Chorosevic v. MetLife Choices

Citation600 F.3d 934
Decision Date02 April 2010
Docket NumberNo. 09-1880.,09-1880.
PartiesDiane CHOROSEVIC; Lawrence Chorosevic, on behalf of themselves and all others similarly situated, Appellants, v. METLIFE CHOICES; Metropolitan Life Insurance Company; United Healthcare Insurance Company; United Healthcare of Alabama, Inc.; United Healthcare of Arizona, Inc.; United Healthcare of Arkansas, Inc.; United Healthcare of Colorado, Inc.; United Healthcare of Florida, Inc.; United Healthcare of Georgia, Inc.; United Healthcare of Illinois, Inc.; United Healthcare of Kentucky, Inc.; United Healthcare of Louisiana, Inc.; United Healthcare of Mid-Atlantic, Inc.; United Healthcare of the Midlands, Inc.; United Healthcare of the Midwest, Inc.; United Healthcare of Mississippi, Inc.; United Healthcare of New England, Inc.; United Healthcare of New Jersey, Inc.; United Healthcare of New York, Inc.; United Healthcare of North Carolina, Inc; United Healthcare of Ohio, Inc.; United Healthcare of Tennessee, Inc.; United Healthcare of Texas, Inc.; United Healthcare of Utah, Inc.; United Healthcare of Wisconsin, Inc.; Uniprise, Inc.; United Healthcare Service Corporation; United Healthgroup, Inc., Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

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Paul Timothy Slocomb, argued, St. Louis, MO, for Appellant.

Stanley G. Schroeder, argued, St. Louis, MO, Charles H. Morgan, St. Louis, MO, James K. Gardner, Athanasios Papadopoulos, John J. Scharkey, Chicago, IL, on the brief, for Appellee.

Before RILEY, Chief Judge,1 WOLLMAN, and MELLOY, Circuit Judges.

MELLOY, Circuit Judge.

Appellant Lawrence Chorosevic pursues this ERISA2 action on behalf of himself and others similarly situated, alleging that Appellees improperly calculated secondary health benefits owed to him for services rendered in 2004. The district court3 denied class certification and granted Appellees' motion for summary judgment due to Chorosevic's failure to exhaust available administrative remedies. Chorosevic argues that the district court erred by denying class certification, denying further class discovery, granting Appellees' motion for leave to file answers out-of-time, and granting summary judgment. For the following reasons, we affirm.

I. Background

In 2004, Chorosevic received health insurance benefits through two ERISA-covered employee welfare benefit plans: a plan issued by Blue Cross and Blue Shield of Missouri ("BCBS") and a plan issued by Appellee Metropolitan Life Insurance Company ("MetLife") known as the MetLife Choices Plan ("the Choices Plan"). Chorosevic was eligible for coverage under the Choices Plan through his wife, Diane ("Mrs.Chorosevic"), who was formerly employed by a wholly owned subsidiary of MetLife. The plan administrator of the Choices Plan was MetLife, and the claims administrator was Appellee United HealthCare Insurance Company ("United").4 Accordingly, MetLife had full discretion in determining benefit eligibility, whereas United reviewed benefit decisions and had final decision-making authority on whether or not to pay a claim.

Coordination of benefits, which occurs when a person has more than one source of reimbursement for health care expenses, is of central importance in this lawsuit. BCBS was Chorosevic's primary insurer, meaning that BCBS was obligated to pay first when Chorosevic made a claim for medical benefits. The 2003 Summary Plan Description ("SPD") for the Choices Plan included a provision for coordinating benefits, which the parties refer to as the "come out whole" method with a benefits reserve.5 According to Chorosevic, this method required the Choices Plan to credit the money that it saved by being the secondary insurer to a reserve, which could be used to reimburse a claimant for out-of-pocket expenses during the applicable calendar year.

The SPD also set forth procedures for submission of claims and appeals, stating in part: "Participants wanting to dispute an adverse benefit determination, payment amount or plan interpretation that relates to the receipt of plan benefits or exercise of a current right available under the plan must file a claim within 180 days of receipt of the adverse determination." United would review the benefits determination and issue a final decision within thirty days, unless a fifteen-day extension was needed. If United upheld a denial of benefits, a dissatisfied plan participant had sixty days from the notification letter's date to submit a second appeal. After that sixty-day period, no further administrative appeals were permitted under the SPD. United was to review second appeals and determine benefits payable within thirty days.

Chorosevic's claims relate to medical services he received on June 17 and August 20, 2004. For each of those services, the BCBS plan paid an amount and United determined that the Choices Plan owed nothing. Consequently, Chorosevic incurred out-of-pocket expenses in the following amounts: $13.00 for services rendered on June 17, 2004; $69.20 for services rendered on August 20, 2004; and $190.10 for services rendered on August 20, 2004. For each benefits determination, United issued an Explanation of Benefits ("EOB") to Chorosevic describing the appeals procedure, including the 180-day deadline for requesting review of the benefits determination.

On November 17, 2004, Mrs. Chorosevic wrote to United, disputing the determination of secondary benefits under the Choices Plan related to her husband's $69.20 claim. Mrs. Chorosevic complained that United was using the wrong preferred provider rates, which caused it to understate the amount that the Choices Plan saved by being a secondary benefits provider. Mrs. Chorosevic attached copies of the EOBs from BCBS and United and the hospital bill showing $69.20 due. She also addressed what she called a "multiple coverage limitation" credit, explaining that "United saves money as the secondary carrier and that money should be used to pay any remaining charges in full, if the secondary carrier does not pay them."

United denied Chorosevic's appeal on December 7, 2004, concluding that Chorosevic's claim for benefits was processed correctly. The denial letter explained the coordination-of-benefits procedure under the Choices Plan in a way that appears inconsistent with the so-called come-out-whole method with a benefits reserve. The denial letter also notified Chorosevic of his right to submit a second appeal of the adverse benefits determination, which he did not do.

On January 26, 2005, Sharon Bibby, a senior benefits specialist at MetLife, sent a letter to Mrs. Chorosevic stating that United incorrectly processed the $69.20 claim and that MetLife directed United to pay Mrs. Chorosevic $69.20 related to the claim ("the Bibby letter"). This payment, the parties agree, resolved the $69.20 claim. The letter continued: "United is reviewing your other claims as well. We are also working with United to review and if necessary take corrective action regarding all of the MetLife secondary coordination-of-benefits claims processed by United."

On April 28, 2005, Mrs. Chorosevic wrote to Bibby, detailing her belief that United improperly processed her husband's claims in 2002, 2003, and 2004. She attached several EOBs and requested reprocessing of "any claims where United did not make payment" since 2002. Additionally, Mrs. Chorosevic specifically addressed the issue of "banked money" and explained, "During those years United saved a considerable amount of money as the secondary carrier for which I should not have incurred any out-of-pocket expenses." MetLife did not respond to the April 28 letter. Then, on May 23, 2005, Mrs. Chorosevic sent a letter to United requesting that United reprocess her husband's claims and pay them out of the "banked money" account. She explained, "Since I was not aware that I could request reimbursement out of the `banked money' account, I am doing so now." Fourteen days later, on June 7, 2005, Mr. and Mrs. Chorosevic commenced this litigation.

Effective January 1, 2006, MetLife amended the Choices Plan to change its method of coordinating secondary benefits to a "non-duplication" method without a benefits reserve. The non-duplication method is less favorable for plan members because the Choices Plan generally pays less secondary benefits and the money the Plan saves by being a secondary insurer is not placed in a reserve for the member's allowed out-of-pocket expenses. Chorosevic does not allege that Appellees improperly processed benefits under the non-duplication method, and therefore, this lawsuit concerns only the coordination of benefits prior to 2006.

In August 2007, United entered into a regulatory settlement agreement, which over thirty states have joined. The State of Missouri joined the agreement by entering a memorandum of understanding with United in November 2008. The settlement agreement identifies coordination of benefits as an area of review and requires United to reprocess claims, make restitution to past and present insureds, and make restitution with interest on underpaid claims. However, neither the settlement agreement nor the memorandum of understanding covers members of self-funded plans, such as Chorosevic.

II. Procedural History

The Chorosevics filed their initial complaint in the Southern District of Illinois challenging United and MetLife's failure to pay secondary benefits due under the Choices Plan. They voluntarily dismissed that action in November 2005. One month later, they filed their first complaint in this putative class action in the Eastern District of Missouri. With leave from the court, Appellees filed their answers in April 2006, asserting several affirmative defenses, including failure to exhaust administrative remedies.

In December 2006, Appellants filed a motion to certify a class consisting of all members of ERISA-covered health plans controlled, underwritten, or administered by United...

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