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Shannon v. Jack Eckerd Corp.

United States Court of Appeals, Eleventh Circuit
May 29, 1997
113 F.3d 208 (11th Cir. 1997)

Summary

holding that failure to obtain and review additional relevant information prior to denying a claim is arbitrary and capricious

Summary of this case from Duckett v. Blue Cross and Blue Shield of Alabama

Opinion

No. 96-4291.

Decided May 29, 1997.

Susan Leslie Dolin, Muchnick Wasserman Dolin, Hollywood, FL, William G. Liston, Marlow Connell Valerius Abrams Adler, Miami, FL, for Defendant-Third Party Plaintiff-Appellant.

Arnold R. Ginsberg, Miami, FL, for Plaintiff-Appellee.

Appeal from the United States District Court for the Southern District of Florida.

(91-271-CIV-LCN),

Lenore Carrero Nesbitt, Judge.

Before HATCHETT, Chief Judge, BARKETT, Circuit Judge, and RONEY, Senior Circuit Judge.


Thomas Shannon filed this action after Jack Eckerd Corporation denied his request for preauthorization of benefits under an employee group health plan. Eckerd is appealing the district court's judgment awarding Shannon $70,714.35. Eckerd argues on appeal that the district court erred in denying its motion for summary judgment and in finding that the Plan's original denial of benefits was arbitrary and capricious. Eckerd also contends that the district court erred in directing the Plan administrator on remand to consider evidence available subsequent to the initial determination.

Thomas Shannon is a beneficiary under the Jack Eckerd Corporation Health Benefits Plan ("the Plan"), a self-funded plan governed by the Employee Retirement Income Security Act ("ERISA"). Shannon suffers from long-term diabetes mellitus Type I, which has resulted in severe renal disease and kidney failure. Due to these complications, Shannon's doctor advised Shannon to undergo a kidney transplant. After further consultation with other physicians, Shannon decided to undergo a simultaneous kidney/pancreas transplant at the University of Minnesota. The University of Minnesota requires either advance payment or verification of insurance coverage before a patient can be placed on the cadaveric pancreas transplant list. Accordingly, Shannon's surgeon requested preauthorization of benefits for the procedure from the Plan. At the time Shannon sought benefits for his transplant, the Plan excluded coverage for experimental or investigational human organ transplants. The Plan administrator rejected the claim for those benefits, informing Shannon and his surgeon that although the Plan would cover expenses associated with the kidney transplant, it could not cover expenses associated with the pancreas transplant because it was medically experimental or investigational and the Plan excluded coverage for experimental or investigational human organ transplants. Shannon's surgeon filed a formal appeal but the Plan administrator continued to deny coverage for the pancreas portion of the transplant. Shannon went forward with the transplant using other funding, but the pancreas graft failed. Shannon then sued under ERISA,

29 U.S.C. §(s) 1132(a)(1)(B) to recover the benefits denied by the Plan administrator. After a bench trial, the district court found that in rejecting the claim as investigational, the Plan administrator had failed to consider all of the relevant evidence available and concluded that this failure rendered the Plan administrator's denial of benefits for the pancreas portion of the transplant arbitrary and capricious. The district court remanded the matter to the Plan administrator for a new determination based upon all relevant evidence including subsequently available evidence. On remand, the Plan administrator determined that the pancreas operation was covered under current standards. However, the Plan refused to pay Shannon any benefits, arguing that at the time Shannon made his claim the procedure was experimental/investigational. Shannon again sought relief in the district court and the district court entered final judgment for the benefits in accordance with the Plan administrator's conclusion that the pancreas procedure was covered.

"A civil action may be brought by a participant or beneficiary . . . to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C.A. 1132(a)(1)(B) (West 1985).

Eckerd's appeal to this Court of the remand order was dismissed for want of jurisdiction.

We review a district court's grant of summary judgment de novo applying the same legal standards that control the district court's determination. Jones v. Firestone Tire Rubber Co., 977 F.2d 527 (11th Cir. 1992). Denial of benefits under an ERISA plan that gives the plan administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan is reviewed by the district court for abuse of that discretion. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989); Jett v. Blue Cross and Blue Shield of Alabama, Inc., 890 F.2d 1137, 1138-39 (11th Cir. 1989). There is no dispute that the Eckerd Plan gives its administrator discretionary authority to determine eligibility for benefits. Therefore, we must determine whether the Plan administrator's decision was arbitrary and capricious. Jett, 890 F.2d at 1139. A decision to deny benefits is arbitrary and capricious if no reasonable basis exists for the decision. Id. In this case the district court found that in evaluating whether the proposed procedure was experimental or investigational, the Plan administrator relied only on Medicare's denial of coverage, a conclusory recommendation of denial from Cost Care, the Plan's medical consultant, and the statements of several insurance companies that pancreas transplants were "investigational." The court concluded that this was an insufficient basis to support the denial. Simply accepting the bald assertions of Cost Care and the denial of other insurance companies without examining or evaluating their underlying bases and failing to obtain additional relevant information was arbitrary and capricious. We cannot say that the district court erred in remanding for the Plan administrator to make a reasonably relevant inquiry.

Nor can we say that the district court erred in directing the Plan administrator to consider subsequently available evidence. The district court relied on Bucci v. Blue Cross-Blue Shield of Conn., 764 F. Supp. 728, 732 (D.Conn. 1991), holding that since a defendant's duty to provide benefits "is a continuing one, its refusal to provide benefits is thus a continuing denial, the propriety of which is measured against the information available from time to time." Eckerd's Plan administrator had an obligation to make a reasonably relevant inquiry and failed to do so at the time of the original determination. The district court did not err in directing that the Plan administrator consider all available evidence. As we stated in Jett, "Should [the beneficiary] wish to present additional information that might affect the determination of eligibility for benefits, the proper course would be to remand to [the plan administrator] for a new determination." 890 F.2d at 1140. Accordingly, we AFFIRM.


Summaries of

Shannon v. Jack Eckerd Corp.

United States Court of Appeals, Eleventh Circuit
May 29, 1997
113 F.3d 208 (11th Cir. 1997)

holding that failure to obtain and review additional relevant information prior to denying a claim is arbitrary and capricious

Summary of this case from Duckett v. Blue Cross and Blue Shield of Alabama

denying appeal of district court's judgment ordering plan administrator to pay benefits to plan participant

Summary of this case from Hunt v. Hawthorne Associates, Inc.

affirming remand where plan administrator accepted recommendations without engaging in an independent analysis

Summary of this case from Lee v. Equity Props. Asset Mgmt., Inc.

affirming remand to consider subsequently available evidence after district court found that administrator's decision was arbitrary and capricious

Summary of this case from Hooks v. Hartford Life & Accident Ins. Co.

affirming district court's ruling that insurer's reliance on conclusory determinations of third parties was arbitrary and capricious, and permitting insured to submit subsequently available evidence on remand

Summary of this case from Schreck v. Reliance Standard Life Ins.

In Shannon v. Jack Eckerd Corp., 113 F.3d 208 (11th Cir. 1997), the claimant's request for coverage of an organ transplant surgery was denied under an experimental or investigational medicine exclusion in the policy.

Summary of this case from Boysen v. Ill. Tool Works Inc.

In Shannon, after affirming the district court's decision that a claim decision was arbitrary and capricious, we also affirmed the district court's decision to remand to the plan administrator.

Summary of this case from Levinson v. Reliance Standard Life Ins. Co.

In Shannon, the plan administrator relied only upon a conclusory recommendation of denial from its medical consultant and the denials of other insurance companies in deciding that a pancreas transplant was investigational.

Summary of this case from Levinson v. Reliance Standard Life Ins. Co.

In Shannon, the Eleventh Circuit affirmed the district court's decision to remand to the claims administrator to consider additional evidence.

Summary of this case from Hooks v. Hartford Life & Accident Ins. Co.

In Shannon, the “district court relied on Bucci v. Blue Cross–Blue Shield of Conn., 764 F.Supp. 728, 732 (D.Conn.1991), holding that since a defendant's duty to provide benefits ‘is a continuing one, its refusal to provide benefits is thus a continuing denial, the propriety of which is measured against the information available from time to time.

Summary of this case from McCay v. Drummond Co.

In Shannon v. Jack Eckerd Corp., 113 F.3d 208, 210 (11th Cir. 1997), the Eleventh Circuit affirmed the district court's remanding the case to the plan administrator because its denial of claims benefits was arbitrary and capricious, and — given that the administrator would be making a second and more comprehensive evaluation of the matter on remand — directed the plan administrator also to consider subsequently available evidence.

Summary of this case from Ray v. Sun Life Health Ins. Co.

In Shannon v. Jack Eckerd Corp., 113 F.3d 208 (11th Cir. 1997), the United States Court of Appeals for the Eleventh Circuit embraced a district court's holding that "since a defendant's duty to provide benefits is a continuing one, its refusal to provide benefits is thus a continuing denial, the propriety of which is measured against the information available from time to time."

Summary of this case from Warming v. Hartford Life Accident Insurance Company

stating that " decision to deny benefits is arbitrary and capricious if no reasonable basis exists for the decision"

Summary of this case from Scarpulla v. Bayer Corporation Disability Plan

In Shannon, the district court found after a bench trial that because the defendant plan administrator did not consider all relevant evidence in determining Plaintiff's claim, its denial of benefits to the plaintiff was arbitrary and capricious.

Summary of this case from White v. Reliance Standard Life Insurance Company
Case details for

Shannon v. Jack Eckerd Corp.

Case Details

Full title:Thomas SHANNON, Plaintiff-Appellee, v. JACK ECKERD CORPORATION, a Delaware…

Court:United States Court of Appeals, Eleventh Circuit

Date published: May 29, 1997

Citations

113 F.3d 208 (11th Cir. 1997)

Citing Cases

Warming v. Hartford Life Accident Insurance Company

See id. at 13. In Shannon v. Jack Eckerd Corp., 113 F.3d 208 (11th Cir. 1997), the United States Court of…

Levinson v. Reliance Standard Life Ins. Co.

We review a district court's grant of summary judgment de novo, applying the same legal standards that…