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Harrity v. Target Corp.: US Distrct Court : ERISA - procedures specifically excluded; no abuse reading "and" in bulleted list instead of "or"

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA


Ronda Harrity,

Plaintiff,
v.
Target Corporation,
Civ. No. 07-3958 (JNE/JJG)
ORDER
Defendant.

Plaintiff Ronda Harrity brings this action against Defendant Target Corporation pursuant
to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001-1461 (2000).
Plaintiff seeks reimbursement under a medical insurance policy (Plan) sponsored and
administered by Target for medical expenses related to jawbone surgery for her son. The case is
before the Court on cross motions for summary judgment. For the reasons stated below, the
Court grants Targets motion and denies Plaintiffs motion.

I. BACKGROUND
In 2007, Plaintiffs son underwent orthognathic surgery, a type of jawbone surgery, to
correct lifelong malformations of his jaw, namely mandibular hyperplasia and maxillary
hypoplasia. These malformations had affected his ability to eat, breathe, and speak, and his
doctors believed that his condition would likely have deteriorated in the absence of surgery.

Plaintiff and her son are both insured by the Plan. In February 2007, Plaintiff submitted a
request for coverage to United Healthcare (UHC), the third-party administrator of the Plan, for
her sons surgery and related treatment. On March 7, 2007, UHC denied Plaintiffs request,
citing the following language from the Summary Plan Description:

Expenses Not Covered: Jawbone Surgery . . . diagnosis or treatment of the

jawbones, including orthognathic surgery (procedure to correct underbite or

overbite), except as treatment of obstructive sleep apnea; and . . . upper and lower

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jawbone surgery, except as required for direct treatment of acute traumatic injury,

tumor or cancer.

Plaintiff appealed, and UHC upheld the denial of coverage in a letter dated April 4, 2007.
In the letter, UHC again indicated that denial of coverage was appropriate because orthognathic
surgery is specifically listed as an expense not covered.

In accordance with the terms of the Plan, Plaintiff appealed UHCs decision to Target. In
a letter dated April 27, 2007, Target acknowledged receipt of various letters and materials
submitted by Plaintiff to support her appeal and denied Plaintiffs appeal. The letter stated that
orthognathic surgery was not covered by the Plan regardless of whether such surgery was
medically necessary, and Target enclosed the pages of the Summary Plan Description that
contain the section entitled Expenses Not Covered, which was referenced in the first two letters
denying coverage to Plaintiff.

In a letter dated May 30, 2007, Plaintiff asked Target to reconsider. In a letter dated June
13, 2007, Target rejected Plaintiffs request, noting that the Plan did not provide for another
appeal and that the appeal process had concluded. Plaintiff filed the present lawsuit on
September 12, 2007, seeking to recover more than ,000 in medical expenses, plus interest and
legal fees.

II. DISCUSSION
Summary judgment is proper if the pleadings, the discovery and disclosure materials on
file, and any affidavits show that there is no genuine issue as to any material fact and that the
movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The movant bears the
initial responsibility of informing the district court of the basis for its motion, and must identify
those portions of [the record] which it believes demonstrate the absence of a genuine issue of
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant satisfies its

2



burden, the party opposing the motion must respond by submitting evidentiary materials that set
out specific facts showing a genuine issue for trial. Fed. R. Civ. P. 56(e)(2); see Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In determining whether
summary judgment is appropriate, a court must look at the record and any inferences to be drawn
from it in the light most favorable to the party opposing the motion. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986).

When, as in this case, a plaintiff seeks review of denial of benefits under a plan that
grants discretionary authority to the plan administrator to determine benefit eligibility, a district
court normally applies an abuse of discretion standard. See Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 115 (1989); Wakkinen v. UNUM Life Ins. Co., 531 F.3d 575, 580 (8th Cir.
2008). However, even when a plan administrator is granted such discretionary authority, de
novo review is appropriate if the plan administrators decision was made without reflection or
judgment, such that it was the product of an arbitrary decision or the plan administrators whim.
Parkman v. Prudential Ins. Co., 439 F.3d 767, 772 n.5 (8th Cir. 2006) (quotation marks omitted).

Plaintiff argues that de novo review is appropriate because the denial of her claim for
benefits was so perfunctory that it fails to constitute actual exercise of the discretion granted to
UHC and Target.1 The record in this case establishes that denial of benefits by UHC and Target
constitutes actual exercise of their discretion. UHC and Target, for example, explained their
decisions regarding denial of coverage with reference to relevant portions of Plan documents.
Cf. id. (indicating that review for abuse of discretion is appropriate unless a court has a total
lack of faith in the integrity of the decision making process (quotation marks omitted)); Morgan

v. Contractors, Laborers, Teamsters & Engrs Pension Plan, 287 F.3d 716, 723 (8th Cir. 2002)
In their various memoranda, both parties discuss UHCs actions as if they may be
imputed to Target.

3



(concluding that de novo review was appropriate where the evidence was produced that
suggested the decision was not a product of proper judgment and reflection based upon [the]
evidence); McGarrah v. Hartford Life Ins. Co., 234 F.3d 1026, 1031 (8th Cir. 2000) ([W]here
the trustee never offers a written decision, so that the applicant and the court cannot properly
review the basis for the decision; or where procedural irregularities are so egregious that the
court has a total lack of faith in the integrity of the decision making process, a court may infer
that the trustee did not exercise judgment when rendering the decision. (quotation marks
omitted)).

Plaintiff further asserts that a de novo standard should apply because neither Target nor
UHC has specifically considered the arguments and materials submitted by Plaintiff in her May
2007 letter, after denial of Plaintiffs second appeal and conclusion of the administrative appeal
process. However, Plaintiff is not entitled to extend the process for appealing denial of benefits
indefinitely. See Rittenhouse v. UnitedHealth Group Long Term Disability Ins. Plan, 476 F.3d
626, 631 (8th Cir. 2007). The fact that Target did not issue a new ruling addressing Plaintiffs
late-submitted materials does not entitle Plaintiff to a de novo standard of review. See id. at 63031
(reviewing for abuse of discretion where new information was submitted following a final
ruling on the plaintiffs appeal by the plan administrator); Cash v. Wal-Mart Group Health Plan,
107 F.3d 637, 641-42 (8th Cir. 1997) (indicating that review for abuse of discretion was
appropriate despite submission of new evidence after completion of the administrative appeal
process and noting that district courts should not become substitute plan administrators).2
Accordingly, the Court concludes that review for abuse of discretion is appropriate.

However, because the materials submitted by Plaintiff after conclusion of the appeals
process deal with interpretation of Plan provisions themselves and because they present no
significant new factual material, the Court considers Plaintiffs late submissions. Cf.

4



When reviewing for abuse of discretion, a court must uphold the plan administrators
decision if it was reasonable, that is, if a reasonable person could havenot would have
reached a similar decision. Wakkinen, 531 F.3d at 583. Factors relevant to whether a plan
administrators decision is reasonable include:

whether (1) the interpretation is consistent with the goals of the Plan, (2) the
interpretation renders any language in the Plan meaningless or internally
inconsistent, (3) the interpretation conflicts with the substantive or procedural
requirements of ERISA, (4) the plan administrator has interpreted the words at
issue consistently, and (5) the interpretation is contrary to the clear language of
the Plan.

Tillery v. Hoffman Enclosures, Inc., 280 F.3d 1192, 1199 (8th Cir. 2002). In this case, the Court
concludes that UHC and Target acted reasonably when they denied Plaintiffs claim related to
her sons surgery.

The Plan provides benefits for Covered Health Services. Covered Health Services
are defined as:
those health services and supplies that are:


provided for the purpose of preventing, diagnosing or treating Sickness,
Injury, Mental Illness, substance abuse, or their symptoms;

included in Plan Highlights and Covered Health Services[;]

not identified in Expenses Not Covered.
Plaintiff argues that an expense is covered if it meets any one of these three criteria. Because it
would render certain Plan provisions superfluous, such an interpretation is untenable. See Harris
v. Epoch Group, L.C., 357 F.3d 822, 825 (8th Cir. 2004) (The federal courts apply federal
common law rules of contract interpretation to discern the meaning of the terms in an ERISA
Rittenhouse, 476 F.3d at 630 (indicating that a court may consider a new argument when it is
purely legal and requires no additional factual development (quotation marks omitted)). But see
id. at 630-31 (indicating that a district court should ordinarily not consider materials submitted
after a final decision by a plan administrator); Cash, 107 F.3d at 641 ([R]eview under the
deferential standard is limited to evidence that was before the [plan administrator]. (quotation
marks omitted))

5


plan, and under federal common law a contract should be interpreted as to give meaning to all of
its termspresuming that every provision was intended to accomplish some purpose, and that
none are deemed superfluous. (citation and quotation marks omitted)). For example, under
Plaintiffs suggested interpretation, any expense not excluded under Expenses Not Covered
would necessarily be covered, rendering much of the positive recitation of covered expenses in
the Plan Highlights and Covered Health Services sections unnecessary. Similarly, under the
interpretation urged by Plaintiff, inclusion of an expense in the Plan Highlights or Covered
Health Services section would negate any exclusion of that expense in the Expenses Not Covered
section. There is nothing unusual or ambiguous about exclusion of a specific procedure that
would otherwise fall into a general description of a broad category of covered expenses. See,
e.g., Manny v. Central States, Se. & Sw. Areas Pension & Health & Welfare Funds, 388 F.3d
241, 245-46 (7th Cir. 2004); Tillery, 280 F.3d at 1199-1200. Accordingly, Target reasonably
interpreted the Plan to require that all three criteria must be met before an expense will be
covered.

Plaintiff argues that her sons orthognathic surgery qualifies for coverage under the broad
provisions in the Plans Covered Health Services section regarding coverage for reconstructive
procedures and preventative care. Assuming that this is the case, the Court concludes that the
Plans language reasonably supports denial of coverage because orthognathic surgery is
specifically excluded from coverage by the Plans Expenses Not Covered section. The Expenses
Not Covered section, under the heading Dental, excludes from coverage the following:

any confinement, treatment or service which is for removal of impacted teeth,

dental implants, orthognathic surgery (surgery to correct a problem of the jaw

bones such as maxillary or mandibular osteomy) and any treatment or service by

a dentist or dental surgeon except those specified as Covered Health Services.

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Plaintiff acknowledges this exclusion for orthognathic surgery but argues that the phrase except
those specified as Covered Health Services applies to resurrect coverage for orthognathic
surgery, as orthognathic surgery is specified as a covered health service by the provisions
regarding reconstructive or preventative care. This interpretation, however, would leave the
specific exclusion for orthognathic surgery without any operative effectthe surgery would be
excluded whenever it is not covered. Instead, it is much more likely that the phrase singled out
by Plaintiff modifies the words that immediately precede itany treatment or service by a
dental surgeon. Some limited dental expenses are specifically covered by the Plan. In the
absence of an exclusion for non-specified dental expenses, broader coverage provisions in the
Covered Health Services section, such as provisions covering reconstructive or preventative
costs, could be construed to cover a vast array of dental expenses, rendering the specific
statement of coverage for certain dental expenses irrelevant.

Moreover, as noted by UHC and Target in their letters to Plaintiff, the Plans Expenses
Not Covered section, under the heading Jawbone Surgery, reiterates the exclusion for
orthognathic surgery more specifically:


diagnosis or treatment of the jawbones, including orthognathic surgery
(procedure to correct underbite or overbite), except as treatment of
obstructive sleep apnea; and

upper and lower jawbone surgery, except as required for direct treatment
of acute traumatic injury, tumor or cancer.
This exclusion for orthognathic and jawbone surgery indicates that such surgery is not excluded
from coverage when it is undertaken to treat sleep apnea, traumatic injury, a tumor, or cancer.
The surgery of Plaintiffs son was not undertaken for any of those reasons. While the surgery
may have prevented the possible onset of sleep apnea, the record does not suggest that the
procedure was performed for purposes of treatment of that condition. Were prevention covered

7



as well, the Plan could have stated so, as it did, for example, in defining covered health expenses
to include services and supplies [p]rovided for the purpose of preventing, diagnosing or
treating health conditions.3

Finally, to the extent that Plaintiff argues that her sons surgery should be covered by the
Plan because the surgery was medically necessary, the argument is without merit. The Expenses
Not Covered section specifically states that [t]he Plan does not pay Benefits for any of the
following services, treatments or supplies even if they . . . are the only available treatment for
your condition. In addition, the record indicates that denial of coverage for the surgery of
Plaintiffs son was consistent with UHCs prior interpretation of similar language, and
application of the exclusion is not inconsistent with either ERISA or the Plans purposes, see
Black & Decker Disability Plan v. Nord, 538 U.S. 822, 823 (2003); Tillery, 280 F.3d at 11991200.
Moreover, while the fact that Target may be considered to operate under a conflict of
interest because it both evaluates claims for benefits and pays benefit claims may be weighed as
a factor in determining whether there is an abuse of discretion, it is insufficient to justify a
conclusion that Target abused that discretion, in part because any conflict was mitigated by
UHCs role as third-party administrator. See Wakkinen, 531 F.3d at 581 (quotation marks
omitted). Accordingly, the conclusions of Target and UHC that coverage for the orthognathic
surgery was precluded by exclusions in the Plans Expenses Not Covered section were
reasonable.

Similarly, the Plan, in the Covered Health Services section, indicates that surgical
treatment of TMJD (temporomandibular joint disorder) qualifies as a covered expense. Even if
the specific exclusions for orthognathic surgery did not apply, the parties do not dispute that the
surgery was intended to prevent rather than treat TMJD.

8



III. CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons stated above, IT
IS ORDERED THAT:

1.
Plaintiffs Motion for Summary Judgment [Docket No. 12] is DENIED.
2.
Defendants motion for summary judgment [Docket No. 16] is
GRANTED.
3.
The Complaint [Docket No. 1] is DISMISSED WITH PREJUDICE.
LET JUDGMENT BE ENTERED ACCORDINGLY.

Dated:
October 6, 2008
s/ Joan N. Ericksen
JOAN N. ERICKSEN
United States District Judge

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  What day were you injured?

  / /


  What caused your injuries?
Traffic/Bicycle Accident
Work-Related Injury
Wrongful Death
Dog Bite
Slip and Fall
Other:


  How have your injuries affected

  your life?

 


  What kinds of medical care
  professionals have you seen?

 


  What has your treatment cost?

 

  Is Insurance Involved?
My insurance may cover
        this.

Someone else's insurance
        may cover this.

I already filed a claim.
I rejected a settlement
        offer.

I accepted a settlement
        offer.

  Were there any witnesses?
Bystanders Witnessed This.
Police Responded and Filed
        a Police Report

Police Responded but Did
        Not File a Police Report


 

 

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