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Aviation West Charters, LLC v. UnitedHealthcare Insurance Co.

United States District Court, E.D. California

November 15, 2017

AVIATION WEST CHARTERS, LLC d/b/a ANGEL MEDFLIGHT, Plaintiff,
v.
UNITEDHEALTHCARE INSURANCE COMPANY, Defendant.

          MEMORANDUM AND ORDER RE: MOTION FOR SUMMARY JUDGMENT AND MOTION TO STRIKE

          WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE

         Plaintiff Dina Miller ("Miller") brings this action against defendant UnitedHealthcare Insurance Company ("United") alleging that defendant violated the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a), when it failed to pay Aviation West Charters, LLC ("Aviation West") for ambulatory services provided to M.M., Miller's minor child. Before the court is defendant's Motion for summary judgment and Motion to strike Miller's declaration.

         I. Factual and Procedural Background

         M.M. is covered by an employer-sponsored health benefit plan sponsored by McClone Construction Company ("the Plan"), for which United is the insurer and claims administrator. (See Stalinski Decl., Ex. A, the Plan (Docket No. 24-1).) The Plan offers emergency and non-emergency ambulatory services.

         While on vacation in La Paz, Mexico, M.M. broke her right leg and was subsequently taken to a Mexican hospital. From the hospital, M.M.'s family called and spoke with M.M.'s primary care physician as well as an orthopedic surgeon in Seattle, Washington, and arranged for M.M. to be transported back to Seattle. (PX032.) On Friday, January 10, 2014, Aviation West, an air ambulance service, requested pre-authorization from defendant for air and ground ambulance service to transport M.M. from Mexico to Seattle Children's Hospital. (Stalinski Decl., Ex. B at 1 (Docket No. 24-1) .) A United representative told Aviation West that somebody would contact them soon to request documents. (PX033.) Aviation West later called back and was told that the United system showed that the request had not been categorized as urgent, and that the flight could occur at any time between January 10 and August 10, 2014. (Id.) Aviation West explained the urgency of the request and stated that the flight needed to leave that day. (Id.) The United representative stated that she would put the request "on a rush" and that a case manager would review the request that day. (Id.) Aviation West later called back once more and was again told that the request had not been submitted as urgent. (Id.) Aviation West again explained that the request was urgent and that the flight needed to leave that day. In response, the United representative explained that a case manager had been assigned and would contact Aviation West to request records. (Id.) The representative then stated that United closed at 6 p.m., and explained that "[i]f it's that severe and the patient needs to go to an emergency room, then it's best that you take [her] to the emergency room." (PX043.)

         On January 11, 2014, after still not hearing from a United case manager, Aviation West flew M.M. from Mexico to Seattle, at a cost of $495, 925. (Stalinski Decl., Ex. D at 203 (Docket No. 24-2) .) Upon arrival at Seattle Children's Hospital, M.M. was immediately taken to the emergency department. (PX032.) M.M.'s family "wished to proceed with the planned intramedullary fixation, " and M.M. immediately received this treatment. (Id.)

         Aviation West submitted a reimbursement claim for emergency transportation, which United denied.[1] (Stalinski Decl., Ex. C at 1-2 (Docket No. 24-1).) Aviation West brought three internal appeals from the denial of this claim as M.M.'s authorized representative, which United denied. (See PX15; PX16; PX21.) Aviation West then filed a request for external review, which United also denied. (See PX41.) On March 1, 2016, Aviation West initiated a lawsuit against United, seeking to recover benefits due under the Plan and ERISA as M.M.'s purported assignee. (See First Am. Compl. (Docket No. 13).)

         United moved for summary judgment on the basis that Aviation West lacked standing to bring the action. (See Def.'s July 24 Mot. for Summ. J. (Docket No. 23).) Miller subsequently filed a motion to intervene as plaintiff. On August 24, 2017, the court granted United's motion for summary judgment along with Miller's motion to intervene. (Docket Nos. 46, 47.) As the new plaintiff, Miller is seeking recovery of benefits under 29 U.S.C. § 1132(a) (1) (B), as well as prejudgment interest and reasonable attorneys' fees under 29 U.S.C. § 1132(a)(3) and § 1132(g)(1).

         II. Standard of Review

         The court must first address the argument regarding what standard of review to apply to the administrator's denial of Aviation West's claim for benefits. When an ERISA plan grants discretion to the administrator to interpret the terms of the plan and determine benefits eligibility, the administrator's denial of benefits is subject to abuse of discretion review. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Abatie v. Alta Health & Life Ins., 458 F.3d 955, 962-64 (9th Cir. 2006). Here, it is undisputed that the Plan explicitly stated that United had discretion to "[i]nterpret Benefits under the Policy, " "[i]nterpret the other terms, conditions, limitations and exclusions set out in the Policy, " and "[m]ake factual determinations related to the Policy and its Benefits." (Stalinski Decl., Ex. A at 44.)

         Plaintiff contends that the application of California Insurance Code § 10110.6 voids provisions that purport to grant discretion to insurance companies.[2] According to plaintiff, the discretionary clause in the Plan is therefore void, and thus abuse of discretion review is inapplicable and de novo review should be applied instead. However, the Plan contains a choice of law provision explaining that Virginia law will apply to any disputes involving the terms of the Plan. (Stalinski Decl., Ex. A at 40.) Thus California Insurance Code § 10110.6 is inapplicable.

         Plaintiff also argues that de novo review should apply because defendant engaged in a flagrant procedural violation of ERISA that "shifts the standard of review from abuse of discretion to de novo." See Abatie, 458 F.3d at 972. Specifically, plaintiff points to United's failure to grant Aviation West's request for an independent external review and its determination that the claim denial did not involve medical judgment. Assuming these to be violations, they are not of the type so egregious as to shift the standard of review from abuse of discretion to de novo. Under Abatie, the administrator must have "failed to comply with virtually every applicable mandate of ERISA." Id. at 971. The court does not find that here.

         III. Motion to Strike

         Miller's declaration was not part of the administrative record. In reviewing a denial of ERISA benefits under the abuse of discretion standard, the court is limited to the evidence that was reviewed by the administrator at the time the denial decision was made. See Taft v. Equitable Life Assurance Soc'y, 9 F.3d 1469, 1471 (9th Cir. 1993) (abrogated on another ground by Abatie, 458 F.3d 955) ("Permitting a district court to examine evidence outside the administrative record would open the door to the anomalous conclusion that a plan administrator abused its discretion by failing to consider evidence not before it."); Abatie, 458 F.3d at 971 ("review is limited to the record before the plan administrator.") In fact, plaintiff's attorneys themselves previously objected to certain interrogatories, arguing that ...


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