Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_05-cv-00718/USCOURTS-azd-2_05-cv-00718-0/pdf.json

Parties Involved:
Scottsdale Healthcare Corporation Health Plan
Defendant
Raymond Vaught
Plaintiff

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Raymond Vaught,

Plaintiff, 

vs.

Scottsdale Healthcare Corporation

Health Plan,

Defendant. 

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No. CV 05-0718 PHX-DGC

ORDER 

Pending before the Court is Defendant’s motion for summary judgment. Docs. #17.

For the reasons set forth below, the Court will grant Defendant’s motion. 

A. Factual Background

Plaintiff, a participant in Defendant’s ERISA medical plan, was injured when his

motorcycle collided with an automobile on July 26, 2003. Doc. #1. On August 15, 2003,

Plaintiff submitted a claim to Defendant for payment of all medical bills. Doc. #16.

Plaintiff’s wife provided additional information to Defendant on August 29, 2003, including

a police report stating that “[Plaintiff] will be charged via long form for driving under the

influence of alcohol.” Id. On January 15, 2004, Defendant informed Plaintiff that his claim

was denied. Doc. #16, Ex. 6. Defendant directed Plaintiff to refer to the “benefits booklet

under exclusions and what the plan does not cover regarding motor vehicle related

charges.” Doc. #16, Ex. 6. The section of the benefits booklet titled “What the Plan Does

Not Cover” provided that t he p lan does not cover injuries incurred while driving under the

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influence of alcohol or drugs. Doc. #16. 

B. Procedural Issue.

Plaintiff filed his complaint on March 7, 2005, alleging that Defendant’s denial of his

claim was arbitrary and capricious, violated the plan, was an abuse of discretion, and

constituted a breach of fiduciary duties. Doc. # 1. Pursuant to 29 U.S.C. § 1132(g)(1),

Plaintiff seeks payment of plan benefits and penalties for Defendant’s alleged nondisclosure of plan documents. Id. 

In preparation for a case management conference t o be held on August 3, 2005,

Defendant asserted that Plaintiff had failed to exhaust his administrative remedies and

therefore could not pursue this action. See Doc. #10. Because the exhaustion issue might

resolve this case, the Court directed that Defendant file a memorandum on the exhaustion

issue on or before August 31, 2005, Plaintiff file a response on or before September 23,

2005, and Defendant file a reply on or before October 7, 2005. See Doc. #11. Apparently

recognizing that the exhaustion issue could be case-disp osit ive, Defendant actually filed

a motion for summary judgment on August 31, 2005. See Doc. #15. Plaintiff filed a

memorandum on September 23, 2005 that addressed the exhaustion issue, but asserted that

the memorandum was “not intended to const it ut e a Rule 56 (F.R.C.P.) response.” Doc. #18.

Plaintiff did not otherwise respond to Defendant’s motion. Defendant filed a rep ly in

support of its motion on October 7, 2005. See Doc. #27. 

Despite his assertions to the contrary, the Court will treat Plaintiff’s memorandum

as a response to Defendant’s motion for summary judgment. Defendant’s motion was

timely. See F. R. Civ. P. 56(a). Plaintiff was required t o respond within 30 days. LRCiv.

56.1(b). Plaintiff did not do so, and the Court could treat the motion as having received no

response. LRCiv 7.2(1). Rather than penalize Plaintiff in this manner, however, the Court

will consider the exhaustion arguments asserted in Plaintiff’s memorandum as a response

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1

 Plaintiff appears to suggest that because “Defendant’s MSJ goes beyond this Court’s

[August 8, 2005] order” he was not required to respond. Doc. #18. The Court does not

agree. Nothing in t he Court’s August order precluded Defendant from filing its summary

judgment motion, nor did the order waive the requirement for Plaintiff to file a timely

response. 

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to the motion.1

C. Standard of Review for Summary Judgment.

Summary judgment is appropriate if the evidence, viewed in the light most favorable

to the nonmoving party, “show[s] that there is no genuine issue as to any material fact and

that t he moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); see

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Jesinger v. Nev. Fed. Credit Union,

24 F.3d 1127, 1130 (9th Cir. 1994). Substantive law determines which facts are material and

“ [o]nly disputes over facts that might affect the outcome of the suit . . . will properly

preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

248 (1986); see Jesinger, 24 F.3d at 1130. Similarly, t o preclude summary judgment the

dispute must be genuine, that is, the evidence must be “such that a reasonable jury could

return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. Because

“[c]redibility determinations, the weighing of evidence, and the drawing of inferences from

the facts are jury functions, not those of a judge, ... [t]he evidence of the non-movant is to

be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255 (citing

Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970); see Warren v. City of Carlsbad,

58 F.3d 439, 441 (9th Cir. 1995). 

C. Relevant Law

The Ninth Circuit has held that “federal courts have t he aut hority to enforce the

exhaustion requirement in suits under ERISA, and that as a matter of sound policy they

should usually do so.” Amato v. Bernard, 618 F.2d 559, 568 (9th Cir. 1980). “[I]n most

cases, an issue not presented to an administrative decisionmaker cannot be argued for the

first time in federal court.” Sims v. Apfel, 530 U.S. 103, 112 (2000); see also Stark v. PPM

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America Inc., 354 F.3d 666, 672 (7th Cir. 2004) (affirming a district court’s refusal to review

an ERISA claim based on a theory not presented in the administrative proceedings.) The

purpose of the exhaustion doctrine is to “help reduce the number of frivolous lawsuits

under ERISA; to promote the consistent treatment of claims for benefits; to provide a

nonadversarial method of claims settlement; and the minimize the costs of claims settlement

for all concerned.” Amato, 618 F.2d at 568.; see Diaz v . United Agricultural Employee

Welfare Benefit Plan and Trust, 50 F.3d 1478, 1483 (9th Cir. 1995). 

D. Analysis.

Plaintiff and Defendant agree that the exhaustion doctrine ap p lies in this case.

Doc. #18, 27. Plaintiff argues that he “fully pursued and exhausted all available remedies

under the Plan.” Doc. #18. 

The plan’s appeal procedure was p rovided t o Plaintiff in the January 15, 2004 denial

letter. It stated that if Plaintiff took issue with the denial he must submit a written appeal

to the Claims Administrator within 180 days explaining (1) that he is ap p ealing a claim

denial and (2) the reason the Claims Administrator should reconsider his claim. Doc. #16,

Ex. 6. Plaintiff assert s t hat he submitted his formal appeal through attorney Joseph P.

Rocco on February 19, 2004, in a letter that stated, in part, “we are appealing the adverse

determination of benefits under the plan.” Id., Ex. 8. The letter listed seven procedural

reasons for the appeal, including the complaint that the “specific reason or reasons for the

adverse benefit determination have not been provided, [the] description of the plan’s

appeal procedures . . . has [not] been provided, [and t he] description provided [for the

denial] . . . is vague and ambiguous,” Id. 

Defendant argues that its January 2004 letter clearly articulated the reasons

Plaint iff’s claim was denied and provided a clear description of the plan’s appeal procedure

as well as information regarding Plaintiff’s rights to “bring a civil action under ERISA.”

Docs. #16, Ex. 6, #17. Defendant argues that because Plaintiff’s subsequent appeal raised

only procedural questions and never challenged Defendant’s determination that Plaintiff’s

injuries were the result of his driving while under the influence of alcohol, he cannot do so

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 The Court acknowledges that Defendant’s March 16, 2004 letter appears to give Plaintiff

an additional 180 days within which to submit his appeal, and that on September 14, 2004,

two days prior to the appeal expiration date, Defendant rejected Plaintiff’s claim as timebarred. Doc. #16, Ex. 12, 13. The Court cannot conclude, however, that this two-day

premature action excuses Plaintiff’s exhaustion obligation. Plaintiff has presented no

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in this case. Doc. #17.

The Court agrees that the January 15, 2004 letter adequately informed Plaintiff of

the reason his claim was denied, the plan’s appeal procedure, and Plaintiff’s right to bring

a civil action under ERISA. The second page of the January letter describes the plan’s

ap p ellat e review process and informs Plaintiff of his right to bring an ERISA action. Id., Ex.

6. Moreover, Defendant’s denial let t er clearly referred him to the “benefits booklet under

exclusions and what the plan does not cover regarding motor vehicle related charges.” Id.,

Ex. 6. Plaintiff was in possession of Defendant’s benefit booklet. Docs. ##19-26. The

table of contents shows the section “What t he M edical Plans Do Not Cover” on pages 23

and 24. Doc. #20. There are only t wo listed driving related exclusions in this section: (1)

driving without a license and (2) driving under the influence of drugs or alcohol. Docs.

##21, 22. Plaintiff’s wife had provided Defendant with a copy of the July 26, 2003

Scottsdale Police Rep ort st at ing that Plaintiff would be charged with DUI. Doc. #16, Ex. 4.

Plaintiff’s blood alcohol level had registered 0.261 – three times the legal limit in Arizona.

Id. at Ex. 5. No reasonable jury could find that on January 15, 2004, Plaintiff was not

adequately informed of the reason his claims were denied. 

Moreover, Defendant’s March 16, 2004 letter explicitly placed Plaint iff on notice of

why his claim was denied. Doc. # 16, Ex. 8. The letter read in part: “the specific reason for

denial of coverage is driving under the influence of alcohol or drugs.” Id. 

If the Court construes the facts in Plaintiff’s favor by counting the March 16, 2004

letter as Plaintiff’s first formal notification of the reasons for denial, Plaintiff had 180 days

from that date to administratively challenge Defendant’s determination that t he accident

was a result of his driving under the influence. To date, Plaintiff has failed to do so.2

 

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evidence, and does not argue, that he would have raised a substantive challenge to

Defendant’s DUI determination between September 14 and 16, 2004.

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Plaintiff’s first subst ant ive challenge to Defendant’s DUI determination was raised

in this Court. Docs. ##1, 10. Plaintiff argues that there is no proof he was legally impaired

by alcohol, and that the plan’s DUI exclusion does not apply because his injuries were

caused “by an automobile/motorcycle collision” rather than alcohol. Doc. #10. Plaint iff

asks the Court t o accept these substantive arguments and order full payment of his medical

expenses, attorney’s fees, and statutory penalt ies. Id. These arguments, however, were

never presented to the plan administrator, either within 180 day s of January 15, 2004 or 180

days of March 16, 2004. Thus, under either time calculation, Plaintiff has failed to exhaust

his administrative and cannot raise t hese substantive arguments “for the first time in

federal court.” Sims, 530 U.S. at 112; see also Stark, 354 F.3d at 672. 

IT IS ORDERED:

1. Defendant’s Motion for Summary Judgment (Doc. #17) is granted.

2. Defendant also filed a Motion Regarding Discovery (Doc. #17) is denied as

moot.

3. The Clerk of the Court is directed to terminate this action.

DATED this 23rd day of January, 2006.

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