Bonilla v. Principal Financial Group, CIV 99-1119-PHX-SMM.

• Decision Date: 18 August 2003
• Docket Number: No. CIV 99-1119-PHX-SMM.,CIV 99-1119-PHX-SMM.
• Citation: 281 F.Supp.2d 1106
• Parties: David C. BONILLA, et al., Plaintiffs, v. PRINCIPAL FINANCIAL GROUP, et al., Defendants.
• Court: U.S. District Court — District of Arizona

281 F.Supp.2d 1106

David C. BONILLA, et al., Plaintiffs, v. PRINCIPAL FINANCIAL GROUP, et al., Defendants.

No. CIV 99-1119-PHX-SMM.

United States District Court, D. Arizona.

August 18, 2003.

COPYRIGHT MATERIAL OMITTED

David C. Bonilla, Yuma, AZ, pro se.

Patricia Bonilla, Yuma, AZ, pro se.

A. James Clark, Esq., Heather D. Moore, Clark & Moore, Yuma, AZ, for Plaintiffs/Counter-Defendants.

Stephanie Lee Chilton, Bess Kunz, Phoenix, AZ, Lawrence A. Peshkin, Esq., Paulette S. Sarp, Esq., Peshkin & Kotalik PC, Phoenix, AZ, for Defendant/Counter-Claimant.

ORDER

MCNAMEE, Chief Judge.

Defendant Principal Life Insurance Company¹'s ("Principal") Motion for Summary Judgment [Doc. No. 76] is pending before the Court. After considering the arguments raised by the parties in their briefings and oral arguments, the Court now issues the following ruling.

BACKGROUND

Plaintiff Patricia Bonilla ("Mrs. Bonilla") was diagnosed with atrial fibrillation ("a-fib") by Henry Meyer, M.D. ("Dr. Meyer"), of Cardiac Arrhythmia Associates, in 1990. (Def.'s Statement of Facts in Supp. of Renewed Mot. for Summ. J. ("Def.'s SOF # 2") [Doc. No. 69] Ex. 1 at 9, Ex. 7.) In approximately 1991, Tony Chee, M.D. ("Dr. Chee") first advised Mrs. Bonilla that she needed a heart pacemaker. (Id. Ex. 1 at 11.) Subsequently, Dr. Meyer repeatedly made this same recommendation to Mrs. Bonilla. (Id. Ex. 1 at 14-15.)

On May 5, 1994, Plaintiff David Bonilla's ("Mr. Bonilla") employer, Dennis Construction Company of Yuma, Inc., applied to the Upper Midwest Group Trust for employee life insurance, accidental death and dismemberment insurance, and health insurance. (Def.'s SOF in Supp. of Mot. for Summ. J. ("Def.'s SOF # 1") [Doc. No. 17] Ex. 1.) The subsequently issued group insurance policy (the "Plan") was underwritten by Defendant Principal Life Insurance Company ("Principal"). (Id.) The Plan is part of an employee benefit plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. (See Order of 12/13/00 [Doc. No. 42] at 5-11.)

On February 20, 1998, Dr. Meyer treated Mrs. Bonilla for her a-fib and noted that she needed a pacemaker. (Def.'s SOF # 2 Ex. 9.) On April 7, 1998, Mrs. Bonilla completed an application for health insurance coverage under the Plan. (Id. Ex. 2.) Section C of the application included the following language: "I understand if we are approved for coverage all policy provisions will apply including but not limited to preexisting conditions restriction."² (Id. at 1.) Section D of the application included a series of questions. In response to question 11, which inquired about whether she had undergone surgeries and hospitalizations, as well as clinical and outpatient treatments, Mrs. Bonilla responded "yes" and provided the following details: "Irregular heartbeat. 9-90 [through] present. Remaining symptoms or problems. Dr. Henry Meyer. Irregular heartbeat. 9-91[to] still have condition. Dr. Chee." (Id. at 2.)

Mrs. Bonilla also responded in the affirmative to question 13(a), which inquired as to whether she had experienced "chest pain or pressure, heart trouble, heart attack, heart murmur, rapid, slow, or irregular heartbeat" in the past ten years. (Id.) When she completed the application, Mrs. Bonilla was taking Coumadin, a blood thinner, which requires monthly blood checks by a physician. (Def.'s SOF # 2 Ex. 1 at 10-15.) Mrs. Bonilla's health coverage under the Plan began on June 15, 1998. (Id. Ex. 3.) The Bonillas were subsequently provided with a booklet describing rights and benefits under the Plan (the "Booklet"). (Id. Ex. 1 at 20.) The Booklet included a section entitled "Preexisting Conditions Restrictions" which indicated that "[a] Preexisting Condition is a sickness or injury for which a person was confined or received treatment or service in the six-month period before becoming insured for Comprehensive Medical Expense Insurance." (Def.'s OSF # 2 Ex. 4 at 66.) In addition, the "Arizona Rider" to the Booklet provided the following:

MEDICAL EXPENSE INSURANCE PREEXISTING CONDITIONS RESTRICTIONS

A Preexisting condition is a sickness or injury for which a person was confined or received treatment or service in the 12-month period before becoming insured for Comprehensive Medical Expense Insurance.

No benefits will be payable for a Preexisting Condition until the date that a person has been insured under this Group Plan for 12 consecutive months (18 consecutive months for Late Entrants); and then benefits will be payable only with respect to days of confinement occurring after that date or to treatment or service received after that date.

(Id. at 11 of Addendum.)

In late August or early September 1998, Mrs. Bonilla experienced a frightening irregular heartbeat. (Def.'s SOF # 2 Ex. 1 at 12.) She visited Dr. Meyer and decided to have pacemaker implant surgery (the "Surgery"). (Id. at 12-14.) Mrs. Bonilla called Principal to determine if Principal would pay for the surgery, but Principal did not make any commitment. (Id. at 25.) On September 2, 1998, Liza, from Cardiac Arrhythmia Associates, called Principal for benefit verification for the Surgery and spoke to Melissa Perkins (formerly Melissa Hill), Benefit Specialist. (Id. Ex. 5.) Ms. Perkins explained the Plan's benefit provisions and provided the following disclaimer ("Disclaimer # 1"): "The following information is not a guarantee of payment. I can only verify Patricia Bonilla has been a participant in this group plan. Actual payments will be based on the plan provisions. Do you understand this disclaimer?" (Id.) The next day, Sheila from Scripps Hospital called Principal for benefit verifications for the pacemaker implant surgery and spoke to Cindy Dicks, Benefit Specialist, who also explained the benefit provisions and repeated Disclaimer # 1. (Id. Ex. 6.)

On September 3, 1998, Liza, from Cardiac Arrhythmia Associates, wrote a letter to Mrs. Bonilla which addressed the logistics of the surgery and stated, "Your insurance company has approved this procedure." (Id. Ex. 7.) On September 11, 1998, Mrs. Bonilla underwent the Surgery, (Pls.' Am Compl., [Doc. No. 43] ¶ VIII), and Principal proceeded to pay approximately $11,633.83 of the resultant charges (Def.'s Countercl. [Doc. No. 47] at 5.) Then, on November 6, 1998, Principal sent a letter to Dr. Meyer and other treating physicians requesting copies of Mrs. Bonilla's medical records. (Def.'s SOF # 2 Ex. 8.) Phyllis LoBosco, Senior Claim Examiner, reviewed these records and found that, on February 20, 1998, Dr. Meyer had treated Mrs. B. for a-fib and noted that she "needs [a] pacemaker." (Id. Ex. 9.)

Principal completed its review and concluded that Mrs. Bonillas's claim for benefits was precluded by the Preexisting Conditions Restrictions provision of the Plan. (Id. Ex. 8.) Principal then sent a letter, dated January 18, 1999, denying the remaining amounts submitted by Mrs. Bonilla's health care providers in connection with the Surgery. This letter quoted the Plan's six-month preexisting condition provision instead of the Arizona Rider's 12-month provision.³ (Id.)

Plaintiffs filed their original Complaint on May 19, 1999. Defendants removed this action to this Court on June 23, 1999, and filed a Motion for Summary Judgment seeking a determination that the Bonillas' claim was governed by ERISA. The Court granted Defendants' motion, and, on January 12, 2001, Plaintiffs filed their Amended Complaint, alleging breach of contract, breach of fiduciary duty, and estoppel.

On February 16, 2001, Principal served Counterdefendants David C. Bonilla and Patricia Bonilla (the "Bonillas"), through their attorneys, with Principal's Answer to Amended Complaint and Counterclaim for restitution of $11,633.83 in medical expenses erroneously paid to Mrs. Bonilla's health care providers by Principal. The Court granted the Bonillas' counsel's Motion to Withdraw on March 9, 2001, and the Bonillas proceeded pro se. In spite of two extensions of time, the Bonillas failed to reply to the Counterclaim, and the Clerk of the Court entered default against them on the Counterclaim on August 15, 2001. Then, Principal sought judgment against the Bonillas for the sum certain sought in the counterclaim in the amount of $11,633.83, and, on September 21, 2001, the Court entered Judgment on the counterclaim in this amount.

Next, Principal proceeded to depose the Bonillas. After obtaining leave of the Court, on December 21, 2001, Principal filed a Motion for Summary Judgment in which Principal sought dismissal of the Bonilla's Amended Complaint on the grounds that Principal did not abuse its discretion in denying the Bonillas' claim for benefits. Principal stated that the Court should apply a de novo standard of review, but then proceeded to argue its motion under an abuse of discretion standard. Because Principal had skipped an important step in the analysis of this case, the Court denied Principal's Motion for Summary Judgment.

On September 10, 2002, Defendant filed the pending Renewed Motion for Summary Judgment.⁴ On September 30, 2002, the Court provided the Bonillas with a warning regarding procedures governing motions practice before the Court and ordered them to respond to Principal's Motion for Summary Judgment no later than October 31, 2002. The Bonillas filed a brief Response to the Renewed Motion for Summary Judgment on October 30, 2002. The Bonillas also sent correspondence to the Court, with a copy to opposing counsel, on September 18, 2002. In this letter, the Bonillas expressed an intent to incorporate their previous "Answer" [Doc. 72], which was filed on January 31, 2002, as a Response to Principal's subsequently denied Motion for Summary Judgment. To avoid confusion, the Court will construe the Bonillas' correspondence, dated September 14, 2002, and received September 18, 2002, as a Supplemental Response to Renewed Motion for Summary Judgement and direct the Clerk of the Court to docket...