Mitchell v. Blue Cross Blue Shield of N.D.

• Decision Date: 20 March 2020
• Docket Number: No. 18-2890,No. 18-2784,18-2784
• Citation: 953 F.3d 529
• Parties: Ivan MITCHELL; Melissa Mitchell, Plaintiffs - Appellants v. BLUE CROSS BLUE SHIELD OF NORTH DAKOTA; Towner County Medical Center, Defendants - Appellees Secretary of Labor, Amicus on Behalf of Appellant(s) Ivan Mitchell; Melissa Mitchell, Plaintiffs - Appellees v. Blue Cross Blue Shield of North Dakota; Towner County Medical Center, Defendants - Appellants Secretary of Labor, Amicus on Behalf of Appellee(s)
• Court: U.S. Court of Appeals — Eighth Circuit

953 F.3d 529

Ivan MITCHELL; Melissa Mitchell, Plaintiffs - Appellants

v.BLUE CROSS BLUE SHIELD OF NORTH DAKOTA; Towner County Medical Center, Defendants - Appellees

Secretary of Labor, Amicus on Behalf of Appellant(s)

Ivan Mitchell; Melissa Mitchell, Plaintiffs - Appellees

v.Blue Cross Blue Shield of North Dakota; Towner County Medical Center, Defendants - Appellants

Secretary of Labor, Amicus on Behalf of Appellee(s)

No. 18-2784

No. 18-2890

United States Court of Appeals, Eighth Circuit.

Submitted: October 15, 2019

Filed: March 20, 2020

Counsel who presented argument on behalf of the appellants/cross-appellees was John J. Conway, III, of Royal Oak, MI. The following attorney(s) appeared on the appellants/cross-appellees brief; John J. Conway, III, of Royal Oak, MI.

Counsel who presented argument on behalf of the appellees/cross-appellants was Thomas M. Christina, of Greenville, SC. The following attorney(s) appeared on the appellees/cross-appellants brief; Thomas M. Christina, of Greenville, SC.

Counsel who presented argument on behalf of the amicus in support of appellants/cross-appellees was Christine Han, of Washington, DC. The following attorney(s) appeared on the amicus brief; Christine Han, of Washington, DC.

Before COLLOTON, BEAM, and KELLY, Circuit Judges.

KELLY, Circuit Judge.

Appellants Ivan and Melissa Mitchell filed this action under the Employee Retirement Income Security Act of 1974 (ERISA) alleging that Blue Cross Blue Shield of North Dakota (BCBSND) abused its discretion by partially denying their claim for air-ambulance benefits under an employee health plan. The district court granted summary judgment in part to BCBSND and in part to the Mitchells. Because we conclude that BCBSND did not abuse its discretion by partially denying the Mitchells’ claim, we affirm in part and reverse in part.

I. Factual Background

In 2013, Valley Med Flight, Inc. (VMF), a provider of air-ambulance services, terminated its participation agreement with BCBSND following a dispute over BCBSND’s reimbursement rates. On January 10, 2014, BCBSND sent participating healthcare providers a memorandum informing them that VMF had terminated its participation agreement and that, as a result, "patients could be exposed to collection of fees in excess of the payment made by [BCBSND]. In the case of air ambulance services, this can result in a huge expense." BCBSND encouraged healthcare providers to use participating air-ambulance service providers rather than VMF to avoid exposing patients to this expense.

On January 13, 2014, BCBSND sent participating healthcare providers an Ambulance Reimbursement Notice stating that, effective January 1, 2014, "[a]ir ambulance rates for HCPCS codes A0430, A0431, A0435 and A0436 have been increased and are based on 150 percent of the 2013 Medicare rural air ambulance rates." The 2014 rate for code A0430, a base-rate fee, was $6,601.01. The 2014 rate for code A0435, a mileage fee, was $18.72 per mile.

On January 15, 2014, Melissa Mitchell was admitted to the Towner Medical Center emergency room in Cando, North Dakota with complaints of cardiac distress. The attending physician decided to transfer her to a hospital in Grand Forks, North Dakota for "a higher level of care for cardiology consult." Due to weather and road conditions, it was necessary to use an air ambulance to transport Ms. Mitchell. VMF provided the transportation and administered intravenous fluids during the flight. BCBSND does not dispute that air-ambulance transportation was medically necessary or that Ms. Mitchell did not choose VMF as the service provider.

At the time, Ms. Mitchell was enrolled through her husband’s employer in an employee welfare benefit plan (the Plan), which was "fully insured by BCBSND and issued by BCBSND." She signed an authorization and assignment permitting VMF to submit a claim directly to BCBSND for reimbursement under the Plan.

The Plan provides that BCBSND will pay 80% of the Allowed Charge for medically necessary Ambulance Services (after any deductible).¹ The Plan defines "Allowance or Allowed Charge" as "the maximum dollar amount that payment for a procedure or service is based on as determined by BCBSND." The Plan also distinguishes between services provided by participating healthcare providers and services provided by non-participating healthcare providers. "When Covered Services are received from a Participating Health Care Provider, a provider discount provision is in effect. This means the Allowance paid by BCBSND will be considered by the Participating Health Care Provider as payment in full, except for Cost Sharing Amounts, Maximum Benefit Allowances or Lifetime Maximums." However, "[i]f a Member receives Covered Services from a Nonparticipating Health Care Provider within the state of North Dakota, benefit payments will be based on the Allowance .... The Member is responsible for ... any charges in excess of the Allowance ...." (emphasis in original).

On January 22, 2014, VMF submitted a claim to BCBSND billing a total of $33,200 for transporting Ms. Mitchell. The charges were divided among three billing codes: a $21,500 base-rate charge (A0430), a $11,250 mileage charge (A0435), and a $450 medical-supply charge for the intravenous fluids (A0398).

On March 26, 2014, BCBSND issued an explanation of benefits (EOB) partially paying and partially denying VMF’s claim. BCBSND paid the Mitchells $5,280.81 on the base-rate charge, $1,479.17 on the mileage charge, and $0 on the medical-supply charge. The EOB explained that, as to the first two charges, "[b]enefits are provided for 80% of the [BCBSND] allowance for this service." As to the third charge, the EOB stated that "[t]his service is included in the payment made for a related procedure." This left a total of $26,440.02 remaining on VMF’s bill. As a non-participating provider, VMF could seek to recover this outstanding balance from the Mitchells. VMF and the Mitchells requested further review, but BCBSND reaffirmed its decision.

II. Procedural Background

On July 30, 2015, the Mitchells and VMF entered into a joint litigation agreement. The Mitchells agreed to file a lawsuit against BCBSND and VMF agreed to pay for all costs and attorney’s fees related to the lawsuit. Any recovery was to be distributed as follows: "First, to repay [VMF] for all costs and attorney fees paid or owing in this matter; second, to satisfy any outstanding invoices to [VMF]; and third, the remainder, if any, will be split 70% to [VMF] and 30% to the Mitchells." Additionally, VMF "agree[d] to limit any liability of the Mitchells to [VMF] to the amount recovered in Lawsuit. Other than [VMF’s] right to receive that amount recovered in Lawsuit ... [VMF] will thereafter waive all other claims it has against the Mitchells."

The Mitchells filed a complaint on September 2, 2015, asserting various claims. After the district court denied BCBSND’s motion to dismiss for lack of standing, the parties filed a "joint motion for an order remanding plaintiffs’ claims to the claims administrator and for a stay of proceedings." The Mitchells agreed to file "a single count under ERISA 502(a)(1)(B)" and BCBSND agreed to review the claim as if it "were made for the first time, without any presumption that the prior determination of [the Mitchells’] claim was correct." The district court granted the motion and remanded the case. On January 18, 2017, BCBSND denied the Mitchells’ claim in a thirteen-page letter. The Mitchells chose not to pursue any further internal appeals, the stay was lifted, and the matter returned to federal court.

The parties subsequently filed cross-motions for summary judgment. The Mitchells argued that BCBSND abused its discretion by basing its reimbursement decision on undisclosed administrative policies that lacked substantive support. BCBSND argued that the Mitchells lacked standing and that it did not abuse its discretion because its interpretation of the Plan was reasonable. After a hearing, the district court decided that the Mitchells had standing to sue but that BCBSND’s interpretation of the Plan was reasonable. However, the district court concluded that BCBSND’s decision on the medical-supply charge was based on an "after-the-fact plan interpretation devised for purposes of litigation" announced for the first time in its January 18, 2017 letter. Accordingly, the district court granted summary judgment to BCBSND as to the base-rate and mileage fees, but granted summary judgment to the Mitchells as to the medical-supply fee. BCBSND and the Mitchells appeal the adverse portions of the district court’s ruling.

III. Standing

"When a plaintiff alleges injury to rights conferred by statute, two separate standing-related inquiries are implicated: whether the plaintiff has Article III standing (constitutional standing) and whether the statute gives that plaintiff authority to sue (statutory standing)." Miller v. Redwood Toxicology Lab., Inc., 688 F.3d 928, 934 (8th Cir. 2012). BCBSND argues that the Mitchells have not satisfied either standing requirement. We consider the issue of constitutional standing first, see id., and review both issues de novo, see Rodgers v. Bryant, 942 F.3d 451, 454 (8th Cir. 2019) (constitutional standing); Am. Chems. & Equip. Inc. 401(k) Ret. Plan v. Principal Mgmt. Corp., 864 F.3d 859, 861 (8th Cir. 2017) (statutory standing).

Article III of the Constitution extends the judicial power only to "cases" and "controversies." U.S. Const. art. III, § 2. This case-or-controversy limitation requires, as an "irreducible constitutional minimum," that a plaintiff have constitutional standing. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). "The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins, ––– U.S. ––––, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016...