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Aviation West Charters Inc. v. Administaff Group Health Plan

United States District Court, D. Arizona

March 5, 2014

Aviation West Charters Incorporated, as successor in interest to Angel Jet Services, LLC, an Arizona limited liability company, ORDER and as assignee of Jane Doe, Plaintiff,
Administaff Group Health Plan; and Administaff of Texas, Inc., a Texas corporation; and United Healthcare Insurance Company, a Connecticut corporation, Defendants.


G. MURRAY SNOW, District Judge.

Pending before the Court is Plaintiff Aviation West Charters, Inc.'s Motion for Summary Judgment. (Doc. 21.) Pursuant to the Case Management Order (Doc. 18), the parties were required to produce and submit a Joint Administrative Record for this Court's use in the review of the benefits determination in this ERISA action. Defendant's filed a notice that they had timely disclosed an initial copy of that record as required (Doc. 19) but apparently Aviation West did not respond to that record, or propose any additions or omissions. Unable to file a joint Administrative Record, the Defendants submitted the Administrative Record they disclosed to Aviation West. (Doc. 20.) Aviation West did not object to the submitted Administrative Record, submitted nothing additional for the Court to consider, and requested no discovery. Aviation West's Statement of Facts included exhibits that are almost all excerpts from the Administrative Record submitted by Defendants. The only new evidence submitted is an affidavit attached to the Reply about whether a person worked for Aviation West. (Doc 25-1.) Therefore, the Court will treat the Administrative Record submitted by Defendants, and the extra affidavit, as the full and complete record for review in this case.

The Case Management Order also set a briefing schedule for an opening, response, and reply brief. ( Id. ) Instead, Aviation West submitted a Motion for Summary Judgment (Doc. 21) and a Statement of Facts (Doc. 22). Defendants responded to the Motion for Summary Judgment (Doc. 23) and submitted their own Statement of Facts (Doc. 24). Aviation West then replied. (Doc. 25.) Nevertheless, the parties followed the deadlines established for the briefing schedule and focus their arguments on the standard of review for ERISA actions by this Court. Therefore, this Court will treat these motions as briefs in this review of the ERISA determination of benefits.[1]

The Court now turns to the merits of this challenge to the ERISA determination made by Defendants. The request for Oral Argument is denied because the parties have thoroughly discussed the law and the evidence, and oral argument will not aid the Court's decision. See Lake at Las Vegas Investors Group, Inc. v. P. Malibu Dev., 933 F.2d 724, 729 (9th Cir.1991). For the reasons explained below, the benefits determination is affirmed because Aviation West fails to establish that Defendants abused their discretion in reaching their determination.


This action challenges the amount paid by a medical insurance plan for the transportation costs of flying a patient from Pennsylvania to Texas. On May 28, 2011, Aviation West Charters Inc. ("Aviation West")[2] provided air ambulance services for a patient who was suffering from a number of severe psychological problems. Insperity Group Health Plan f/k/a/ Administaff Group Health Plan, Insperity Holdings, Inc. f/k/a Administaff of Texas, Inc., and United Healthcare Insurance Company (collectively referred to as "Defendants") provided and administered the patient's health insurance. Aviation West sought and obtained a prior authorization from Defendants before the flight. (A.R. at 3.)

After the flight, Aviation West submitted a claim form to Defendants requesting $307, 785 in reimbursement. (A.R. at 1.) Defendants responded with two Explanations of Benefits and made two payments on the claim in the amounts of $7, 967.10 and $7, 092.80. (A.R. at 79-84.) The Explanation of Benefits both listed the "amount charged, " the amount "not covered, " the "amount allowed, " and the amount "paid to provider." ( Id. ) The Explanation of Benefits each had remark codes of "ND" and "#" which were defined in the "Remarks" section as follows:

(ND) A non network health care provider or facility provided these services. Your claim has been paid based on your benefit plan, which uses rates established by the federal government for the Medicare program. If no Medicare rate applies to these services, your claim was paid based on another available rate source developed by us or our affiliate or by an outside entity.... (#) Payment of Benefits has been made in accordance with the terms of the managed care system.

( Id. ) Defendants issued these benefits determinations on August 17 and 22, 2011. ( Id. )

Aviation West appealed the determinations on February 17, 2012 (A.R. at 67-76) and Defendants acknowledged receipt of that appeal on February 24, 2012 (A.R. at 153-60) and then on March 23, 2012, it indicated that it was transferring the appeal to another department (A.R. at 1209-10). Aviation West alleges that Defendants have not otherwise responded to the appeal (Doc. 22 at ΒΆ 32), but Defendants insist that they responded by phone on June 14, 2012, and cite to a record of that call (A.R. at 638-39). On March 18, 2013, Aviation West initiated this action seeking full payment and accrued interest on the billed total of $307, 785. (Doc. 1.)


I. Standard of Review

"The Employee Retirement Income Security Act of 1974 (ERISA) permits a person denied benefits under an employee benefit plan to challenge that denial in federal court." Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 108 (2008). When a plan administrator both determines eligibility and pays the claims, that creates a conflict of interest and courts should weight that conflict as a factor in determining whether the administrator abused its discretion. Id. The significance of that conflict is determined by the facts of each particular case. Id. The parties here agree that an abuse of discretion standard applies in this case.

An "abuse of discretion" occurs when the Court is "left with a definite and firm conviction that a mistake has been committed." Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 676 (9th Cir. 2011) (quoting United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc)). A court "may not merely substitute [its] view for that of the fact finder, " but must consider whether the plan administrator's decision was "(1) ...

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