Krodel v. Bayer Corp.

345 F.Supp.2d 110

Louis F. KRODEL, Ed.D, Plaintiff, v. BAYER CORPORATION, et al., Defendants.

No. CIV.A. 03-11109-NMG.

United States District Court, D. Massachusetts.

November 19, 2004.

COPYRIGHT MATERIAL OMITTED

Peter Francis Carr, II, Eckert Seamans Cherin & Mellott, LLC, Boston, MA, for Bayer Corp., Defendant.

Erik J. Frick, Eckert Seamans Cherin & Mellott, LLC, Boston, MA, for Bayer Corporation, Defendant.

Anne L. Josephson, Kotin, Crabtree & Strong, Boston, MA, for Louis F. Krodel, Plaintiff.

Marie F. Mercier, Kotin, Crabtree & Strong, Boston, MA, for Louis F. Krodel, Plaintiff.

MEMORANDUM & ORDER

GORTON, District Judge.

In the present dispute, Plaintiff, Dr. Louis F. Krodel ("Dr.Krodel"), alleges that Defendant, Bayer Corporation ("Bayer"), acting in its role as Plan Administrator of the Bayer Corporation Welfare Benefits Plan ("The Plan"), wrongfully denied him certain health benefits to which he is entitled. Plaintiff and Defendants have filed cross motions for summary judgment.

I. Factual Background

The following facts are taken from Plaintiff's Statement of Undisputed Material Facts (Docket No. 31), Defendants' Response to Plaintiff's Statement of Undisputed Material Facts (Docket No. 37), Defendants' Statement of Undisputed Material Facts (Docket No. 38) and Plaintiff's Response to Defendants' Statement of Undisputed Material Facts (Docket No. 43).

Bayer is the Plan Administrator of the Bayer Corporation Welfare Benefits Plan which provides an array of benefits to employees. Bayer has delegated responsibility for claim administration to the Connecticut General Life Insurance Company ("CIGNA"). CIGNA receives claims and makes the initial determination as to eligibility for coverage.

Under the Plan, an expense is covered only if it is a "medical necessity," as determined by Bayer in accordance with a definition contained in the "Summary Plan Description". The Summary Plan Description is a general document that expressly incorporates by reference CIGNA's more detailed Standard Operating Procedures ("SOP").

Dr. Krodel is eligible to participate in the Plan because he is the spouse of a Bayer employee. In 1979, Dr. Krodel was struck by a car, requiring amputation of his left leg above the knee. In 1999, Dr. Krodel received a prosthesis manufactured by Next Step Orthotics & Prosthetics, Inc. ("Next Step") and was covered under the Plan.

In November, 2001, Dr. Krodel returned to Next Step for a consultation concerning his prosthesis. Dr. Krodel contends that he had lost 30 pounds which caused the shape of his residual limb to change such that his prosthesis no longer fit properly. He complained that the knee sometimes "buckled," causing him to lose his balance and fall.

In April, 2002, Dr. Krodel's physician, Dr. Segre, wrote him a prescription for a new, computer-controlled prosthesis called the "C-Leg" that costs $41,500. In a letter dated May 29, 2002, Next Step sought pre-approval from Bayer for coverage of the C-Leg. The letter enclosed a prescription for the device and a three-page letter from Dr. Segre detailing its medical necessity.

On June 4, 2002, CIGNA denied Dr. Krodel's request for coverage of a "below knee prosthesis" and reasoned that it was a "biomechanical device" which was not covered under the Plan. Next Step promptly appealed that denial on Dr. Krodel's behalf, pointing out that the request had been for an "above knee prosthesis". On August 20, 2002, CIGNA again denied coverage for the prosthesis (this time correctly identifying it as an above knee model) on the grounds that biomechanical devices were not covered. Neither denial contained any reference to a determination with respect to the medical necessity of the device.

On August 20, 2002, Dr. Krodel appealed the denial to Bayer's ERISA Review Committee.¹ Bayer acquired the documents that it needed in order to consider the appeal by sending a letter to CIGNA requesting that:

your response should include details of Ms. Krodel's communications to Cigna. In addition please only provide the pertinent back-up information that supports your summary and decision.

In response, CIGNA forwarded to Bayer a case summary which included 13 pages of documents.

By letter dated October 8, 2002, Bayer denied the appeal on the grounds that 1) the requested device was a biomechanical device which was not covered and 2) "a prosthesis of this type is not considered to be medically necessary because the existing prosthesis addresses [Dr. Krodel's] medical condition." Bayer did not, however, inform Dr. Krodel of any possible entitlement to a different kind of a prosthesis.

On November 19, 2002, Dr. Krodel e-mailed Susan Murphy, a Bayer employee, to request copies of the documents governing the Plan. Bayer responded by providing a copy of the Summary Plan Description. On March 18, 2003, Dr. Krodel requested copies of all documents "relevant to the claim" and was subsequently provided with 13 pages of documents that Bayer relied on in denying his appeal. However, Dr. Krodel suspected that he had not received all relevant documents because neither he nor his counsel could determine, based upon the documentation in hand, the source of certain language that was quoted by Bayer in its letter denying the requested coverage.

Thus, Dr. Krodel alleges that, prior to filing suit, he did not receive all of the information that he needed to argue effectively in support of his claim for coverage. Specifically, before litigation began, Dr. Krodel was not provided with a copy of the SOP. Bayer explains that the SOP was not sent to Dr. Krodel sooner because CIGNA had refused to release it.

On June 6, 2003, Dr. Krodel filed the present action. On January 23, 2004, Bayer produced documents, including the SOP, that had been internally produced by CIGNA. Some of those documents suggest that, during 2002 and after Bayer denied coverage to Dr. Krodel, CIGNA had re-evaluated his claim. The parties vigorously dispute the reason for that re-evaluation: Bayer asserts that it was unilaterally undertaken by CIGNA while Dr. Krodel suggests that Bayer must have ordered it. The CIGNA documents call into question whether the subject prosthesis was, in fact, an excluded biomechanical device and whether a new prosthesis should have been considered a medical necessity for Dr. Krodel.

All parties now move for summary judgment. Dr. Krodel contends that the consideration of his claim was so impaired by substantive and procedural deficiencies that the denial of coverage constituted an abuse of discretion. Accordingly, Dr. Krodel requests that this Court order that he is entitled to the C-Leg under the Plan and to monetary penalties for each day documents relevant to his claim were withheld.

Defendants argue that, to the contrary, the Court must confine its review to the information that Bayer itself considered at the time of the denial. In the alternative, Bayer suggests that, if procedural infirmities were present, the proper remedy would be to remand the case to the Plan Administrator for re-consideration of the claim by Bayer in light of the new information generated by CIGNA and highlighted by Dr. Krodel.

II. Legal Analysis

A. Standard of Review

1. Judicial Review of Action by an ERISA Board

A district court reviews ERISA claims arising under 29 U.S.C. § 1132 de novo unless the benefits plan in question confers discretionary authority upon the administrator to "determine eligibility for benefits or to construe the terms of the plan". Bekiroglu v. Paul Revere Life Ins. Co., 223 F.Supp.2d 361, 366 (D.Mass.2002), aff'd 75 Fed.Appx. 8 (1st Cir.2003). If the plan clearly gives such authority to an administrator (as this one does), then the administrator's decisions are subject to deference and will only be reversed if they were "arbitrary, capricious or an abuse of discretion". Diaz v. Seafarers Int'l Union, 13 F.3d 454, 456 (1st Cir.1994). Under that standard, a "decision will be upheld if it was within [the plan administrator's] authority, reasoned, and supported by substantial evidence in the record." Doyle v. Paul Revere Life Ins. Co., 144 F.3d 181, 184 (1st Cir.1998)(internal citations omitted).

2. Summary Judgment Standard

The role of summary judgment is "to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Mesnick v. General Elec. Co., 950 F.2d 816, 822 (1st Cir.1991)(quoting Garside v. Osco Drug, Inc., 895 F.2d 46, 50 (1st Cir.1990)). The burden is upon the moving party to show, based upon the pleadings, discovery and affidavits, "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

A fact is material if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "Factual disputes that are irrelevant or unnecessary will not be counted." Id. A genuine issue of material fact exists where the evidence with respect to the material fact in dispute "is such that a reasonable jury could return a verdict for the nonmoving party." Id.

Once the moving party has satisfied its burden, the burden shifts to the non-moving party to set forth specific facts showing that there is a genuine, triable issue. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The Court must view the entire record in the light most hospitable to the non-moving party and indulge all reasonable inferences in that party's favor. O'Connor v. Steeves, 994 F.2d 905, 907 (1st Cir.1993). If, after viewing the record in the non-moving party's favor, the Court determines that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate.

B. Bayer's Denial of Dr. Krodel's Claim

Plaintiff contends that a reversal of Bayer's decision is required on...