Opinion
No. 99-0990-CB-S.
January 22, 2001
FINAL JUDGMENT
Pursuant to separate order entered this date granting defendant's motion for summary judgment, it is hereby ORDERED, ADJUDGED and DECREED that the claims of the plaintiff, Gayle McDuffie, against the defendant, Flowers Hospital, Inc. d/b/a Home Care Services, be and hereby are DISMISSED with prejudice.
ORDER
This matter comes before the Court on a motion for summary judgment filed by Defendant Flowers Hospital, Inc. d/b/a Home Care Services. Based on the briefs and supplementary evidentiary materials submitted by the parties, the Court makes the following findings of fact and conclusions of law.
I. Findings of Fact
Home Care Services provides general nursing care and therapy services to patients in their respective homes in the Mobile, Alabama area. Home Care Services provides health benefits to certain full-time employees and their dependents under the terms of the Flowers Hospital Health Benefits Plan (the "Plan"). A copy of the Plan is provided to each full-time employee as part of a benefits packet.
Under the terms of the Plan, an employee becomes eligible to receive benefits "on the first day of the month following the completion of 30 days of employment as a full-time Employee." A "full-time Employee" is defined as an individual "who is regularly scheduled to work at least 32 hours each week." To be eligible for benefits, each full-time employee must also pay a portion of the cost of this coverage through deductions from his or her paycheck.
The Plan provides that benefits will be payable promptly upon receipt of proof of loss and sets forth the following procedures for obtaining reimbursement for medical expenses incurred by an eligible employee:
WHEN CLAIM MUST BE FILED TO RECEIVE BENEFITS
You have 90 days from the date of the loss to file claim. We will not deny a claim filed after 90 days from the date of loss if the claim was filed just as soon as it was reasonably possible, and except in the absence of legal capacity, is filed within one year from the date proof is otherwise required.
(Def.'s Ex. 2 at 30.) The Plan also establishes a limitations period for filing suit to recover under the Plan:
No action at law or in equity may be brought to recover under the Plan before 60 days after proof of loss has been filed nor shall such action be brought at all unless brought within three years from the end of the time allowed for furnishing proof of loss.
(Id.)
The Plan directed that an employee should submit any benefits claim forms to McGriff directly or to Home Care Services' Personnel Department, at which point the form would be forwarded to McGriff. McGriff was responsible for receiving and reviewing the benefits claim form, conducting any necessary investigation, issuing a benefits determination and, if a claim were denied, handling any appeal of that determination filed by the employee.
In 1994, Fountainhead Administrators, Inc. ("Fountainhead") began providing these same claims services to Home Care Services. On or about August 4, 1993, Plaintiff applied for a certified nursing assistant position with Home Care Services. On August 19, 1993, Home Care Services hired Plaintiff as a certified nursing assistant on a part-time basis. As a part-time employee, Plaintiff was not entitled to health benefits.
On or about April 15, 1994, Home Care Services employee Debra Tims informed Plaintiff that she was being converted from part-time to full-time status, effective April 18, 1994. During this meeting, Ms. Tims gave Plaintiff a benefits packet which included, among other things, enrollment forms and a copy of the Plan. Under the terms of the Plan, Plaintiff would not have become eligible for benefits until June 1, 1994, which is the first day of the month after Plaintiff would have completed thirty days of full-time employment.
Ms. Tims also informed Plaintiff that, although Home Care Services would begin to deduct a certain amount from her paycheck for this coverage, her coverage would not become effective until June 1, 1994. Plaintiff understood that she was not immediately eligible for benefits under the terms of the Plan. Nonetheless, plaintiff contends that she was eligible for benefits as of May 1, 1994 because she met the Plan's definition of a full-time employee, having worked more than 32 hours per week for several months prior to April 15, 1994.
Obviously, there is a dispute of fact as to when Plaintiff became a full-time employee. However, for reasons discussed in the Conclusions of Law, supra pp. 10-11 n. 4, this dispute is not a material one.
Less than three weeks after becoming a full-time employee, on May 6, 1994, Plaintiff was involved in an automobile accident. Plaintiff was treated for her injuries at Springhill Memorial Hospital for approximately eight weeks and, after her release, Plaintiff received additional therapy. Shortly after the accident, Ms. Tims and Agency Secretary Terri Howard visited Plaintiff at the hospital and discussed health benefits with her. During this conversation, Plaintiff asked whether her medical expenses would be covered by the Plan, and Ms. Tims informed her that they would not. Ms. Tims explained that she would not become eligible for health benefits until June 1, 1994. Plaintiff was upset about this fact, but she did not dispute it. This meeting was short, and it lasted approximately only fifteen minutes.
After this meeting, Plaintiff did not have any further verbal communications with Home Care Services regarding her medical expenses or health benefits relating to this accident. Plaintiff claims that she incurred more than $90,000.00 in unpaid medical expenses related to this accident. Plaintiff has not reimbursed any of her medical care providers for any portion of these medical expenses.
At some point in or around October 1994, Plaintiff began receiving collection letters from her medical care providers, and Plaintiff retained John Parker, Esq., to assist her in obtaining funds to pay her medical expenses. From that point forward, Mr. Parker handled all communications regarding Plaintiffs claim for benefits with Home Care Services and the Plan's Administrator.
On December 12, 1994, more than seven months after the automobile accident, Plaintiffs counsel sent a demand letter to Home Care Services requesting reimbursement for the medical expenses she had incurred. Home Care Services informed Plaintiffs counsel that she should file a benefits claim form with the Plan's Administrator as required under the Plan (a copy of which Plaintiff had received from Ms. Tims). On January 25, 1995, Plaintiffs counsel filed her benefits claim with the Plan. In her benefits claim form, Plaintiff provided only general information, such as her name and other identifying information and a brief description of her automobile accident. Plaintiff indicated that the accident had occurred on May 6, 1994.
On February 24, 1995, the Administrator denied Plaintiffs benefits claim. The Administrator sent a letter to Plaintiff indicating that her benefits claim was denied for the following two reasons:
(1) The "Eligibility for Medical Benefits — Employee" provisions of the Plan provide that employees are not covered by the Plan until the first day of the month following the completion of the 30 days of full-time employment. You began full-time employment with Home Care Services on April 18, 1994 and, therefore, your coverage under the Plan would have been effective on June 1, 1994. Your injury occurred on May 6, 1994, prior to the effective date of coverage under the Plan.
(2) The "When Claim Must Be Filed to Receive Benefits" provision of the Plan requires that claims be filed within 90 days from the date of the loss or, if after 90 days from the date of loss, as soon as reasonably possible. Your claims were not filed within this time period.
The letter further advised Plaintiff of her right to appeal this determination, as follows:
In accordance with the claims review procedures set forth in the Plan, you have the right to appeal the claims denial decision. Should you desire to appeal this decision, please submit to us a request for review in writing within 90 days of the date of this letter . . .
Our decision on review will be made promptly within 60 days of the date of your request for review unless special circumstances exist warranting an extension. Under those circumstances, our decision on review will be made within 120 days of your request for review.
Plaintiffs counsel also received a copy of this letter.
The deadline for Plaintiff to file an appeal with the Administrator expired on May 25, 1995. After receiving this benefits determination, neither Plaintiff nor her counsel had any verbal or written communications with the Administrator regarding her benefits claim and she did not appeal this determination. Plaintiffs counsel directed all remaining written communications to Home Care Services or its counsel.
The next communication from Plaintiff regarding her request for health benefits took place on October 21, 1996 — more than eighteen months later — when Plaintiff's counsel sent a demand letter to Home Care Services threatening to file a lawsuit. In this letter, Plaintiff did not submit any additional information supporting her claim that she was entitled to benefits.
On September 22, 1999, Plaintiff filed this action in the Circuit Court of Mobile County asserting claims for breach of contract, fraud negligence, and an alleged violation of ERISA. Defendant subsequently filed a notice of removal in this Court. After removal, the Court granted defendant's unopposed motion to dismiss all state law claims, to dismiss all claims for compensatory and punitive damages and to dismiss plaintiffs demand for jury trial.
II. Conclusions of Law
Summary judgment should be granted only if "there is no 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). The party seeking summary judgment bears "the initial burden to show the district court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial." Clark v. Coats Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991).Once the moving party has satisfied his responsibility, the burden shifts to the nonmoving party to show the existence of a genuine issue of material fact. Id.
If the nonmoving party fails to make "a sufficient showing on an essential element of her case with respect to which she has the burden of proof," the moving party is entitled to summary judgment. Id. at 1438 (quoting Celotex Corp. v. Catrett, 477 U.S. 317 (1986)) (footnote omitted). "In reviewing whether the nonmoving party has met its burden, the court must not weigh the evidence or make credibility determinations and must draw all inferences in favor of the nonmoving party." Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 999 (11th Cir. 1992).
It is important to note that the factual disputes raised by the nonmoving party must be both material and genuine. "As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted."Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). "Genuine disputes are those in which the evidence is such that a reasonable jury could return a verdict for the non-movant. For factual issues to be considered genuine, they must have a real basis in the record." Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742 (11th Cir. 1996) (quotingHairston v. Gainesville Sun Publishing Co., 9 F.3d 913, 918 (11th Cir. 1993)).
Defendant asserts several alternative grounds for summary judgment: (1) Plaintiff failed to file suit within the limitations period specified in the contract; (2) Plaintiff failed to exhaust administrative remedies; and (3) the decision to deny Plaintiffs claim for benefits was reasonable. For reasons discussed below, each of these grounds has merit.
Plaintiffs ERISA claim fails because she did not file her lawsuit within the applicable limitations period. The Eleventh Circuit has held that where the applicable plan provides its own limitations period, the Court must apply the plan's limitations period, provided that it is reasonable. Northlake Reg'l Med. Ctr. v. Waffle House Sys. Employee Benefit Plan, 160 F.3d 1301, 1303 (11th Cir. 1998) (summary judgment affirmed because Plaintiff failed to file claim within the plan's ninety-day limitations period). See also Doe v. Blue Cross Blue Shield United, 112 F.3d 869, 874-75 (7th Cir. 1997) (summary judgment affirmed to the extent that the ERISA claim was filed outside of the plan's three year and three month limitations period).
The Plan provides that an employee must file a benefits claim with the Plan Administrator within ninety days after the date of a loss, and that any lawsuit must be filed within three years after the date the claim was due. Plaintiff, therefore, had to file her benefits claim with the Administrator on or before August 3, 1994 (ninety days from the date of the automobile accident), and she had until August 3, 1997 to file a lawsuit challenging the denial of benefits for injuries she suffered in this accident.
Plaintiffs ERISA claim is barred because she did not file her lawsuit until September 22, 1999, more than two years after the expiration of the limitations period set forth in the Plan. The Plan's three year and three month limitations period is reasonable because it provided ample time for Plaintiff to investigate her claim and complete the Plan's administrative claims process. Northlake, 160 F.3d at 1304 (noting that the fact that the administrative claims process could be completed prior to the running of the limitations period is a factor favoring "reasonableness").
Plaintiffs argument that the contractual limitations period is unreasonable and, therefore, should not be enforced is unavailing. Relying upon rather convoluted logic, Plaintiff contends that the contractual provision setting forth the limitations period is unenforceable because Defendant breached the contract by failing to pay the claims that are the basis for this litigation. According to Plaintiff, breach of one contractual provision makes the entire contract, including the limitations period unenforceable. Although Plaintiff buttresses her argument with a general citation to Northlake, nothing in that case remotely supports Plaintiffs position. As Defendant points out in its reply brief, if Plaintiffs logic were followed, no contractual limitations period could be enforced in an ERISA action or, for that matter, in any breach of contract action.
Plaintiff asserts that in the absence of the contractual limitations period Alabama's six-year statute of limitations would apply. See Blue Cross and Blue Shield of Alabama v. Sanders, 138 F.3d 1347, 1356 (11th Cir. 1998) (applying Alabama's six-year breach of contract limitations period to action against plan administrator by beneficiary's subrogee).
Plaintiffs ERISA claim also fails because she did not exhaust her administrative remedies by completing the Plan's administrative claims process. It is well-settled that, before filing an ERISA claim, a plaintiff must complete the ERISA-mandated administrative claims process (including the appeal procedure), or her ERISA claim is barred. Variety Children's Hosp. v. Century Med. Health Plan, 57 F.3d 1040, 1042 (11th Cir. 1995) ("We have repeatedly held that plaintiffs must exhaust their administrative remedies under a covered benefits plan prior to bringing an ERISA claim in federal court."). See also, Counts v. American Gen. Life and Accident Ins. Co., 111 F.3d 105, 108 (11th Cir. 1997) (affirming summary judgment where plaintiff failed to appeal initial benefits determination); Springer v. Wal-Mart Assocs. Group Health Plan, 908 F.2d 897, 899 (11th Cir. 1990) (action remanded with instructions to dismiss where plaintiff did not seek administrative review of plan's decision).
Plaintiff failed to exhaust her administrative remedies under the Plan because she did not appeal the Administrator's denial of her benefits claim. The Plan sets forth procedures for appealing the denial of a claim and requires that the appeals process be exhausted before a lawsuit is filed. On February 24, 1995, the Administrator notified Plaintiff that it had denied her benefits claim and provided a detailed description of the reasons for this denial. In the same letter, the Administrator informed Plaintiff that she could appeal this determination by submitting a "request for review in writing within 90 days of the date of this letter." Despite explicit notice of her rights and obligations under the Plan, Plaintiff did not appeal the Administrator's decision.
Plaintiff argues that she was not required to exhaust administrative remedies because exhaustion would have been futile. Plaintiff provides no legal authority to support this argument, and the factual basis for her futility claim is not much stronger. According to plaintiff, exhaustion would have been futile because the Plan Administrator denied her initial claim. Once again, plaintiffs logic is skewed, for if initial denial of a claim rendered exhaustion futile, then there could never be an exhaustion requirement. Plaintiffs ERISA claim is barred by her failure to exhaust her administrative remedies under the Plan.
Even assuming that Plaintiff had satisfied the mandatory prerequisites for filing her ERISA claim, her claim would still fail because the Administrator's decision to deny her benefits claim was reasonable. The Court is not empowered to make its own determination as to the merits of Plaintiffs benefits claim. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101 (1989). The Eleventh Circuit has held that where, as here, the benefit plan grants the administrator discretionary authority to determine eligibility for benefits, the court must review the administrator's decision under the abuse of discretion standard. Paramore v. Delta Air Lines, Inc., 129 F.3d 1446, 1449 (11th Cir. 1997); Buckley v. Metropolitan Life Ins., 115 F.3d 936 (11th Cir.), rehearing denied, 129 F.3d 617 (11th Cir. 1997); Shannon v. Jack Eckerd Corp., 113 F.3d 208, 210 (11th Cir. 1997), cert. denied 522 U.S. 111 (1998). Under this standard, the Court should determine not whether it would have made the same decision but "whether there was a reasonable basis for the [Administrator's] decision, based upon the facts as known to the [A]dministrator at the time the decision was made." Hunt v. Hawthorne Assoc., Inc., 119 F.3d 888, 912, (llth Cir. 1997), cert. denied, 523 U.S. 1120 (1998); Paramore, 129 F.3d at 1451; Carroll v. Prudential Ins. Co. of Am., 859 F. Supp. 1474, 1477 (S.D. Ala. 1993).
In this case, the Administrator had a reasonable basis for denying Plaintiffs benefits claim. The Administrator determined that there were two independent reasons that Plaintiff was not entitled health benefits under the Plan, namely that: (1) she was not an "eligible Employee" under the terms of the Plan; and (2) she did not file a timely benefits claim. The Administrator's determination was based on a reasonable interpretation of the Plan's provisions and the facts that had been presented to it by Plaintiff or her counsel at the time.
The Plan provides that an employee does not become eligible for benefits until "the first day of the month following the completion of 30 days employment as a full-time Employee." In this case, Home Care Services' records unambiguously state that Plaintiff became a full-time employee on April 18, 1994 and, therefore, she would not have become eligible for benefits until June 1, 1994 (or nearly one month after her automobile accident). There was no contrary evidence for the Administrator to consider. Accordingly, the Administrator did not abuse its discretion in determining that the effective date of Plaintiffs health benefits coverage was June 1, 1994.
Since the Court's job is to review the decision of the Administrator, it is the evidence that was before the Administrator on this issue, not the evidence Plaintiff has presented in opposition to summary judgment, that is material.
The Administrator also reasonably determined that Plaintiffs benefits claim was untimely. Plaintiff filed her benefits claim with the Administrator on January 25, 1994, more than seven months after she had suffered her accident. Under the terms of the Plan, however, Plaintiff was required to file her benefits claim within "90 days of the date of loss," or before August 3, 1994. The Plan further provides that the Administrator will only pay a benefits claim that is filed after this ninety-day window provided it is filed "as soon as it was reasonably possible." In this case, it is undisputed that Plaintiff could have filed her benefits claim within the ninety-day window. Plaintiff has no reasonable excuse for waiting more than seven months to do so and, even if there were such an excuse, Plaintiff did not present it to the Administrator.
Plaintiff argues that the Plan was ambiguous with regard to the date for filing of the claim and, therefore, should be construed in her favor. According to Plaintiff, the Plan can be interpreted to require that claims be filed either within ninety days of the date of loss or within one year of the date of loss. Plaintiffs interpretation is a tortured one, as is obvious from the clear language of the Plan, which states:
You have 90 days from the date of the loss to file claim. We will not deny a claim filed after 90 days from the date of loss if the claim was filed just as soon as it was reasonably possible, and except in the absence of legal capacity, is filed within one year from the date proof is otherwise required.
By ignoring the highlighted language, which provides for limited situations where claims may be filed after ninety days has elapsed, plaintiff reduces the provision to nonsense, i.e., claims must be filed within 90 days or, if not, within one year. Contrary to Plaintiffs argument, the Plan is not ambiguous, and the Administrator did not abuse its discretion in determining that Plaintiffs benefit claim was untimely.
For the reasons set forth above, the defendant is entitled to summary judgment. Accordingly, it is ORDERED that defendant's motion be and hereby is GRANTED. Judgment will be entered by separate order.