Lacy Atzin et al v. Anthem, Inc. et al, No. 2:2017cv06816 - Document 33 (C.D. Cal. 2018)
Court Description: ORDER DENYING DEFENDANTS' MOTION TO DISMISS 20 by Judge Otis D. Wright, II. (iv)
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Lacy Atzin et al v. Anthem, Inc. et al Doc. 33 O 1 2 3 4 5 6 7 United States District Court Central District of California 8 9 10 11 12 LACY ATZIN; MARK ANDERSEN, on behalf of themselves and a class of similarly situated individuals, v. 14 15 ORDER DENYING DEFENDANTS’ MOTION TO DISMISS [20] Plaintiff, 13 Case 2:17-CV-06816-ODW (PLAx) ANTHEM, INC and ANTHEM UM SERVICES, 16 Defendants. 17 I. 18 INTRODUCTION 19 Plaintiffs Lacy Atzin and Mark Andersen bring this putative class action on 20 behalf of themselves and others similarly situated against Defendants Anthem, Inc. 21 (“Anthem”) and Anthem UM Services (AUMS).1 (See generally Complaint, ECF No. 22 1.) Atzin alleges claims against Defendants for: 1) the denial of plan benefits in 23 violation of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 24 U.S.C. § 1132(a)(1)(B); and 2) breach of fiduciary duty in violation of ERISA, 29 25 U.S.C. § 1132(a)(3). 26 27 28 1 The Court refers to all defendants collectively as “Defendants.” Dockets.Justia.com 1 Defendants move to dismiss the Complaint because: 1) Anthem is not is not a 2 proper defendant; and 2) Plaintiffs’ breach of fiduciary duty claim is duplicative of 3 their claim for plan benefits. II. 4 FACTUAL BACKGROUND2 5 Anthem provides health benefit plans that are administered by its wholly owned 6 subsidiaries. (Compl. ¶ 1.) AUMS is one such subsidiary and serves as the claims 7 administrator for all Anthem plans. (Id. ¶ 2.) Anthem assists AUMS in carrying out 8 various administrative duties, including formulating coverage guidelines and 9 determining the types of claims that will be approved or denied. (Id.) Plaintiffs allege 10 that Defendants wrongfully denied them benefits by refusing to grant their requests for 11 microprocessor controlled prostheses, an artificial extension that replaces a missing 12 body part. (Id. ¶¶ 3, 49–60.) 13 Anthem plans deny coverage for treatments that are not “medically necessary” 14 or “investigational.” (Id. ¶¶ 19–20.) To assist in administering the plans, Defendants 15 also adhere to coverage guidelines for specific treatments, such as OR-PR.00003, 16 Anthem’s medical policy for microprocessor controlled prostheses. (Id. ¶¶ 16, 21.) 17 Plaintiffs allege that OR-PR.00003—which applies to all Anthem plans—is 18 wrongful because it contradicts their plans’ definition of the “medical necessity” and 19 “investigational” exclusions. (Id. ¶¶ 3, 16, 18–20.) OR-PR.00003 sets forth four 20 criteria to determine whether a microprocessor controlled prostheses is “medically 21 necessary” for any given claimant. (Id. ¶ 21.) The policy only covers claimants if the 22 individual: 1) is physically and mentally capable of using a microprocessor controlled 23 prosthesis; 2) is able to ambulate faster than their baseline rate using a standard 24 prosthesis; 3) has a need for daily long distance ambulation at variable rates outside of 25 their home; and 4) has a need for regular ambulation on uneven terrain or regular use 26 on stairs outside of their home or place of employment. (Id.) Plaintiffs contend that 27 28 2 All factual references are allegations taken from Atzin’s Complaint and accepted as true for purposes of this Motion. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 2 1 this policy unreasonably strict and therefore “erroneous.” (Id. ¶ 22.) Plaintiffs also 2 contend that Or-PR.00003 contains a blanket policy of denying all requests for 3 microprocessor controlled foot-ankle prostheses, which flies in the face of medical 4 studies demonstrating the benefits of such prostheses. (Id. ¶ 23, 24.) III. 5 LEGAL STANDARD 6 A motion to dismiss under either Rule 12(c) or 12(b)(6) is proper where the 7 plaintiff fails to allege a cognizable legal theory or where there is an absence of 8 sufficient facts alleged under a cognizable legal theory. Bell Atl. Corp. v. Twombly, 9 550 U.S. 544, 555 (2007); see also Shroyer v. New Cingular Wireless Serv., Inc., 622 10 F.3d 1035, 1041 (9th Cir. 2010). That is, the complaint must “contain sufficient 11 factual matter, accepted as true, to state a claim to relief that is plausible on its face.” 12 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). IV. 13 DISCUSSION 14 A. Request for Judicial Notice 15 Plaintiffs request the Court take judicial notice of a court order Denying Motion 16 to Dismiss issued in Lawrence Bradford v. Anthem, Inc. et al., Case No. 2:17-cv- 17 5098-AB (KSx) (C.D. Cal. Nov. 2, 2017). Bradford is not a related proceeding3 and 18 Plaintiffs rely on Bradford not for the adjudicative facts, but for its legal authority. It 19 is unnecessary to take judicial notice of case law, but the Court will consider Bradford 20 as persuasive legal authority. See McVey v. McVey, 26 F. Supp. 3d 980, 984 (C.D. 21 Cal. 2014); see also Fed. R. Evid. 201. Plaintiff’s Request for Judicial Notice is 22 therefore DENIED. 23 B. 24 Defendants argue that Anthem should be dismissed from both claims because it 25 Anthem is a Proper Defendant for Both Claims is not a proper defendant. (Mot. 9, 13.) 26 3 27 28 Plaintiffs previously attempted to transfer the case as a related proceeding to Judge André Birotte, Jr., who is presiding over Bradford. (See ECF No. 21.) Judge Birotte declined the transfer, stating that the cases are not related in part because they involve different treatments for different medical conditions. (See ECF No. 24.) 3 1 In Cyr v. Reliance Standard Life Insurance Co., 642 F.3d 1202 (9th Cir. 2011) 2 (en banc), the Ninth Circuit analyzed the Supreme Court’s holding in Harris Trust & 3 Savings Bank v. Salomon Smith Barney, Inc., 530 U.S. 238 (2000), and concluded that 4 there was no limit as to who could be sued under both § 1132(a)(3) and 5 § 1132(a)(1)(B). Broadly stated, “an entity other than the plan itself or the plan 6 administrator may be sued under [ERISA] in appropriate circumstances . . . as long as 7 that party’s individual liability is established.” Cyr, 642 F.3d at 1204, 1207. Liability 8 extends at least to any party that can deny a claimant’s “request for increased benefits 9 even though . . . it was responsible for paying legitimate benefits claims.” Id. at 1207. 10 The Ninth Circuit thus held the insurer in Cyr liable because it “effectively controlled 11 the decision whether to honor or deny a claim under the program.” Id. at 1204. 12 The Ninth Circuit later clarified the reach of Cyr in Spinedex Physical Therapy 13 USA Inc. v. United Healthcare of Arizona, Inc., 770 F.3d 1282 (9th Cir. 2014). 14 “[P]roper defendants under § 1132(a)(1)(B) for improper denial of benefits at least 15 include ERISA plans, formally designated plan administrators, insurers or other 16 entities responsible for payment of benefits, and de facto plan administrators that 17 improperly deny or cause improper denial of benefits.” Id. at 1297. Suits may also be 18 brought “against the plan as an entity and against the fiduciary of the plan.” Id., 19 quoting Hall v. Lhaco, Inc., 140 F.3d 1190, 1194 (8th Cir. 1998) (emphasis omitted); 20 see 29 U.S.C. § 1002(21)(A) (a fiduciary is any entity that exercises discretionary 21 authority or control over the plan’s management, administration, or disposition of 22 assets). 23 In this case, there is no dispute that Anthem is neither the plan nor plan 24 administrator. (Compl. ¶¶ 1–3.) However, Plaintiff alleges that Anthem is a de facto 25 administrator due to the control it wields over the policy making process. (Opp’n 4.) 26 Specifically, Plaintiffs allege that Anthem aided AUMS in developing and 27 implementing OR-PR.00003, which sets forth specific criteria that must be met before 28 a claimant’s request for a microprocessor controlled prosthesis is granted. (Compl. ¶¶ 4 1 2, 21.) Plaintiffs also allege that OR-PR.00003 contains a categorical rule mandating 2 blanket denials of microprocessor controlled foot-ankle prostheses. (Id. ¶ 23.) By 3 creating such policies, Plaintiffs contend that Anthem “collaborat[es] with Anthem 4 UM on the types of claims that will be approved or denied.” (Id. ¶ 2.) 5 Anthem argues that these allegations only show that Anthem helped to develop 6 the medical policies at issue, but the development of those policies are a “step 7 removed” from administrative decisions. (Mot. 12.) However, under Spinedex and 8 Cyr, whether a party actually makes the final administrative decision is not 9 dispositive. The relevant inquiry is whether it “den[ies] or cause[s] improper denial 10 of benefits.” Spinedex, 770 F.3d at 1297 (emphasis added). This is what Anthem 11 has done. The coverage guidelines developed by Anthem “cause” grants or denials by 12 foreclosing certain claims—such as claims for microprocessor controlled foot-ankle 13 prostheses—regardless if AUMS would otherwise find them “medically necessary” 14 and not “investigational” under plan definitions. (See Compl. ¶ 23.) 15 Anthem’s reliance on Cox v. Reliance Standard Life Insurance Co., 2014 WL 16 896985 (E.D. Cal. Mar. 6, 2014) and Cox v. Allin Corporation Plan, 2013 WL 17 1832647 (N.D. Cal. May 1, 2013) is misplaced. In both cases, the plaintiffs sought to 18 sue their employer as sponsors of their respective plans. See Reliance, 2014 WL 19 896985 at *3; Allin, 2013 WL 1832647 at *4. The courts dismissed the employers as 20 improper defendants because the plaintiffs did not make any allegations that their 21 employers had the authority or obligation to resolve claims. See Reliance, 2014 WL 22 896985 at *3–4, 6; Allin 2013 WL 1832647 at *4. In contrast, Plaintiffs allege that 23 Anthem had a hand in developing coverage guidelines that determine what types of 24 claims should be granted or denied. (Compl. ¶¶ 2, 21–23.) 25 26 For these reasons, the Court finds that Anthem is a proper defendant for Plaintiffs claims under § 1132(a)(1)(B) and § 1132(a)(3). 27 28 5 1 C. Duplicative Claims 2 Defendants also move to dismiss Plaintiffs’ second claim for breach of 3 fiduciary duty on the grounds that it is duplicative of their first claim for denial of plan 4 benefits. (Mot. 15.) 5 ERISA allows plaintiffs to seek relief under both §1132(a)(1)(B) and 6 § 1132(a)(3). Moyle v. Liberty Mut. Ret. Ben. Plan, 823 F.3d 948, 960–61 (9th Cir. 7 2016), citing CIGNA Corp. v. Amara, 563 U.S. 421 (2011). Although plaintiffs are 8 prohibited from seeking “duplicate recoveries when a more specific section of the 9 statute . . . provides a remedy similar to what the plaintiff seeks under the equitable 10 catchall provision [of § 1132(a)(3),]” plaintiffs are permitted to present both 11 § 1132(a)(1)(B) and § 1132(a)(3) as alternative theories of liability so long as there is 12 no double recovery. Id. at 961, quoting Silva v. Metro. Life Ins. Co., 762 F.3d 711, 13 726 (8th Cir. 2014) (emphasis in original). In other words, “§ 1132(a)(1)(B) and § 14 1132(a)(3) claims can proceed simultaneously if they plead distinct remedies.” Id. 15 Plaintiff’s § 1132(a)(1)(B) claim requests the “payment of medical expenses, 16 interest thereon, [and] a clarification of rights.” Plaintiff’s § 1132(a)(3) claim seeks 1) 17 declaratory relief that Defendant’s denials of requests for microprocessor controlled 18 prostheses are wrong and improper; 2) an accounting; and 3) injunctive relief 19 requiring Defendants to reevaluate and reprocess Plaintiffs’ requests; 4) provide notice 20 of the reevaluation and reprocessing; and 5) precluding Defendants from relying on 21 specific reasons not recited in their form denial letters. (See Compl. ¶ 60(a)–(f).) 22 Although some of the requested relief for their § 1132(a)(3) claim—an injunction 23 requiring reevaluation of Plaintiffs’ claims, for example—may be duplicative, 24 Plaintiffs request relief under § 1132(a)(3) that plainly is not. For instance, injunctive 25 relief precluding Defendants from relying on specific reasons not recited in their form 26 denial letters is distinct from payment of unpaid benefits. Accordingly, Plaintiffs’ 27 § 1132(a)(3) claim is not duplicative of their § 1132(a)(1)(B) claim. 28 6 V. 1 2 3 CONCLUSION For the reasons discussed above, the Court DENIES Defendants’ Motion to Dismiss. 4 5 IT IS SO ORDERED. 6 7 January 19, 2018 8 9 10 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7
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