Killian v. Concert Health Plan

Decision Date07 November 2013
Docket NumberNo. 11–1112.,11–1112.
Citation742 F.3d 651
PartiesJames E. KILLIAN, Plaintiff–Appellant, v. CONCERT HEALTH PLAN, et al., Defendants–Appellees.
CourtU.S. Court of Appeals — Seventh Circuit


David R. Shannon, Attorney, Tenney & Bentley, Chicago, IL, for PlaintiffAppellant.

Paul A. Farahvar, Attorney, Cuisinier, Farahvar & Benson, Ltd., Chicago, IL, Peter R. Bulmer, Attorney, Jackson Lewis P.C., Chicago, IL, Rene E. Thorne, Attorney, Jackson Lewis P.C., New Orleans, LA, for DefendantsAppellees.


RIPPLE, Circuit Judge.

In February 2006, Susan Killian learned that she had lung cancer, which had spread to her brain. After physicians at Delnor Community Hospital determined that they could not operate, she sought a second opinion from a physician at Rush University Medical Center (“Rush”) and soon afterward was admitted for emergency brain surgery. Although the surgery successfully removed the most serious tumor, her cancer treatment was ultimately unsuccessful, and she died a few months later.

At the time of her diagnosis, Mrs. Killian was an employee of Royal Management Corporation (“Royal Management”) and participated in its group health insurance, which was provided by Concert Health Plan Insurance Company (Concert). Concert paid for part of Mrs. Killian's cancer treatment, but denied coverage, or paid only a small percentage, of services received at Rush. Mr. Killian, the administrator of her estate, brought this action against Concert, Concert Health Plan,1 Royal Management and Royal Management Corporation Health Insurance Plan (the “Royal Plan”) seeking payment of benefits against the Royal Plan and Concert, relief for breach of fiduciary duty against Royal Management and Concert, and statutory penalties against Royal Management.2

The district court granted summary judgment for the defendants on the denial of benefits and breach of fiduciary duty claims and awarded statutory penalties against Royal Management. A panel of this court affirmed the decision of the district court on the first two claims,3 but remanded for the district court to correct the calculation of statutory penalties. Killian v. Concert Health Plan ( Killian I ), 680 F.3d 749, 764–65 (7th Cir.2012).4 After rehearing by the en banc court, we adopt the panel's reasoning and conclusion related to the denial of benefits and statutory penalties issues. On the breach of fiduciary duty claim, however, we reverse the judgment of the district court and remand for further proceedings.


Concert began providing insurance to Royal Management's employees in July 2005. The agreement between Royal Management and Concert provided that Royal Management would be the plan administrator and that Concert would be the “administrator for claims determinations” and the ERISA [Employee Retirement Income Security Act] claims review fiduciary” with “full and exclusive discretionary authority to: 1) interpret Policy or Group Plan provisions; 2) make decisions regarding eligibility for coverage and benefits; and 3) resolve factual questions relatingto coverage and benefits.” 5

While employed with Royal Management, Mrs. Killian enrolled in the Royal Plan and selected coverage under the “SO35 Open Access” option. The Master Group Policy and accompanying Certificate of Insurance applicable to her SO35 plan described the terms, exclusions, conditions and benefits available under the Royal Plan. Participants were cautioned to seek services from network providers whenever possible and told that [t]o confirm that Your ... provider is a CURRENT participant ... You must call the number listed on the back of Your medical identification card.” 6 The Master Group Policy did not specify which of several numbers on the back of the card should be called, and a few pages later it instructed participants to obtain provider participation information by calling an unspecified “toll free telephone number on your identification card.” 7 Participants also were directed to “call the number” on their identification cards to verify infertility benefits, or appeal a decision denying benefits 8 They were instructed to follow the procedures described in the “Utilization Management section when receiving emergency care.9

The front of Mrs. Killian's insurance card listed toll-free numbers under four different headings. The second and most prominently listed number was for “Customer Service,” which was the same toll-free number for “Utilization review.” The back of her card listed toll-free numbers under three different headings, but used the same toll-free number for “UTILIZATION REVIEW” and medical claims.10 Both sides of this card are appended to this opinion.

In late February 2006, Mrs. Killian sought treatment from her primary care physician, Dr. Bradshaw, for a severe cold and persistent headaches. A CT scan revealed the presence of three brain tumors, and she was diagnosed with lung cancer, which had metastasized to her brain. Mrs. Killian then went to Delnor Community Hospital; she stayed for five days, but her physicians concluded that they could not operate on the tumors. Seeking a second opinion, the Killians scheduled an appointment with Dr. Philip Bonomi, a physician at Rush who had treated Mrs. Killian's daughter before she died of cancer in 2001. The Killians met with Dr. Bonomi and Dr. Louis Barnes, a neurosurgeon, on April 7, 2006. Dr. Barnes reviewed Mrs. Killian's medical records, including the CT scan, and determined that Mrs. Killian would be dead in five days unless the largest tumor was removed immediately.

The Killians did not contact Concert before meeting with Dr. Bonomi because their plan to see Dr. Bonomi for a second opinion did not depend on whether he was in Mrs. Killian's network. However, when they learned that Mrs. Killian had only a few days to live unless the largest tumor was removed and that physicians at Rush could perform the necessary surgery, Mr. Killian called Concert about the developing situation. He first called the “provider participation” number listed on the front of Mrs. Killian's insurance card. Mr. Killian informed the Concert representative that he and Mrs. Killian were at St. Luke's Hospital 11 for a second opinion, that the physicians had determined that the tumor had to be removed and that the physicians wanted Mrs. Killian to be admitted for brain surgery. The representative searched her database and could not find any information on “St. Luke's,” but told Mr. Killian to “go ahead with whatever had to be done.” 12 She also told him to call back later.13

Mr. Killian called back later the same day, April 7, but this time he called the number listed under the prominent “Customer Service” heading on the front of Mrs. Killian's insurance card, which is the same number under the heading “Utilization review” on the front and back of the card and is also listed as the number for medical claims. The representative who took the second call seemed to be aware of Mr. Killian's earlier call and confusion about the name of the hospital because when he mentioned Rush she said, perhaps in jest, “Oh, you mean St. Luke's.” 14 He could hear her laugh and tell a colleague, “It's the guy from St. Luke's.” 15 When Mr. Killian told the representative, “I'm trying to get confirmation that we are going to be—my wife is going to be admitted to Rush,” the representative said, “Okay.” 16 She did not tell Mr. Killian whether services at Rush were in or out of network or whether there would be any limits to coverage.17

Mrs. Killian underwent surgery at Rush two days later, April 9, and was released on April 12, 2006. The record is silent as to whether the Killians would have gone to a different hospital or sought emergency admission at Rush 18 had Concert representatives told Mr. Killian that Rush was not in Mrs. Killian's network. After the surgery, she received some outpatient services from Dr. Bonomi, and, in June 2006, she was admitted to Rush on an emergency basis for nine days to be treated for pneumonia. Mrs. Killian attempted chemotherapy but could not tolerate it, and she died in August 2006.

During the months between Mrs. Killian's surgery and death, Mr. Killian received notices from Concert stating that Concert would not cover services at Rush because the hospital was not in Mrs. Killian's network. In response to a letter from Mr. Killian disputing the denial and requesting immediate review, Concert reiterated that the claims were out of network and that the Killians were responsible for the maximum allowable fee. When Mr. Killian appealed, Concert agreed to consider Mrs. Killian's treatment for pneumonia as an emergency and to process the claim for that treatment at the in-network level. The remaining claims total approximately $80,000.

Mr. Killian filed this action in his capacity as administrator of Mrs. Killian's estate, and discovery ensued. The proceedings before the district court included multiple motions to dismiss and for summary judgment, and Mr. Killian amended his complaint twice. Finally, the district court granted summary judgment in favor of the defendants on the denial of benefits and breach of fiduciary duty claims and granted statutory penalties against Royal Management for failure to provide Mrs. Killian with a summary plan description.

On the denial of benefits claim, Mr. Killian argued that Concert's decision to deny benefits should not be sustained because Concert did not comply with ERISA's notification requirements and because there was no evidence supporting Concert's determination that Rush and Dr. Bonomi were not in Mrs. Killian's network. Section 1133(1) of Title 29 requires that when a benefits claim is denied, the plan must give notice to the beneficiary by “setting forth the...

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