United States Court of Appeals,
Fifth Circuit.
No. 96-20782.
Constance J. BARHAN, Plaintiff-Appellant,
v.
RY-RON INC., et al., Defendants,
Charlie Thomas Chevrolet, Inc. & Affiliates Employee Benefit Plan
and Allianz Life Insurance Company of North America, Defendants-
Appellees.
Sept. 5, 1997.
Appeal from the United States District Court for the Southern
District of Texas.
Before KING, DAVIS and DeMOSS, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
Constance Barhan appeals from a district court's summary
judgment order denying her insurance benefits under her employer's
insurance plan. We affirmed in part, reversed in part and remand.
I.
In late 1992, Barhan was diagnosed with adjuvant breast
cancer. Her doctor recommended that she receive high-dose
chemotherapy with peripheral stem-cell support (HDCT/PSCS). Her
medical provider requested approval of the treatment from Barhan's
insurer, the Charlie Thomas Chevrolet, Inc. & Affiliates Employee
Benefit Plan ("the Plan"). The plan administrator, citing
exclusions in the plan for treatments not recognized by the
American Medical Association and experimental or investigational
1
procedures, denied coverage.1
Barhan filed suit against the Plan and Allianz Life Insurance
Company of North America ("Allianz") seeking a declaratory judgment
that the treatment ordered by her doctor was covered by the Plan
and that she was deprived of the "full and fair review" of her
claim required by ERISA, 29 U.S.C. § 1133(2).2 She also asked the
court to order the Plan to pay for her treatment and enter a
judgment for $30,124.44, the amount of unpaid medical expenses.
The Plan and Allianz filed motions for summary judgment, which the
district court granted.
II.
A.
On appeal, Barhan challenges the plan administrator's denial
of coverage under § 502(a)(1)(B) of the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(1)(B), and
1
According to the policy, "Covered Expenses" do not include:
L. Charges for services, supplies, or treatments not
recognized by the American Medical Association as
generally accepted and Medical Necessary for the
diagnosis and/or treatment of an active Illness or
Injury; or charges for procedures, surgical or
otherwise, which are specifically listed by the
American Medical Association as having no medical
value;
...
U. Charges for experimental or investigational
procedures, drugs, or research studies, or for any
services or supplies not considered legal in the
United States.
2
The Plan is funded, in part, under an excess risk or
stop-loss insurance policy issued by the North American Life and
Casualty Company, now known as Allianz.
2
contends that the district court erred in granting summary judgment
upholding the denial of benefits.
We review the district court's holding on the question of
whether the plan administrator abused its discretion de novo.
Sweatman v. Commercial Union Ins. Co., 39 F.3d 594, 601 (5th
Cir.1994). Summary judgment is appropriate if "the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex
Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91
L.Ed.2d 265 (1986). The moving party must identify evidence that
establishes the absence of any genuine issue of material fact,
Celotex Corp., 477 U.S. at 323, 106 S.Ct. at 2553, and the court
reviewing a grant of summary judgment must evaluate the facts in
the light most favorable to the nonmovant. Todd v. AIG Life Ins.
Co., 47 F.3d 1448, 1451 (5th Cir.1995).
The district court reviews the denial of benefits for abuse
of discretion when the terms of a benefit plan governed by ERISA
give the plan administrator discretionary authority to determine
eligibility for benefits. Firestone Tire & Rubber Co. v. Bruch,
489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989);
Duhon v. Texaco, Inc., 15 F.3d 1302, 1305-06 (5th Cir.1994). The
benefit plan here provides that, "[t]he Administrator has the sole
authority and responsibility to review and make final decisions on
all claims to benefit hereunder." This language grants the plan
3
administrator discretion; therefore, if the administrator's
decision on eligibility is supported by substantial evidence and is
not erroneous as a matter of law, it will be upheld. Wildbur v.
ARCO Chemical Co., 974 F.2d 631, 637 n. 12 (5th Cir.1992).
B.
To support its motion for summary judgment, the Plan submitted
various documents and affidavits. The district court did not
assess this evidence. Instead, it stated that in reviewing the
plan administrator's decision, it was acting as an appellate court;
accordingly, the district court determined, the parties were bound
by the Federal Rules of Appellate Procedure. Under Rule 11(a), the
appellant must designate the record to be reviewed. Fed. R.App. P.
11(a). The district court concluded that "it is Barhan's duty to
provide the administrative record upon which the Plan made its
decision" and that because Barhan failed to submit such a record,
summary judgment for the Plan was appropriate.
We disagree. While the district court acts as a reviewing
court when it examines a plan administrator's decision, we are not
persuaded that the Federal Rules of Appellate Procedure apply.
Neither the rules themselves nor ERISA provide for such an
outcome.3 Moreover, it is the plan administrator's responsibility
3
According to the rule setting forth the scope of the
Federal Rules of Appellate Procedure:
These rules govern procedure in appeals to United
States courts of appeals from the United States
district courts and the United States Tax Court; in
appeals from bankruptcy appellate panels; in
proceedings in the courts of appeals for review or
enforcement of orders of administrative agencies,
4
to compile a record that he is satisfied is sufficient for his
decision. See, e.g., 29 C.F.R. § 2560.503-1(f) (requiring that
benefits claim denial include specific reference to plan provisions
on which denial is based and description of additional material or
information necessary to perfect claim for review). Therefore, as
a practical matter, the plan administrator is ordinarily
best-positioned to submit that administrative record.4
We are persuaded that summary judgment is an appropriate
procedural vehicle for the administrator to use in obtaining a
resolution of the plan beneficiary's suit. Once the motion for
summary judgment is filed, the usual summary judgment rules
control. In this case and under those rules, the Plan bore the
initial burden of informing the court of the basis for its motion
and identifying those portions of the pleadings, depositions,
affidavits or other factual support that demonstrate that it did
not abuse its discretion in rejecting the beneficiary's claim. See
Celotex Corp., 477 U.S. at 323, 106 S.Ct. at 2552-53. Thereafter,
the nonmovant—here, Barhan—had to set forth factual support in
proper form tending to show that the plan administrator was not
entitled to summary judgment and/or that the nonmovant was entitled
boards, commissions and officers of the United States;
and in applications for writs or other relief which a
court of appeals or a judge thereof is competent to
give.
Fed. R.App. P. 1.
4
Indeed, in the analogous context of appeals from the denial
of Social Security benefits, the government is required by
statute to submit the administrative record to the district
court. 42 U.S.C. § 405(g).
5
to summary judgment. See id. at 322-23, 106 S.Ct. at 2552-53.
In this case, the Plan, in support of its motion for summary
judgment, submitted, among other documents: (1) the insurance
policy containing the exclusionary language; (2) the initial
letter refusing to authorize the treatment; (3) the affidavit of
Dr. Charles Manner, Barhan's board-certified oncologist,
recommending treatment; and (4) the affidavit of Jane Wolff,
claims manager for the third-party administrator for the Plan.
Wolff's affidavit states that the plan administrator reviewed
coverage guides of various insurers and relevant articles in
various medical journals; however, those articles were not
attached. Wolff's affidavit also states that the plan
administrator solicited the opinion of Dr. Giora Mavligit, but no
affidavit of Dr. Mavligit was submitted. In her motion opposing
summary judgment, Barhan relied on the affidavit from Dr. Manner,
already in the record.
The district court concluded that it did not need to assess
the plan administrator's factual basis for its decision because
Barhan failed to supply an administrative record. This conclusion
is inconsistent with rules governing summary judgment. Under those
rules, despite our deferential standard of review, this record does
not sufficiently demonstrate the plan administrator's entitlement
to summary judgment. The only evidence put forth by the Plan in
support of its position that the HDCT/PSCS treatment is
experimental is an affidavit of the claims manager; that affidavit
relies chiefly on hearsay evidence. See, e.g., Vidrine v. Enger,
6
752 F.2d 107, 110 (5th Cir.1984); see also Garside v. Osco Drug,
Inc., 895 F.2d 46, 50 (1st Cir.1990) (holding that "third-party's
description of an expert's supposed testimony is not suitable grist
for the summary judgment mill"). None of the documents cited in
that affidavit were presented to the court. Nor was an affidavit
of Dr. Mavligit, the Plan's expert, submitted. Summary judgment on
this record is inappropriate. Therefore, the district court's
order granting summary judgment is vacated.5
III.
Allianz, the Plan's reinsurer, argued in its motion for
summary judgment that Barhan, as the original insured, had no
rights against it. See, e.g., 13A John A. Appleman & Jean
Appleman, Insurance Law and Practice § 7681 (1976). Allianz
contends that Barhan's standing to sue it is a matter of state—in
this case, Texas—law. Under Texas law, absent a provision stating
otherwise, "the reinsurance contract allows only the reinsured
company to bring a claim against the reinsurer [and] the original
insureds have no basis for a claim against the reinsurer."
5
Upon their return to district court, both parties have a
number of options. They may put evidence into proper summary
judgment form and file additional motions for summary judgment.
See Jones v. Wike, 654 F.2d 1129, 1130 (5th Cir.1981). Moreover,
if either party concludes that additional factual development is
necessary, it may move to remand to the plan administrator for
further factual development. Cf. Duhon, 15 F.3d at 1309 n. 8.
The district court should keep in mind that ERISA cases
are appropriately handled with some informality by the plan
administrator. Many of the claims are small, and in the run
of cases, the plan administrator will be understandably
reluctant to allow investigative costs to rise to a
disproportionate level.
7
Malaysia British Assurance v. El Paso Reyco, Inc., 830 S.W.2d 919,
921 (Tex.1992). Barhan fails to demonstrate that Allianz's
contract with the Plan contains an exception to this general rule
allowing her to bring a claim; thus, summary judgment as to
Allianz is proper.
IV.
The district court's order granting summary judgment as to
Allianz is AFFIRMED. For the reasons set forth above, the order
granting summary judgment as to the Plan is REVERSED and the case
is REMANDED for reconsideration in light of this opinion.
8