Zavislak v. Netflix, Inc.

• Court: U.S. District Court — Northern District of California
• Writing for the Court: EDWARD J. DAVILA, United States District Judge
• Docket Number: 5:21-cv-01811-EJD
• Decision Date: 07 June 2024
• Parties: MARK ZAVISLAK, Plaintiff, v. NETFLIX, INC., Defendant.
• topic: Contracts,Civil Procedure

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MARK ZAVISLAK, Plaintiff, v. NETFLIX, INC., Defendant.

No. 5:21-cv-01811-EJD

United States District Court, N.D. California

June 7, 2024

AMENDED^[1] FINDINGS OF FACT AND CONCLUSIONS OF LAW

EDWARD J. DAVILA, United States District Judge

This dispute arises under the Employee Retirement Income Security Act of 1974 (“ERISA”) section 104, 29 U.S.C § 1024(b)(4) (“Section 104”). Plaintiff Mark Zavislak, the beneficiary of Defendant Netflix, Inc.'s (“Netflix”) health benefit plan, initiated this action against Netflix after he requested health and welfare plan documents from Netflix and did not receive all the Plan documents that Netflix was obligated to furnish under Section 104. Plaintiff alleges various statutory violations including a Section 104 violation and a separate claim that Netflix allegedly failed to operate its Plan in accordance with its written documents.

The Court heard the parties' arguments and evidence, and has also received briefing on all pending motions, as well as pre-hearing and post-hearing submissions of the parties' proposed findings of fact. Having considered the parties' submissions and evidence, the Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).^[2]

I. FACTUAL FINDINGS

A. The Parties

1. Defendant Netflix is a Delaware corporation with a principal place of business in Los Gatos, California. Am. Compl. ¶ 2, ECF No. 16. Netflix is the Plan Sponsor and Administrator of the “Netflix, Inc. Health and Welfare Benefits Plan” (“the Plan”). Decl. of Dana Armanino ISO Netflix's Mot. to Dismiss, or in the Alt. for Summ. J. (“Armanino Decl.”) ¶ 3, ECF No. 19-1. The Plan is a self-funded^[3] employee benefit plan maintained by Netflix pursuant to a written instrument and governed by ERISA. Id.

2. It is undisputed that Plaintiff Mark Zavislak (“Plaintiff” or “Zavislak”) is a beneficiary of the Plan through his spouse, Chen Zheng, who is a Netflix employee. Def.'s Separate Statement ISO Def.'s Reply MSJ; And in Opp'n to Pl.'s MSJ (“Undisputed Facts”) ¶ 2; Armanino Decl. ¶ 8.

B. The Plan

3. Netflix uses a third-party administrator and claims administrators (at times referred to as “carrier partners”) to administer its Plan. Decl. of O. Shane Balloun ISO Pls.' Mot. to Exclude Expert Opinion Testimony of Marcia S. Wagner and Mot. for Summ. J. (“Balloun MSJ Decl.”), Ex. 11 (“Armanino Dep.”) 34:25-37:6, ECF No. 144-11. Collective Health Administrators, LLC (“Collective Health”) serves as the third-party administrator of the Plan. Id. at 51:11-12. Netflix's claim administrators include Anthem Blue Cross Life & Health Insurance Company (“Anthem”), Delta Dental of California (“Delta Dental”), and Vision Service Plan (“VSP”). Id. at 37:5-11; 45:22-46:18. Netflix maintains separate agreements with Collective Health, Anthem, Delta Dental, and VSP that define their obligations and services with respect to the Plan. Id. at 47:9-20; see infra Section I.E.1.

4. Collective Health is a provider of “administrative, analytical, digital, and platform services” for self-funded employee health and welfare benefit plans. Balloun MSJ Decl., Ex. 19 (“BSA”) 1, ECF No. 144-19. As Netflix's third-party administrator to the Plan, Collective Health acts as the intermediary for information exchange with Netflix's claims administrators, such as Anthem, Delta Dental, and VSP. Id. at 37:14-22 (“[Netflix] funnel[s] things to Collective Health, and Collective Health distributes it to other partners for us.”). Collective Health is responsible for, inter alia, member services, the plan administration, claims adjudication, payments, communication to members concerning their claims, and care navigation. Id. at 51:9-15; Balloun MSJ Decl., Ex. 12 (“Nielsen Dep.”) 25:3-7; 56:2, ECF No. 144-12.

5. Netflix leases Anthem's network of medical providers inside and outside of California, and Anthem also provides Netflix with utilization management or case management services (frequently referred to as, “prior authorization”). Nielsen Dep. 16:13-19; 17:6-8. These terms are synonymous and refer to pre-review of a particular admission or procedure to determine whether it is a medical necessity, in which case Anthem's medical management team approves the request, and assistance to beneficiaries experiencing acute and/or chronic issues with navigating the process. Id. at 18:10-17; 18:25-19:3; 30:5-18; 32:2-6. Medical necessity review consists of reviewing the documentation received from the medical provider supporting the condition against the clinical criteria for the medical condition as defined in Anthem's medical policy. Id. at 34:46; 34:20-23. However, Anthem does not review for benefits; its review is limited only to whether an admission or procedure is medically necessary-although an adverse finding as to medical necessity would ultimately impact whether a beneficiary receives benefits. Id. at 32:9-15.

6. Anthem and Collective Health have a joint administrative arrangement (“JAA”) that governs the adjudication of claims under the Plan. Id. at 27:3-6. Under the JAA, Anthem is responsible for pricing claims and Collective Health adjudicates the claims and administers the benefits. Id. at 25:14-21; 26:13-19; Balloun MSJ Decl., Ex. 13 (“Nelson Dep.”) 56:24-57:2, ECF No. 144-13 (“Q: And when you adjudicate or when Collective Health adjudicates, what does that mean? A: So we apply the appropriate corresponding benefits for that claim.”). For example, Anthem receives beneficiaries' claims, prices them, and sends them to Collective Health to adjudicate the claim and apply the benefit. Nielsen Dep. 16:25-17:4; see also Nelson Dep. 56:2023. After this process is complete, Collective Health sends the claim back to Anthem to pay the provider. Nielsen Dep. at 17:5-6.

7. In addition, Netflix provides dental benefits to its participants and beneficiaries through its agreement with Delta Dental. Balloun MSJ Decl., Ex. 14 (“Stanek-Lowe Dep.”) 14:516, ECF No. 144-14; see generally Balloun MSJ Decl., Ex. 20 (“Delta Dental Agreement”), ECF No. 144-20.

8. Netflix also provides vision care benefits to its participants and beneficiaries through its relationship with VSP under the Group Vision Care Plan. Balloun MSJ Decl., Ex. 15 (“Bass Dep.”) 9:14-15, ECF No. 144-15; see generally Balloun MSJ Decl., Ex. 21 (“VSP Agreement”), ECF No. 144-21.

C. Plaintiff's ERISA Section 104 Request(s)

1. January 1, 2021 Request

9. On January 6, 2021, Zavislak sent a letter addressed to “Netflix, Inc.” at Netflix's corporate headquarters dated January 1, 2021 and postmarked January 4, 2021. Am. Compl. ¶¶ 79; Armanino Decl., Ex. H, ECF No. 19-9, at 3; Balloun MSJ Decl., Ex. 3, ECF No. 144-4. Among other things, Zavislak's letter requested, for each calendar year 2021 benefit plan that he was a beneficiary of, “documents governing the operation of the respective plan (e.g., formal plan document, trust agreement, insurance contract, contract of coverage, third party administration agreement, and in general, any document that the claim administrator or named fiduciary refers to when making benefit determinations under the respective plan).” Am. Compl. ¶ 9; Armanino Decl., Ex. H at 3; Balloun MSJ Decl., Ex. 3.

10. In January 2021, Netflix's Los Gatos office was open on a limited basis due to the COVID-19 pandemic and an order from the County of Santa Clara requiring businesses to maximize the number of personnel working remotely and encouraging citizens to stay at home as much as possible. Armanino Decl., Ex. N, ECF No. 20-4 ¶¶ 4-6. At the time Netflix instructed employees that could work from home to do so. Id. ¶ 6.

11. Dana Armanino, the Benefits Manager at Netflix, did not receive Zavislak's Section 104 request dated January 2021. Armanino Decl. ¶ 7.

12. Zavislak did not receive a response to the January 2021 letter. Am. Compl. ¶ 10.

13. On February 11, 2021, Zavislak sent a second letter to Netflix's registered agent for service of process attaching proof that Defendant received the first letter on January 6 and asking if the delay was caused by matters reasonably outside the control of Defendant. Id.; Balloun MSJ Decl., Ex. 5, ECF No. 144-5. In the letter, Zavislak stated for the first time that his request was made pursuant to 29 U.S.C. § 1024(b)(4), and he reminded Netflix that the penalty for failing to comply with his request within 30 days was $110 per day. Balloun MSJ Decl., Ex. 5; Armanino Decl., Ex. H at 1.

14. On February 17, 2021, Jon Hicks, Netflix's in-house counsel, responded to Zavislak's February 11 letter by email. Balloun MSJ Decl. at 4-5, Ex. 6, ECF No. 144-6. Following an email exchange, Zavislak agreed that he would receive the documents from Netflix on a rolling basis because the 2021 documents were not yet available. Id. at 3-4. At the time Zavislak's request was made, the 2021 documents “were still in process of being finalized.” Armanino Dep. 43:20-44:1. Netflix does not provide drafts of Plan documents to participants or beneficiaries. Decl. of Dana Armanino ISO Def.'s Mot. for Summ. J. and Opp'n to Pl.'s Mot. for Summ. J. (“Second Armanino Decl.”) ¶ 8, ECF No. 186-6. Netflix would, however, share a section or portion of a draft Plan document if a participant or beneficiary has a specific question regarding coverage or benefits. Id.

15. On February 24, Hicks electronically provided Zavislak with “all the documents” that were pulled for 2020 and 2021, which included the following seven documents:

• Netflix Inc. Health and Welfare Benefits Adoption Agreement, Plan and Summary Plan Description, effective January 1, 2020 (“2020 Adoption Agreement”) • 2020 Collective Health Netflix HSA Summary Plan Description;

• 2020 Delta Dental Summary Plan Description;

• 2020 VSP

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