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IHC Health Services Inc. v. Intermountain United Food

United States District Court, D. Utah Central Division

June 5, 2018

IHC HEALTH SERVICES, INC. dba LDS HOSPITAL, Plaintiff,
v.
INTERMOUNTAIN UNITED FOOD AND COMMERCIAL WORKERS AND FOOD INDUSTRY HEALTH FUND, Defendant.

         MEMORANDUM DECISION AND ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ON THE RECOVERY OF BENEFITS CLAIM (ECF NO. 23), GRANTING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE FIDUCIARY DUTY CLAIM (ECF NO. 24), AND RESERVING JUDGMENT ON THE MOTIONS FOR SUMMARY JUDGMENT ON THE FAILURE TO PROVIDE PLAN DOCUMENTS CLAIM (ECF NOS. 23 & 24)

          EVELYN J. FURSE United States Magistrate Judge.

         Before the Court[1] are Plaintiff IHC Health Services, Inc.'s (“IHC”) Motion for Summary Judgment (ECF No. 23) and Defendant Intermountain United Food and Commercial Workers and Food Industry Health Fund's (“Intermountain”) Motion for Partial Summary Judgment (ECF No. 24). IHC did not file a reply in support of its Motion for Summary Judgment by the April 18, 2018 deadline; instead, it filed its reply memorandum late, without seeking an extension of time or leave to so. (See Order Granting Stipulated Mot. for Extension of Time for Briefing re Pl.'s Mot. for Summ. J., ECF No. 30 (setting April 18, 2018 deadline to file reply); IHC Reply to Def.'s Mem. in Opp'n, ECF No. 33 (filed April 20, 2018)). The Court disregards IHC's untimely reply memorandum and considers all timely-filed briefs on the parties' Motions for Summary Judgment.

         IHC's Complaint asserts three claims against Intermountain under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”): (1) recovery of plan benefits under 29 U.S.C. § 1132(a)(1)(B) (first cause of action); (2) breach of fiduciary duties under 29 U.S.C. §§ 1104, 1109, and 1132(a)(2) and (3) (second cause of action); and failure to produce plan documents under 29 U.S.C. §§ 1024(b)(4) and 1132(c)(1) (third cause of action). (Compl., ECF No. 2.) Intermountain seeks summary judgment on IHC's second cause of action for breach of fiduciary duties and third cause of action for failure to produce plan documents. (Intermountain Mot. for Partial Summ. J. (“Intermountain Mot.”) 2, ECF No. 24.) In response to Intermountain's Motion, IHC concedes summary judgment on its second cause of action for breach of fiduciary duties. (IHC Opp'n to Mot. for Partial Summ. J. (“IHC Opp'n”) 1, ECF No. 28 (“On Count II, [IHC] concedes that summary judgment is appropriate.”). Because the parties agree that the Court should grant Intermountain's Motion on IHC's second cause of action for breach of fiduciary duties, the Court GRANTS summary judgment in favor of Intermountain as to that claim.

         IHC also moves for summary judgment on its first cause of action for recovery of plan benefits and third cause of action for failure to produce plan documents. (IHC Mot. for Summ. J. (“IHC Mot.”) 1, ECF No. 23.) Intermountain also seeks summary judgment on IHC's third cause of action for failure to produce plan documents. (Intermountain Mot. 1-2, ECF No. 24.)

         As to the remaining two causes of action, for the reasons addressed below, the Court DENIES IHC's Motion as to the first cause of action for recovery of plan benefits, and RESERVES judgment on IHC's Motion and Intermountain's Motion as to the third cause of action for failure to produce plan documents. The parties should come to the final pretrial conference with a proposal about how to proceed.

         SUMMARY JUDGMENT STANDARD

         The Court grants summary judgment when the evidence shows “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “In an ERISA case like this, where both parties move for summary judgment and stipulate that no trial is necessary, ‘summary judgment is merely a vehicle for deciding the case; the factual determination of eligibility for benefits is decided solely on the administrative record, and the non-moving party is not entitled to the usual inferences in its favor.'” Cardoza v. United of Omaha Life Ins. Co., 708 F.3d 1196, 1201 (10th Cir. 2013) (quoting LaAsmar v. Phelps Dodge Corp. Life, Accidental Death & Dismemberment & Dependent Life Ins. Plan, 605 F.3d 789, 796 (10th Cir. 2010)).

         In ERISA cases, the Court generally confines its review to the administrative record. Adamson v. Unum Life Ins. Co., 455 F.3d 1209, 1212 (10th Cir. 2006). However, the Court may consider “extra-record materials related to an administrator's dual role conflict of interest.” Murphy v. Deloitte & Touche Grp. Ins. Plan, 619 F.3d 1151, 1162 (10th Cir. 2010).

         EVIDENTIARY ISSUES

         In opposing IHC's motion for summary judgment, Intermountain objects to certain of IHC's facts-supported by citations to the administrative record in this case-as inadmissible, unauthenticated, and/or containing hearsay. (Intermountain Opp'n to Pl.'s Mot. for Summ. J. (“Intermountain Opp'n”) 6-9, ECF No. 32.) Intermountain's objections lack merit, and the Court overrules them. The Court reviews the entire administrative record considered by the plan administrator in ERISA cases, including exhibits that may otherwise be excluded under the Federal Rules of Evidence. See, e.g., Black v. Long Term Disability Ins., 582 F.3d 738, 746 n.3 (7th Cir. 2009) (“The Federal Rules of Evidence, however, do not apply to an ERISA administrator's benefits determination, and we review the entire administrative record, including hearsay evidence relied upon by the administrator.”); Bigley v. Ciber, Inc., No. 11-CV-0055-RBJ-MJW, 2012 WL 5494660, at *6 (D. Colo. Nov. 13, 2012) (unpublished) (“The administrative record is what it is. If it contains hearsay that would be inadmissible in a court of law under the Federal Rules of Evidence, so be it. The rules of evidence do not apply to what the plan or third party administrator may consider in evaluating a . . . claim. If they rely on unreliable evidence, then that could and should be considered by the reviewing court in making a determination as to whether to affirm or reverse the decision of the administrators.”); Malenski v. Standard Ins. Co., No. CIV-11-408-SPS, 2012 WL 4485331, at *1 (E.D. Okla. Sept. 27, 2012) (unpublished) (overruling evidentiary objections to joint administrative record).

         Intermountain also submits evidence outside of the administrative record in the form of a declaration from D.A. Jensen, former president and fund manager for JAS, Inc. (“JAS”), which provided third party administrative services for multi-employer benefit plans operated pursuant to ERISA, including Intermountain's Plan at issue in this case. (App. of Evid., Tab 1, Jensen Decl., ECF No. 32-1.) Mr. Jensen's declaration addresses the relationship between JAS and Intermountain, and the third party administrative services it performed on Intermountain's behalf. (See id.) While the Court generally confines its review in an ERISA case to the administrative record, Adamson, 455 F.3d at 1212, the Court may consider materials outside the record if they relate to a plan administrator's “dual role conflict of interest.” Murphy, 619 F.3d at 1162. The Court will consider Mr. Jensen's declaration since it informs the applicable standard of review in this case. The Court notes that IHC has not presented any evidence outside of the administrative record concerning Intermountain's alleged conflict of interest.

         FACTUAL BACKGROUND

         From October 12, 2013 through November 12, 2013, K.M. received treatment at LDS Hospital. (IHC Opp'n, Resp. to Undisputed Material Fact No. 3, ECF No. 28.) Plaintiff IHC operates LDS Hospital. (IHC Opp'n, Resp. to Undisputed Material Fact No. 1, ECF No. 28.) Defendant Intermountain's Plan, a multi-employer health and welfare plan, provided health coverage to K.M., a union employee whose membership entitled her to coverage, at the time of treatment. (IHC Mot., Undisputed Material Fact No. 4, ECF No. 23; IHC Opp'n, Resp. to Undisputed Material Fact Nos. 1-4, ECF No. 28; Compl. ¶ 7, ECF No. 2; Answer ¶ 7, ECF No. 6; AR[2] 149.) This case arises out of a dispute between IHC and Intermountain over the amount Intermountain owes IHC for the care and treatment of K.M. Intermountain notes that IHC named only the trust fund as a Defendant and not the “plan” as required under ERISA. (Intermountain Opp'n, Resp. to Undisputed Material Fact Nos. 2 & 19, ECF No. 32; Intermountain Mot. 6 n.1, ECF No. 24.) However, Intermountain concedes that for purposes of the Motions for Summary Judgment, IHC “sued the proper party.” (Id.) While not specifically addressed in any of the briefs, the parties agree that LDS Hospital, where K.M. received treatment, is an out-of-network provider per the terms of Intermountain's Plan. K.M. remains obligated to pay for all services provided to her by IHC for which Intermountain refuses to pay. (AR 2.)

         The Intermountain Plan is an ERISA covered plan. (IHC Opp'n, Resp. to Undisputed Material Fact No. 2, ECF No. 28; Answer ¶ 3, ECF No. 6; AR 87.) Intermountain's Board of Trustees is the Plan administrator. (AR 82, 84.) Intermountain's Summary Plan Description (“SPD”) indicates that the Board of Trustees operates and administers the Plan and that the Board

has full power to interpret the Plan and all Plan documents, agreements, rules, and regulations, and to decide all questions concerning the Fund, including, but not limited to, the eligibility of any person to participate in the Fund and his or her entitlement to Plan benefits. The Board's interpretations and decisions concerning these matters are final and conclusive, so long as they are made in good faith and are not arbitrary or capricious.

         (AR 82; Intermountain Opp'n 11-12, ECF No. 32.) The SPD further states that “[o]nly the full Board of Trustees (or its authorized designee) is authorized to interpret the terms of the Plan. The Board of Trustees (or its authorized designee) has sole discretion to decide questions involving the Plan, including questions regarding [] eligibility for benefits.” (AR 12-13; Intermountain Opp'n 12, ECF No. 32.) The Board delegated its “authority to determine the appropriate payments to make to providers making claims for benefits under the health plan . . . and to respond to appeals from [those] determinations to JAS. (App. of Evid., Tab 1, Jensen Decl. ¶ 6, ECF No. 32-1.) JAS acted as third-party administrator for Intermountain's Plan. (IHC Mot., Undisputed Material Fact No. 3, ECF No. 23; Intermountain Opp'n, Add'l Material Fact No. 1, ECF No. 32; App. of Evid., Tab 1, Jensen Decl. ¶¶ 2-3, ECF No. 32-1; Compl. ¶ 5, ECF No. 2; Answer ¶¶ 5, 6, ECF No. 6.)

         As a third-party administrator for the Intermountain Plan, JAS reviewed claims for eligibility and payment on behalf of the Plan's participants and beneficiaries and provided financial reports and claims analysis to the Plan's Board of Trustees. (Intermountain Opp'n, Add'l Material Fact No. 2, ECF No. 32; App. of Evid., Tab 1, Jensen Decl. ¶ 3, ECF No. 32-1.) JAS received a fixed monthly fee for its services; it did not receive incentive payments or bonuses for denying claims. (Intermountain Opp'n, Add'l Material Fact No. 4, ECF No. 32; App. of Evid., Tab 1, Jensen Decl. ¶ 7, ECF No. 32-1.) JAS, as the third-party administrator for Intermountain's Plan, determined the amount of benefits to pay to IHC on K.M.'s behalf for the treatment she received from LDS Hospital. (Intermountain Opp'n, Add'l Material Fact No. 5, ECF No. 32; App. of Evid., Tab 1, Jensen Decl. ¶ 6, ECF No. 32-1.) JAS did not receive a reward or payment for making a particular determination on K.M.'s claim. (Intermountain Opp'n, Add'l Material Fact No. 5, ECF No. 32; App. of Evid., Tab 1, Jensen Decl. ¶ 8, ECF No. 32-1.) JAS provided similar services for other funds, in addition to Intermountain. (App. of Evid., Tab 1, Jensen Decl. ¶ 4, ECF No. 32-1.)

         The billed charges for K.M.'s treatment totaled $78, 458.99. (IHC Mot., Undisputed Material Fact No. 6, ECF No. 23; AR 104, 110, 112, 118, 120, 123, 126, 133, 141, 153, 178 & 183.) Based on a review conducted by Data iSight, Intermountain, through JAS, determined that the allowable expense for K.M.'s claim was $27, 738.80, and Intermountain paid IHC 50% of the allowed amount, or $13, 869.40. (IHC Mot., Undisputed Material Fact Nos. 8, 11, ECF No. 23; IHC Opp'n, Resp. to Undisputed Material Fact No. 8, ECF No. 28; Intermountain Opp'n, Resp. to Undisputed Material Fact Nos. 10-11, ECF No. 32; App. of Evid., Tab 1, Jensen Decl. ¶¶ 6, 8, ECF No. 32-1; AR 108, 114, 125, 126, 133, 141, 151-55, 178.)

         IHC claims the Plan provides that it will pay inpatient hospital treatment at an out-of-network provider at 60% of the Usual, Customary, and Reasonable charges (“UCR”); mental health treatment at 80% of the UCR; and emergency room treatment at 95% of the UCR. (IHC Mot., Undisputed Material Fact Nos. 12-14, ECF No. 23; AR 15.) IHC cites a Plan document dated October 1, 2003 that states the change took effect January 1, 2003. (AR 5, 11.) Intermountain claims an amendment to the Plan IHC relies on took effect June 1, 2006, and governed payment for K.M.'s 2013 treatment at LDS Hospital. (Intermountain Opp'n, Resp. to Undisputed Material Fact Nos. 12-14, ECF No. 32; AR 187-89.) The notice of the amendment indicates that the plan will pay for inpatient hospital treatment at an out-of-network provider at 50% of the UCR; that it will pay for “all other medical services, ” including mental health treatment, at 50% of the UCR; and that it will pay for emergency room treatment at rates ranging from 75%-85% depending on whether the beneficiary has Plan A, B, or C. (AR 189.) IHC cites to the Plan A schedule of benefits in the 2003 plan in its briefs, (see AR 14-17 (“Plan A Schedule of Benefits”)), but never specifically indicates whether K.M. had Plan A, B, or C. (See Intermountain Opp'n, Resp. to Undisputed Material Fact No. 14, ECF No. 32.)

Intermountain's SPD defines the UCR as:
a charge which falls within the common range of fees billed by a majority of health care providers for a procedure in a given geographic region, or which is justified based on the complexity or the severity of treatment for a specific case, as determined from time to time by the Board.

(IHC Mot., Undisputed Material Fact No. 17, ECF No. 23; AR 27.) Data iSight, a third party used to review ...


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