Woods v. Riverbend Country Club, Inc., CIVIL ACTION NO. H-17-0416

• Decision Date: 30 August 2018
• Docket Number: CIVIL ACTION NO. H-17-0416
• Citation: 320 F.Supp.3d 901
• Parties: Marlon WOODS, Plaintiff, v. RIVERBEND COUNTRY CLUB, INC.; Riverbend Country Club, Inc. Occupational Injury Employee Benefit Plan; and Special Insurance Services, Inc., Defendants.
• Court: U.S. District Court — Southern District of Texas

320 F.Supp.3d 901

Marlon WOODS, Plaintiff,

v.RIVERBEND COUNTRY CLUB, INC.; Riverbend Country Club, Inc. Occupational Injury Employee Benefit Plan; and Special Insurance Services, Inc., Defendants.

CIVIL ACTION NO. H-17-0416

United States District Court, S.D. Texas, Houston Division.

Signed August 30, 2018

Leonid Kishinevsky, The Kishinevsky Law Firm, Houston, TX, for Plaintiff.

Gerard (Jerry) Thomas Fazio, Owen Fazio PC, D. Randall Montgomery, D. Randall Montgomery & Associates, PLLC, James M. McCoy, Attorney at Law, Dallas, TX, for Defendants.

ORDER ADOPTING MEMORANDUM AND RECOMMENDATION

SIM LAKE, UNITED STATES DISTRICT JUDGE

The court has conducted a de novo review of the Magistrate Judge's Memorandum and Recommendation, to which no objections have been filed. The court concludes that the Memorandum and Recommendation should be and is hereby ADOPTED.

MEMORANDUM AND RECOMMENDATION

Nancy K. Johnson, United States Magistrate JudgePending before the court¹ is Defendant Special Insurance Services, Inc.'s ("SIS") Motion for Summary Judgment (Doc. 26), Defendants Riverbend Country Club, Inc. and Riverbend Country Club, Inc. Occupational Injury Employee Benefit Plan's (collectively, "the Riverbend Defendants") Motion for Summary Judgment (Doc. 38) and First Supplemental Motion for Summary Judgment (Doc. 40), and Plaintiff's Cross Motions for Summary Judgment (Docs. 53, 54). The court has considered the motions, the responses, all other relevant filings, and the applicable law. For the reasons set forth below, the court RECOMMENDS that Defendant SIS's motion be GRANTED , the Riverbend Defendants' motions be GRANTED, and Plaintiff's cross-motions be DENIED .

I. Case Background

Plaintiff filed this suit under the Employee Retirement Income Security Act of 1974² ("ERISA") seeking benefits allegedly owed to him under an occupational injury employment benefit plan (the "Plan").³

A. Policy Provisions

Plaintiff was covered under the Plan through his employer, Riverbend Country Club, Inc. ("RiverBend CC").⁴ SIS served as the third-party administrator to the Plan.⁵ Under the Plan, "accident" was defined as

an event that: 1) was unforeseen, unplanned, unexpected and abrupt; 2) occurred at a specifically identifiable time and place; 3) occurred by chance from unknown causes; 4) solely and independently of all other causes, resulted in Injury to a Participant; 5) arose out of the Participant's course and Scope of Employment with Company; and 6) occurred during the Plan Term.⁶

Accidents were considered covered occurrences under the Plan.⁷ Specifically excluded under the Plan were:

11. Any claim that does not result from an Accident ...

25. Infections of any kind regardless how contracted, except bacterial infections that are directly caused by botulism

, ptomaine poisoning or an accidental cut or wound during the Participant's Scope of Employment independent and in the absence of any underlying sickness, disease or condition including, but not limited to, diabetes...

27. Any Pre-Existing Condition ...

32. The medical or surgical treatment of sickness, disease, mental incapacity or bodily infirmity whether the loss results directly or indirectly from the treatment;⁸ Pre-existing condition was defined as "an Occupational Injury caused by, or diagnosed to be, the aggravation or re-injury of a condition or injury for which the Participant received medical treatment, care or advice prior to the date the Participant's coverage became effective under the Plan."⁹

B. Basis for Claim

On October 2, 2015, Plaintiff, a maintenance worker for Riverbend CC, tripped on a rock on a sidewalk and fell while setting up chairs and tables for a wedding at the country club.¹⁰ In his claim form, affidavit, and employee statement, Plaintiff stated that he received cuts to his hand and toe from the fall.¹¹ In the course of the investigation, other employees reported that Plaintiff received a cut to his hand from the fall.¹² Plaintiff's supervisor stated that Plaintiff only reported the hand injury and was offered, and refused, medical treatment for his hand.¹³ Plaintiff claims he was not offered medical treatment.¹⁴ In the days following the fall, Plaintiff's supervisor stated that Plaintiff complained about leg pain.¹⁵ In a phone conversation between Plaintiff and his supervisor, his supervisor recalled that they discussed "how bad diabetes

was and [Plaintiff] admitted to [him] this was all diabetic related."¹⁶ Plaintiff's supervisor recounted that Plaintiff had a known history of diabetes.¹⁷ Plaintiff spoke with Donna Barclay, the authorized policyholder representative, on October 27, 2015, and they discussed how his diabetes had "taken a toll on his health," and how he had a history of foot circulation problems.¹⁸

Plaintiff sought medical treatment for his toe from Mark Blick, D.O., ("Dr. Blick") on October 6, 2015, and complained of pain and swelling in his left foot, attributing the pain to a fall at work.¹⁹ Dr. Blick noted Plaintiff's history of type 2 diabetes

, hypertensive heart disease, and chronic kidney disease.²⁰ On October 12 and October 16, 2015, Plaintiff saw podiatrist Richard Rees, D.P.M., ("Dr. Rees"), who opined that Plaintiff had gangrene with cellulitis on his left fifth toe, also noting his history of diabetes.²¹ On October 21, 2015, Plaintiff returned to Dr. Rees for a follow-up due to continuing gangrene in his left fifth toe.²² Dr. Rees noted that Plaintiff "relate[d] no history of trauma to this condition."²³ Dr. Rees referred Plaintiff to the emergency room.²⁴

Plaintiff presented to Houston Methodist Sugar Land Hospital Emergency Room on October 21, 2015.²⁵ The records stated that the onset of the gangrene

condition "began/occurred gradually."²⁶ On the intake form, Jafar Imanpour, M.D., ("Dr. Imanpour") noted that Plaintiff "claim[ed] that 2 weeks ago, he fell at work and he started to have some small wound in the left fifth toe and some skin tear ... but unfortunate[ly] in the last 2 weeks he has been getting worse."²⁷ On October 25, 2015, Plaintiff was discharged after his toe was amputated.²⁸ Dr. Imanpour noted that Plaintiff's condition was stable, but his diabetes was "uncontrolled" and that he had "[s]evere diabetic peripheral neuropathy."²⁹

C. Third-Party Administrator

SIS is the third-party administrator to the Plan.³⁰ The Riverbend Defendants hired SIS to administer the Plan.³¹ Carla Jakhar ("Jakhar"), the claims manager for SIS, explained that SIS was:

a Third Party Administrator and acted as such on behalf of the Riverbend Plan. Its authority with regard to actions taken on behalf of the plan is set forth in the Riverbend plan. It does not have the authority to deny claims on behalf of the plan, nor did it. It did not exercise actual control over the Riverbend plan and made no decision to deny the initial claim or the appeal filed by [Plaintiff] relating to the October 2, 2015, alleged injury. SIS advised the Riverbend plan administrator with regard to the scope of the Riverbend plan and its coverage, but the decision to deny [Plaintiff's] October 2, 2015, claim was done by the Riverbend Plan and not SIS. As a third part [sic] administrator, SIS refers all disputed claims to the plan administrator for resolution.³²

Emails between SIS and the Riverbend CC show that SIS offered opinions as to whether Plaintiff was eligible for benefits under the Plan.³³ In the email from SIS to Riverbend CC on December 17, 2015, SIS explained that it did not believe that Plaintiff was eligible for benefits under the Plan, and asked how Riverbend CC wanted to handle the claim, inquiring whether it wanted to pay Plaintiff's claim or deny it under the Plan.³⁴ Riverbend CC responded that it decided to deny Plaintiff's claim under the Plan.³⁵ On August 10, 2016, the manager of the Riverbend CC, Wynn Chapman ("Chapman"), stated that there was no new information that would warrant a change in position as to the denial of Plaintiff's claim.³⁶ Chapman explained that Riverbend CC decided to therefore reaffirm the denial of benefits under the Plan.³⁷ In his deposition, Chapman explained that SIS reviewed the medical records, that he relied on their evaluation of the records, and that the medical records were not personally reviewed by the Riverbend Defendants.³⁸

Jakhar testified that she was told that the Riverbend Defendants did a "thorough" job of investigating Plaintiff's claims and that they undertook their own investigation.³⁹ Jakhar explained that SIS took "direction and information" from the Riverbend Defendants and that it did not "make any determinations."⁴⁰ Jakhar also testified that Riverbend "was adamant that [Plaintiff's injury] was not an on-the-job accident and that this was related to the diabetes."⁴¹

D. Initial Denial

On November 3, 2015, Plaintiff signed and submitted a claim to SIS, seeking the Plan's benefit based on his toe injury and subsequent amputation.⁴² On January 15, 2016, his claim was denied.⁴³ The denial explained that Plaintiff's injury was not covered for several reasons: (1) it was not the result of an accident; (2) medical treatment due to illness was not covered by the plan; and (3) Plaintiff's injury was not immediately reported to his supervisor.⁴⁴

E. Denial on Appeal

On July 12, 2016, Plaintiff filed an appeal, which was denied on August 12, 2016.⁴⁵ In the affirmation decision, Chapman reasoned:

The ERISA plan provides for treatment of bodily injury solely and independently of all other causes that results from a covered accident. [Plaintiff] did not inform us his foot or toe was injured when he reported the fall. He indicated an injury only to his hand and said he did not need medical treatment, so we went ahead and administered first aid to the scratch on his hand.

Mr. Woods was off work on more than one occasion before the accident as a result of his uncontrolled diabetes

, and he spoke freely about his condition. That uncontrolled diabetes is indicated to be the cause of Mr. Woods' foot and toe condition.

The ERISA...