I v. Services v. Inn Development

• Court: Court of Appeals for the First Circuit
• Decided: June 28, 1999
• Docket: 98-1696
• Status: Published

Opinion

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit


No.  98-1696



                 I.V. SERVICES OF AMERICA, INC.,



                      Plaintiff, Appellant,



                                v.



           INN DEVELOPMENT & MANAGEMENT, INC., ET AL.,



                      Defendants, Appellees.


APPEAL FROM THE UNITED STATES DISTRICT COURT



                FOR THE DISTRICT OF MASSACHUSETTS



          [Hon. Michael A. Ponsor, U.S. District Judge]


Before



                      Selya, Circuit Judge,

                                

                Campbell, Senior Circuit Judge,

                                

                   and Lynch, Circuit Judge.


Francis A.  Miniter with whom Daniel S.  Fabricant, William D.

Gillis and Miniter & Associates were on brief for appellant.

     Edward S. Rooney with whom Eric P. Finamore, Patrick J. Riley

and Riley, Burke & Donahue were on brief for appellees.


June 28, 1999


CAMPBELL, Senior Circuit Judge.  This appeal concerns a

demand for payment for medical services provided to Shelia Daly, a

former employee of the Sheraton Hotel in Mansfield, Massachusetts,

by Daly's medical care provider, appellant I.V. Services of

America, Inc. ("I.V. Services").  I.V. Services sued Daly's

employer and the administrator of its employee health benefit plan

in the district court, seeking payment under the Employee

Retirement Income Security Act of 1974, ("ERISA"), 29 U.S.C.  1001

et seq.  The district court dismissed on the ground that the suit

was barred by the statute of limitations, finding that I.V.

Services waited, without justification, over five years from the

time its action accrued before bringing suit.  I.V. Services

appeals, claiming the district court erred by refusing to apply

equitable tolling principles to the limitations period.  We affirm.



                               I.

  During Daly's employment at the Sheraton Hotel in

Mansfield, the hotel was owned and managed by Appellee Inn

Development & Management, Inc. ("IDM").  In May 1988, IDM adopted

a self-funded health benefit plan ("the Plan") for its employees

and their dependents.  Under the Plan, IDM was responsible for

paying claims for medical care directly out of its own pocket and

administering the Plan. Four months later, IDM contracted with

Appellee Reliastar Life Insurance Company ("Reliastar") via an

Administrative Services Only Agreement ("the ASO agreement") to

have Reliastar act as the claims processor for IDM's Plan. 

Reliastar's duties under the ASO agreement included various claims

processing functions, such as claim investigation and record

keeping.  

  In April 1990, Daly began receiving intravenous

antibiotic treatment from I.V. Services for Lyme disease.  Her

treating physician recommended that the treatment continue for six

to eight weeks.  Prior to receiving treatment from I.V. Services,

Daly signed a Benefits Assignment form ("the assignment") which

authorized her medical insurance benefits to be paid directly to

I.V. Services.

  On May 14, 1990, Daly submitted a claim to Reliastar for

her treatment at I.V. Services.  Over the next several months,

Reliastar requested, and ultimately received, information both from

I.V. Services and Daly's treating physician in order to evaluate

her claim.  On October 15, 1990, Reliastar advised I.V. Services by

letter that its review of Daly's claim was complete.  Noting that

Daly's claim for treatment from April 11 to August 14, 1990 totaled

$48,266.65, Reliastar concluded that only two weeks of treatment

were "medically necessary" as defined by the Plan.  Reliastar

further stated that it would reconsider its decision only if it

received additional written evidence contradicting its conclusion.

  In November 1990, Daly's treating physician wrote to

Reliastar that he believed, based on medical literature, that more

than two weeks of treatment was medically necessary for Daly's case

of Lyme disease.  This letter caused Reliastar to reconsider its

decision and authorize payment for an additional two weeks of

treatment (for a total of four weeks).  Reliastar advised Daly and

her treating physician of its revised decision by letter dated

April 19, 1991.  The letter also stated that the claim for the

balance of Daly's treatments from I.V. Services were still being

denied as not "medically necessary."  I.V. Services received

$9,246.66 from the IDM Plan funds for four weeks of Daly's

treatment.

  On May 13, 1991, Mary Lou Nicoli, a regional claims

representative for Reliastar, sent another letter to Daly, her

treating physician, and IDM explaining why the remainder of her

claim had been denied.  This letter was sent as a "follow-up" to a

telephone conversation five days earlier in which Daly had called

Reliastar and asked Nicoli to explain Relaistar's decision.

  On August 9, 1996, I.V. Services brought suit against IDM

and Reliastar, citing the enforcement provisions of ERISA.  These

provisions entitle an ERISA plan "participant" or "beneficiary" to

bring an action "to recover benefits due him under the terms of his

plan, to enforce his rights under the terms of the plan, or to

clarify his rights to future benefits under the terms of the plan." 

29 U.S.C.  1132(a)(1)(B).  IDM cross-claimed against Reliastar for

contribution and indemnification, and moved for summary judgment

against I.V. Services, arguing, among other things, that the claim

was barred by the applicable limitations period.  Reliastar in turn

moved for summary judgment against I.V. Services and IDM.

  The district court referred the motions to a magistrate

judge for a report and recommendation.  The magistrate recommended

that I.V. Services' action be dismissed as against both IDM and

Reliastar, and that Reliastar's motion for summary judgment against

IDM therefore be dismissed as moot.  He determined that the

applicable limitations period derived from the Plan's internal

limitations clause, rather than from the statute of limitations

applicable to ERISA actions or Massachusetts contract disputes. 

The Plan itself states that a claimant must request an appeal "at

any time during the 60 day period following receipt of the notice

of the denial of the claim" and commence legal action "within 3

years after the date proof of loss must be submitted" unless the

"the Planholder's state requires longer time limits than these[.]" 

The magistrate further determined that, because Massachusetts law

did not require a longer time period than did the Plan, the Plan's

three-year internal limitations period controlled.  

  According to the magistrate, I.V. Services' action

accrued at the time of the denial of benefits, which was, "at the

latest, May 13, 1991"   the day Nicoli sent her "follow-up" letter

explaining why Daly's claim had been denied.  The magistrate

concluded that I.V. Services' action, filed on August 9, 1996, was

"belated and ineffective," and he recommended that it be dismissed. 

The district court adopted the magistrate's "well-reasoned" report

and recommendation, adding only a two-page summary to the

magistrate's findings and conclusions.  This appeal followed.



                              II.

  I.V. Services does not challenge the district court's

decision to apply the three-year statute of limitations period

specified in the Plan, nor the court's determination that its claim

accrued, at the latest, on May 13, 1991.  Rather, it argues that

the three-year period should be equitably tolled so as to permit

the filing of Daly's complaint in 1996.  I.V. Services identifies

three alternative bases for equitable tolling.  First, it says that

there was evidence that Daly never received a copy of the Plan,

creating a factual issue as to whether she received appropriate 

notice of the Plan's three-year limitation period.  Second, when

I.V. Services and Daly requested a copy of the Plan from Reliastar,

their requests were allegedly ignored or rebuffed.  Third, it

argues that the denial of claim letter that Daly received was

deficient under applicable regulations, thus excusing her failure

to comply with the three-year limitations period.  Assuming,

arguendo, that one or another of these points, if established,

would equitably toll the running of the limitations period, I.V.

Services has not sufficiently established any of them. 

 

            A. Did Daly Receive a Copy of the Plan?

  Under ERISA, the administrator of each employee benefit

plan must furnish to each participant covered under the plan and to

each beneficiary who is receiving benefits under the plan a summary

plan description that is "written in a manner calculated to be

understood by the average plan participant, and [is] sufficiently

accurate and comprehensive to reasonably appraise such participants

and beneficiaries of their rights and obligations under the plan." 

29 U.S.C.  1022 (a).  I.V. Services argues that IDM and Reliastar

failed to comply with this requirement by not furnishing Daly with

a copy of the Plan.  Although not expressly stated, the implication

is that it would be inequitable to apply the Plan's internal

limitations period to someone who had no opportunity to learn of

it.

  As the party seeking to invoke the doctrine of equitable

tolling to avoid application of the limitations period, I.V.

Services has the burden  of proving that Daly never received a copy

of the Plan.  See Catrone v. Thoroughbred Racing Ass'n of North

America, Inc., 929 F.2d 881 (1st Cir. 1991) (citing Franklin v.

Albert, 411 N.E.2d 458, 463 (Mass. 1980)) ("The plaintiff bears the

burden of presenting facts sufficient to take the case outside the

statute of limitations.").  Attempting to satisfy this burden, I.V.

Services points to Daly's deposition testimony.  The relevant

testimony is as follows:

         Q:  Let me ask you now, at the time that you started

         working or at some time when you worked at the

         Sheraton, do you remember ever getting some written

         information about the health insurance that you   

         that was covering you from the people at Sheraton?

         A:  I   I don't remember.  I don't remember

         specifically.  If you want me to remember a

         detailed time, I don't remember.

         Q:  No, no, my question is just whether you remember

         getting   

         A:  Usually when we had different insurances and they

         would change or whatever, they would usually have

         like a meeting and talk to us about it or they

         would give us literature on it.  Usually that's how

         it would work.

         Q:  Let me show you this document, which is Exhibit 18

         at Maureen Teachman's deposition [the Plan], and

         just ask you whether you ever recall seeing that

         document before.

         A:  I don't know, this is kind of big.  I don't know if

         I recall this.

         Q:  Okay.

         A:  You know?  I do recall IDM Development &

         Management, Inc., I do recall that.  Because that

         was one of the companies that was involved at the

         Sheraton within the ten years or whatever years I

         worked there.

         Q:  Okay.  And but as you sit here today, you don' t

         know one way or the another whether you saw that

       document?

         A:  You know, I'd imagine   I would imagine.  Yeah, I

         don't recall.

         Q:  Just want to know what you remember.

         A:  Yeah.  It's just like I said, we had so many people

           you know, I would get what I was supposed to get,

         you know, and that's it.

     

  The magistrate characterized this testimony as

"equivocal, at best" and stated: "If anything, Daly's testimony

supports an assumption that she received a copy of the Plan during

her employment with IDM."  I.V. Services interprets the exchange

differently, claiming that only two inferences are possible from

this testimony -- either Daly never saw the Plan before or she

could not remember if she had -- and it is entitled, as the party

opposing a motion for summary judgment, to the more favorable of

those two inferences. 

  I.V. Services is correct insofar as it argues that it is

entitled to the benefit of all reasonably drawn inferences.  See

Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).  But the

only reasonable reading of Daly's testimony is that she did not

recall whether she ever received a copy of the Plan.  Her mere lack

of recollection does not suffice to create an issue of fact over

whether or not she received a Plan copy.  When asked if she

"remember[ed] ever getting some written information about the

health insurance[,]" she responded that she did not remember

specifically.  Then, when shown the Plan itself and asked if she

"ever recall[ed] seeing that document before" she testified that

she "would imagine" that she did but did not actually recall. 

  Absent from Daly's testimony is the fact that might

indicate the existence of a genuine issue for trial -- i.e.,

evidence that she never received a copy of the Plan.  In this

regard, the present case is similar to Posey v. Skyline Corp., 702

F.2d 102, 106 (7th Cir. 1983).  In Posey, the plaintiff sought to

defeat the defendant's motion for summary judgment by arguing for

equitable tolling, based on the defendant's alleged failure to post

conspicuously a notice advising employees of their rights under the

Age Discrimination in Employment Act.  The plaintiff's support for

this claim was his own affidavit in which he averred: "[t]hat he

frequently, i.e., almost every working day, glanced at the posters

on the bulletin board in the employees' lunch room . . . and

promptly read any new posted notices, and that he never saw and

does not recall ever reading a notice to employees of their rights

under the [ADEA] . . ."  Id. at 105.  The Seventh Circuit affirmed

the district court's grant of summary judgment for the defendant,

stating, "the mere possibility that a factual dispute may exist,

without more, is an insufficient basis on which to justify denial

of a motion for summary judgment.  Posey's affidavit perhaps at

best hints that a question of fact may exist in this case.  Rule

56, however, demands that Posey show specific facts indicating that

a genuine issue does indeed exist for trial."  Id. at 106; see also

Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d

Cir. 1980))("The litigant opposing summary judgment . . . must

bring to the district court's attention some affirmative indication

that his version of relevant events is not fanciful.").

  As in Posey's case, Daly's deposition testimony that she

did not remember receiving the Plan at best raises one possibility,

among others, that a copy was never sent to her.  That is not

enough.  See, e.g., Posey, 702 F.2d at 106; Cadle Co. v. Hayes, 116

F.3d 957, 960 (1st. Cir. 1997) ("[E]stablishing a genuine issue of

material fact requires more than effusive rhetoric and optimistic

surmise."); Mack v. Great Atl. & Pac. Tea Co., 871 F.2d 179, 181

(1st Cir. 1989) ("[the] evidence illustrating the factual

controversy cannot be conjectural or problematic; it must have

substance in the sense that it limns differing versions of the

truth which a factfinder must resolve at an ensuing trial.").   

   

     B. Did IDM or Reliastar Conceal the Terms of the Plan?

  I.V. Services argues alternatively that equitable tolling

is required because IDM or Reliastar allegedly refused repeated

requests to forward a copy of the Plan, thereby concealing its

terms.  This argument need not detain us long.  The magistrate

found that "[w]hat the record shows, however, is that [I.V.

Services] made no effort to obtain a copy of the Plan until 1995,

well after three years from the initial denial of Daly's claim for

benefits."  The district court echoed this finding in its order

adopting the magistrate's report.      

  I.V. Services contends that this finding is not supported

by the record.  It points to the testimony of I.V. Services

President, Maureen Teachman, who stated that she contacted IDM and

Reliastar in an effort to procure a copy of the Plan.  In her

affidavit, however, Teachman's states that she attempted to obtain

a copy of the Plan "in 1995."  This statement is reiterated in her

deposition, where she testified that on August 10, 1995, she sent

a letter to IDM via fax requesting a copy of the Plan.  I.V.

Services contends that, prior to this time, Teachman had spoken

with an employee at IDM named Nancy Warino about getting a copy. 

However, Teachman testified that she had between three and six

conversations with Warino, the first of which took place

"[p]robably some time in the range of [the August 10, 1995] fax, a

few months before perhaps."       

  In short, the district court was not in error in stating

that I.V. Services did not seek to obtain a copy of the Plan until

after the applicable limitations period had already run.  Acts of

alleged concealment by IDM or Reliastar after the statute had run

would not warrant equitable tolling.  Cf. Bernier v. Upjohn Co.,

144 F.3d 178, 180 (1st Cir. 1998) ("A party seeking to toll the

statute must at the very least show that the information could not

have been found by a timely diligent inquiry[.]") (emphasis

supplied).

 

    C. Did the Defective Notice Warrant Equitable Tolling?  

  I.V. Services' final contention is that the district

court should have excused it from complying with the Plan's three-

year limitation period because it was denied the opportunity to

exhaust the Plan's internal grievance procedures.  The district

court found that Appellees' letters denying Daly's claim did indeed

fail to comply with the Department of Labor's requirement that a

denial of benefits letter provide "[a]ppropriate information as to

the steps to be taken if the participant or beneficiary wishes to

submit his or her claim for review."   29 C.F.R.  2560.503-

1(f)(4).  In light of this deficiency, the court excused I.V.

Services' failure to exhaust its administrative remedies prior to

filing suit.  The court, however, refused to toll the three-year

limitation period on this basis, finding no genuine dispute that,

by May, 1991 at the latest, both Daly and I.V. Services were aware

that the claim for reimbursement had been denied, and that a cause

of action had accrued.  

  According to I.V. Services, the limitations period should

have been tolled as well.  It claims that, had it been given the

opportunity to utilize the Plan's administrative grievance

procedures, that process would have "pushed forward significantly

the time when the Plan's three-year limitations period for judicial

action would have started running."  

  The Plan itself indicates the contrary.  It states in

relevant part: "Legal action may not be taken to receive benefits

until 60 days after the date proof of loss is submitted according

to the requirements of the Plan.  Legal action must be taken within

3 years after the date proof of loss must be submitted." The "proof

of loss" referred to is a form or other less formal submission

which must be returned "within 90 days after the date of loss." 

Thus, the beginning of the Plan's limitations period is not

dependent on whether the claimant pursues administrative review. 

See note 2, supra.   

  Similarly, we are not persuaded by I.V. Services' final

salvo that refusing to toll the limitations period effectively

rewards the Appellees for their own failure to comply with the

notice regulations.  Compare White v. Jacobs Engineering Group Long

Term Disability Benefit Plan et al., 896 F.2d 344, 351 (9th Cir.

1989) (claim letter so deficient as to deny information needed to

vindicate rights).  As found by the district court -- and not

challenged on appeal -- I.V. Services knew, by May, 1991 at the

latest, that it had a cause of action regarding the denial of its

claim for reimbursement.  The technical defect in the letter

denying the claim in no way altered this critical fact. 

  Because we affirm the district court's ruling that

equitable tolling was not warranted and summary judgment was

appropriate, we need not consider Reliastar's alternative bases for

affirmance. 

  Affirmed.  Costs to appellees.