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Kazda v. Aetna Life Insurance Co.

United States District Court, N.D. California

December 10, 2019





         Aetna Life Insurance Company (“Aetna”) denied Michala Kazda insurance coverage for liposuction to treat her advanced lipedema because it found the procedure was “cosmetic” and not medically necessary. Kazda filed suit under the Employee Retirement Income Security Act (“ERISA”), seeking recovery on behalf of herself and others who have had their claims erroneously denied. I previously dismissed her original complaint because she did not sufficiently plead a claim under 29 U.S.C. § 1132 (a)(1)(B) for denial of benefits and under 29 U.S.C. § 1132 (a)(3) for breach of fiduciary duty. See Order Granting Motion to Dismiss Without Prejudice (“Order”) [Dkt. No. 30]. Now in her First Amended Complaint (“FAC”), Kazda sufficiently pleads that Aetna, as claims administrator, breached its fiduciary duty by implementing internal policy guidelines inconsistent with her plan, and using it to systematically deny insurance claims like hers. The declaratory and injunctive relief she seeks are not duplicative of her Section 1132(a)(1)(B) claim. Aetna's motion to dismiss Kazda's Section 1132(a)(3) claim in the FAC is DENIED.


         Kazda is a plan participant in a health benefit plan governed by ERISA, issued and administered by Aetna, and sponsored by her husband's employer, Ipsos America, Inc. FAC [Dkt. No. 34] ¶¶ 21, 25. Aetna acts as the claims administrator of her plan. Id. ¶ 26. She alleges that Aetna health plans generally “provide surgical benefits to treat illness and injury, including functional problems that result from illness or injury.” Id. ¶ 16. Aetna plans also “exclude from coverage those medical services that Aetna considers ‘cosmetic, '” defined as “services, including surgeries, the purpose of which is to ‘alter, improve or enhance the shape or appearance of the body whether or not for psychological or emotional reasons[.]'” Id. ¶ 17. In particular, she contends that her Aetna health plan covers “[s]urgery needed to improve a significant functional impairment [sic] of a body part.” Id. ¶ 29. Her plan defines cosmetic services as “[s]ervices or supplies that alter, improve or enhance appearance.” Id. ¶ 30.

         Kazda was diagnosed with Stage 3 lipedema, a condition caused by abnormal buildup of adipose (fat) tissue in the lower body and sometimes in the arms. FAC ¶¶ 2, 31. As lipedema progresses, it causes pain, mobility problems, joint disorders, and other physical problems that prevent patients from engaging in daily activities. Id. ¶ 11. She alleges that the “only effective treatment for the pain and immobility caused by lipedema is a form of surgery called tumescent liposuction.” Id. ¶ 12.

         Kazda sought coverage for tumescent liposuction to treat her advanced lipedema, a procedure that removes excess fat tissue to allow patients to gain mobility, reduce or eliminate pain, and lead a productive life. FAC ¶¶ 12, 33. Her medical provider submitted this information to Aetna, setting forth her diagnosis and proposed treatment. Id. ¶ 33. On April 25, 2018, Aetna sent her a letter denying coverage for the proposed surgery. Id. ¶ 34.

         Aetna denied coverage by referring to its Clinical Policy Bulletins (“CPBs”), internal written directives guiding Aetna's coverage positions with respect to certain medical treatments. FAC ¶ 18. Aetna's denial letter states the following:

We received information about your condition and circumstances. We used the Clinical Policy Bulletin (CPB): Cosmetic Surgery. Based on CPB criteria and the information we have, we are denying coverage for this procedure. This procedure is meant to improve appearance, not to correct a physical problem that affects your daily activities.

Id. ¶ 34. The denial letter refers to its CPB 0031 on cosmetic surgery, which provides the following:

Aetna plans exclude coverage of cosmetic surgery that is not medically necessary, but generally provide coverage when the surgery is needed to improve the functioning of a body part or otherwise medically necessary even if the surgery also improves or changes the appearance of a portion of the body.

Id. ¶ 19. According to Kazda, Aetna has followed a consistent practice of denying claims for tumescent liposuction to treat advanced lipedema on the basis that the treatment is “cosmetic.” Id. ¶ 23. She contends that tumescent liposuction is medically necessary because the surgery treats symptoms of advanced lipedema, such as pain and mobility problems. Id. ¶ 12. The surgery is accordingly not “cosmetic” because it addresses these functional problems. Id.

         No other denial bases were given in Aetna's initial denial letter, and Kazda appealed this decision. FAC ¶ 35. On October 29, 2018, Aetna denied her appeal by relying on CPB 0211. Id. ¶ 36. Under CPB 0211, Aetna considers “abdominoplasty, suction lipectomy, or lipoabdominoplasty” as “cosmetic” procedures. Id. ¶ 21. Aetna stated that it was “upholding the previous decision to deny the request for suction-assisted lipectomy” because “[it] considers this procedure cosmetic per the above reference guidelines.” Id. ¶ 36.

         On May 9, 2019, Kazda filed this action against Aetna on behalf of herself and a putative class, alleging that Aetna violated ERISA because it (i) erroneously denied coverage for surgical treatment for lipedema under 29 U.S.C. § 1132 (a)(1)(B) and (ii) breached its fiduciary duty under 29 U.S.C. § 1132 (a)(3). See Complaint [Dkt. No. 1]. On September 11, 2019, I granted Aetna's motion to dismiss both claims for failure to state a claim and gave Kazda leave to amend her complaint. See Order. On September 26, 2019, she filed her First Amended Complaint, bringing the same claims. Aetna now moves to dismiss her second claim for breach of fiduciary duty under Section 1132(a)(3) for failure to state a claim. See Motion to Dismiss First Amended Complaint's Second Claim for Relief (“MTD FAC”) [Dkt. No. 35].


         Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when the plaintiff pleads facts that “allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). There must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. While courts do not require “heightened fact pleading of specifics, ” a plaintiff must allege facts sufficient to “raise a right to relief above the speculative level.” See Twombly, 550 U.S. at 555, 570.

         In deciding whether the plaintiff has stated a claim upon which relief can be granted, the court accepts the plaintiff's allegations as true and draws all reasonable inferences in favor of the plaintiff. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is not required to accept as true ÔÇťallegations that are merely conclusory, unwarranted deductions of ...

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