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Chesterfield Spine Center, LLC v. Gilster-Mary Lee Corp.

United States District Court, E.D. Missouri, Eastern Division

April 25, 2017




         Plaintiff sues defendant Gilster for a denial of benefits under the Employee Retirement and Income Security Act (ERISA), 29 U.S.C. §1001 et seq.[1] Plaintiff provides surgical care to patients in Missouri and treated patient RC in the amount of $60, 692.90. RC was a beneficiary of an ERISA benefit plan (the Plan) sponsored and administered by defendant. Before providing the medical care, plaintiff alleges that it verified that RC was covered under the Plan. Plaintiff then provided RC the medical care but defendant ultimately failed to pay because RC and/or plaintiff failed to provide requested documentation.

         Defendant moves for summary judgment on the amended complaint for plaintiff's failure to exhaust remedies. According to defendant, plaintiff did not exhaust the Plan's internal review procedures because it failed to timely appeal the denial of benefits. Plaintiff responds that it did appeal the denial of benefits and, alternatively, that it was excused from doing so. Because plaintiff did not timely appeal the denial of benefits and was required to do so, defendant is entitled to judgment as a matter of law.

         Standards Governing Summary Judgment

         The standards for summary judgment are well settled. In ruling on summary judgment, the Court views the facts and inferences therefrom in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The moving party has the burden to establish both the absence of a genuine issue of material fact and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in its pleadings but must set forth by affidavit or other evidence specific facts showing that a genuine issue of material fact exists. Fed.R.Civ.P. 56(c). At the summary judgment stage, I will not weigh the evidence and decide the truth of the matter, but rather I need only determine if there is a genuine issue for trial. Anderson, 477 U.S. at 249.

         Undisputed Background Facts

         RC is the husband of a Gilster employee. Defendant Gilster provides medical benefits to its employees and their families under the Plan. Defendant used Benefit Administrative Services, LLC (BAS) to assist it with the administration of the Plan. At the time of his surgery, RC was a participant in the Plan and claims for benefits were handled for defendant by BAS. The Plan does not provide benefits for work-related illness or injuries covered by worker's compensation insurance. The Plan requires participants to provide information if requested to determine whether a claim is covered under the Plan.

         Plaintiff performed spine surgery on RC in 2011. Plaintiff alleges that it verified RC was eligible for benefits under the Plan before performing surgery. BAS received Claim No. 24743249-01 with a service date of September 7, 2011, from plaintiff for RC's surgery and, in response, sent plaintiff a letter on October 19, 2011. This letter states that the processing of the claim was delayed because BAS was awaiting “accident details.” RC's wife was copied on the letter. BAS also contacted plaintiff by telephone on numerous occasions to advise that BAS still needed accident information to process the claim. Neither plaintiff nor RC ever provided the requested accident information.

         BAS sent an Explanation of Benefits (EOB) to plaintiff denying the claim for RC on November 29, 2012. The EOB states the entire requested amount of $60, 692.90 is “ineligible” and under the section entitled “Reason Code Description” it states that “[w]e are closing our file at this time. There has been no response to the requests for information that have been sent multiple times.” Under the section entitled “Messages” the EOB states that the file is closed due to lack of response to requests for accident information from the member. The EOB then provides the following the information:

If your claim is denied in part or whole, you may appeal the determination by submitting written comments, documents, records or other information relating to the claim, and, upon request and free of charge, receive copies of all documents, records and other information relevant to the claim. Your appeal must be submitted in writing to the plan administrator within 180 days after receipt of this notice. You will be notified of the determination within 60 days after receipt of your appeal. In addition, following the determination of your appeal you have a right to bring a civil action under Section 502(a) of ERISA.

         The Plan requires all appeals be submitted in writing within 180 days following the initial denial of benefits and include “all facts and theories supporting the claim for benefits” and a “statement in clear and concise terms of the reason or reasons for disagreement with the handling of the claim.”

         On December 17, 2012, plaintiff's counsel sent BAS a letter stating that “we have not been contacted by anyone concerning RC. Therefore, this matter is not closed and my client fully intends to pursue this matter.” Neither BAS nor defendant received anything else from plaintiff regarding RC's claim for benefits. Plaintiff subsequently filed this lawsuit on July 29, 2015.


         As an assignee of RC's claim to benefits under the Plan, plaintiff “stands in the shoes of the assignor, and, if the assignment is valid, has standing to assert whatever rights the assignor possessed.” Grasso Enterprises, LLC v. Express Scripts, Inc., 809 F.3d 1033, 1039 (8th Cir. 2016) (internal quotation marks and citation omitted). Thus, plaintiff is likewise required to exhaust an ERISA plan's internal review procedures before bringing suit in federal court unless one of the exceptions to exhaustion of remedies applies. See id.; Brown v. J.B. Hunt Transport Services, Inc., 586 F.3d 1079, 1084-85 (8th Cir. 2009). Exhaustion of administrative remedies is a threshold legal question that should be reviewed de novo. See Kinkead v. Sw. Bell Corp. Sickness & Accident Disability Benefit Plan, 111 F.3d 67, 68 (8th Cir. 1997). Here, the Plan requires all appeals be submitted in writing within 180 days ...

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