Opinion
Case No. 3:19-cv-00169-JWS
2021-08-26
Peter HEWKO, Plaintiff, v. COFFMAN ENGINEERS, INC. ; Coffman Engineers, Inc. Welfare Plan; Regence Blue Shield, Defendants.
Michael W. Flanigan, Flanigan & Bataille, Anchorage, AK, for Plaintiff. Connor Royce Smith, James E. Torgerson, Stoel Rives LLP, Anchorage, AK, for Defendant Regence Blueshield. Brewster H. Jamieson, Lane Powell LLC, Anchorage, AK, Hans Nicholas Huggler, Lane Powell PC, Portland, OR, for Defendants Coffman Engineers, Inc., Coffman Engineers, Inc. Welfare Plan.
Michael W. Flanigan, Flanigan & Bataille, Anchorage, AK, for Plaintiff.
Connor Royce Smith, James E. Torgerson, Stoel Rives LLP, Anchorage, AK, for Defendant Regence Blueshield.
Brewster H. Jamieson, Lane Powell LLC, Anchorage, AK, Hans Nicholas Huggler, Lane Powell PC, Portland, OR, for Defendants Coffman Engineers, Inc., Coffman Engineers, Inc. Welfare Plan.
ORDER ON MOTION FOR SUMMARY JUDGMENT
JOHN W. SEDWICK, Senior United States District Judge
I. MOTION PRESENTED
At docket 121 Plaintiff Peter Hewko (Plaintiff) filed a motion for summary judgment as to its claim against Defendant Coffman Engineers, Inc. and Coffman Engineers, Inc. Welfare Plan (Coffman) for an award under 29 U.S.C. § 1132(c)(1). Coffman filed its response at docket 123. Plaintiff replied at docket 127. Oral argument would not be of assistance to the court.
II. BACKGROUND
Plaintiff was formerly employed by Coffman, which provides health insurance benefits to its employees by and through a self-funded benefits plan, the Coffman Engineers, Inc. Welfare Plan (the Plan). The Plan is regulated and governed by the Employee Retirement Income Security Act (ERISA). Regence is the "Claims Administrator" for the Plan and as such provides administrative services for claims made under the Plan. Regence has discretion under the Plan, as the Claims Administrator, to interpret the Plan and make benefit determinations, but Regence does not assume any financial risk or obligations with respect to claims. Coffman is the "Plan Sponsor," and all covered medical services and supplies are paid for by Coffman.
A.R. 3540.
A.R. 3542, 3482.
A.R. 3482.
In June of 2016, while employed with Coffman and eligible for benefits under the Plan, Plaintiff suffered a cerebral stroke. He was hospitalized and incurred substantial medical expenses both during and after his hospitalization, including expenses stemming from rehabilitative services. Under the Plan's rehabilitation services provision, Plaintiff's rehabilitative therapy was covered, but the benefit was limited to 30 inpatient days per calendar year and 25 outpatient visits per calendar year. In April of 2017, Plaintiff's mother, Jane Hewko, learned that there was a provision in the Plan that covered neurodevelopmental therapy. That provision included coverage for unlimited inpatient therapy and 25 outpatient therapy visits per calendar year. Plaintiff, through his mother, wrote Regence to request that Plaintiff's family be reimbursed for out-of-pocket costs related to Plaintiff's rehabilitation that she believed should have been covered under the neurodevelopmental therapy provision, because unlike the rehabilitation services provision it provided unlimited inpatient therapy. Regence denied the request because it had never received a claim from one of Plaintiff's providers that showed Plaintiff was eligible for neurodevelopmental therapy, which it contended only applied to services needed to treat delays in normal development and unrelated to an injury or illness.
A.R. 3508, 3586, 3664.
A.R. 3501, 3579, 3657.
A.R. 1355-1357.
A.R. 1363-1364.
This lawsuit followed. The operative complaint—the corrected second amended complaint—asserted three claims against Defendants. The first was based on a denial of benefits. The second was for equitable surcharge based on the denial. The court granted summary judgment in favor of Regence and Coffman on these two ERISA claims.
Doc. 61.
Plaintiff now seeks summary judgment on his third ERISA claim. The third claim is that Regence and Coffman failed to provide requested information and documents related to the Plan, and therefore he is entitled to an award under 29 U.S.C. § 1132(c)(1) and/or (3). The complaint did not specify the correspondence that triggered Defendants' duty to respond. Now, in this motion for summary judgment Plaintiff explains that he seeks an award under § 1132(c) based upon an email his attorney wrote to Coffman's attorney on March 3, 2020, and to which Coffman did not respond within thirty days. In that email, he requested the "Coffman Eng[ineering] Benefits booklet (listing all benefits for employees), the ‘actual’ health benefits ‘Plan,’ plus the SPD [a]nd the complete administrative claims file ...." The attorney's exchanged emails about a month later, and Plaintiff's counsel again asked for the requested documents. The summary plan description (SPD) was emailed to him. Plaintiff's counsel then asked for the "formal Plan" and "some kind of agreement between the employer and the claims company." Coffman's attorney took these requests as informal discovery and attempted to accommodate the requests, but he assumed that all documents would eventually be provided in the administrative record and in due course pursuant to the pre-trial scheduling order. The administrative record was filed on September 2, 2020, and it contained the applicable SPDs that set forth Plaintiff's medical benefits. Plaintiff requested that the administrative record be supplemented with Coffman's larger "wrap" document, which set forth components of all employee benefits and various administrative provisions, and with the contract between Regence and Coffman. Defendants argued that those documents were not relevant to the court's review under ERISA but agreed to include them in the record on October 16, 2020. Plaintiff now asks the court to award $21,780 based on the 198-day delay in providing the requested materials.
Doc. 121-1.
Doc. 121-2, 121-3.
Doc. 121-4.
Doc. 121-4, 121-5.
Doc. 125 at ¶ 3.
Doc. 76.
Docs. 79-1, 79-2.
While the claim was raised against both Coffman and Regence, Plaintiff seeks summary judgment only against Coffman. It is unclear whether, by not moving for summary judgment against Regence, Plaintiff intends to somehow pursue the § 1132(c) claim against Regence or rather concedes that he cannot bring such a claim against it because Regence was not the plan administrator or employer and thus had no duty to provide the requested documents. Regence asked Plaintiff to drop the claim against it for this reason, but Plaintiff has not done so.
Doc. 122-7.
III. DISCUSSION
Under ERISA, the "[plan] administrator" is required to furnish a copy of the latest updated summary plan description and any annual report, bargaining agreement, contract, or other document under which the plan is established or operated when a participant or beneficiary makes a request for these documents in writing. The plan administrator must comply within thirty days. The failure to timely provide the requested documents opens up the plan administrator to penalties under § 1132(c) of up to $110 a day past the 30-day deadline. The imposition of such penalties, however, is at the court's discretion.
29 U.S.C. § 1132(c)(1) provides for a $100 a day penalty but the applicable regulation, 29 C.F.R. 2575.502c-1, increased the amount of the maximum penalty to $110 for violations occurring after July 29, 1997.
As noted above, Plaintiff identifies his counsel's March 3, 2020 email as the request that triggered the thirty-day response deadline. However, at the time that email was sent, litigation had already commenced. The original complaint was filed by Plaintiff's former attorney on May 22, 2019 in state court. It was removed to federal court on June 14, 2019. Amended complaints were filed in November of 2019 and February of 2020. Neither of the amended complaints included a claim under § 1132(c). Plaintiff then changed counsel to Mr. Flanigan. On February 28, 2020, before the March 3rd email at issue here, Mr. Flanigan requested leave to file a correction to the second amended complaint. This correction contained the claim for penalties under § 1132(c). Given this timeline, a claim based on a failure to timely respond to the March 3rd email request was not ripe at the time it was pleaded. That is, the email does not predate the complaint and therefore could not have been contemplated as the basis for penalties.
Moreover, this March 3, 2020 email request is not actionable under § 1132(c) because requests for plan documents made between attorneys during the course of litigation do not trigger the application of § 1132(c). As the Seventh Circuit reasoned in Verkuilen v. South Shore Building & Mortgage , confusion would result from treating discovery requests as ERISA demands. If a plan participant or beneficiary wishes to make a demand for eligible documents under ERISA, the statute is clear: "send a simple written request to the plan administrator." If the plan administrator does not respond and litigation is ongoing, the claimant may amend the complaint to add the § 1132(c) claim.
See Verkuilen v. S. Shore Bldg. & Mortg. Co. , 122 F.3d 410, 411 (7th Cir. 1997) ; see also Hughes v. Nat'l Res. Consultants , 77 Fed. Appx. 973, 974 (9th Cir. 2003) ("We also agree with the district court that requests for plan documents made pursuant to the Rules of Civil Procedure in the course of pre-trial discovery do not trigger the application of § 1132(c)").
Id.
Id.
Plaintiff argues that the Sixth and Third circuits have "soundly rejected" this rule and asks the court to do the same here, but his analysis is incorrect. The Sixth Circuit's decision in Minadeo v. ICI Paints , and the Third Circuit's decision in Daniels v. Thomas & Betts Corp., stand for the proposition that an actionable written request under ERISA includes one made by an attorney on behalf of a participant. The requests at issue were sent to the plan administrators by the attorneys for the participant or beneficiary; they were not sent to opposing counsel during the course of ERISA litigation. Indeed, the district court case Plaintiff cites as providing a basis for rejecting Verkuilen was reversed by the Fifth Circuit as to this issue: "We do not agree with the district court's interpretation and find more persuasive the approach of the Seventh Circuit in Verkuilen ...."
398 F.3d 751 (6th Cir. 2005).
263 F.3d 66 (3rd Cir. 2001).
Kujanek v. Houston Poly Bag I, Ltd. , 658 F.3d 483, 489 (5th Cir. 2011).
Moreover, even if the March 3, 3020 email is somehow actionable under ERISA, the court, exercising its discretion, would not apply penalties. As the declaration by Coffman's attorney explains, Mr. Flanigan's request was considered to be informal discovery, which is reasonable given it was addressed to him and not Coffman itself shortly after Mr. Flanigan took over the case. Furthermore, the attorneys were discussing the production of these materials in April of 2020, right as the COVID-19 pandemic was taking shape with its concomitant restrictions and closures that explain some of the delay here. Given the situation, the delay in production did not delay proceedings. Most importantly, the delay did not prejudice Plaintiff's ability to bring an ERISA claim. Plaintiff had already been provided an explanatory memo about his medical and disability coverage and copies of various benefit documents, including the applicable SPD, after his stroke in 2016 when coverage for services was being determined. There is no indication he was unable to adequately pursue his ERISA claims. Plaintiff points to written requests his mother made before the commencement of litigation as an alternate basis for imposing penalties. He refers to a letter dated July 26, 2017, written by his mother, Jane Hewko. However, that letter was a request to expand Plaintiff's coverage to include additional rehabilitation services under the Plan's neurodevelopmental therapy provision. Ms. Hewko did not make a request for documents in that letter. Moreover, the request was made to Regence, not Coffman. He also refers to an email sent by Ms. Hewko on November 22, 2017. In that email, Ms. Hewko asked that a hard copy of the 2018 Benefits Guide booklet be mailed to her. Plaintiff argues that in response she was only sent the 2018 Benefits Guide booklet for COBRA insurance plans. However, reviewing the email in context, this was exactly what was requested by Ms. Hewko. The November 22, 2017 email to Coffman was in response to a Coffman employee's email discussing open enrollment in insurance plans through COBRA and including as an attachment an electronic copy of the "2018 Benefits Guide booklet for COBRA participants." When asking for a "hard copy of the 2018 Benefits Guide booklet" in response to that email it is clear that Ms. Hewko was asking for a hard copy for the COBRA booklet, given the topic of the email chain. There is no justification for imposing penalties on Coffman based on this email exchange.
Doc. 125.
While prejudice is not required for a district court to grant an award under § 1132(c), it is a factor courts consider when exercising discretion. See Hemphill v. Estate of Ryskamp , 619 F. Supp. 2d 954, 975 (E.D. Cal. 2008) ; DeFazio v. Hollister, Inc. , No. S-04-1358, 2007 WL 3231670, at * 11 (E.D. Cal. Nov. 1, 2007) (noting that some degree of harm is usually present when the court imposes penalties under § 1132(c) ); Barboza v. Cal. Ass'n of Prof'l Firefighters , 594 Fed. Appx. 903, 906 (9th Cir. 2014) (noting that while prejudice is not required, the decision to impose penalties under § 1132(c) is entirely discretionary).
Plaintiff's attorney argues that there is no proof that the explanatory memo and benefit materials submitted by Coffman in support of its opposition were actually mailed to Plaintiff. However, Coffman provided evidence in the form of a declaration by Coffman's Vice President of Human Resources, which states that Plaintiff was mailed the benefit memo along with the applicable medical benefit summary. Doc. 124. To the contrary, Plaintiff fails to provide evidence in support of the attorney's speculation that Plaintiff may not have received the mailing described in the declaration. That is, there is no assertion by Plaintiff or his mother that they did not receive the applicable SPDs or did not have the substantive terms of his benefit plan to contest coverage.
A.R. 1355-1357.
Plaintiff seeks summary judgment on his § 1132(c) claim against Coffman. Moreover, under Moran v. Aetna Life Ins. Co. , 872 F.2d 296, 298-300 (9th Cir. 1989), penalties under § 1132(c) can only be assessed against plan administrators.
Doc. 127-2.
Doc. 127-2 at p. 6.
Doc. 127-2 at p. 6.
Although Coffman did not file a cross motion for summary judgment, it is clear that judgment in its favor is warranted under Rule 56(f). Plaintiff has had an opportunity to come forward with all his evidence and a "full and fair opportunity to ventilate the issues involved in the matter."
Gospel Missions of Am. v. City of Los Angeles , 328 F.3d 548, 553 (9th Cir. 2003).
IV. CONCLUSION
Based on the preceding discussion, Plaintiff's motion for summary judgment is DENIED. There is no basis for awarding penalties against Coffman under § 1132(c) on the record presented and therefore judgment in favor of Coffman is warranted. As noted above, it is unclear if Plaintiff intends to pursue his § 1132(c) claim against Regence. It appears that any such claim would be baseless given Ninth Circuit precedent that limits liability under § 1132(c) to plan administrators. However, Plaintiff has not adequately presented its position as to this issue for the court to sua sponte grant summary judgment in favor of Regence. The parties are directed to confer and file within fourteen days the necessary papers to finalize this remaining claim.
IT IS SO ORDERED this 26th day of August, 2021, at Anchorage, Alaska.