Filed: Jan. 07, 2004
Latest Update: Mar. 02, 2020
Summary: Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit 1-7-2004 Scorsone v. Local 1245 Precedential or Non-Precedential: Non-Precedential Docket No. 03-1491 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "Scorsone v. Local 1245" (2004). 2004 Decisions. Paper 1110. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/1110 This decision is brought to you for free and open access by the Opinions o
Summary: Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit 1-7-2004 Scorsone v. Local 1245 Precedential or Non-Precedential: Non-Precedential Docket No. 03-1491 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "Scorsone v. Local 1245" (2004). 2004 Decisions. Paper 1110. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/1110 This decision is brought to you for free and open access by the Opinions of..
More
Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
1-7-2004
Scorsone v. Local 1245
Precedential or Non-Precedential: Non-Precedential
Docket No. 03-1491
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004
Recommended Citation
"Scorsone v. Local 1245" (2004). 2004 Decisions. Paper 1110.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/1110
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
NOT PRECEDENTIAL
THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 03-1491
___________
BARBARA SCORSONE
v.
UNITED FOOD AND COM MERCIAL WORKERS UNION LOCAL 1245;
UNITED FOOD AND COMMERCIAL WORKERS UNION LOCAL 1245 HEALTH
PLAN, MAGNACARE; ABC CORPORATIONS 1-100; JOHN DOES 1-10, (being
fictitiously named companies and/or individuals whose identities are presently unknown)
United Food and Commercial Workers
Union Local 1245 Health Plan, Magnacare,
Appellant
___________
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. Civil No. 00-cv-05121)
District Judge: The Honorable W illiam H. Walls
___________
Submitted Under Third Circuit LAR 34.1(a)
October 28, 2003
BEFORE: SCIRICA, Chief Judge, NYGAARD, and AMBRO, Circuit Judges.
(Filed January 7, 2004)
___________
OPINION OF THE COURT
___________
NYGAARD, Circuit Judge.
I.
In this appeal, appellants (collectively, “the Union”) challenge the District
Court’s denial of their motion for summary judgment, its decision to conduct a bench
trial, its determination that they acted arbitrarily and capriciously and its award of
attorneys’ fees. We have jurisdiction under 28 U.S.C. § 1291 and will affirm.
II.
Because we write only for the benefit of the parties we address only those
facts particularly relevant to our analysis and conclusion. In 1993, Appellee Barbara
Scorsone, the wife of a Union member and covered person under the Union’s health plan
(the health plan, its board of trustees and administrators are collectively referred to as “the
Fund”), began experiencing drooping in her eyelids. Between 1993 and 1999, Scorsone
saw a bevy of doctors in order to address this medical issue, its possible causes and
several complications she believed were related to it. In 1999, Scorsone began seeing Dr.
Ralph Mauriello, an opthamologist specializing in plastic surgery. Mauriello had, prior to
treating Scorsone, performed ptosis repair surgery on Scorsone’s brother for a similar
2
problem involving drooping eyelids. After seeing Scorsone, Mauriello determined that
she could also be aided by this surgery. Scorsone elected to proceed with the surgery.
On July 6, 1999, Mauriello sent a letter to the Fund advising it of
Scorsone’s election to undergo the surgery and several diagnostic test results supporting
the surgery. In addition, Mauriello advised the Fund that due to Scorsone’s dry eye she
would undergo the surgery for her two eyes sequentially. At the conclusion of this
letter, Mauriello thanked the Fund “in advance for [its] approval for this surgery.” In
response to this letter Mauriello was provided with pre-notification numbers for each
surgery.1
On August 23, 1999, Mauriello performed surgical ptosis repair on
Scorsone’s left eye and on November 11, 1999 he performed the surgery on her right eye.
After the first surgery, the Fund sent Scorsone’s claim regarding the ptosis
repair to its third party claims management company for peer review. The information
provided to this company, which included Mauriello’s July 6, 1999 letter and several
medical reports from the doctors Scorsone had seen between 1993 and 1999, was
forwarded to Dr. Peter Laino for peer review. By letter dated August 31, 1999, Laino, an
associate professor of opthamology, offered his opinion that the ptosis repair
1. During the bench trial, representatives of the Fund were clear that they do not
engage in pre-approval of procedures. Instead, the Fund wishes to be notified of
upcoming procedures and only after they are completed and billed does it determine
whether the procedures are covered.
3
recommended by Mauriello was “ill conceived” medically and that “[c]osmetically it may
be desireable [sic] but that is a separate consideration.” (App. 263.) Based on this letter,
the Fund decided that the procedure was cosmetic and, for that reason, denied Scorsone’s
claim. On December 28, 1999, after both surgeries had been conducted and Mauriello
had been partially paid,2 Scorsone received a denial of benefits letter from the Fund.
In response to the denial letter, Scorsone submitted additional information
to the Fund through her husband and Mauriello. This information included a letter from
her husband regarding the benefits of the surgery and a letter from Mauriello explaining
that the surgery was medically necessary, and not done for cosmetic reasons. M auriello
also included the surgical operative record and photographs of Scorsone’s eyes. The
Fund did not forward this additional material to Laino. Instead, the Fund denied
Scorsone’s appeal.
Scorsone filed suit seeking, among other relief, compensatory damages and
attorneys’ fees. Because her claims fell under the Employee Retirement Income Security
Act’s (“ERISA’s”) pre-emptive umbrella it was removed to the District Court. 29 U.S.C.
§§ 1001-1461. After denying the Union’s motion for summary judgment and conducting
a bench trial, the District Court found in favor of Scorsone and awarded her both
compensatory damages and attorneys’ fees. This appeal followed.
2. The Fu nd explained that partial payments m ade to M auriello were in error.
W hether this is accurate is not relevant to our analysis.
4
III.
Initially, the Union argues that the District Court erred in conducting a
bench trial on Scorsone’s claims. The Union claims that because the District Court was
only permitted to consider the evidence presented to the Fund it should have looked only
at the documentary evidence and acted improperly in conducting a bench trial. The
Union is incorrect that conducting a bench trial was beyond the limits of the District
Court’s review. While it is true that the District Court could consider only the
information that was available to the Fund when it made its decisions, Mitchell v.
Eastman Kodak Co., 113 F.3d 433, 440 (3d Cir. 1997), this does not imply that the
District Court was prevented from conducting a bench trial to determine what that
information was. Through the use of a bench trial and live testimony, the District Court
was able to more fully understand what the Fund relied upon in denying Scorsone’s
claim.
The heart of the Union’s appeal is that the District Court erred by finding
that the Fund acted arbitrarily and capriciously by denying Scorsone’s claim for her
surgical ptosis repair. When an ERISA plan gives the administrator discretion to award
benefits and construe the terms of the plan a court reviews the administrator’s actions
only to determine if they were arbitrary and capricious. Abnathya v. Hoffman-La Roche,
Inc., 2 F.3d 40, 44-45 (3d Cir. 1993). The parties do not dispute that this plan gave the
5
Fund’s administrators such discretion. Thus, we, like the District Court, are limited to
determining whether the Fund’s denial of benefits was arbitrary and capricious.
According to the Union, the Fund properly relied upon the opinion of Laino
in denying Scorsone’s claim and such reliance was well within its discretion. We
disagree. As the District Court noted, if Laino had received all the information Scorsone
and Mauriello provided to the Fund during their appeal and affirmed his initial opinion,
then the Fund’s denial of Scorsone’s claim would likely be within its discretion. Instead,
the Fund failed to supply Laino with this additional information and decided to simply
deny Scorsone’s claim without obtaining a medical opinion that considered this new
evidence. At trial, a Fund administrator who had no medical training stated that she
determined that the information supplied in response to the Fund’s initial denial was not
new and, therefore, Scorsone’s appeal was turned down without further consultation with
Laino or any other medical professional. As the District Court noted, this is not a case of
the Fund favoring the opinion of one doctor over the opinion of another. See, e.g.,
Abnathya, 2 F.3d at 47-48 (explaining that the Sixth Circuit has held that ERISA plan
administrators may, within their discretion, rely on a single independent medical
evaluation to deny benefits and holding that reliance on two such medical evaluations was
“clearly not unreasonable”). Instead, this is a case where the Fund, without requesting the
opinion of a doctor or other medical professional, denied Scorsone’s appeal of the denial
of her claim in the face of medical evidence and a medical opinion submitted by
6
Mauriello that supported the payment of that claim. By failing to forward this
information on to Laino so that he could consider it in reference to his initial opinion and,
instead, simply discounting the new information and affirming the denial of Scorsone’s
claim, the Fund acted in an arbitrary and capricious manner. See, e.g., Lain v. UNUM
Life Ins. Co. of Am., 279 F.3d 337, 342 (5th Cir. 2002) (holding that a plan’s denial of a
claim for benefits in the face of medical evidence supportive of that claim is an abuse of
discretion when that denial is not founded on “concrete evidence”). Accordingly, the
District Court was correct in both denying the Union’s motion for summary judgment and
finding in favor of Scorsone after the bench trial.
Finally, the Union claims that the District Court erred by awarding
attorneys’ fees to Scorsone. In ERISA cases, a District Court is permitted to award
attorneys’ fees after it determines:
1) the offending parties’ culpability or bad faith;
2) the ability of the offending parties to satisfy an award
of attorneys’ fees;
3) the deterrent effect of an award of attorneys’ fees
against the offending parties;
4) the benefit conferred on members of the pension plan
as a whole; and
5) the relative merits of the parties’ position.
Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983). We review the District
Court’s decision regarding attorneys’ fees for abuse of discretion. McPherson v.
Employees’ Pension Plan of Am. Re-Ins. Co.,
33 F.3d 253, 256 (3d Cir. 1994).
7
It is clear that the District Court did not abuse its discretion in awarding
fees. The District Court applied each of the Ursic factors to the facts and adequately
analyzed those factors. In particular, the District Court found that the Fund’s actions
were culpable, the Fund was able to satisfy the fee award and the Fund’s participants
would be benefitted by the deterrent effect such an award would have on the Fund. The
District Court’s analysis was sound and its award of fees was well within its discretion.
IV
For the foregoing reasons we will affirm the District Court’s judgment in
favor of Scorsone, its use of a bench trial and its award of attorneys’ fees.
8
_________________________
TO THE CLERK:
Please file the foregoing opinion.
/s/ Richard L. Nygaard
_________________________________
Circuit Judge
9
