Court Opinion

ID: 71623
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:20:40+00
Date Added: 2024-06-11T14:58:48.038164
License: Public Domain

United States Court of Appeals,

                             Eleventh Circuit.

                               No. 96-4291.

                 Thomas SHANNON, Plaintiff-Appellee,

                                     v.

 JACK ECKERD CORPORATION, a Delaware Corporation, Defendant-Third
Party Plaintiff-Appellant,

Cost Care, Inc., a California Corporation, Third-Party Defendant.

                              May 29, 1997.

Appeal from the United States District Court for the Southern
District of Florida. (91-271-CIV-LCN), Lenore Carrero Nesbitt,
Judge.

Before HATCHETT, Chief Judge, BARKETT, Circuit Judge, and RONEY,
Senior Circuit Judge.

     BARKETT, Circuit Judge:

     Thomas Shannon filed this action after Jack Eckerd Corporation

denied his request for preauthorization of benefits under an

employee group health plan.         Eckerd is appealing the district

court's judgment awarding Shannon $70,714.35.            Eckerd argues on

appeal that the district court erred in denying its motion for

summary judgment and in finding that the Plan's original denial of

benefits was arbitrary and capricious.          Eckerd also contends that

the district court erred in directing the Plan administrator on

remand to consider evidence available subsequent to the initial

determination.

     Thomas   Shannon   is    a   beneficiary    under   the   Jack   Eckerd

Corporation Health Benefits Plan ("the Plan"), a self-funded plan

governed by the Employee Retirement Income Security Act ("ERISA").

Shannon suffers from long-term diabetes mellitus Type I, which has
resulted in severe renal disease and kidney failure.           Due to these

complications, Shannon's doctor advised Shannon to undergo a kidney

transplant.     After further consultation with other physicians,

Shannon     decided    to   undergo   a    simultaneous     kidney/pancreas

transplant at the University of Minnesota.              The University of

Minnesota    requires   either   advance    payment    or   verification   of

insurance coverage before a patient can be placed on the cadaveric

pancreas transplant list. Accordingly, Shannon's surgeon requested

preauthorization of benefits for the procedure from the Plan.               At

the time Shannon sought benefits for his transplant, the Plan

excluded coverage for experimental or investigational human organ

transplants.    The Plan administrator rejected the claim for those

benefits, informing Shannon and his surgeon that although the Plan

would cover expenses associated with the kidney transplant, it

could not cover expenses associated with the pancreas transplant

because it was medically experimental or investigational and the

Plan excluded coverage for experimental or investigational human

organ transplants. Shannon's surgeon filed a formal appeal but the

Plan administrator continued to deny coverage for the pancreas

portion   of   the    transplant.     Shannon   went    forward   with     the

transplant using other funding, but the pancreas graft failed.

Shannon then sued under ERISA, 29 U.S.C. § 1132(a)(1)(B)1 to
recover the benefits denied by the Plan administrator.              After a

bench trial, the district court found that in rejecting the claim

     1
      "A civil action may be brought by a participant or
beneficiary ... 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.A. § 1132(a)(1)(B) (West 1985).
as investigational, the Plan administrator had failed to consider

all of the relevant evidence available and concluded that this

failure rendered the Plan administrator's denial of benefits for

the pancreas portion of the transplant arbitrary and capricious.

The district court remanded the matter to the Plan administrator

for a new determination based upon all relevant evidence including

subsequently          available        evidence.2         On   remand,        the   Plan

administrator determined that the pancreas operation was covered

under current standards.              However, the Plan refused to pay Shannon

any benefits, arguing that at the time Shannon made his claim the

procedure was experimental/investigational.                    Shannon again sought

relief in the district court and the district court entered final

judgment        for      the     benefits      in     accordance     with     the   Plan

administrator's conclusion that the pancreas procedure was covered.

           We review a district court's grant of summary judgment de

novo applying the same legal standards that control the district

court's determination.               Jones v. Firestone Tire & Rubber Co., 977
F.2d 527 (11th Cir.1992).                 Denial of benefits under an ERISA plan

that       gives   the    plan      administrator      discretionary    authority    to

determine eligibility for benefits or to construe the terms of the

plan       is   reviewed       by   the    district    court   for    abuse    of   that

discretion.        Firestone Tire & Rubber Co. v. Bruch,               489 U.S. 101,

115, 109 S. Ct. 948, 956, 103 L. Ed. 2d 80 (1989);                    Jett v. Blue Cross

and Blue Shield of Alabama, Inc., 890 F.2d 1137, 1138-39 (11th

Cir.1989).         There is no dispute that the Eckerd Plan gives its

       2
      Eckerd's appeal to this Court of the remand order was
dismissed for want of jurisdiction.
administrator discretionary authority to determine eligibility for

benefits.     Therefore,       we   must   determine    whether   the   Plan

administrator's decision was arbitrary and capricious.            Jett, 890
F.2d at 1139.     A decision to deny benefits is arbitrary and

capricious if no reasonable basis exists for the decision.          Id. In

this case the district court found that in evaluating whether the

proposed procedure was experimental or investigational, the Plan

administrator relied only on Medicare's denial of coverage, a

conclusory recommendation of denial from Cost Care, the Plan's

medical   consultant,    and    the   statements   of   several   insurance

companies that pancreas transplants were "investigational."              The

court concluded that this was an insufficient basis to support the

denial.   Simply accepting the bald assertions of Cost Care and the

denial of other insurance companies without examining or evaluating

their underlying bases and failing to obtain additional relevant

information was arbitrary and capricious.          We cannot say that the

district court erred in remanding for the Plan administrator to

make a reasonably relevant inquiry.

      Nor can we say that the district court erred in directing the

Plan administrator to consider subsequently available evidence.

The district court relied on Bucci v. Blue Cross-Blue Shield of

Conn., 764 F. Supp. 728, 732 (D.Conn.1991), holding that since a

defendant's duty to provide benefits "is a continuing one, its

refusal to provide benefits is thus a continuing denial, the

propriety of which is measured against the information available

from time to time."     Eckerd's Plan administrator had an obligation

to make a reasonably relevant inquiry and failed to do so at the
time of the original determination. The district court did not err

in directing that the Plan administrator consider all available

evidence.   As we stated in Jett, "Should [the beneficiary] wish to

present additional information that might affect the determination

of eligibility for benefits, the proper course would be to remand

to [the plan administrator] for a new determination." 890 F.2d at

1140.   Accordingly, we AFFIRM.