1. Case Name: E.G. v. Companion Ben. Alternatives, Inc.

2. Type of Treatment Services Denied: Residential Treatment

3. Lawyers:

  1. Plaintiff: Charles J. Potts, Briskman & Binion, P.C.; Jordan M. Lewis, Jordan Lewis, P.A.
  2. Defendant: Bruce F. Rogers, Bainbridge, Mims, Rogers & Smith, LLP; Theodore DuBose Willard, Jr., Montgomery Willard, LLC

4. Format: Memorandum Opinion and Order on Defendant’s Motion to Dismiss Amended Complaint

5. Outline:

  1. ERISA Claim? Yes
  2. Class Action/or Individual Action: Individual
  3. Defendant: Manager of Behavioral Health Benefits for member’s health plan
  4. Type of Insurance Plan: Employer-sponsored ERISA-regulated health insurance plan
  5. Type of Coverage Denial: Medical Necessity

6. Legal Pointer: The de facto plan administrator doctrine does not apply to third-part administrative services providers in this Circuit.

7. Legal Issues and Causes of Action: Plaintiff filed suit against Companion Benefit Alternatives, Inc. (CBA) for plan enforcement under 29 U.S.C. § 1132(a)(1)(B) and violation of the Parity Act. Defendant filed a Motion to Dismiss.

  1. Ruling: Defendant’s Motion to Dismiss the Amended Complaint was granted, and the case was dismissed without prejudice.

8. Narrative Case Description: Plaintiff sought coverage for E.G.’s intensive residential mental health treatment. On September 28, 2016, Plaintiff received a denial letter from CBA. The denial letter indicated that CBA managed the behavioral health benefits from the member’s health plan. Plaintiff appealed the denial. On August 25, 2017, CBA sent a letter stating that the denial was being upheld. The letter also included a document captioned “About Companion Benefit Alternatives (CBA),” which reflected the following: i) “CBA is a behavioral health benefits management company that [your] health plan engages to review claims,” ii) “CBA reviews behavioral health claims to ensure that the services you received are covered under your plan and medically necessary,” and iii) “in performing this claims-reviewing function, [w]e compare the clinical data sent by your provider with the health plans’ benefits and our medical criteria to determine if your request meets your health plans’ requirements for payment.”

On June 7, 2018, this lawsuit was filed against CBA seeking recovery of the behavioral health benefits that were denied. Neither Diversified Port Holdings, LLC (Diversified), the Plaintiff’s employer, nor Blue Cross and Blue Shield of Florida, Inc. (BCBSF), the provider of administrative services for Diversified’s group health plan, were named in the lawsuit. Rather, Plaintiff’s Amended Complaint stated that CBA had full discretionary authority to administer and pay mental health benefits under the plaintiff’s plan and, accordingly, owed her fiduciary obligations. CBA filed a Motion to Dismiss the Amended Complaint, claiming that CBA was neither the employer nor an ERISA plan fiduciary and therefore was not the proper defendant. CBA further argued that Diversified and BCBSF were required parties, the former because it was the employer/plan administrator and the latter because it was the third-parity administrator who contracted with CBA.

CBA’s Motion to Dismiss began with the premise that “for a plaintiff to state a claim for unpaid benefits, the defendant must have discretion to award the benefits at issue” and that it cannot be liable in this case unless it was performing a fiduciary function under ERISA. In response, Plaintiff insisted that CBA was a proper defendant by application of the “de facto plan administrator doctrine.”[1] Plaintiff argued that the Court should apply the de facto plan administrator doctrine and to conclude that the question of whether a defendant is acting as plan administrator is fact intensive and better decided at a later stage of this litigation.

The Court opined that Plaintiff’s position ran headlong into Oliver v. Coca Cola Co., 497 F.3d 1181 (11th Cir. 2007). In Oliver, the Eleventh Circuit distinguished Hamilton by emphasizing that those cases “applied the de facto administrative document to employers, not to third-party administrative services providers” where “plan participants brought suit against employers that had sought to avoid liability as plan administrators” by “outsourcing responsibility for administrating claims to a separate entity.” By contract, Oliver observed that “where a plaintiff has sought to hold a third-party administrative services provider liable, rather than an employer, we have rejected the de facto plan administrator doctrine. The Court stated that, in accordance with this language from Oliver, courts in this Circuit had routinely determined that the de facto plan administrator doctrine had no valid application to third-party service providers (as opposed to employers). The Court concluded that Plaintiff failed to address Oliver by either distinguishing it or explaining why it did not mean what the courts applied it to mean., thus finding Plaintiff’s argument unpersuasive.

9. Additional Comments: None.

10. Website: None.

11. Practical Implications and Lessons Learned: Plaintiff failed to include the proper parties in this litigation.

12. All Legal Theories Presented in Case: Breach of Fiduciary Duty and Violation of Parity Law

13. Successful Legal Theories in Case: None.

 

 

[1] The Eleventh Circuit has explained that Section 1132(a)(1)(B) “confers a right to sue the plan administrator for recovery of benefits. … Proof of who is the plan administrator may come from the plan document but can also come from the factual circumstances surrounding the administration of the plan, even if these factual circumstances contradict the designation in the plan document.” Hamilton v. Allen-Bradley Co., 244 F.3d 819, 824 (11th Cir. 2001). Therefore, “[a] de facto plan administrator – i.e., one who assumes responsibility for or controls the provision of plan documents and information – can be a proper defendant.” Till v. Lincoln Nat’l Life Ins. Co., 2014 U.S. Dist. LEXIS 174278, 2014 WL 6895285, *6 (M.D., Ala. Dec. 5, 2014) (citation omitted). “The key question on this issue is whether [an entity] had sufficient decisional control over the claim process that would qualify it as a plan administrator … This requires an analysis of the facts surrounding the administration of the  … plan.” Hamilton, 244 F.3d at 824.

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