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Killian v. Concert Health Plan Insurance Co.

July 6, 2010

JAMES E. KILLIAN, AS INDEPENDENT ADMINISTRATOR OF THE ESTATE OF SUSAN M. KILLIAN, PLAINTIFF,
v.
CONCERT HEALTH PLAN INSURANCE COMPANY, ROYAL MANAGEMENT CORPORATION HEALTH INSURANCE PLAN, AND ROYAL MANAGEMENT CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Marvin E. Aspen, District Judge

MEMORANDUM OPINION AND ORDER

Presently before us are two motions for summary judgment, one filed by Defendant Concert Health Plan Insurance Company ("CHPIC") and the other filed by Defendants Royal Management Corporation Health Insurance Plan ("Royal Plan") and Royal Management Corporation ("RMC") (collectively, "Royal Defendants"). Defendants seek dismissal of Plaintiff James Killian's four-count complaint, which alleges violations of the Employee Retirement Income Security Act ("ERISA"). As administrator of his wife's estate, Killian filed suit after Susan's*fn1 insurance provider failed to cover certain medical expenses incurred prior to her death in August 2006. As set forth below, we grant CHPIC's motion. We grant Royal Defendants' motion in part and deny it in part.

BACKGROUND FACTS*fn2

RMC employed Susan Killian prior to her death in 2006. CHPIC entered into an agreement with RMC to provide health insurance coverage to RMC's eligible employees, effective July 1, 2005. Susan enrolled in the medical benefit plan offered by RMC-defendant Royal Management Corporation Health Insurance Plan-referred to herein as the Royal Plan.*fn3

(RMC Facts ¶ 4.) RMC is the plan administrator for the Royal Plan. Susan chose a particular insurance coverage level, known as the "SO35" plan option.*fn4

In early 2006, Susan was diagnosed with cancer. She was treated at several facilities, including Rush University hospital, where she sought a second opinion from Dr. Bonami. Susan and Killian decided to seek a second opinion on their own, and Susan selected Dr. Bonami based on his prior treatment of her daughter. Prior to Susan's appointment with Dr. Bonami on April 7, 2006, Killian personally made no effort to determine whether, or to what extent, Susan's treatment at Rush would be covered by her insurance. (Resp. to CHPIC Facts ¶¶ 35--38.) Although Killian was not sure whether Susan contacted CHPIC prior to that appointment to check on Dr. Bonami's status, Killian testified that she did not appear concerned that Dr. Bonami might be an out-of-network provider. (Resp. to CHPIC Facts ¶¶ 35--36, 38.) He further testified that it was "fair to say" that neither he, nor Susan, attempted to confirm whether Dr. Bonami and Rush were network providers before the April 7 appointment. (Id. ¶ 36; see also CHPIC Facts, Ex. R, Killian Dep. at 137--39.) In short, the Killians decided to get a second opinion from Dr. Bonami, whether or not that consultation would be covered. (CHPIC Facts ¶ 42; see also CHPIC Facts, Ex. R, Killian Dep. at 54--55.)

Immediately prior to the appointment, and after arriving at the hospital, Killian called CHPIC's toll-free number found on the back of Susan's insurance identification card. (CHPIC Facts ¶ 38; CHPIC Facts, Ex. R, Killian Dep. at 51, 53--54, 71--72.) He informed a CHPIC representative that they were obtaining a second opinion. After the April 7, 2006 appointment, Susan underwent surgery, attempted chemotherapy, and obtained emergency services at Rush.

CHPIC later took the position that many of these services at Rush were not fully covered by Susan's insurance because they were out-of-network. (See CHPIC Facts, Exs. K--M.) On July 31, 2006, Killian wrote the claims department, requesting an immediate review of several unpaid claims. (Id., Ex. V.) In his letter, Killian stated that the disputed "invoices were refused and the reasons given were over maximum allowable or out of network coverage." (Id.) CHPIC's appeals department responded on September 19 and 20, 2006, informing Killian that no additional benefits were payable under Susan's plan because the services at issue were delivered by an out-of-network provider. (CHPIC Facts, Exs. K--L.) The letters explained that because Rush did not fall within the PHCS (Open Access) network, claims from Rush were processed at the out-of-network level, which were subject to a maximum allowable fee.

On October 25, 2006, CHPIC's Appeals Committee again informed Killian that no additional benefits were payable. (Id., Ex. M.) That letter stated that some of the claims (apparently emergency services) were processed at the in-network level. Nonetheless, CHPIC indicated that the maximum allowable fee would still apply for those certain claims being processed in-network. (Id. ("Your claims were processed using the maximum allowable fee and processed at the in-network level.").) CHPIC noted that because "medical providers are not required to write-off the over maximum allowed amounts... [they] are the responsibility of the member." (Id.) Several of Susan's health care providers billed Killian for services not covered by her health plan, and Killian filed suit, seeking, inter alia, judgment for the amount of unpaid medical bills.

STANDARD OF REVIEW

Summary judgment is proper only when "there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed R. Civ. P. 56(c). A genuine issue for trial exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986). This standard places the initial burden on the moving party to identify "those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553 (1986) (internal quotations omitted). Once the moving party meets this burden of production, the nonmoving party "may not rest upon the mere allegations or denials of the adverse party's pleading" but rather "must set forth specific facts showing that there is a genuine issue [of material fact] for trial." Fed. R. Civ. P. 56(e). In deciding whether summary judgment is appropriate, we must accept the nonmoving party's evidence as true, and draw all reasonable inferences in that party's favor. See Anderson, 477 U.S. at 255.

ANALYSIS

We have before us two summary judgment motions, which overlap in several respects. Our analysis below will address Killian's claim: (1) against RMC for statutory penalties under 29 U.S.C. §§ 1024(b)(4) and 1132(c)(1); (2) against the Royal Plan and CHPIC for benefits under 29 U.S.C. § 1132(a)(1)(B) as a result of CHPIC's violations of 29 U.S.C. § 1133 regarding notification of benefit determinations; and (3) against RMC and CHPIC for breach of fiduciary duty pursuant to 29 U.S.C. §§ 1105(a) and 1132(a)(3). We will resolve any pertinent evidentiary disputes as we evaluate each claim.

I. Killians's § 1132(c)(1) Claim: Sufficiency of the SPD Provided by RMC*fn5

Royal Defendants contend that RMC, as plan administrator, complied with ERISA's requirements governing summary plan descriptions. They emphasize that Killian requested a copy of the Royal Plan summary plan description ("SPD") on April 28, 2008 pursuant to 29 U.S.C. § 1024(b)(4), and RMC complied on May 5, 2008 as required. The parties do not dispute that on May 5, 2008, RMC provided copies of the Certificate of Insurance for Susan's SO35 Open Access Plan ("COI") and of RMC's Employee Benefit Summary ("EBS"). (RMC Facts ¶ 31.) Royal Defendants assert that these two documents, read in conjunction, constitute an SPD that fully complies with ERISA. (RMC Mem. at 9--10; Reply at 5--7.) Killian argues, however, that the COI and EBS do not satisfy ERISA's requirements for an SPD.*fn6 (Resp. to RMC MSJ at 6--8, 11--12.) Thus, RMC is entitled to summary judgment only if the COI and EBS are, in fact, an acceptable SPD.*fn7

The requirements for an SPD are found at 29 U.S.C. § 1022 and in the associated regulations, 29 C.F.R. § 2520.102-2--102-3, both of which dictate that the SPD "shall be written in a manner calculated to be understood by the average plan participant." 29 U.S.C. § 1022(a); 29 C.F.R. § 2520.102-2(a). Although the SPD "shall be sufficiently accurate and comprehensive to reasonably apprise [the] participants and beneficiaries of their rights and ...


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