C. v. California Physicians Service

Background

C.C. participated in a fully insured employee welfare benefit plan issued by California Physicians’ Service, doing business as Blue Shield of California. J.C. was a beneficiary. The plan covered the period from December 1, 2017, through November 30, 2019, and was governed by the Employee Retirement Income Security Act (ERISA).

The plaintiffs alleged that J.C. received residential mental-health treatment at Kolob Canyon Residential Treatment Center in Utah from January 29, 2018, through August 29, 2019. They alleged that Blue Shield denied coverage for the treatment and denied their administrative appeals. They also alleged that the California Department of Managed Health Care upheld Blue Shield’s decision after an independent medical review.

The complaint asserted claims under ERISA sections 1132(a)(1)(B) and 1132(a)(3). The plaintiffs sought plan benefits for the treatment and declaratory and injunctive remedies concerning alleged violations of the Mental Health Parity and Addiction Equity Act of 2008 in Blue Shield’s use of medical-necessity criteria for residential mental-health claims.

Blue Shield is a California corporation with its principal place of business in Oakland, California. The plaintiffs alleged that they were residents of Ventura County, California. Blue Shield issued and administered their health coverage in California.

Request for judicial notice

Blue Shield asked the court to take judicial notice of official California and Utah Secretary of State records concerning Blue Shield’s registration, principal place of business, and incorporation. The court granted that request.

Motion to transfer

Blue Shield moved to transfer the case to the United States District Court for the Northern District of California under the doctrine of forum non conveniens. The court evaluated the motion under 28 U.S.C. § 1404(a), which permits transfer for the convenience of the parties and witnesses and in the interest of justice.

The court first found that the case could have been brought in the Northern District of California. Under ERISA’s venue provision, an action may be brought where the plan is administered, where the alleged breach occurred, or where the defendant resides or may be found. The court found that all three bases applied because Blue Shield administered the plan and adjudicated the disputed claims in that district, and Blue Shield could be found there.

The court gave little weight to the plaintiffs’ choice of Utah. Although the treatment occurred in Utah and the plaintiffs’ counsel resided there, the plaintiffs alleged that they lived in California, not Utah. The court also found that the conduct giving rise to the claims—Blue Shield’s adjudication of the coverage requests—occurred in California.

The court concluded that California was more convenient for the parties and likely witnesses. It found that all parties resided in California and that the likely evidence consisted largely of records located there. The court stated that counsel’s travel costs did not count as a convenience factor. It also found that the Northern District of California could protect the plaintiffs’ privacy through a protective order or other available means.

The court explained that witnesses are generally less important in ERISA cases because review is often limited to the administrative record. It found that records concerning the claims and any permitted discovery about Blue Shield’s financial conflicts of interest would likely be in California. The court further found that records from the Utah treatment facility would already be in Blue Shield’s possession if they were part of the administrative record.

The court also rejected the argument that the location of the treatment facility made Utah the more convenient forum. It stated that the plaintiffs’ mental-health-parity claim focused on the terms of their coverage compared with medical or surgical coverage, making Blue Shield’s corporate records in California more relevant. The court additionally stated that Blue Shield did not do business in Utah through the BlueCard program for purposes relevant to the motion.

Finally, the court found that judges in the Northern District of California were particularly familiar with California’s regulation of health care service plans through the Department of Managed Health Care and with ERISA benefit-denial cases involving Blue Shield.

Ruling

The court held that the Northern District of California had the greatest connection to the operative facts and was the more appropriate and convenient forum. It granted Blue Shield’s motion to transfer venue under the doctrine of forum non conveniens and transferred the case to the Northern District of California. The opinion did not decide whether Blue Shield properly denied coverage or violated ERISA or the Mental Health Parity and Addiction Equity Act.