Espy v. Independence Blue Cross et al, No. 3:2012cv00952 - Document 37 (S.D. Cal. 2018)
Court Description: ORDER Granting Motion to Dismiss (Dkt. No. 16 ). This action is dismissed without leave to amend. Signed by Judge Larry Alan Burns on 8/6/2018. (jdt). (All non-registered users served via U.S. Mail Service). Modified on 8/7/2018 to add service to nonregistered users (jdt).
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Espy v. Independence Blue Cross et al Doc. 37 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 13 14 15 RHONDA ESPY, vs. CASE NO. 12cv952-LAB (WMc) ORDER GRANTING MOTION TO DISMISS Plaintiff, INDEPENDENCE BLUE CROSS, Defendant. 16 Plaintiff Rhonda Espy, believing that her sleep study and bariatric lap band surgeries 17 would be mostly paid for by a health plan (the “Plan”), underwent the procedures. Defendant 18 Independent Blue Cross paid far less of Espy’s claim than she expected. She filed suit, 19 bringing ERISA-related claims. After two unsuccessful attempts at amendment, she failed 20 to oppose Blue Cross’s second motion to dismiss the second amended complaint (“SAC”). 21 The Court had also ordered Espy to show cause why the Court had jurisdiction, and she filed 22 no response to that either. Because she had been warned about the consequence of failure 23 to file written opposition, the Court construed this as her consent to the motion’s being 24 granted. The Court accepted Espy's non-opposition as her consent to entry of the order of 25 dismissal, and granted the motion. Espy then appealed. 26 The Ninth Circuit determined that the Court should have considered alternatives to 27 dismissal. The panel remanded with instructions to vacate the dismissal of the SAC, albeit 28 without addressing the jurisdictional issue. Although the panel suggested that it thought -1- 12cv952 Dockets.Justia.com 1 Espy's complaint could have survived the motion to dismiss, it made clear that was merely 2 dicta and should not be relied on. (See Mandate, Docket no. 26, at 3 ("We are not in a 3 position to assess the merits of Espy's action, but it seems likely that her complaint could 4 have survived at the motion to dismiss stage if the motion had been considered on the 5 merits.")) The panel did not address the jurisdictional issues, or comment on Espy's failure 6 to respond to the Court's order to show cause. Jurisdiction and the merits of Espy’s claims 7 are therefore appropriate matters for the Court to decide. United States v. Cote, 51 F.3d 178, 8 182 (9th Cir. 1995) (quoting In re Sanford Fork & Tool Co., 160 U.S. 247, 256 (1895)) (on 9 remand, district court may “consider and decide any matters left open by the mandate”). 10 On remand, the Court vacated the dismissal, but ordered Espy to respond to its order 11 to show cause, and also to file her opposition to the motion to dismiss. Because the panel 12 opined that, in spite of having failed to file an opposition, Espy might show up at the hearing 13 and present her arguments there, the Court's order clarified that if Espy failed to oppose the 14 motion again, no oral argument would be held. (See Docket no. 25, 2:3–13).) The Court also 15 explained that fairness demands that the parties have a chance to prepare their rebuttal or 16 response, and that Espy should not expect to make any points at oral argument that she has 17 not raised in her written opposition. (Id. at 2:9–13.) The Court also cautioned that a hearing 18 would be held only if the Court determined it was appropriate, and that the matter might be 19 submitted on the papers without oral argument. (Docket no. 25.) 20 In addition to the required briefing, Espy filed a surreply to Blue Cross's reply brief. 21 By discrepancy order, the Court accepted this for filing. 22 Jurisdiction 23 Blue Cross raised the issue of standing, which is jurisdictional, by pointing out that its 24 records suggested Espy had assigned her benefits. In view of the obligation of federal courts 25 to confirm their own jurisdiction before reaching the merits, see Steel Co. v. Citizens for a 26 Better Environ., 523 U.S. 83, 94 (1998), the Court directed Espy to explain whether she did 27 or did not assign her benefits. Espy responded ambiguously, failing to comply with the 28 Court's direction that she squarely address this issue. The Court then ordered her to file a -2- 12cv952 1 memorandum showing why her complaint should not be dismissed for lack of standing. This 2 was to be supported by a declaration under penalty of perjury stating unequivocally whether 3 she had assigned her benefits. If she had assigned her benefits, it would be her assignee 4 and not Espy who had standing to sue. See Blue Cross of Calif. v. Anesthesia Care Assocs. 5 Medical Group, Inc., 187 F.3d 1045, 1051 (9th Cir.1999) (citing Misic v. Building Serv. 6 Employees Health & Welfare Trust, 789 F.2d 1374, 1377 (9th Cir.1986)). As the party 7 invoking the Court’s jurisdiction, Espy bears the burden of establishing it. See Spokeo, Inc. 8 v. Robins, 136 S. Ct. 1540, 1547 (2016). And until she does so, jurisdiction is presumed to 9 be lacking. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). 10 She has now filed a declaration, which is little better than before. She did not file a 11 separate memorandum. If this were the first time, Court would ordinarily accept her factual 12 declaration at face value for now. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 13 (1992) (holding that the party invoking federal jurisdiction bears the burden fo establishing 14 the elements of standing at each stage of litigation). The problem here is that Espy has been 15 told several times what she needs to show, and has not done it. All the Court has to base its 16 decision on is her own opinion about the legal effect of something she signed, which she 17 does not attach or quote. 18 The declaration says she has not assigned her “patient rights and benefits” under the 19 Plan. Yet at the same time, it says she has directed her insurance company to send her 20 benefit check payments directly to ACSC. This merely repeats what was known before. (See 21 Docket no. 25 at 2:25–3:1.) 22 The Plan does not include an anti-assignment clause. In the absence of such a 23 clause, “ERISA does not forbid assignment by a beneficiary of his right to reimbursement 24 under a health care plan to the health care provider.” Misic v. Bldg. Serv. Emps. Health and 25 Welfare Tr., 789 F.2d 1374, 1377 (9th Cir. 1986) (per curiam). See also Spinedex Physical 26 Therapy USA Inc. v. United Healthcare of Arizona, Inc., 770 F.3d 1282, 1297 (9th Cir. 2014)) 27 (a plan’s anti-assignment clause can prevent effective assignments). 28 /// -3- 12cv952 1 Recently, the question of whether assignment of payments constituted an assignment 2 for purposes of ERISA has been debated in other federal courts, and the Court has taken 3 care to review these. As discussed in Dual Diagnosis Treatment Center, Inc. V. Blue Cross 4 of Calif., 2016 WL 6892140 at *4–*5 (C.D. Cal., Nov. 22, 2016) the Third and Sixth Circuits 5 have determined that assigning the right to payment confers on a provider standing to sue 6 for those benefits under ERISA. The corollary is that if an assignment of rights is effective 7 then the plan participant (i.e., the patient) loses standing — at least, for the limited purposes 8 of that one claim. 9 Recently, the Ninth Circuit clarified that the assignment of a right to payment (e.g., to 10 a health care provider) does not act as a more general assignment of benefits. See 11 generally, DB Healthcare, LLC v. Blue Cross Blue Shield of Arizona, Inc., 852 F.3d 868 (9th 12 Cir. 2017). The right to payment and the right to sue for that payment can be assigned. Id. 13 at 876. Doing so would not assign other rights under ERISA, however, such as the right to 14 sue for breach of fiduciary duty. Id. But for reasons discussed below, the only possibly viable 15 claim Espy has is a claim for payment. If she has assigned that to ACSC, then she may 16 have assigned to ACSC the right to sue for that payment. 17 In DB Healthcare, the Ninth Circuit treated an authorization of payment directly to a 18 provider, even without use of the term “assign” or “assignment,” as an assignment of limited 19 rights to payment under ERISA. Id. at 876. And if the right to payment was assigned, then 20 the provider would have the right to sue. Misic, 789 F.2d at 1377–78. If that happened, 21 ACSC — the one with the right to receive payment — would have suffered the compensable 22 injury, rather than Espy. “[A] valid assignment confers upon the assignee standing to sue 23 in place of the assignor.” Id. at 1378 (emphasis added). See also Spinedex, 770 F.3d at 1293 24 (participants who assigned their right to seek payment could not thereafter seek payment of 25 those claims themselves). Viewing Espy’s declaration in detail, she apparently has not retained the right to sue. 26 27 She says, in pertinent part: 28 /// -4- 12cv952 1 2. I did not assign my patient rights and benefits under my health plan. 2 3. I directed my insurance company to send my benefit check payments directly to the providers for medical services rendered. 3 4 5 6 4. I did not sign an authorization of representation that assigned to the medical providers my patient rights and benefits under my health plan, nor did I authorize the providers to represent me in legal proceedings that might be necessary to pursue appropriate payment of benefits under my insurance plan. 7 (Docket no. 27 at 2:3–9.) Measuring this against the very simple term that DB Healthcare 8 treated as an assignment (“I Hereby Authorize My Insurance Benefits to Be Paid Directly to 9 the Physician,” 852 F.3d at 876) it appears Espy probably has assigned to ACSC her right 10 to payment for the procedures she underwent. That is not to say she assigned all her ERISA 11 rights to ACSC. See id. at 876. But the only right that is really at issue here is the right to 12 payment, and that apparently belongs to ACSC. The fact that she never mentioned 13 authorizing ACSC to sue or to represent her in court does not change anything. See id. at 14 877 n.7 (“An assignment of the right to receive payment of benefits generally includes the 15 limited right to sue for non-payment under § 502(a)(1)(B).”) Her own beliefs about the effect 16 of all this merely amounts to a legal conclusion, which need not be accepted as true — and 17 in light of DB Healthcare and other precedent, cannot be accepted. 18 This does not appear to be merely a case of inartful drafting, or a pro se litigant who 19 misunderstands legal subtleties. Rather, it appears Espy really cannot establish standing to 20 sue for non-payment. Blue Cross’s briefing points out forms that suggest she intended to 21 and did assign her right to payment. Furthermore, the issue has been raised repeatedly. She 22 has told to be specific and unambiguous, and apparently cannot in good faith say any more 23 than she already has. 24 Mindful of the Supreme Court’s instruction that jurisdiction is presumed to be lacking 25 until it is affirmatively shown, see Kokkonen 511 U.S. at 377, the Court finds that Espy lacks 26 standing to sue for additional payment. 27 Because she attempts to raise other claims, the Court will address those on the 28 merits. But even with regard to her claim for additional payment, some discussion of the -5- 12cv952 1 merits is appropriate. As the Supreme Court has explained, even if a claim is barred for some 2 other reason it may be appropriate to discuss why a party would lose on the merits. See 3 Carey v. Saffold, 536 U.S. 214, 225–26 (2002). Here, the law regarding assignments and 4 standing does not appear to be firmly settled, and it is possible another panel of the Ninth 5 Circuit might not follow DB Healthcare’s assumption that authorization of payments to a 6 provider amounted to an assignment. See Saffold at 225–26 (explaining that reaching the 7 merits may be appropriate in order to give a reviewing court alternative grounds for decision). 8 It may also be helpful to show a pro se litigant “that it was not merely a procedural 9 technicality that precluded [her] from obtaining relief.” Id. at 226. 10 Legal Standards 11 A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro v. 12 Block, 250 F.3d 729, 732 (9th Cir. 2001). In ruling on a motion to dismiss, the Court accepts 13 all allegations of material fact in the complaint as true and construes them in the light most 14 favorable to the non-moving party. Cedars–Sinai Medical Center v. National League of 15 Postmasters of U.S., 497 F.3d 972, 975 (9th Cir. 2007). 16 The pleading standard is governed by Bell Atlantic Corp. v. Twombly, 550 U.S. 544 17 (2007) and Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To avoid dismissal, the complaint 18 must “give the defendant fair notice of what the . . . claim is and the grounds upon which it 19 rests” and its factual allegations must “raise the right to relief above a speculative level.” 20 Twombly, 550 U.S. at 555. The complaint must contain enough factual allegations that, if 21 accepted as true, would state a claim for relief that is “plausible on its face.” Iqbal, 556 U.S. 22 at 678. 23 The scope of review on a motion to dismiss for failure to state a claim is ordinarily 24 limited to the contents of the complaint, including attached documents, as well as any 25 “documents whose contents are alleged in a complaint and whose authenticity no party 26 questions, but which are not physically attached to the pleading, may be considered in ruling 27 on a Rule 12(b)(6) motion to dismiss.” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994), 28 overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. -6- 12cv952 1 2002). The court may treat such a document as “part of the complaint, and thus may assume 2 that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6).” United 3 States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). 4 In ruling on a motion to dismiss, the Court need not accept conclusory allegations. 5 See Iqbal, 556 U.S. at 678. Nor does the Court accept as true factual allegations 6 contradicted by documents attached to the complaint or incorporated by reference into the 7 complaint. See Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). 8 Because Espy is proceeding pro se, the Court construes her pleadings liberally, as 9 it has done throughout this case. See Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987). 10 That being said, the Court cannot supply facts she has not pled. See Ivey v. Board of 11 Regents of the Univ. of Alaska, 673 F.2d 266, 268 (9th Cir.1982). Nor can the Court make 12 her arguments for her, suggest how she should litigate her claims, or otherwise serve as her 13 counsel. See Jacobsen v. Filler, 790 F.2d 1362, 1364–66 (9th Cir. 1986). 14 In the course of this litigation, the Court has ruled on a number of issues. Except to 15 the extent they are inconsistent with the panel’s order, those issues are law of the case. In 16 the absence of any extraordinary reason to do so, they will not be reconsidered or set aside. 17 See Hall v. City of Los Angeles, 697 F.3d 1059, 1067 (9th Cir. 2012). 18 Dismissal of the Amended Complaint, and Filing of the SAC 19 In its order dismissing Espy’s first amended complaint, the Court dismissed certain 20 claims with prejudice, but gave her leave to amend others. It did not give her leave to add 21 new claims. 22 Originally, Espy alleged she was entitled to payment for two surgeries and a sleep 23 study. The sleep study accounted for a relatively small portion of her claim, and the amount 24 Blue Cross paid towards that claim was proportionately much higher than for the surgeries.1 25 Then in her amended complaint she mentioned only the surgeries. In her SAC, she added 26 the sleep study back. But she has never developed any separate claim based on it, or tried 27 28 1 Exhibits show that $406.49 of the $5,810.00 bill for the sleep study was approved for payment. (SAC, Ex. C.) -7- 12cv952 1 to show why Blue Cross should have paid more towards it. Rather, she treats all procedures 2 as related, and as governed by the same Plan provisions. 3 The SAC brings three claims: a claim for wrongful denial of benefits under 29 U.S.C. 4 § 1102(a)(2) (ERISA § 502(a)(2)); a claim for breach of fiduciary duty under 29 U.S.C. 5 § 1109; and a claim for benefits under an equitable estoppel theory. She asks for judgment 6 for “the full amount due” under the plan ($48,802.79), attorney’s fees and costs, and interest. 7 Motion to Dismiss 8 Unopposed Arguments 9 Espy only opposed in part Blue Cross's motion to dismiss. Because this is her second 10 chance to oppose the motion, and because she has repeatedly been warned of the 11 consequences of failure to oppose, the Court has no realistic option but to treat her failure 12 to oppose as an admission that she has no argument to make. The Court cannot make her 13 arguments for her, see Jacobsen, 1364–65, and allowing claims to linger that Espy herself 14 has shown no inclination to prosecute runs counter to the interests of justice, economy, and 15 efficiency. See Fed. R. Civ. P. 1. 16 With respect to the claims Espy herself has not defended, the panel has made clear 17 the Court is obligated to consider each of the factors set forth in Ghazali v. Moran before 18 treating her failure to oppose as an abandonment of the issues. Those factors are: 19 (1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the defendants; (4) the public policy favoring disposition of cases of their merits; and (5) the availability of less drastic sanctions. 20 21 22 46 F.3d 52, 53 (9th Cir. 1995). 23 All five factors weigh against Espy. After two rounds of amendment, this case is still 24 at the motion to dismiss stage, and is no closer to resolution. Blue Cross has borne extra 25 litigation expenses and thus far has been denied finality. And after multiple reminders and 26 cautions, it does not appear any more likely now that Espy can offer meritorious arguments 27 against dismissal of her claims. In fact, all indications are that she cannot. In short, to the 28 /// -8- 12cv952 1 extent Espy did not oppose the motion to dismiss, there is no reason to do anything other 2 than dismiss those claims. 3 Specifically, Blue Cross argues that the Second Amended Complaint (SAC) fails to 4 allege any extraordinary circumstances to support her equitable estoppel claim, see Pisciotta 5 v. Teledyne Indus., Inc., 91 F.3d 1326, 1331 (9th Cir. 1996), and that she has failed to allege 6 how Blue Cross violated its fiduciary duties towards her. It also argues that as a pro se 7 litigant she cannot recover attorney’s fees. 8 Under Ninth Circuit precedent, an ERISA beneficiary seeking to recover benefits 9 under an equitable estoppel theory must both plead and prove, as part of her claim, 10 "extraordinary circumstances." Pisciotta, 91 F.3d at 1331; Spink v. Lockheed Corp., 125 11 F.3d 1257, 1262 (9th Cir. 1997) (holding that a plaintiff must allege extraordinary 12 circumstances). “‘Extraordinary circumstances’ generally involve acts of bad faith on the part 13 of the employer, attempts to conceal a significant change in an ERISA plan, or affirmative 14 acts of fraud." Biba v. Wells Fargo & Co., 2010 WL 4942559 (N.D. Cal., Nov. 10, 2010) 15 (citing cases). A single misrepresentation is not enough. See Capianco v. Long-Term 16 Disability Plan of Sponsor Uromed Corp., 247 Fed. App’x. 885, 887 (9th Cir. 2007) (holding 17 that summary judgment in favor of benefit plan was proper, where plaintiff had "shown at 18 most one instance of [it] misrepresenting its coverage"). The SAC does not plead any 19 extraordinary circumstances, Blue Cross asserts there are none, and Espy does not disagree 20 nor does she attempt to show she could plead them. Because this required element is 21 missing, and because Espy cannot correct this defect, her equitable estoppel claim is subject 22 to dismissal with prejudice. 23 24 Espy also does not explain how Blue Cross violated its fiduciary duty, or why she would be entitled to attorney’s fees. 25 These are not the SAC’s only defects, however. As discussed below, all of Espy’s 26 claims, even the ones she attempted to defend in her opposition, must fail. Because Espy 27 could not prevail on the merits for other reasons, treating these arguments as abandoned is 28 appropriate under Ghazali. -9- 12cv952 1 Entitlement to Additional Payment 2 Espy does, however, argue that she is entitled to additional payment under the Plan’s 3 terms. The SAC quotes and attaches portions of a Plan document that Espy relies on to 4 establish her claim.2 Although she mentions three different procedures, she treats all three 5 as subject to the same Plan terms. Blue Cross argues that, under the terms of the Plan, Espy 6 is not entitled to relief. 7 The heart of the dispute is a clause that provides as follows: 8 a. For services provided by Non-Preferred Facility Providers that have no contractual arrangement with the Carrier, “Covered Expenses” means the lesser of the: (a) Facility Provider’s allowable charges; (b) Medicare Allowable Payment, or © Reasonable and Customary Charge for the Covered Services. 9 10 11 (SAC, ¶ 14.) Although Blue Cross paid a portion of Espy’s claim, it did not pay for most of the 12 services provided by her health care provider Ambulatory Care Surgery Center (“ACSC”). 13 She agrees ACSC was a non-preferred facility provider that did not have a contract with Blue 14 Cross, and that this clause governs her claim. The only real question concerns the meaning 15 of subclause (b), the Medicare Allowable Payment. 16 Espy argues that Medicare does not have an “Allowable Payment” for the procedures 17 that were performed on her, because ACSC is an outpatient facility, and Medicare will only 18 “allow for” the procedure to be done in a hospital. (SAC, ¶ 15.) She supports this with a 19 copy of the Medicare National Coverage Determinations Manual in effect at the time. 20 Therefore, she concludes, “Medicare has no rates” for this procedure as performed on her, 21 and subclause (b) does not apply here. (Id.) Her interpretation, at its heart, is that the 22 absence of a Medicare fee schedule for a particular type of service means either that the 23 “Medicare Allowable Payment” does not exist, or else that it is limitless. 24 25 26 27 28 2 The Court’s earlier orders explain why the Court is treating this, as well as the documents attached to the motion to dismiss, as Plan documents. See Espy v. Independence Blue Cross, 2013 WL 1164364 at *2 and n.1 (S.D. Cal., Mar. 20, 2013). No party has ever challenged the authenticity of any of these documents, or argued that they are not Plan documents. In fact, the document Espy attaches to the SAC and identifies as the Plan document is a printout of an earlier document Blue Cross attached to its first motion to dismiss. (See SAC, Ex. A (Docket no. 15 at 21) (attaching portions of Docket no. 3-4 with CM/ECF identifiers, and hand-annotating it “*The Plan”).) - 10 - 12cv952 1 This is based on an erroneous reading of an incomplete version of the Plan document, 2 and also in part on a misreading of the Medicaid Manual she cites. The Manual in fact says 3 that bariatric lap band procedures, such as the type Espy underwent 4 5 6 are only covered when performed at facilities that are: (1) certified by the American College of Surgeons as a Level 1 Bariatric Surgery Center . . .; or (2) certified by the American Society for Bariatric Surgery as a Bariatric Surgery Center of Excellence . . . . 7 (SAC, Ex. B (Docket no. 15 at 24).) The Manual includes a list of approved facilities, which 8 does not include ACSC.3 Espy has hand-annotated these pages, showing that these are the 9 provisions she is relying on. 10 As an initial matter, Espy is wrong to read the Manual as she does. The Manual 11 provides that procedures must take place in one of the approved facilities in order to be 12 covered. It does not, as she argues, leave open the question of what payment is allowed for 13 procedures that take place in other facilities. Instead, it makes clear those are not covered, 14 and Medicare will not pay anything for them. 15 The capitalized terms in the clause quoted above are defined terms, and definitions 16 are provided in a separate section of the document. Espy highlights all of those definitions 17 except one, that for “Medicare Allowable Payment.” (See SAC, Ex. A (Docket no. 15 at 18 15–21).) But even though she did not attach this particular page it to the SAC, it is part of 19 the document she selected pages from to attach to the SAC, and whose authenticity and 20 applicability she affirms. (See Docket no. 3-4 at 62.) Blue Cross, however, did attach that 21 page to its motion to dismiss, and cited it. The Plan document defines “Medicare Allowable 22 Payment” as “the payment amount, as determined by the Medicare program, for a Covered 23 Service or supply.”4 (Docket no. 16-3 at 62.) This definition makes no reference to the 24 existence of fee or rate schedules, and does not leave the amount undefined. Rather, it 25 26 27 28 3 ACSC’s letter to Blue Cross suggests that ACSC may have erroneously believed it was an approved facility. (See SAC, Ex. E (ACSC’s letters to Blue Cross, referring to its San Diego facility as a “Medicare certified surgery center”).) 4 “Covered Service” here is a defined term within the Plan document, and refers to whether a service or supply is covered by the Plan. It does not refer to whether a service is covered by Medicare. - 11 - 12cv952 1 defines the term as whatever “payment amount” the “Medicare program” has determined. 2 By refusing to pay anything for the type of procedure Espy had, the Medicare program has 3 determined that the “payment amount” is zero. 4 Under the clause Espy is relying on, this means Blue Cross pays nothing for this 5 procedure. That is not the same as saying it is “not covered” under the Plan, however. What 6 it means is that Blue Cross pays nothing for the cost of the surgical procedure itself. Blue 7 Cross did pay some other expenses, such as a portion of her claim attributable to the 8 facilities charge. Unfortunately for Espy, that portion was relatively minor compared to the 9 cost of the surgeries. 10 The Court finds the terms of the Plan unambiguously provide that the payment for the 11 procedures that Espy had was zero. Her claim to enforce the terms of the Plan document 12 therefore fails and must be dismissed. 13 Estoppel Claims 14 “ERISA preempts state equitable estoppel claims but a party may assert a federal 15 equitable estoppel claim in an ERISA action.” Qualls By and Through Qualls v. Blue Cross 16 of California, Inc., 22 F.3d 839, 845 (9th Cir. 1994) (citing Greany v. W. Farm Bureau, 973 17 F.2d 812 (9th Cir. 1991)). Among other things, this requires that the party show that the 18 provisions of the plan were ambiguous, and that oral representations interpreting the plan 19 were made to the employee. Id. at 846. These are only threshold questions, and meeting 20 these two conditions does not by itself establish an equitable estoppel claim. All it means is 21 that the inquiry can go further. Greany, 973 F.2d at 822, n.9. A plaintiff cannot avail herself 22 of an estoppel claim based on representations that would modify the plan. Id. at 822. Under 23 ERISA, oral agreements or modifications cannot be relied on to contradict or override a 24 plan’s written terms. Richardson v. Pension Plan of Bethlehem Steel Corp., 112 F.3d 982, 25 986 n.2 (9th Cir. 1997). 26 Here, neither condition is met. The Plan provision is not ambiguous. But more than 27 that, Blue Cross only made representations to ACSC, not to Espy, and the communications 28 did not involve an interpretation of the Plan. Espy’s exhibits show that ACSC called Blue - 12 - 12cv952 1 Cross to ask for information. (SAC, Ex. B and E.) Specifically, an employee of ACSC asked 2 about pre-approval and about benefits, such as whether Espy was covered, whether the 3 procedure was covered, what her deductible was, and the coverage rate. (Ex. B.) The 4 exhibits show that the calls did not concern interpretation of the Plan’s language or some 5 ambiguity in it. (Ex. E (“When we called for benefits . . . .”)) 6 The SAC and exhibits confirm that it was an employee of ACSC, not Espy, who spoke 7 with Blue Cross, that any representations Blue Cross made were to ACSC, and that Espy 8 heard about Blue Cross’s remarks indirectly. 9 characterizes these representations as having been made to her (id., ¶ 31), this is an 10 unreasonable interpretation of events. She has not alleged facts suggesting that ACSC was 11 acting as her agent or representative when it called Blue Cross, or that Blue Cross thought 12 it was speaking to Espy or to her representative or agent, nor could she. The exhibits and 13 other allegations show that ACSC was calling on its own behalf, to reassure itself about 14 payment, and that Blue Cross believed it was speaking to ACSC. (Id., ¶ 24, Ex. B and E.) 15 In her surreply, Espy agrees she never spoke with Blue Cross. Instead, she argues 16 that she directed ACSC to verify her benefits with Blue Cross, and to provide her with a copy 17 of whatever benefit-related document Blue Cross provided her. (Docket no. 32 at 2:1–8.) 18 This would not make ACSC her agent for purposes of asking about an ambiguity in the Plan, 19 however. According to the surreply, Espy wanted ACSC to verify her eligibility for benefits, 20 and to provide her a copy of Blue Cross’s approval letter. She does not allege that she had 21 a question about Plan terms, or even that she looked at the Plan document at that time. And 22 the letters she points to as making representations were addressed to ACSC, not to her. 23 They concern approval of coverage, not Plan terms. They don’t say how much Blue Cross 24 will pay under the Plan. Rather, they include a disclaimer about payment, and note that the 25 approval was based on the information ACSC had submitted. (SAC, ¶¶ 12, 20, 21.) Although Espy 26 The records also do not show that ACSC’s employee asked about whether it qualified 27 as an approved facility, or told Blue Cross ACSC was not an approved facility. If anything, 28 the exhibits suggest ACSC incorrectly believed it was an approved facility. (SAC, Ex. E - 13 - 12cv952 1 (ACSC’s letter, referring to the facility where the surgery was performed as a “Medicare 2 certified surgery center”). 3 Nothing in the allegations or in any of the exhibits suggests that in providing 4 information to ACSC, Blue Cross intended to induce Espy to undergo surgery, or to do so 5 in an unapproved facility, or to expect a certain level of payment. ACSC might have been 6 able to make an estoppel-based claim here, had it joined as a plaintiff. See The Meadows 7 v. Employers Health Ins., 47 F.3d 1006, 1008 (9th Cir. 1995) (holding that ERISA did not 8 preempt claim by healthcare provider based on insurer’s representation about patient 9 coverage). But Espy cannot. 10 Because any representations Blue Cross made about the Plan were to ACSC and not 11 to Espy, she cannot prevail on an estoppel claim. See Bernstein v. Health Net Life Ins. Co., 12 2013 WL 12095240, at *5 (S.D. Cal., Apr. 4, 2013) (citing Pisciotta, 91 F.3d at 1331 and 13 Greany, 973 F.2d at 821) (“Moreover, and fatal to Plaintiff’s instant claim,. . . the Plaintiff can 14 only prevail [on an estoppel claim] if the representations were made to him, rather than to a 15 third party on his behalf.”) 16 The exhibits also make clear that ACSC’s employee spoke to Blue Cross about 17 matters of interest to ACSC, not about the Plan document or interpretation of allegedly 18 ambiguous Plan language. (See SAC, Ex. B.) The letters Blue Cross sent to ACSC 19 approving coverage for the procedures (id.) prominently mention that approval for coverage 20 is not a guarantee of payment. And they mention that authorization was based on the 21 information ACSC had provided to Blue Cross. Even if ACSC thought it had secured 22 promises of payment at a particular rate, these notices would have disabused it of that 23 notion. 24 25 The standard for an estoppel claim is clearly not met here, and this claim cannot be saved by amendment. 26 Breach of Fiduciary Duty 27 Espy had abandoned her breach of fiduciary duty claim when she amended her 28 complaint the first time, and (without leave) added it back without leave when she amended - 14 - 12cv952 1 the second time. The SAC identifies 29 U.S.C. § 1109 as authorizing this claim. Espy’s 2 theory is that by wrongly denying her claim, Blue Cross breached a duty to act in her best 3 interests. She asks for damages for this alleged breach. 4 Espy cannot prevail on a breach of fiduciary claim based merely on denial of benefits. 5 “A fiduciary's mishandling of an individual benefit claim does not violate any of the fiduciary 6 duties defined in ERISA.” Amalgamated Clothing & Textile Workers Union, AFL–CIO v. 7 Murdock, 861 F.2d 1406, 1414 (9th Cir.1988). Amalgamated Clothing & Textile Workers 8 Union, AFL-CIO v. Murdock, 861 F.2d 1406, 1414 (9th Cir. 1988) (citing Mass. Mut. Life Ins. 9 Co. v. Russell, 473 U.S. 134, 146 (1985)). Even if she could some broader practice that 10 harmed participants more generally, she has no standing to raise other participants’ claims. 11 And as a pro se litigant she cannot bring claims on behalf of a class. 12 In her surreply, Espy attempts to recharacterize this issue, claiming that the breach 13 consisted of “drafting and administering an ambiguous plan . . . .” (Docket no. 32 at 7:25–27.) 14 Even assuming the Plan document were ambiguous, this would not create a cause of action 15 for breach of fiduciary duty. See Toohey v. Wyndham Worldwide Corp. Health & Welfare 16 Plan, 673 F. Supp. 2d 1223, 1231 (D. Or. 2009) (rejecting argument that drafting an 17 ambiguous plan term creates a claim for breach of fiduciary duty). The proper remedy would 18 be to construe the relevant provision in Espy’s favor. 19 administering a plan that later turns out to be ambiguous is not a breach of fiduciary duty. See id. By the same token, 20 The Court cannot construe this as a claim under 29 U.S.C. § 1132(a)(1)(B) (ERISA 21 § 502(a)(1)(B)). This section authorizes suits to recover benefits due under the Plan. But for 22 reasons discussed above, she is not entitled to benefits, and this claim would fail. 23 Attorney’s Fees 24 Although the Court dismissed Espy’s claim for attorney’s fees, she added it back in 25 her SAC. As a pro se litigant who is not an attorney, Espy cannot recover attorney’s fees. 26 See Espy, 2013 WL 1164364 at *4; Gemmel v. Systemhouse, Inc., 2009 WL 3157263, at *18 27 (D. Ariz., Sept. 28, 2009) (citing Kay v. Ehrler, 499 U.S. 432, 435–37 (1991)). 28 /// - 15 - 12cv952 1 Conclusion and Order 2 The Court finds that, as to her claim for payment, Espy has failed to meet her burden 3 of establishing standing. Even if that claim were not being dismissed for lack of jurisdiction, 4 it would be dismissed on the merits. Espy’s other claims must also be dismissed, and her 5 complaint cannot be saved by amendment. This action is DISMISSED WITHOUT LEAVE 6 TO AMEND. 7 8 9 10 11 IT IS SO ORDERED. DATED: August 6, 2018 ___________________________________ HONORABLE LARRY ALAN BURNS United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 16 - 12cv952
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