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Howard v. Blue Cross Blue Shield of Arizona

United States District Court, D. Arizona

November 2, 2018

Russell Keith Howard, Plaintiff,
v.
Blue Cross Blue Shield of Arizona, Defendant.

          ORDER

          Honorable John J. Tuchi United States District Judge.

         At issue is Plaintiff's Motion to Admit Certain Non-Record Documents (Doc. 78, Mot.). Defendant filed a Response in Opposition to the motion (Doc. 80, Resp.).

         I. FACTUAL BACKGROUND

         Plaintiff is an employee of Sunstate Equipment Co., LLC (Sunstate). (Doc. 1, Compl. ¶ 6.) Defendant is the medical insurance provider for Sunstate employees, including Plaintiff. (Compl. ¶ 6.) After Defendant denied Plaintiff's claims for coverage related to cancer treatment, Plaintiff filed an action under the Employee Retirement Income Security Act (“ERISA”). (Doc. 1, Compl.)[1]

         On June 13, 2018, Plaintiff filed an Opening Brief (Doc. 77, Pl. OB) and a Motion for Admission of Documents (Mot.). Plaintiff seeks to admit the following: Blue Cross Blue Shield of Arizona's (“BCBSAZ”) Appeal Guidelines and Procedures manual (Doc. 77-1); discovery responses served on Plaintiff (Docs. 77-2 and 77-3); proof of payment by Plaintiff of the cost of treatment for which he seeks recovery of benefits (Doc. 77-4); two public website materials posted by Harvard Pilgrim Health Care and Health Care Service Corporation (Docs. 77-5 and 77-6); and all documents produced by Defendant in response to discovery requests. (Mot.) In response, Defendant objects only to admission of the BCBSAZ Appeal Guidelines and Procedures manual (Doc. 77-1) and the materials from the public websites of Harvard Pilgrim and Health Care Service Corporation (Docs. 77-5 and 77-6). (Resp.)

         II. LEGAL STANDARD

         In ERISA cases, whether evidence outside the administrative record may be admitted depends on the whether the court reviews the benefits decision under an abuse of discretion or de novo standard. See Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006). The Ninth Circuit recognized that “in general, a district court may review only the administrative record when considering whether the plan administrator abused its discretion, but may admit additional evidence on de novo review.” Id. at 970.

         When a plan grants the administrator discretion in approving or denying a claim, courts apply an abuse of discretion review to the administrator's decision. Id. at 969. The more lenient abuse of discretion standard is limited to the evidence in the administrative record. Id. at 970 (“[I]n general, a district court may review only the administrative record when considering whether the plan administrator abused its discretion”). However, a potential conflict of interest may be proven through evidence outside the administrative record, as long as the evidence is used to show “the nature, extent, and effect on the decision-making process of any conflict of interest.” Id. at 970. The most obvious conflict of interest occurs when the plan administrator “both administers the plan and funds it, ” therefore acting as both administrator and fiduciary. Id. at 967. When that is the case, the plaintiff “will have the benefit of an abuse of discretion review that always considers the inherent conflict . . . even in the absence of ‘smoking gun' evidence of conflict.” Id. at 969. In any case of potential conflict of interest, even when the administrator is not a fiduciary but may have some other conflict, the court may look outside the record to determine whether such a conflict exists and ultimately “must decide in each case how much or how little to credit the plan administrator's reason for denying insurance coverage.” Id. at 968. While this limited exception allows extrinsic evidence under the abuse of discretion standard when necessary to determine whether a conflict of interest affected the administrator's decision, “the decision on the merits, though, must rest on the administrative record once the conflict (if any) has been established.” Id.

         On the other hand, when a plan confers no discretion on the administrator, a court will review the decision de novo. Id. at 969. Under this standard, the court is permitted to examine evidence outside of the administrative record. Id. at 970 (“While under an abuse of discretion standard our review is limited to the record . . . this limitation does not apply to de novo review.”) (quoting Jebian v. Hewlett-Packard Co. Emp. Benefits Org. Income Prot. Plan, 349 F.3d 1098, 1110 (9th Cir. 2003)). Courts are not required to accept extrinsic evidence, and should review it only “when circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review.” Jebian, 349 F.3d at 1110 (quoting Mongeluzo v. Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 944 (9th Cir. 1995)).

         As a default, the Ninth Circuit applies a de novo review, and in order to trigger “the more lenient abuse of discretion, the plan must unambiguously provide discretion to the administrator.” Abatie, 458 F.3d at 963. In deciding whether the plan administrator has discretion, “[t]he essential first step of the analysis . . . is to examine whether the terms of the ERISA plan unambiguously grant discretion to the administrator.” Id. While “[t]here are no ‘magic' words that conjure up discretion . . . the Supreme Court has suggested that a plan grants discretion if the administrator has the ‘power to construe disputed or doubtful terms' in the plan.” Id. (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111 (1989)). The Ninth Circuit has held that wording “granting the power to the interpret plan terms and to make final benefits determinations” is sufficient to confer discretion on the administrator. Id. But plans “are insufficient to confer discretionary authority on the administrator when they do not grant any power to construe the terms of the plan.” Id. at 964.

         III. ANALYSIS

         Here, Plaintiff wishes to admit several documents outside of the administrative record, only some of which are contested. Defendant does not object to the admission of discovery responses served on Plaintiff (Docs. 77-2 and 77-3), proof of Plaintiff's payment for his medical treatment (Doc. 77-4), or documents produced in response to discovery requests. (Resp.) Those documents are therefore admitted.

         As to BCBSAZ's manual (Doc. 77-1) Defendant argues that the manual Plaintiff seeks to admit is the 2017 version, which is inapplicable to Plaintiff's 2014 claim. (Resp.) Defendant also points out that the 2014 manual is currently part of the administrative record. (Resp. at 1.) Indeed, Plaintiff cites to the 2014 version throughout his Opening Brief (Pl. OB). The Court finds no need to admit the 2017 manual when it has no bearing on Plaintiff's case. Thus, Plaintiff's motion is denied as to Doc. 77-1.

         The only remaining evidence which Plaintiff seeks to admit from outside the administrative record are two public website materials posted by Harvard Pilgrim Health Care and Health Care Service Corporation. (Mot.) Specifically, these pages describe the coverage that those two insurance companies provide for Plaintiff's cancer treatment. (Resp. at 1.) Presumably, Plaintiff seeks to admit them to show that other insurers cover his treatment and that it was unreasonable for Defendant not to. ...


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