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Huerth v. Anthem Insurance Co. Inc.

United States District Court, D. Massachusetts

June 26, 2017

RICHARD J. HUERTH
v.
ANTHEM INSURANCE COMPANIES INC., et al.

          MEMORANDUM OF DECISION

          RYA W. ZOBEL SENIOR UNITED STATES DISTRICT JUDGE

         Plaintiff Richard J. Huerth resided at and received care at Milton Health Care, LLC (“MHC”), a skilled nursing facility (“SNF”) in Milton, Massachusetts, from 2007 to 2016. Beginning in 2013, when Huerth's health insurance plan switched claim administrators to Anthem Blue Cross Blue Shield, 43 claims for services he received at MHC were denied.

         In this action, Huerth brings a claim for benefits under the Employee Retirement Income Security Act of 1974 (“ERISA”) against the following “Plan Defendants”: Anthem Insurance Companies, Inc., Anthem UM Services, Inc. (together, “Anthem”), and his employer-sponsored health care plan, the Verizon Medical Expense Plan for New York and New England Associates (the “Verizon plan”). He also brings six state law claims against MHC. MHC moves for judgment as a case stated against Huerth. See Docket # 69. Huerth moves for judgment as a case stated against all defendants. See Docket # 74. The Plan Defendants move for summary judgment on the administrative record. See Docket # 77.

         I. Background

         The facts underlying this case are set forth in this court's February 3, 2016, Memorandum and Order on the Plan Defendants' motion to dismiss. See Memorandum and Order, Huerth v. Anthem Ins. Cos., No. 15-cv-13568-RWZ (D. Mass. Feb. 3, 2016), ECF No. 47. I repeat only those facts necessary to frame the issues here.

         In 1974, Huerth suffered an injury during an accident that left him paralyzed from the waist down. At the time, he was working for New England Telephone (now Verizon), where he continued to work until 1997, at which point he accepted early retirement. His early retirement package included lifetime health insurance under an ERISA-covered and Verizon-sponsored plan. After his retirement, Huerth lived on his own until 2005, when he moved into a SNF in Norwood, Massachusetts. On October 22, 2007, Huerth moved from that SNF to MHC.

         From October 22, 2007, until December 31, 2012, Huerth's medical expenses from his care at MHC were paid in full by Empire Blue Cross Blue Shield (“Empire”), which was then the claims administrator of the Verizon plan. However, on January 1, 2013, Verizon switched claims administrators from Empire to Anthem Blue Cross Blue Shield, the trade name of Anthem Insurance Companies, Inc. Anthem UM Services, Inc., provided “utilization management” (“UM”) review services - processes to help determine which services are medically necessary under a plan - for Anthem Insurance Companies, Inc.

         Between August 2013 and July 2015, Anthem denied 43 claims for services billed by MHC. As relevant here, MHC filed first and second level appeals for claims related to benefits provided in February, March, and May 2013. These appeals were all ultimately denied.

         On November 4, 2014, MHC filed an action against Huerth in Norfolk County Superior Court, seeking payment for services rendered for which Anthem denied coverage. Huerth filed a complaint against MHC and the Plan Defendants in Norfolk Superior Court on September 14, 2015. The Plan Defendants removed this action on October 14, 2015, and filed a Motion to Dismiss on October 23, 2015. See Docket ## I, 14. On February 3, 2016, this court allowed in part and denied in part the Plan Defendants' motion, allowing only Huerth's claim for benefits under ERISA to go forward. See Docket # 47.

         II. Claim Against the Plan Defendants

         Huerth's remaining claim against the Plan defendants is for benefits under ERISA § 502(a)(1)(B). See 29 U.S.C. § 1132(a)(1)(B).

         A. Standard of Review

         In his initial Memorandum in Support of Motion for Judgment as a Case Stated, Huerth states that “the parties expressed their intent to have this District Court resolve . . . his one remaining claim against the Plan Defendants on a case-stated basis.” Docket # 75, at 9. The Plan Defendants, however, explicitly maintain that they “did not agree to resolve Plaintiff's remaining ERISA claim against them on a case-stated basis” and instead urge the court to decide the case as a motion for summary judgment on the administrative record. Docket # 84, at 4. In response, Huerth asserts that “[i]t was the understanding of counsel for Mr. Huerth that all parties agreed to proceed with resolving this matter by means of motions for judgment as a case stated.” Docket # 89, at 4 n.3. Nevertheless, he states that practically, “the difference between the two procedural vehicles is negligible, ” id. at 4, and that “[g]iven the nature of summary judgment proceedings in an ERISA action, the case stated model ends up with the same result for all intents and purposes with regard to Mr. Huerth's claims against the Plan Defendants, ” id. at 4 n.4. Given the parties' largely compatible positions, I resolve this case as cross-motions for summary judgment.

         “[I]n an ERISA case where review is based only on the administrative record before the plan administrator and is an ultimate conclusion as to disability to be drawn from the facts, summary judgment is simply a vehicle for deciding the issue. . . . This means the non-moving party is not entitled to the usual inferences in its favor.” Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510, 517 (1st Cir. 2005) (citations omitted); see also Gent v. CUNA Mut. Ins. Soc'y, 611 F.3d 79, 82-83 (1st Cir. 2010).[1] The level of deference given to the administrator depends on the terms of the plan. See Gent, 611 F.3d at 83. “[A] denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). When a plan gives the administrator discretion, then the administrator's decision is reviewed for abuse of discretion. McDonough v. Aetna Life Ins. Co., 783 F.3d 374, 379 (1st Cir. 2015).

         Here, Huerth and the Plan Defendants agree that “the express terms of the Plan give discretionary authority to the Plan Defendants.” Docket # 83, at 11; see also Docket # 78, at 18. Accordingly, their decision is reviewed for abuse of discretion. McDonough, 783 F.3d at 379. “A court that undertakes abuse of discretion review in an ERISA case must determine whether the claims administrator's decision is arbitrary and capricious or, looked at from another angle, whether that decision is reasonable and supported by substantial evidence on the record as a whole.” Id.

         B. Discussion

         Huerth maintains that the care he received was “medically necessary” under the Anthem UM Guideline, and he was therefore wrongfully denied coverage. The Plan Defendants argue that for the exhausted claims, Anthem's determinations were reasonable and supported by substantial evidence, that Huerth did not exhaust his administrative remedies for the remaining claims, and that even if the futility exception applied to the unexhausted claims, the denial of these claims was not arbitrary and capricious.

         1. Anthem's Clinical UM Guideline

         Under the Anthem Clinical UM Guideline applicable during the time Huerth's claims arose (CG-MED-31H), “[s]killed nursing facility (SNF) services are medically necessary when ALL of the following criteria in Section A are met and one or more of the criteria in Section B are met:” AR[2] ANTHEM-0000397.

         Section A:

1. The individual requires skilled nursing or skilled rehabilitation services that must be performed by, or under the supervision of, professional or technical personnel; and
2. The individual requires these skilled services on a daily basis; (note: if skilled rehabilitation services are not available on a 7-day-a-week basis, an individual whose inpatient stay is based solely on the need for skilled rehabilitation services would meet the “daily basis” requirement when he/she needs and receives those services at least 5 days a week); and
3. As a practical matter, the daily skilled services can be provided only on an inpatient basis in a skilled nursing facility (SNF) setting; and
4. SNF services must be furnished pursuant to a physician's orders and be reasonable and necessary for the treatment of an individual's illness or injury (i.e., be consistent with the nature and severity of the individual's illness or injury, his particular medical needs and accepted standards of medical practice[)]; and
5. Initial admission and subsequent stay in a SNF for skilled nursing services or rehabilitation services must include development, management and evaluation of a plan of care as follows:
a. The involvement of skilled nursing personnel is required to meet the individual's medical needs, promote recovery and ensure medical safety (in terms of the individual's physical or mental condition); and
b. There must be a significant probability that complications would arise without skilled supervision of the treatment plan by a licensed nurse; and
c. Care plans must include realistic nursing goals and objectives for the individual, discharge plans and the planned interventions by the nursing staff to ...

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