Mitchell v. Blue Cross Blue Shield of North Dakota, No. 18-2784 (8th Cir. 2020)
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Plaintiffs filed suit under the Employee Retirement Income Security Act of 1974 (ERISA), alleging that Blue Cross 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 Blue Cross and in part to plaintiffs.
The Eighth Circuit held that the wrongful denial of plan benefits breaches the parties' contract and deprives the participant of the benefit of their bargain. Therefore, this constitutes an injury to the participant—even if the benefits are assigned to a third party. In this case, plaintiffs satisfied the injury-in-fact component of constitutional standing. The court also held that plaintiffs had statutory standing, because they have alleged a colorable claim that Blue Cross unreasonably prevented the "Allowed Charge" for "Ambulance Services" and denied their claim for benefits based on that interpretation.
On the merits, the court held that Blue Cross did not abuse its discretion by partially denying plaintiffs' claim. The court wrote that the plan gave Blue Cross broad discretion to determine the "Allowed Charge" for air-ambulance services, and Blue Cross has adopted a consistent interpretation, tied to an external benchmark, which is compatible with both the plan's language and its purpose. Finally, the court held that Blue Cross did not abuse its discretion in interpreting the "medical supply" fee language.
Court Description: [Kelly, Author, with Colloton and Beam, Circuit Judges] Civil case - ERISA. The wrongful denial of plan benefits breaches the parties' contract and deprives the participant of the benefit of their bargain; this constitutes an injury to the participant even if the benefits have been assigned to a third party, such as the service provider; as a result, plaintiffs satisfy the injury-in-fact component of standing; they also have statutory standing to bring an action to recover benefits due under the terms of the plan; the plan gives Blue Cross broad discretion to determine the "Allowed Charge" for air-ambulance services and Blue Cross has adopted a consistent interpretation, tied to an external benchmark, which is compatible with both the plan's language and its purpose, and the court cannot say Blue Cross has abused its discretion; Blue Cross's interpretation of the "medical-supply fee" language was not an abuse of its discretion, and the district court erred in granting plaintiff's motion for summary judgment on this claim.
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