Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-03790/USCOURTS-cand-5_05-cv-03790-3/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:1001 E.R.I.S.A.

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United States District Court

For the Northern District of California

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ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT—No. C-05-03790 RMW

JAH

United States District Court

For the Northern District of California

E-FILED on 10/24/06

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

GINA FISCHER,

Plaintiff,

v.

THE ANDERSON BEHEL STEVEN CREEK

PORCHE AUDI EMPLOYEE BENEFIT

PLAN,

Defendant.

BLUE SHIELD OF CALIFORNIA,

Real Party in Interest.

No. C-05-03790 RMW

ORDER ON CROSS-MOTIONS FOR

SUMMARY JUDGMENT

[Re Docket Nos. 24, 29, 33, 37, 38, 40, 43, 44]

Real party in interest California Physicians' Service d/b/a Blue Shield of California ("Blue

Shield") moves for summary judgment affirming its decision on payment of plaintiff Gina Fisher's

medical bills, or, alternatively, that its decision will be reviewed for abuse of discretion and that

the court will consider nothing beyond the administrative record. Fisher moves for summary

adjudication on several points, including that Blue Shield must cover her medical bills at nonpreferred provider rates. For the reasons set forth below, the court grants each motion in part and

denies each motion in part.

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United States District Court

For the Northern District of California

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1

 Endometriosis is an often painful condition characterized by the occurrence of functional

endometrial tissue (which normally occurs only inside the uterus) outside the uterus.

2

 The court adopts the parties' use of "BSC [page]" to refer to the Bates-numbered pages of the

administrative record, submitted as Exhibit A to the Crawford Declaration, docket no. 25.

3

 It should not be forgotten when searching through the administrative record that Blue Shield does

not pay the "Allowable Amount" (which appears to correspond to the "AMOUNT ALLOWED" on

the forms Blue Shield sent Fisher). Blue Shield pays only 70 percent of the Allowable Amount, less

the amount of any applicable co-payment.

ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT—No. C-05-03790 RMW

JAH 2

I. BACKGROUND

In January 2002, gynecologist Deborah Metzger performed two laparoscopic surgeries a

week apart on Fisher to treat, inter alia, endometriosis.1

 Metzger's notes following the first

procedure stated:

PREOPERATIVE DIAGNOSIS: Chronic pelvic pain; endometriosis; bilateral

groin pain; dysfunctional uterine bleeding; pudendal neuralgia.

POSTOPERATIVE DIAGNOSIS: Stage IV endometriosis; obliterated cul-desac; bilateral ovarian endometriomas; left direct femoral hernias; right indirect,

femoral, and obturator hernias; pudendal neuralgia; dysfunctional uterine bleeding.

BSC 60.2

 A later note stated:

Following [Fisher's] postoperative recovery she is stable. Due to the extensive

nature of her surgery, she is at risk of adhesion reformation, and she does have a

history of severe chronic pelvic pain. She has elected to return to surgery for a

second laparoscopy to rule out adhesions, infection, bleeding, or any other

complication of surgery. 

BSC 15.

Fisher's medical insurance is administered by Blue Shield. Under the insurance plan,

Fisher generally pays only 10 percent of the costs of services rendered by in-plan doctors or inplan facilities, but 30 percent of out-of-plan costs up to certain maximums, beyond which she pays

100 percent. BSC 413-18. The precise plan language Blue Shield alleges applies to Metzger's

surgeries is "Services rendered by a Non-Participating Physician are paid at 70% of the Allowable

Amount. Subscribers are responsible for the remaining 30% of the Allowable Amount, as well as

any charges above the Allowable Amount."3 BSC 413. Under the plan, "Allowable Amount" is

defined as

1. the amount Blue Shield of California has determined is an appropriate payment

for the Services(s) rendered in the provider's geographic area, based upon such

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ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT—No. C-05-03790 RMW

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factors as Blue Shield's evaluation of the value of the Service(s) relative to the

value of other Services, market considerations, and provider charge patterns; or

2. such other amounts as the provider and Blue Shield of California have agreed

will be accepted as payment for the Service(s) rendered; or

3. if an amount is not determined as described in either (1.) or (2.) above, the

amount Blue Shield of California determines is appropriate considering the

particular circumstances and the Services rendered.

BSC 398. The plan does not cover services that are not "medically necessary." BSC 446-47.

It is not disputed that Fisher's 2002 surgeries were rendered by out-of-plan providers. Blue

Shield paid substantially less than it was billed for Fisher's surgeries. The parties have not

presented a useful summary of the difference between the amounts paid and billed. However, of a

$24,300 bill, Blue Shield paid $132.89, BSC 52-53; of a $5,750 bill, Blue Shield paid $772.72,

BSC 517. Fisher challenged Blue Shield's decision not to pay large amounts of her medical bills. 

See, e.g., BSC 9. Blue Shield ultimately determined that Metzger did not have sufficient evidence

to diagnose Fisher with herniae, and that the second surgery was not medically necessary. BSC 1. 

Fisher filed suit, seeking $40,000 in damages, plus attorneys' fees. Compl. at 2-3.

II. ANALYSIS

A. Summary judgment

Summary judgment is proper when the pleadings, discovery, and affidavits show that there is

"no genuine issue as to any material fact and that the moving party is entitled to judgment as a

matter of law." Fed.R.Civ.P. 56(c). Material facts are those which may affect the outcome of the

case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is

genuine if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving

party. Id. A party moving for summary judgment who does not have the ultimate burden of

persuasion at trial has the initial burden of producing evidence negating an essential element of the

non-moving party's claims or showing that the non-moving party does not have enough evidence of

an essential element to carry its ultimate burden of persuasion at trial. Nissan Fire & Marine Ins.

Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). A court may grant a motion for summary

judgment in part and narrow the issues remaining for trial. See Fed.R.Civ.P. 56(d). 

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For the Northern District of California

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4

 The plan provides that Blue Shield "shall have the power and discretionary authority to construe

and interpret the provisions of this plan, to determine the benefits of this plan, and determine

eligibility to receive benefits under the plan." BSC 457. 

ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT—No. C-05-03790 RMW

JAH 4

B. Standard of review

"[A] denial of benefits challenged under [29 U.S.C.] § 1132(a)(1)(B) is to be reviewed

under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary

authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire

& Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). When the plan confers discretion on the plan

administrator to determine eligibility for benefits, courts generally review the denial of benefits for

abuse of discretion. See id. A conflict of interest on the part of the plan administrator can convert

review for abuse of discretion into de novo review. Lang v. Long-Term Disability Plan of Sponsor

Applied Remote Tech., Inc., 125 F.3d 794, 797 (9th Cir. 1997). 

Here, Fisher concedes that the plan at issue gives Blue Shield discretion.4

 Pl.'s Mot. at 6. 

However, Fisher argues that Blue Shield operated under a conflict of interest sufficient to convert

the standard of review to de novo. Fisher claims that the following facts show that Blue Shield

was operating under a conflict of interest: (1) Blue Shield gave "preauthorization" for the

procedures, see BSC 21, which conflicts with its decision that they were not medically necessary;

(2) Blue Shield has not produced its medical policy, see BSC 407, which it appears to use to

determine medical necessity under the plan; (3) no medical literature indicates "second-look"

laparoscopy is medically unnecessary; and (4) the administrative record is disorganized. None of

these facts provides a persuasive basis for finding that Blue Shield had a conflict of interest. The

first three are in essence arguments that Blue Shield abused its discretion; the last—which is

discussed below—is not relevant to the issues before the court except to the extent the record is

incomplete.

Fisher has not demonstrated a conflict of interest. Therefore, Blue Shield's decision is

reviewed under the abuse-of-discretion standard.

C. Consideration of evidence beyond the administrative record

Fisher wishes the court to consider two documents outside the administrative record:

(1) selected pages of Chronic Pelvic Pain: An Integrated Approach, of which Metzger is one

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5

 Fisher's passing assertion that the magistrate judge incorrectly denied discovery into

"preauthorization," the qualifications of Blue Cross's medical reviewers, and Blue Cross's medical

policy, see Pl.'s Mot. at 5 n.5, is hardly sufficient to constitute an appeal of that order, and, even if it

was, would have been deemed denied under Civil L.R. 72-2 as of June 24, 2006.

ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT—No. C-05-03790 RMW

JAH 5

author, and (2) a letter dated June 9, 2006 from Cindy Casamina, which states that Menlo Park

Surgical Hospital had a contract in effect with Blue Shield for all of 2002. Blue Shield objects to

consideration of either document. Blue Shield has, itself, offered the declaration of Leslie

Crawford to rebut assertions in Casamina's letter.

The Ninth Circuit "has clearly established that the abuse of discretion standard permits the

district court to review only the evidence presented to the plan trustees." Banuelos v. Constr.

Laborers' Trust Funds for S. Cal., 382 F.3d 897, 904 (9th Cir. 2004) (quotation marks and brackets

omitted). Contrary to Fisher's argument, see Pl.'s Mot. at 3 n.4, additional evidence may only be

considered in an ERISA case if the de novo standard of review applies. See Banuelos, 382 F.3d at

904; Mongeluzo v. Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 943-44 (9th

Cir. 1995). The court will therefore not consider Fisher's additional evidence5

 or the Crawford

declaration.

D. Whether Blue Shield abused its discretion

"ERISA plan administrators abuse their discretion if they render decisions without any

explanation." Taft v. Equitable Life Assur. Soc'y, 9 F.3d 1469, 1472 (9th Cir. 1993) (quotation

marks omitted). Blue Shield argues that its determination must be upheld under abuse-ofdiscretion review. Fisher counters that there is insufficient evidence in the record to determine

whether Blue Shield's decision was within its discretion to make, and she requests the court

remand the matter for articulation of the standards used to calculate how much of her medical bills

Blue Shield is obligated to pay. 

Because the court tentatively agreed with Fisher that the evidence in the administrative

record was insufficient to satisfy Taft, at the hearing on these motions the court instructed Blue

Shield to submit a table with columns showing with respect to each of Fisher's bills submitted to

Blue Shield (1) the date of the bill, (2) the provider, (3) the amount of the bill, (4) the amount paid,

and (5) the reason for payment of less than the full amount and, if there is more than one reason,

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6

 Or, technically, Deborah A. Metzger, Ph.D M.D. Inc.

ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT—No. C-05-03790 RMW

JAH 6

the amount attributable to each reason. Blue Shield has purported to do this. See Table (docket

no. 47). 

1. Physician services

Blue Shield explained in its supplemental table some of the procedure codes (such as that

"5855859" means "laparoscopy—hysteroscopy, surgical with biopsy") that are not readily, and

perhaps not at all, decipherable from the administrative record alone. According to Blue Shield,

the administrative record (assuming one understands the procedure codes) shows that Blue Shield

paid Metzger6

 $905.61 of $9,400 she billed for the first laparoscopic endometriosis surgery and

$700.84 of $3,800 for the second. Table at 3-4. Blue Shield also claims the administrative record

indicates that Blue Shield paid nothing for the hernia repair and pudendal nerve block, and also

paid nothing "[f]or codes related to procedures that were billed separately, but were encompassed

by other procedures performed the same day," i.e., "laparoscopy related to digestive system -

surgeon," "laparoscopy related to digestive system - assistant surgeon," "repair of urinary

system—ureterolysis - surgeon," and "repair of urinary system—ureterolysis - assistant surgeon," 

Id. at 3-5. The court has no reason to doubt Blue Shield's representations.

That some of the procedures Metzger billed overlap sufficiently to justify not paying for all

of them is supported by nothing more than the fact that they all seem to be abdominal laparoscopic

procedures and a footnote on Blue Shield forms that reads "THIS PAYMENT HAS BEEN

REDUCED BECAUSE MULTIPLE RELATED SERVICES WERE PROVIDED ON THE

SAME DAY." BSC 53, 64. Likewise, the administrative record indicates that Blue Shield paid

nothing for the procedure codes relating to pudendal nerve block, 644305950 and 644305980,

claiming they were not medically necessary. BSC 52-53. However, nothing in the administrative

record indicates why Blue Shield found the procedures unnecessary (though Blue Shield now

claims it was in part because the Fisher was under general anesthesia during the procedure,

making a nerve block unnecessary, see Table at 4-5). 

However, even accepting, arguendo, that Blue Shield did not abuse its discretion by

finding that some of Metzger's procedures were not medically necessary and that Metzger did not

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7

 Fisher's argument that Blue Shield "preapproved" Metzger's procedures is not supported by the

existing evidence. As Blue Shield points out, Fisher's evidence for preapproval is solely a letter she

sent to Blue Shield stating that Blue Shield had "preapproved" the procedures. See BSC 21. 

Whether Blue Shield "preapproved" Fisher's surgery or surgeries is not susceptible to determination

on the summary judgment motions under consideration, though Blue Shield is free to renew its

motion on this point in light of the declaration of Leslie Crawford submitted to the court after the

hearing. 

ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT—No. C-05-03790 RMW

JAH 7

have sufficient evidence to diagnose Fisher with herniae, there is still insufficient explanation in

the administrative record of how Blue Shield arrived at its "Allowable Amounts" to satisfy Taft. 

The plan has a three-pronged definition of "Allowable Amount," which means that Blue Shield

will base the "Allowable Amount" on (1) the standard amount paid in the geographic area,

(2) Blue Shield's contract with the provider, or (3) whatever Blue Shield deems appropriate. See

BSC 398. As Fisher's procedures were admittedly performed out-of-plan, Blue Shield would not

have used the second prong. However, the court cannot determine whether Blue Shield abused its

discretion without knowing if it selected an "Allowable Amount" for each procedure using the

first or third prong. 

As the record before the court is insufficient to sustain the conclusion that Blue Shield

acted within the discretion allowed it in denying payment for certain of Fisher's medical bills and

paying only portions of others,7 the court will grant Fisher's request to remand this matter to the

plan administrator with instructions to augment the administrative record and explain how the

amounts paid and not paid were determined. See Saffle v. Sierra Pac. Power Co. Bargaining Unit

Long Term Disability Income Plan, 85 F.3d 455, 460-61 (9th Cir. 1996). 

2. Hospital stays

Blue Shield's supplemental discussion of hospital expenses indicates that Blue Shield itself

may have trouble making sense of the administrative record. For example, Blue Shield claims that

BSC 79 explains why it paid only $249.20 of $32,650 billed by Menlo Park Surgical Hospital. 

Table at 7. Blue Shield also claims that BSC 335 explains why Blue Shield paid only $249.20 of

$32,650 billed by Recovery Inn of Menlo Park for supplies provided on January 15, 2002. Table

at 8. 

It does not appear that Blue Shield's explanation can be completely correct. First, the court

notes that BSC 79 appears to be identical to BSC 335, from the identifying number (296026569)

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8

 This discrepancy appears to stem from a simple error. The figures differ by $244, the amount

listed as Fisher's deductible for the charges. However, the discrepancy still (in the light most

favorable to Blue Shield) highlights the fact that even Blue Shield appears to have some trouble

deciphering the administrative record.

9

 The parties have not briefed this issue.

10 Several documents appear in multiple copies in the record. See, e.g., BSC 60, 361, 527. Some

documents are appear to have been copied and faxed multiple times and border on illegible. See,

e.g., BSC 324. Others were nearly illegible from the outset. See, e.g., BSC 8. Some pages are

ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT—No. C-05-03790 RMW

JAH 8

down to the way the printing on the left margin is clipped. Second, BSC 79 refers to Recovery Inn

of Menlo Park, so it does not clearly (if at all) justify the amounts of any payments to Menlo Park

Surgical Hospital. Third, operating from an identical sheet of paper in two different places in the

administrative record, Blue Shield's calculations are not completely consistent: It claims the

amount disallowed shown by BSC 79 is $32,294, while BSC 335 shows $32,050.8

 Table at 7-8.

Looking past the above concerns, the court notes that the plan contains the following

limitations:

a. For covered Services not available in a Preferred Hospital, subject to Blue

Shield's Pre-admission Review and other applicable requirements, benefits are paid

at 90% of Billed Charges. Subscribers are responsible for the remaining 10% of

Billed Charges.

b. For other non-Emergency Inpatient and Outpatient Services, benefits are paid at

70% of allowed charges of no more than $600 per Person per day. Subscribers are

responsible for the remaining 30% of the $600, as well as all charges in excess of

$600.

BSC 414-15. The court would need to determine whether the language quoted above regarding

"Services" limits the amount Blue Shield must pay Recovery Inn of Menlo Park for "SUPPLIES."9

However, since Blue Shield's elucidation of the administrative record is clearly incorrect, the court

is unable to determine at this time whether Blue Shield abused its discretion in paying what it did

(or even the exact amount paid) for Fisher's hospitalization.

E. Organization of administrative record

Fisher asks the court to require the plan administrator to provide a better-organized

administrative record for this court's review. It appears that someone merely copied all the

documents contained in Blue Shield's file on Fisher in the order they happened to be in that file,

and then filed and served this unorganized stack.10

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28 mostly blank and contain no useful information. See, e.g., BSC 81. Some pages (at least in the

copy of the administrative record filed with the court) are upside-down. See, e.g., BSC 599-605. 

ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT—No. C-05-03790 RMW

JAH 9

However, Fisher cites no authority requiring a well-organized administrative record. There

is no evidence that the order of the administrative record is not the order of Blue Shield's file as

"kept in the usual course of business." See Fed.R.Civ.P. 34(b) para. 3. The court would certainly

not object to the parties stipulating to the admission of an organized, legible excerpt of the

administrative record with duplicate documents removed, but the court will not at this time order

Blue Shield to produce one. 

F. Attorneys' fees

Fisher requests an award of fees to date. An award of fees is not justified at this time.

III. ORDER

For the foregoing reasons, the court:

1. determines the standard of review is for abuse of discretion;

2. remands this matter to the plan administrator with instructions to explain how the

amounts paid or not paid were determined; and

3. otherwise denies both parties' motions for summary judgment, though without

prejudice to filing, after the administrative record is augmented, new motions for

summary judgment on issues left open by this order.

Furthermore, the parties shall each sixty days file a short, non-argumentative joint report on their

progress during remand to the plan administrator and shall inform the court immediately if they

settle this matter.

DATED: 10/23/06

RONALD M. WHYTE

United States District Judge

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ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT—No. C-05-03790 RMW

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Notice of this document has been electronically sent to:

Counsel for Plaintiffs:

Laurence F. Padway lp@padway.com 

Counsel for Defendants:

John M. LeBlanc jleblanc@barwol.com 

Jordan S. Altura jaltura@gordonrees.com 

Jordan S LeBlanc 

Ned A. Fine nfine@employerlawyers.com 

Counsel are responsible for distributing copies of this document to co-counsel that have not registered

for e-filing under the court's CM/ECF program.

Dated: 10/24/06 /s/ JH

Chambers of Judge Whyte

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