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Mitchell v. Blue Cross Blue Shield of North Dakota

United States District Court, D. North Dakota, Northeastern Division

July 18, 2018

IVAN MITCHELL, et al., Plaintiff



         Pending 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.

         Also before the Court is Defendant's Motion for Summary Judgment, Doc. 82. In its motion, Defendant[1] 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.

         The Court has considered all filings and applicable law and, for the following reasons, Plaintiffs' motion is denied and Defendant's motion is granted.


         On 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.

         At the 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.

         Valley 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 liability.

         On 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 charge."

         On July 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] Lawsuit."


         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."

         Upon 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 Summary Judgment.



         Pursuant 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).

         In a 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).


         Where 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.[2]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 ambiguous terms.")

         To 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).

         "Where 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.



         As an 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 case.

         To "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. 1998).

         "[S]tanding 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

         "When 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)).

         Defendant 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 ...

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