KAREN E. SCHREIER, UNITED STATES DISTRICT JUDGE.
Plaintiffs filed suit under 29 U.S.C. § 1132(a)(1)(B) claiming that defendant, Wellmark of South Dakota, Inc., wrongfully denied benefits and improperly handled claims under a group health plan operated by Wellmark and governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461 (2012). Docket 33. Currently pending are cross-motions for summary judgment. Dockets 42 and 50. For the reasons that follow, the court denies plaintiffs' motion for summary judgment and grants Wellmark's motion for summary judgment.
Plaintiff Gretchen Hillenbrand is an enrolled member of a Blue Select, BlueRX Preferred Plan ("the Plan") operated by Wellmark. Docket 51 ¶ 1. Plaintiffs John Arlt, M.A., and T.A. are also covered under the Plan. Id. ¶ 2. Coverage for the Plan is provided to plaintiffs by the employer group Dakota Partnership DBA Triple Seven Ranch. Id. ¶ 4.
Plaintiffs have a number of health conditions and diagnoses that require treatment. Gretchen suffers from Lyme disease and three different autoimmune diseases: hypothyroidism, ulcerative colitis, and polychondritis. Id. ¶¶ 7-8. John suffers from Lyme disease and reactive arthritis. Id. ¶ 9. John has also been diagnosed with Reiter's Syndrome. AR at 2365-2367. Both M.A. and T.A. have been diagnosed with Lyme disease. Docket 51 ¶ 10.
To treat the plaintiffs' health conditions and diagnoses, plaintiffs obtain treatment from various providers.
The benefits covered under the Plan are listed in the Blue Select, BlueRx Preferred Coverage Manual ("Coverage Manual").
Id. It is within Wellmark's discretion to determine if a service is medically necessary. Id. If Wellmark concludes that a service is not medically necessary, the plan member is responsible for the cost of the service. Id.
Another restriction detailed in the Coverage Manual is that Wellmark may deny benefits if Wellmark determines that the medical service or treatment is investigational or experimental. AR at 124. "A treatment is considered investigational or experimental when it has progressed to limited human application but has not achieved recognition as being proven effective in clinical medicine." Id. If Wellmark determines that a service or treatment is experimental or investigational, the plan member is responsible for the costs of the service. Id.
Under the Coverage Manual, after receiving notification of an adverse benefit decision, a plan member or their authorized representative has 180 days to initiate an internal appeal. AR at 165. When requesting an internal appeal, a claimant "must submit all relevant information ... including the reason for your appeal. This includes written comments, documents, or other information in support of your appeal." Id. Wellmark's review of the internal appeal considers "all information regarding the adverse benefit determination whether or not the information was presented or available at the initial determination." AR at 166. The Coverage Manual also provides that the internal review will not involve any Wellmark employees who participated in the initial benefit determination, and that the review "will be conducted without regard to the original decision." Id. In the event that the decision on an internal appeal requires a medical judgment, Wellmark may consult a qualified medical expert who was not involved in the initial determination and who does not have a conflict of interest, to render an opinion. Id. Once Wellmark makes a decision on an internal appeal, the decision is final. Id. Claimants generally receive notice of Wellmark's final decision on an appeal within 30 days, and all appeal requests are determined within 60 days after the appeal is filed. Id.
Between July 2011 and July 2013, Wellmark processed a number of claims submitted by plaintiffs from various providers. SAR at 1-21. While some of these claims were denied, the majority of the benefits claims submitted by plaintiffs were approved. See id. After July 23, 2013, however, Wellmark began to more regularly deny claims from plaintiffs' providers (Drs. Blackman, Chandra, Anderson, and Gordon) and from Ingex.
Courts review a plan administrator's benefit determinations for an abuse of discretion if an ERISA governed plan grants the plan administrator "discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). Here, the parties agree that the Plan's language requires the court to apply the abuse of discretion standard in reviewing Wellmark's denial of plaintiffs' benefits.
Under the abuse of discretion standard of review, a plan administrator's benefit determination must stand if the decision "is based on a reasonable interpretation of the Plan and is supported by substantial evidence." Hampton v. Reliance Standard Life Ins. Co., 769 F.3d 597, 600 (8th Cir. 2014). Substantial evidence is defined as "more than a scintilla but less than a preponderance." Wakkinen v. UNUM Life Ins. Co. of Am., 531 F.3d 575, 583 (8th Cir. 2008). "A decision is reasonable `if a reasonable person could have reached a similar decision, given the evidence before him, not that a reasonable person would have reached that decision.'" Ingram, 812 F.3d at 634 (quoting Midgett v. Wash. Grp. Int'l Long Term Disability Plan, 561 F.3d 887, 897 (8th Cir. 2009)). In Finley v. Special Agents Mut. Ben. Ass'n, Inc., 957 F.2d 617 (8th Cir. 1992), the Eighth Circuit identified several factors to guide courts when determining whether a plan administrator's interpretations of an ERISA-governed plan was reasonable, including
Finley, 957 F.2d at 621. Although these factors inform a court's review of a plan administrator's decision, "[w]here a plan fiduciary offered a reasonable interpretation of a disputed plan provision, `courts may not replace it with an interpretation of their own — and therefore cannot disturb as an "abuse of discretion" the challenged benefits determination.'" Ingram, 812
A plan administrator has a conflict of interest when the administrator holds the dual role of making benefit determinations and paying benefit claims. Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 108, 128 S.Ct. 2343, 171 L.Ed.2d 299 (2008).
Plaintiffs seek an order finding that Wellmark abused its discretion by unreasonably denying benefits owed to plaintiffs under terms of the Plan. Docket 43 at 22. Plaintiffs present two primary arguments in support of their claim that Wellmark abused its discretion when it denied plaintiffs' 26 benefit claims. See id. at 6-20; Docket 53 at 4-13. The court will address each of these arguments in turn.
Plaintiffs argue that Wellmark lacked substantial evidence to deny plaintiffs' 26 internal appeals because Wellmark's initial denials, as well as Wellmark's "rubber stamp" affirmances of those initial denials during the internal appeals process, were not supported by substantial evidence. Docket 43 at 7-11. Plaintiffs' theory in support of this argument is that Wellmark's medical directors often denied plaintiffs' benefit claims in the first instance without reviewing the plaintiffs' medical records. See id. at 8-9 (discussing some of Wellmark's initial claims denials). Moreover, according to plaintiffs, within minutes of making an initial benefit determination in one claim, Wellmark's medical directors would often deny benefits in a completely different claim and use identical reasoning to support the denials. See id. at 8 (citing AR at 263, 3265, 4438) (arguing that the denial of these claims, which occurred within minutes of one another and were denied for identical reasons, demonstrates that Wellmark's medical directors did not rely on substantial evidence in denying the claims). These errors were compounded during the internal appeals process, when — despite the fact that plaintiffs submitted letters from their providers that described the medical necessity of the treatment — Wellmark would deny plaintiffs' appeals for the same reasons that Wellmark denied the initial benefits request. See id. at 9-11 (comparing some of Wellmark's justifications for denying plaintiffs' initial benefits claims and observing that Wellmark often denied the appeals for those benefit claims using language that was identical to the initial claim denial).
Wellmark responds by arguing that the initial decision by Wellmark's medical directors is beyond the court's review. Docket 52 at 7. This is because "under ERISA, [courts] `review only the final claims decision,
The court finds that Wellmark relied upon substantial evidence in denying plaintiffs' 26 internal appeals. As the Administrative Record makes clear, many of the claims that plaintiffs cite as evidence that Wellmark engaged in a systematic effort to give only cursory reviews to plaintiffs' claims actually belie the plaintiffs' arguments. For example, plaintiffs cite pages 48 and 2010 of the Administrative Record as evidence that Wellmark's initial medical directors, "[d]espite allegedly reviewing the file, ... would deny benefits for two separate claims (two separate individuals) at the exact same time and for the identical reason." Docket 43 at 8 (citing AR at 48, 2010). But because these two claims — for Gretchen Hillenbrand (AR at 48) and John Arlt (AR at 2010) — were both submitted by plaintiffs on May 28, 2014, and received by Wellmark on May 30, 2014, see AR at 42, 1977, it is reasonable that Wellmark would review the claims together.
Eighth Circuit precedent requires that courts review only a plan administrator's "final claims determination, [and] not the initial denial letter, to ensure development of a complete record." Ingram, 812 F.3d at 634 (citing Khoury, 615 F.3d at 952). Because the Plan here grants Wellmark discretion to construe the Plan's language, the court can only overturn Wellmark's denials if they were unsupported by substantial evidence, that is "more than a scintilla but less than a preponderance." Wakkinen, 531 F.3d at 583. Plus, "[w]hen a plan places the burden on the claimant to
In denying plaintiffs' claims, Wellmark reviewed all of the records provided by plaintiffs. See, e.g., AR at 31, 1994 ("The information you have submitted has been reviewed."). Given that the abuse of discretion standard applied in ERISA cases is meant to be "highly deferential," Khoury, 615 F.3d at 952, the court finds that Wellmark's decisions were supported by substantial evidence. Thus, Wellmark did not abuse its discretion in denying plaintiffs' 26 internal appeals seeking an award of benefits.
Citing the Eighth Circuit's Finley factors, plaintiffs argue that Wellmark's denial of the 26 internal appeals was unreasonable and constitutes an abuse of discretion. Docket 43 at 11-20; Docket 53 at 8-13. Plaintiffs specifically contend that Wellmark's lack of consistency when interpreting the Plan's terms and when deciding to award or deny benefits demonstrates that Wellmark's review during the internal appeals process was unreasonable. Docket 43 at 19-20 (citing SAR at 1-42) (arguing that plaintiffs' claims for benefits did not begin to become denied with regularity until after July 23, 2013); Docket 53 at 12-13 (citing SAR at 1-42) (same). Plaintiffs also identify Wellmark's alleged failure to honor the Plan's language when deciding to award or deny benefits claims as further evidence of the unreasonableness of Wellmark's internal review process. Docket 43 at 11-17; Docket 53 at 9-10.
Wellmark, on the other hand, argues that the denials of plaintiffs' various claims were reasonable. Docket 52 at 8-11. To support this argument, Wellmark cites to portions of the Administrative Record and the Coverage Manual to highlight that many of the plaintiffs' claims were denied because the treatments provided were not medically necessary or were investigational or experimental. See id. Wellmark further maintains that the fact that all of the plaintiffs' benefits claims were subject to a review as to whether the treatments are medically necessary, experimental, or investigational underscores the reasonableness of Wellmark's final determinations on plaintiffs' internal appeals. Id. at 9-11.
Because the Plan gives Wellmark the discretion to interpret the Plan's language, this court cannot replace Wellmark's interpretations of the language of the plan with its own interpretations. Ingram, 812 F.3d at 634. Thus, while the Finley factors are meant to guide this court's analysis when assessing the reasonableness of Wellmark's interpretations of the Plan language, the ultimate inquiry is whether Wellmark's decisions were reasonable. As explained in more detail below, after considering the Finley factors, Finley, 957 F.2d at 621, and analyzing Wellmark's interpretations of the relevant Plan terms, the court believes that all of the Finley factors weigh in Wellmark's favor. Therefore, the court concludes that Wellmark's final determinations on plaintiffs' 26 internal appeals were reasonable.
First, Wellmark's interpretations of the Plan language (i.e. the Coverage Manual)
Second, Wellmark's interpretations did not render any of the Plan's language meaningless, were not internally inconsistent, and were not contrary to the Plan's clear language. See Finley, 957 F.2d at 621.
Third, Wellmark's interpretations of the Plan's language did not conflict with the procedural or substantive requirements of ERISA. See Finley, 957 F.2d at 621. Under ERISA, when a plan administrator gives an adverse benefit determination, it must provide a notice to the plan member stating "the specific reasons for such denial, written in a manner calculated to be understood by the participant...." 29 U.S.C. § 1133(1); King, 414 F.3d at 999 (citing 29 U.S.C. § 1133). "The purpose of this requirement is to provide claimants with enough information to prepare adequately for further administrative review or an appeal to the federal courts." DuMond v. Centex Corp., 172 F.3d 618, 622 (8th Cir. 1999). The substance of a notice under § 1133 is defined by 29 C.F.R. § 2560.5031-1(g), the applicable federal regulation for the content required in adverse benefit determinations. Under 29 C.F.R. § 2560.5031-1(g), a notification of an adverse benefit determination must include, "in a manner calculated to be understood by the claimant —"
Id.; Chorosevic v. MetLife Choices, 600 F.3d 934, 943 n.9 (8th Cir. 2010).
Plaintiffs argue that under Wellmark's denial letters, it was "difficult to ascertain just what Wellmark needed from Plaintiffs to reverse the decision of the medical director." Docket 53 at 12. As such, according to plaintiffs, the denial letters failed to comport with the requirements of 29 U.S.C. § 1133(1) and 29 C.F.R. § 2560.5031-1(g).
Furthermore, plaintiffs have not shown that the information Wellmark provided in the final determination letters was so insufficient that the notice failed to provide plaintiffs with an understanding of Wellmark's decision. See Chorosevic, 600 F.3d at 944 (concluding that plaintiffs made no showing that required the plan administrator to "describe the additional materials or information needed for further review" under the applicable ERISA regulations). Under ERISA, a plan administrator is required to "identify and request additional information only if [the plan administrator] `believe[d] that more information [was] needed to make a reasoned decision.'" Id. (quoting Booton v. Lockheed Med. Benefit Plan, 110 F.3d 1461, 1463 (9th Cir. 1997)) (last two alterations in original). Therefore, because Wellmark did not believe that more information was needed to reach a final decision on plaintiffs' internal appeals, Wellmark was not required to request that information. Thus, Wellmark's decisions on plaintiffs' internal appeals did not conflict with the procedural or substantive requirements of ERISA and this factor weighs in Wellmark's favor.
Finally, nothing in the Administrative Records shows that Wellmark failed to interpret the words at issue in the Coverage Manual consistently. See Finley, 957 F.2d at 621. Plaintiffs argue that Wellmark took inconsistent positions by initially granting plaintiffs' benefits claims for services from their providers and then denying similar claims from those same providers after July 23, 2013.
For plaintiffs to prevail under this factor they would need to show that Wellmark inconsistently interpreted phrases from the Coverage Manual, such as "medically necessary" or "experimental or investigational." But as reflected in the Administrative Record, plaintiffs cannot show that Wellmark inconsistently interpreted the terms of the Coverage Manual. Instead, for each final claim denial that Wellmark made, Wellmark explained to plaintiffs the reason for the denial and provided to plaintiffs Wellmark's definition of the relevant language of the Coverage Manual. E.g. AR at 229 (final adverse benefit notification that defines what a "medically necessary" health care service is under the Plan); AR at 798 (final adverse benefit notification that defines when treatments are "investigational or experimental" under the Plan). Thus, accounting for the fact that Wellmark previously awarded benefits to plaintiffs for some of the same types of claims that it later declined to award benefits for, McOsker, 279 F.3d at 589, a review of the Administrative Record demonstrates that because Wellmark did not interpret the language of the Coverage Manual differently the court concludes that this factor ultimately weighs in Wellmark's favor.
Because Wellmark is responsible both for evaluating claims and awarding benefits for those claims, see AR at 169, the court must consider what impact, if any, this conflict of interest had on Wellmark's decisions. Glenn, 554 U.S. at 112, 128 S.Ct. 2343; see also Khoury, 615 F.3d at 953 (explaining that "the existence of a conflict of interest is `one factor among many that a reviewing judge must take into account' when determining whether a plan administrator has abused its discretion in denying benefits" (quoting Glenn, 554 U.S. at 116, 128 S.Ct. 2343)). Here, plaintiffs do not explicitly argue that Wellmark's dual role impacted its decision to award or deny benefits on plaintiffs' 26 internal appeals. But as post-Glenn case law makes clear, the court is still required to give Wellmark's conflict some weight.
In sum, Wellmark's decisions on the plaintiffs' 26 internal appeals were "based on a reasonable interpretation of the Plan and [were] supported by substantial evidence." Hampton, 769 F.3d at 600. Thus, the court concludes that Wellmark did not abuse its discretion in denying the plaintiffs' 26 internal appeals. Therefore, under the standard of review applicable in this case, the court will not disturb Wellmark's final determinations. Thus, it is
ORDERED that plaintiffs' motion for summary judgment (Docket 42) is denied.
IT IS FURTHER ORDERED that Wellmark's motion for summary judgment (Docket 50) is granted.
IT IS FURTHER ORDERED that each party shall bear its own fees and costs.
