Shelby County Health Care v. Majestic Star Casino
| Decision Date | 22 September 2009 |
| Docket Number | No. 08-6419.,No. 08-6078.,08-6078.,08-6419. |
| Citation | 581 F.3d 355 |
| Parties | SHELBY COUNTY HEALTH CARE CORPORATION, Plaintiff-Appellee, v. The MAJESTIC STAR CASINO, LLC Group Health Benefit Plan, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
ARGUED: David A. Thornton, Bass, Berry & Sims PLC, Memphis, Tennessee, for Appellant. Curtis Henry Goetsch, McCullough & McCullough, PLLC, Germantown, Tennessee, for Appellee. ON BRIEF: David A. Thornton, Colleen D. Hitch, Bass, Berry & Sims PLC, Memphis, Tennessee, John R. Kirk, Bass, Berry & Sims PLC, Nashville, Tennessee, for Appellant. Curtis Henry Goetsch, McCullough
& McCullough, PLLC, Germantown, Tennessee, for Appellee.
Before: CLAY and ROGERS, Circuit Judges; JORDAN, District Judge.*
CLAY, J., delivered the opinion of the court, in which JORDAN, D. J., joined. ROGERS, J. (pp. 378-383), delivered a separate opinion concurring in part and concurring in the judgment.
Plaintiff, Shelby County Health Care Corporation ("the Med"), filed this action pursuant to the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. ("ERISA"), challenging the decision of Majestic Star Casino, LLC ("Majestic"), the plan administrator of The Majestic Star Casino, LLC Group Health Benefit Plan (the "Plan"), to deny the Med's claim for benefits. The Med filed the claim pursuant to an assignment of benefits by one of Majestic's employees insured under the Plan. On the parties' cross-motions for summary judgment on the administrative record, the district court granted judgment in favor of the Med. The district court determined that Majestic erroneously denied benefits, and awarded benefits to the Med. Majestic appeals from that decision, challenging the district court's decision on several grounds. In addition, Majestic appeals from the subsequent order of the district court awarding attorney fees and costs to the Med. For the reasons that follow, we AFFIRM the judgment of the district court granting benefits and prejudgment interest to the Med, but REVERSE the district court's order awarding attorney fees.
Damon Weatherspoon, an employee of Fitzgerald's Casino, a subsidiary of Majestic, sustained injuries as a result of a one-car accident on March 13, 2005. According to the Uniform Crash Report (the "Crash Report") completed by the responding Mississippi police officer, Weatherspoon was driving straight on a two-lane state highway when his car left the road, entered a ditch, and collided with a tree. The Crash Report indicated that, at the time of the accident, the road was dry, the weather was clear, and the road was not under construction. Additionally, the police officer reported that Weatherspoon was not wearing a seatbelt and did not have a driver's license or proof of insurance. The police officer also checked a box indicating that "driving under the influence" was a "contributing circumstance" to the accident, and noted that a blood test to determine Weatherspoon's blood-alcohol level was pending.
Following the accident, Weatherspoon received treatment for his multiple injuries at the Regional Medical Center, one of the Med's medical facilities, accumulating medical bills totaling over $400,000. On March 14, 2005, Weatherspoon assigned his insurance benefits to the Med, authorizing the Med to seek and recover all health insurance and hospitalization benefits available to Weatherspoon under the Plan. On June 10, 2005, Weatherspoon submitted a claim for medical benefits, again authorizing the Plan to pay the benefits directly to the Med.
Weatherspoon filed his claim with Benefit Administrative Systems, Ltd. ("BAS"), the third-party administrator for the Plan. Under the terms of the Plan, BAS was "hired as the third party Contract Administrator by the Plan Administrator to perform claims processing and other specified administrative services in relation to the Plan." (ROA vol. 1 at 89.) Importantly, the Plan Summary stated that BAS "is not a fiduciary of the Plan and does not exercise any of the discretionary authority and responsibility granted to the Plan Administrator." (Id.) The Plan documents define Majestic as "the sole fiduciary of the Plan," and provide that Majestic "shall have the sole discretionary authority to determine eligibility for Plan benefits or to construe the terms of the Plan, and benefits under the Plan will be paid only if the Plan Administrator decides, in its discretion, that the Participant or beneficiary is entitled to such benefits." (ROA vol. 1 at 96.)
After receiving Weatherspoon's claim for medical benefits, BAS began its investigation of the claim. BAS sent a letter to the Mississippi Department of Public Safety ("DPS") requesting the Crash Report, Weatherspoon's motor vehicle records, and the citation for driving under the influence. However, the DPS informed BAS that it could not "track" Weatherspoon because it had "no record of him in the system." (A.R. 180.) The DPS referred BAS to the office of the police officer who completed the Crash Report. BAS then contacted the Driver Records Department of the DPS, which informed BAS that, because Weatherspoon did not have a driver's license, it could not determine whether he was convicted of driving under the influence.
Despite being unable to ascertain whether Weatherspoon was driving under the influence at the time of the accident, BAS informed the Med that Weatherspoon's medical expenses were "ineligible" for coverage because the Plan excludes from coverage charges related to an illegal act. BAS based its conclusion on an exclusionary provision of the Plan:
This Plan does not cover and no benefits shall be paid for any loss caused by, incurred for or resulting from .... [c]harges for or in connection with an injury or illness arising out of the participation in, or in consequence of having participated in, a riot, insurrection or civil disturbance or being engaged in an illegal occupation or the commission or attempted commission of an illegal or criminal act.
In a letter dated September 16, 2005, BAS sent counsel for the Med copies of the Plan Summary, the Crash Report, and the explanation of benefits denying coverage. The letter noted that "Weatherspoon has not appealed the Plan's denial by providing proof of [insurance], a valid driver's license ... and a dismissal of the charges brought against him...." (A.R. 152.) On September 23, 2005, counsel for the Med sent a letter to BAS requesting an appeal of the denial of its claim for benefits, stating that "an accident report is not conclusive evidence of the commission of an illegal act." (A.R. 151.)
To apprise Majestic of the status of Weatherspoon's claim, BAS sent an email to Sally Ramirez, Majestic's Corporate Director of Compensation and Benefits. BAS attached the letter it received from the Med's counsel requesting an appeal of the denial of benefits, noting that the Med appealed "the claims we denied on Damon Weatherspoon." (A.R. 150.) The email from BAS also informed Ramirez that "[w]e denied the claims based on `an illegal act'" and that BAS "will be reviewing this case ... and ... will be contacting you to discuss further." (Id.)
On October 4, 2005, as part of its review of the Med's appeal, BAS requested information from the county clerk regarding the status of Weatherspoon's blood-alcohol test. In response, on October 5, 2005, the county clerk sent BAS a letter confirming that "blood was drawn and that the status of the [blood] test given is pending." (A.R. 133.) The letter further informed BAS that it could "contact [the clerk's] office within the next few months to get an updated status" of the blood test. (Id.) However, BAS did not obtain the results of the blood test prior to completing its review of the Med's appeal and issuing the final decision to deny the benefits claim.
On October 24, 2005, BAS sent a letter to counsel for the Med noting receipt of the Med's appeal. The same day, BAS sent Ramirez a copy of the letter and informed Ramirez that BAS "has reviewed the appeal" and that BAS was "still in the process of discovery" and would "update [Majestic] on [BAS's] final response shortly." (A.R. 36.) Subsequently, on November 18, 2005, BAS sent an email to Ramirez requesting that she "review and approve" the attached denial letter "before [BAS] send[s] it out." (A.R. 6.) The record does not contain a response from Ramirez.
By letter dated November 21, 2005, BAS informed counsel for the Med that it was denying the benefits claim, stating that "[w]e have conducted a final review of the Plan's denial of benefits." (A.R. 3.) The letter cited the illegal-act provision of the Plan, and noted that BAS's "final determination" was based on the Crash Report and BAS's independent investigation of whether Weatherspoon had a driver's license or automobile insurance. (A.R. 3-4.) Specifically, BAS justified its denial of benefits as follows:
Mr. Weatherspoon's charges for driving under the influence are currently pending. A pending charge on an accident report is not proof of evidence of a commission of an illegal act, however, driving without a license or automobile insurance coverage under Mississippi law, is an illegal act; neither of which require a conviction to be considered illegal....
(A.R. 4.) Thus, although the denial letter identified three illegal acts potentially warranting application of the exclusionary provision — driving under the influence, driving without insurance, and driving without a license — BAS based the denial decision solely on driving without a license and driving without insurance. Because of the lack of evidence, BAS expressly disclaimed reliance on the citation for driving under the influence as a reason for denying benefits.
After receiving the final denial letter from BAS, on August 24, 2006, the Med filed an action for benefits pursuant to 29 U.S.C. § 1132(a)(1)(B). On the...
To continue reading
Request your trial
-
Easter v. Cayuga Med. Ctr. at Ithaca Prepaid Health Plan
...remand to a Plan Administrator or Claims Administrator is an available remedy. See Shelby Cnty. Health Care Corp. v. Majestic Star Casino, LLC Grp. Health Benefit Plan , 581 F.3d 355, 373 (6th Cir. 2009) ("Where a district court determines that the plan administrator erroneously denied bene......
-
In re Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010
... ... Treasure Chest Casino, LLC, 186 F.3d 620, 625 (5th Cir. 1999), ... See, e.g., Sacred Heart Health Sys., Inc. v. Humana Military Healthcare Sys., ... that a business claimant in a county that does not issue occupational licenses should ... 16. Moreover, the release was crafted with care, and specifically excludes certain Reserved ... ...
-
W. Hills Farms, LLC v. Classicstar Farms, Inc. (In re Classicstar Mare Lease Litig.)
...F.3d 836, 842 (6th Cir.1994) (examining prejudgment interest in the context of Title VII); see also Shelby Cnty. Health Care Corp. v. Majestic Star Casino, 581 F.3d 355, 376 (6th Cir.2009) (finding that in the ERISA context, an award of prejudgment interest is “compensatory, not punitive”).......
-
Bon Secour Fisheries, Inc. v. BP Exploration & Prod. Inc. (In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico)
... ... Mullen v. Treasure Chest Casino, LLC, 186 F.3d 620, 625 (5th Cir.1999), ... See, e.g., Sacred Heart Health Sys., Inc. v. Humana Military Healthcare ... that a business claimant in a county that does not issue occupational licenses should ... 16. Moreover, the release was crafted with care, and specifically excludes certain Reserved ... ...
-
How to litigate an Erisa disability claim
...where the factual record is incomplete); Shelby County Health Care Corp. v. Majestic Star Casino, LLC Group Health Beneit Plan , 581 F.3d 355, 373, (6th Cir. 2009) (“Remand therefore is appropriate in a variety of circumstances, particularly where the plan administrator’s decision sufers fr......