Bryan v. Office of Personnel

• Court: Court of Appeals for the Tenth Circuit
• Decided: January 14, 1999
• Docket: 97-6425
• Status: Published

Opinion

F I L E D United States Court of Appeals Tenth Circuit PUBLISH JAN 14 1999 UNITED STATES COURT OF APPEALS PATRICK FISHER Clerk TENTH CIRCUIT __________________________

LORITA BRYAN,

Plaintiff-Appellant,

v. No. 97-6425

OFFICE OF PERSONNEL MANAGEMENT,

Defendant-Appellee.

Appeal from the United States District Court for the Western District of Oklahoma (D.C. No. 97-CV-982)

Glen Mullins, Oklahoma City, Oklahoma, for Plaintiff-Appellant.

Robert A. Bradford (Patrick M. Ryan, United States Attorney, with him on the brief), Assistant United States Attorney, Oklahoma City, Oklahoma, for Defendant-Appellee.

Terry B. Dowd of Miller & Chevalier, and James R. Barnett of Gordon & Barnett, Washington, D.C., filed a brief for amici Curiae Blue Cross and Blue Shield Association and the Association of Federal Health Organizations.

Before ANDERSON, BRORBY, Circuit Judges, and CAMPBELL *, District Judge.

* The Honorable Tena Campbell, United States District Court Judge for the District of Utah, sitting by designation. BRORBY, Circuit Judge.

Plaintiff-Appellant, Mrs. Lorita Bryan, appeals a district court order

dismissing her suit against the Office of Personnel Management to recover health

benefits for jaw surgery, plus interest and attorney fees. The district court

determined it lacked jurisdiction to award money damages against the Office of

Personnel Management, it could not award interest in absence of a monetary

judgment, and attorney fees were not warranted under state law or the Equal

Access to Justice Act, 28 U.S.C. § 2412. We exercise jurisdiction pursuant to 28

U.S.C. § 1291 and affirm.

I. Background

In 1992, Mrs. Bryan had reconstructive maxillofacial surgery to correct a

skeletal deformity in her jaw. At the time of her surgery, Mrs. Bryan participated

in a health benefit plan for federal employees and their dependents provided

through the Office of Personnel Management (“Personnel Management”).

Pursuant to this plan, Mrs. Bryan submitted three claims for her surgery, totaling

$19,744.15, to the plan administrator, Blue Cross/Blue Shield of Oklahoma

(“Blue Cross”). Blue Cross denied the claims because it determined the surgery

was not medically necessary.

-2- Mrs. Bryan then embarked on a fairly lengthy appeals process. First, she

appealed to Personnel Management, which affirmed the denial of benefits because

it determined Mrs. Bryan’s surgery constituted oral surgery not covered under her

plan. Mrs. Bryan then sought judicial review of Personnel Management’s

decision in district court. The district court granted summary judgment in favor

of Personnel Management. Mrs. Bryan filed an appeal with this court but later

dismissed it voluntarily when Personnel Management offered to reconsider her

claims. Upon joint motion of the parties, the district court withdrew its earlier

decision, dismissed the complaint, and remanded the case to Personnel

Management. In April 1997, Personnel Management notified Mrs. Bryan it had

reconsidered her claims, determined the plan did cover her surgery, and Blue

Cross would provide benefits up to the contract limits. After receiving this

notification, Mrs. Bryan advised Blue Cross and Personnel Management her

attorneys were asserting a lien on any benefits she recovered and requested

information regarding payment of that lien. Neither party responded to her

letters. Mrs. Bryan also filed suit in district court, seeking to recover attorney

fees and costs under the Equal Access to Justice Act, 28 U.S.C.A. § 2412(d).

In early July, three months after Personnel Management extended coverage

to Mrs. Bryan’s surgery, Blue Cross made a payment on one of Mrs. Bryan’s three

-3- claims. The payment, accompanied by a brief “Explanation of Benefits,” was not

for the full amount claimed by Mrs. Bryan. 1 Rather, Blue Cross deducted certain

amounts for “noncovered charges” and coinsurance payments. The Explanation

of Benefits did not elaborate as to why some charges were “non-covered,” stating

only that “[b]enefits are not paid for services and supplies not specifically listed

as covered in ... [the] plan brochure.” Mrs. Bryan sought additional information

regarding the calculation of benefits from Blue Cross but Blue Cross failed to

provide it. Apparently out of frustration, Mrs. Bryan then amended her complaint

to request a judgment for the “benefits owed” plus interest. While her suit was

pending, Blue Cross made payments on Mrs. Bryan’s remaining two claims. On

both claims, Blue Cross paid less than the amount claimed based on deductions

for coinsurance and negotiated savings. 2 None of the payments made by Blue

Cross acknowledged Mrs. Bryan’s attorney’s lien.

Personnel Management moved to dismiss Mrs. Bryan’s complaint, arguing

sovereign immunity barred an award of money damages or interest. The district

1 Mrs. Bryan submitted a claim for $9,220.01 for the services of Dr. Markowitz. Blue Cross paid $2,907.50 on that claim.

2 Blue Cross paid $6,150.28 of the $9,470.15 claim Mrs. Bryan submitted for the services provided by Columbia Presbyterian Hospital and $675 of the $1,054 claim submitted for the services of Dr. Perkins.

-4- court agreed and dismissed the complaint for lack of jurisdiction. The court also

determined the Oklahoma attorney fees statute relied on by Mrs. Bryan was

inapplicable and that fees were not appropriate under the Equal Access to Justice

Act because the government’s position was substantially justified. On appeal,

Mrs. Bryan argues (1) the district court had authority to review Personnel

Management’s calculation of benefits and to enter an order directing Personnel

Management to pay the full amount of benefits claimed plus interest; (2) the court

erred in allowing Personnel Management to ignore the attorney lien; and (3)

attorney fees and costs are warranted under state law and the Equal Access to

Justice Act.

II. Judicial Review

Mrs. Bryan asserts that, pursuant to federal regulation, the district court had

jurisdiction to “determine the amount of benefits owed” and enter an order

directing Personnel Management to require Blue Cross to pay that amount and

honor her attorney’s lien. See 5 C.F.R. § 890.107. Further, Mrs. Bryan asserts

she is entitled to the full amount of benefits claimed ($19,744.15) because

Personnel Management failed to provide the court with any information on an

alternative calculation. Mrs. Bryan also claims the district court failed to perform

a proper judicial review of her benefit claims. We review de novo the district

-5- court's order dismissing the case for lack of subject matter jurisdiction. Weaver v.

United States, 98 F.3d 518, 519 (10th Cir. 1996).

In order to bring a suit against the government or one of its agencies, a

plaintiff must have “a substantive right to the relief sought and an explicit

Congressional consent authorizing such relief.” Keesee v. Orr, 816 F.2d 545, 547

(10th Cir. 1987). Consent is a prerequisite of jurisdiction, In re Talbot (United

States v. Richman), 124 F.3d 1201, 1205 (10th Cir. 1997), and the government’s

consent “defines the terms and conditions upon which it may be sued,” Richman

v. Straley, 48 F.3d 1139, 1146 (10th Cir. 1995). A waiver of sovereign immunity

is strictly construed in favor of the sovereign. Talbot, 124 F.3d at 1206.

In this case, the Federal Employees Health Benefits Act (“Benefits Act”), 5

U.S.C. §§ 8901 through 8914, governs claims brought under Mrs. Bryan’s health

benefit plan. The regulations accompanying the Benefits Act delegate authority

to resolve benefit claims to the health benefit carrier, in this case Blue Cross. 5

C.F.R. § 890.105(a)(1). If a covered individual, such as Mrs. Bryan, disputes the

carrier’s resolution of a claim, the individual may seek reconsideration by the

carrier and further review by Personnel Management. 5 C.F.R. § 890.105(a)(1)

and (b)(3). Only after exhausting these remedies, may the covered individual

-6- seek judicial review of Personnel Management’s final action. 5 C.F.R.

§ 890.107(c) and (d). The regulations limit the role of the courts in a benefits

dispute:

A covered individual may seek judicial review of OPM's final action on the denial of a health benefits claim. A legal action to review final action by OPM involving such denial of health benefits must be brought against OPM and not against the carrier or carrier's subcontractors. The recovery in such a suit shall be limited to a court order directing OPM to require the carrier to pay the amount of benefits in dispute.

5 C.F.R. § 890.107(c).

Congress clearly intended a limited waiver of sovereign immunity in

Benefits Act disputes – courts only have jurisdiction to review final actions, after

exhaustion, and only one remedy is available. See id. Moreover, because the

Benefits Act does not specifically provide otherwise, the Administrative

Procedure Act; 5 U.S.C. §§ 500 through 706, governs judicial review of final

Personnel Management decisions. See Harris v. Mutual of Omaha Cos., 992 F.2d

706, 712 (7th Cir. 1993) (concluding the Administrative Procedure Act governs

review of a final Personnel Management decisions); Caudill v. Blue Cross & Blue

Shield, 999 F.2d 74, 79 (4th Cir. 1993) (same). Under the Administrative

Procedure Act, the court must afford considerable deference to the Personnel

Management’s findings and set aside a Personnel Management action only if it

was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance

-7- with law.” 5 U.S.C. § 706(2)(A).

Mrs. Bryan seeks more from the district court than this limited waiver of

sovereign immunity allows. In her Amended Complaint, Mrs. Bryan alleges

“[t]he defendant has breached the terms of the plan and owes plaintiff the benefits

she is entitled to under the plan in the amount of $19,744.15” and prays for

judgment against the defendant in that amount plus interest. 3 We read this

language as a request for monetary judgment against Personnel Management – a

remedy not contemplated by the government’s waiver of sovereign immunity. See

5 C.F.R. § 890.107(c). Because the government has not consented to monetary

judgments in Benefits Act disputes, the district court correctly dismissed Mrs.

Bryan’s suit for lack of jurisdiction.

Moreover, even if we were to construe Mrs. Bryan’s complaint as a request

for judicial review, the court would still lack jurisdiction in this case because

Mrs. Bryan did not meet the terms and conditions defined in the government’s

waiver of sovereign immunity. See Richman, 48 F.3d at 1146. First, the

3 Mrs. Bryan’s complaint requests judicial review, but only in regard to Personnel Management’s denial of attorney fees under the Equal Access to Justice Act. As discussed below, even if we were to construe this language as a request for judicial review of all her claims, the district court still lacked jurisdiction to hear the case.

-8- regulations require covered individuals to exhaust administrative remedies before

seeking judicial review. 5 C.F.R. § 890.107(d)(1). While Mrs. Bryan clearly

exhausted her administrative remedies in her first appeal regarding the issue of

overall coverage of her surgery, she never formally appealed Blue Cross’ decision

to pay only a portion of the claimed expenses. See 5 C.F.R. § 890.105(a)

(detailing administrative remedies if a covered individual disputes the carrier’s

denial of a claim or portion of a claim). Under the federal regulations, a covered

individual must submit a request for reconsideration to the carrier in writing and

give reasons why the carrier should have approved the denied claim. See 5 C.F.R.

§ 890.105(c). We do not believe Mrs. Bryan’s various requests for information fit

within this definition, especially considering that Mrs. Bryan made those requests

before Blue Cross had made payment on all three claims. Even if those letters did

amount to a request for reconsideration to Blue Cross, Mrs. Bryan still failed to

request further review by Personnel Management, as required by the regulations.

See 5 C.F.R. § 890.105(a)(1) (“A covered individual must exhaust both the carrier

and OPM review processes specified in this section before seeking judicial review

of the denied claim.”).

Second, courts may only review Personnel Management’s “final action on

the denial of a health benefits claim.” 5 C.F.R. § 890.107(c) (emphasis added).

-9- Because Mrs. Bryan failed to exhaust her administrative remedies, Personnel

Management never reviewed Blue Cross’ calculation of benefits. As such, there

is no “final action” by Personnel Management nor an administrative record for the

district court to review.

While we recognize the frustration experienced by Mrs. Bryan in

attempting resolve her claims, we must adhere to the terms and conditions of the

government’s waiver of sovereign immunity. 4 Talbot, 124 F.3d at 1206 (holding

that a waiver of sovereign immunity is strictly construed in favor of the

sovereign). Accordingly, we conclude the district court lacked jurisdiction to

review Mrs. Bryan’s claims and therefore could not order the payment of benefits

and/or interest, nor review Personnel Management’s/Blue Cross’s treatment of the

4 The district court speculated it would excuse exhaustion if that were the only argument relied on by Appellee because of Mrs. Bryan’s “thwarted efforts” to recover benefits. A court may excuse exhaustion if administrative remedies would be futile, when administrative remedies would provide inadequate relief, or when the agency has adopted a policy or practice of general applicability which is contrary to law. Urban v. Jefferson County School Dist., 89 F.3d 720, 724 (10th Cir. 1996). Mrs. Bryan did not raise an excuse of exhaustion argument before this court. See State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979, 984 n.7 (10th Cir 1994) (concluding appellant waived issue not raised in his opening brief). Nevertheless, we note administrative remedies are futile or inadequate when a plaintiff alleges “structural or systemic failure and seek[s] system- wide reforms. Urban, 89 F.3d at 725 (internal quotation marks and citation omitted). Mrs. Bryan’s Amended Complaint does not address such structural deficiencies but focuses on the denial of her particular benefit claims.

-10- attorney’s lien. 5

III. Attorney Fees

A. Oklahoma Law

Mrs. Bryan first argues an award of attorney fees is appropriate under

Oklahoma state statute. The district court concluded the state statute was

inapplicable. We review de novo the legal conclusions underlying an award of

attorneys’ fees. Harolds Stores, Inc. v. Dillard Dep’t Stores, Inc., 82 F.3d 1533,

1553 (10th Cir.), cert. denied, 117 S. Ct. 297 (1996).

Under the Benefits Act, the provisions of contracts issued pursuant to the

Act “supersede and preempt” any state or local law which relates to health

insurance “to the extent that such law or regulation is inconsistent with such

contractual provisions.” 5 U.S.C. § 8902(m)(1). Mrs. Bryan’s health benefit plan

limits recoverable damages to “the amount of contract benefits in dispute, plus

simple interest and court costs.” Oklahoma law allows courts to award costs and

attorneys fees to the prevailing party in a dispute between an insured and insurer.

5 While we recognize the limited jurisdiction of the court in this case, we join with the district court in expressing concern over the manner in which Personnel Management and Blue Cross handled Mrs. Bryan’s claims.

-11- Okla. Stat. tit. 36, § 3629(B). Because the Oklahoma statute is inconsistent with

the terms of Mrs. Bryan’s plan, the provisions of the plan preempt and supercede

the statute. Accordingly, the district court did not err in denying attorney fees on

that basis.

B. The Equal Access to Justice Act

Mrs. Bryan next argues she is entitled to attorney’s fees under the Equal

Access to Justice Act. The Equal Access to Justice Act requires a court to award

attorney fees to prevailing, non-government parties in civil actions brought by or

against the United States, “unless the court finds that the position of the United

States was substantially justified or that special circumstances make an award

unjust.” 28 U.S.C. § 2412(d)(1)(A). Mrs. Bryan contends she is a prevailing

party because Personnel Management ultimately granted coverage of her surgery

after the parties voluntarily agreed to dismiss the suit. Further, she argues

Personnel Management’s initial position in denying coverage was not

substantially justified because the evidence clearly established her surgery was

not oral surgery. The district court disagreed, concluding Personnel

Management’s position was substantially justified. We review the district court’s

decision whether to award fees under the Equal Access to Justice Act for abuse of

discretion. Kopunec v. Nelson, 801 F.2d 1226, 1229 (10th Cir. 1986). However,

-12- we do not reach the substantial justification issue because we believe Mrs.

Bryan’s application was untimely and affirm the denial of fees on that basis. See

United States v. Sandoval, 29 F.3d 537, 542 n.6 (10th Cir. 1994) (“We are free to

affirm a district court decision on any grounds for which there is a record

sufficient to permit conclusions of law, even grounds not relied upon by the

district court.”).

A party seeking an award of fees and expenses under the Equal Access to

Justice Act must submit an application to the court “within thirty days of final

judgment in the action.” 28 U.S.C. § 2412(d)(1)(B). A “final judgment in the

action” is a judgment rendered by a court that terminates the civil action for

which fees may be received. Goatcher v. Chater, 57 F.3d 980, 981 (10th Cir.

1995) (quoting Melkonyan v. Sullivan, 501 U.S. 89, 96 (1991)). The so-called

“30-day EAJA clock” begins to run “after the time to appeal that effective final

judgment has expired.” Goatcher, 57 F.3d at 981 (internal quotation marks and

citation omitted); see also 28 U.S.C. § 2412(d)(2)(G) (“‘final judgment’ means a

judgment that is final and not appealable.”). The thirty-day time limitation is

jurisdictional in nature. Myers v. Sullivan, 916 F.2d 659, 666 (11th Cir. 1990).

In this case, Mrs. Bryan and Personnel Management filed a joint motion to

-13- voluntarily dismiss the suit and remand it for further consideration at the

administrative level. The district court granted that motion on October 8, 1996

and thereby terminated the civil action for which Mrs. Bryan seeks fees. 6 Because

Mrs. Bryan voluntarily moved to dismiss, she could not appeal the district court’s

order. 7 United States v. Procter & Gamble Co., 356 U.S. 677, 680 (1958) (stating

the general rule that “a plaintiff who has voluntarily dismissed his complaint may

6 The “final judgment” which triggered the thirty-day clock is the district court’s dismissal, not Personnel Management’s decision to extend coverage after remand. See Melkonyan, 501 U.S. at 95-96 (“Congress' use of ‘judgment’ in 28 U.S.C. § 2412 refers to judgments entered by a court of law, and does not encompass decisions rendered by an administrative agency.”). We recognize in certain social security benefit disputes, the filing period commences “after the postremand proceedings are completed” at the administrative level. Id. at 102 (discussing “sentence six” remand cases under the Social Security Act). This is so because the Social Security Act requires the Secretary of Health and Human Services to file its postremand findings with the district court and the district court “retains jurisdiction of the civil action and contemplates entering a final judgment following the completion of administrative proceedings.” Id. at 97-98. We find these cases inapplicable to Mrs. Bryan’s situation. The district court did not retain jurisdiction over Mrs. Bryan’s claims and did not contemplate the parties returning to court.

7 Exceptions to this rule exist, but are inapplicable to Mrs. Bryan’s situation. For instance, movant may appeal an order granting voluntary dismissal where the dismissal is with prejudice, see, e.g., Chappelle v. Beacon Communications Corp., 84 F.3d 652, 653 (2d Cir. 1996); where the dismissal disposed of fewer than all of plaintiff’s claims, see, e.g., Chappelle, 84 F.3d at 653; or where the court imposes terms as a condition of permitting dismissal, see, e.g., LeCompte v. Mr. Chip, Inc., 528 F.2d 601, 603-04 (5th Cir. 1976). None of these exceptions applies here as the district court dismissed all of Mrs. Bryan’s claims without prejudice and without condition. Moreover, even if we were to factor in a sixty-day appeal period, Mrs. Bryan’s application would still be untimely. See Fed. R. App. P. 4(a)(1) (stating that parties may appeal within sixty days of entry of judgment when the government is a party).

-14- not sue out a writ of error.”); Coffey v. Whirlpool Corp., 591 F.2d 618, 620 (10th

Cir. 1979) (“where the dismissal is upon motion of the plaintiffs themselves ... we

will not permit those plaintiffs to appeal”). Accordingly, the “30-day clock”

began running October 6, 1996. Mrs. Bryan did not file her application for fees

in district court until June 17, 1997, well after the thirty-day cut-off.

Accordingly, we conclude Mrs. Bryan is not entitled to attorney fees or costs

under the Equal Access to Justice Act.

The order of the district court is AFFIRMED.

-15-