United States District Court, D. North Dakota, Northeastern Division
MEMORANDUM OPINION AND ORDER ON PARTIES' MOTIONS
FOR SUMMARY JUDGMENT, DOCS. 77 & 82
LAWRENCE L. PIERSOL UNITED STATES DISTRICT JUDGE.
before the Court is Plaintiffs' Motion for Summary
Judgment, Doc. 77. In their motion, Plaintiffs argue that
Blue Cross Blue Shield of North Dakota's (BCBSND's)
adverse benefits determination violated The Employee
Retirement Income Security Act of 1974 (ERISA), because the
determination, which left the Mitchells owing 79% of the
billed charges for Ms. Mitchell's air ambulance
transport, was not based on a reasonable reading of the
health insurance plan's language and was not based on
substantial evidence. Plaintiffs ask that the Court declare
Plaintiffs' cost-sharing obligations under this claim are
limited to $ 1, 525.83 after all sums are paid by BCBSND.
before the Court is Defendant's Motion for Summary
Judgment, Doc. 82. In its motion, Defendant first argues
Plaintiffs lack Article III and statutory standing to
maintain this action. Second, Defendant asserts that BCBSND
had discretionary authority to determine the claims for
benefits under the health insurance plan at issue and that
BCBSND did not abuse their discretion in partially denying
Plaintiffs' claim because the partial denial was the
result of a reasonable interpretation of the relevant terms
of the Plan.
Court has considered all filings and applicable law and, for
the following reasons, Plaintiffs' motion is denied and
Defendant's motion is granted.
January 15, 2014, Melissa Mitchell sought emergency medical
care at Towner County Medical Center in Cando, North Dakota.
Upon examination, Ms. Mitchell's physician determined it
medically necessary to transport her to a facility that could
provide a higher level of care. Due to impending weather and
the need to provide treatment quickly, Ms. Mitchell was
transported to another facility via a "fully staffed
multi-million-dollar advanced life support fixed wing
aircraft." BCBSND does not dispute that the transfer by
air ambulance was medically necessary.
time of transport, Ivan Mitchell, Ms. Mitchell's husband,
was employed by Towner County Medical Center, making him and
his spouse eligible for coverage under the Towner County
Medical Center-Healthcare Reimbursement Plan (Plan), an
"employee welfare benefit plan" and "employee
benefit plan" as defined by ERISA. 29 U.S.C. §
1002(1), (3). Mr. Mitchell elected such coverage for himself
and his spouse for the 2014 calendar year, which included
January 15, 2014, the date Ms. Mitchell sought emergency
care. The Plan Document sets forth the terms under which the
Plan Administrator, in this case BCBSND, will pay for or
reimburse a patient for payments made for health care.
Med Flight, Inc. (VMF), a nonparticipating provider under the
Plan, provided the emergency air ambulance transport on
January 15, 2014, billing $33, 200 for its services. On March
27, 2014, BCBSND paid a total of $6, 759.98. This left the
Mitchells to cover the remaining $26, 440.02: $1, 525.83 in
coinsurance liability and $24, 914.19 in balance bill
April 21, 2014, VMF reached out to BCBSND requesting
reconsideration for additional payment for charges incurred
by Ms. Mitchell, stating they wished to resolve the issue
"without having to consider any legal intervention or
putting a financial burden for $26, 440.02 on the
patient." Mr. Mitchell also wrote to Kathy Johnson, a
BCBSND Specialist, - challenging the partial payment and
asking for any necessary paperwork so that he may file an
appeal. On May 27, 2014, VMF received a letter from BCBSND
stating "[t]he claim did process correctly according to
the current [BCBSND] fee schedule and the benefit plan's
20% non-participating reduction." BCBSND did not provide
a copy of the fee schedule as it is only available to
participating providers. On June 13, 2014, Mr. Mitchell also
received a letter from BCBSND indicating it would not be
making an additional payment on the claim and it had been
processed correctly. BCBSND explained that VMF had once been
a participating provider but BCBSND had received a
termination notice from VMF in the fall of 2013. Though
BCBSND had worked to secure a participation agreement,
"[i]n response to [VMF's] proposed pricing, we
conducted a regional analysis of air ambulance services and
concluded the rates they proposed were excessive."
Indicating that the determination through their internal
appeal process was final, BCBSND informed Mr. Mitchell that
an external review with the North Dakota Department of
Insurance was available. BCBSND also stated that "[a]ny
rule, guideline, protocol, diagnosis and treatment codes and
their corresponding meaning or relevant documentation used to
make this determination can be provided upon request, free of
30, 2015, Plaintiffs entered into an agreement with VMF (July
2015 Agreement) "pertain[ing] to the civil litigation
involving [the Mitchells] and [BCBSND], as directly related
to a suit filed or to be filed ("Lawsuit") in the
United States District Court of North Dakota." The July
2015 Agreement is governed by Michigan law and provides that
VMF has agreed to pay for the costs and attorney fees related
to the Lawsuit and that the Lawsuit "seeks remedies
against BCBSND by the Mitchells for issues related to the
health insurance coverage held by [the] Mitchells,"
"[U]pon recovery of any money as a result of the
Lawsuit, through litigation, settlement, or otherwise, the
Mitchells and [VMF] agree to disburse such recovery" in
the following order; "First, to repay [VMF] for all
costs and attorney fees paid or owing in this matter; second,
to satisfy any outstanding invoices to [VMF]; and third, the
remainder, if any, will be split 70% to [VMF] and 30% to the
Mitchells." Finally, "following the conclusion of
the Lawsuit, [VMF] will thereafter waive all other claims it
has against the Mitchells" and "limit any liability
of the Mitchells to [VMF] to the amount recovered in [the]
Mitchells filed this lawsuit against BCBSND on September 2,
2015. On October 12, 2016, the Parties entered a joint
stipulation to stay this proceeding and remand the claim to
the BCBSND Claims Administrator. Pursuant to the joint
stipulation, BCBSND treated the submission as an original
claim for benefits and on November 17, 2016, Plaintiffs'
attorney submitted a letter and exhibits for review. On
January 28, 2017, BDBSND notified Plaintiffs, through
counsel, that the claim was allowed to the extent of benefits
previously paid and was otherwise denied. Contrary to the
earlier letter received by VMF, however, the November 17
Determination Letter informed Plaintiffs that the 20%
non-participating provider reduction was not applied in
making the determination because "one of the conditions
for the imposition of a 20% reduction in calculating the
amount of the Claim payable or reimbursable was not met
because the reduction applies only to certain procedure
codes, and the procedure codes in this Claim are not among
the ones that trigger the imposition of the 20%
reduction," BCBSND internal policy on air ambulance
reimbursement also provides that all air ambulance providers
operating in North Dakota are reimbursed using the same
methodology, whether they are participating or
non-participating air ambulance providers. Further, the
Determination Letter provided that the air ambulance services
were not "emergency services" for purposes of the
Affordable Care Act. On February 17, 2017, counsel for BCBSND
received an email from Plaintiffs' counsel stating that
Ms. Mitchell would not file any "further appeals."
return to litigation, BCBSND moved this Court for limited
written discovery beyond the administrative record in the
form of one interrogatory, one request for production of
documents, and one request for admission. The proposed
discovery sought to uncover the July 2015 Agreement so that
BCBSND may pursue a lack of standing theory. That request was
granted by this Court on June 17, 2017. On October 19, 2017,
Plaintiffs filed the pending Motion for . Summary Judgment. A
few days later, Defendant filed its pending Motion for
to Rule 56(a) of the Federal Rules of Civil Procedure,
summary judgment is proper "if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). "[A] fact is 'material' if
its resolution affects the outcome of the case."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). "A party asserting that a fact cannot be . . .
disputed must support the assertion" either by
"citing to particular parts of materials in the
record," or by "showing that the materials cited do
not establish the... presence of a genuine dispute[.]"
FED. R. Crv. P. 56(c)(1)(A)-(B). At summary judgment, the
Court's function is not to weigh the evidence and
determine the truth of the matter itself, but to determine
whether mere is a genuine issue for trial." Nunn v.
Noodles &. Co., 647 F, 3d 910, 914 (8th Cir. 2012).
motion for summary judgment, the moving party bears the
initial burden of establishing the absence of a genuine issue
of material fact. Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986) (internal quotations omitted). Once this
burden is met, the burden then shifts to the non-moving party
to demonstrate "that a fact ... is genuinely
disputed" either by "citing to particular parts of
materials in the record," or by "showing that the
materials cited do not establish the absence ... of a genuine
dispute." Fed.R.Civ.P. 56(c)(1)(A)-(B). The Court must
view the evidence and "all justifiable inferences"
in favor of the party opposing the motion. Quick v.
Donaldson Co., Inc., 90 F.3d 1372, 1377 (8th Cir. 1996).
"'If reasonable minds could differ as to the import
of the evidence,' summary judgment is
inappropriate." Id. (citing Anderson,
477 U.S. at 250).
ERISA CLAIMS ADMINISTRATION
the claim at issue is denial of ERISA benefits, a plan
administrator's denial of those benefits is reviewed de
novo 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 plan grants such discretionary
authority, then the plan administrator's decision is
reviewed for abuse of discretion." Waldoch v.
Medtronic, Inc., 757 F.3d 822, 829 (8th Cir. 2014),
as corrected (My 15, 2014). Here, the Plan states
that "BCBSND shall construe and interpret the provisions
of the Benefit Plan Agreement, the Certificate of Insurance
and Summary Plan Description and related documents, including
doubtful or disputed terms and to determine all questions of
eligibility; and to conduct any and all review of claims
denied in whole or in part." Doc. 31-1 at 7; Doc. 54 at
ICPO 000194.Further, Section 8 of the Plan provides
that BCBSND shall determine the interpretation and
application of the Definitions in each and every
situation." Id.; Doc. 54 at ICPO 000266.
Further, the Plan's definition of "Allowance"
or "Allowed Charge" is "the maximum dollar
amount that payment for a procedure or service is based on
as determined by BCBSND." Id. (emphasis added).
This language is sufficient to trigger the
abuse-of-discretion standard. See Hankins v. Standard
Ins. Co., 677 F.3d 830, 835 (8th Cir. 2012)
("policy language reserving the power to 'resolve
all questions. .. [of] interpretation" indicates that
the administrator has discretionary power to construe
withstand review for abuse of discretion, a decision
"supported by a reasonable explanation . . . should not
be disturbed, even though a different reasonable
interpretation could have been made." Midgett v.
Wash. Grp. Int'l Long Term Disability Plan, 561 F.3d
887, 897 (8th Cir. 2009) (internal quotation marks omitted).
The plan administrator's decision must be reasonable,
that is, it must be "supported by substantial evidence,
meaning more than a scintilla but less than a
preponderance." Id. "Any reasonable
decision will stand, even if the court would interpret the
language different as an original matter." Manning
v. Am. Republic Ins. Co., 604 F.3d 1030, 1038 (8th Cir.
2010). "The requirement that the [plan
administrator's] decision be reasonable should be read to
mean that a decision is reasonable if a reasonable person
could have reached a similar decision, given the
evidence before him, not that a reasonable person
would have reached that decision." Jackson
v. Metro. Life Ins. Co., 303 F.3d 884, 887 (8th Cir.
2002) (internal quotation marks omitted).
the entity that administers an ERISA plan, such as an
employer or an insurance company, both determines whether an
employee is eligible for benefits and pays benefits out of
its own pocket, a conflict of interest is created."
Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105,
114 (2008). When a conflict of interest exists, "a
reviewing court should consider that conflict as a factor in
determining whether the plan administrator has abused its
discretion in denying benefits, with the significance of the
factor depending upon the circumstances of the particular
case." Id. at 115.
EVIDENCE OUTSIDE THE ADMINISTRATIVE RECORD
initial matter, Plaintiffs take issue with Defendant's
citations to and the Court's potential consideration of
the July 2015 agreement between Plaintiffs and VMF, a
non-party to this litigation. Plaintiffs argue that it should
not be considered as it is not part of the administrative
record and "is essentially irrelevant" under
Federal Rules of Evidence 401 and 402. Doc. 91 at 4. While it
is true that the July 2015 agreement is irrelevant as to the
merits of the case, it must be considered in order to address
the issue of standing, as challenged by the Defendant in this
"ensure expeditious judicial review of ERISA benefit
decisions and to keep district courts from becoming
substitute plan administrators," review under the
deferential abuse of discretion standard is generally limited
to the administrative record. Cash v. Wal-Mart Group
Health Plan, 107 F.3d 637, 641-42 (8th Cir. 1997)
(quoting Donatelli v. Home Ins. Co., 992 F.2d 763,
765 (8th Cir. 1993). A district court may admit additional
evidence in an ERISA benefit-denial case, .however, upon a
showing of good cause. See Brown v. Seitz Foods, Inc.,
Disability Ben. Plan, 140 F.3d 1198, 1200 (8th Cir.
is a jurisdictional prerequisite that must be resolved before
reaching the merits of a suit." City of Clarkson
Valley v. Mineta, 495 F.3d 567, 569 (8th Cir. 2007).
"If a plaintiff lacks, standing, a district court has no
subject matter jurisdiction over the matter and must dismiss
the case." Murphy v. Minnesota Dept. of Human
Services, 260 F.Supp.3d 1084 (D. Minn. 2017) (citing
Young Am. Corp. v. Affiliated Comp. Servs., Inc.,
424 F.3d 840, 843 (8th Cir. 2005)). When it is contended that
the Court lacks jurisdiction, the Court "would be
obliged to consider" that contention. Mt. Healthy
City School Dist. Bd. of Educ. v. Doyle, 429 U.S. 274,
278 (1977). Indeed, the Court must raise the issue sua sponte
"whenever a doubt arises as to the existence of federal
jurisdiction." Id. Because Defendant argues
that the terms of the July 2015 Agreement speak to the injury
and redress ability factors of a standing inquiry, good cause
to consider evidence outside the administrative record is
shown and the Court considers the July 2015 Agreement to
address that argument, II. STANDING
a plaintiff alleges injury to rights conferred by statute,
two separate standing-related inquiries are implicated:
whether the plaintiff has Article III standing
(constitutional standing) and whether the statute gives that
plaintiff authority to sue (statutory standing)."
Miller v. Redwood Toxicology Laboratory, Inc., 688
F.3d 928, 934 (8th Cir. 2012). Because Article III standing
presents a question of justiciability-that is, whether the
court has jurisdiction over the claim- constitutional
standing must be decided first. Id. (citing
Steel Co. v. Citizens for a Better Env'l, 523
U.S. 83, 92-94 (1998)). By contrast, statutory standing goes
to the merits of the claim. Id. "Statutory
standing is simply statutory interpretation: the question it
asks is whether Congress [, or the State, ] has accorded
this injured plaintiff the right to sue the
defendant to redress his injury." Id. (citing
Grafoi v. Conexant Sys., Inc., 496 F.3d 291, 295 (3d
Cir. 2007) (emphasis in original)).
argues Plaintiffs no longer have standing to pursue this
claim for two reasons. First, Defendant asserts that, because
the July 2015 Agreement extinguishes any payment obligation
of the Plaintiffs to VMF, Plaintiffs cannot show that they
have suffered a concrete injury that can be redressed by
these proceedings. Second, Defendant contends that ...