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D.K. v. United Behavioral Health

United States District Court, D. Utah

October 24, 2018

D.K., K.K. and A.K., Plaintiffs,
v.
UNITED BEHAVIORAL HEALTH and ALCATEL-LUCENT MEDICAL EXPENSE PLAN FOR ACTIVE MANAGEMENT EMPLOYEES, Defendants.

          MEMORANDUM DECISION AND ORDER

          DALE A. KIMBALL, UNITED STATES DISTRICT JUDGE

         Defendants United Behavioral Health (“UBH”) and Nokia Medical Expense Plan for Management Employees move the court for an order dismissing Plaintiffs' D.K., K.K. and A.K.'s (Plaintiffs') claims on the grounds of improper venue, or in the alternative to transfer this action to the United States District Court for the District of New Jersey pursuant to 28 U.S.C. § 1404(a). On October 15, 2018, the court held a hearing on the motion. At the hearing, the Plaintiffs were represented by Brian King. Defendants were represented by Scott Peterson. The court took the motion under advisement. Based on the briefing filed by the parties and the law and facts relevant to the pending motion, the court issues the following Memorandum Decision and Order DENYING the Defendants' Motion in its entirety.

         FACTUAL BACKGROUND

         Plaintiffs brought this action seeking an award of benefits under an employee welfare benefit plan governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §1001. Plaintiffs, who are residents of Texas, allege that Defendants wrongfully denied Plaintiffs' claim for benefits under the Plan in connection with Plaintiff A.K.'s treatment at a Utah residential treatment facility.

         Plaintiff A.K. received medical care and treatment in Utah at Discovery Ranch for Girls (“Discovery”), which provides residential treatment for adolescent girls with mental health conditions. A.K. was admitted to Discovery on November 4, 2013. Defendants paid Plaintiffs' claims for benefits in connection with A.K.'s treatment at Discovery through February 8, 2014 and denied Plaintiffs' claims for benefits from February 9, 2014 forward.

         Following exhaustion of the available internal administrative appeals, Plaintiffs requested and obtained an external review of their claim for benefits. The external reviewer upheld Defendants' denial of coverage under the Plan for A.K.'s treatment at Discovery from February 9, 2014 forward, finding that A.K.'s treatment was not medically necessary under the terms of the Plan. Plaintiffs brought this action pursuant to ERISA §502(a)(1)(B), 29 U.S.C. §1132(a)(1)(B), seeking an order awarding them benefits under the Plan in an amount exceeding $87, 000, as well as interest, attorneys' fees and costs. Plaintiffs also allege claims for violations of the Mental Health Parity and Addiction Equity Act and the Patient Protection and Affordable Care Act and the Patient Protection and Affordable Care Act under ERISA §502(a)(3), 29 U.S.C. §1132(a)(3), based on Defendants' denial of Plaintiffs' claim for benefits under the Plan.

         Defendants brought this motion to transfer venue arguing that it has insufficient contacts to Utah to establish venue in the state. The only connections to Utah in this case are that A.K.'s treatment was provided in Utah, and UBH has a Utah P.O. Box where it directed Plaintiffs to submit their claims. Plaintiffs are residents of Texas and UBH is a resident of California. The Plan is located and administered in New Jersey.

         DISCUSSION

         UBH makes two arguments in its motion. UBH argues that it has insufficient contacts to the State of Utah to satisfy the Fifth Amendments due process requirements. Alternatively, it argues that even if venue is proper, the court should transfer this case to New Jersey because it is a more convenient forum.

         1. Venue is Proper in Utah Because UBH Can Be Found in the Forum.

         ERISA's venue provision, ERISA §502(e)(2), 29 U.S.C. §1132(e)(2), expressly limits where a claimant may file an action seeking benefits under ERISA §502. Those sections provide that an action seeking benefits “may be brought in the district where the plan is administered, where the breach took place, or where the defendant resides or may be found, and process may be served in any other district where a defendant resides or may be found.”

         A plan is administered in the district where it is “managed.” IHC Health Servs. v. Eskaton props., No. 2:16-cv-3-DN, *10 (D. Utah 2016). Here, the Plan was located and managed in New Jersey.

         It is also well-established that “the breach occurs at the place where the policy holder resides and would have received benefits.” Jon N. v. Blue Cross Blue Shield of Mass., Inc., No. 1:07-cv-137-DAK, 2008 U.S. Dist. LEXIS 35464, *8 (D. Utah 2008). Here, Plaintiff D.K., who was a Plan participant, was a resident of Texas, as well as Plaintiffs K.K. and A.K. Therefore, any purported breach occurred in Texas and not in Utah.

         29 U.S.C. §1132(e)(2) also allows jurisdiction “in any district 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.” The 10th Circuit held in Peay v. BellSouth Medical Assistance Plan, that “the last clause of §1132(e)(2) authorizes nationwide service of process. When a federal statute provides nationwide service of process, it becomes the statutory basis for personal jurisdiction.” 205 F.3d 1206, 1210 (10th 2000). The 10th Circuit reasoned ...


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