Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-01229/USCOURTS-cand-3_05-cv-01229-18/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 29:1132 E.R.I.S.A.: Employee Benefits

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

RICHARD P. WELLS,

Plaintiff,

 v.

CALIFORNIA PHYSICIANS’ SERVICE,

dba BLUE SHIELD OF CALIFORNIA,

Defendant. /

No. C 05-01229 CRB

MEMORANDUM AND ORDER

This lawsuit arises out of the alleged six-week delay by Defendant California

Physicians’ Service, dba Blue Shield (“Blue Shield”), in approving cancer treatment for

Plaintiff’s wife, Mrs. Wells. Plaintiff alleges that when Blue Shield finally approved the

treatment, the doctors determined that the cancer had spread too far to administer the

treatment and thus, as a result of the delay, his wife died sooner than she would have

otherwise. Plaintiff seeks injunctive relief under ERISA sections 502(a)(2) and 502(a)(3), to

ensure that a similar incident will not happen to himself, his sons, or other members of the

health plan (“Plan Members”) in the future.

Now pending before the Court is Defendant’s motion for summary judgment on the

ground that under the recent Ninth Circuit case of Glanton v. AdvancePCS Inc., 465 F.3d

1123 (9th Cir. 2006), Plaintiff lacks standing to maintain this action. After carefully

reviewing the papers filed by the parties, and the cases that both parties emphasized at oral

argument, the Court DENIES the motion.

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ALLEGATIONS OF THE COMPLAINT

Plaintiff Richard Wells lives in Georgia and is employed by a California company. 

He and his family, including his two minor sons, have Blue Shield health insurance (“the

Plan”) through his employer.

Plaintiff’s wife, Mrs. Wells, was diagnosed with breast cancer in 1998. By May 2000,

the cancer had spread to her liver. From May 2000 through June 2002, Mrs. Wells was

treated at the MD Anderson Cancer Center in Houston, Texas with a course of treatment

called Taxol Protocol. Blue Shield approved and paid nearly $90,000 for the treatment. Mrs.

Wells responded well to the treatment, which appeared to destroy the tumors in her liver and

keep the cancer from spreading.

After Christmas 2002, Mrs. Wells learned that new tumors had been detected in her

liver. Plaintiff immediately contacted MD Anderson to arrange for more Taxol Protocol

treatments. MD Anderson informed Plaintiff that the doctor who had cared for Mrs. Wells

was retiring and that MD Anderson was no longer providing the treatment. MD Anderson

referred Plaintiff to two other centers, one in Illinois and one in California, that administer

the Taxol Protocol. 

On or about January 6, 2003, Plaintiff attempted to arrange treatment for Mrs. Wells

at the center in Illinois, the Cancer Treatment Centers of America (“Cancer Center”). 

However, on or about January 9, 2003, the Cancer Center informed him that Blue Shield had

refused to authorize Mrs. Well’s treatment on the ground that the Taxol Protocol was

“investigational” and not covered under the Plan. Plaintiff immediately contacted Blue

Shield by telephone and a representative orally confirmed the denial, but he never received a

written notification or explanation of the denial decision. Plaintiff then made a series of

telephone calls to Blue Shield from January 6 through January 28, during which he pointed

out that Blue Shield had previously paid for the treatment, and emphasized that the situation

was life threatening.

On January 28, the Plan’s insurance broker contacted Blue Shield on Mrs. Well’s

behalf and related all the same information that Plaintiff had previously shared. That same

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day Blue Shield sent Plaintiff a letter stating that it would respond to Plaintiff’s “grievance”

within 30 calendar days. The Blue Shield Grievance Coordinator requested an “expedited

review,” but Blue Shield determined the case did not meet the requirements for expedited

review, and so instead processed it as a standard grievance. 

Blue Shield subsequently contacted Plaintiff and asked him to provide Mrs. Wells’

medical records. On February 10, a “Blue Shield Physician Adviser” determined that the

Taxol Protocol was investigational and not covered. Blue Shield then finally spoke with

Mrs. Wells’ physician from MD Anderson, and, on February 22, Plaintiff received written

confirmation that Blue Shield had approved the treatment.

On February 25, 2003, Mrs. Wells was admitted to MD Anderson for diagnostic tests

which revealed the cancer had advanced to a point that further treatment would be futile. 

Mrs. Wells died one month later.

PROCEDURAL BACKGROUND

Plaintiff initiated this ERISA action on his own behalf, as guardian of his two minor

children, and as the administrator of his wife’s estate. Plaintiff initially sought injunctive

relief, compensatory damages, and other equitable relief against Defendant Blue Shield. In

October 2005, this Court dismissed Plaintiff’s claims for compensatory damages because

they are not recoverable under ERISA. See Order on Mot. to Dismiss, Oct. 11, 2005; see

also Bast v. Prudential Ins. Co. of Am., 150 F.3d 1003, 1008-09 (9th Cir. 1998); McLeod v.

Oregon Lithoprint Inc., 102 F.3d 376, 378 (9th Cir. 1996). The Court also dismissed the

claims for other equitable relief, finding that they likewise sought compensatory damages. 

See Order on Mot. to Dismiss, Oct. 11, 2005. The Court, however, denied dismissal of the

claim seeking injunctive relief on the ground that under the language of the statute it appears

that Plaintiff has standing. See id. 

As a result, all that remains in this case is the claim for injunctive relief. Plaintiff

seeks injunctive relief under sections 502(a)(2) and 502(a)(3) of ERISA, and asserts that his

intent is to prevent what happened to Mrs. Wells from happening to other Plan Participants. 

Specifically, Plaintiff seeks to (1) bar Defendant from denying the Taxol Protocol treatment

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to any Plan Member on the ground that it is “experimental” when the treatment is prescribed

by a Plan Provider; (2) bar Defendant from discontinuing or failing to approve any treatment

that it has already approved without giving the beneficiary timely written notice, including

certain specific information; (3) require Defendant to implement and maintain a procedure

which assures the retention and production of records of communications between Plan

Members or Providers and Defendant regarding the denial or previously approved treatment;

(4) require Defendant to implement and maintain a procedure to assure that urgent care

claims will be processed expeditiously; and (5) require Defendant to maintain auditable

records to allow measurement of compliance with these rules.

During a Case Management Conference on October 20, 2006, Defendant asserted that

the recently-decided Ninth Circuit case of Glanton v. Advance PCS Inc., 465 F.3d 1123 (9th

Cir. 2006), was dispositive as to whether Plaintiff has standing to maintain this action. The

Court continued all pending dates to permit Defendant to file a motion for summary

judgment based on Glanton, and this is the motion now before the Court. 

DISCUSSION

To bring an ERISA lawsuit, a plaintiff must not only have standing under the statute,

but must also meet the standing requirements of Article III of the U.S. Constitution. See

Horvath v. Keystone Health Plan E., Inc., 333 F.3d 450, 455 (3d Cir. 2003) (citing Warth v.

Seldin, 422 U.S. 490, 491 (1975)); Cent. States SE & SW Areas Health & Welfare Fund v.

Merck-Medco Managed Care, L.L.C., 433 F.3d 181, 199 (2d Cir. 2005); Bank America

Pension Plan v. McMath, No. C 97-3242 CRB, 2001 WL 263290, at *9 (N.D. Cal. March 5,

2001). To meet the Article III standing requirements, a party must demonstrate: (1) an injury

in fact, or harm that is actual or imminent; (2) causation, or a fairly traceable connection

between the alleged injury in fact and the alleged conduct of the defendant; and (3)

redressability, or a substantial likelihood that the requested relief will remedy the alleged

injury in fact. See Vt. Agency of Natural Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 771

(2000); Bank America Pension Plan, 2001 WL 263290, at *8. 

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With respect to claims for injunctive relief, it is well-established that “‘[t]he actual or

threatened injury required by Art. III may exist solely by virtue of statutes creating legal

rights, the invasion of which creates standing.’” Horvath, 333 F.3d at 456 (quoting Warth,

422 U.S. at 499-500); see also Ziegler v. Conn. Gen. Life Ins. Co., 916 F.2d 548, 551 (9th

Cir. 1990) (finding that “Congress intended to make fiduciaries culpable for certain ERISA

violations even in the absence of actual injury to a plan or participant.”). Accordingly, courts

hold that when plan participants seek injunctive relief for violations of ERISA’s disclosure or

fiduciary requirements, they can demonstrate Article III standing by showing a violation of

ERISA and need not prove actual injury. See Horvath, 333 F.3d at 456 (finding that plaintiff

“need not demonstrate actual harm in order to have standing to seek injunctive relief

requiring that [defendant] satisfy its statutorily-created disclosure or fiduciary

responsibilities.”) (citing, among other cases, Fin. Inst. Ret. Fund v. Office of Thrift

Supervision, 964 F.2d 142, 149 (2d Cir. 1992) (noting that “ERISA’s goal of deterring

fiduciary misdeeds” supports a “broad view of participant standing under ERISA,” and

holding that a violation of § 404 satisfies the injury requirement of Article III)); Cent. States,

433 F.3d at 199-200 (quoting Horvath); see also Shaver v. Operating Eng’rs Local 428

Pension Trust, 332 F.3d 1198, 1203 (9th Cir. 2003) (in context of motion to dismiss for

failure to state a claim, holding that no showing of individual harm is necessary where

plaintiffs seek purely equitable relief to enjoin future misconduct). 

Although some courts have held that an ERISA plaintiff must allege individual loss or

injury to have Article III standing, they require such a showing only where plaintiffs seek

monetary relief. See Horvath, 333 F.3d at 456 (finding that plaintiff’s requests for restitution

and disgorgement were individual in nature and therefore required plaintiff to demonstrate

individual loss to satisfy Article III standing) (citation omitted); Cent. States, 433 F.3d at

200 (quoting Horvath); see also Bollig v. Christian Comm. Homes & Servs., Inc., No. 02-C532-C, 2003 WL 23200362, at *2 (W.D. Wis. July 10, 2003) (finding that although a

plaintiff seeking injunctive relief may have Article III standing without a showing of actual

harm, requests for monetary damages require a plaintiff to demonstrate individual loss). 

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Indeed, in Horvath and Central States the courts explicitly distinguished between ERISA

claims for monetary relief, which require a showing of individual harm, and claims for

injunctive relief, which do not. Horvath, 333 F.3d at 456; Cent. States, 433 F.3d at 200. As

the Ninth Circuit explained in the context of a motion to dismiss for failure to state a claim:

Requiring a showing of loss in such a case would be to say that the

fiduciaries are free to ignore their duties so long as they do no tangible harm,

and that the beneficiaries are powerless to rein in the fiduciaries’ imprudent

behavior until some actual damage has been done. This result is not

supported by the language of ERISA, the common law, or common sense.

Shaver, 332 F.3d at 1203. 

In Glanton v. Advance PCS Inc., 465 F.3d 1123 (9th Cir. 2006), plaintiffs alleged

monetary losses to an ERISA plan and its participants. Id. at 1124-25. Specifically,

plaintiffs were participants in drug prescription plans who sued a pharmacy benefits

management company and claimed that in addition to earning fees from the plan, the

company secretly retained the difference between what it charged the plans for the drugs and

what it paid suppliers. Id. at 1124. Plaintiffs asserted that they were harmed by high copayments, and that a favorable resolution of the case would lead to a decrease in drug costs

to the plans, which might in turn reduce their co-payments. Id. at 1125. 

The court held that in addition to showing they were authorized to bring a suit under

ERISA, plaintiffs had to demonstrate standing under Article III. Id. at 1124. The court

found that plaintiffs lacked standing because they could not demonstrate a redressable injury

because, even if plaintiffs’ suit was successful, the relief sought would not require the plans

to decrease the co-payments, nor would an award to the plans for past overpayments inure to

the benefit of participants. Id.

Defendant argues that Glanton requires all ERISA plaintiffs to demonstrate

redressable injury to satisfy the Article III standing requirements, even when the plaintiffs

seek injunctive relief. Glanton, however, does not support such a sweeping change in the

established case law; instead, Glanton fits squarely within the prior case law addressing

Article III standing in ERISA cases. 

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First, although Glanton did not distinguish between plaintiffs’ claims for monetary

and equitable relief, all of the plaintiffs’ claims revolved around the alleged monetary loss to

the plan. Glanton is therefore distinguishable from those cases that address claims for

injunctive relief that exist wholly apart from claims for monetary relief and find that no

showing of redressable injury is required for the injunctive relief claims. See Hovarth, 333

F.3d at 455-56 (plaintiff sought an injunction barring defendant from omitting information

from its disclosures to plan members, in addition to seeking restitution and disgorgement); 

Cent. States, 433 F.3d at 199-200 (plaintiffs sought injunctive relief requiring defendant to

satisfy its disclosure and fiduciary duty responsibilities, in addition to claims for restitution

or disgorgement).

Second, Glanton discusses plaintiffs’ allegations of monetary loss, but never even

mentions the equitable relief claims. 465 F.3d at 1124-25. Thus, Glanton cannot be read as

broadly holding that plaintiffs must show individual injury in all ERISA cases, including

those in which a plaintiff seeks only injunctive relief, or injunctive relief wholly unrelated to

a monetary loss. 

Third, Glanton cites Horvath and Central States for having “reached the same

conclusion.” Id. at 1125. Because Horvath and Central States require a showing of

individual injury for claims of monetary loss while explicitly holding that no such

requirement exists for claims seeking injunctive relief, it follows that Glanton refers only to

claims of monetary loss, and does not broaden or overrule the pre-existing case law. See

Horvath, 333 F.3d at 456; Cent. States, 433 F.3d at 200. 

Here, Plaintiff seeks only injunctive relief wholly unrelated to any monetary loss and

therefore need not demonstrate that he was individually harmed or suffered a loss. Horvath,

333 F.3d at 456; Cent. States, 433 F.3d at 200. Instead, to demonstrate “injury” for purposes

of Article III standing Plaintiff need only show that Blue Shield violated one or more

provisions under ERISA. See Horvath, 333 F.3d at 456 (citing Warth, 422 U.S. at 500

(1975)). Plaintiff alleges several violations of ERISA, including that Blue Shield failed to

process Mrs. Well’s medical claim as one involving “Urgent Care,” and that, upon denial of

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G:\CRBALL\2005\1229\Order re Summary Judgment.wpd 8

the claim, it failed to provide timely written notice with specific detailed information, as

required by ERISA. See First Amended Compl. ¶ 46 (alleging violations of various

subsections of 29 C.F.R. § 2560.503-1). Furthermore, Plaintiff has satisfied the other Article

III standing requirements because there is a connection between the alleged ERISA

violations and the alleged conduct of the defendant, and the requested injunctive relief would

redress the alleged violations.

Moreover, it bears emphasis that there is a concrete case or controversy here. Plaintiff

is not a random member of the Plan who decided to sue Defendant for no reason; instead, he

is seeking injunctive relief to correct alleged ERISA violations that led, in his view, to the

premature death of his wife.

CONCLUSION 

For the foregoing reasons, the Court DENIES Defendant’s motion for summary

judgment.

IT IS SO ORDERED.

Dated: March 26, 2007

 

CHARLES R. BREYER

UNITED STATES DISTRICT JUDGE

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