Rittinger v. Healthy Alliance Life Ins. Co.

• Decision Date: 31 January 2019
• Docket Number: No. 17-20646,17-20646
• Citation: 914 F.3d 952
• Parties: Karen A. RITTINGER, Plaintiff–Appellee Cross–Appellant, v. HEALTHY ALLIANCE LIFE INSURANCE COMPANY, Doing Business as Anthem Blue Cross and Blue Shield; Anthem UM Services, Incorporated, Defendants–Appellants Cross–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

914 F.3d 952

Karen A. RITTINGER, Plaintiff–Appellee Cross–Appellant,

v.HEALTHY ALLIANCE LIFE INSURANCE COMPANY, Doing Business as Anthem Blue Cross and Blue Shield; Anthem UM Services, Incorporated, Defendants–Appellants Cross–Appellees.

No. 17-20646

United States Court of Appeals, Fifth Circuit.

FILED January 31, 2019

Daniel F. Harvath, Nicholas Hollingsworth Weil, Esq., Harvath Law Group, L.L.C., Webster Groves, MO, for Plaintiff - Appellee Cross-Appellant.

Martin J. Bishop, Rebecca R. Hanson, Esq., Reed Smith, L.L.P., Chicago, IL, James Christopher Martin, Esq., Reed Smith, L.L.P., Pittsburgh, PA, for Defendant - Appellant Cross-Appellee.

Before HIGGINBOTHAM, GRAVES, and WILLETT, Circuit Judges.

PER CURIAM:

This case involves a bariatric surgery gone wrong and the ensuing clash over insurance coverage. Given our highly deferential standard of review, we cannot say that Anthem, the plan administrator, abused its discretion in either the first or second internal appeal. Because we agree with Anthem, Rittinger’s cross-appeal (to determine the exact dollar amount of damages she is owed) is moot.

I

Karen Rittinger was the beneficiary of an ERISA-covered plan. Healthy Alliance Life Insurance Company offered the plan and Anthem Blue Cross Blue Shield (Anthem) administered it.

In October 2014, Rittinger underwent bariatric surgery

. Complications arose requiring follow-up surgery and intensive care. Anthem denied preauthorization for both the bariatric surgery and the follow-up surgery, writing, "We cannot approve coverage for weight loss surgery (bariatric surgery ) or hospital care after this surgery. Bariatric or weight loss surgery is an exclusion in your health plan contract."

Pertinently, Paragraph 33 of the Health Certificate of Coverage (Certificate) deals with bariatric surgery:

[The plan does not cover] bariatric surgery

, regardless of the purpose it is proposed or performed. This includes but is not limited to Roux-en-Y (RNY), Laparoscopic gastric bypass surgery or other gastric bypass surgery.... Complications directly related to bariatric surgery that result in an Inpatient stay or an extended Inpatient stay for the bariatric surgery, as determined by Us, are not covered.

Crucially, there is an exception at the end of Paragraph 33: "This exclusion does not apply to conditions including but not limited to ... excessive nausea/vomiting." Since none of Rittinger’s preauthorization information mentioned "excessive nausea/vomiting," Anthem cited Paragraph 33’s exclusion and denied coverage.

The next month, Rittinger’s husband emailed Anthem. He explained that he had "Medical Power of Attorney ... to speak on behalf of [his] wife[,] Karen Rittinger." He stated that he "would like to file an appeal for her hospitalizations which began on 10/15/2014." Anthem treated this as an official first-level appeal. After gathering more information from Rittinger and her surgeons and obtaining an independent peer review, Anthem again denied coverage.

In April 2015, Rittinger hired counsel and filed a second-level internal appeal. She submitted materials about her medical history and the surgery. Emphasizing Paragraph 33’s exception for bariatric surgery

where there is "excessive nausea/vomiting," Rittinger provided records showing: (1) she suffered from Gastroesophageal Reflux Disease

(GERD) and esophagitis, (2) GERD/esophagitis is linked to nausea and vomiting, and (3) she underwent surgery to address these problems.

Anthem convened a five-person "Grievance Advisory Panel" (GAP) to evaluate Rittinger’s second-level appeal. The GAP quoted Paragraph 33, concluded it excluded Rittinger’s bariatric surgery, and affirmed the denial of coverage.

Having exhausted her internal remedies, Rittinger sued. Both parties moved for summary judgment. Since neither side disputed that the plan properly delegated discretion to Anthem to administer the plan, the district court correctly reviewed the two internal appeals for abuse of discretion. It held that Anthem did not abuse its discretion when it treated Mr. Rittinger’s email as a first-level appeal. But the district court held that Anthem did abuse its discretion in the second-level appeal. It believed Anthem’s construction of the plan’s terms directly contradicted their plain meaning. It also thought Rittinger’s evidence linking GERD/esophagitis

to nausea/vomiting deserved more weight.

II

The district court had jurisdiction over this case under ERISA, 29 U.S.C. §§ 1001 et seq . We have jurisdiction over Anthem’s appeal under 28 U.S.C. § 1291. Rittinger also filed a cross-appeal, arguing we should state the exact dollar amount of damages she is owed. But because we hold that Anthem did not abuse its discretion in either internal appeal, her cross-appeal is moot.

We review a district court’s grant of summary judgment in an ERISA case de novo.¹ Here, Anthem had "all the powers necessary or appropriate ... to construe the Contract [and] to determine all questions arising under the Certificate." Rittinger never challenged the clause’s enforceability in the district court. Because "[f]ailure to raise an argument before the district court waives that argument,"² Rittinger has forfeited this issue. Anthem’s fiduciary discretion was valid.

Rittinger argues that our recent en banc decision in Ariana M.³ requires us to review Anthem’s denial de novo instead of for abuse of discretion. But Ariana M. only governs cases in which a plan does not validly delegate fiduciary discretion.⁴ And even though Texas Insurance Code § 1701.062 bans insurers’ use of delegation clauses in Texas, Missouri law governs this case. As Anthem observes (and Rittinger fails to contest), this case involves a plan sold in Missouri by a Missouri insurer to a Missouri employer. Moreover, the Certificate of Coverage specifically states that the "laws of the state in which the Group Contract was issued [Missouri] will apply." Ariana M. , therefore, does not control.

Where a plan administrator has discretion, as here, we review the administrator’s denial of benefits deferentially for abuse of discretion.⁵ We have clarified this standard, saying that a "plan administrator abuses its discretion where the decision is not based on evidence, even if disputable, that clearly supports the basis for its denial."⁶ Yet "[i]f the plan fiduciary’s decision is supported by substantial evidence and is not arbitrary or capricious, it must prevail."⁷ "Substantial evidence is ‘more than a scintilla, less than a preponderance, and is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’ "⁸

III

A

Rittinger argues that Anthem abused its discretion when it treated her husband’s email as a formal first-level appeal. The plan prescribes "How To File a First Level Appeal or Grievance for Review." But nowhere does it supply an email address where appeals can be directed. Rittinger contends that, given its elaborate appeals procedures, Anthem had no wiggle room to interpret other inquiries as appeals.

Anthem argues that it had wide discretion in administering the plan. Moreover, treating this as an appeal did not prejudice Rittinger, nor does she argue that it did. Anthem says, "[n]o harm, no foul."

The district court disagreed with Anthem’s interpretation of plan terms and procedures. It also rejected Anthem’s "no harm, no foul" argument, reasoning that a customer whose plan entitles her to two internal appeals is harmed if she receives one adequate appeal. But the district court also understood Anthem’s need to "respond quickly to a customer’s request," and not "shut out customers who do not dot every ‘i’ and cross every ‘t’ in a complex submission process." Plus, it is natural to read Mr. Rittinger’s email—"I would like to file an appeal"—as a request to appeal.

We agree. Given the email’s wording, it was reasonable to think Mr. Rittinger was appealing. Thus, Anthem did not abuse its discretion when it treated Mr. Rittinger’s email as a first-level appeal.

B

Was the GAP’s denial of coverage in the second-level appeal an abuse of discretion? Rittinger contends it was. She claims the GAP ignored her relevant evidence and failed to analyze Paragraph 33’s "excessive nausea/vomiting" exception. Anthem responds that the administrative record contained more than a scintilla of evidence that Rittinger’s surgery was for weight loss purposes and that she had no vomiting or nausea.

The district court rightly observed that assessing the second-level appeal breaks down into: (1) "an interpretive dispute" and (2) a "factual dispute." But the district court was wrong to hold that Anthem abused its discretion at either the interpretive or factual level.

On appeal, Rittinger challenges Anthem’s application of the plan terms, but not Anthem’s interpretation . (Her brief does not discuss the interpretive issue at all.) "It is a well worn principle that the failure to raise an issue on appeal constitut es waiver of that argument."⁹ So she has forfeited her ability to defend the district court’s ruling on the plan-interpretation issue.

The district court reasoned that Anthem’s distinction between GERD/esophagitis

and nausea/vomiting was "sophistic" and rendered Paragraph 33’s exclusion "meaningless." And a construction that renders terms superfluous is "contrary to the provision’s plain meaning."

Anthem challenges this reading, arguing that GERD/esophagitis

and nausea/vomiting are not coterminous: Distinguishing between them does not render Paragraph 33’s exception an empty set. Paragraph 33 specifically contemplates particular exceptions to its exclusion of bariatric and weight loss surgeries. It is wrong for a court to rewrite Paragraph 33 and insert a new exception for GERD/esophagitis—expressio unius est exclusio alterius .¹⁰

Anthem’s construction makes sense. It fits with the plan’s plain language. We ordinarily think of GERD/esophagitis

and nausea/vomiting as two different things. In fairness, the district court had a point too: These could be...