Opinion ID: 3053428
Heading Depth: 3
Heading Rank: 2

Heading: References to the specific plan provisions on

Text: which the adverse benefit determination is based have not been provided; 3. No description of additional material or information necessary to complete the claim has been requested; 4. No description of the plan’s appeal procedures, including applicable time limits, plus a statement of the right to bring suit under § 502 of ERISA with respect to any adverse benefit determination has been provided; 5. No statement that the Vaughts are entitled to receive on request and free of charge, reasonable VAUGHT v. SCOTTSDALE HEALTHCARE CORP. 13855 access to and copies of all documents, records and other information relevant to the claim has been provided; 6. No description of adverse benefit determination based upon an internal rule, guideline, protocol or similar criteria, if so based, has been provided; 7. The sole description provided, “AM refer to the benefits booklet under exclusions and what the plan does not recover [sic] regarding motor vehicle related charges” is vague and ambiguous, fails to meet the requirements for a claim denial as outlined at page 37 of the “Flex Choice — Medical Benefit Summary Plan Description.” The letter was stamped “RECEIVED” by the Claims Administrator on February 24, 2004. On March 16, 2004, Mitchell Melamed replied to Rocco regarding the February letter to the Claims Administrator.1 In the letter, Melamed acknowledged receipt of Rocco’s letter “requesting an appeal” of the adverse benefits determination, and explained that Vaught’s claim was denied because the Plan does not cover “expenses incurred related to ‘driving under the influence of alcohol or drugs.’ ” Apparently unaware that the Claims Administrator had already received Vaught’s written authorization designating Rocco as his representative, Melamed asked Rocco to provide such authorization, adding “[i]f you have already forwarded that written authorization to the Plan, please forward a copy for my file.” In response to Rocco’s letter, Melamed stated that “[t]he spe- 1 Melamed subsequently identified himself as an attorney representing the Plan, and therefore the Claims Administrator did not directly respond to Vaught’s appeal, although the EOB indicated that the Claims Administrator was the decisionmaker for the first-level appeal. However, neither party places any weight on this procedural irregularity. 13856 VAUGHT v. SCOTTSDALE HEALTHCARE CORP. cific reason for denial of coverage is driving under the influence of alcohol or drugs, your client having an indicated blood alcohol level of 0.261.” Melamed further advised that “[n]o additional material or information was necessary to complete the claim.” Finally, Melamed stated that, “based on this apparently being the first formal notification, I would recommend that you now have 180 days within which to submit your appeal as set forth on page 37 of the Summary Plan Description.” On March 29, 2004, Rocco responded to Melamed by raising additional questions, and requesting a list of all documents reviewed by the Claims Administrator in order to reach its determination to deny coverage to Vaught because of his blood alcohol level, as well as copies of “any other documents or testimony of whatsoever kind” on which the Claims Administrator intended to rely. Instead of including a copy of Vaught’s signed authorization, as Melamed requested in the March 16 letter, Rocco asked Melamed to confirm that the Plan had received Vaught’s earlier authorization. Melamed responded on April 28, 2004, noting that hospital records indicated that Vaught was driving with a blood alcohol level that was over three times the legal limit for Arizona. However, Melamed did not provide copies of the records or other documents on which the Claims Administrator was relying. Melamed sent subsequent letters to Rocco requesting a copy of Vaught’s signed authorization. On September 2, 2004, Randolph Bachrach (Vaught’s attorney in the district court, and on appeal) sent a letter to the Plan Administrator, with copies to Melamed and the Claims Administrator, explaining that Vaught had retained Bachrach to appeal the denial of benefits. Bachrach stated that “Mr. Vaught appeals the denial of his claim, dated March 16, 2004,” and requested copies of “all relevant claim and Plan documents” relating to the denial of benefits. VAUGHT v. SCOTTSDALE HEALTHCARE CORP. 13857 On September 14, 2004, Melamed replied to Bachrach in a letter which recited Melamed’s understanding of the history of the denial of benefits. Melamed noted that Rocco had forwarded a letter to the Claims Administrator “stating in part that he was appealing the notice of declination of coverage and the basis of the alleged appeal.” Melamed also recounted his repeated requests that Vaught provide a written authorization appointing a representative, and concluded that “[t]o the best of [Melamed’s] knowledge, this was never done.” Finally, Melamed concluded: The fact remains that the Covered Person [Raymond Vaught] or that Covered Person’s authorized agent, being authorized in writing and sent to the Claims Administrator, has 180 days from the date of the original post-service denial to file an appeal to the Claims Administrator, and this has not been done. As a result, the original denial of benefits as set forth on the Explanation of Benefits must stand. Bachrach replied on September 20, stating his “understanding of the Plan’s position is that Mr. Vaught’s appeal will not be accepted or acted upon for the reasons set forth in Mr. Melamed’s letter,” and that he assumes “the same to be true with respect to his request for claim and Plan documents.” Vaught filed a complaint in the United States District Court for the District of Arizona on March 7, 2005, alleging that the Plan had violated ERISA and the terms of the Plan in handling Vaught’s claim. The complaint requested (1) Plan benefits, (2) penalties for non-disclosure of Plan documents under 29 U.S.C. § 1132(c)(1), and (3) attorney’s fees and costs under 29 U.S.C. § 1132(g)(1). On July 27, 2005, the parties submitted a joint case management report, in which Vaught first raised his theory that his “injuries were not ‘caused,’ either directly or indirectly, by alcohol,” and instead “were the direct result of and proximately caused by an automobile/ motorcycle collision.” In the same report, the Plan contended 13858 VAUGHT v. SCOTTSDALE HEALTHCARE CORP. that this claim was unexhausted because Vaught had never explained to the Plan why the alcohol-related exclusion did not apply to him. Recognizing that exhaustion could be a dispositive issue, the district court ordered both parties to brief whether Vaught had exhausted the Plan’s appeal procedures, and whether failure to exhaust would preclude him from pursuing his claim in district court. In lieu of simply briefing the issue, however, the Plan filed a motion for summary judgment. On January 23, 2006, the district court granted the Plan’s motion for summary judgment on the ground that Vaught had failed to exhaust the Plan’s internal remedies. The district court stated that Vaught’s communications with the Claims Administrator and Melamed had failed “to administratively challenge Defendant’s determination that the accident was a result of his driving under the influence.” The court noted that Vaught raised his “first substantive challenge” to the Plan’s determination in court. Because Vaught had not previously presented these arguments to the plan administrator, the court ruled that Vaught had failed to exhaust his administrative remedies, and could not raise his substantive challenges to the denial of benefits in federal court. Vaught timely appealed.