Tuttle v. Varian Med. Sys. Inc.

• Decision Date: 24 September 2013
• Docket Number: No. CV–12–01424–PHX–GMS.,CV–12–01424–PHX–GMS.
• Citation: 15 F.Supp.3d 944
• Parties: Deana TUTTLE, Plaintiff, v. VARIAN MEDICAL SYSTEMS INC., Medical Plan Administrator; United Healthcare Insurance Company, Defendants.
• Court: U.S. District Court — District of Arizona

15 F.Supp.3d 944

Deana TUTTLE, Plaintiff

v.VARIAN MEDICAL SYSTEMS INC., Medical Plan Administrator; United Healthcare Insurance Company, Defendants.

No. CV–12–01424–PHX–GMS.

United States District Court, D. Arizona.

Signed Sept. 24, 2013.

Kevin Koelbel, Law Offices of Kevin Koelbel PC, Randolph G. Bachrach, Law Office of Randolph G. Bachrach, Chandler, AZ, for Plaintiff.

Ishra Khalifa Solieman, John C. West, Brownstein Hyatt Farber Schreck LLP, Phoenix, AZ, for Defendants.

ORDER

G. MURRAY SNOW, District Judge.

Pending before the Court is Plaintiff Deana Tuttle's Motion Regarding Standard of Review, (Doc. 23). For the reasons discussed below, the Motion is denied.

BACKGROUND

At issue in this case is an employee welfare plan's denial of an employee's claim for the reimbursement of medical payments. The crux of this Motion is to request the Court to apply a non-deferential standard to its review of that denial.

Plaintiff Deana Tuttle is employed by Defendant Varian Medical Systems, Inc. (“Varian”) as a Medical Physicist. (Doc. 1 (Compl.) ¶ 8.) As an employee, Ms. Tuttle is a participant in Varian's Welfare Benefit Plan (the “Plan”) which is a health and medical reimbursement insurance plan. (Id. ¶ 4; Doc. 15 (Ans.) ¶ 4.) Varian is the Plan Sponsor and Defendant United Healthcare Insurance Company (“UHIC”) is the insurer of the Plan as well as the claims administrator. (Doc. 1 ¶¶ 5–6; Doc. 15 ¶¶ 5–6.) The Parties dispute whether the Plan delegates to UHIC the discretionary authority to make benefits determinations. (Doc. 1 ¶ 7; Doc. 15 ¶ 7.)

In July 2009, Ms. Tuttle was diagnosed with breast cancer by the Mayo Clinic of Scottsdale, Arizona (the “Clinic”). (Doc. 1 ¶ 13; Doc. 15 ¶ 13.) She underwent multiple breast cancer surgical procedures at the Clinic on August 4 and 12, 2009. (Doc. 1 ¶ 14; Doc. 15 ¶ 14.)

After the surgeries, Ms. Tuttle's providers at the Clinic billed the Plan for payment of medical expenses related to her treatment from August 4 to 12. (Doc. 1 ¶ 28; Doc. 15 ¶ 28.) Although the Parties agree that the Plan, acting through UHIC, paid expenses, they dispute the percentage of expenses that the Plan paid and what percentage it advised Ms. Tuttle that she must pay. (Doc. 1 ¶ 29–30; Doc. 15 ¶ 29–30.) Ms. Tuttle filed an administrative appeal of the Plan's benefits determination pursuant to the procedure set out in the Plan. (Doc. 1 ¶ 31; Doc. 15 ¶ 31.) The Plan's benefits determination was upheld on appeal on January 12, 2010. (Doc. 1 ¶ 32; Doc. 15 ¶ 32.) A letter describing the decision to Ms. Tuttle advised her of the right to request an independent review of her claim's denial within thirty calendar days. (Doc. 1 ¶ 32; Doc. 15 ¶ 32.)

Based on the Plan's instructions, Ms. Tuttle sent a completed “Health Care Appeal Request Form” to the Plan on February 16, 2010. (Doc. 1 ¶ 35; Doc. 15 ¶ 35.) The Parties dispute whether the Plan acknowledged receipt of the Form and processed it for independent review. (Doc. 1 ¶ 36–37; Doc. 15 ¶¶ 36–37.)

Ms. Tuttle filed an action against Varian in this Court on August 23, 2011. (Doc. 1 ¶ 38; Doc. 15 ¶ 38.) The Parties stipulated to dismiss the action without prejudice to allow the Arizona Department of Insurance (the “Department”) to perform an external independent review of Ms. Tuttle's claim; the action was dismissed on November 21. (Doc. 1 ¶ 39; Doc. 15 ¶ 39.) The Department, however, declined to review the matter because the appeal was about the amount of coverage and not whether services were covered under the Plan. (Doc. 1 ¶ 43; Doc. 15 ¶ 43.) As a result of her appeals, Ms. Tuttle has fully exhausted administrative remedies required by the Plan. (Doc. 1 ¶ 44; Doc. 15 ¶ 44.)

During the period in question, the Plan and UHIC acted at least under a structural conflict of interest because UHIC was the insurer and made benefits determinations. (Doc. 1 ¶ 45; Doc. 15 ¶ 45.) That conflict of interest allegedly influenced the Plan's benefits determination regarding Ms. Tuttle's medical expenses. (Doc. 1 ¶ 46.) Ms. Tuttle alleges that she suffered economic damage as a result of Defendants' processing of her claim and that the Plan, acting through UHIC, violated the terms and conditions of the Plan, failed to act on her appeal until she filed suit, and denied her a full and fair review of her claim. (Id. ¶¶ 48–52.) She requests Plan benefits pursuant to 29 U.S.C. § 1132(a)(1)(B) and attorney's fees and costs pursuant to id. § 1132(g)(1). (Id. ¶ 52.) She now moves the Court to determine that a de novo standard of review should apply to its review of the Plan's benefits determination.

DISCUSSION

I. DETERMINATION OF STANDARD OF REVIEW

The presumptive standard of review of a fiduciary's decision to deny benefits is de novo. Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th Cir.2006) (en banc); see also Kearney v. Standard Ins. Co., 175 F.3d 1084, 1089 (9th Cir.1999). “In adopting the de novo standard, the Supreme Court was guided by principles of trust law because ERISA was enacted to protect employees and the plan administrators have a fiduciary duty to the beneficiaries.” Gonzales v. Unum Life Ins. Co. of Am., 861 F.Supp.2d 1099, 1106 (S.D.Cal.2012) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) ). But “[t]rust principles make a deferential standard of review appropriate when a trustee exercises discretionary powers.” Firestone, 489 U.S. at 111, 109 S.Ct. 948. Therefore, if a plan “unambiguously provide[s] discretion to the administrator,” a denial of benefits is reviewed for abuse of discretion. Abatie, 458 F.3d at 963.

If a plan confers such discretionary authority, an abuse of discretion standard applies even if the decisionmaker was also the funding source. Abatie, 458 F.3d at 967. Judicial review in that case, however, is “informed by the nature, extent, and effect on the decision-making process of any conflict of interest that may appear in the record.” Id. The plan administrator or fiduciary has the burden of proving the abuse of discretion standard is provided for by the plan documents. Thomas v. Or. Fruit Prods. Co., 228 F.3d 991, 994 (9th Cir.2000).

II. PLAN DOCUMENTS

To determine whether the Plan grants discretionary authority, the Court first must determine which documents constitute the Plan. ERISA requires that “[e]very employee benefit plan shall be established and maintained pursuant to a written instrument,” 29 U.S.C. § 1102(a)(1), and an administrator must act “in accordance with the documents and instruments governing the plan” insofar as they accord with the statute, id. § 1104(a)(1)(D). “Each such plan must (1) provide a policy and a method for funding the plan, (2) describe a procedure for plan operation and administration, (3) provide a procedure for amending the plan, and (4) specify a basis for payments to and from the plan.” Cinelli v. Sec. Pac. Corp., 61 F.3d 1437, 1441–42 (9th Cir.1995) (internal quotation marks and citation omitted); 29 U.S.C. § 1102(b).

Ms. Tuttle contends that the administrative record before this Court does not contain the Plan. Defendants dispute that contention and assert that the Plan document is the Policy in the record; it constitutes the written instrument that should control the review of the benefits determination. Ms. Tuttle does not dispute that the Plan is sponsored by Varian and insured by UHIC. The Policy issued by UHIC to Varian and its employees under the Plan consists of the following: (1) the Group Policy; (2) the Schedule of Benefits; (3) the Certificate of Coverage; (4) the Enrolling Group's Application; (5) Riders; and (6) Amendments. (Doc. 22–1 (Admin. Record) at 124.) The Certificate of Coverage states that the Policy “is a legal document between [UHIC] and [Varian] to provide Benefits to Covered Persons, subject to the terms, conditions, exclusions and limitations of the Policy.” (Id. at 54.) Further, the Policy is defined therein as the “entire agreement” between UHIC and Varian under the Plan. (Id. at 124.)

“[I]t is clear that an insurance policy may constitute the “written instrument” of an ERISA plan....” Cinelli v. Sec. Pac. Corp., 61 F.3d 1437, 1441 (9th Cir.1995) (internal citations omitted); See Sterio v. HM Life, 369 Fed.Appx. 801, 803 (9th Cir.2010) (“We reject [the plaintiff's] contention that the district court should have applied a de novo standard because there is no ‘plan’ document, only an insurance policy. The insurance policy is the plan document in this case.”); Gonzales, 861 F.Supp.2d at 1108 (finding that the ERISA plan at issue was contained, in part, in the group insurance policy). Further, “[a] plan may incorporate other formal or informal documents, such as a collective bargaining agreement or a certificate of insurance.” Gonzales, 861 F.Supp.2d 1099, 1107–08 (citing Richardson v. Pension Plan of Bethlehem Steel Corp., 112 F.3d 982, 983 (9th Cir.1997) ). “[T]here is no requirement that documents claimed to collectively form the employee benefit plan be formally labeled as such.” Horn v. Berdon, Inc. Defined Benefit Pension Plan, 938 F.2d 125, 127 (9th Cir.1991).

Ms. Tuttle argues that the Policy is not a Plan document because the Policy refers to other Plan documents that may be obtained from the Plan administrator. For example, the Policy states that a Plan participant may contact the administrator for “assistance in obtaining documents” or “to obtain, ... copies of documents governing the operation of the plan, including insurance contracts and collective bargaining agreements, and copies of the latest annual report ... and update Summary Plan Description.” (Doc. 22–1 at 166, 491) (internal alterations omitted). Those references do not show that the Policy is not the operative Plan document in this matter but demonstrate that there are other documents related to the Plan described in the Policy. “An employee benefit plan under ERISA can be comprised of more than one document.” Gonzales, 861 F.Supp.2d at 1107.

Ms. Tuttle also...