United States District Court, D. Utah
MEMORANDUM DECISION AND ORDER GRANTING
DEFENDANTS' MOTIONS TO TRANSFER VENUE
TED
STEWART JUDGE
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.
II.
DISCUSSION
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 ...