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Estate of Kenyon v. L M Healthcare Health Reimbursement Account

United States District Court, D. Connecticut

August 5, 2019



          Jeffrey Alker Meyer, United States District Judge.

         Carol Kenyon needed an emergency medical flight from Puerto Rico to Florida. So she contacted an air ambulance operator, who in turn contacted her insurer, who in turn stated that the flight was a covered benefit. The air ambulance then flew Kenyon to Florida. Several months later, it turned out that Kenyon's insurer was only willing to pay about 5% of the air ambulance bill.

         Kenyon's estate now seeks to recover what it claims are the benefits owed to her under her insurance policy. It has asserted claims under both the federal Employee Retirement Income Security Act (“ERISA”), and for promissory estoppel under Connecticut state law. The defendants have moved to dismiss most of the claims, alleging that they are not properly pleaded against them and preemption. I agree with defendants' arguments and will therefore dismiss Count One as to defendant Triple S Blue Card and Counts Two, Three, and Four against all defendants. This case shall proceed solely on the estate's claim under Count One against the remaining defendants for wrongful denial of ERISA benefits.


         The following facts as alleged by the plaintiff in the complaint are accepted as true for purposes of ruling on defendants' motion to dismiss. Doc. #1. Plaintiff the estate of Carol Kenyon is the insured and named beneficiary of the L M Healthcare Health Reimbursement Account ERISA insurance plan. Doc. #1 at 2 (¶¶ 1, 2). Defendant L&M Healthcare was Kenyon's employer, id. at 5-6 (¶ 28), and is a Connecticut company that sponsors the plan and is ultimately responsible for paying claims under the plan. Id. at 2 (¶ 6). Defendant Anthem Blue Cross Blue Shield is the plan administrator. Ibid. (¶ 2). Anthem is also the designated claims administrator for the plan. Ibid. (¶ 4). Defendant Triple S Blue Card is a Puerto Rico company. Ibid. (¶ 5). The estate alleges that the plan designated Triple S as the entity “to decide the appeal of the denial of benefits at issue in this matter, ” and that Triple S “participated in and approved the decision-making process and failed to process the appeal of the denial at issue in this matter.” Ibid.

         On March 13, 2017, non-party CustomAir Ambulance was contacted about carrying Kenyon on an emergency medical flight. Id. at 3-4 (¶¶ 12-13). CustomAir became Kenyon's agent in obtaining reimbursement for the flight, ibid. (¶ 12), and received preapproval from Anthem to provide the flight as a medically necessary covered benefit under Kenyon's plan. Id. at 4 (¶¶ 14-15). CustomAir relied on this information to fly Kenyon from Puerto Rico to Florida on March 16. Ibid. (¶¶ 16-17).

         CustomAir then submitted a claim for benefits, billing the plan the customary and reasonable amount of $437, 320. Ibid. (¶¶ 18-19). On September 5, the plan issued an explanation of benefits that “substantially denied the claim” and reimbursed CustomAir for only $20, 300. Ibid. (¶ 20).[1]

         Still working on behalf of Kenyon, CustomAir appealed. Id. at 5 (¶ 23). Apparently working on the basis of the “Summary Plan Description, ” which the complaint alleges “states that out-of-area appeals should be handled by the [Blue Cross] provider that initiated the service, ” ibid. (¶ 24), CustomAir first appealed to Triple S on November 28. Ibid. (¶¶ 23-24). Triple S refused to consider the appeal because it had not adjusted the original claim. Ibid. (¶ 24). An appeal was then made to Anthem on December 5.[2] Ibid. (¶¶ 23, 25). CustomAir followed up after Anthem had not responded within 60 days, and was advised that Anthem would not process the appeal. Ibid. (¶ 25). CustomAir then contacted an Anthem vice president, who referred CustomAir to Anthem's risk management division. Ibid. (¶ 25). Anthem's risk management division also did not process the appeal. Ibid. (¶ 26).

         Eventually, Kenyon's estate filed suit against the plan, Anthem, Triple S, and L&M Healthcare. Doc. #1. The estate has asserted claims for wrongful denial of benefits under ERISA, id. at 7 (¶¶ 40-47) (Count One), breach of fiduciary duty under ERISA, id. at 7-8 (¶¶ 48-43) (Count Two), equitable estoppel under the federal common law of ERISA, id. at 8-9 (¶¶ 44-51) (Count Three), and promissory estoppel under Connecticut common law, id. at 9-10 (¶¶ 52-57) (Count Four). Triple S has moved to dismiss Count One on the ground that it is an improper ERISA defendant. Doc. #36-1 at 1. The remaining defendants have moved to dismiss Counts Two, Three, and Four on the ground that they are inadequately pleaded and, in the case of Count Four, preempted by ERISA. Doc. #26-1 at 1, 9. The estate has consented to the dismissal of Count Two, Doc. #30 at 3, and Triple S has adopted the other defendants' arguments as to Counts Three and Four. Doc. #36 at 1.


         For purposes of a motion to dismiss for failure to state a claim, the Court must accept as true all factual matters alleged in a complaint, although a complaint may not survive unless the facts it recites are enough to state plausible grounds for relief. See, e.g., Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Kim v. Kimm, 884 F.3d 98, 103 (2d Cir. 2018). This “plausibility” requirement is “not akin to a probability requirement, ” but it “asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678. Because the focus must be on what facts a complaint alleges, a court is “not bound to accept as true a legal conclusion couched as a factual allegation” or “to accept as true allegations that are wholly conclusory.” Krys v. Pigott, 749 F.3d 117, 128 (2d Cir. 2014). In short, my role in reviewing a motion to dismiss under Rule 12(b)(6) is to determine if the complaint-apart from any of its conclusory allegations-alleges enough facts to state a plausible claim for relief.

         ERISA benefits claim against Triple S (Count One)

         Triple S argues that Count One should be dismissed against it because it is not a proper defendant to a claim for benefits under asserted under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). Doc. #36-1 at 6. The estate objects, arguing instead that Triple S is a claims administrator properly subject to suit under § 502(a)(1)(B). I agree with Triple S.

         The Second Circuit has recently clarified the scope of what kind of entities are proper defendants under § 502(a)(1)(B). Although it had previously held that “only the plan and the administrators and trustees of the plan in their capacity as such may be held liable, ” Leonelli v. Pennwalt Corp., 887 F.2d 1195, 1199 (2d Cir. 1989), the Second Circuit has revised this view to make clear that “where the claims administrator has ‘sole and absolute discretion' to deny benefits and makes ‘final and binding' decisions as to appeals of those denials, the claims administrator exercises total control over claims for benefits and is an appropriate defendant in a § 502(a)(1)(B) action for benefits.” N.Y. State Psychiatric Ass'n v. UnitedHealth Grp., 798 F.3d 125, 132 (2d Cir. 2015). Because there is no dispute that Triple S was not a plan or plan administrator, the question of Triple S's role as a defendant turns on whether it has ...

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