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A.H. v. Microsoft Corp. Welfare Plan

United States District Court, W.D. Washington, Seattle

June 5, 2018

A.H. by and through G.H. and L.C., both individually, and on behalf of the MICROSOFT CORPORATION WELFARE PLAN, and on behalf of similarly situated individuals and plans, Plaintiff,
v.
MICROSOFT CORPORATION WELFARE PLAN and MICROSOFT CORPORATION, et al., Defendants.

          ORDER

          JOHN C. COUGHENOUR UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on Defendants' motion to dismiss (Dkt. No. 26). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS in part and DENIES in part the motion for the reasons explained herein.

         I. BACKGROUND

         Plaintiff A.H. brings this putative class action against Defendants Microsoft Corporation and the Microsoft Corporation Welfare Plan (the “Plan”) for violations of the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001 et seq. (“ERISA”), the Federal Mental Health Parity and Addiction Equity Act (the “Parity Act”), PL 110-343, 122 Stat 3765, codified at 29 U.S.C. § 1185a, and its implementing regulations, and the Affordable Care Act (“ACA”). (Dkt. No. 25 at 14-22.)

         Plaintiff A.H. is 16 and suffers from a mental illness and substance abuse disorder. (Id. at 1-3.) He is a beneficiary of the Plan based on his mother's employment at Microsoft. (Id. at 5.) On February 2, 2016, after conventional treatment had failed, Plaintiff entered Wingate Wilderness Therapy (“Wingate”), which is a wilderness therapy program located in Utah. (Id.) Wingate has a state license to provide “Outdoor Youth Treatment for 80 Youth Clients Ages 13 to 17.” (Dkt. No. 25-1 at 111.) Plaintiff received behavioral, substance abuse, and mental health services while residing at Wingate from February 2, 2016 to April 11, 2016. (Id. at 6.)

         Wingate submitted bi-monthly claims to the Plan's claims administrator, Premera Blue Cross (“Premera”), to cover the cost of Plaintiff's attendance.[1] (Dkt. No. 25-1 at 207-212.) Premera determined that the cost of attending Wingate was not covered by the Plan and denied Plaintiff benefits. (Id. at 113-123.) Plaintiff internally appealed Premera's decision. (Id. at 124- 130.) Premera denied the appeal, concluding that “wilderness programs are excluded by the plan.”[2] (Id. at 214-215.) Plaintiff subsequently filed this lawsuit, challenging Premera's denial of benefits under the Plan.

         II. DISCUSSION

         A. Legal Standard for Motion to Dismiss

         Under Rule 12(b)(6), a complaint should be dismissed if it “fails to state a claim upon which relief can be granted.” To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009). A claim has facial plausibility when the plaintiff pleads factual content that allows the Court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 678. Although the Court must accept as true a complaint's well-pleaded facts, conclusory allegations of law and unwarranted inferences will not defeat an otherwise proper Rule 12(b)(6) motion. Vasquez v. L.A. Cty., 487 F.3d 1246, 1249 (9th Cir. 2007); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). The Court may also consider documents incorporated into the complaint by reference and matters of which it can take judicial notice. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).

         In deciding Defendants' motion to dismiss, the Court will consider all of the documents attached to Plaintiff's amended complaint. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995) (“When a plaintiff has attached various exhibits to the complaint, those exhibits may be considered in determining whether dismissal was proper without converting the motion to one for summary judgment.”) Plaintiff attached excerpts from the 2016 Summary Plan Description (“SPD”), as well as documents regarding his appeal of Defendants' denial of coverage. (See generally Dkt. No. 25-1.) Defendants included with their motion to dismiss a complete version of the 2016 SPD, which the Court references throughout this order. (See Dkt. No. 27.)

         B. ERISA Standard of Review

         ERISA, 29 U.S.C. § 1132(a)(1)(B), provides an employee a cause of action for the improper denial of benefits under an employee welfare plan. Moyle v. Liberty Mut. Ret. Ben. Plan, 823 F.3d 948, 956 (9th Cir. 2016). To state a claim for benefits under ERISA, plan participants and beneficiaries must plead facts making it plausible that a provider owes benefits under the plan. See 29 U.S.C. § 1132(a)(1)(B); Iqbal, 556 U.S. at 677. “Depending upon the language of an ERISA plan, a district court reviews a plan administrator's decision to deny benefits either de novo or for abuse of discretion.” Ingram v. Martin Marietta Long Term Disability Income Plan, 244 F.3d 1109, 1112 (9th Cir. 2001) The de novo standard is appropriate “unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). The burden is on the party seeking discretionary review to establish that such power exists under the plan. See Ingram, 244 F.3d at 1112.

         Defendants argue that the Court should review Premera's interpretation of the Plan for an abuse of discretion because the Plan confers discretionary authority on its claims administrator. (Dkt. No. 26 at 17.) Plaintiff asks the Court to conduct a de novo review because the Plan only confers discretionary authority on Microsoft, not Premera. (Dkt. No. 31 at 10.) The Plan grants Microsoft “complete discretion to interpret and construe the provisions of the plan options, programs, and policies described in this [Plan], to determine eligibility for participation and for benefits . . . .” (Dkt. No. 27 at 336.) The Plan also grants Microsoft authority to delegate this discretion to third-parties. (Id.)

         Notwithstanding this language, the record does not demonstrate that the Plan confers discretionary authority on Premera, or that Microsoft has delegated its authority. The Plan lists Microsoft, not Premera, as the Plan administrator. (Dkt. No. 27 at 335.) It is undisputed that Premera, not Microsoft, denied Plaintiff's request for benefits. (See Dkt. No. 25-1 at 214-15.) The Ninth Circuit has held that:

where (1) the ERISA plan expressly gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan and (2) pursuant to ERISA, 29 U.S.C. § 1105(c)(1) (1988), a named fiduciary properly designates another fiduciary, delegating its discretionary authority, the ‘arbitrary and capricious' standard of review for ERISA claims brought under § 1132(a)(1)(B) applies to the designated ERISA-fiduciary as to the named fiduciary.

Madden v. ITT Long Term Disability Plan for Salaried Employees, 914 F.2d 1279, 1283-84 (9th Cir. 1990); see also Jebian v. Hewlett-Packard Co. Employee Benefits Org., 349 F.3d 1098, 1105 (9th Cir. 2003) (noting that deferential review not required where fiduciary has not delegated discretionary authority to the body rendering the decision at issue).

         Just because the Plan confers discretion on Microsoft does not mean that discretion automatically passes to Premera. See Shane v. Albertson's Inc. Employees' Disability Plan, 381 F.Supp.2d 1196, 1203 (C.D. Cal. 2005) (“While the Trustees did have the power to delegate their discretionary authority, nothing presented to the Court indicates that such authority was properly delegated.”). Defendants merely point to the Plan language that confers discretion on Microsoft and allows Microsoft to delegate its discretion to third parties. (Dkt. Nos. 26 at 17, 33 at 8.) On this record, Defendant has not met its burden to demonstrate the Plan conferred discretion on Premera regarding benefit determinations such that the Court should apply an abuse of discretion standard. Therefore, the Court reviews Premera's interpretation of the Plan de novo.

         C. Wilderness Program Exclusion

         Plaintiff alleges that Defendants' denial of the costs of attending Wingate was improper on the terms of the Plan (first claim) and represented a breach of Defendants' fiduciary duties (second claim), both of which violate ERISA.[3] (Dkt. No. 24 at 14-16.)

         The Plan covers medically necessary treatment for “mental health such as, but not limited to the diagnosis and treatment of psychiatric disorders . . . [and] chemical dependency such as substance abuse and alcoholism, ” so long as the treatment is “furnished by an eligible provider.”[4](Dkt. No. 27 at 62.) Under the Plan, an “eligible provider” of mental health or chemical dependency treatment includes any “provider or facility who is licensed or certified by the state in which the care is rendered and who is providing care within the scope of their license or certification.” (Dkt. No. 27 at 63.) Plaintiff asserts that Wingate meets the Plan's generic definition of an “eligible provider” and therefore is not subject to the Plan's wilderness program exclusion. (Dkt. No. 31 at 14-15.) Defendants argue that Plaintiff's suggested interpretation contradicts the plain terms of the Plan and would vitiate the wilderness program exclusion. (Dkt. No. 26 at 13.)

         It is undisputed that Wingate is a wilderness therapy program licensed by the State of Utah to provide “outdoor youth treatment.” (Dkt. No. 25-1 at 111.) Plaintiff alleges in his amended complaint that Wingate is statutorily authorized to provide “behavioral, substance abuse, or mental health services to minors.” (Dkt. No. 25 at 5) (citing UT § 62A-2-101(40)). Plaintiff further alleges that he received a psychiatric assessment when he arrived at Wingate as well as substance abuse and mental health services while attending the program. (Id. at 5-6.) Based on these allegations, Wingate meets the Plan's generic definition of an “eligible ...


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