Mark Bechtel v. Wexford Health Sources Incorporated, et al.

• Court: District Court, D. Arizona
• Decided: December 10, 2025
• Docket: 3:25-cv-08006
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Mark Bechtel, No. CV-25-08006-PCT-DLR

10 Plaintiff, ORDER

11 v.

12 Wexford Health Sources Incorporated, et al.,

13 Defendants.

15 Before the Court is Defendant Wexford Health Sources, Inc.’s (“Wexford”) motion 16 for summary judgment contending that Plaintiff Mark Bechtel failed to exhaust 17 administrative remedies prior to bringing this suit. (Doc. 32.) The motion is fully briefed.1 18 (Docs. 40, 43.) For the following reasons, the Court grants in part and denies in part the 19 motion. 20 I. Background 21 Wexford is a corporation that provides medical care and treatment to inmates at the 22 Mohave County Adult Detention Center where Bechtel worked for several years. (Doc. 16 23 ¶¶ 3, 6.) Bechtel became an employee of Wexford on July 1, 2022, when the Detention 24 Center replaced the previous medical provider, of which Bechtel was also an employee, 25 with Wexford. (Id. ¶ 6.) Wexford established and maintained a Long Term Disability plan, 26 the Group Long Term Disability Insurance for Employees of Wexford Health Sources, Inc. 27 1 Oral argument is denied because the motions are adequately briefed, and oral 28 argument will not help the Court resolve the issues presented. See Fed. R. Civ. P. 78(b); LRCiv. 7.2(f). 1 (“LTD Plan”), and a Short Term Disability plan, the Weekly Disability Income Insurance 2 for Employees of Wexford Health Sources, Inc. (“STD Plan”), (collectively, “Plans”) for 3 its employees by purchasing insurance policies from Lincoln Financial Group (“Lincoln”). 4 (Id. ¶¶ 4, 5, 13.) Only full-time employees are eligible for benefits under the Plans. (Doc. 5 32-1 at 16–20.) Both Plans are governed by the Employee Retirement Income Security Act 6 (“ERISA”). (Doc. 16 ¶¶ 4, 5.) Under the provisions of ERISA, Wexford is the 7 administrator, sponsor, and fiduciary for both Plans. See 29 U.S.C. § 1002(16)(A)–(B), 8 (21). (Id. ¶¶ 7–9.) 9 Bechtel began to experience medical issues in late August 2022 and was admitted 10 to the hospital in September 2022 for five days. (Id. ¶¶ 28–29.) Afterward, Bechtel 11 requested, and Wexford provided, unpaid leave. (Id. ¶ 30.) Bechtel then applied for and 12 received benefits under the STD Plan through November 28, 2022. (Id. ¶ 31.) On January 13 4, 2023, Bechtel returned to work. (Id. ¶ 34.) But then his medical issues returned, and on 14 January 30, 2023, Wexford reduced his scheduled hours per week from 40 to 24 and 15 reclassified Bechtel as a part-time employee. (Id. ¶¶ 36, 39.) Bechtel sought additional 16 leave, and Wexford granted him unpaid leave from April 12, 2023, to June 1, 2023. (Id. ¶¶ 17 44, 47.) Bechtel did not return to work on June 2, 2023, and his last day worked was April 18 11, 2023. (Id. ¶¶ 44, 48.) On June 5, 2023, Wexford retroactively terminated Bechtel 19 effective June 3, 2023. (Id. ¶ 51.) 20 Bechtel again applied for benefits under the STD Plan, but Lincoln denied the 21 application. (Id. ¶ 49.) Lincoln informed Bechtel that his claim was denied because he was 22 a part-time employee who did not meet the minimum required hours for benefits under the 23 STD Plan. (Doc. 32-1 at 174.) In December 2023, Bechtel filed an appeal of the denial. 24 (Id. 107–08.) Lincoln denied his appeal in March 2024. (Id. at 128–31.) Bechtel did not 25 file a second appeal. (Id. at 126, Doc. 35-1 ¶ 27.) 26 In January 2025, Bechtel brought this suit asserting claims against Wexford and the 27 Plans for breach of fiduciary duty under 29 U.S.C. § 1132(a)(3) and for failure to pay 28 benefits under § 1132(a)(1)(B). (Doc. 1, Doc. 16 at ¶¶ 55–79.) Bechtel alleges that 1 Wexford, as fiduciary, failed to advise him of his disability options. (Doc. 16 at ¶¶ 56–63.) 2 He also alleges that he would have been eligible for STD and LTD benefits had Wexford 3 reported the proper information to Lincoln. (Id. at ¶¶ 76–79.) Accordingly, he requests, 4 among other things, damages for non-payment of benefits as a surcharge and reformation 5 of the Plans so that he can file a claim for benefits under both Plans. (Id. at 8.) At a Rule 6 16 scheduling conference, the Court approved Wexford’s request to file two motions for 7 summary judgment, the first addressing the issue of administrative exhaustion. (Doc. 22, 8 Doc. 31 at 26.) This motion followed. 9 II. Legal Standard 10 Summary judgment is appropriate when there is no genuine dispute as to any 11 material fact and, viewing those facts in a light most favorable to the non-moving party, 12 the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A fact is 13 material if it might affect the outcome of the case, and a dispute is genuine if a reasonable 14 jury could find for the non-moving party based on the competing evidence. Anderson v. 15 Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment may also be entered 16 “against a party who fails to make a showing sufficient to establish the existence of an 17 element essential to that party’s case, and on which that party will bear the burden of proof 18 at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 19 The party seeking summary judgment “bears the initial responsibility of informing 20 the district court of the basis for its motion, and identifying those portions of [the record], 21 if any, which it believes demonstrate the absence of a genuine issue of material fact.” Id. 22 at 323 (quotation omitted). The burden then shifts to the non-movant to establish the 23 existence of a genuine and material factual dispute. Id. at 324. The non-movant “must do 24 more than simply show that there is some metaphysical doubt as to the material facts” it 25 must “come forward with specific facts showing that there is a genuine issue for trial.” 26 Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986) 27 (internal quotation and citation omitted). “If the nonmoving party fails to produce enough 28 evidence to create a genuine issue of material fact, the moving party wins the motion for 1 summary judgment.” Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies. Inc., 210 2 F.3d. 1099, 1103 (9th Cir. 2000). 3 In considering a motion for summary judgment, the court must regard as true the 4 non-moving party’s evidence, as long as it is supported by affidavits or other evidentiary 5 material. Anderson, 477 U.S. at 255. However, the non-moving party may not merely rest 6 on its pleadings; it must produce some significant probative evidence tending to contradict 7 the moving party’s allegations, thereby creating a material question of fact. Id. at 256–57 8 (holding that the plaintiff must present affirmative evidence to defeat a properly supported 9 motion for summary judgment); see also Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 10 1989) (“A summary judgment motion cannot be defeated by relying solely on conclusory 11 allegations unsupported by factual data.” (citation omitted)). 12 III. Analysis 13 Wexford argues that Bechtel failed to exhaust administrative remedies as required 14 under ERISA and the language of the Plans because he did not seek two administrative 15 reviews of his claim denial. (Doc. 32 at 2.) Thus, all his claims should be barred. (Id. at 1.) 16 The Court considers each of Bechtel’s claims in turn. 17 A. Failure-to-Pay Claim 18 A claim for denial of benefits ordinarily begins with an administrative review 19 process mandated by ERISA. See 29 U.S.C. § 1133(2); 29 C.F.R. § 2560.503-1(h)(1). If 20 the administrative review affirms the denial of benefits, the claimant may then obtain 21 judicial review under § 1132(a)(1)(B), which states that “[a] civil action may be brought . 22 . . by a participant or beneficiary . . . to recover benefits due to him under the terms of his 23 plan, to enforce his rights under the terms of the plan, or to clarify his rights to future 24 benefits under the terms of the plan.” § 1132(a)(1)(B). 25 The statutory text of ERISA does not require exhaustion of administrative remedies 26 to bring suit. See § 1132; see also Vaught v. Scottsdale Healthcare Corp. Health Plan, 546 27 F.3d 620, 626 (9th Cir. 2008). But the Ninth Circuit has consistently held that “a claimant 28 must avail himself or herself of a plan’s own internal review procedures before bringing 1 suit in federal court.” Diaz v. United Agric. Emp. Welfare Benefit Plan & Tr., 50 F.3d 1478, 2 1483 (9th Cir. 1995) (citing Amato v. Bernard, 618 F.2d 559, 566–68 (9th Cir. 1980)). This 3 requirement “is consistent with ERISA’s background, structure and legislative history.” Id. 4 It “serves several important policy considerations, including the reduction of frivolous 5 litigation, the promotion of consistent treatment of claims, the provision of a nonadversarial 6 method of claims settlement, the minimization of costs of claim settlement and a proper 7 reliance on administrative expertise.” Id. 8 Wexford argues that Bechtel’s failure-to-pay claim is barred for failure to exhaust. 9 (Doc. 32 at 10–12.) In his Response, Bechtel essentially abandons this claim. Bechtel states 10 that the failure-to-pay claim is an alternate claim, and that Wexford is “not the right party 11 under 29 U.S.C. § 1132(a)(1)(B), because it is not obligated to pay benefits, [Lincoln] is.” 12 (Doc. 40 at 8.) Bechtel also admits that Lincoln’s “denial was, unfortunately, proper.” (Id.) 13 Accordingly, Wexford is entitled to summary judgment on Bechtel’s failure-to-pay claim. 14 B. Breach of Fiduciary Duty Claim 15 Section 1132(a)(3) “authorize[s] ERISA plan beneficiaries to bring a lawsuit . . . 16 that seeks relief for individual beneficiaries harmed by an administrator’s breach of 17 fiduciary obligations.” Castillo v. Metro. Life Ins. Co., 970 F.3d 1224, 1229 (9th Cir. 2020) 18 (quoting Varity Corp. v. Howe, 516 U.S. 489, 492 (1996)). An individual bringing a claim 19 under § 1132(a)(3) may seek “appropriate equitable relief.” Generally, exhaustion is not 20 required for a breach of fiduciary duty claim but is required if the plaintiff’s claim is 21 essentially a disguised claim for benefits. Wit. v. United Behav. Health, 79 F.4th 1068, 22 1089 (9th Cir. 2023) (citations omitted). 23 Wexford argues that Bechtel’s breach of fiduciary duty claim is a disguised claim 24 for benefits because it effectively seeks monetary damages, and thus the exhaustion 25 requirement applies. (Doc. 32 at 12–13.) Bechtel’s breach of fiduciary duty claim requests: 26 (1) “damages for non-payment of benefits as a surcharge,” and (2) that “the Court reform 27 the Plan and Policy so that Bechtel can file a claim for STD and LTD benefits from 28 [Lincoln].” (Doc. 16 at 8.) Surcharge and reformation are “appropriate equitable relief” 1 within the meaning of § 1132(a)(3). CIGNA Corp. v. Amara, 563 U.S. 421, 440–442 2 (2011); Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945, 955, 957–58 (9th Cir. 2014). 3 To Wexford’s point, “[m]oney damages are, of course, the classic form of legal relief,” 4 rather than equitable. Mertens v. Hewitt Assocs., 508 U.S. 248, 255 (1993) (citations 5 omitted) (emphasis in original). And compensatory and punitive damages are not equitable 6 relief within the meaning of § 1132(a)(3). Varity Corp., 516 U.S. at 510 (citing Mertens, 7 508 U.S. at 255, 256–258, and n.8). Wexford’s argument, however, ignores that while 8 Bechtel’s requested relief might result in a payment of money, it is a request for surcharge, 9 an equitable remedy, not compensatory and punitive damages. Amara, 563 U.S. at 441 10 (that “relief takes the form of a money payment does not remove it from the category of 11 traditionally equitable relief.”). Surcharge is an equitable monetary remedy against a 12 trustee for a loss resulting from a trustee’s breach of duty. Id. at 441–42. Accordingly, 13 Bechtel’s breach of fiduciary duty claim does not require exhaustion simply because the 14 ultimate relief could be monetary. 15 Next, Wexford asserts that this claim is a disguised benefits claims because its 16 resolution depends on an interpretation of the Plans’ language rather than a statutory 17 interpretation of ERISA. (Doc. 32 at 14.) The Court disagrees. Bechtel alleges that 18 Wexford failed to advise him of his disability options and that he should have continued 19 his STD claim and filed an LTD claim which he alleges are breaches of Wexford’s 20 fiduciary duty. (Doc. 16 ¶¶ 63, 64.) Any fiduciary duty is imposed by ERISA, not the Plans. 21 Thus, this claim does not require an interpretation of either Plan but of a fiduciary’s 22 obligations under ERISA. 23 Wexford also contends that Bechtel cannot obtain relief under § 1132(a)(3) because 24 adequate relief is available under § 1132(a)(1)(B). (Doc. 32 at 13.) But Bechtel cannot 25 make a claim under § 1132(a)(1)(B) to “recover benefits due to him under the terms of his 26 plan” because, as a part-time employee, he was ineligible for benefits, a point he now 27 concedes. See Varity Corp., 516 U.S. at 515 (noting “the plaintiffs in this case could not 28 proceed under [§ 1132(a)(1)(B)] because they were no longer members of the Massey– 1 || Ferguson plan and, therefore, had no ‘benefits due [them] under the terms of [the] plan.’” 2|| (quoting § 1132 (a)(1)(B))). Thus, Bechtel has no other adequate remedy under § 1132 3|| other than subsection (a)(3). 4 A claim for denial of benefits is just that—a claim for wrongly denied benefits. See § 1132(a)(1)(B). In contrast, a claim for breach of fiduciary duty is a claim for harm 6|| suffered because of a fiduciary’s breach of duty. Bafford v. Northrop Grumman Corp., 994 7\| F.3d 1020, 1026 (9th Cir. 2021) (“To state a claim for breach of fiduciary duty under 8 || ERISA, a plaintiff must allege that (1) the defendant was a fiduciary; and (2) the defendant 9|| breached a fiduciary duty; and (3) the plaintiff suffered damages.”). Ultimately, Bechtel’s □□ claim is that Wexford breached its fiduciary duty by failing to inform him of the 11 || consequences to his benefits of becoming a part-time employee. (Doc. 16 63, 64.) This is not a disguised claim for benefits even if it results in a monetary award. 13 Finally, because Bechtel was not required to exhaust administrative remedies for his breach of fiduciary duty claim, the Court need not address the parties’ argument regarding 15 || whether a second appeal would have been futile. 16 IT IS ORDERED that Wexford’s motion for summary judgment (Doc. 32) is 17 || GRANTED in part and DENIED in part as stated herein. 18 Dated this 10th day of December, 2025. 19 20 21 {Z, 23 Son United States District Judge 24 25 26 27 28

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