Court Opinion

ID: 612898
Source: CourtListenerOpinion
Date Created: 2011-08-31 00:07:23+00
Date Added: 2024-06-11T17:50:22.129711
License: Public Domain

FILED
                            NOT FOR PUBLICATION                                  AUG 30 2011

                                                                              MOLLY C. DWYER, CLERK
                     UNITED STATES COURT OF APPEALS                            U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

E. J., a minor, by and through her parents;      No. 10-35877
et al.,
                                                 D.C. No. 1:09-cv-00133-RFC
              Plaintiffs - Appellants,

  v.                                             MEMORANDUM*

MONTANA CONTRACTORS’
ASSOCIATION HEALTHCARE TRUST,

              Defendant - Appellee.

                   Appeal from the United States District Court
                            for the District of Montana
                 Richard F. Cebull, Chief District Judge, Presiding

                                Argued June 6, 2011
                             Submitted August 26, 2011
                                 Portland, Oregon

Before: FISHER, GOULD, and PAEZ, Circuit Judges.

       Appellant E.J. filed a complaint in district court under 29 U.S.C. §

1132(a)(1)(B) of the Employee Retirement Security Act of 1974 (“ERISA”) after

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Appellee Montana Contractors’ Association Healthcare Trust (“MCAHT”) denied

coverage of E.J.’s medical expenses. MCAHT denied benefits on the basis of

E.J.’s refusal 1) to provide a copy of a malpractice settlement, 2) to provide a copy

of a state court order directing the use of funds from the settlement, including the

dollar amount of the settlement funds allocated to E.J., 3) to provide a copy of a

special needs trust (“SNT”), and 4) to sign a third-party reimbursement agreement

(“TPRA”).1 Concluding that E.J. was required to provide this information under

the terms of the health plan, the district court granted MCAHT’s motion for

summary judgment. While we agree with the district court that MCAHT did not

abuse its discretion in denying benefits, we conclude that E.J.’s subsequent

disclosure of information and willingness to seek judicial authorization to provide

any necessary documentation makes remand the appropriate remedy in this case.

We therefore vacate the order granting summary judgment, with instructions to

remand to MCAHT for a determination of coverage in light of the information

provided by E.J.

      1
        Although MCAHT’s letter denying benefits did not specify upon which
missing information it based its denial, we specify the listed documentation
because MCAHT’s requests for information expanded during the course of the
administrative proceedings to include all of these four items. The administrative
record shows that E.J. did not provide any of this documentation prior to
MCAHT’s final determination of E.J.’s entitlement to benefits.

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      When an ERISA plan confers discretion on a plan administrator to determine

eligibility for benefits or to construe the terms of a plan, we review for abuse of

discretion the administrator’s denial of benefits. Abatie v. Alta Health & Life Ins.

Co., 458 F.3d 955, 963 (9th Cir. 2006). The abuse of discretion standard requires

reversal only if the administrator’s decision is arbitrary or capricious. Schikore v.

Bankamerica Supp. Ret. Plan, 269 F.3d 956, 960 (9th Cir. 2001).

      The MCAHT medical plan expressly conditions coverage upon the covered

person’s submission of information that is necessary to determine eligibility for

plan benefits and to implement coordination with other benefits. E.J. concedes that

she failed to provide the information requested by MCAHT, such as a copy of the

malpractice settlement and the SNT, but argues that MCAHT’s denial of benefits

was nonetheless arbitrary and capricious because the information was not

necessary to the administration of the plan. We disagree.

      We reject E.J.’s argument that the terms of the settlement and SNT are not

necessary to a benefits determination because the SNT would never be required to

cover E.J.’s medical expenses before MCAHT. Although it may turn out that the

settlement and SNT terms do not exclude E.J. from coverage under the plan and do

not entitle MCAHT to reimbursement, there is no per se rule that a SNT is always

secondary to an ERISA plan or that an ERISA plan may never seek reimbursement

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from a SNT. See, e.g., Mutual of Omaha Ins. Co. v. Arachikavitz, 2007 WL

2788604 (D. Nev. Sept. 21, 2007) (same). But see Martinez v. Beverly Hills Hotel,

695 F.Supp. 2d. 1085 (C.D. Cal. 2010) (ruling that it was unreasonable for an

ERISA plan to deny benefits based on the existence of a special needs trust

because a special needs trust was not a “coverage, plan, or policy” under the plan’s

provisions covering coordination of benefits). MCAHT is thus entitled to the

information and documents that it has requested from E.J. so that it can make a

final determination of whether E.J. is entitled to benefits under the plan.

      We further conclude that MCAHT’s denial of benefits based on E.J.’s

refusal to sign a TPRA was not arbitrary or capricious. The plan clearly states that

MCAHT is not required to pay any claim under the plan where there is evidence of

third-party liability unless the covered person signs a TPRA. The TPRA also

expressly incorporates the plan’s terms and conditions, including the plan’s

sections covering MCAHT’s right to reimbursement, subrogation, coordination of

benefits, and exclusions. Given this language, there is no merit to E.J.’s argument

that the TPRA creates rights in favor of MCAHT that are not part of the health

plan. Although the TPRA requires a covered person to initiate suit against

potentially liable third parties and seeks acknowledgment that MCAHT provides

additional consideration by making benefit payments during the course of

                                          4
litigation, these provisions do not limit or expand a covered person’s entitlement to

coverage beyond the plan’s terms.

      In sum, we conclude that, before she may demand that MCAHT make a final

determination of her entitlement to benefits under the plan, E.J. must 1) provide

MCAHT with a copy of the malpractice settlement; 2) provide MCAHT with a

copy of the state court order directing the use of funds from the settlement,

including the dollar amount of funds allocated to the SNT; 3) provide MCAHT

with a copy of the SNT; and 4) sign the TPRA. We recognize that some or all of

this information may have been provided during the course of proceedings in the

district court or in this court. Moreover, MCAHT, for its part, has stated that it is

willing to sign a confidentiality agreement to protect any of the disclosed

information.

      Accordingly, we conclude that MCAHT either already has or will be able to

obtain all of the information it requires in order to make a determination of E.J.’s

entitlement to benefits. Under these circumstances, and given the important

interests at stake for a severely disabled child, we remand so that MCAHT can

make this determination. We stress that we express no opinion regarding

MCAHT’s ultimate decision on whether E.J. is entitled to benefits under the plan,

                                           5
except to urge that the district court and the parties involved ensure that a

determination is made without any unnecessary delay.

      The order granting summary judgment is vacated with instructions to

remand the case to MCAHT for a determination on the merits of E.J.’s claim for

benefits.

      The panel shall retain jurisdiction over any future appeal.

      VACATED and REMANDED.

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