I.V. Services v. Inn Development & Mgmt., 98-1696

• Decision Date: 05 January 1999
• Docket Number: No. 98-1696,98-1696
• Parties: (1st Cir. 1999) I.V. SERVICES OF AMERICA, INC., Plaintiff, Appellant, v. INN DEVELOPMENT & MANAGEMENT, INC., ET AL., Defendants, Appellees. Heard
• Court: U.S. Court of Appeals — First Circuit

Page 51

182 F.3d 51 (1st Cir. 1999)

I.V. SERVICES OF AMERICA, INC., Plaintiff, Appellant, v. INN DEVELOPMENT & MANAGEMENT, INC., ET AL., Defendants, Appellees.

No. 98-1696

UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

Heard January 5, 1999

Decided June 28, 1999

Francis A. Miniter with whom Daniel S. Fabricant, William D. Gillis and Miniter & Associates were on brief for appellant.

Edward S. Rooney with whom Eric P. Finamore, Patrick J. Riley and Riley, Burke & Donahue were on brief for appellees.

Before Selya, Circuit Judge, Campbell, Senior Circuit Judge, and Lynch, Circuit Judge.

LEVIN H. CAMPBELL, Senior Circuit Judge.

This appeal concerns a demand for payment for medical services provided to Shelia Daly, a former employee of the Sheraton Hotel in Mansfield, Massachusetts, by Daly's medical care provider, appellant I.V. Services of America, Inc. ("I.V. Services"). I.V. Services sued Daly's employer and the administrator of its employee health benefit plan in the district court, seeking payment under the Employee Retirement Income Security Act of 1974, ("ERISA"), 29 U.S.C. 1001 et seq. The district court dismissed on the ground that the suit was barred by the statute of limitations, finding that I.V. Services waited, without justification, over five years from the time its action accrued before bringing suit. I.V. Services appeals, claiming the district court erred by refusing to apply equitable tolling principles to the limitations period. We affirm.

I.

During Daly's employment at the Sheraton Hotel in Mansfield, the hotel was owned and managed by Appellee Inn Development & Management, Inc. ("IDM"). In May 1988, IDM adopted a self-funded health benefit plan ("the Plan") for its employees and their dependents. Under the Plan, IDM was responsible for paying claims for medical care directly out of its own pocket and administering the Plan. Four months later, IDM contracted with Appellee Reliastar Life Insurance Company ("Reliastar")¹ via an Administrative Services Only Agreement ("the ASO agreement") to have Reliastar act as the claims processor for IDM's Plan. Reliastar's duties under the ASO agreement included various claims processing functions, such as claim investigation and record keeping.

In April 1990, Daly began receiving intravenous antibiotic treatment from I.V. Services for Lyme disease. Her treating physician recommended that the treatment continue for six to eight weeks. Prior to receiving treatment from I.V. Services, Daly signed a Benefits Assignment form ("the assignment") which authorized her medical insurance benefits to be paid directly to I.V. Services.

On May 14, 1990, Daly submitted a claim to Reliastar for her treatment at I.V. Services. Over the next several months, Reliastar requested, and ultimately received, information both from I.V. Services and Daly's treating physician in order to evaluate her claim. On October 15, 1990, Reliastar advised I.V. Services by letter that its review of Daly's claim was complete. Noting that Daly's claim for treatment from April 11 to August 14, 1990 totaled $ 48,266.65, Reliastar concluded that only two weeks of treatment were "medically necessary" as defined by the Plan. Reliastar further stated that it would reconsider its decision only if it received additional written evidence contradicting its conclusion.

In November 1990, Daly's treating physician wrote to Reliastar that he believed, based on medical literature, that more than two weeks of treatment was medically necessary for Daly's case of Lyme disease. This letter caused Reliastar to reconsider its decision and authorize payment for an additional two weeks of treatment (for a total of four weeks). Reliastar advised Daly and her treating physician of its revised decision by letter dated April 19, 1991. The letter also stated that the claim for the balance of Daly's treatments from I.V. Services were still being denied as not "medically necessary." I.V. Services received $ 9,246.66 from the IDM Plan funds for four weeks of Daly's treatment.

On May 13, 1991, Mary Lou Nicoli, a regional claims representative for Reliastar, sent another letter to Daly, her treating physician, and IDM explaining why the remainder of her claim had been denied. This letter was sent as a "follow-up" to a telephone conversation five days earlier in which Daly had called Reliastar and asked Nicoli to explain Relaistar's decision.

On August 9, 1996, I.V. Services brought suit against IDM and Reliastar, citing the enforcement provisions of ERISA. These provisions entitle an ERISA plan "participant" or "beneficiary" to bring an action "to recover benefits due him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. 1132(a)(1)(B). IDM cross-claimed against Reliastar for contribution and indemnification, and moved for summary judgment against I.V. Services, arguing, among other things, that the claim was barred by the applicable limitations period. Reliastar in turn moved for summary judgment against I.V. Services and IDM.

The district court referred the motions to a magistrate judge for a report and recommendation. The magistrate recommended that I.V. Services' action be dismissed as against both IDM and Reliastar, and that Reliastar's motion for summary judgment against IDM therefore be dismissed as moot. He determined that the applicable limitations period derived from the Plan's internal limitations clause, rather than from the statute of limitations applicable to ERISA actions or Massachusetts contract disputes. The Plan itself states that a claimant must request an appeal "at any time during the 60 day period following receipt of the notice of the denial of the claim" and commence legal action "within 3 years after the date proof of loss must be submitted" unless the "the Planholder's state requires longer time limits than these[.]" The magistrate further determined that, because Massachusetts law did not require a longer time period than did the Plan, the Plan's three-year internal limitations period controlled.

According to the magistrate, I.V. Services' action accrued at the time of the denial of benefits, which was, "at the latest, May 13, 1991" - the day Nicoli sent her "follow-up" letter explaining why Daly's claim had been denied.² The magistrate concluded that I.V. Services' action, filed on August 9, 1996, was "belated and ineffective," and he recommended that it be dismissed. The district court adopted the magistrate's "well-reasoned" report and recommendation, adding only a two-page summary to the magistrate's findings and conclusions. This appeal followed.

II.

I.V. Services does not challenge the district court's decision to apply the three-year statute of limitations period specified in the Plan, nor the court's determination that its claim accrued, at the latest, on May 13, 1991. Rather, it argues that the three-year period should be equitably tolled so as to permit the filing of Daly's complaint in 1996.³ I.V. Services identifies three alternative bases for equitable tolling. First, it says that there was evidence that Daly never received a copy of the Plan, creating a factual issue as to whether she received appropriate notice of the Plan's three-year limitation period. Second, when I.V. Services and Daly requested a copy of the Plan from Reliastar, their requests were allegedly ignored or rebuffed. Third, it argues that the denial of claim letter that Daly received was deficient under applicable regulations, thus excusing her failure to comply with the three-year limitations period. Assuming, arguendo, that one or another of these points, if established, would equitably toll the running of the limitations period, I.V. Services has not sufficiently established any of them.

A. Did Daly Receive a Copy of the Plan?

Under ERISA, the administrator of each employee benefit plan must furnish to each participant covered under the plan and to each beneficiary who is receiving benefits under the plan a summary plan description that is "written in a manner calculated to be understood by the average plan participant, and [is] sufficiently accurate and comprehensive to reasonably appraise such participants and beneficiaries of their rights and obligations under the plan." 29 U.S.C. 1022 (a). I.V. Services argues that IDM and Reliastar failed to comply with this requirement by not furnishing Daly with a copy of the Plan. Although not expressly stated, the implication is that it would be inequitable to apply the Plan's internal limitations period to someone who had no opportunity to learn of it.

As the party seeking to invoke the doctrine of equitable tolling to avoid application of the limitations period, I.V. Services has the burden of proving that Daly never received a copy of the Plan. See Catrone v. Thoroughbred Racing Ass'n of North America, Inc., 929 F.2d 881 (1st Cir. 1991) (citing Franklin v. Albert, 381 Mass. 611, 411 N.E.2d 458, 463 (Mass. 1980)) ("The plaintiff bears the burden of presenting facts sufficient to take the case outside the statute of limitations."). Attempting to satisfy this burden, I.V. Services points to Daly's deposition testimony. The relevant testimony is as follows:

Q: Let me ask you now, at the time that you started working or at some time when you worked at the Sheraton, do you remember ever getting some written information about the health insurance that you -- that was covering you from the people at Sheraton?

A: I -- I don't remember. I don't remember specifically. If you want me to remember a detailed time, I don't remember.

Q: No, no, my question is just whether you remember getting --

A: Usually when we had different insurances and they would change or whatever, they would usually have like a meeting and talk to us about it or they would give us literature on it. Usually that's how it would work.

Q: Let me show you this...