Hahnemann University Hosp. v. All Shore, Inc.

• Decision Date: 29 January 2008
• Docket Number: No. 06-1825.,No. 05-4628.,05-4628.,06-1825.
• Citation: 514 F.3d 300
• Parties: HAHNEMANN UNIVERSITY HOSPITAL v. ALL SHORE, INC.; All Shore, Inc. Health Plan; All Shore, Inc. Employee Benefit Plan, All Shore, Inc.; All Shore, Inc. Health Plan, Defendants/Third-Party Plaintiffs v. Plan Vista Solution, formerly NPPN, Third Party Defendant. All Shore, Inc. and * All Shore, Inc. Employee Benefit Plan, Appellants. * Amended pursuant to Clerk's Order of 11/23/05.
• Court: U.S. Court of Appeals — Third Circuit

514 F.3d 300

HAHNEMANN UNIVERSITY HOSPITAL v. ALL SHORE, INC.; All Shore, Inc. Health Plan; All Shore, Inc. Employee Benefit Plan, All Shore, Inc.; All Shore, Inc. Health Plan, Defendants/Third-Party Plaintiffs v. Plan Vista Solution, formerly NPPN, Third Party Defendant.

All Shore, Inc. and * All Shore, Inc. Employee Benefit Plan, Appellants.

* Amended pursuant to Clerk's Order of 11/23/05.

No. 05-4628.

No. 06-1825.

United States Court of Appeals, Third Circuit.

Argued October 23, 2007.

Filed: January 29, 2008.

William P. Marshall, Esq., (Argued), Colmar, PA, for Appellants.

Mark D. Herbert, Esq., (Argued), Law Offices of Mark Douglas Herbert, Golden, CO, for Appellee.

Before: FISHER, STAPLETON and COWEN, Circuit Judges.

OPINION

COWEN, Circuit Judge.

Defendants-Appellants, Allshore, Inc. Employee Benefit Plan ("Allshore Plan") and Allshore, Inc., appeal from the District Court's grant of summary judgment in favor of Plaintiff-Appellee, Hahnemann University Hospital ("Hahnemann"). The Appellants also appeal the District Court's order granting Hahnemann's motion for attorney's fees and costs. For the following reasons, we will affirm the District Court's grant of summary judgment in favor of Hahnemann. However, we will vacate and remand the order granting attorney's fees and costs to Hahnemann.

I. BACKGROUND

This case arises out of the medical treatment of a patient at Hahnemann in March 1999. The patient was covered under the Allshore Plan. The Allshore Plan was a health benefit plan administered by Allshore, Inc., and regulated by the Employee Retirement Income Security Act ("ERISA"). Under the terms of the Allshore Plan, Allshore, Inc. exercised all discretionary authority and control over the administration of the Allshore Plan as well as the management and disposition of plan assets. The plan document gave Allshore, Inc. the ability to hire another agency to perform claims processing and other specified services in relation to the Allshore Plan. However, the plan document stated that if such an agency was hired, it would not be considered a fiduciary of the Allshore Plan. If such an agency was hired, it would not exercise any discretionary authority or responsibility held by Allshore, Inc. Allshore, Inc. hired Benefit Concepts, Inc. ("BCI") to act as claims administrator for the Allshore Plan.

In April 1999, Hahnemann submitted a medical bill to the Allshore Plan for approximately $250,000 for the costs incurred with treating the patient at Hahnemann. Hahnemann submitted its bill rather than the patient because the patient assigned her claims for benefits under the Allshore Plan to Hahnemann. BCI received Hahnemann's claim because it was the claims administrator of the Allshore Plan. Under the terms of the Allshore Plan, the patient paid a $200 deductible. The Allshore Plan would then pay 80% of the first $10,000 in charges, and 100% of the charges thereafter.

Upon receiving Hahnemann's claim for benefits, BCI sought to determine whether a preferred provider organization ("PPO") option applied to the claim, As a third-party claims administrator, BCI entered into contracts with various PPOs which allowed a health benefit plan access to the PPOs' price discounts, even though there might not have been an agreement between the health benefit plan and the PPO itself. These are called passive PPOs. Upon analyzing Hahnemann's claim for benefits, BCI determined that a 10% discount might apply to Hahnemann's claim based upon a PPO established by Multi-Plan, Inc. ("MultiPlan").

Hahnemann did not receive a check for the amount it requested, or even an amount applying a 10% discount. Instead, the managing general underwriter concluded that a 40% discount was applicable to Hahnemann's charges through a different PPO. Specifically, the underwriter determined that the National Preferred Provider Network ("NPPN") PPO applied. Thus, Hahnemann only received 60% (or approximately $150,000) of the charges it originally submitted. Hahnemann received this payment in September 1999.

After receiving payment, Hahnemann questioned the applicability of the 40% discount because it did not have a contract with NPPN. However, Hahnemann did not know how to question the payment because the explanation of benefits it received accompanying the payment did not state where to submit its claims for administrative review. Eventually, Hahnemann's counsel requested review from BCI in April 2000. Hahnemann sought review over whether the 40% NPPN discount was appropriate for the charges it submitted.

In March 2003, NPPN advised BCI that the discount should not have been applied to Hahnemann's claim. After waiting several more months without receiving the balance owed, Hahnemann filed this action against the Allshore Plan and Allshore, Inc. in July 2003. Hahnemann filed its complaint to recover benefits owed pursuant to 29 U.S.C. § 1132(a)(1)(B) of ERISA.

After the close of discovery, the parties filed dueling motions for summary judgment. The District Court heard oral argument on the motions on September 14, 2005. On September 15, 2005, the District Court granted Hahnemann's motion for summary judgment and denied tile Appellants' motion. It deferred entry of final judgment so that Hahnemann could file a motion regarding attorney's fees and costs.

The Appellants subsequently filed a motion for reconsideration and Hahnemann filed a motion for attorney's fees and costs. On February 9, 2006, the District Court conducted a hearing on the motion for reconsideration as well as the motion for attorney's fees and costs. On February 10, 2006, the District Court granted in part the motion for reconsideration, only to change the judgment amount.¹ It denied the motion for reconsideration in all other respects. Also, the District Court granted Hahnemann's motion for attorney's fees and costs. It awarded Hahnemann $136,182.50 in attorney's fees as well as Court costs in the amount of $4,017.26 and $3,372.72 in travel and expense costs.

The Defendants filed a motion to alter or amend judgment. The District Court denied the motion on March 6, 2006. Subsequently, on March 8, 2006, the Defendants filed this appeal.²

II. APPELLATE JURISDICTION AND STANDARD OF REVIEW

We have appellate jurisdiction pursuant to 28 U.S.C. § 1291. Our review over the District Court's grant of summary judgment in favor of Hahnemann is plenary. See Post v. Hartford Ins. Co., 501 F.3d 154, 160 (3d Cir.2007). We apply the, same standard as the District Court; specifically, "[s]ummary judgment is appropriate only where, drawing all reasonable inferences in favor of the nonmoving party, there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Lexington Ins. Co. v. W. Pa. Hosp., 423 F.3d 318, 322 n. 2 (3d Cir.2005)(internal quotation marks and citations omitted). "`An award of . . . attorneys' fees to a prevailing plaintiff in an ERISA case is within the discretion of the district court and may only be reversed for abuse of discretion.'" McPherson v. Employees Pension Plan of Am. Re-Ins. Co., 33 F.3d 253, 256 (3d Cir.1994)(quoting Schake v. Colt Indus. Operating Corp. Severance Plan, 960 F.2d 1187, 1190 (3d Cir.1992)). We review the District Court's factual determinations, "including [the court's] determination of an attorney's reasonable hourly rate and the number of hours he or she reasonably worked on the case, for clear error." United Auto. Workers Local 259 v. Metro Auto Ctr., 501 F.3d 283, 290 (3d Cir.2007)(internal quotation marks and citation omitted). We exercise plenary review over the legal standards employed by the District Court used in calculating the award. See id. (citations omitted).

III. DISCUSSION

On appeal, Appellants raise several issues. First, they assert that the District Court erred in granting summary judgment in favor of Hahnemann because its claim was time-barred. Second, they argue that Hahnemann failed to timely file its claim for administrative review. Third, they assert that material issues of fact precluded the District Court's entry of summary judgment because a 10% discount applied to Hahnemann's charges. Fourth, they argue that the entry of a monetary judgment against Allshore, Inc. was improper. Finally, the Appellants make several arguments objecting to the District Court's award of attorney fees and costs. Each of these arguments will be considered in turn.

A. Statute of Limitations

Hahnemann claims that it is entitled to recover unpaid benefits pursuant to 29 U.S.C. § 1132(a)(1)(B) of ERISA. This section allows a plan participant or a beneficiary "to recover benefits due to him under the terms of the 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." Id. ERISA does not include a specific statute of limitations for claims brought under this statutory provision. However, we have stated that, "[a]s a general rule, when Congress omits a statute of limitations for a federal cause of action, courts `borrow' the local time limitation most analogous to the case at hand." Gluck v. Unisys Corp., 960 F.2d 1168, 1179 (3d Cir.1992)(internal quotation marks and citations omitted). The statutory limitation most applicable to a claim for benefits under Section 1132(a)(1)(B) is a breach of contract claim. See id. at 1181. In Pennsylvania, a breach of contract claim has a statute of limitations of four years. 42 Pa. Cons.Stat. Ann. § 5525(a)(8). The parties are allowed to contract for a shorter limitation period, so long as the contractual period is not manifestly unreasonable. See, e.g., Hosp. Support Servs., Ltd. v. Kemper Group, Inc., 889 F.2d 1311 (3d Cir.1989).

The Appellants argue that the plan document contained a one-year limitation period. They assert that this period barred Hahnemann's July 2003 complaint, which was filed almost four years after Hahnemann received the improper payment. The...