KATHERINE B. FORREST, District Judge.
Plaintiff, a beneficiary of the IBEW Local 1249 Insurance Fund Plan ("the Plan") since 2006, filed the instant ERISA action, seeking recovery for past and future benefits from defendant Fund and a statutory penalty from defendant Dafoe personally. In this regard, she advances five claims: 1) that defendants' denial of coverage for certain providers was a violation of Plan terms, 2) defendants' requirement that plaintiff recertify the need for continued visits to her psychiatrist violates the Mental Health Parity and Addiction Equity Act of 2008 ("MHPAEA"), 3) defendants' recouping of "overpayment" funds from plaintiff is an unlawful set-off because it violates Plan terms, 4) defendants unlawfully terminated her spousal coverage, and 5) defendant Dafoe failed to provide plaintiff requested documents and thus should be subject to sanctions. All but the MHPAEA claim are made under ERISA's civil enforcement provision, 29 U.S.C. § 1132. Defendants also filed a counterclaim seeking equitable relief to recover overpayments of benefits from plaintiff under ERISA, 29 U.S.C. § 1132(a)(3).
Plaintiff moved for summary judgment on her first and third claims. Defendant cross-moved on all affirmative claims as well as the counterclaim.
Plaintiff cannot prevail on her first cause of action regarding denial of coverage because she has not demonstrated that defendants' actions were arbitrary and capricious. Plaintiff also fails on her third claim regarding the overpayment recoupment because she has failed to exhaust administrative remedies as required by ERISA.
On the other hand, defendants have shown that there is no genuine issue of material fact on the MHPAEA claim, as plaintiff has not demonstrated how defendants violate the statute. Plaintiff also does not oppose defendants' motion on her fourth claim for reinstatement of benefits and fifth claim for statutory penalties under ERISA against defendant Dafoe. Moreover, defendants have shown that plaintiff continues to be covered under the Plan, and that defendant Dafoe is not subject to the statutory penalty as a matter of law. Defendants also prevail on the counterclaim because the Plan plainly states that the Fund is entitled to recoupment of overpayments.
For the reasons set forth below, plaintiff's motion for summary judgment is DENIED and defendants' cross-motion is GRANTED.
Plaintiff's husband is a member of the IBEW Local 1249 union. (Pl.'s 56.1 Statement ("Pl.'s 56.1") at ¶ 9.) The IBEW Local 1249 Insurance Fund Trustees ("Trustees") established and administers the Plan, which provides health benefit payments to about 2,000 participants and their eligible spouses and dependents. (Defs.' 56.1 Statement ("Defs.' 56.1") at ¶ 2.) Plaintiff has been a beneficiary of the Plan since 2006. (Pl.'s 56.1 at ¶ 9.) Defendant Daniel Dafoe works for the IBEW Local Insurance Fund ("the Fund") and is involved in the claims process. (
Plaintiff, a 39-year old mother of two and part-time medical assistant at White Plains Hospital, suffers from OCD and other mental illnesses. (First Amended Compl. ("Compl.") at ¶¶ 19-20; Pl.'s 56.1 at ¶ 1; Decl. of Wendy Tedesco ("Tedesco Decl.") at ¶¶ 3, 7.) Her OCD symptoms are severe and include fear of physical and moral contamination, skin picking, excessive cleaning, and fear of certain numbers. (Pl.'s 56.1 at ¶ 2.) She scored a level 36 out of a maximum level 40 on the Yale-Brown Compulsive Scale. (
In 2013, defendant Daniel Dafoe, the Fund's day to day administrator, initiated a review of plaintiff's claims for treatment by Levine and Nicholson. (Pl.'s 56.1 at ¶ 27; Defs.' 56.1 at ¶ 11.) Dafoe retained Corporate Care Management ("CCM"), an organization who has a contract with the Fund to "audit[] or review [] medical claims, [and] screen[] provider charges to determine whether they are reasonable," to review plaintiff's claims. (Pl.'s 56.1 at ¶¶ 26, 27.) CCM engaged Dr. David T. Anthony, M.D., a board-certified psychiatrist, to conduct the review of plaintiff's claims. (
On October 16, 2013, Dafoe sent a letter to plaintiff notifying her that the Plan would no longer cover visits with Levine and that it would cover "once (1) a week consultation[s] with a Psychologist\psychiatrist for 13-20 weeks followed by a monthly booster session for an additional 3-6 months." (Compl. at ¶32; Dafoe Aff. Ex. D.) The letter stated that "[a]ny variation from this would have to be approved by the Fund Office prior in consultation with its medical advisers." (Dafoe Aff. Ex. D.)
On November 7, 2013, plaintiff appealed the Trustees' determination.
On January 9, 2014, the Trustees reviewed plaintiff's appeal and examined the complete record evidence from CCM, the two hired experts, and from plaintiff and her providers. (Pl.'s 56.1 at ¶ 39; Defs.' 56.1 at ¶¶ 27-28.) The Trustees determined that the Plan would not cover further visits to Levine because they are not medically necessary, but that it would cover twice weekly visits to Nicholson for 16 weeks, at which time an updated letter of medical necessity could be submitted for consideration. (Dafoe Aff. Ex. G.) Defendants informed plaintiff of the decision on January 14, 2015. (
On January 28, 2014, the New York State Psychiatric Association wrote a letter to the Trustees, expressing concern and reservations about their determinations in plaintiff's case. (Pl.'s 56.1 ¶ 47; Declaration of Eric Weinstein ("Weinstein Decl.") Ex. Q.) At the end of the 16-week period, plaintiff did not submit any additional documents about the continued medical necessity of continued treatment by Nicholson. (Defs.' 56.1 at ¶ 32.)
Plaintiff made a written request for documents related to her claim on February 20, 2014. (Defs.' 56.1 at ¶ 33; Dafoe Aff. Ex. H.) Defendants responded on June 6, 2014. (Defs.' 56.1 at ¶ 34.)
On February 12, 2014, defendant Dafoe sent plaintiff with a coordination-ofbenefits questionnaire to be filled out by plaintiff's employer. (Pl.'s 56.1 at ¶ 48.) The Fund sends the questionnaire to beneficiaries whom it believes are employed and possibly eligible for coverage by their own employers. (
Plaintiff's claims herein arise out of her husband's Insurance Fund Plan. The Fund's Summary Plan Description ("SPD") states that the Fund provides primary health coverage for spouses and dependents who are not covered by any other insurance, and secondary coverage for spouses and dependents who are covered by another form of insurance. (Dafoe Aff. Ex. B, at 59.) Moreover, spouses who opt out of their own employers' plans are deemed "covered," and the Plan provides only secondary coverage. (
Dafoe informed plaintiff on March 6, 2014 that because the Fund should have been her secondary health insurer in 2013, "[b]ills incorrectly submitted and paid will have to be paid back to the . . . Fund." (Dafoe Aff. Ex. K.) The Fund then sent letters to plaintiff and her medical providers who had been paid for services during the January 2, 2013 to March 27, 2014 time frame, requesting repayment. (Pl.'s 56.1 at ¶ 56.) On October 8, 2014, defendant sent plaintiff an updated request for repayment for a lower amount owed due to calculation adjustments. (Dafoe Aff. Ex. O.)
Plaintiff did not appeal the overpayment notice. (Defs.' 56.1 at ¶ 41.) To date, she remains eligible for benefits under the Plan. (
Plaintiff filed the instant complaint on October 7, 2013. She advances five claims. First, she argues that the Trustees acted arbitrarily and capriciously and in violation of Plan terms when they determined that the Plan would not cover further visits to Levine and that it would cover twice weekly visits to Nicholson for 16 weeks, after which a renewed medical necessity determination would be made. Second, she argues that the renewal requirement for treatment with Nicholson violates the MHPAEA because the Plan does not impose similar limitations on medical benefits. Third, she argues that she was not overpaid and that the Fund's actions to recoup payments from her violate Plan terms. Fourth, plaintiff alleges that she was terminated from the plan and seeks reversal of that termination, as well as recovery of all benefits following termination. Finally, plaintiff claims that her requests for documents under 29 C.F.R. § 2560.503-1 were not timely responded to, and thus defendant Dafoe is liable under the sanctions provision of 29 U.S.C. § 1132(c)(1).
On November 3, 2014, defendants filed a counterclaim seeking equitable relief to enforce the overpayment recoupment provision of the Plan against plaintiff.
Summary judgment may not be granted unless a movant shows, based on admissible evidence in the record placed before the Court, "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). The moving party bears the burden of demonstrating "the absence of a genuine issue of material fact."
Once the moving party has asserted facts showing that the non-movant's claims cannot be sustained, the opposing party must set out specific facts showing a genuine issue of material fact for trial.
Plaintiff's first claim is that the Trustees' two determinations—1) that plaintiff's continued visits to Levine are not medically necessary and 2) that plaintiff's visits with Nicholson are medically necessary two times per week for sixteen weeks and may only be renewed upon review of continued medical necessity —violate Plan terms.
"Although generally an administrator's decision to deny benefits is reviewed de novo, where, as here, written plan documents confer upon a plan administrator the discretionary authority to determine eligibility, we will not disturb the administrator's ultimate conclusion unless it is arbitrary and capricious."
Under the "arbitrary and capricious" standard, courts will overturn a fiduciary's denial of benefits "only if it was without reason, unsupported by substantial evidence or erroneous as a matter of law."
Plaintiffs have not put forth any evidence showing that defendants' determinations were "without reason, unsupported by substantial evidence or erroneous as a matter of law."
First, as to the trustees' determination that continued treatment by a licensed social worker was not medically necessary, Plaintiff does not dispute that the determination is consistent with the conclusions of the two outside expert physicians. After reviewing plaintiff's medical records and speaking to her providers, Anthony and Rater both independently concluded that "Mr. Levine's services were not medically necessary." (Compl. ¶ 66.) In addition, submissions by plaintiff's psychiatrists and psychologist (Nicholson, Badikian and Dankyo) do not state that Levine's services were medically necessary. (Weinstein Decl. Ex. K, at 280-286.) Although Nicholson apparently reported to Rater that he "feels she needs the social worker to for support for her to be able to maintain contact with the . . . psychologist," Nicholson never states that he believes Levine's services are medically necessary, or specifically recommends continued visits to Levine. (Weinstein Decl. Ex. L, at 243; Ex. K, at 283.) Only plaintiff's and Levine's own letters specifically discusses the medical necessity of continued treatment by Levine. (Weinstein Decl. Ex. K, at 277-79, 287-88.)
Plaintiff also does not put forth any evidence supporting an inference that the Trustees' ultimate decision as to the medical necessity of treatment by Nicholson was arbitrary and capricious. The determination was in fact based on recommendations of plaintiff's treating physician and the engaged experts. The Trustees determined that treatment by a psychiatrist or psychologist up to twice a week was for 16 weeks was medically necessary.
Finally, Plaintiff's assertion that the Trustees erroneously used a "test of efficacy" instead of medical necessity to limit her treatment with Nicholson is not supported by any evidence. Plaintiff bases her contention on Rater's statement that at 16 weeks, there should be "a reassessment . . . of efficacy and further treatment needed." (Dafoe Aff. Ex. C.) Rater's own statement of "further treatment needed" incorporates the medical necessity standard. (
Plaintiff has presented no evidence indicating that the Fund imposes a more stringent limitation on mental health benefits than on medical and surgical benefits, and thus has failed to raise an issue of material fact as to her MHPAEA claim. The MHPAEA requires that for plans that provide both medical/surgical benefits and mental health or substance use disorder benefits,
29 U.S.C. § 1185a. The MHPAEA's implementing regulations state that where mental health and medical benefits determinations are both subject to the same "evidentiary standards . . . based on recommendations made by panels of experts" with adequate training and experience and applying "clinically appropriate standards," such a scheme conforms to the statute. 45 C.F.R. § 146.136. This is so even if the result is dissimilar "number of visits [or] days of coverage" for medical versus mental health claims.
Plaintiff submits no admissible evidence in favor of its assertion that the benefit limitations that the Trustees imposed on her mental health treatment are more stringent than limitations on medical benefits. The SPD requires the medical necessity standard for all benefit claims, not just mental health claims. (Dafoe Aff. Ex. B, at 64.) Plaintiff also proffers no evidence that the Fund uses different evidentiary standards in medical necessity determinations for non-mental health claims.
The only evidence plaintiff submits in favor of her position, a January 28, 2014 letter from the New York Psychiatric Association, does not raise a genuine issue of material fact. Indeed, the letter merely states that "
Plaintiff's third claim—that the Fund unlawfully requested the return of funds and refused to pay further benefits on the grounds that plaintiff has been overpaid benefits—must also fail. Plaintiff has not met the threshold requirement of exhausting her administrative remedies. (Answer & Countercl. 15.) It is wellestablished that in order to bring an ERISA claim for benefits in federal court, a plaintiff must have exhausted the administrative review procedures established by her insurance carrier.
It is undisputed that plaintiff did not appeal the Trustees' March 2014 letter informing plaintiff that she and her providers had been overpaid and that overpayments not paid to the Fund back would be deducted from future benefits. (Weinstein Decl. Ex. T; Defs.' 56.1 ¶ 41.) Plaintiff's futility argument, based on her assertion that administrative remedies were unavailable because the deduction provision is a "set-off" and not an "adverse benefit determination" under the SPD, is unavailing. She has proffered no facts in support of this position. The SPD defines an adverse benefit determination as "a denial, reduction, or termination of, or a failure to provide or make payment (in whole or in part) for a benefit, including any such denial, reduction, or failure to provide or make payment that is based on a determination of a participant's eligibility to participate in this plan." (Dafoe Aff. Ex. B, at 27.) Based on this language, defendants may well have interpreted the overpayment "set-off" as a "reduction" of future benefits, and therefore an adverse benefit determination subject to appeal. Thus, plaintiff has made no clear showing that an appeal would have been futile.
Finally, plaintiff cannot rest on the contention that "any appeal to the trustees would have been futile, particularly in the middle of this litigation." The insurer's "position in this lawsuit does not establish futility."
Defendants bring their counterclaim under a provision of ERISA, 29 U.S.C. § 1132(a)(3), which allows recovery
Because there is no dispute that Trustee defendants are fiduciaries of the Fund, and because the relief defendants seek is equitable, this Court has subject matter jurisdiction over the counterclaim.
Plaintiff's sole argument in opposition to defendants' motion is that this Court lacks subject matter jurisdiction because defendants seek monetary, not equitable, relief. This is plainly incorrect. Courts have addressed this issue previously and have found against plaintiff's position. Defendants seek recovery of specific funds: namely, the benefit payments to plaintiff from January 1, 2013 to March 27, 2014, a period during which plaintiff could have elected health insurance coverage from her own employer. The Supreme Court has held that recovery of specific funds is different from seeking general, "personal liability . . . for a contractual obligation to pay money."
That plaintiff did not keep her benefit payments in a separate fund and may have spent those assets, however, does not change the equitable nature of plaintiff's claim. In
Defendants put plaintiff "on notice" that it will not cover the benefit amounts that her own employer's health insurance plan would have paid had she elected it. The SPD states,
(Dafoe Aff. Ex. B, at 60) (emphasis in original).
In addition, the SPD gave plaintiff clear notice that the Trustees would require reimbursement in cases of overpayment:
(
Thus, defendants have met the notice requirement under
Plaintiff has raised no genuine issue of material fact that would preclude defendant from. obtaining equitable relief on its counterclaim.
The plain language of the SPD is clear: when a spouse beneficiary refuses coverage from her own employer, the Plan will "treat the spouse as if they were covered by their employer's plan" and "subtract . . . the amount that would have been paid by the spouse's employer's Plan if they had not elected to not be covered." (Dafoe Aff. Ex. B at 60). It is undisputed that plaintiff declined health insurance coverage offered by her own employer. (Compl. ¶ 83; Defs.' 56.1 ¶ 38.)
Plaintiff cites an IBEW union newsletter characterizing the SPD as incorporating "a series of rules agreed upon by the Insurance Commissioner of all 50 states" (plaintiff states that this refers to the National Association of Insurance Commissioners' Coordination of Benefits Model Regulations, which prohibits reductions of benefits on the basis that a claimant did not enroll in her own employer's plan) as evidence that defendant acted arbitrarily and capriciously and contradicted their published position. (Tedesco Decl. Ex. A.) However, plaintiff does not proffer any facts to support its assertion that the Fund or the Trustees published the union newsletter, or adopted its contents as the Fund's own position. In fact, plaintiff agrees that the newsletter is published by "Local Union 1249." (Pl.'s 56.1 at ¶ 52.)
In all events, the contents of the newsletter cannot amend the SPD. The SPD reserves the rights to amend to the Trustees only, and not to the union.
The SPD states:
(Dafoe Aff. Ex. B, at 12.) Plaintiff does not dispute that the SPD governs the rules of the Plan and that the defendant Trustees "determine the rules by which claims are administered and approved under the Plan." (Defs.' 56.1 at ¶ 3.) Because the SPD is clear that no other sources—including the union—have authority to "speak for" the Plan, plaintiff's argument fails.
Furthermore, the very same page of the newsletter warns that the Plan will not "pick up the spouses and dependents in primary coverage if they drop the other coverage" and that it will only serve as "the SECONDARY COVERAGE, NEVER the primary" when "a spouse makes a voluntary election out of their Employers Group Plan." (
There is also no genuine material dispute about defendants' authority to "recover any payment or mistaken payment," which is clearly articulated in the SPD. (Dafoe Aff. Ex. B, at 73). Because the Fund mistakenly paid plaintiff benefits without knowledge that the IBEW Plan should have been the secondary, not primary, coverage, it is entitled to recover the payment directly or by reducing benefits from plaintiff. (
Plaintiff argues that the Fund does not have authority to recover because it "assumed the risk," as it knew that plaintiff was employed. Yet it is undisputed that plaintiff's employer began offering her coverage on January 1, 2013. (Pl.'s 56.1 ¶11; Weinstein Decl. Ex. S (noting "original eligibility" on January 1, 2013).) Defendant sent the coordination of benefits update form to plaintiff on February 12, 2014. (Weinstein Decl. Ex. R.) Plaintiff does not allege any facts suggesting that defendant knew or should have known that plaintiff had been offered, and declined, insurance from her own employer prior to receiving the completed coordination of benefits form on February 20, 2014. (Weinstein Decl. Ex. S.) Therefore, defendants have demonstrated that there is no genuine dispute on any material fact as to the overpayment counterclaim.
Plaintiff do not oppose defendants' motion for summary judgment on the Fourth Cause of Action, "Unlawful Termination of Coverage." It is undisputed that plaintiff remains eligible for benefits. (Defs.' 56.1 at ¶ 42.) Thus, defendants are entitled to summary judgment on this cause of action.
Plaintiff also do not oppose defendants' motion for summary judgment on the Fifth Cause of Action for sanctions under ERISA.
The relief that plaintiff seeks—personal penalties against defendant Dafoe up to $100 per day of violation—is only available for failures "to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary." 29 U.S.C. § 1132(c)(1)(B). ERISA requires that the plan administrator provides beneficiaries with "the latest updated summary, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated" upon request. 29 U.S.C. § 1024.
Plaintiff does not suggest that she requested those enumerated documents. Instead, she only alleges that Dafoe failed to comply with ERISA regulations, 29 C.F.R. § 2560.503-1, by not timely providing her with copies of her own file. (Compl. at ¶106, 109.) However, plaintiff does not claim that defendant violated any statutory provision of ERISA that requires timely furnishing of information. Section 1132(c)(1) does not cover "alleged violations of ERISA's implementing regulations."
For the reasons set forth above, plaintiff's motion for summary judgment is DENIED and defendants' motion for summary judgment is GRANTED. The Clerk of Court is directed to terminate the motions at ECF Nos. 26 and 31 and to terminate this action.
SO ORDERED.
