shall be granted in favor of Defendant and against Plaintiff Jason Haymond, individually and in his capacity as the personal representative of the Estate of Heather Haymond, on all claims. It is further
ORDERED that the claims of the following Defendants: the University of Utah Medial Center, the University of Utah Ophthalmology Department, Department of Neurology School of Medicine, the University of Utah Surgical Associates, University Radiology Associates, the University of Utah Department of Anesthesiology, U-U Pulmonary Division, Department of Internal Medicine, Love Homecare, and Utah Valley Regional Medical Center; against Defendant are DISMISSED WITH PREJUDICE.