Halpern v. Blue Cross / Blue Shield York, 12-CV-407S

BRUCE J. HALPERN, Plaintiff, v. BLUE CROSS / BLUE SHIELD OF WESTERN NEW YORK, Defendant.

12-CV-407S

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NEW YORK

August 30, 2014

DECISION AND ORDER

I. INTRODUCTION

Plaintiff Bruce J. Halpern ("Plaintiff") commenced this action for breach of contract against Blue Cross / Blue Shield of Western New York, also known as HealthNow New York, Inc., ("HealthNow" or "Defendant") in state court following the denial of reimbursement claims under a group health benefits plan. Because the reimbursement claims were related to an employee benefit plan, HealthNow removed the matter to this Court on May 4, 2012, pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), (e)(1). Currently pending before this Court are the parties' cross-motions for summary judgment. For the following reasons, Defendant's motion is granted, and Plaintiff's cross-motion is denied.

II. BACKGROUND

A. Facts

The following facts are undisputed unless otherwise noted. During the period at issue in this case, Plaintiff was covered under a Traditional Blue point-of-service health benefit plan ("the Plan") issued by HealthNow.

In mid-December, 2009, Plaintiff's dependant son B.H. entered Telos Residential Facility ("Telos") for teenage boys in Orem, Utah. Telos describes itself as a "unique, clinically sophisticated, relationship-based treatment center for teenage boys," and specializes in the treatment of problems such as anxiety, depression, substance abuse, and learning differences. (Def. Ex. Q.) The facility provides therapy, academics, and off-campus activities. (Id.)

Upon admission to the Telos Residental Treatment Center, B.H. was evaluated by an adolescent psychiatrist who diagnosed B.H. with mood disorder, not otherwise specified; anxiety disorder, not otherwise specified; ADHD; cognitive disorder, not otherwise specified with social delays, executive functioning delays, rigid thinking, and a possible non-verbal learning disability disorder. (Pl. Aff. ¶14 & Pl. Ex. E.) A Master Treatment Plan was then developed for B.H. (Pl. Aff. ¶¶15-20 & Pl. Exs. E-I.)

B.H. left Telos on April 12 or April 15, 2011, the last date for which Plaintiff claims an entitlement of benefits. HealthNow reimbursed Plaintiff for B.H.'s stay at Telos from December 2009 through July 2010.

In a letter dated July 6, 2010, Health Integrated, which provides mental health utilization management on behalf of HealthNow, informed Plaintiff that B.H. was not entitled to residential treatment benefits under the Plan. HealthNow nonetheless reimbursed Plaintiff for B.H.'s stay for the month of July, but denied Plaintiff's reimbursement claims for B.H.'s stay at Telos from August 2010 through November of 2010. In a letter dated November 11, 2010, Health Integrated again advised Plaintiff that B.H. did not have residential benefits, and Plaintiff's reimbursement claims for December 2010, through January 2011 were subsequently denied by HealthNow.

Plaintiff filed a grievance dated December 23, 2010, arguing that identical prior treatment had previously been routinely reimbursed, and there had been no finding that such treatment was not medically necessary. (Def. Ex. K.) On January 18, 2011, Plaintiff was advised by letter that the decision to deny Plaintiff benefits would be upheld, that any past reimbursement had been made in error, and that Telos did not qualify as a hospital as defined by the Plan, a definition that includes any "hospital" as defined by New York Mental Hygiene Law § 1.03(10). (Def. Ex. L.)

On April 4, 2011, Plaintiff filed an administrative appeal. Plaintiff argued that the denial of his claims was inappropriate because Telos was a "residential treatment facility for children and youth" under subdivision (33) of § 1.03 of the Mental Hygiene Law and therefore qualified as a "hospital" under subdivision (10) of § 1.03, requiring coverage under the Plan. (Def. Ex. M.)

The administrative appeal was denied by letter dated May 2, 2011, which stated that inpatient residential mental health treatment was not a covered benefit of Plaintiff's plan. The letter stated that, although acute hospital care or rehabilitative care were covered benefits, residential treatments failed to qualify under either benefit provision as they were "more loosely structured and . . . generally more vocational in nature." (Def Ex. N.) The grievance procedures information and instruction sheet Plaintiff received for his claim denials provided that Plaintiff had the right to bring a civil action pursuant to ERISA should his claim for benefits be denied following an appeal. (Pl. Aff. ¶ 22 & Pl. Ex. J.)

Plaintiff then commenced this action on April 23, 2012, by filing a summons and complaint in New York State Supreme Court, Erie County. Defendant removed the matter to this Court on May 4, 2012.

III. DISCUSSION

In its motion, Defendant contends that it is entitled to summary judgment because: (1) Plaintiff's claim is time-barred; and (2) Plaintiff's claim relates to a benefit that is not covered under the Plan. (Def. Mem. 11-24.) Plaintiff opposes the Defendant's motion on the grounds that his claim is timely. Alternatively, Plaintiff asserts that a fact issue exists as to whether Plaintiff was properly notified of the limitations period contained in the Plan. Plaintiff also cross-moves for summary judgment on the basis that the Plan Administrator's decision to deny benefits was arbitrary and capricious as a matter of law because B.H.'s treatment at Telos was a covered benefit under the Plan. (Pl. Mem. 9-25.)

The standard for the grant of summary judgment pursuant to Federal Rule of Civil Procedure 56 is well-established. "A motion for summary judgment may properly be granted . . . only where there is no genuine issue of material fact to be tried, and the facts as to which there is no such issue warrant the entry of judgment for the moving party as a matter of law." Kaytor v. Elec. Boat Corp., 609 F.3d 537, 545 (2d Cir. 2010). Where, as here, both parties move for summary judgment, "each party's motion must be examined on its own merits, and in each case all reasonable inferences must be drawn against the party whose motion is under consideration." Morales v. Quintel Entm't, 249 F.3d 115, 121 (2d Cir. 2001). Further, in denial-of-benefits cases such as this one, the applicable summary judgment standard "must also be viewed in conjunction with the standard of review of administrative actions under the ERISA guidelines." Diagnostic Med. Assoc., M.D., P.C. v. Guardian Life Ins. Co. of Am., 157 F. Supp. 2d 292, 297 (S.D.N.Y. 2001).

A. Limitations Periods under ERISA

As a threshold matter, this Court must determine whether Plaintiff's suit is timely.Defendant argues that Plaintiff's suit is time-barred under the Plan's contractual limitations period because Plaintiff filed his ERISA suit over one year from the last date for which he claimed benefits. (Def. Mem. 11-16.) Plaintiff counters that the Plan's one-year period is unenforceable because: (1) it violates the statutory minimum for limitations periods applicable to insurance benefit actions under New York Insurance Law; (2) a one-year limitations period in group health plans covered by ERISA is unreasonable; and (3) Defendant failed to effectively notify Plaintiff of shortened limitations period. (Pl. Mem. 9-19.)

Generally, because ERISA contains no statute of limitations for actions brought under 29 U.S.C. § 1132, such claims are subject to the most analogous state statute of limitations. Guilbert v. Gardner, 480 F.3d 140, 148-49 (2d Cir. 2007); Miles v. N.Y.S. Teamsters, 698 F.2d 593, 598 (2d Cir. 1983), cert denied, 464 U.S. 829 (1983). In New York, courts typically apply the six-year limitations period for contract actions set forth in N.Y. Civil Practice Law and Rules ("CPLR") § 213(2). See, e.g., Burke v. Price WaterHouseCoopers LLP Long Term Disability Plan, 572 F.3d 76, 78 (2d Cir. 2009); Bilello v. JPMorgan Chase Ret. Plan, 607 F. Supp. 2d 586, 592 (S.D.N.Y. 2009). This limitations period may be shortened, however, where the parties memorialize such agreement in writing. Burke, 572 F.3d at 78 (citing CPLR § 201). Indeed, absent a controlling contrary statute, enforcement of contractual limitations provisions as written is especially appropriate in ERISA context. see Heimeshoff v. Hartford Life & Acc. Ins. Co., - U.S. -, 134 S. Ct. 604, 611-12 187 L. Ed. 2d 529 (2013) (a plan's limitation provision must be enforced unless unreasonably short or contrary to a controlling statute).

Here, the Plan language provides that "You must start any lawsuit against us underthis Plan within one year from the date you received the service for which you want us to pay." (Def. Exs. D at HN00072; E at HN00179; F at HN00303.) Plaintiff does not dispute that this action was not commenced within this contractual limitations period. He argues that his suit is nonetheless timely because the Plan's limitation period violates Section 3221 of the New York Insurance Law, which prohibits group health insurance policies from containing a limitations period of less than two years. (Pl. Mem. 9-17.)

New York Insurance Law § 3221(a) provides, in relevant part:

No policy of group or blanket accident and health insurance shall . . . be delivered or issued for delivery in this state unless it contains in substance the following provisions or provisions which in the opinion of the superintendent are more favorable to the holders of such certificates or not less favorable to the holders of such certificates and more favorable to policyholders.

The required provisions include a minimum statute of limitations, specifically:

That no action at law or in equity shall be brought to recover on the policy prior to the expiration of sixty days after proof of loss has been filed in accordance with the requirements of the policy and that no such action shall be brought after the expiration of two years following the time

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