Woodley v. Aetna Health Inc et al, No. 2:2008cv01612 - Document 55 (W.D. Wash. 2010)
Court Description: ORDER denying dfts' 46 Second Motion for Summary Judgment by Judge Ricardo S Martinez.(RS)
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Woodley v. Aetna Health Inc et al Doc. 55 1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 8 9 10 GORDON WOODLEY, 11 Plaintiff, 12 13 14 15 CASE NO. C08-1612RSM v. AETNA HEALTH, INC.; ALASKA AIR GROUP, INC. WELFARE BENEFIT PLAN & TRUST; ALASKA AIRLINES, INC. PENSION/BENEFITS ADMINISTRATIVE COMMISSION, ORDER ON SECOND MOTION FOR SUMMARY JUDGMENT 16 Defendants. 17 18 19 20 21 22 23 I. INTRODUCTION This matter comes before the Court on Defendants’ Second Motion for Summary Judgment.1 The Court denied Defendants’ first Motion for Summary Judgment on June 18, 2009. The Court determined that the evidence was insufficient to allow the Court to determine the standard of review of Aetna’s claim denial. The evidence was also insufficient for the Court 24 25 26 27 28 1 In responding to Defendants’ Second Motion for Summary Judgment, Woodley attempted to combine his Response with a Cross-Motion for Summary Judgment. His submission failed to comply with Local Rule 7(d)(3), however, as the noting date should have been no earlier than March 5, 2010. His submission also failed to separate the factual and legal arguments supporting his Response from those supporting his attempted cross-motion. The Court considers his Response in full, and disregards his improperly filed cross-motion. ORDER PAGE - 1 Dockets.Justia.com 1 to grant summary judgment for Defendants. The Court could not find that Section 5 of the 2 Administrative Services Contract between Aetna and Alaska Air Group Welfare Benefits Plan 3 and Trust, dated August 20, 1990, was the operative agreement as of 2007. The Court could not 4 find that Woodley was not entitled to benefits under the express terms of the Plan, because the 5 operative 2007 Plan was not in the record. The absence of the 2007 Plan from the record also led 6 the Court to deny Defendants’ arguments that Woodley’s promissory estoppel claim should be 7 dismissed. 8 9 In their current motion, Defendants argue first that the Court should review Aetna’s denial of Woodley’s claim for benefits for an abuse of discretion. Defendants also argue that 10 Woodley’s ERISA claim should be dismissed because an exception for “experimental” 11 procedures excluded his claim from coverage under the terms of the insurance Plan. Finally, 12 Defendants argue that Woodley’s promissory estoppel claim should be dismissed because the 13 exclusion for experimental procedures was not ambiguous. 14 Woodley counters that Aetna’s decision to deny his claim should be reviewed de novo. 15 He argues that Aetna improperly denied his claim because (1) Aetna had already pre-certified his 16 claim; (2) Aetna has not produced a copy of any “experimental exception” operative in 2007; (3) 17 Aetna improperly changed its reasons for denying his claim at both the first and second levels of 18 the claim appeals process; (4) Aetna was wrong in stating, in its final appeals decision, that 19 Woodley had not called the pre-certification telephone line; and (5) Aetna denied his claim for 20 all of the medical procedures in question, when only some of them were even arguably 21 experimental. He also argues that his promissory estoppel claim should not be dismissed 22 because the exclusion for experimental procedures still has not been produced, and is in any case 23 ambiguous. II. DISCUSSION 24 25 26 A. Summary Judgment Standard of Review Summary judgment is proper where “the pleadings, the discovery and disclosure 27 materials on file, and any affidavits, show that there is no genuine issue as to any material fact 28 and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). The ORDER PAGE - 2 1 Court must draw all reasonable inferences in favor of the non-moving party. See F.D.I.C. v. 2 O’Melveny & Meyers, 969 F.2d 744, 747 (9th Cir. 1992), rev’d on other grounds, 512 U.S. 79 3 (1994). 4 Genuine factual issues are those for which the evidence is such that “a reasonable jury 5 could return a verdict for the non-moving party.” Anderson, 477 U.S. at 248. Material facts are 6 those which might affect the outcome of the suit under governing law. Id. In ruling on summary 7 judgment, a court does not weigh evidence to determine the truth of the matter, but “only 8 determine[s] whether there is a genuine issue for trial.” Crane v. Conoco, Inc., 41 F.3d 547, 549 9 (9th Cir. 1994) (citing O’Melveny & Meyers, 969 F.2d at 747). 10 11 B. Standard of Review of Aetna’s Claim Denial Despite Defendants’ new proffers of evidence, there is insufficient evidence for the Court 12 to conclude either that Section 5 of the Administrative Services Contract was the operative 13 agreement in 2007, or that the Court should review Aetna’s claim denial under an abuse of 14 discretion standard. 15 In ERISA denial of benefits cases such as this, the default standard of review is de novo. 16 Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th Cir. 2006) (en banc) (citing 17 Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). “[F]or a plan to alter the 18 standard of review from the default of de novo to the more lenient abuse of discretion, the plan 19 must unambiguously provide discretion to the administrator.” Id. 20 Since the Court’s June 18 ruling, the only evidence that Defendants have proffered 21 regarding their argument that the abuse of discretion standard applies is one sentence from 22 Thomas G. Richards, Managing Director, Employee Benefits at Alaska Air Group: “Based on 23 information and belief, the Administrative Services Contract previously submitted as Exhibit A 24 to the Declaration of Charles Huber (Court Dkt. #21) was the governing agreement . . . at the 25 time Aetna adjudicated Woodley’s claim . . . .” Without more detail or information, this 26 statement is insufficient to persuade the Court that the seventeen-year-old (in 2007) document 27 was the operative agreement in 2007. A genuine issue of material fact remains. 28 ORDER PAGE - 3 1 Furthermore, even if the Court were satisfied that the Section 5 language was operative at 2 the time of Woodley’s claim, the Court would likely find that the language does not 3 “unambiguously provide discretion to the administrator.” See Abatie, 458 F.3d at 963. The 4 Ninth Circuit, sitting en banc, has recently reaffirmed its holding that “ERISA plans are 5 insufficient to confer discretionary authority on the administrator when they do not grant any 6 power to construe the terms of the plan.” Id. at 963 (citing Ingram v. Martin Marietta Long 7 Term Disability Income Plan, 244 F.3d 1109, 1112 (9th Cir. 2001)). Section 5 states that the 8 Contractholder “delegate[d] to Aetna authority to make determinations on behalf of the 9 Contractholder with respect to benefit payments under the Plan and to pay such benefits.” This 10 11 language does not grant authority to construe the terms of the plan. Instead, Section 5 resembles contract language that the Ninth Circuit has held merely 12 identifies the Plan administrator’s tasks, and bestows no power to interpret the plan. See Ingram, 13 244 F.3d at 1112 (plan language was that “[t]he carrier solely is responsible for providing the 14 benefits under [the] Plan”; “[t]he carrier will make all decisions on claims”; and “the review and 15 payment or denial of claims and the provision of full and fair review of claim denial pursuant to 16 [ERISA] shall be vested in the carrier.”). Discretion may not be “inferred simply from the fact, 17 standing alone, that [the administrator] is making benefit decisions for which it must give 18 reasons.” Sandy v. Reliance Standard Life Ins. Co., 222 F.3d 1202, 1206 (9th Cir. 2000). 19 The Section 5 provision can be contrasted with the language of those provisions which 20 have led the Ninth Circuit to apply abuse of discretion review because the provisions 21 unambiguously conferred discretion. See, e.g., Abatie (“The responsibility for full and final 22 determinations of eligibility for benefits; interpretation of terms; determinations of claims; and 23 appeals of claims denied in whole or in part under the HFLAC Group [Home Life] policy rests 24 exclusively with HFLAC.”) (emphases in Abatie); Pannebecker v. Liberty Life Assur. Co. Of 25 Boston, 542 F.3d 1213, 1215 (9th Cir. 2008) (“[administrator] shall possess the authority, in its 26 sole discretion, to construe the terms of this policy and to determine benefit eligibility 27 thereunder”); McDaniel v. Chevron Corp., 203 F.3d 1099, 1107 (9th Cir. 2000) (conferring “sole 28 ORDER PAGE - 4 1 discretion to interpret the terms of the Plan”); Friedrich v. Intel Corp., 181 F.3d 1105, 1110 n.5 2 (same). 3 Because the Section 5 language does not track precisely the language in prior cases, 4 Defendants have a fair argument that discretion was conferred. But “[i]f language only arguably 5 confers discretion, it does not unambiguously confer discretion and cannot escape the default of 6 de novo review.” Feibusch v. Integrated Device Technology, Inc. Employee Ben. Plan, 463 F.3d 7 880, 884 (9th Cir. 2006). “If an insurance company . . . wants to have discretion in making 8 claims decisions, it should say so.” Ingram, 244 F.3d at 1113-14. What is clear from the record 9 is that Aetna and Alaska were able to unambiguously confer discretion when they so desired. 10 Amendment 7 to the agreement provides that Aetna shall “provide assistance to Contractholder 11 for subrogation services.” Doc. 21, Ex. A, at 17. With regards to its subrogation services, 12 “Aetna has the exclusive discretion” regarding certain subrogation duties. Id. The word 13 “discretion” does not appear in the Section 5, however. 14 Woodley also has strong arguments that the procedural irregularities in Aetna’s handling 15 of Woodley’s claim warrant heightened scrutiny. In sum, while it appears that the de novo 16 standard applies, the Court refrains from deciding the issue at this time. On this motion, as on 17 Defendants’ previous motion for summary judgment, the outcome would be the same under 18 either standard. 19 C. Whether the Procedure Was Excluded as Experimental 20 Defendants argue, as they did on their first motion for summary judgment, that Woodley 21 is not entitled to benefits because the medical procedures were excluded from coverage under a 22 provision in the Employee Handbook excluding experimental procedures. 23 In its June 18, 2009 ruling, the Court noted “that it cannot find that plaintiff is not entitled 24 to benefits under the express terms of the plan, because the operative plan i[s] not in the record at 25 this time.” Defendants have provided other Plan documents and two declarations, but the 26 operative Plan is still not in the record. The new evidence is problematic for several reasons and 27 does not resolve the factual question of what terms were in effect in 2007. 28 ORDER PAGE - 5 1 Defendants have provided what they contend is the 2006 Employee Benefits Handbook. 2 There is, however, a disjunction between the table of contents and the actual text of the 3 document. The page numbers indicated in the table of contents do not match the page numbers 4 of the sections in the text. This disparity casts doubt on the authenticity of the document as a 5 complete and genuine copy of the 2006 handbook. 6 Even if the text of the document is, in fact, the 2006 handbook, the evidence is still 7 insufficient for the Court to hold the 2006 handbook’s relevant “experimental and investigational 8 services” provision operative in this case. Defendants offer the declaration of Richards, who 9 “do[es] not believe that there is any difference between the language set forth in the applicable 10 provision (page 20) of the” 2006 and 2007 handbooks. This statement is problematic for two 11 reasons. First, it is not clear when Richards reviewed the 2007 provision, or to what extent. 12 Second, Richards cites the incorrect page of the alleged 2006 Plan. He cites page 20, but the 13 provision is in fact on page 24 of the proffered 2006 handbook. Richards’s declaration is thus an 14 insufficient basis to determine the operative “experimental” exclusion language, if any, at the 15 time of Woodley’s treatment. 16 Defendants also submitted a second declaration of Valecia Jones. On this issue, Jones 17 states that the exclusion in the alleged 2006 handbook is the same as the exclusion in the 2007 18 handbook. She had previously stated that the 2007 exclusion was substantively the same as the 19 2009 exclusion. There is a triable issue of fact regarding the accuracy of Jones’s recollection of 20 the 2007 provision over a year after she reviewed, perhaps only briefly, a one-page excerpt from 21 the 2007 handbook, which was downloaded from the Internet, sent to the insured, and apparently 22 not retained. 23 Furthermore, Jones’s and Richards’s statements and Defendants’ general argument that 24 the 2006, 2007 and 2009 versions of the exclusion are substantively the same appear to be 25 contradicted by the record. The exclusion appears to have undergone at least one major change 26 at some point between the issuance of the alleged 2006 handbook and the 2009 handbook. The 27 “experimental/investigative” one-paragraph bullet point in the 2006 version was broken 28 completely out of the bullet point list of exclusions and amplified as it became its own section, ORDER PAGE - 6 1 “What are Experimental/Investigative Services?”, in the 2009 version. Instead of a simple, 2 broadly worded bullet point exclusion, the 2009 handbook has two complete paragraphs of text 3 and five bullet points, with more specific clauses. See Document 16, Ex. A, the 2009 handbook, 4 at 34-35; Doc. 47, Ex. A, at 24. Richards may believe that the 2006 and 2007 provisions are the 5 same, and Jones may not “believe there is any substantive difference” between the 2007 and 6 2009 provisions. But they are not, as Defendants contend in the present motion, “identical.” 7 Doc. 46, at 3. A genuine issue of material fact clearly remains regarding what the language of 8 the experimental procedure exclusion was in 2007, if any, and to what extent, as Jones herself 9 declared, “[t]he version of the Plan that was contained on the Alaska Airlines website during Mr. 10 11 Woodley’s appeal was revised in 2007.” Doc. 28, ¶ 2. Finally, the Defendants provided Doc. 47, Ex. B, the open enrollment letter. They argue 12 that this letter states that the only change made to the Handbook between the 2006 and 2007 13 versions was to the acupuncture benefit, which was increased from 15 to 20 visits. In fact, the 14 open enrollment letter merely states that, at least for purposes of conditions for which 15 acupuncture may be sought, the “covered conditions have not changed; the list includes most 16 conditions for which acupuncture is an alternative treatment, and is found in your Benefits 17 Handbook . . . .” This language could simply mean that the conditions for which acupuncture 18 services may be sought have not changed. It does not mean that the Plan’s language regarding 19 experimental procedures, or other non-covered services, remained unchanged from 2006 to 2007. 20 Richards states, apparently based on the language in the open enrollment letter, that between 21 2006 and 2007 the “only change made to the Plan was the acupuncture benefit . . . . No other 22 changes were made to the Plan, or any provisions contained therein.” (emphasis added). This 23 bare assertion is, along with Defendants’ other recent submissions, discussed supra, insufficient 24 to dispose of the genuine issue of material fact that existed when the Court denied Defendants’ 25 first motion for summary judgment. 26 D. Woodley’s Promissory Estoppel Claim 27 28 Relying on Greany v. W. Farm Bureau Life Ins. Co., 973 F.2d 812 (9th Cir. 1992), Defendants argue that Woodley’s promissory estoppel claim must be dismissed because the ORDER PAGE - 7 1 exclusion for experimental procedures is not ambiguous. As mentioned above, without further 2 evidence or testimony at trial, there remains a genuine issue of whether the proffered exclusion 3 provision was the operative provision at the time of Woodley’s benefits claim. The Court cannot 4 now find that the operative provision was unambiguous, or that Woodley’s estoppel claim must 5 be dismissed. III. CONCLUSION 6 7 The Court hereby finds and ORDERS: 8 (1) Defendants’ Second Motion for Summary Judgment (Dkt. #46) is DENIED. 9 (2) The Clerk is directed to forward a copy of this Order to all counsel of record. 10 11 DATED this 9th day of April 2010. 12 A 13 14 RICARDO S. MARTINEZ UNITED STATES DISTRICT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER PAGE - 8
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