Opinion
Case No. 1:10-cv-50.
April 21, 2011
Summary : Defendants filed a motion to stay this ERISA action while a second administrative appeal was under consideration. The Plaintiffs resisted and the motion and moved for declaratory judgment. The Court denied the motion to stay finding the lawsuit and the second administrative appeal could proceed simultaneously. The motion for declaratory judgment was denied as premature.
ORDER DENYING DEFENDANTS' MOTION TO STAY AND DENYING PLAINTIFFS' MOTION FOR DECLARATORY JUDGMENT
Before the Court is the Defendants' motion to stay filed on March 24, 2011. See Docket No. 29. The Plaintiffs filed a response in opposition to the motion on April 7, 2011. See Docket No. 35. The Defendants filed a reply brief on April 14, 2011. See Docket No. 38 Also before the Court is the Plaintiffs' motion for declaratory judgment filed on April 7, 2011. See Docket No. 34. For the reasons explained below, the motions are denied.
I. BACKGROUND
The Plaintiffs, Arthur M. Hayden and Joy Lynn Hayden, are co-conservators and co-guardians of their adult son, Todd Lowell Hayden. Todd Hayden was severely injured in an all-terrain-vehicle (ATV) accident on June 13, 2009. Hayden was 34-years old at the time of the accident which occurred near Sidney, Montana. Initial treatment was in the emergency room at Sidney Health Center in Sidney, Montana. He was then airlifted to Billings, Montana and treated at Billings Clinic. Todd Hayden was eventually transferred by air to Bismarck, North Dakota and treated by medical professionals at Mid Dakota Clinic and Medcenter One. His injuries included serious brain damage which required, and continues to require, significant medical, nursing, and rehabilitative care. The emergency room notes reflect that an odor of alcohol was detected on admission. See Docket No. 1-6. However, testing revealed a blood alcohol content of .026 which was described in the medical records as "minimal." See Docket Nos. 1-7, p. 2. and 1-8, p. 1. Todd Hayden now resides at a nursing home/long-term care facility in Mandan, North Dakota. Medical expenses have exceeded $1,000,000 to date and continue to mount.
Todd Hayden was an employee of Nabors Well Services Co, an affiliate of Nabors Industries, at the time of the accident. Nabors Well Service has a self-insured Group Health Plan ("Plan") which provides employees of Nabors Well Service and Nabors affiliates with health coverage. See Docket Nos. 30-1 and 30-2. It is undisputed that Todd Hayden was covered by the Plan at the time of the accident. Defendant Blue Cross and Blue Shield of Texas is the Claims Administrator for the Plan. Nabors Industries, Inc. is the Plan Administrator for the Plan. The Plan has maximum lifetime benefits limit of $2,000,000. See Docket No. 30-2, p. 11.
The Haydens, who live in South Heart, North Dakota, were appointed co-conservators and co-guardians of Todd Hayden on September 9, 2009. See Docket No. 1-1. The Haydens repeatedly contacted Blue Cross and Blue Shield of Texas after their son's accident in order to obtain health insurance benefits for him under the Plan. Blue Cross and Blue Shield of Texas did pay a small portion of the medical bills related to the accident but ultimately denied the claims. The Haydens appealed this determination in a letter dated February 16, 2010. See Docket No. 1-9. Blue Cross and Blue Shield of Texas reconsidered the claim for benefits but on March 2, 2010, denied coverage based on a policy exclusion for accidents involving alcohol. See Docket No. 1-5. Blue Cross and Blue Shield of Texas explained in its denial letter, "[t]he group will not pay for any accidents where alcohol or drugs were involved." See Docket No. 1-5. The relevant exclusion actually states that the plan does not cover "[a]ny services, supplies, or treatment due to injuries resulting from alcohol intoxication, drug induced impairment or felonious acts."See Docket No. 30-3, p. 14. The Plan provides for a second round of appeals whereby the decision of the Claims Administrator may be appealed to the Plan Administrator. See Docket No. 30-2, p. 66. After the first appeal was rejected, the Haydens sought legal advice.
The Haydens filed suit in federal court on June 28, 2010, alleging violation of the Employee Retirement Income Security Act of 1974 ("ERISA") as well as a number of state law claims. See Docket No. 1. The Court dismissed the state law claims in an order dated November 2, 2010. See Docket No. 15. The Defendants filed their answer to the ERISA claims on November 16, 2010. See Docket No. 16. The Haydens appealed the Claims Administrator's denial of coverage to the Plan Administrator on March 21, 2011.See Docket No. 16. The Defendants now seek a stay while the appeal is under consideration. The Haydens are opposed to a stay. In conjunction with their response to the motion for stay, they have requested a declaratory judgment that Todd Hayden is entitled to health care benefits under the Plan along with prejudgment interest, attorney fees, and other costs and damages.See Docket No. 35.
II. LEGAL DISCUSSION
The Defendants argue that the Haydens have failed to exhaust all available administrative remedies and the case should be stayed until they have done so. The Haydens, who have now filed a second administrative appeal, oppose a stay. The parties dispute whether the appeal to the Plan Administrator, Nabors Industries, Inc., is a necessary prerequisite to legal action. The Haydens also contend that they were not given proper notice of the possibility or necessity of a second round of appeals.
It is well-established that a trial court has the inherent power to stay proceedings to control its docket, to conserve judicial resources, and to ensure that each matter is handled "with economy of time and effort for itself, for counsel, and for litigants." Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). The consideration to stay proceedings involves an "exercise of judgment, which must weigh competing interests and maintain an even balance." Id. at 254-55. The party requesting a stay "must make out a clear case of hardship or inequity in being required to go forward, if there is even a fair possibility that the stay for which he prays will work damage to someone else." Id. at 255;see Jones v. Clinton, 72 F.3d 1354, 1364 (8th Cir. 1996).
The Plan states all administrative remedies must be exhausted before further action is taken but goes on to say that "you may exercise your right to appeal all adverse determinations with the Plan Administrator." See Docket No. 30-2, p. 66. This permissive language could be construed as making a second round of administrative appeals voluntary. However, Eighth Circuit case law requires claimants to exhaust all available review procedures prior to bringing a wrongful denial of ERISA benefits suit. See Brown v. J.B. Hunt Transp. Servs., Inc., 586 F.3d 1079, 1084-85 (8th Cir. 2009) (exhaustion serves important purpose such as creation of an adequate record upon which court review might be based); Wert v. Liberty Life Assur. Co. of Boston, Inc., 447 F.3d 1060, 1062-63 (8th Cir. 2006) (requiring exhaustion so long as the claimant has notice and review procedures comply with 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1(f) and (g)); Kinkead v. Sw. Bell Corp. Sickness Accident Disability Benefit Plan, 111 F.3d 67, 70 (8th Cir. 1997) (recognizing judicially-created exhaustion requirement under ERISA). A notice of benefit determination on review must give the reason for the adverse determination, reference to the specific plan provision relied upon, notice of the right to obtain relevant documents, and notice of additional appeal procedures available under the plan. 29 C.F.R. § 2560.503-1(j).
Since a second appeal has now been filed by the Haydens and accepted by the Plan Administrator, the Court need not resolve the issue of whether the Haydens were given adequate notice, access to requested information, and whether the Defendants complied with the implementing regulations set forth in 29 C.F.R. § 2560.503-1. Once Nabors Industries, as Plan Administrator, renders its decision on the second appeal, exhaustion of administrative remedies will be complete.
The only issue before the Court is whether a stay is necessary. A jury trial is scheduled for May 7, 2012. See Docket No. 21. Discovery is ongoing. A full administrative record has been compiled and a copy furnished to the Court. The significant issue to be determined in the second appeal is whether Todd Hayden's injuries resulted from "alcohol intoxication, drug induced impairment, or felonious acts." The record presently before the Court is silent as to the existence of these specific exclusionary conditions.
The Plan does not specify how long the Plan Administrator has to complete its review and render a final determination. The Plan does specify that the initial appeal to the Claims Administrator will be completed within sixty-days. See Docket No. 30-2, p. 65. The implementing regulations contemplate a sixty-day time frame for benefit determination reviews. 29 C.F.R. § 2560.503-1(i). The Defendants have not specified how long a stay is sought. The Court will not grant an indefinite stay. Since the second appeal was filed on March 21, 2011, the Court would reasonably expect a decision from the Plan Administrator on or before the end of May 2011. The issue(s) to be resolved are not inherently complex.
The record before the Court suggests a less than cooperative attitude on the part of the Defendants which the Haydens describe as "stonewalling." See Docket No. 37-8. Todd Hayden was injured nearly two years ago. The case has been pending since June 28, 2010. A stay would only delay matters. The Defendants have not shown how requiring them to go forward with the appeal under consideration, and this lawsuit, would cause them any "undue hardship or inequity." As such, they have failed to demonstrate the necessity of a stay. The trial is scheduled more than a year from now. A decision on the second appeal is imminent. The Court sees no legitimate reason why both the administrative appeal and this lawsuit cannot proceed simultaneously. The request for a stay under the circumstances is denied.
Also before the Court is the Haydens' motion for declaratory judgment. See Docket No. 34. The motion asks the Court to decide the ultimate factual and legal issues in dispute. Discovery is not complete. The Plan Administrator has not rendered a decision on the second administrative appeal. The outcome of the second appeal will undoubtedly frame the issues going forward. The record must be fully developed and discovery complete before the Court will consider a dispositive motion. The motion for a declaratory judgment is premature and will be denied without prejudice.
III. CONCLUSION
For the reasons set forth above, the Defendants' motion for a stay (Docket No. 29) is DENIED. The Plaintiffs' motion for declaratory judgment (Docket No. 34) is DENIED at this early stage without prejudice.