Chambers v. Family Health Plan Corp., 95-3134

• Decision Date: 13 November 1996
• Docket Number: No. 95-3134,95-3134
• Citation: 100 F.3d 818
• Parties: JOSEPH W. CHAMBERS, Plaintiff - Appellant, v. FAMILY HEALTH PLAN CORPORATION, aka Healthcare America Plans, Inc., Defendant - Appellee
• Court: U.S. Court of Appeals — Tenth Circuit

Page 818

100 F.3d 818

JOSEPH W. CHAMBERS, Plaintiff - Appellant, v. FAMILY HEALTH PLAN CORPORATION, aka Healthcare America Plans, Inc., Defendant - Appellee.

No. 95-3134

United States Court of Appeals Tenth Circuit

November 13, 1996

Appeal from the United States District Court for the District of Kansas, (D. Ct. No. 93-CV-1287) Kenneth L. Weltz (Michael D. Herd and Kenneth P. Leyba, with him on the briefs), Curfman, Harris, Rose, Weltz, Metzger & Smith, Wichita, KS, for Appellant.

Charles E. Millsap (Lyndon W. Vix, with him on the brief). Fleeson, Gooing, Coulson & Kitch, Wichita, KS, for Appellee.

Before PORFILLIO, TACHA, and BRORBY, Circuit Judges.

TACHA, Circuit Judge.

Joseph Chambers brought suit against Family Health Plan Corporation ("FHP") seeking judicial review of FHP's decision to deny him healthcare benefits under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Section(s) 1132(a)(1)(B). The parties agreed to have a federal magistrate judge hear the case pursuant to 28 U.S.C. 636(c)(1). The magistrate judge entered judgment for FHP and Chambers appeals. We have jurisdiction under 28 U.S.C. Section(s) 1291 and affirm.

BACKGROUND

Chambers, a retired employee of the National Cooperative Refinery Association, is a beneficiary of a prepaid healthcare plan provided by FHP ("the Plan"). In February of 1990, Chambers learned that he suffered from pulmonary embolization, a condition which results in the accumulation of blood clots in the arteries to the lungs. The condition is fatal if untreated. Other than a lung transplant, the only known treatment is pulmonary thrombo-endarterectomy ("PTE"), a procedure which involves the surgical removal of blood clots from affected arteries.

After diagnosing Chambers, his doctors in Wichita advised him to undergo a PTE procedure. They recommended that Dr. Kenneth Moser at the University of California San Diego Medical Center ("UCSDMC") perform the surgery. Chambers made a claim for health insurance benefits to FHP under the Plan to cover the cost of the PTE treatment.

FHP assigned the investigation of the Chambers's claim to Dr. Andrew Nachtigall, FHP's medical director. Dr. Nachtigall thereafter began investigating how the medical community characterized PTE. On March 9, 1990, Dr. Nachtigall notified Chambers in writing that FHP considered PTE to be an "experimental" procedure that was not covered by the Plan.

Jeff Chambers, the plaintiff's son, filed a formal grievance with FHP on behalf of his father. Because of the plaintiff's declining health, FHP accelerated the grievance process to the final step, a hearing before the board of directors of FHP ("Board"). Approximately one week before the hearing, FHP informed Chambers that he should be prepared to present his father's claim for benefits and any information regarding the experimental nature of the PTE procedure at the hearing.

On April 26, 1990, the Board conducted a thirty-minute hearing to consider Chambers's claim. Jeff Chambers told the Board that although PTE was an uncommon procedure, Dr. Moser had performed it "for years." Relying on information provided by his father's doctors, Chambers told the Board that the procedure was not experimental. Chambers also submitted information and journal articles from Dr. Moser describing the procedure. Dr. Nachtigall presented a report on the results of his investigation. At the conclusion of the hearing, the Board told Chambers that he could submit additional information to the Board.

On May 1, 1990, the Board sent a letter to Joseph Chambers, denying insurance benefits for the PTE procedure because it was "experimental." Chambers successfully underwent PTE treatment later that month at UCSDMC. Although Chambers proceeded to submit evidence to FHP to support his claim for coverage, FHP continued to deny benefits to Chambers.

Chambers brought suit against FHP, seeking to recover the expenses he incurred in connection with the PTE procedure and for attorneys' fees. At trial, FHP filed a motion in limine to prevent the magistrate judge from considering evidence that was not in the administrative record in reviewing FHP's decision to deny Chambers benefits. The magistrate judge granted the motion and thus refused to consider any evidence presented to FHP after May 1, 1990, the date of FHP's final decision to deny coverage. The magistrate stated that if she had been able to conduct a de novo review of all the evidence, she would have found that FHP's denial of coverage was erroneous. Based only on the evidence submitted to FHP on or before May 1, 1990, the judge concluded that FHP's decision was not arbitrary and capricious.

Chambers makes four arguments on appeal. First, Chambers contends that FHP failed to follow ERISA's procedural requirements. Second, Chambers argues that the magistrate judge erred in limiting the scope of review to evidence submitted to FHP on or before May 1, 1990. Third, Chambers asserts that FHP's decision denying him health insurance benefits was arbitrary and capricious, especially in light of FHP's conflict of interest. Finally, Chambers contends the magistrate erred in failing to award him attorneys' fees.

DISCUSSION

I. ERISA's Procedural Requirements

Chambers devotes a significant portion of his brief to arguing that FHP failed to follow several of ERISA's procedural requirements in denying him benefits. Specifically, Chambers alleges that FHP failed to inform him of the "specific reasons" for its denial of coverage as required by 29 U.S.C. Section(s) 1133(1) and 29 C.F.R. Section(s) 2560.503-1(f)(1). Chambers also contends that FHP failed to tell him the type of information he needed to submit to FHP to appeal its initial decision as required by 29 C.F.R. Section(s) 2560.503-1(f)(3)-(4). Chambers next maintains that FHP failed to tell him the evidence that FHP relied upon in making its decision as required by 29 C.F.R. Section(s) 2560.503-1(g)(1)(iii). Finally, Chambers argues that FHP failed to conduct a "full and fair review" of the claim by refusing to review information submitted by Chambers and by refusing to collect and review reasonably available information from other sources as required by 29 U.S.C. Section(s) 1133(2) and 29 C.F.R. 2560.503.1(g)(1).

As a preliminary matter, we must determine whether Chambers may properly appeal these procedural claims despite his failure to raise the claims before the magistrate judge. Although the magistrate's Memorandum and Order did not discuss his procedural claims, Chambers nevertheless argues that because the record contains "numerous references" to FHP's alleged procedural violations he adequately preserved the issue for appeal.

Chambers asserts that the complaint, pretrial order, and his trial brief refer to FHP's violations of "ERISA, 29 U.S.C. Section(s) 1001, et seq." He argues that this is a clear reference to all applicable ERISA sections and regulations, including ERISA's procedural requirements. We disagree that such a general reference is sufficient to preserve the issues for appeal.

Chambers also contends that both the complaint and pretrial order allege that FHP acted arbitrarily and capriciously to "interfere" with his rights. He maintains that such "interference" includes FHP's failure to follow ERISA procedures. We reject his contention that such broad language sufficiently raised the issue below such that it preserved his right to appeal his procedural claims.

Chambers next maintains that because he discussed FHP's procedural irregularities in his trial brief, he adequately preserved his procedural claims for appeal. The trial brief has some general discussion about FHP's investigation of PTE, the notice given to Chambers, the reasons for denying his claim, and the disclosure of the information FHP consulted. We find, however, that these allegations were made only to show that FHP's ultimate decision was arbitrary and capricious, not that FHP violated any particular procedural requirement. The failure of Chambers to cite any cases or regulations upon which he now relies bolsters our conclusion.

Finally, Chambers argues that he preserved his procedural ERISA claims because his proposed findings of fact and conclusions of law requested that the magistrate judge find that FHP's "actions and failures to act" were arbitrary and capricious. We find that this conclusory language, coupled with his failure to cite any cases or regulations, fails to preserve his procedural claims for appeal.

Despite Chambers's failure to raise his procedural claims, we must determine whether we should nevertheless address the claims on appeal. "Absent compelling reasons, we do not consider arguments that were not presented to the district court." Crow v. Shalala, 40 F.3d 323, 324 (10th Cir. 1994). As in Crow, "we see no reason to deviate from the general rule" and will not adress the merits of his procedural claims. Id.

II. Scope of Review

A. Requirements of Federal Rule of Appellate Procedure 3

As a preliminary matter, FHP argues that Chambers, in appealing the magistrate judge's decision limiting the scope of review, failed to comply with the jurisdictional requirements of Federal Rule of Appellate Procedure 3, which requires that a party appealing a decision must designate the particular "judgment, order, or part thereof appealed from." FHP argues that while the trial court granted FHP's motion in limine on December 13, 1994, the plaintiff's notice of appeal refers only to the court's order on March 31, 1995. FHP contends that the notice of appeal, by referring only to the order on March 31, 1995, did not state the proper "order . . . appealed from."

On December 13, 1994, the magistrate judge granted FHP's motion in limine. After granting the motion, the judge added:

And I would invite the parties to address this further in your proposed findings if you choose to do so. I'm not asking you to do it, but if you still want to revisit that...