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Barbara R. v. Nexsen Pruet Group Medical & Dental Plan

United States District Court, D. Utah

March 19, 2018

MICHAEL M., BARBARA R., and LILLIAN M., Plaintiffs,



         This matter is before the Court on Defendants Companion Benefit Alternatives' (“CBA”) and Nexsen Pruet Group Medical & Dental Plan's (“the Plan”) (collectively, “Defendants”) Motions to Transfer Venue. For the following reasons, the Court will grant the Motions.

         I. BACKGROUND

         Plaintiffs Michael M., Barbara R., and Lillian M. (collectively “Plaintiffs”) are individuals residing in Richland County, South Carolina. Michael is employed by Nexsen Pruet, LLC, and is a participant in the Plan. Nexsen Pruet is the Plan Administrator and Barbara and Lillian are beneficiaries. The Plan is a self-funded employee welfare benefits plan under the Employee Retirement Income Security Act of 1974 (“ERISA”). CBA, located in Columbia, South Carolina, provides the Plan with utilization management services and reviews member claims for behavioral healthcare services.

         In 2015 and 2016, Lillian received treatment for certain medical conditions at Uinta Academy (“Uinta”) in Utah. Following treatment, the medical bills were submitted to the Plan's third party claims processing administrator, Planned Administrators Inc., in South Carolina. Those claims were denied on the basis that the treatment did not meet the Plan's guidelines, and an appeal was submitted to CBA. CBA affirmed the denial in a letter directed to Uinta on March 17, 2016. On May 25, 2016, Nexsen Pruet issued a decision affirming the denial, [1] and, pursuant to the mandated external review section of the Patient Protection and Affordable Care Act, an external review of the denial was performed by Medical Review Institute of America (“MRI”), which is not a Plan entity and is based in Utah. MRI also affirmed the denial of Plaintiffs' claims and Plaintiffs filed this action asserting that CBA and the Plan wrongfully denied Plaintiffs' claims under the terms of the Plan and ERISA, and failed to provide Plaintiffs with full and fair review of the initial denial.[2]

         The Plan contends that venue is improper in Utah under 29 U.S.C. § 1132(e)(2) and Defendants seek transfer to the United States District Court for the District of South Carolina under 28 U.S.C. § 1404(a). Defendants argue that South Carolina is the proper forum because the action could have been brought there originally, the Plan is administered in South Carolina, the services provided by CBA were performed in South Carolina, the alleged conduct and actions that Plaintiffs contend constitute breaches of ERISA and the Plan occurred in South Carolina, all of the parties are located in South Carolina, and Plaintiffs communicated with CBA from South Carolina throughout the appeals process.


         A. Venue is Proper in Utah

         An action brought under ERISA “may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found, and process may be served in any other district where a defendant resides or may be found.”[3]

         There is no dispute that the Plan is administered in South Carolina rather than Utah, so venue is not proper in Utah under the first prong of the statute. Looking to the second prong,

[s]everal cases establish that, under ERISA, the duty is owed to the plan participant and any breach of duty owed under the plan occurs at the place where the plan participant resides. The place is the location where the payment is to be made, even though the services may have been provided at an out-of-state location.[4]

         In this case, while the services were provided at an out-of-state location, Michael, the plan participant, is a resident of South Carolina and payment was to be made to him in South Carolina. Therefore, the Court finds that the alleged breaches occurred in South Carolina and venue is not proper in Utah under the second prong of the statute.

         Finally, under the third prong, “a corporation resides wherever personal jurisdiction is proper.”[5] “Before a federal court can assert personal jurisdiction over a defendant in a federal question case, the court must determine (1) whether the applicable statute potentially confers jurisdiction by authorizing service of process on the defendant and (2) whether the exercise of jurisdiction comports with due process.”[6] Because this is a federal question case and § 1132(e)(2) authorizes nationwide service of process, this Court has personal jurisdiction over Defendants so long as due process is satisfied.[7]

         Under ERISA, “the personal jurisdiction requirement flows from the Due Process Clause of the Fifth Amendment and . . . the proper focus for a personal jurisdiction test should be on protecting an individual's liberty interest in avoiding the burdens of litigating in an unfair or unreasonable forum.”[8] In order for a defendant to demonstrate “that his liberty interests actually have been infringed, ” he must show “that the exercise of jurisdiction in the chosen forum will make litigation so gravely difficult and inconvenient that he unfairly is at a severe disadvantage in comparison to his opponent.”[9]

         To determine whether a defendant meets its burden, courts consider the following factors:

         (1) the extent of the defendant's contacts with the place where the action was filed;

         (2) the inconvenience to the defendant of having to defend in a jurisdiction other than that of his residence or place of business, including

(a) the nature and extent and interstate character of the defendant's business,
(b) the defendant's access to counsel, and
(c) the distance from the defendant to the place where the action was brought;

         (3) judicial economy;

         (4) the probable situs of the discovery proceedings and the extent to which the discovery proceedings will take place outside the state of the defendant's residence or place of business; and

         (5) the nature of the regulated activity in question and the extent of impact that the defendant's activities have beyond the borders of his state of residence or business.[10]

         The Tenth Circuit has emphasized “that it is only in highly unusual cases that inconvenience will rise to a level of constitutional concern. Certainly, in this age of instant communication, and modern transportation, the burdens of litigating in a distant forum have lessened.”[11]

         Considering the first factor, neither CBA nor the Plan have much, if any, contact with Utah. Plaintiffs allege in the Complaint that CBA does business in Utah through Regence BlueCross BlueShield of Utah, the local Blue Cross Blue Shield affiliate, but CBA denies this and Plaintiffs do not argue this in their Opposition. Plaintiffs also argue that the Plan has contact through MRI, but this argument is weakened by the fact that the external review was mandatory and Plaintiffs concede that the Plan may not have selected MRI as its external reviewer. Finally, Plaintiffs allege that CBA and the Plan have undoubtedly paid claims in Utah, but Plaintiffs fail to provide any evidence of this. Therefore, the first factor weighs against finding personal jurisdiction.

         Second, there is some inconvenience to Defendants if they have to defend this action in Utah since the distance between Utah and South Carolina is great. However, Defendants are already represented by counsel here, and they may seek admission of South Carolina counsel that they are more familiar with. Finally, while Defendants do business in South Carolina and nearby states, both have the ability to deal with out-of-state claims and neither party has alleged any inability to defend this case. Therefore, the inconvenience is only minor under this factor.

         Third, judicial economy is most often better served when all of the parties reside in the forum state as there are less scheduling and travel concerns throughout the proceedings and less resources are expended by all involved parties. With that said, it seems as though neither court would be more unduly burdened than the other if it was to take on this case, except for the previously stated scheduling and traveling issues this Court would have to deal with.[12] This factor, therefore, weighs more in favor of inconvenience.

         Finally, while it is unlikely that there will be any discovery in this case since it will mainly involve an administrative review, any discovery would largely take place in South Carolina since any witnesses or documents related to the denial of Plaintiffs' claim are in South Carolina. And while there may be some need for discovery regarding the details of treatment from Uinta, or discovery in relation to MRI's involvement, South Carolina would still be more convenient for all parties involved.

         Plaintiffs, however, argue that this case is similar to Peay v. BellSouth Med. Assistance Plan and the Court should find that it may assert jurisdiction over Defendants. In Peay, none of the parties resided in Utah where the case was filed, and the plan was administered and allegedly breached elsewhere. However, the defendants precertified the plaintiff's treatment at a Utah hospital and rendered benefits in Utah. Those facts are similar ...

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