Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-88-01625/USCOURTS-ca10-88-01625-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

---

FILED 

United States Court of Appeals 

Tenth Circuit 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

JAN O 31989 

ROBERT L. HOECKER 

Clerk 

RUSSELL L. INMAN and ORIENNE INMAN, 

Plaintiffs-Appellants, 

v . 

HMO COLORADO, INC., a subsidiary 

of Blue Cross & Blue Shield of 

Colorado, 

Defendants-Appellees. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

ORDER AND JUDGMENT 

No. 88-1625 

(D.C. 87-F-1007) 

(Dist. of Colorado) 

Before LOGAN, BARRETT, and BRORBY, Circuit Judges. 

Russell L. and Orienne Inman, husband and wife (plaintiffs) 

appeal from an order of the district court granting summary 

judgment in favor of HMO Colorado, Inc. (HMO) and a subsequent 

order denying their motion for reconsideration. 

Russell Inman was an employee of Joy Manufacturing (Joy) in 

early 1987 at a time when Joy was converting its group health 

insurance to one of three carriers, including HMO. During the 

initial registration period, Russell alleged that he inquired of 

an HMO representative as to whether the HMO plan would cover heart 

transplants. According to Russell, the HMO representative stated 

that such surge r ies would be covered if they were not 

experimental. Based on this response, Russell enrolled himself 

Appellate Case: 88-1625 Document: 01019962008 Date Filed: 01/03/1989 Page: 1 
and Orienne in the HMO plan through Joy. Russell does not recall 

the name of the HMO representative he spoke with. 

Subsequent to their enrollment, Orienne underwent a 

successful heart transplant. After HMO denied coverage for the 

operation and expenses related to the surgery, plaintiffs brought 

this action under Section 502 of the Employee Retirement Income 

Security Act of 1974 (ERISA), 29 U.S.C. § 1132. 1 

Within their complaint, plaintiffs alleged that HMO had 

breached its contract with them by denying a legitimate claim; HMO 

had breached its fiduciary duties under ERISA; HMO had violated 

its fiduciary duty to act prudently when it misrepresented 

information to Russell; HMO's actions constituted a bad faith 

breach of contract for which plaintiffs were entitled to punitive 

damages; and that since HMO breached its fiduciary duties to 

plaintiffs and thereby induced Russell to rely on inaccurate 

facts, it should be estopped from denying that its policy excludes 

heart transplants and related costs. 

HMO subsequently moved to dismiss alleging, inter alia, that: 

plaintiffs' complaint is based exclusively on ERISA claims; HMO's 

insurance contract with Joy is an approved "plan" under ERISA; the 

plain and express language of the plan excludes heart transplant 

1 s 1132 provides in part: 

A civil action may be brought -

(1) by a participant or beneficiary -

(A) for the relief provided for in subsection (c) of 

this section, or 

(B) to recover benefits due to him under the terms of 

his plan. • • . 

-2-

Appellate Case: 88-1625 Document: 01019962008 Date Filed: 01/03/1989 Page: 2 
benefits; HMO is a fiduciary under ERISA; and 

fiduciary denying benefits will not be overturned 

action was contrary to the express language of 

arbitrary and capricious. 

actions by a 

unless the 

the plan or 

In granting summary judgment for HMO, the district court 

found that HMO's plan excluded organ transplants (with exceptions 

not relevant hereto), that HMO's denial of plaintiffs' requested 

benefits was consistent with the plain meaning of the plan, and 

that HMO's denial of benefits was rational and clearly not 

arbitrary or capricious. The district court also rejected 

plaintiffs' argument that even if the HMO plan excluded heart 

transplant procedures, HMO was, nonetheless, liable for expenses 

related to the transplant, including hospitalization and 

medication. In so doing, the court specifically found that the 

plan excluded coverage of transplant-related expenses. 

On appeal, plaintiffs contend that: (1) the district court 

erred in granting summary judgment in favor of HMO; (2) HMO should 

be bound by the misrepresentations made to Russell Inman relative 

to the medical benefits provided under HMO's plan; and (3) 

regardless of HMO's liability for its misrepresentations, HMO is 

liable to plaintiffs for certain expenses related to Orienne's 

surgery. It is uncontested that the HMO plan expressly excluded 

organ transplants, except for exceptions not relevant hereto. 

Plaintiffs argue that HMO should be bound by its 

misrepresentations to Russell Inman as to the benefits provided 

under the HMO plan. As set forth, supra, plaintiffs alleged that 

an HMO representative related to Russell Inman that heart 

-3-

Appellate Case: 88-1625 Document: 01019962008 Date Filed: 01/03/1989 Page: 3 
transplants would be covered if they were not experimental, 2 and 

that they subsequently relied on said representation in selecting 

the HMO plan. 

Inasmuch as this court may affirm a district court judgment 

on grounds not relied upon by the district court, if those grounds 

are supported by the record, Griess v. State of Colorado, 841 F.2d 

1042, 1047 (10th Cir. 1988), we affirm the district court's order 

granting summary judgment on the basis that no liability exists 

under ERISA for purported oral modifications of the terms of an 

approved plan. Straub v. Western Union Telegraph Company, 851 

F.2d 1262, 1265 (10th Cir. 1988). 

It is uncontested that the HMO plan selected by Russell 

Inman, which expressly excluded coverage for organ transplants, 

was an approved plan under ERISA. 

subject to oral modification: 

As such, the plan was not 

Following the lead of the Eleventh Circuit, we hold 

that no liability exists under ERISA for purported oral 

modifications of the terms of an employee benefit plan. 

See Nachwalter v. Christie, 805 F.2d 956, 959-61 (11th 

Cir. 1986). As the court noted in Nachwalter, under 

ERISA all 'employee benefit plans [must] 'be established 

and maintained pursuant to a written instrument.'' Id. 

at 960 (quoting 29 U.S.C. § 1102(a)(l). The court then 

stated, '[T]his requirement that ERISA plans be 

'maintained' in writing precludes oral modifications of 

the Plans; the common law doctrine of estoppel cannot be 

used to alter this result.' Nachwalter, 805 F.2d at 

960. 

2 It is uncontested, as found by the district court, that 

"plaintiffs have failed to present any evidence, by affidavit or 

otherwise, substantiating this claim." (R., Vol. I, Tab 8, at p. 

4 ) • 

-4-

Appellate Case: 88-1625 Document: 01019962008 Date Filed: 01/03/1989 Page: 4 
Straub v. Western Union Telegraph Company, 851 F.2d at 1265. 

We AFFIRM. 

-5-

Entered for the Court: 

James E. Barrett, 

Senior United States 

Circuit Judge 

Appellate Case: 88-1625 Document: 01019962008 Date Filed: 01/03/1989 Page: 5