Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-00107/USCOURTS-casd-3_12-cv-00107-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.-Employee Benefits

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SARA KOBLENTZ,

Plaintiff,

CASE NO. 12-CV-0107-LAB

ORDER GRANTING

DEFENDANT’S MOTION TO

DISMISS

vs.

THE UPS FLEXIBLE EMPLOYEE

BENEFIT PLAN,

Defendant.

I. Introduction

This is an ERISA case. Sara Koblentz, a United Parcel Service employee, has sued

her employer’s Flexible Benefits Plan (“the Plan”) for its refusal to cover inpatient treatment

she received for alcoholism and an eating disorder. Now pending before the Court is the

Plan’s motion to dismiss. The Plan alleges, first, that Koblentz assigned her right to sue to

her treatment center, and second, that Koblentz’s claim is contractually time-barred. The

Court disagrees with the Plan on the first point, but agrees with it on the second. It therefore

GRANTS the Plan’s motion to dismiss.

II. Factual and Procedural Background

On December 16, 2009, Koblentz enrolled in an inpatient alcoholism and eating

disorder treatment program at Timberline Knolls Residential Treatment Center. (FAC ¶¶

9-10.) Fifteen days later, she learned that the Plan was refusing to pay for her treatment,

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and she left the program immediately. (FAC ¶ 10.) In the following months the Plan

communicated with Koblentz through its claims administrator, ValueOptions, and the Plan’s

Claims Review Committee. The Plan denied Koblentz’s first level appeal, filed by Timberline

Knolls, and initiated an automatic second level appeal. On April 1, 2010, the Plan wrote

Koblentz a letter denying her second level appeal, which Koblentz alleges she did not initially

receive, at least in full. (FAC ¶ 16.) On April 29, the Plan again wrote to Koblentz, “[Y]our

appeal rights have been exhausted through ValueOptions and the Plan.” (FAC ¶ 20.) On

May 28, the Claims Review Committee sent Koblentz a second copy of the April 1 letter

denying her second level appeal. (FAC ¶ 25.) And on July 22, 2010, the Plan informed

Koblentz of the denial of her second level appeal a fourth time, stating that all her appeals

had been exhausted. (FAC ¶ 27.) Koblentz filed this ERISA lawsuit on January 12, 2012.

III. Legal Standard

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of a complaint and

allows a court to dismiss a complaint upon a finding that the plaintiff has failed to state a

claim upon which relief may be granted. See Navarro v. Block, 250 F.3d 729, 732 (9th Cir.

2001). A complaint survives a motion to dismiss if it contains “enough facts to state a claim

to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570. 

“Factual allegations must be enough to raise a right to relief above the speculative level.” 

Twombly, 550 U.S. at 555. In deciding a motion to dismiss, the court accepts all factual

allegations in the complaint as true, and draws all reasonable inferences in favor of the

nonmoving party. al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009) (citations omitted). 

Nevertheless, the reviewing court need not accept “legal conclusions” as true. Ashcroft v.

Iqbal, 556 U.S. 662, 678, (2009). 

IV. Consideration of Extrinsic Documents

The Plan asks the Court to consider thirteen documents attached to its motion, none

of which are attached to the FAC itself. They are the provisions of the Plan, various

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correspondences with Koblentz, and documents related to the handling of her claim. This 1

is acceptable. 

“Documents whose contents are alleged in a complaint and whose authenticity no

party questions, but which are not physically attached to the pleading, may be considered

in ruling on a Rule 12(b)(6) motion to dismiss.” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.

1994). A court may treat such documents as “a part of the complaint, and thus may assume

that [their] contents are true for purposes of a motion to dismiss under Rule 12(b)(6).” United

States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).

The Court can consider the documents in question because Koblentz’s complaint

necessarily relies on them. Koblentz’s claims are based primarily on the Plan’s alleged

violation of appeal procedures described in the Summary Plan Description (SPD) and

incorporated by the terms of Plan. She purports to quote substantial text from these

procedures and alleges that the contents of her correspondence with the Plan substantiate

her claims. The Plan attaches the very same documents to its motion and Koblentz does

not challenge their authenticity. The Court can therefore consider them. See Parrino v.

FHP, Inc., 146 F.3d 699, 706 (9th Cir. 2003) (on a motion to dismiss an ERISA claim,

documents governing plan membership, coverage, and administration were “essential to the

complaint”); Pension Ben. Guar. Corp. v. White Consol. Indus., inc., 998 F.2d 1192, 1197

(3d Cir. 1993).

IV. Discussion

As the Court said at the outset, the Plan’s motion to dismiss presents two questions. 

The first is whether Koblentz assigned away her right to sue to Timberline Knolls. The

second is whether this lawsuit is time-barred. 

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The FAC explicitly references and alleges the contents of eleven of the thirteen

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documents. The two outlying documents are Dkt. No. 18-4, Timberline Knolls Financial

Responsibility Agreement Insurance Form, and Dkt. No. 18-5, notes summarizing

correspondences between Koblentz and ValueOptions. Neither of these documents works

against Koblentz’s claim here, so the question of their admissibility is somewhat less

imperative.

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A. Koblentz’s Right to Sue

ERISA creates a cause of action for a plan participant “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. § 1132(a). Civil actions may

be brought under the statute by participants, beneficiaries, fiduciaries, and the Secretary of

Labor. Id. But they may also be brought by health care providers to whom a plan participant

has assigned her rights. Misic v. Bldg. Serv. Employees Health & Welfare Trust, 789 F.2d

1374, 1378 (9th Cir. 1986). Such an assignment, in some cases, may deprive the participant

of her right to sue. See Klamath-Lake Pharm. Ass’n v. Klamath Med. Serv. Bureau, 701

F.2d 1276, 1283 (9th Cir. 1983). A court’s task in interpreting the scope of an assignment

is to “enforce the intent of the parties.” Id. Courts must look to the language of an ERISA

assignment itself to determine the scope of the assigned claims. See Eden Surgical Ctr. v.

B. Braun Med., Inc., 420 F. App’x 696, 697 (9th Cir. 2011).

The plain language of the Agreement shows that it has no effect on Koblentz’s right

to sue the Plan. The Agreement merely guarantees Timberline Knoll’s payments by

assigning Koblentz’s benefits to it, but it is still Koblentz who is personally responsible for

making sure Timberline Knolls gets paid. (See Dkt. No. 18-4 at 4 (“We will submit claims on

your behalf. You are responsible for payment[.]”).) That responsibility actually requires that

she be able to sue the Plan. In other words, the Agreement assigns just benefits, not the

claims from which the benefits come. Klamath-Lake, which the Plan cites here, is

distinguishable on that very point. Claims were explicitly assigned in that case. KlamathLake Pharm. Ass’n, 701 F.2d at 1283. The language of the Agreement simply does not

deprive Koblentz of her right to sue the Plan, in the Court’s judgment.

B. Timeliness of Koblentz’s Claim

The statute of limitations for recovering against a California employer under ERISA

is four years. Wetzel v. Lou Ehlers Cadillac Group, 222 F.3d 643, 648 (9th Cir. 2000). 

However, if a plan provides for a shorter contractual limitations period, then that period will

be enforced so long as it is reasonable. Sousa ex rel. Will of Sousa v. Unilab Corp. Class

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II (Non-Exempt) Members Grp. Benefit Plan, 252 F. Supp. 2d 1046, 1055-56 (E.D. Cal.

2002). A period begins to run as defined by the plan’s terms. Mogck v. Unum Life Ins. Co.

of Am., 292 F.3d 1025, 1028 (9th Cir. 2002). Terms in ERISA insurance policies should be

interpreted “in an ordinary and popular sense as would a person of average intelligence and

experience.” Simkins v. NevadaCare, Inc., 229 F.3d 729, 734-35 (9th Cir. 2000); Evans v.

Safeco Life Ins. Co., 916 F.2d 1437, 1441 (9th Cir. 1990). Ambiguous language is construed

in favor of the insured and against the insurer. McClure v. Life Ins. Co. of N. Am., 84 F.3d

1129, 1134 (9th Cir. 1996). However, if a reasonable interpretation favors the insurer and

finding another interpretation would be strained, the court is not to torture or twist the

language of the policy. Simkins, 229 F.3d at 735; Evans, 916 F.2d at 1441.

The terms of the Plan, as incorporated from the SPD, include a contractual “Limitation

on Legal Action” provision. (Dkt. No. 18-2 at 120.) It states that “[a]ny legal action to receive

Plan benefits must be filed [within] . . . six months from the date a determination is made

under the Plan or should have been made in accordance with the Plan’s claims review

procedures.” The relevant review procedures indicate that a determination is “made” for this

purpose once a Plan member receives notice that a second level appeal has been denied. 

(Dkt. No. 18-2 at 119-120.) The allegations of the complaint make clear that the second

level appeal denying Koblentz’s claim for benefits was made April 1, 2010. Six months from

that determination is October 1, 2010. Koblentz’s claim, filed on January 12, 2012, is 2

therefore time-barred unless the limitations period is unreasonable, or the Plan did not

comply with ERISA requirements in informing Koblentz of the denial.

Koblentz does not argue that the six-month limitations period is unreasonable, nor

could she, since similar contractual limitations periods have been upheld and found

reasonable. See, e.g., Northlake Reg’l Med. Ctr. v. Waffle House Sys. Employee Benefit

Plan, 160 F.3d 1301 (11th Cir. 1998) (finding 90-day period reasonable and enforceable);

Koblentz alleges she did not receive notice of her right to bring a civil action under 2

§ 502(a) until May 28, 2010. This allegation is immaterial to the Court’s analysis. Whether

Koblentz received the second page of the denial letter sent on April 1, 2010, or on May 28,

2010, the six-month contractual limitation was long-expired by the time she filed her claim

in January of 2012.

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Roback v. UPS Retired Employees’ Healthcare Plan, No. 09-CV-14478, 2010 WL 4286180,

at *6 (E.D. Mich. Oct. 26, 2010) (granting motion to dismiss because action was barred by

the plan’s six-month limitation on legal action).

Deprived of the argument that six months is an unreasonable limitations period,

Koblentz argues that the contractual time limitation did not begin to accrue due to insufficient

notice under ERISA. Under 29 U.S.C. § 1133, all plans must “provide adequate notice in

writing to any participant or beneficiary whose claim for benefits under the plan has been

denied[.]” The corresponding regulations require that plan administrators provide claimants

the following information:

(i) The specific reason or reasons for the adverse determination; 

(ii) Reference to the specific plan provisions on which the

determination is based;

(iii) A description of any additional material or information

necessary for the claimant to perfect the claim and an

explanation of why such material or information is necessary; 

(iv) A description of the plan’s review procedures and the time

limits applicable to such procedures, including a statement of the

claimant’s right to bring a civil action under section 502(a) of the

Act following an adverse benefit determination on review. 

(v) In the case of an adverse benefit determination by a group

health plan or a plan providing disability benefits,

(A) If an internal rule, guideline, protocol, or other similar

criterion was relied upon in making the adverse determination,

either the specific rule, guideline, protocol, or other similar

criterion; or a statement that such a rule, guideline, protocol, or

other similar criterion was relied upon in making the adverse

determination and that a copy of such rule, guideline, protocol,

or other criterion will be provided free of charge to the claimant

upon request; or

(B) If the adverse benefit determination is based on a medical

necessity or experimental treatment or similar exclusion or limit,

either an explanation of the scientific or clinical judgment for the

determination, applying the terms of the plan to the claimant’s

medical circumstances, or a statement that such explanation will

be provided free of charge upon request.

29 C.F.R. § 2560.503-1. Substantial compliance with these requirements is sufficient. 

Chuck v. Hewlett Packard Co., 455 F.3d 1026, 1032 (9th Cir. 2006) (citing Brogan v.

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Holland, 105 F.3d 158, 165 (4th Cir. 1997)). To substantially comply with the regulation, the

Plan “must have supplied the beneficiary with a statement of reasons that, under the

circumstances of the case, permitted a sufficiently clear understanding of the administrator’s

position to permit effective review.” Brogan, 105 F.3d at 165. 

A review of the April 1, 2010, denial letter shows that the Plan’s notice substantially

complied with ERISA regulations. The letter provided information complying with

subsections (i), (ii), (iv), and (v) of 29 C.F.R. § 2560.503-1. Compliance with section (iii)

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was not required here because there was no indication that any particular additional

information was needed to make a reasoned decision. See Kerney v. Standard Ins. Co.,

175 F.3d 1084, 1091 (9th Cir. 1999). 

The April 1 letter, therefore, provided Koblentz with a “statement of reasons that,

under the circumstances of the case, permitted a sufficiently clear understanding of the

administrator’s position to permit effective review[.]” See Brogan, 105 F.3d at 165. The

letter complied with all pertinent ERISA regulations, exceeding the ERISA requirement of

“[T]he Committee agrees that the [residential treatment] level of care from December 3

16, 2009 through January 8, 2010 was not medically necessary and that intensive outpatient

would have been appropriate[.]” (Dkt. No. 18-3 at 82.) 

“In the ‘Medical’ section under the heading ‘Mental Health and Substance Abuse 4

Treatment’ of the Plan’s Summary Plan Description (SPD) it states that medically necessary

means care that, as determined by ValueOptions can reasonably be expected to improve

an individual’s condition or level of functioning[.]” (Dkt. No. 18-3 at 82.)

“This is the Claims Review Committee’s final decision. We are required by federal 5

law to inform you that you may have a right to bring a civil action in federal court in

accordance with ERISA Section 502(a).” (Dkt. No. 18-3 at 82.) 

“Upon receipt of the appeal the Committee requested that a peer physician review 6

all submitted documentation. The reviewer stated . . . Certification for [residential treatment]

is not medically necessary . . . . [T]he review does not indicate the presence of biomedical

or psychological complications . . . . After a thorough review of the records, information

submitted and the opinion of the peer physician, the Committee agrees that the [residential

treatment] level of care . . . was not medically necessary.” (Dkt. No. 18-3 at 82.) 

As discussed above, the Court may consider the Plan’s April 1, 2010 letter because 7

its contents are alleged in the complaint and Koblentz’s claim necessarily relies on it. See

Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994).

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substantial compliance. The Court finds that the Plan’s notice to Koblentz conformed to the 8

terms of the Plan and substantially complied with applicable ERISA requirements, affording

Koblentz the opportunity for a full and fair review. Accordingly, Koblentz’s claims are

contractually time-bared by the Plan’s Limitation on Legal Action. Because Koblentz’s claims

are time-barred, she does not state a claim upon which relief may be granted. Navarro, 250

F.3d at 732. The Court GRANTS the Plan’s motion to dismiss Koblentz’s claims under Rule

12(b)(6), WITH PREJUDICE. 

IT IS SO ORDERED.

DATED: August 23, 2013

HONORABLE LARRY ALAN BURNS

United States District Judge

While the April 1, 2010 letter was sufficient to provide the required notice under the 8

Plan and under ERISA, the Plan provided additional notice of final determination of denial

of Koblentz’s claim in a April 29 letter, and again when it resent the April 1 letter on May 28.

On July 22, 2010, the Plan wrote Koblentz a fourth time, “stating all appeals had been

exhausted.” (FAC ¶ 27.) Koblentz’s own June 24, 2010 letter, referenced in her complaint,

indicated she had actual knowledge of the final denial of her claim at that writing. If any of

these communications equated to sufficient notice, then Koblentz’s January 12, 2012

complaint is time-barred.

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