953 F.3d 529
8th Cir.2020Background
- In January 2014 Valley Med Flight (VMF) terminated participation with BCBSND; BCBSND sent providers a notice that it would reimburse air-ambulance services at 150% of 2013 Medicare rural rates (e.g., A0430 = $6,601.01; A0435 = $18.72/mi).
- On Jan. 15, 2014 Melissa Mitchell was air-transported by VMF; VMF billed $33,200 (base rate, mileage, and a $450 IV-supply charge); Mitchells assigned benefits to VMF.
- BCBSND’s EOB paid 80% of its ‘‘Allowed Charge’’ for base and mileage (leaving large balance) and denied the $450 supply charge as included in the related procedure; BCBSND initially gave limited explanation and later issued a fuller letter in 2017.
- Mitchells sued under ERISA § 502(a)(1)(B); case was remanded for administrative review, BCBSND denied on review, Mitchells sought summary judgment arguing abuse of discretion and procedural/fiduciary violations; district court split relief (BCBSND wins on base/mileage; Mitchells on supply), prompting appeal.
- Eighth Circuit reviewed for abuse of discretion (plan grants administrator discretion) and addressed standing (Article III and statutory) and reasonableness of BCBSND’s interpretations and claims-handling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing (Article III & statutory) | Mitchells: denial of contractually promised benefits is a concrete injury; they are participants/beneficiaries with a colorable claim | BCBSND: joint-litigation agreement and VMF’s waiver mean Mitchells have no personal stake or recoverable benefit | Mitchells have Article III and statutory standing; denial of benefits is a cognizable injury and they are former participant/beneficiary with a colorable claim |
| Reasonableness of base-rate & mileage (abuse of discretion) | Mitchells: rate benchmark (150% Medicare rural) was undisclosed to participants, possibly post-hoc and tainted by conflict; violates ERISA procedural/fiduciary duties | BCBSND: Plan gives broad discretion to determine “Allowed Charge”; BCBSND consistently used Medicare-based benchmarks and the interpretation is reasonable | Court: BCBSND’s interpretation reasonable under Finley factors and not an abuse of discretion; affirmed summary judgment for BCBSND on base and mileage |
| Denial of $450 medical-supply fee | Mitchells: denial rested on an after-the-fact rationale and inadequate notice, so it was procedurally defective and unreasonable | BCBSND: supply is encompassed by the Ambulance Services base rate and it consistently took that position in the claim file | Court: BCBSND’s position was consistent with plan language and consistent in the record; reversal of district court — BCBSND entitled to summary judgment on supply charge |
| ERISA procedural/fiduciary violations (§503, §404) | Mitchells: BCBSND’s failure to disclose rationale and late explanations denied a full and fair review and may reflect breach of fiduciary duty | BCBSND: procedural delays or terse explanations do not render its substantive interpretation unreasonable; no specific fiduciary-rule was violated | Court: procedural shortcomings were troubling but did not make BCBSND’s interpretation unreasonable and no fiduciary breach shown |
Key Cases Cited
- Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (standard of review: de novo unless plan grants discretionary authority)
- Finley v. Special Agents Mut. Benefit Ass'n, Inc., 957 F.2d 617 (8th Cir. 1992) (five-factor reasonableness test for plan interpretation)
- Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (conflict of interest considered in abuse-of-discretion review)
- Lujan v. Defs. of Wildlife, 504 U.S. 555 (Article III standing requirements)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (intangible harms can be concrete injuries for standing)
- LaRue v. DeWolff, Boberg & Assocs., 552 U.S. 248 (former employee may have a colorable claim for plan benefits)
- Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (ERISA protects contractually defined benefits)
- Lockheed Corp. v. Spink, 517 U.S. 882 (plan design choices generally not reviewable)
- Sprint Commc’ns Co. v. APCC Servs., Inc., 554 U.S. 269 (assignment of payment does not defeat redressability)
- Donaho v. FMC Corp., 74 F.3d 894 (8th Cir. standard for reviewing plan administrator decisions)