Wise v. Monterey County Hospitality Association Health and Welfare Plan

Background

Benjamin Wise sued MVI Administrators Insurance Solutions, Inc. (MVI), the Monterey County Hospitality Association Health and Welfare Plan, United HealthCare Services, Inc., Monterey County Hospitality Association, and UnitedHealthCare Insurance Co. The dispute concerned denial of coverage for a MyoPro orthosis, a device intended to help restore movement in Wise’s paralyzed left arm. The plan was governed by the Employee Retirement Income Security Act (ERISA).

Wise requested preauthorization from United HealthCare. United HealthCare denied the request and later denied an appeal. Wise then sought an independent medical review through the California Department of Insurance. MAXIMUS Federal Services, Inc. conducted that review through three physicians, who concluded that the device was not likely to be more beneficial than available standard therapy.

Claims and procedural history

Wise asserted three claims against MVI: a claim for ERISA benefits under 29 U.S.C. § 1132(a)(1)(B); a claim for breach of ERISA fiduciary duties under § 1132(a)(3); and a claim that he was denied the full and fair review required by 29 U.S.C. § 1133.

The court had previously dismissed Wise’s initial complaint against MVI without prejudice because Wise had not adequately alleged that MVI was a named or functional ERISA fiduciary. The court allowed amendment and warned that failure to correct the problems would lead to dismissal with prejudice. Wise filed a first amended complaint, and MVI again moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim.

Court’s analysis

The court held that MVI was not a named fiduciary. Although MVI served as the plan administrator, the court explained that an administrator is not automatically a named fiduciary. The summary plan description did not designate MVI as a fiduciary.

The court also held that MVI was not a functional fiduciary. A functional fiduciary is an entity that exercises discretionary authority over plan management or administration, controls plan assets, or provides investment advice for compensation. The court found that Wise’s own allegations showed that United HealthCare—not MVI—made the initial benefit decision and decided the appeal. MAXIMUS conducted the independent medical review. The amended complaint did not allege that MVI played any role in denying Wise’s benefits.

The court rejected Wise’s arguments that MVI had discretionary authority because it was identified as plan administrator, could determine eligibility, had a duty to monitor other entities, or could change insurance carriers or policies. The court distinguished eligibility determinations from benefit determinations and found that the amended complaint did not allege the asserted authority to change carriers. It also found that the plan documents assigned benefit determinations and payment of claims to the insurance carriers.

Disposition

Because MVI was not an ERISA fiduciary, the court granted MVI’s motion to dismiss Wise’s first cause of action for ERISA benefits, second cause of action for breach of fiduciary duties, and third cause of action for denial of a full and fair review. The court denied further leave to amend because Wise had already been given an opportunity to correct the same deficiency and the court found additional amendment would be futile.

The court therefore granted MVI’s motion to dismiss with prejudice as to all three causes of action against MVI. The order addressed MVI’s motion, not a motion by every defendant named in the case.