13-2114-cv
Gates v. UnitedHealth Group Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE
OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY
ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL
APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION: “SUMMARY ORDER”). A PARTY
CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
COUNSEL.
1 At a stated term of the United States Court of Appeals for the Second Circuit, held at the
2 Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 3rd day
3 of April, two thousand fourteen.
4
5 PRESENT:
6 BARRINGTON D. PARKER,
7 DEBRA ANN LIVINGSTON,
8 SUSAN L. CARNEY
9 Circuit Judges.
10 __________________________________________
11
12 MARIANNE GATES, individually and on behalf of all others similarly situated,
13
14 Plaintiff-Appellant,
15
16 v. No. 13-2114-cv
17
18
19 UNITEDHEALTH GROUP INCORPORATED, UNITED HEALTHCARE INSURANCE COMPANY,
20 ALLIANCEBERNSTEIN L.P., UNITED HEALTHCARE CHOICE PLUS COPAY PLAN FOR
21 ALLIANCE BERNSTEIN L.P., ALLIANCEBERNSTEIN L.P. UNITED HEALTHCARE INDEMNITY
22 PLAN, XYZ ENTITIES 1-100, UNITED HEALTHCARE SERVICE, INC., UHIC HOLDINGS, INC.,
23 UNITED HEALTHCARE INSURANCE COMPANY, OXFORD HEALTH PLANS LLC, AND
24 UNITEDHEALTHCARE, INC.,
25
26 Defendants-Appellees.
27 __________________________________________
28
1 APPEARING FOR APPELLANT: DAVID S. PREMINGER, Keller Rohrback L.L.P., New York,
2 New York; Lynn L. Sarko, Erin M. Riley, Benjamin
3 Gould, Keller Rohrback L.L.P., Seattle, Washington.
4
5 APPEARING FOR APPELLEES
6 UNITEDHEALTH GROUP
7 INCORPORATED, UNITED
8 HEALTHCARE INSURANCE
9 COMPANY, UNITED HEALTHCARE
10 SERVICES, INC., UHIC HOLDINGS,
11 INC., OXFORD HEALTH PLANS LLC,
12 AND UNITEDHEALTHCARE, INC.: NICHOLAS J. PAPPAS, Jeffrey S. Klein, Daniel J. Venditti,
13 Weil, Gotshal & Manges LLP, New York, New York.
14
15 APPEARING FOR APPELLEES
16 ALLIANCEBERNSTEIN L.P., UNITED
17 HEALTHCARE CHOICE PLUS COPAY
18 PLAN FOR ALLIANCEBERNSTEIN L.P.,
19 AND ALLIANCEBERNSTEIN L.P.
20 UNITED HEALTHCARE
21 INDEMNITY PLAN: JOHN D. GIANSELLO, Michael Delikat, Orrick, Herrington
22 & Sutcliffe LLP, New York, New York
23
24 APPEARING FOR AMICUS CURIAE
25 THOMAS E. PEREZ,
26 SECRETARY, UNITED STATES
27 DEPARTMENT OF LABOR: MICHAEL R. HARTMAN; M. Patricia Smith, Solicitor of
28 Labor; Timothy D. Hauser, Associate Solicitor for Plan
29 Benefits Security; Elizabeth Hopkins, Counsel for
30 Appellate and Special Litigation; Syma Ahmad, Trial
31 Attorney, United States Department of Labor,
32 Washington, D.C.
33
34 Appeal from an order of the United States District Court for the Southern District of New
35 York (Katherine B. Forrest, Judge). UPON DUE CONSIDERATION IT IS HEREBY
36 ORDERED, ADJUDGED, AND DECREED that the April 29, 2013 Judgment and the May 15,
37 2013 Order of the district court be AFFIRMED in part, REVERSED in part, VACATED in part,
38 and the case be REMANDED for further proceedings consistent with this order.
2
1 Gates appeals from the district court’s orders and judgment dismissing her second amended
2 complaint for lack of standing. We assume the parties’ familiarity with the relevant facts, the
3 procedural history, and the issues on appeal.
4 “Our standard of review for both motions to dismiss and motions for summary judgment is de
5 novo.” Guippone v. BH S & B Holdings LLC, 737 F.3d 221, 225 (2d Cir. 2013) (internal quotation
6 marks omitted). When bringing a lawsuit, a plaintiff bears the burden of establishing the “irreducible
7 constitutional minimum of standing” which requires, in part, that a “plaintiff must have suffered an
8 ‘injury in fact’ — an invasion of a legally protected interest which is (a) concrete and particularized,
9 and (b) actual or imminent, not conjectural or hypothetical.” Lujan v. Defenders of Wildlife, 504 U.S.
10 555, 560 (1992) (internal quotation marks and citations omitted). To establish standing at the
11 summary judgment stage, a plaintiff “must ‘set forth’ by affidavit or other evidence ‘specific facts,’
12 Fed. R. Civ. P. 56(e), which for purposes of the summary judgment motion will be taken to be true.”
13 Id. at 561.
14 A declaration submitted by the Defendants established that Gates’s benefits under the United
15 HealthCare Choice Plus Copay Plan for AllianceBernstein L.P. (the “Plan”) were calculated by
16 applying the coordination of benefits methodology of the claims administrator, United Healthcare
17 Insurance Company (“UHIC”), ostensibly derived from its interpretation of the plan terms contained
18 in the Summary Plan Description (“SPD”).1 Gates contends that UHIC has misinterpreted the SPD
19 and that a different methodology is required. The parties agree that Gates would receive higher
20 benefits payments under her alternative calculation than she does under UHIC’s methodology.
21 Treating the facts Gates has “set forth” as true, including her interpretation of the SPD, the denial of
1
The SPD is available at page 103 of the Joint Appendix.
3
1 the higher benefits payments was a concrete and particularized injury that Gates actually suffered.
2 Nothing more is required to demonstrate her standing to bring the claims. Whether Gates’s or
3 UHIC’s interpretation of the SPD is correct is a question that goes to the merits, not to standing. See,
4 e.g., Warth v. Seldin, 422 U.S. 490, 498-99, 500 (1975) (noting that “the standing question is whether
5 the plaintiff has alleged such a personal stake in the outcome of the controversy as to warrant [her]
6 invocation of federal-court jurisdiction and to justify exercise of the court’s remedial powers on [her]
7 behalf,” an inquiry that “in no way depends on the merits of the plaintiff’s contention that particular
8 conduct” creates liability (internal quotation marks and citations omitted)).
9 Because Gates has standing to assert her benefits claims, we reverse the district court’s
10 dismissal on that ground. As the district court converted Defendants’ motion on the first claim into
11 one for summary judgment2 and alternatively dismissed that claim on the merits, however, we must
12 also review its dismissal on those grounds.
13 Where, as here, “the benefit plan gives the administrator or fiduciary discretionary authority
14 to determine eligibility for benefits or to construe the terms of the plan,” the administrator’s
15 interpretation is “subject to the more deferential arbitrary and capricious standard,” rather than de
16 novo review. Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 249 (2d Cir. 1999)
17 (internal quotation marks omitted). Applying the “arbitrary and capricious” standard, a court
18 reverses a discretionary interpretation “only if the decision is without reason, unsupported by
19 substantial evidence or erroneous as a matter of law,” or “where [a] plan administrator or fiduciary
2
Although the district court’s April 19, 2013 Opinion and Order does not limit the conversion to summary
judgment to the first claim, it is clear from the oral argument transcripts both before the district court and this Court,
as well as the parties’ supplemental summary judgment briefing before the district court, that conversion occurred
only with respect to the first claim.
4
1 has imposed a standard not required by the plan’s provisions, or interpreted the plan in a manner
2 inconsistent with its plain words.” Id. (internal quotation marks and brackets omitted).
3 Before the district court, the parties agreed that a dispositive issue with respect to Gates’s
4 first claim for relief was “whether the terms of the AllianceBernstein CoPay Plan are consistent with
5 Defendants’ use of a single ‘Allowable Expense’ on both sides of the Medicare coordination of
6 benefits comparison when Medicare is primary and the service provider opted out of Medicare or the
7 participant is Medicare-eligible but has not enrolled.”3 Letter, Gates v. UnitedHealth Group Inc., No.
8 11-3487 (S.D.N.Y. Jan 22, 2013), ECF No. 112. Notwithstanding that agreement, the district court
9 apparently did not examine the terms of the SPD on this question. Instead, the district court
10 examined the terms of the SPD concerning UHIC’s decision to not refer to the Medicare fee schedule
11 when determining “the full amount that would have been payable under Medicare.” Gates v. United
12 Healthcare Ins. Co., No. 11 Civ. 3487 (KBF), 2013 WL 1718914, at *9 (S.D.N.Y. Apr. 19, 2013).
13 After finding that phrase ambiguous, the district court appears to have deemed the entire SPD
14 ambiguous and, therefore, reviewed the use of a single “allowable expense” only for rationality. Id.
15 at *10.
16 This approach was problematic. Even if we agreed with the district court that the SPD
17 permitted UHIC to estimate the “full amount that would have been payable under Medicare” without
3
We note here that on appeal the parties disagree about the use of the term “allowable expense”to refer to
the amount Medicare or the Plan authorizes a provider to charge for a given service. Gates notes that the term is not
used in the coordination of benefits formula, and argues that Defendants’ reliance upon “Allowable Expense,” a
capitalized defined term in the SPD, to support their argument is misplaced because the defined term refers only to
the binary question of whether a service is covered or not. Defendants, on the other hand, contend that the term
concerns a permitted amount, and that the examples contained in the Coordination of Benefits section of the SPD
support their interpretation. As we do not rely upon the examples, we need not resolve this terminological dispute.
For the purposes of this opinion, we use the term, without capitalization, to refer to the amount a provider is
authorized to charge for a service under Medicare or the Plan.
5
1 reference to actual Medicare payments (which we do not for the reasons discussed further below),
2 that conclusion is not dispositive on whether the use of a single “allowable expense” is “inconsistent
3 with [the] plain words” of the SPD. Kinstler, 181 F.3d at 249
4 Based on our initial review of the terms of the SPD on the “allowable expense” issue, we
5 believe there is a colorable claim that UHIC might be required to calculate “the benefit payments that
6 this Coverage Plan would have paid had it been the Primary Coverage Plan,” without reference to the
7 Medicare “allowable expense” because the SPD explains that “[w]hen [the Plan] is primary, its
8 benefits are determined before those of any other Coverage Plan and without considering any other
9 Coverage Plan’s benefits.” As the district court has not yet fully considered these plan terms nor the
10 parties’ other arguments on this issue, however, we decline to resolve this question in the first
11 instance and instead vacate the district court’s grant of summary judgment on this point and remand
12 this issue to the district court for its consideration.
13 Gates also challenges UHIC’s methodology insofar as when Gates received services from
14 opt-out providers, UHIC determined “the full amount that would have been payable under Medicare”
15 by simply substituting the opt-out provider’s “billed amount” for Medicare’s “allowable expense,”
16 rather than referring to the Medicare fee schedule to determine the actual “allowable expense,” as
17 Gates contends is required. The district court approved of UHIC’s methodology because it
18 interpreted the “full amount” phrase to be ambiguous, concluding that “[t]his language leaves open
19 the question of what ‘amount’ would have been payable and how that amount is calculated.” Gates,
20 2013 WL 1718914, at *9.
21 The district court’s focus on the ambiguity of the word “amount,” however, fails to consider
22 it in context with the surrounding words and other provisions. In general, the SPD does not require
6
1 determination of an “estimate” of Medicare payments, as was the case in Lipstein v. UnitedHealth
2 Grp., --- F.R.D. ----, No. 11 Civ. 1185 (JBS)(JS), 2013 WL 5410631, at *3 (D.N.J. Sept. 26, 2013).
3 Rather, the SPD requires UHIC to determine “the full amount that would have been payable under
4 Medicare.” Moreover, where a beneficiary has received services from a provider who has opt-ed out
5 of Medicare, as Gates did, the SPD is even more specific and requires UHIC to determine the
6 Medicare benefits “as if . . . the provider had agreed to limit charges to the amount of charges
7 allowed under Medicare rules.”
8 It is not clear to us how UHIC can give appropriate meaning to these terms without referring
9 to actual Medicare payment information in some way. A provider’s “billed amount” has no apparent
10 relationship to any amount that “would have been payable under Medicare,” let alone “the full
11 amount.” Moreover, simply using the “billed amount,” without any adjustment based on Medicare
12 rules, ignores the SPD’s instruction that where a beneficiary receives services from an opt-out
13 provider, the Medicare benefits side of the coordination of benefits calculation is to be determined
14 “as if . . . the provider had agreed to limit charges to the amount of charges allowed under Medicare
15 rules.” In our view, therefore, UHIC must base its determination on actual Medicare payments to
16 some degree when it conducts this part of the coordination of benefits calculation.
17 Gates argues that the only way for UHIC to incorporate actual Medicare payment information
18 is for UHIC to align the services provided by opt-out providers with billing codes on the Medicare fee
19 schedule. While this may ultimately be the case, the plan terms do not specifically refer to the fee
20 schedule, and the record before the Court is not sufficient to allow us to reach that conclusion. It is
21 possible, for instance, that UHIC could obtain Medicare payment information from other sources.
22 Moreover, there appears to be a disputed issue of material fact as to whether UHIC has the ability to
7
1 exactly align services provided by opt-out providers with the Medicare fee schedule. UHIC contends
2 that is impossible, and that it must estimate to some degree, while Gates argues that UHIC could do
3 so by taking advantage of ERISA provisions allowing it extended claims processing time to seek
4 additional information from opt-out providers, or by performing a systems upgrade. Accordingly,
5 from our review of the documents, it appears that UHIC must rely upon actual Medicare benefits
6 payments information for the determination of the Medicare benefits portion of the coordination of
7 benefits calculation. We leave it to the district court, however, to make this determination in the first
8 instance and also to address the question of whether UHIC can accomplish this only through reference
9 to the Medicare fee schedule, or if there are alternative procedures that would be consistent with the
10 plan terms. For these reasons, we vacate the district court’s merits determination on the first claim
11 and remand for further consideration consistent with this order.
12 We also conclude that Gates has standing to pursue her third through sixth claims. There is
13 no question that Gates has a statutory right to a full and fair review of her claims, and that violations
14 of that right are made expressly actionable by the applicable regulations. See 29 U.S.C. § 1133; 29
15 C.F.R. § 2560.503-1(l). Gates has submitted evidence related to the processing of her claims that,
16 when taken as true, establishes a violation of her right sufficient to establish standing. Defendants’
17 other arguments for dismissing Gates’s procedural claims concern whether or not she may properly
18 bring certain claims on the basis of a breach of fiduciary duty, and whether she is entitled to certain
19 forms of relief. These are not issues of standing, but rather questions of whether Gates has “state[d] a
20 claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). As these arguments were not
21 addressed by the district court, in light of its dismissal of the claims on standing grounds, we remand
22 Gates’s third through sixth claims for consideration of Defendants’ arguments by the district court in
8
1 the first instance. In doing so, but without expressing a view as to the outcome of these issues, the
2 district court should reevaluate whether it properly characterized Gates’s third claim as one for breach
3 of fiduciary duty given her representation on appeal that it is a straightforward claim for a violation of
4 29 U.S.C. § 1133, and whether Gates may brings claims on behalf of the beneficiaries of other plans
5 pursuant to the second amended complaint in light of this Court’s decision in NECA-IBEW Health &
6 Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2d Cir. 2012) and her decision not to reallege
7 claims against the numerous defendants related to UnitedHealth Group, Inc. that did not cause her an
8 injury.
9 Gates’s seventh claim contends that she was improperly transferred from the Plan to the
10 AllianceBernstein L.P. United HealthCare Indemnity Plan because she enrolled in Medicare. This
11 claim does not raise difficult questions of law, as the plain terms of the Plan restrict eligibility to
12 current employees of AllianceBernstein L.P. Therefore, her transfer out of the Plan was proper.
13 Accordingly, we affirm the district court’s dismissal of this claim.
14 The district court’s April 29, 2013 judgment and May 15, 2013 order are hereby AFFIRMED
15 in part, REVERSED in part, VACATED in part, and the case is REMANDED for further proceedings
16 consistent with this order.
17
18 FOR THE COURT:
19 Catherine O’Hagan Wolfe, Clerk
20
21
9