VANESSA L. BRYANT, District Judge.
The Plaintiff, Tiffany L. Halo ("Halo"), who at all times relevant to this proceeding was a student at Yale University and an insured under Yale Health Plan ("YHP"), brings this action pro se against the Defendant, YHP, under the Employee Retirement Income Security Act of 1974 ("ERISA"). Plaintiff alleges that Defendant violated the provisions of 29 C.F.R. § 2560.503-1, which governs the timing of notification of benefit determinations, and that YHP acted in an arbitrary and capricious manner in denying her coverage for out-of-network urgent or emergency care.
On April 9, 2012, Halo appealed this Court's judgment. [Dkt. # 29]. On October 11, 2013, the Second Circuit vacated and remanded the judgment. [Dkt. # 34]. In its Summary Order, the Second Circuit held that Halo did not receive proper notice of the consequences of failing to respond to a motion for summary judgment. See [Dkt. # 34, Mandate of USCA, at 5]. Further, in response to the amicus curiae brief filed by the Department of Labor in support of Halo's appeal, in addition to the merits of Halo's claims, the Second Circuit directed this Court to consider whether YHP violated the procedural requirements for claim administration under 29 C.F.R. § 2560.503-1, and if so, whether Halo is entitled to civil penalties and to de novo review of her claims. [Id. at 6-7].
On December 27, 2013, YHP renewed its motion for judgment on the administrative record to affirm YHP's coverage decisions. [Dkt. # 38]. On February 24, 2014, Halo filed her Opposition to YHP's motion. [Dkt. # 43]. On March 21, 2014, YHP filed its Reply to Halo's Opposition. [Dkt. # 46]. On April 24 and September 2, 2014, Halo filed supplemental evidence and briefing. [Dkt. # # 20, 52 and 53]. After consideration of the record and the mandate of the Second Circuit, for the reasons stated hereinafter, the Defendant's motion for judgment on the administrative record is granted, in part, and denied in part.
As an enrolled student attending Yale at least half time and working towards a Yale degree, Halo was a member of the Yale Health Plan and received "YHP Basic" coverage at no charge. [Dkt. # 38-3, Ex. A (Yale Health Plan Student Handbook) at
In addition to the YHP Basic plan, Halo purchased YHP Hospitalization/Specialty Coverage (the "Specialty Plan"). [Dkt. # 43, Opp. at 12]. The Specialty Plan offers three types of coverage "at 100%": (i) outpatient specialty care received through the YHP health care network, (ii) approved inpatient care at YHP-approved inpatient facilities, and (iii) limited out-of-network care. [Dkt. # 38-3, Ex. A at 58].
Under the Specialty Plan, "[e]mergency care and pre-authorized follow-up care for emergency conditions is covered at 100% regardless of location." [Id. at 62]. YHP defines an "emergency condition" as "a major acute medical problem or major acute trauma that requires immediate medical attention or a condition that could lead to serious harm or death if care is no received or is delayed." [Id.]. Emergency coverage includes "emergency facility fees, laboratory expenses, radiological expenses, emergency physicians' fees, ambulance transportation, and pre-authorized short-term follow-up care." [Id.].
In the event of an emergency condition, YHP instructs covered beneficiaries to "contact the YHP Care Coordination Department within 48 hours (or 2 business days) of receiving emergency outpatient treatment or being admitted to an emergency facility." [Id.]. After receiving notification of emergency care, the Care Coordination Department "will (1) notify YHP clinical staff of [the beneficiary's] condition so that they can coordinate [the beneficiary's] care as appropriate ... and (2) pre-authorize any necessary follow-up care." [Id.]. The Specialty Plan expressly warns that any "[f]ollow-up care that is not pre-authorized may be denied." [Id.].
The Specialty Plan also provides 100% coverage for "[u]rgent care at any medical facility" when a beneficiary is "away from New Haven County." [Id. at 63]. YHP defines an "urgent condition" as "the sudden and unexpected onset of an acute medical problem or trauma that requires immediate medical attention." [Id.]. "Urgent conditions" do not include "chronic conditions, maintenance care, and routine care." [Id.]. As is the case with emergency care, beneficiaries are instructed to "contact the YHP Care Coordination Department within 48 hours (or 2 business days) of any care received out of area for an urgent condition to ensure that YHP clinical staff are aware of your condition and to request the Care Coordination Department to pre-authorize follow-up care." [Id.]. YHP also warns that "[f]ollow-up care that is not pre-authorized may be denied." [Id.].
Finally, YHP informs its beneficiaries that, "[i]f, in the judgment of YHP, the illness or injury does not meet the plan definition of an emergency or urgent condition, coverage will be denied. This includes all elective admissions or treatments. Coverage will also be denied for conditions that could have been treated at YUHS but were not while the student or enrolled dependent was in area." [Id.].
YHP's Student Handbook describes the procedures governing the submission of claims for coverage:
YHP also advises that "[c]laims for covered services are honored for one year from the date of service." [Id.]. In the event a claim is denied, beneficiaries "have a right to appeal the decision." [Id. at 41]. YHP provides for a two-level appeals process. The first level "requires a request for reconsideration in writing within 180 days from the date of receipt of the initial determination." [Id.]. Once a beneficiary has received written notice that their first appeal was unsuccessful, they may request a second level appeal. "Second level appeals must be requested in writing within 60 days of receipt of the first level claim appeal determination and mailed to the Yale Health Plan Patient Representative." [Id.]. This second review "will be completed within 30 days of receipt of the [second] appeal." [Id.].
The series of incidents involving Plaintiff's eye condition began on May 31, 2008, when Halo developed a visual disturbance in her left eye. She went to the Yale University Health Services Urgent Care Department and was referred to Yale New Haven Hospital for an inpatient consultation. [Dkt. # 38-4, Ex. B, at 1-2]. She was examined by Dr. Joan Cho, who identified a "[f]ocal visual field abnormality" and recommended that the Plaintiff "be evaluated by ophthalmology today." [Id. at 2]. Later that day, Halo went to Yale-New Haven hospital, an in-network care provider, for an eye consultation. [Dkt. # 43, Opp. at 9]. Halo was examined by Dr. Huffman. During his examination of Plaintiff's retina, Dr. Huffman detected "retinal folds" and a possible "small hole." [Dkt. # 38-4, Ex. B, at 3].
At Dr. Huffman's direction, Halo returned to the hospital the following morning, June 1, 2008, for a new patient evaluation. [Dkt. # 43, Opp. at 9]. There, Dr. Kempton examined Plaintiff's eyes and determined that Halo had a "[r]etinal hole." [Dkt. # 38-4, Ex. B, at 6]. Accordingly, Dr. Kempton recommended that Halo undergo a scleral buckle/cryotherapy procedure that day, June 1, with Dr. Liggett. [Id.] Dr. Kempton also concluded that Halo "will need laser [r]etinopexy
On June 1, 2008, Dr. Kempton performed surgery on Halo's left eye. [Dkt. # 38-4, Ex. B, at 7-9]. The surgery was supervised by Dr. Peter Liggett, a specialist in retinal detachment. [Dkt. # 43, Opp. at 10]. Follow up appointments were scheduled for June 2 and 9, 2008 with Dr. Huang at Yale New Haven Hospital. [Id.]. During the latter of these two appointments, Dr. Huang determined that
On June 11, 2008, Halo was referred to Dr. Liggett for a second opinion with New England Retina Associates ("NHRA"), an in-network care provider. [Dkt. # 43, Opp. at 10]. The report documenting Plaintiff's examination that day states that "[t]he adhesion (cryo) used doesn't work as well on thin retinas (takes about a week to seal well)." [Dkt. # 38-4, Ex. B, at 14]. The report further notes that, "[a]t some point, [Halo] should have laser [surgery] to secure lattice areas" and that Plaintiff's "OS
Two days later, on Friday, June 13, 2008, in accordance with his recommendation, Dr. Liggett performed a vitrectomy
On the morning of Monday, June 16, 2008, the day Halo was scheduled to return to NHRA for a consultation, Halo and her mother allege that they made several calls to NHRA and to the cell phone number Halo had been given. See [Dkt. # 43, Opp. at 11; Dkt. # 43-6, Ex. S (Verizon Telephone Records) at A-210; Dkt. # 43-7, Ex. S at A-220]. Later that day, Halo went in to NHRA for her scheduled appointment, and was examined by Dr. Haffner. Dr. Haffner's report states that Halo had been suffering "severe pain [in her left eye] since 7:30 this [morning]." [Dkt. # 38-4, Ex. B, at 17]. The report notes that the pain had "gotten worse thr[oughout] the day," but that Halo "was ok[ay] this weekend." [Id.] Dr. Haffner concluded that an increase in intra-ocular pressure in Halo's left eye was the cause of her severe pain. [Id. at 17-19; Dkt. # 43, Opp. at 11]. Dr. Haffner performed a procedure to release this pressure and instructed Halo to return in two days. [Dkt. # 38-4, Ex. B, at 18].
On June 16, 2008, the same day Halo was examined by Dr. Haffner, Halo's mother made a request by telephone to YHP for a second opinion on Halo's condition. See [Dkt. # 38, Mot. for J., at 8; Dkt. # 43, Opp. at 13]. Plaintiff's mother spoke with Vicki Eisler, of Yale Member Services. The parties agree that during this call, Halo's mother stated that Halo wanted to see Dr. D'Amico, a world-renowned eye specialist, that she felt Halo's "post-op care" was "awful," and that Halo did not "feel comfortable going back to Dr. Liggett." [Dkt. # 38-4, Ex. B at 19; Dkt. # 43, Opp. at 13]. Plaintiff also alleges that during this call, her mother informed Ms. Eisler of Halo's "urgent care [sic] and the fact that [Halo] was still in severe pain." [Dkt. # 43-8, Ex. W at ¶ 7].
Within 24 hours, Dr. Forster, Chief of Ophthalmology at Yale University Health Services, called and approved the referral for a second opinion with Dr. D'Amico of Weill Cornell Ophthalmology Associates ("Weill"), an out-of-network doctor. [Dkt. # 38, Mot. for J., at 8; Dkt. # 43, Opp. at 13].
On June 17, 2008, Dr. D'Amico saw Halo and determined that immediate treatment was necessary. Halo received treatment the same day. Halo further alleges that, while she was at Weill, her father contacted YHP and informed them of her "emergency treatment." [Dkt. # 43, Opp. at 14]. The Weill treatment record of Halo's June 17, 2008 visit states, "Patient will move to her parents in N.J. and would like to transfer her care to W[eill]." [Dkt. # 38-4, Ex. B, at 22].
Without seeking or obtaining prior authorization from YHP, Halo went to see Dr. D'Amico the next day for a follow-up. [Dkt. # 38, Mot. for J., at 9; Dkt. # 43, Opp. at 14]. Halo alleges that, either on June 17 or June 18, her father received a telephone call from Vicki Eisler, of YHP, who told him that Halo's "circumstances were emergency in nature" and that authorization to extend the referral to include medical benefits was granted for Halo's care with Dr. D'Amico through June 30, 2008.
The bills for the visits on June 17 and June 18, 2008 were received by YHP's Claims Department on July 8, 2008. [Dkt. # 38-6, Ex. D.] The bills were itemized and included procedure codes, diagnosis pointers, and the Claims Department address. [Id.] In a form entitled "Explanation of Benefits," dated July 30, 2008, YHP denied all but one of Halo's claims. [Dkt. # 38-7 at Ex. E]. The form stated that the denials were because the "service[s] [were] not authorized." [Id.] Halo alleges that she received this form on August 6, 2008. See [Dkt. # 1, Compl. at 4; Dkt. # 38-8, Ex. F at 2].
The next day, August 7, 2008, Halo sent a letter to Connie Rollinson, YHP's Manager of Claims, which Halo explained was "to serve as a formal `first level claim appeal.'" [Dkt. # 38-8 at Ex. F]. In her letter, Halo described the events beginning on May 31, 2008, when she "went to the Yale University health Services Emergency Room," through August 6, 2008, when she spoke with YHP's Vicki Eisler after receiving the denial form. [Id. at 1-2]. Halo informed Ms. Rollinson that on the same day she met with Dr. D'Amico for the first time, June 17, 2008, she and her mother "consulted Dr. Susan Forster, the physician handling [Halo]'s case at Yale Health Services, about the `emergency situation.'" [Id. at 2]. She further explained that, during this conversation, "Dr. Forster approve[d] the referral for a second opinion and inform[ed] Tiffany that she must consult with Ms. Vicki Eisler ... for any further, `emergency coverage.'" [Id.].
Halo's August 7, 2008 letter next recounted her conversation with Ms. Eisler that day (June 17), who allegedly told Halo that her "circumstances were, `emergency in nature' and that authorization for extended referral and coverage of benefits would be given for [Halo]'s care with Dr. D'Amico until [June 30, 2008]." [Id.]. There is no evidence in the record before the administrator which would form the basis of a conclusion that Halo's circumstances were emergency in nature. There is nothing in the claim file on June 17, 2008, on which Ms. Eisler could have drawn the conclusion that Halo qualified for out-of-network emergency care through June 30, 2008. None of the treatment notes, nothing in the claim file, and no exhibit filed in support of any of the briefing by either party indicates that, at the time Ms. Eisler allegedly extended YHP's initial referral, any physician or other medical expert opined that Halo suffered from an acute medical condition requiring urgent or emergency medical care, necessitating treatment by a physician or hospital outside the YHP network.
Eight days later, on August 15, 2008, YHP sent Halo a letter in response to her "appeal [of] a decision by Yale Health Plan to deny coverage for portions of the care [she] received out of network on June 17, 2008 at the office of Dr. Donald D'Amico." [Dkt. # 38-12, Ex. J at 1]. The letter explained that Halo's "claim ha[d] been reviewed in detail by [YHP's] Medical Director, Dr. Michael Rigsby along with the Chief of Ophthalmology, Dr. Susan Forster." [Id.] It then stated that, although Halo "elected to leave the New Haven area" and "[t]he services provided by Dr. D'Amico went beyond consultation, resulting in charges that were not covered," YHP decided to "attempt to negotiate with Cornell Opthamology Associates a payment based on usual and customary charges for the services provided," because
On September 8, 2008, Halo again wrote YHP's Manager of Claims, regarding her "First Level Claim Appeal." [Dkt. # 38-13, Ex. K, at 1]. Halo explained that her letter was "to serve as a formal response to [YHP's] letter of August 15, 2008 in which [YHP] denied the appeal under the Yale Health Plan for care, coverage, and expenses that student and patient Tiffany Halo received ... with Dr. Donald J. D'Amico." [Id.]. Halo's letter noted "several issues" with YHP's letter of August 15, including that Dr. Rigsby and Forster, who reviewed Halo's claim had not "ever physically examined [Halo]." [Id. (emphasis in original)]. Halo also took issue with the letter's assertion that Halo "received timely and appropriate care from Yale Health Plan, Yale Eye Center and New England Retina Associates," [Id.], and the assertion that Halo "elected to leave the New Haven area." [Id. at 2]. Halo stated in her letter that her reason for pointing out these and other issues with YHP's August 15 letter was "so that the Claims Review Committee [would be] fully informed of [Halo]'s situation upon secondary examination of her claim." [Id.] The same day, September 8, 2008, Halo also sent a letter to YHP's "Claims Review Committee" regarding her "Second Level Claim Appeal." [Id. at 3]. This letter tracked the sequence of events Halo described in her August 7 letter. [Id. at 3-4].
On September 18, 2008, Moshe Siev, a co-chair of YHP's Claims Committee, wrote Halo to inform her that the "Claims Committee voted to approve payment in full for the office visits on June 17, 2008 and June 18[], 2008." [Dkt. # 38-14, Ex. L, at 1].
Throughout the period Halo sought reimbursement for her first two appointments with Dr. D'Amico (on June 17 and June 18, 2008), she continued to treat with him. She attended follow-up visits on June 20 and June 26, 2008. The report concerning her June 20, 2008 visit stated that Halo was experiencing "no pain," that the "[v]isit [t]ype" was a "[f]ollow [u]p [v]isit," and that she had experienced "no pain" the previous day. [Dkt. # 38-4, Ex. B, at 28]. However, the report did note that there remained a number of "abnormal[ities]," [Id. at 29-30], and recommended that Halo "[r]eturn in about 7 days (around 6/27/2008)." [Id. at 31]. Halo's report from her June 26, 2008 visit similarly noted that she was "not having pain any longer." [Id. at 32]. However, Dr. D'Amico did observe that "there is a high chance of permanent cataract [in Halo's left eye], and the state of the retina cannot yet be clearly determined." [Id. at 34]. Accordingly, he recommended a follow-up appointment in two weeks. [Id.] Neither of these treatment notes states that Halo had an acute medical condition necessitating urgent or emergency medical treatment. Id.
Rather than come back in two weeks, Halo did not return to Dr. D'Amico's office until more than a month later, on August
The parties dispute whether Halo submitted claims for reimbursement of the cost of her June 20 and June 26, 2008 appointments.
In her letter dated August 7, 2008, Halo informed YHP that she had scheduled a surgery "for next Wednesday, August 13, 2008 with Dr. D'Amico at Cornell Weill Department of ophthalmology." [Dkt. # 38-8, Ex. F at 2].
On August 11, 2008, Dr. Forster, of YHP, called Halo to advise her to stay in network in order for the plan to cover her medical expenses, and she indicated that YHP would not pre-authorize the August 13 scheduled surgery. [Dkt. # 38-10 at Ex. H; Dkt. # 43, Opp. at 17]. For purposes of this decision, the Court will treat
Halo alleges that she told Dr. Foster that, as a result of her condition, she was unable to return to New Haven and that she had experienced a decrease in vision. [Dkt. # 43, Opp. at 17]. In addition, she now alleges for the first time that she "told Dr. Forster about the lack of access [to] emergency treatment at Yale." [Id.]. Dr. Forster's contemporaneous notes of this conversation make no reference to any "emergency treatment," whether in or out-of-network, but they do state that Halo "was advised to the YHP need to have her stay in network where equivolent [sic] care could be given," that Halo "was unhappy with this," and that she "plan[ned] to go through with sergery [sic] with [Dr.] D'Amico in NYC inspite [sic] of the YHP denial of coverage." [Dkt. # 38-10, Ex. H].
Notwithstanding her conversation with Dr. Forster, Halo elected to undergo surgery on August 13, 2008 with Dr. D'Amico at New York Presbyterian Hospital. [Dkt. # 43, Opp. at 19; Dkt. # 38-4, Ex. B, at 43-45]. However, it is unclear whether Halo ever submitted a written claim for this procedure.
Two days later, on August 15, 2008, YHP responded in writing to Halo's letter of August 7, in which Halo initially disclosed her intent to undergo surgery on August 13. [Dkt. # 38-12 at Ex. J]. In its letter, YHP once again stated that it had already provided "clear and explicit" communication to Halo that "further visits and follow-up surgery with Dr. D'Amico would be denied." [Id. at 2]. Halo does not dispute YHP's contention that this letter confirmed YHP's oral denial of Halo's claim for her August 13, 2008 procedure.
The parties agree that Halo appealed this denial on September 8, 2008,
Following her surgery on August 13, Halo returned to Weill on September 10, 2008 for a follow-up visit. See [Dkt. # 38-4, Ex. B, at 46-48]. Halo's examination report states that since her last retina appointment, she was experiencing vision
The parties agree that the administration of the Yale Health Plan is subject to ERISA and the regulations promulgated thereunder.
For the purposes of ERISA, "a claim for benefits is a request for a plan benefit or benefits made by a claimant in accordance with a plan's reasonable procedure for filing benefit claims." 29 C.F.R. § 2560.503-1(e). Pursuant to 29 C.F.R. § 2560.503-1(f)(iii), in connection with pre-service claims,
Under 29 C.F.R. § 2560.503-1(g), the administrator is required to provide a written or electronic notification of any adverse benefit determination, and the notification must set forth "in a manner calculated to be understood by the claimant (i) [t]he specific reason or reasons for the adverse determination [and] (ii) [r]eference to the specific plan provisions on which the determination is based." Id.
In addition, 29 C.F.R. § 2560.503-1(h) provides that the administrator shall provide a "full and fair" review on an appeal of adverse benefit determinations that "takes into account all comments, documents, records, and other information submitted by the claimant relating to the claim." Administrators of group health plans which provide for two appeals of an adverse determination, like YHP's policy, must provide notification "with respect to any one of such two appeals, not later than 30 days after receipt by the plan of the claimant's request for review of the adverse determination." 29 C.F.R. § 2560.503-1(i)(2)(iii)(A). Lastly, under 29 C.F.R. § 2560.503-1(j), the administrator must provide the claimant with written or electronic notification of a plan's benefit determination on appeal that sets forth "in a manner calculated to be understood by the claimant (i) [t]he specific reason or reasons for the adverse determination [and] (ii) [r]eference to the specific plan provisions on which the determination is based."
While a motion for judgment on the administrative record is a motion that "does not appear to be authorized in the Federal Rules of Civil Procedure," courts treat such motions as motions for summary judgment. Muller v. First Unum Life Ins. Co., 341 F.3d 119, 124 (2d Cir. 2003); see also Guglielmi v. Northwestern Mutual Life Ins. Co., No. 06-CV-3431, 2007 WL 1975480, at *3 (S.D.N.Y. July 6, 2007); Chitoiu v. UNUM Provident Corp., No. 05-CV-8119, 2007 WL 1988406, at *3 (S.D.N.Y. July 6, 2007); Pava v. Hartford Life and Accident Ins. Co., No. 03-CV-2609, 2005 WL 2039192, at *6 (E.D.N.Y. August 24, 2005); Perezaj v. Bldg. Serv. 32B-J Pension Fund, No. CV-04-3768, 2005 WL 1993392 at *4 (E.D.N.Y. Aug. 17, 2005); Katzenberg v. First Fortis Life Ins. Co., 500 F.Supp.2d 177, 191-92 (E.D.N.Y.2007); Charles v. First Unum Life Ins. Co., No. 02-CV-0748E, 2004 WL 963907, at *1 (W.D.N.Y. March 26, 2004).
Summary judgment should be granted "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). The moving party bears the burden of proving that no factual issues exist. Vivenzio v. City of Syracuse, 611 F.3d 98, 106 (2d Cir.2010). "In determining whether that burden has been met, the court is required to resolve all ambiguities and credit all factual inferences that could be drawn in favor of the party against whom summary judgment is sought." Id., (citing
ERISA jurisprudence determines the standard and scope of review in connection with a challenge to a plan's denial of benefits. Gannon v. Aetna Life Ins. Co., 2007 WL 2844869 at *6 (S.D.N.Y. 2007). "ERISA does not set out the applicable standard of review for actions challenging benefit eligibility determinations." Zuckerbrod v. Phoenix Mut. Life Ins. Co., 78 F.3d 46, 49 (2d Cir.1996). However, after analyzing the legislative history of ERISA, the Supreme Court has held that a denial of benefits challenge is to be reviewed de novo unless the benefit plan gives the administrator discretionary authority to determine eligibility. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); see also O'Shea v. First Manhattan Co. Thrift Plan & Trust, 55 F.3d 109, 111-12 (2d Cir.1995); Murphy v. IBM Corp., 23 F.3d 719, 721 (2d Cir.1994) (per curiam), cert. denied, 513 U.S. 876, 115 S.Ct. 204, 130 L.Ed.2d 134 (1994); Miles v. New York State Teamsters Conference Pension & Retirement Fund Employee Pension Benefit Plan, 698 F.2d 593, 599 (2d Cir. 1983), cert. denied, 464 U.S. 829, 104 S.Ct. 105, 78 L.Ed.2d 108 (1983).
In order to determine if a plan confers discretionary authority on its administrator(s), the Court must examine the language of the plan. The Second Circuit has held that discretionary authority can be granted without specific trigger words such as "discretion" or "deference," as long as the benefit plan's language is clear. Nichols v. Prudential Ins. Co. of America, 406 F.3d 98, 108 (2d Cir.2005). In general, objective standards do not grant discretion while subjective standards do. The Second Circuit has instructed that subjective phrases such as "resolve all disputes and ambiguities" or "in our judgment," clearly confer discretionary authority. Id.; see also Krauss v. Oxford Health Plans, Inc., 517 F.3d 614, 622-23 (2d Cir.2008) (finding that terms such as "may adopt reasonable policies, procedures, rules, and interpretations" and "determine[s] to be the reasonable charge" confer discretionary authority).
However, the Second Circuit has explained that a requirement to "submit satisfactory proof of Total Disability" is ambiguous and does not clearly confer discretionary authority. Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 251-52 (2d Cir.1999). The Second Circuit explained that such a phrase is ambiguous because it is unclear whether the claimant must submit to the administrator satisfactory proof which would imply an objective standard of "satisfactory proof," or the claimant must submit proof that is satisfactory to the administrator, which would imply a subjective standard of "satisfactory proof." Id. It is the administrator's burden to prove that discretionary authority has been granted. Id. at 249.
In this case, the plan clearly reserves discretion for the plan administrator.
Once it is clear that the administrator has discretionary authority, the standard of review ordinarily shifts from de novo to an arbitrary and capricious standard of review. Id.; see also McCauley v. First Unum Life Ins. Co., 551 F.3d 126, 131 (2d Cir.2008); Krauss, 517 F.3d at 622; Pastore v. Witco Corp. Severance Plan, 196 Fed.Appx. 18, 21 (2d Cir.2006); Brockett v. Reed, 78 Fed.Appx. 148, 150 (2d Cir.2003); Fay v. Oxford Health Plan, 287 F.3d 96, 104 (2d Cir.2002). However, the Second Circuit has held that, under certain circumstances, a plan administrator's failure to comply with the letter of the claims procedures outlined in ERISA requires courts to eschew the more deferential arbitrary and capricious review normally applied to an administrator's discretionary decisions in favor of a more searching de novo review. See Nichols v. Prudential Ins. Co., 406 F.3d 98, 109 (2d Cir.2005). As the Department of Labor noted in the amicus brief it submitted to the Second Circuit, the Nichols court "reasoned that when a plaintiff's benefit claim was `deemed denied' because the plan had not decided her claim within the applicable time limits there was no `exercise of discretion' to which to give `deferential review.'" Brief of the Acting Secretary of Labor, at 8, Halo v. Yale Health Plan, No. 12-CV-1447 (2d Cir. filed Jan. 31, 2013), 2013 WL 453955 at *20-21. However, Nichols arose under an extreme set of facts that are not applicable here.
In Nichols, the plan administrator failed to even acknowledge the claimant's appeal until after the time period specified by the regulations then in effect had expired. When the administrator did provide notice of the appeal, it informed the claimant that it would not resolve the appeal until the claimant submitted certain medical records. The claimant refused to comply with the request and filed suit in federal court. See Nichols, 406 F.3d at 101-02. Under this set of facts, the Second Circuit held that it "may give deferential review only to actual exercises of discretion, and that a `deemed denied' claim is not denied by an exercise of discretion[,] but by operation of law" on the day after the regulations require a decision be issued. Id.
Given the unique facts under which the Second Circuit decided Nichols, when faced with the question of whether an administrator's failure to comply with ERISA claims procedure is sufficient to trigger de novo review, district courts in this Circuit conduct a fact-specific inquiry to determine whether the plan administrator had acted in a dilatory or bad faith manner such that a claimant's claim is "deemed denied," or if the administrator made efforts to keep the beneficiary apprised
Here, while YHP's communications of its claim denials were not ideal (and in some instances failed to comply with ERISA regulations), the substance and timing of its denials of Halo's claims were sufficient to indicate that YHP had exercised its discretion, such that this Court will review its denials of Halo's claims under an arbitrary and capricious standard. See Topalian, 945 F.Supp.2d 294, 337 (E.D.N.Y.2013) ("[T]he weight of authority in the Second Circuit supports the application of arbitrary and capricious review where ... the plan administrator remains in regular contact with the benefits claimant and issues a decision prior to the commencement of federal litigation.")
With regard to Halo's first two out-of-network treatments, on June 17 and June 18, 2008, YHP communicated with Halo throughout the claim process. YHP spoke with Halo on June 17 before she underwent the procedures. See [Dkt. # 38, Mot. for J., at 8; Dkt. # 43, Opp. at 13]. YHP reaffirmed the scope of its out-of-network referral in writing the same day (June 17). See [Dkt. # 38-5 at Ex. C]. Plaintiff alleges that YHP spoke with her father on either June 17 or 18. See [Dkt. # 38-8, Ex. F at 2; Dkt. # 43, Opp. at 14; Dkt. # 43-8, Ex. V (Aff. of Hal Halo) at ¶ 3].
Once Halo submitted formal post-service claims for these visits, YHP complied with the ERISA notification requirements. YHP received Halo's claim on July 8, 2008, see [Dkt. # 38-6 at Ex. D], and issued an initial written denial on July 30, 2008. [Dkt. # 38-7 at Ex. E]. YHP's initial written denial of Halo's claims came within ERISA's 30-day requirement for post-service claims. See 29 C.F.R. § 2560.503-1(f) (2)(iii)(B).
Although YHP's initial written denial met the timing requirements under ERISA, the Court finds that the notification itself falls short of ERISA's requirements. Under ERISA, a notification of any adverse benefit determination must communicate, "in a manner calculated to be understood by the claimant ... [t]he specific reason or reasons for the adverse determination." 29 C.F.R. § 2560.503-1(g)(1)-(g)(1)(i). The notification must also make "[r]eference to the specific plan provisions on which the determination is based," 29 C.F.R. § 2560.503-1(g)(1)(ii), and it must describe "the plan's review procedures and the time limits applicable to such procedures, including a statement of the claimant's right to bring a civil action under section 502(a) of the Act following an adverse benefit determination on review." 29 C.F.R. § 2560.503-1(g)(1)(iv). The "Explanation of Benefits" form YHP sent Halo provides only the following explanation for YHP's denial of her June 17 and June 18 claims: "REJ — SERVICE NOT AUTHORIZED." [Dkt. # 38-7, Ex. E]. Without more, this explanation does not sufficiently communicate the "specific reason or reasons" for YHP's denial. 29 C.F.R. § 2560.503-1(g)(1)(i). The form also failed to reference specific plan provisions and to state the plan's review procedures. See 29 C.F.R. § 2560.503-1 (g)(1)(ii)-(iv).
However, YHP's second letter, denying Halo's August 7, 2008 "first level claim appeal," [Dkt. # 38-8, Ex. F at 1], cured some of these defects, by explaining the basis for YHP's denial and notifying Halo of her right to appeal, and it also put Halo on notice about subsequent claims for out-of-network treatment in connection with her eye condition. See [Dkt. # 38-12 at Ex. J]. First, YHP explained the basis for its denial of the claims, stating that Halo "elected to leave the New Haven area and requested coverage for a second opinion with a[n] [out-of-network] physician," that "[c]overage for non-emergency out of network care is not part of [Halo's] health care benefit with Yale Health Plan," that
On September 8, 2008, Halo sought a second and final appeal of these two claims, see [Dkt. # 38-13 at Ex. K], and ten days later, on September 18, 2008, YHP sent Halo a written notice informing her that YHP voted to approve the payment, [Dkt. # 38-14 at Ex. L], well within the 30-day ERISA notification period. See 29 C.F.R. § 2560.503-1(i)(2)(iii)(A).
Halo alleges that YHP was "51 days delinquent" in issuing its "denial of benefits for (June 17, 18)." [Dkt. # 43, Opp. at 19]. Halo appears to have arrived at this figure by calculating the number of days between the date she first orally requested an out-of-network referral, June 16, 2008, and August 6, 2008, the day Halo alleges she received YHP's notice denying her claims for the out-of-network treatment. This calculation is incorrect for at least three reasons. First, there is no dispute that the only pre-service approval Halo requested on June 16 was for a second opinion, See [id. at 13], and YHP approved this request the next day. Second, even under Halo's calculation, YHP would have had to provide written notice of its denial by July 17, at the earliest, for a post-service claim. Thus, at most, YHP's denial letter was 20 days late. Third, and most importantly, this allegation hinges on the conclusion that an oral request for authorization, which did not comply with YHP's claim procedures, constituted a
Turning now to Halo's next two procedures, June 20 and June 26, 2008, Halo maintains that YHP did not render a benefits decision on her claims until November 11, 2008. [Dkt. # 43, Opp. at 19]. However, the Court is unable to assess whether or not YHP violated the procedures because there is no evidence in the record as to when Halo submitted these claims.
Halo next complains that YHP did not provide timely notice of its denial of her claim for surgery on August 13, 2008. Indeed, Halo alleges that YHP was "116 days delinquent" in denying her claim for this procedure. [Dkt. # 43, Opp. at 20]. Halo also maintains, as she did with regard to her previous procedures, that YHP was required to comply with the accelerated notification requirements ERISA prescribes for urgent care claims. [Id.] However,
In addition, YHP complied with the non-urgent timing requirements. Halo first informed YHP of her upcoming August 13 surgery in her letter of August 7, which appealed the initial denial of her June 17 and 18 procedures. See [Dkt. # 38-8, Ex. F at 2]. Within eight days, YHP had provided both an oral notification informing Halo of "YHP['s] denial of coverage" for the surgery, [Dkt. # 38-10, Ex. H; Dkt. # 43, Opp. at 17], and a follow-up letter, which both parties understood conveyed a denial of coverage for Halo's August 13 surgery. See [Dkt. # 38, Mot. for J., at 12; Dkt. # 38-12 at Ex. J; Dkt. # 43, Opp. at 19]. Accordingly, YHP satisfied its timing of notification requirements, regardless of whether Halo's claim was construed as a pre-service or post-service claim. See 29 C.F.R. § 2560.503-1(f)(2)(iii)(A)-(B).
Finally, YHP timely handled Halo's claim for surgery she underwent on September 17, 2008. YHP received her postservice claim on October 3, 2008, see [Dkt. # 38-18 at Ex. P], and issued a written denial on November 7, see [Dkt. # 38-19 at Ex. Q], within the 30-day time period mandated by ERISA. See 29 C.F.R. § 2560.503-1(f)(2)(iii)(B).
Although the Court is troubled by some of the sparse denial notices YHP issued in response to some of Halo's claims, YHP's overall course of conduct, which included pre- and post-service telephone conversations with Halo, a detailed denial letter setting forth the reasons for YHP's denials of Halo's June 17 and 18 and August 13 claims and providing Halo with the information necessary for her to pursue her administrative appeals, YHP's timely handling of Halo's appeals, and the uncertainty of if and when Halo submitted claims
A decision that is arbitrary and capricious will not be upheld and is defined as "without reason, not supported by substantial evidence or erroneous as a matter of law." Kinstler, 181 F.3d at 249 (citing Pagan v. NYNEX Pension Plan, 52 F.3d 438 (2d Cir.1995)). "Substantial evidence is `such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the [administrator and] ... requires more than a scintilla but less than a preponderance.'" Celardo v. GNY Auto. Dealers Health & Welfare Trust, 318 F.3d 142, 146 (2d Cir.2003) (quoting Miller v. United Welfare Fund, 72 F.3d 1066, 1072 (2d Cir.1995)). "This scope of review is narrow and the Court is not permitted to substitute its own judgment for that of the decision maker." Burgio v. Prudential Ins. Co. of America, No. 06-CV-6793, 2011 WL 4532482, at *4 (E.D.N.Y. Sept. 26, 2011) (citing Pagan v. NYNEX Pension Plan, 52 F.3d 438, 442 (2d Cir.1995) and Jordan v. Ret. Comm. of Rensselaer Polytechnic Inst., 46 F.3d 1264, 1271 (2d Cir.1995)).
In addition, courts have held that where a plan administrator both evaluates and pays benefits claims out of its own pocket, the administrator has a conflict of interest that must be taken into account in a court's review under an arbitrary and capricious standard. The conflict of interest analysis was articulated by the Supreme Court in Glenn. Metropolitan Life Ins. Co. v. Glenn., 554 U.S. 105, 128 S.Ct. 2343, 2349, 171 L.Ed.2d 299 (2008) (ERISA "permits a person denied benefits under an employee benefit plan to challenge that denial in federal court ... Often the entity that administers the 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. We here decide that this dual role creates a conflict of interest; that a reviewing court should consider that conflict as a factor in determining whether the plan administrator has abused its discretion in denying benefits; and that the significance of the factor will depend upon the circumstances of the particular case.") (citations omitted).
A plaintiff's showing that the administrator's conflict of interest affected the choice of a reasonable interpretation is only one of "several different considerations" that judges must take into account when "review[ing] the lawfulness of benefit denials." McCauley, 551 F.3d at 133. The Court must "determine how heavily to weight the conflict of interest thus identified, considering such circumstances as whether procedural safeguards are in place that abate the risk, `perhaps to the vanishing point.'" Durakovic v. Bldg. Serv. 32 BJ Pension Fund, 609 F.3d 133,
Durakovic, 609 F.3d at 139-140 (quoting Glenn, 128 S.Ct. at 2351).
To the extent Halo continues to press for reimbursement of her claims for the June 17 and June 18, 2008 visits to Dr. D'Amico, both parties agree that YHP agreed to pay these claims. See [Dkt. # 38, Ex L; Dkt. # 43, Opp. at 19]. Thus, Halo's complaints about the earlier denial of these claims are moot. See Finkel v. Alltek Sec. Sys. Grp., Inc., No. 10-CV-4887 (DLI)(VVP), 2011 WL 4543495, at *1 n. 2 (E.D.N.Y. Sept. 29, 2011) (noting that a "claim is moot where defendant paid amount demanded")
The parties agree that Halo exhausted her administrative remedies in connection with her August 13, 2008 claims. See [Dkt. # 38, Mot. for J., at 24; Dkt. # 43, Opp. at 23-24]. Therefore, these claims are properly before this Court. As stated above, the Court will consider whether YHP's denial of coverage for the August 13, 2008 procedure was arbitrary and capricious. See supra at 262.
Under the clear and express terms of the plan, Halo would only be entitled to reimbursement for the services provided by an out-of-network physician under two exceptions. First, where the care is for an emergency or urgent condition, and second, where the care has been arranged in advance by a YHP clinician and approved by YHP's Care Coordination Department. See [Dkt. # 38-3, Ex. A at 58, 68].
It is undisputed that YHP had not pre-approved the August 13, 2008 surgery. See [Dkt. # 38, Mot. for J., at 12; Dkt. # 43, Opp. at 17]. Accordingly, the only way Halo would have been entitled to coverage for her August 13 procedure is if the procedure was necessary to treat an emergency or urgent condition. There is ample evidence in the record to support YHP's ultimate determination that the August 13 treatment was not for emergency or urgent care.
First, the record indicates Halo knew over a week in advance of the August 13 procedure. See [Dkt. # 38-4, Ex. B at 38]. At her previous out-of-network appointment on August 5 (for which Halo never submitted a claim), the examining doctor's report recommended that Halo "return in about 7 days (around 8/12/2008)" to undergo retinal detachment surgery. [Id.] Aware of this upcoming procedure, Halo notified YHP by letter on August 7, 2008 —
Second, the records from Halo's recent appointments with Dr. D'Amico also support a determination that her August 13, 2008 procedure was not an emergency or urgent. Following Halo's June 17 procedure, her records suggest that her condition was improving. For instance, the report of her June 20, 2008 visit stated that she had experienced "no pain" the previous day and recommended that Halo "[r]eturn in about 7 days (around 6/27/2008)." [Dkt. # 38-4, Ex. B at 28, 31]. The report of her next visit 6 days later, on June 26, stated that Halo was "not having pain any longer." [Id. at 32]. Although the report also noted that "there is a high chance of permanent cataract [in Halo's left eye], and the state of the retina cannot yet be clearly determined," [id. at 34], it contained a recommendation that Halo attend a follow-up appointment in two weeks. [Id.].
After this appointment, Halo did not return to Dr. D'Amico's office for over a month, on August 5, 2008. See [id. at 35-38]. The report from this visit stated that, on July 10, 2008, Halo reported "no change or problem since [her] last visit." [Id. at 35]. Her condition appears to have worsened since that July 10 follow-up, as the August 5 reported stated that Halo had a "round spot" on her left eye, that her right eye was "feeling tight," and that Halo had a "recurrent inferior [retinal detachment in her left eye] with subretinal bands." [id. at 35-37]. Nevertheless, the report recommended that Halo "[r]eturn in about 7 days for treatment." [Id. at 38]. Taken as a whole, it would not be unreasonable for YHP to have concluded that, while Halo still required additional treatment, her overall condition, particularly her pain and discomfort, had stabilized or improved. YHP may also have reasonably concluded that the weeks-long gap in between these appointments, as compared to the near-daily treatment Halo required from May 31 through June 18, [Dkt. # 43, Opp. at 9-14], indicated that the gravity, severity and prognosis of her condition had diminished.
Third, YHP's determination that Halo's August 13 procedure with Dr. D'Amico was elective, rather than emergent or urgent, was not arbitrary and capricious. [Dkt. # 38, Mot. for J., at 37-38]. While Halo maintained that she "was unable to travel back to New Haven" for treatment with Dr. Ron Adelman, a YHP in-network clinician, [Dkt. # 43-8, Ex. T (Aff. of Tiffany Halo) at ¶¶ 3-4], Halo was already traveling a considerable distance for her out-of-network treatment, from her parents' home in Denville, New Jersey to New York City. [Dkt. # 38-4, Ex. B at 20, 22]. Halo also chose to undergo the procedure despite being informed by YHP beforehand that it would not cover it. See [Dkt. # 38-10 at Ex. H].
Against this evidence, Halo offered YHP only hers and her parents' lay medical conclusions that Halo's treatment was urgent or emergent.
Halo also did not provide YHP with any quantifiable medical documentation establishing that the services were care for an emergency or urgent condition. For example, Halo did not submit a letter or other documentation from Dr. D'Amico expressing his medical opinion that the care provided was for an emergency or urgent condition. In fact, the Court has reviewed all of the medical records that Plaintiff has submitted into the record and there is no mention or indication in any of these records that Dr. D'Amico provided Halo with care for an emergency or urgent condition. The medical records describe the majority of the services provided by Dr. D'Amico as "follow up visit" and expressly note that Halo had transferred her care to Dr. D'Amico because she was moving to her parents' home in NJ. See [Dkt. # 38-4, Ex. B at 22]. There is simply no evidence in Halo's medical records submitted to HYP in support of her claims that she was being provided with care by Dr. D'Amico for an emergency or urgent condition.
While YHP alleges that Halo has failed to exhaust her administrative remedies on her June 20, June 26, and September 17, 2008 claims, see [Dkt. # 38, Mot. for J. at 25], as explained above, the denial notices YHP issued in connection with each of these claims failed to comply with the ERISA notification requirements. See supra at 260, 261-62. Accordingly Halo is deemed to have exhausted her administrative remedies. See 29 C.F.R. § 2560.503-1(l) ("In the case of the failure of a plan to establish or follow claims procedures consistent with the requirements of this section, a claimant shall be deemed to have exhausted the administrative remedies available under the plan."). As these claims are deemed exhausted, the Court will now examine each of them under the arbitrary and capricious standard. See Montefiore Med. Ctr. v. Local 272 Welfare Fund, No. 09 Civ. 3096(HB), 2013 WL 3193397, at *6 (S.D.N.Y. Jun. 25, 2013) (determining that content of denial notices failed to meet ERISA requirements, finding claims deemed exhausted, and reviewing claims under arbitrary and capricious standard).
There is sufficient evidence in the record to support YHP's denials of each of these claims. As was the case with Halo's surgery on August 13, these claims arose from treatment Halo received out-of-network from Dr. D'Amico. Unless these treatments were pre-authorized or were for urgent or emergency care, they were not covered under the plan's express terms. See [Dkt. # 38-3, Ex. A at 58, 68].
Halo first argues that these claims were pre-authorized by Vicki Eisler, a YHP employee, during a phone conversation in June 2008. See [Dkt. # 43, Opp. at 15]. Halo alleges that during this call between Eisler and Halo's father, Eisler stated that Halo's "circumstances were `emergency in nature' and that authorization for extended referral and coverage of benefits would be given for [Halo's] care with Dr. D'Amico until [June 30, 2008]." [Dkt. # 43, Opp. at 14; Dkt. # 38-8, Ex. F at 2]. Halo further alleges that Eisler stated "that the necessary paperwork for the [extended] authorization would follow," but that the paper work never arrived. [Dkt. # 43, Opp. at 14-15].
In denying coverage for Halo's June 20 and June 26 claims, YHP determined that, despite Halo's allegation, it had not pre-approved coverage of all claims for care with Dr. D'Amico through June 30, 2008. See [Dkt. # 38, Mot. for J., at 30 n. 16]. There is substantial evidence in the record to find that YHP's determination was not arbitrary and capricious.
First, there was no evidence in the record before YHP that would have warranted such an extension. After Halo's initial consultation and procedure on June 17, 2008, her appointment the next day, on June 18, 2008 was for a post-operation, "[f]ollow [u]p [v]isit." [Dkt. # 38-4, Ex. B at 25]. The examination summary prepared for that day states that Halo was "feeling much better today after anterior paracentesis yesterday," [id.], and the assessment and plan described in the summary did not indicate that Halo required close medical supervision or that she was
Second, at the time YHP was considering Halo's claim that it had pre-approved coverage for her June 20, June 26, and any other appointments through June 30, 2008, there was substantial evidence before it to support a conclusion that no such agreement had ever been made. In her August 7, 2008 letter, Halo described the substance of this call and stated that it occurred on "6/17/2008." [Dkt. # 38-4, Ex. B at 2]. YHP was aware that on that same day, it had sent to Halo a written referral stating that YHP had authorized "1" visit, for a "2nd opi[nion]," and that this referral was "valid ... through 06/30/2008," [Dkt. # 38-5 at Ex. C], the same end date as the extended referral Halo claimed she received. Accordingly, based on the record before it, YHP's conclusion that Halo's assertion of an extended referral was incorrect was not arbitrary and capricious.
YHP's denial of Halo's September 17 claims was similarly not arbitrary and capricious. First, YHP claims — and Halo does not deny — that she did not receive pre-approval for her September 17 surgery. See [Dkt. # 38, Mot. for J., at 13-14]. Second, there is sufficient evidence in the record to support YHP's conclusion that this procedure, while medically necessary, was not an emergency or urgent. Prior to undergoing surgery, Halo had an appointment with a different Weill doctor on September 10, 2008. See [Dkt. # 38-4, Ex. B at 46]. The summary of this appointment noted that, since her August 13 surgery, Halo "[r]eport[ed] increasing size of black spot in superior visual field and approaching central vision," but, since "last Thursday [September 4, 2008] ... has stabilized. No photopsia, floaters, eye pain, or redness." [Id.]. The summary further noted that Halo was "symptomatic for more than one week. VA is decreased from last visit. IOP moderately increased from last visit, but no evidence of glaucomatous or corneal changes or pain." [Id. at 48]. Accordingly, the "plan [wa]s to proceed with RRD repair ... next Wednesday [September 17, 2008]." Similarly, Halo's pre-operation form, prepared on September 16, 2008, the day before she underwent surgery, stated that her systems were all normal and her rheumatoid arthritis condition was stable. [Id. at 49-52]. The content of Halo's pre-surgical examination reports is sufficient to show that YHP's denial of Halo's September 17 claims was not arbitrary and capricious.
Unlike the previous claims the Court has examined, Halo has failed to exhaust her administrative remedies with regard to her August 5 and September 10, 2008 claims, as there is no evidence that she has either filed a claim or that any such claim has been denied. See Reid v.
Although the Second Circuit has not addressed the issue of whether civil penalties are available for violations of 29 C.F.R. § 2560.503-1, several other circuits have held that the civil penalties provided under 29 U.S.C. § 1132(c) apply only to violations of a duty imposed by the ERISA statute and not a duty imposed by regulations promulgated thereunder. See e.g., Wilczynski v. Lumbermens Mutual Casaulty Co., 93 F.3d 397 (7th Cir.1996) (holding that § 1132 penalties can be assessed only for conduct that breaches an administrator's duty of disclosure created by ERISA subchapter I and that "violations of regulations promulgated thereunder will not suffice."); Kollman v. Hewitt Assocs., LLC, 487 F.3d 139, 147 (3d Cir.2007) (noting that the Third Circuit has previously "held that the defendants' failure to provide information required by federal regulations did not state a claim under ERISA § [1132](c)(1)" and that "[§ 1132(c)] subjects plan administrators to liability only for failure or refusal to release the information that Subchapter 1 of ERISA" requires) (citing Groves v. Modified Ret. Plan, 803 F.2d 109, 111 (3d Cir.1986)); see also Faircloth v. Lundy Packing Co., 91 F.3d 648, 659 (4th Cir.1996) (holding that civil penalties are available for administrators "who fail to furnish requested documents that are required to be furnished by § [1024](b)(4)").
Moreover, several district courts in the Second Circuit have held that § 1132(c) penalties do not apply to violations of agency regulations, and, in particular, have found that § 1132(c) penalties are not available for purported violations of 29 C.F.R. § 2560.503-1. See e.g., Anderson v. Sotheby's Inc. Severance Plan, No. 04 Civ. 8180, 2005 WL 1309056, at *4 (S.D.N.Y. May 31, 2005) (concluding that plaintiff was not entitled to sanctions for plan's alleged failure to produce requested documents under 29 C.F.R. § 2560.503-1 since "a violation of ERISA's implementing regulations cannot support the imposition of sanctions under section 1132"); Mohamed v. Sanofi-Aventis Pharmacueticals, No. 06 CIV. 1504, 2009 WL 4975260, at *21 (S.D.N.Y. Dec. 22, 2009) (holding that plaintiff could not recover for plan's alleged violations of 29 C.F.R. § 2560.503-1(h)(2)(iii), (m)(8) under § 1132(c)(1)); Gill v. Bausch & Lomb Supplemental Retirement Income Plan, No. 09-CV-6043, 2009 WL 3164854, at *4-5 (W.D.N.Y. Sept. 28, 2009) (holding that Plaintiffs could not seek to impose § 1132(c) penalties for violation of a regulation under 29 C.F.R. § 2560.503-1).
Indeed, in its amicus curiae brief, the Department of Labor asserts as much, citing to Wilczynski and Groves, and stating that "the remedies for violations of
These courts have reached this conclusion for three reasons: (i) the plain language of §§ 1132 and 1133 of the ERISA statute indicates that Congress viewed the "plan" and the "plan administrator" as two distinct actors with two sets of duties; (ii) the claims procedures with which the plan administrator must comply appear in agency regulations while the civil penalty provision of ERISA authorizes penalties for failure to furnish information required by the statute itself; and (iii) the § 1132 provision providing for civil penalties is penal, rather than remedial, in nature. See Wilczynski, 93 F.3d at 405-07; Groves 803 F.2d at 116-118; Kollman, 487 F.3d at 147 (adopting Groves' analysis); Anderson, No. 04 Civ. 8180, 2005 WL 1309056 at *4 n. 2 (adopting analysis in Groves and Wilczynski and finding that a contrary case Zanella was "in effect overruled"); Mohamed, No. 06 CIV. 1504, 2009 WL 4975260, at *21 (quoting Groves, Wilczynski, and Anderson).
On the other hand, a few courts have recognized a gap between duty and liability created by these two sections of ERISA and have closed it by finding that civil penalties may apply to plan administrators who fail to adhere to claims procedures. See Adams v. Cyprus Amax Mineral Co., 927 F.Supp. 1407, 1410-1411 (D.Colo.1996); Zanella v. Principal Mut. Life Ins. Co., 878 F.Supp. 144, 146-47 (E.D.Wisc.1995); Kleinhans v. Lisle Sav. Profit Sharing Trust, 810 F.2d 618, 623-625 (7th Cir. 1987); Stone v. Travelers Corp., 58 F.3d 434 (9th Cir.1995).
After reviewing the case law and the ERISA statute as a whole, this Court joins those which have held that civil penalties may be awarded against plan administrators who fail to substantially comply with the claims procedures. In addition to grounds (i) and (iii), the Court believes that such a holding is the proper one in light of the purposes behind the two sections and ERISA as a whole.
Before examining the provisions of ERISA, it is important to first consider and articulate the standards governing a court's review of a statute. The Court "begin[s] with the understanding that Congress says in a statute what it means and means in a statute what it says there." Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6, 120 S.Ct. 1942, 147 L.Ed.2d 1 (2000) (quotation and citation omitted). Thus, "[w]hen the statute's language is plain, the sole function of the courts ... is to enforce it according to its terms." Id. However, "[w]hether or not words of a statute are clear is itself not always clear." Tex. State Com'n for the Blind v. U.S., 796 F.2d 400, 406 (Fed.Cir.1986) (en banc). "[A]bsurd results are to be avoided and internal inconsistencies in the statute must be dealt with." Id. (citing Trans Alaska Pipeline Rate Cases, 436 U.S. 631, 643, 98 S.Ct. 2053, 56 L.Ed.2d 591 (1978) and Commissioner v. Brown, 380 U.S. 563, 571, 85 S.Ct. 1162, 14 L.Ed.2d 75 (1965)).
A statute is passed as a whole and not in parts or sections and is animated by one general purpose and intent. Consequently, each part or section should be construed in connection with every other part or section to produce a harmonious whole. Thus it is not proper to confine interpretation to the one section to be construed. 2A N. Singer, Sutherland Statutes and Statutory Construction § 46:5 (7th Ed.2008); see also U.S. Nat. Bank of Oregon v. Independent Ins. Agents of Am., Inc., 508 U.S. 439, 454, 113 S.Ct. 2173, 124 L.Ed.2d 402 (1993) ("Statutory construction is a holistic endeavor ... and, at minimum, must account for a statute's full text, language as well as punctuation, structure, and subject matter.") (quotations and citation omitted); Dada v. Mukasey, 554 U.S. 1, 16, 128 S.Ct. 2307, 171 L.Ed.2d 178 (2008) ("In reading a statute we must not look merely to a particular clause, but consider in connection with it the whole statute.") (quotations and citation omitted). In addition, because it is a court's duty "to give effect, if possible to every clause ... of [a] [s]tatute," Duncan v. Walker, 533 U.S. 167, 174, 121 S.Ct. 2120, 150 L.Ed.2d 251 (2001), it should avoid construing words or sections of a statute in such a manner as to render them "a practical nullity." United Sav. Ass'n of Texas v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 375, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988). ERISA is "a comprehensive statute for the regulation of employee benefit plans," Aetna Health Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004), whose sections cannot be read in isolation. See, e.g., U.S. v. Morgan, 118 F.Supp. 621, 691 (S.D.N.Y.1953) (stating that portions of "one comprehensive scheme of regulation" such as the Securities Act of 1933 and the Securities Exchange Act of 1934 "are to be read together" rather than be treated as "separate, air-tight compartments").
The Supreme Court views ERISA as a "careful balancing between ensuring fair and prompt enforcement of rights under a plan and the encouragement of the creation of such plans." Fifth Third Bancorp. v. Dudenhoeffer, ___ U.S. ___, 134 S.Ct. 2459, 2470, 189 L.Ed.2d 457 (2014). While Congress sought "to create a system that is not so complex that administrative costs, or litigation expenses, unduly discourage employers from offering ERISA plans in the first place," Conkright v. Frommert, 559 U.S. 506, 517, 130 S.Ct. 1640, 176 L.Ed.2d 469 (2010) (quotations and citation omitted), Congress also "desire[d] to offer employees enhanced protection for their benefits." Varity Corp. v.
ERISA's comprehensive legislative scheme includes an integrated system of procedures for enforcement. Aetna Health Inc., 542 U.S. at 208, 124 S.Ct. 2488. ERISA § 1132(c)(1)(B)
"Congress' purpose in enacting the ERISA disclosure provisions" was to "ensur[e] that the individual participant knows exactly where he stands." Firestone Tire & Rubber Co., 489 U.S. at 103, 109 S.Ct. 948. To accomplish this aim, Congress fastened a civil penalty in order to incentivize plan administrators and other fiduciaries to disclose information sought by a claimant or other plan participant. Id.; see also In re Interstate Bakeries Corp., 704 F.3d 528, 534 (8th Cir.2013) ("The purpose of this statutory penalty is to provide plan administrators with an incentive to comply with the requirements of ERISA and to punish noncompliance.") (quotations and citation omitted).
ERISA § 1133 states:
The purpose of these requirements is "to provide claimants with sufficient information to prepare adequately for any further administrative review or for an appeal to the federal courts." Brown v. J.B. Hunt Transp. Servs., Inc., 586 F.3d 1079, 1086 (8th Cir.2009); accord Moyer v. Metro. Life Ins. Co., 762 F.3d 503 (6th Cir. 2014); Gagliano v. Reliance Standard Life Ins. Co., 547 F.3d 230, 235 (4th Cir.2008); Brogan v. Holland, 105 F.3d 158, 165 (4th Cir.1997). Indeed, "the notice requirements of subsection (1) help ensure the meaningful review on administrative appeal contemplated by subsection (2)." Rossi v. Precision Drilling Oilfield Servs. Corp. Emp. Benefits Plan, 704 F.3d 362, 367 (5th Cir.2013). To accomplish these aims, ERISA permits the Secretary of Labor to "prescribe such regulations as he finds necessary or appropriate." 29 U.S.C. § 1135.
If this Circuit were to join those holding that civil penalties are unavailable, plan administrators would be less incentivized to process beneficiaries' claims accurately and efficiently than Congress appears to have intended.
As the Second Circuit recently noted, "the typical remedy" for violations of § 1133 "is remand for further administrative review." Martin v. Hartford Life and Acc. Ins. Co., 478 Fed.Appx. 695, 698 (2d Cir.2012). In addition, 29 C.F.R. § 2560.503-1(l) provides that violations of the implementing regulations of § 1133 permit a claimant to immediately pursue
First, "the vast majority of Participants whose claims are denied do not sue. In fact, most do not even appeal the claim internally to a plan administrator." Katherine Vukadin, Delayed and Denied: Toward An Effective ERISA Remedy For Improper Processing Of Healthcare Claims, 11 Yale J. Health Pol'y, L. & Ethics 331, 337 (2011). Indeed, there is evidence that more than 90% of claim denials are not appealed through to exhaustion. See, e.g., Caroline E. Mayer, The Health Claim Game, AARP THE MAGAZINE, Nov.Dec.2009, at 32, available at http://www.aarp.org/health/medicare-insurance/info-09-2009/health_claim_game.html (quoting health care advocate Kevin Lembo as stating that 96% percent of claimants "walk away" from denied claims without appealing). Given that 7.1 % of all healthcare claims are not processed correctly,
Second, when applied, these procedural remedies present little risk to plan administrators. In the event a court applies the "typical" remedy of remanding the claim back to the administrator for a full and fair review, the effect of such instruction is merely to insist that the administrator "do what they should have done in the first place." Vukadin, Delayed and Denied: Toward An Effective ERISA Remedy For Improper Processing Of Healthcare Claims, 11 Yale J. Health Pol'y, L. & Ethics, at 352. Moreover, even if the violations are sufficient to get a claimant to court, "the regulatory violation itself usually makes little substantive difference to the outcome," since, at most, it is "conflated" with the court's conclusion that the administrator's initial denial (or deemed denial) was improper. Id. at 351.
Third, even when a court makes the rare decision to apply de novo, rather than arbitrary and capricious review, this still may not cure the plan administrator's failure to properly adhere to the ERISA claims procedures. If sufficiently pervasive, these violations could result in material gaps in
While the Second Circuit has previously contemplated the possibility of "substantive harm" caused by "violations of ERISA disclosure provisions," it has resolved its concerns by concluding that a reviewing court may view such violations as "warrant[ing] a finding that the denial was arbitrary and capricious and grant the benefits" that were improperly denied. Veilleux v. Atochem N. Am., Inc., 929 F.2d 74, 76 (2d Cir.1991). However, the uncertainty of whether and how a reviewing court will weigh these procedural violations, and the considerable likelihood that significant procedural deficiencies will produce substantive harm to claimants above and beyond the value of their claims, appears to warrant providing claimants with additional substantive safeguards (and plan administrators with additional incentives to comply with the ERISA procedures).
Federal courts have all but precluded claimants from recovering damages for a plan administrator's failure to comply with claims procedures. Claimants are expressly prevented from pursuing such damages through breach of fiduciary duty claims under 29 U.S.C. §§ 1104, 1109, and 1132(a)(2). See Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985) (holding that damages under § 1132(a)(2) may be brought only on behalf a plan itself rather than for the benefit of an individual participant). Similarly, the ERISA "catch-all" provision, § 1132(a)(3)(b), which acts as a "safety net, offering appropriate equitable relief for injuries caused by violations that § [1132] does not elsewhere adequately remedy," Varity Corp. v. Howe, 516 U.S. 489, 512, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996), has nevertheless proven unhelpful to beneficiaries seeking redress for flagrant violations of claims procedures because compensatory damages, including extra-contractual consequential damages, are not available. See Mertens v. Hewitt Assocs., 508 U.S. 248, 255, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993) (determining that compensatory damages are "legal" in nature and thus not recoverable under § 1132(a)(5) which, like § 1132(a)(3)(b), limits recoverable damages to "equitable relief"). Thus, a claimant is limited to bringing an equitable claim, such as a claim for unjust enrichment, which, even if successful, would likely expose the plan or administrator to nothing "beyond the amount of the denied claim." Vukadin, Delayed and Denied: Toward An Effective ERISA Remedy For Improper Processing Of Healthcare Claims, 11 Yale J. Health Pol'y, L. & Ethics, at 358.
Those courts which have held that civil penalties under § 1132(c) are unavailable for violations of § 1133 and its implementing regulations appear to have construed each of these sections in isolation, rather than read them together, in light of the aims of ERISA.
First, their heavy reliance on the use of the term "plan" in § 1133 and "plan administrator" in § 1132 appears rigid and hyper-technical, given the nature of the duties articulated in § 1133 and the individual to whom those duties are assigned. ERISA defines an employee benefits plan as "any plan, fund, or program ... [that] was established or is maintained for the purpose of providing for its participants or their beneficiaries" certain benefits. 29 U.S.C. § 1002(1).
Second, the close parsing of the language in § 1132(c)(1) that these courts have employed appears to be inconsistent with the aims of the comprehensive nature of the scheme embodied by ERISA and the intended meaning of this section. They construe the phrase, "a request for any information which such administrator is required by this subchapter to furnish," to mean any (and only) information which is specifically referenced in the ERISA statute, ignoring completely any information
In light of the aims of ERISA, the incongruity of reading § 1133 as imposing duties upon plans and their administrators and § 1132 as failing to provide any remedy for the failure to perform these duties, and the fact that such a construction would essentially render § 1133 a nullity, this Court concludes that civil penalties pursuant to § 1132(c)(1) should be available where a plan administrator fails to substantially comply with claims procedures contained in 29 C.F.R. § 2560.503-1.
Based upon the foregoing reasoning, the Court GRANTS the Defendant's motion for judgment on the administrative record as to Plaintiff's June 17, June 18, June 20, June 26, and September 17, 2008 claims. [Dkt. # 38]. The Court DENIES the Defendant's motion for judgment on the administrative record as to Plaintiff's August 5 and September 10, 2008 claims and REMANDS those claims for further administrative proceedings consistent with this decision. The Clerk is directed to enter judgment in favor of Defendant and close the file.
IT IS SO ORDERED.
