Aviation W. Charters, LLC v. Unitedhealthcare Ins. Co.

• Decision Date: 23 August 2017
• Docket Number: CIV. NO. 2:16-436 WBS AC
• Court: U.S. District Court — Eastern District of California
• Parties: AVIATION WEST CHARTERS, LLC d/b/a ANGEL MEDFLIGHT, Plaintiff, v. UNITEDHEALTHCARE INSURANCE COMPANY, Defendant.

AVIATION WEST CHARTERS, LLC d/b/a ANGEL MEDFLIGHT, Plaintiff, v. UNITEDHEALTHCARE INSURANCE COMPANY, Defendant.

CIV. NO. 2:16-436 WBS AC

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

August 23, 2017

MEMORANDUM AND ORDER RE: MOTION FOR SUMMARY JUDGMENT AND MOTION TO STRIKE

Plaintiff Aviation West Charters, LLC ("Aviation West") brought this action against defendant UnitedHealthcare Insurance Company ("United"), alleging that defendant violated ERISA when it failed to pay plaintiff for ambulatory services provided to a beneficiary of a medical plan provided by defendant. Before the court is defendant's Motion for summary judgment and Motion to strike. (Docket Nos. 23, 36.)

While on vacation in La Paz, Mexico, non-party minor M.M. sustained a fractured right leg, and was subsequently taken to a Mexican hospital. M.M. is covered by a healthcare plan ("the Plan"), for which United is the insurer and claims administrator. (See Stalinski Decl., Ex. A ("Plan") (Docket No. 24-1).) The Plan offers emergency and non-emergency ambulatory services.

On January 10, 2014, Aviation West, an air ambulance service, requested pre-authorization for air and ground ambulance service to transport M.M. from Mexico to Seattle Children's Hospital in Seattle, Washington. (Stalinski Decl., Ex. B at 1 (Docket No. 24-1).) United did not respond, and on January 11, Aviation West flew M.M. from Mexico to Seattle, at a cost of $495,925. (Stalinski Decl., Ex. D ("Health Ins. Claims Form") at 203 (Docket No. 24-2).) Aviation West submitted a reimbursement claim for emergency transportation, which United denied. (Stalinski Decl., Ex. C at 1-2 (Docket No. 24-1).)

Aviation West brought three internal appeals to the denial of this claim as M.M.'s authorized representative, which United denied. (See PX15; PX16; PX21.) Aviation West then filed a request for external review as M.M.'s authorized representative, which United also denied. (See PX41.) On March 1, 2016, Aviation West initiated this action against United, seeking to recover benefits due under the Plan and ERISA, 29 U.S.C. § 1132(a), as M.M.'s purported assignee. (See First Am. Compl. (Docket No. 13).)

Defendant moves for summary judgment on the basis, among others, that Aviation West lacks standing to bring this action. Under 29 U.S.C. § 1132(a), a civil ERISA enforcement action may be brought only by a plan participant, beneficiary,fiduciary, or the Secretary of labor. A healthcare provider cannot bring claims on its own behalf, but may do so if a beneficiary assigned its benefits claims to the healthcare provider. See Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272, 1277 (6th Cir. 1991); Misic v. Building Serv. Emps. Health & Welfare Trust, 789 F.2d 1374, 1377 (9th Cir. 1986) (per curiam). M.M., as the beneficiary to the Plan, assigned her rights under the Plan to Aviation West. (See Health Ins. Claim Form at 208.)

However, a beneficiary may not assign her rights under the plan if the plan contains a non-assignment clause. See Davidowitz v. Delta Dental Plan of Cal., Inc., 946 F.2d 1476, 1481 (9th Cir. 1991); Quaresma v. BC Life & Health Ins. Co., 623 F. Supp. 2d 1110, 1128-29 (E.D. Cal. 2007) (Wanger, J.) (dismissing causes of action against insurer by assignee because non-assignment clause prevented the purported assignee from having standing to recover under the ERISA plan). Here, it is undisputed that the Plan contains a non-assignment clause that prevents a beneficiary from assigning "Benefits under the Policy to a non-Network provider without [United's] consent." (Plan at 46.) Plaintiff cites no evidence that United consented to the assignment of M.M.'s benefits to Aviation West.

Aviation West nonetheless argues it has standing to bring this action because United waived the non-assignment clause when (1) it did not object to the assignment of benefits document and (2) it did not object to the assignment during the internal administrative process.

First, M.M. and Aviation West signed an Assignment ofBenefits document, which states that if the assignment is prohibited "by the terms of an anti-assignment provision . . . , [United should] advise and disclose to [Aviation West] in writing . . . within ten (10) days upon receipt of [the] Assignment"; otherwise "any anti-assignment provision is waived." (Health Insurance Claim Form at 208.) Aviation West argues that because United did not object to the assignment within ten days of receipt, United waived its non-assignment clause. Requiring United to affirmatively reject an assignment is contradictory to the express terms of the Plan, which states that United must consent to an assignment. (Plan at 46.) Further, while Aviation West submitted this document to United, United did not sign or otherwise acknowledge this agreement and Aviation West provides no authority suggesting that United can be bound by a contract it did not sign. Therefore, United's failure to object to the assignment contract that it did not sign does not constitute a waiver of the Plan's non-assignment clause.

Second, the Ninth Circuit has held that an insurer is required to provide a reason for denying a claim when communicating the denial and an insurer waives the right to rely on "a known or reasonably knowable reason" not cited in the denial letter. Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1296 (9th Cir. 2014); see Harlick v. Blue Shield of Cal., 686 F.3d 699, 719 (9th Cir. 2012) ("A plan administrator may not fail to give a reason for a benefits denial during the administrative process and then raise that reason for the first time when the denial is challenged in federal court . . . ."); Aceves v. Allstate Ins. Co., 68 F.3d1160, 1163-64 (9th Cir. 1995) ("Waiver providers insurers with an incentive to investigate claims diligently. The doctrine prevents insurers from denying claims for one reason, then coming forward with several other reasons after the insured defeats the first."). During the internal appeals, United never relied on the non-assignment clause to deny the claim for benefits.

However, if an insurance provider was not aware that the healthcare provider was acting as an assignee in the administrative appeal, there is no waiver of a non-assignment clause. See Spinedex, 770 F.3d at 1296. In Spinedex, 770 F.3d at 1297, the Ninth Circuit held that there was no evidence that the insurance provider was aware, or should have been aware, of the fact that the healthcare provider was acting as the beneficiaries' assignee during the internal administrative process claim....