Meidl v. Aetna, Inc.

          RULING RE: MOTION FOR SUMMARY JUDGMENT (DOC. NO. 132)

          Janet C. Hall United States District Judge

         I. INTRODUCTION

         Plaintiff Christopher Meidl (“Meidl”) brings this class action against the defendants, Aetna, Inc. and Aetna Life Insurance Company (collectively, “Aetna”), for denying insurance coverage of Transcranial Magnetic Stimulation (TMS) as a treatment for depression. See generally Corrected Amended Class Action Complaint (“Corr. Am. Compl.”) (Doc. No. 112). Meidl asserts that Aetna improperly developed and implemented a policy to deny TMS coverage on the grounds that TMS was an experimental and investigational treatment. See Plaintiff's Memorandum in Opposition to Defendants' Motion for Summary Judgment (“Pl.'s Mem.”) (Doc. No. 159) at 1. In doing so, Aetna allegedly violated the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1102, et seq., by (1) breaching its fiduciary duties of prudence and loyalty, and (2) wrongfully denying claims for TMS benefits. Id.

         Meidl brings these ERISA claims on behalf of a class of participants and beneficiaries in plans administered by Aetna who were denied health insurance coverage for TMS between September 3, 2009, and July 29, 2016 (the “TMS Class”). See Ruling on Motion for Class Certification and Motion to Seal (“Class Certification Ruling”) (Doc. No. 114) at 1-2. On May 4, 2017, the court certified the TMS Class to seek retrospective equitable relief, primarily in the form of an order requiring Aetna to reprocess class members' requests for TMS coverage that it had previously denied. See id. at 6, 52.

         Aetna now moves for summary judgment. See generally Motion for Summary Judgment (“Defs.' Mot.”) (Doc. No. 132). For the following reasons, Aetna's Motion for Summary Judgment is denied.

         II. BACKGROUND

         Aetna's insurance plans contain provisions excluding coverage of treatments determined by Aetna to be experimental or investigational. Defendants' Local Rule 56(a)1 Statement (“Defs.' L.R. 56(a)1”) (Doc. No. 155) at ¶ 30; Plaintiff's Local Rule 56(a)2 Statement (“Pl.'s L.R. 56(a)2”) (Doc. No. 160) at ¶ 30. The plans classify a treatment as “experimental and investigational” if any of the following criteria are satisfied:

(1) The treatment is “[n]ot approved by the U.S. Food and Drug Administration (FDA) to be lawfully marketed for the proposed use”;

(2) There are “insufficient outcomes data from controlled trials published in peer-reviewed literature to substantiate its safety and effectiveness for the illness or injury involved”;

(3) The treatment is “[s]ubject to review and approval by any institutional review board for the proposed use”; or

(4) The treatment is “[t]he subject of an ongoing clinical trial that meets the definition of a Phase 1, 2 or 3 clinical trial set forth in the FDA regulations, regardless of whether the trial is actually subject to FDA oversight.”

Pl.'s Mem. at 4; see also Defs.' L.R. 56(a)1 at ¶¶ 31, 32; Pl.'s L.R. 56(a)2 at ¶¶ 31, 32.

         Throughout the Class Period (September 3, 2009, to July 29, 2016), Aetna classified TMS as an experimental and investigational treatment for depression on the grounds that “its value and effectiveness ha[d] not been established” through reliable clinical research. Pl.'s L.R. 56(a)2 at ¶ 51; Defendants' Memorandum in Support of Motion for Summary Judgment (“Defs.' Mem.”) (Doc. No. 154) at 1. Aetna codified this determination in its Clinical Policy Bulletin 469 (“CPB 469”). See Defs.' L.R. 56(a)1 at ¶ 1; Pl.'s L.R. 56(a)2 at ¶ 1; Pl.'s Mem. at 1; Defs.' Mem. at 1. As support for designating TMS as an experimental and investigational treatment, CPB 469 provided a “background section” that summarized and discussed various scientific studies on the effects of TMS on depression. See Pl.'s Mem. at 6.

         At least once a year, Aetna's policy team updated CPB 469 to reflect new research on TMS' effectiveness. See Defs.' L.R. 56(a)1 at ¶ 2; Pl.'s L.R. 56(a)2 at ¶ 2. Throughout the Class Period, however, CPB 469 consistently concluded that:

[T]he available peer-reviewed medical literature has not established the effectiveness of TMS in the treatment of major depression . . . . More research is needed to ascertain the roles of various stimulation parameters of [TMS] for its optimal outcome as well as its long-term effectiveness in the treatment of depression . . . .

E.g., Defendants' Exhibit 14 (“DX 14”) (Doc. No. 135-7) at 1059 (August 21, 2009, version of CPB 469); Defendants' Exhibit 15 (“DX 15”) (Doc. No. 135-8) at 1036 (August 3, 2010, version of CPB 469); Defendants' Exhibit 62 (“DX 62”) (Doc. No. 135-48) at 988 (August 12, 2011, version of CPB 469); Defendants' Exhibit 64 (“DX 64”) (Doc. No. 135-50) at 936 (March 15, 2012, version of CPB 469); Defendants' Exhibit 65 (“DX 65”) (Doc. No. 135-51) at 890 (October 11, 2013, version of CPB 469); Defendants' Exhibit 19 (“DX 19”) (Doc. No. 135-12) at 684 (October 23, 2015, version of CPB 469).

         Meidl, who was enrolled in a plan administered by Aetna, was denied TMS coverage. See Defs.' L.R. 56(a)1 at ¶ 36; Pl.'s L.R. 56(a)2 at ¶ 36. On January 21, 2016, Meidl initiated this action on behalf of all enrollees who were denied TMS benefits by Aetna on the grounds that the treatment was experimental and investigational. See Corr. Am. Compl. at ¶¶ 88-92. On May 4, 2017, the court granted in part and denied in part Meidl's Motion for Class Certification. See Class Certification Ruling at 52-53. Pursuant to Federal Rules of Civil Procedure 23(b)(1) and (b)(2), the court certified a class consisting of all participants or beneficiaries in ERISA plans administered by Aetna who, on the basis of CPB 469's classification of TMS as an experimental and investigational treatment, were denied coverage of TMS to treat depression during the Class Period. Id. at 52. The TMS Class, which includes “both persons whose post-service claims for reimbursement were denied and persons whose pre-service requests that Aetna confirm coverage for TMS were denied, ” was permitted to seek retrospective injunctive relief, including an order to reprocess previously denied requests for TMS coverage. See id. at 6, 52.

         III. LEGAL STANDARD

         On a motion for summary judgment, the burden is on the moving party to establish that there are no genuine issues of material fact in dispute and that the party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Wright v. N.Y. State Dep't of Corr., 831 F.3d 64, 71-72 (2d Cir. 2016). Once the moving party has met its burden, the nonmoving party “must set forth specific facts showing that there is a genuine issue for trial, ” Anderson, 477 U.S. at 256, and present “such proof as would allow a reasonable juror to return a verdict in [its] favor, ” Graham v. Long Island R.R., 230 F.3d 34, 38 (2d Cir. 2000). “An issue of fact is genuine and material if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Cross Commerce Media, Inc. v. Collective, Inc., 841 F.3d 155, 162 (2d Cir. 2016).

         In assessing the record to determine whether there are disputed issues of material fact, the trial court must “resolve all ambiguities and draw all inferences in favor of the party against whom summary judgment is sought.” LaFond v. Gen. Physics Servs. Corp., 50 F.3d 165, 175 (2d Cir. 1995). “Where it is clear that no rational finder of fact ‘could find in favor of the nonmoving party because the evidence to support its case is so slight,' summary judgment should be granted.” F.D.I.C. v. Great Am. Ins. Co., 607 F.3d 288, 292 (2d Cir. 2010) (quoting Gallo v. Prudential Residential Servs., Ltd. P'ship, 22 F.3d 1219, 1224 (2d Cir. 1994)). On the other hand, where “reasonable minds could differ as to the import of the evidence, ” the question must be left to the finder of fact. Cortes v. MTA N.Y. City Transit, 802 F.3d 226, 230 (2d Cir. 2015) (quoting R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 59 (2d Cir. 1997)).

         IV. DISCUSSION

         Meidl has pled four counts under ERISA. In Count One, he alleges that Aetna violated ERISA's fiduciary standards under section 1104(a) of title 29 of the United States Code. See Corr. Am. Compl. at ¶¶ 97, 98; 29 U.S.C. § 1104(a) (requiring “a fiduciary [to] discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries . . . and for the exclusive purpose of providing benefits to participants and their beneficiaries”). In Count Two, he asserts that Aetna violated the terms of the class members' insurance plans by improperly denying insurance claims for TMS on the basis of CPB 469. See Corr. Am. Compl. at ¶¶ 103, 104. Meidl brings Count One for breach of fiduciary duty and Count Two for denial of benefits pursuant to section 1132(a)(1)(B), which authorizes a participant or beneficiary in an ERISA-covered plan to bring a civil action “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.” See Corr. Am. Compl. at ¶¶ 94, 103. In Counts Three and Four, Meidl asserts breach-of-fiduciary-duty claims for injunctive and equitable relief under section 1132(a)(3), which authorizes a participant or beneficiary in an ERISA-covered plan to “(A) enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.” See id. at ¶¶ 107-15. Meidl asserts Counts Three and Four “only to the extent that the Court finds that the injunctive . . . [and] equitable relief sought to remedy Counts I and/or II are unavailable pursuant to 29 U.S.C. 1132(a)(1)(B).” Id. at ¶¶ 108, 111. Meidl also acknowledges that Counts Three and Four are based on the same conduct that underpins Count Two. See id. at ¶¶ 108, 112.

         In response, Aetna advances three arguments for why summary judgment is warranted in its favor. Defs.' Mem. at 10. First, Aetna argues it is entitled to summary judgment because there is no basis in the administrative record for concluding that CPB 469 arbitrarily and capriciously classified TMS as experimental and investigational during the Class Period. Id. at 11. Second, Aetna argues that the class action fails as a matter of law because the TMS Class cannot satisfy the required elements for injunctive relief. Id. at 34. Third, Aetna argues that summary judgment is warranted as to particular segments of the TMS Class, namely: (1) class members who received “off label” TMS, and (2) class members whose claims are time barred by the contractual limitations periods in their ERISA plans. Id. at 36. Below, the court addresses each of these arguments in turn.

         A. CPB 469

         Before deciding whether summary judgment is warranted because there is no issue of material fact as to whether Aetna violated ERISA by developing and applying CPB 469 to deny TMS benefits during the Class Period, the court addresses several preliminary issues relating to (1) the appropriate standard of review under ERISA, and (2) the scope of the administrative record.

         1. ERISA Standard of Review

         There is no dispute that Meidl's denial-of-benefits claims should be reviewed under the deferential “arbitrary and capricious” standard. See Pl.'s Mem. at 11; Defs.' Mem. at 8. Where, as here, the ERISA plan “gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan, ” courts apply the arbitrary and capricious standard to actions challenging a denial of benefits under section 1132(a)(1)(B). Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); see also Defs.' L.R. 56(a)1 at ¶ 33 (providing examples of class members' plans that expressly vest Aetna with discretionary authority to make coverage determinations).

         However, the parties disagree as to the appropriate standard of review for Meidl's breach-of-fiduciary-duty claims. Meidl asserts that these claims warrant de novo review. See Pl.'s Mem. at 11. Aetna, on the other hand, argues that the arbitrary and capricious standard applies because the breach-of-fiduciary-duty claims arise out of Aetna's decision to deny TMS benefits. See Defendants' Reply Memorandum in Support of Motion for Summary Judgment (“Defs.' Reply Mem.”) (Doc. No. 157) at 2-3.

         In John Blair Communications, the Second Circuit drew a distinction between denial-of-benefits claims that are reviewed for abuse of discretion and breach-of- fiduciary-duty claims that warrant a stricter standard of review (i.e., ERISA's “strict prudent person standard”). See John Blair Communications, Inc. Profit Sharing Plan v. Telemundo Grp., Inc. Profit Sharing Plan, 26 F.3d 360, 369-70 (2d Cir. 1994). While the former concern “whether the trustees have correctly balanced the interests of present claimants against the interests of future claimants," the latter concern whether the trustees have sacrificed the interests of beneficiaries to advance the interests of non-beneficiaries. Id. at 369 (quoting Struble v. New Jersey Brewery Employees' Welfare Trust Fund, 732 F.2d 325, 333-34 (3d Cir.1984)). In other words, the court limited the application of the arbitrary and capricious standard to conduct that involves the “mere balancing of interests among claimants through the payment or non-payment of certain claims.” Id.

         Subsequently, the Supreme Court in Varity cautioned against allowing plaintiffs to repackage a simple denial-of-benefits claim as a breach-of-fiduciary-duty claim through artful pleading. See Varity Corp. v. Howe, 516 U.S. 489, 514-15 (1996). Recognizing the potential advantages that plaintiffs gain from bringing a breach-of-fiduciary-duty claim, the Varity court stressed that “characterizing a denial of benefits as a breach of fiduciary duty does not necessarily change the standard a court would apply when reviewing the administrator's decision to deny benefits.” Id. at 514. Accordingly, lower courts have routinely rebuffed litigants' attempts to dress up simple denial-of-benefits claims as breach-of-fiduciary-duty claims. See, e.g., Harrow v. Prudential Ins. Co. of Am., 279 F.3d 244, 252-53 (3d Cir. 2002) (rejecting plaintiff's attempts to circumvent an exhaustion requirement through “artfully pleading benefit claims as breach of fiduciary duty claims”); Rothwell v. Chenango Cty. N.Y.S.A.R.C. Pension Plan, No. 3:03-CV-00637 (GLS), 2005 WL 2276023, at *4-5 (N.D.N.Y. Sept. 19, 2005) (dismissing breach-of-fiduciary-duty claims that were duplicative of plaintiff's denial-of-benefits claim); Spann v. AOL Time Warner, Inc., 219 F.R.D. 307, 322 (S.D.N.Y. 2003) (holding that plaintiff's breach-of-fiduciary-duty claim did not provide an independent basis for relief where the claim was derivative of plaintiff's denial-of-benefits claim); Fitch v. Chase Manhattan Bank, N.A., 64 F.Supp.2d 212, 228-29 (W.D.N.Y. 1999) (concluding that plaintiff's breach-of-fiduciary-duty claim was precluded by a duplicative denial-of-benefits claim); Asbestos Workers Syracuse Pension Fund by Collins v. M.G. Indus. Insulation Co., 875 F.Supp. 132, 138-39 (N.D.N.Y. 1995) (applying the arbitrary and capricious standard where the fiduciary's decision “was intended to benefit the plan participants, ” even though the decision also “balance[d] the interests of plan participants and a third party”).

         In this case, Meidl's breach-of-fiduciary-duty claims are entirely duplicative of his denial-of-benefits claims because they all arise from the same underlying conduct, namely: Aetna's development and implementation of a policy that denied coverage for TMS on the grounds that the treatment was experimental and investigational. See Corr. Am. Compl. at ¶ 98 (“Aetna violated [its fiduciary duties] by adopting and implementing a policy to deny coverage for TMS based on the experimental and investigational exclusions under its plans[.]”). Meidl does not point to any other conduct as the basis for his suit. See Transcript, September 20, 2018, Oral Argument (“Tr.”) (Doc. No. 167) at 47:1-6. Instead, he attempts to distinguish his breach-of-fiduciary ...