Penwell v. Providence Health & Services

• Court: District Court, W.D. Washington
• Decided: March 31, 2021
• Docket: 2:19-cv-01786
• Status: Unknown

Opinion

The Honorable Richard A. Jones 1

8 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON 9 AT SEATTLE

JUSTIN PENWELL; GEORGIA BAKKE- 11 TULL; JORDAN ENYEART; and CASE NO. 2:19-cv-01786-RAJ 12 MILDRED UZOMA,

13 Plaintiffs, ORDER 14 v.

15 PROVIDENCE HEALTH & SERVICES,

16 Defendant. 17 18 This matter comes before the Court on Defendant’s motion to dismiss Plaintiffs’ 19 amended complaint. Dkt. # 26. Having considered the submissions of the parties, the 20 relevant portions of the record, and the applicable law, the Court finds that oral argument 21 is unnecessary. For the reasons below, Defendant’s motion to dismiss is GRANTED. 22 I. BACKGROUND 23 Plaintiffs Jordan Enyeart, Georgia Bakke-Tull, and Mildred Uzoma (“Plaintiffs”) 24 are employees of Providence Health & Services (“Providence” or “Defendant”) and 25 participants in the Swedish Health Services Employee Benefits Plan (“Swedish Welfare 26 1 Plan”) or the Providence Health & Services Employee Benefits Plan (“Providence 2 Welfare Plan”) (collectively, the “Plans”). Dkt. # 24 at 2-4. Plaintiffs “are required to 3 pay deductibles, co-pays, co-insurance, facility fees, pharmacy co-pays and co-insurance, 4 and other payments while utilizing the Plans.” Dkt. # 24 ¶ 9. Plaintiff Justin Penwell is 5 no longer an employee or participant in a Providence plan. Id. ¶ 3. However, he remains 6 a Plaintiff in this action. Id. Plaintiffs allege that Providence is the plan administrator for 7 both Plans.1 Id. ¶¶ 14, 23. 8 In early 2019, after noticing an increase in premiums, Plaintiffs requested 9 information about network pricing from Defendant. Id. ¶ 38. The request included 10 several categories of documents including (1) “the annual renewal document for 2017, 11 2018, and 2019,” (2) “a complete schedule or set of schedules of the negotiated payment 12 rates applicable to each of the Plans’ participating network providers (‘Network 13 Providers’) for goods and services provided to participants that are covered by the Plans,” 14 (3) “a complete set of each of the contracts or agreements between the Plans and each 15 Network Provider,” (4) “all documents specifying the methodology by which actual 16 payment amounts to plan providers are determined, as well as the underlying data and 17 information by which such payment rates are determined,” and (5) “any other documents 18 under which the Plans are maintained or administered.” Id. ¶ 39. Plaintiffs based these 19 requests on ERISA section 104(b) which requires a plan administrator “upon written 20 request of any participant or beneficiary” to “furnish a copy of the latest updated 21 summary plan description, and the latest annual report, any terminal report, the 22 bargaining agreement, trust agreement, contract, or other instruments under which the 23 1 As noted in the Court’s prior order, Providence refutes that it is the plan administrator 24 for either Plan but argues that the Plaintiffs’ Amended Complaint fails as a matter of law 25 even if Defendant were the plan administrator. The Court need not, therefore, resolve this factual matter at this juncture. Dkt. # 26 at 6, n.6. 26 1 plan is established or operated.” 29 U.S.C. § 1024(b)(4); Id. ¶ 41. 2 At the end of January 2019, Providence responded to Plaintiffs’ initial request by 3 “providing the Health and Wellness Benefit Plan Document, with amendments; a 4 summary plan description; and open enrollment information for the 2017, 2018, and 2019 5 plan years.” Id. ¶ 49. Plaintiffs allege that Providence informed them that “it did not 6 possess documents that would be responsive to the remainder of the requests, such as 7 schedules of negotiated payment rates.” Dkt. # 24 ¶ 50; see Dkt. # 13-2 at 2. About a 8 month later, Plaintiffs made a second request for the same documents. Dkt. # 24 ¶ 54. In 9 a letter dated April 12, 2019, Providence informed Plaintiffs that “the documents 10 requested are either nonexistent or not in our possession” and “ERISA does not require a 11 plan administrator to create documents or produce documents it does not have.” Dkt. 12 # 24 ¶¶ 56-57; Dkt. # 13-4 at 2-5. In response, Plaintiffs submitted a third and final 13 request for the same information, noting that “ERISA [requires] a plan administrator to 14 create and produce documents that it does not have, when such documents are required to 15 be furnished.” Dkt. # 24 ¶¶ 58-59. Providence did not respond to Plaintiffs’ final 16 request. Id. ¶ 61. 17 Plaintiffs filed a complaint in this Court on November 4, 2019, seeking specific 18 performance and civil penalties based on Providence’s alleged failure to provide the 19 requested documents and information under 29 U.S.C. § 1024(b). See generally Dkt. # 1. 20 Defendant moved to dismiss the complaint for failure to state a claim under Rule 12(b)(6) 21 on December 20, 2019. See generally Dkt. # 12. On June 5, 2020, the Court granted 22 Defendant’s motion with leave to amend. Dkt. # 23 at 7. Plaintiffs timely filed an 23 amended complaint on June 19, 2020. See generally Dkt. # 24. Defendant now moves to 24 dismiss Plaintiffs’ amended complaint under Federal Rule of Civil Procedure 12(b)(6). 25 Dkt. # 26 at 5, 13. 26 1 II. LEGAL STANDARD 2 Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a complaint 3 for failure to state a claim. Fed. R. Civ. P. 12(b)(6). The court must assume the truth of 4 the complaint’s factual allegations and credit all reasonable inferences arising from those 5 allegations. Sanders v. Brown, 504 F.3d 903, 910 (9th Cir. 2007). A court “need not 6 accept as true conclusory allegations that are contradicted by documents referred to in the 7 complaint.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 8 2008). Instead, the plaintiff must point to factual allegations that “state a claim to relief 9 that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 568 (2007). If 10 the plaintiff succeeds, the complaint avoids dismissal if there is “any set of facts 11 consistent with the allegations in the complaint” that would entitle the plaintiff to relief. 12 Twombly, 550 U.S. at 563; Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 13 On a motion to dismiss, a court typically considers only the contents of the 14 complaint. However, a court is permitted to take judicial notice of facts that are 15 incorporated by reference in the complaint. United States v. Ritchie, 342 F.3d 903, 908 16 (9th Cir. 2003) (“A court may . . . consider certain materials documents attached to the 17 complaint, documents incorporated by reference in the complaint”); Mir v. Little Co. of 18 Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988) (“[I]t is proper for the district court to 19 ‘take judicial notice of matters of public record outside the pleadings’ and consider them 20 for purposes of the motion to dismiss’”). With these principles in mind, the Court turns 21 to the instant motion. 22 III. DISCUSSION 23 In their amended complaint, Plaintiffs reassert their claim that they are entitled to 24 the documents they requested based on ERISA Section 104(b)(4), which requires a plan 25 administrator “upon written request of any participant or beneficiary” to “furnish a copy 26 1 of the latest updated summary plan description, and the latest annual report, any terminal 2 report, the bargaining agreement, trust agreement, contract, or other instruments under 3 which the plan is established or operated.” Dkt. # 24 ¶ 41 (citing 29 U.S.C. 4 § 1024(b)(4)). In an attempt to cure the deficiencies identified by the Court in their prior 5 complaint, Dkt. # 23 at 6, Plaintiffs incorporated new factual allegations in explanation of 6 their requests. Dkt. # 24 ¶¶ 43-47. Specifically, Plaintiffs allege that the requested 7 documents (1) include information about pricing details and how pricing is determined, 8 (2) determine out-of-pocket costs for goods and services covered by the Plans, (3) allow 9 Plaintiffs to determine whether they are receiving the most beneficial network prices, and 10 (4) provide information about the maintenance and administration of the plans. Dkt. # 24 11 ¶¶ 43-47. Plaintiffs allege that “each of Plaintiffs’ written document requests are made 12 up of requests specifically associated to network pricing attributed to medical or 13 prescription coverage, as they relate to and ultimately affect pricing details and Plaintiffs’ 14 out-of-pocket costs.” Dkt. # 29 at 11. Plaintiffs claim that Defendant is required to 15 produce all requested documents because they are “instruments under which the plan is 16 established or operated.” Dkt. # 24 ¶ 48 (citing 29 U.S.C. § 1024(b)(4)). 17 The Court is unconvinced. Plaintiffs’ unaltered request for the same categories of 18 documents remains incredibly broad and Plaintiffs’ attempt to fit each document in the 19 catch-all provision of Section 104(b)(4) is unavailing. The Ninth Circuit has adopted a 20 narrow interpretation of the term “other instruments” as “limited to the class of objects 21 that specifically precedes it.” Shaver v. Operating Eng’rs Local 428 Pension Trust Fund, 22 332 F3d. 1198, 1202 (9th Cir. 2003). The Ninth Circuit specifically declined to interpret 23 the statute to “require general disclosure,” explaining that broad disclosure “is not 24 supported by either the language of the statute or its legislative history.” Hughes 25 Salaried Retirees Action Comm. v. Adm’r of Hughes Non-Bargaining Ret. Plan, 72 F.3d 26 1 686, 691 (9th Cir. 1995). The provision “requires disclosure of only the documents 2 described with particularity and ‘other instruments’ similar in nature.” Id. Indeed, 3 disclosure under this provision is limited to “documents that provide individual 4 participants with information about the plan and benefits.” Dkt. # 23 at 5 (citing Hughes, 5 72 F.3d at 690). The Ninth Circuit further limited the definition of “other instruments” to 6 “legal documents that describe the terms of the plan, its financial status and other 7 documents that restrict or govern the plan’s operation.” Shaver, 332 F3d. at 1201-02. 8 Plaintiffs fail to show that the documents they request are either legal documents 9 or relevant to Plaintiffs’ plans and benefits. For example, Plaintiffs’ request for “all 10 documents specifying the methodology by which actual payment amounts to plan 11 providers are determined, as well as the underlying data and information by which such 12 payment rates are determined” fails on both counts. Dkt. # 24 ¶ 39. The Court finds that 13 “all documents” on payment methodology, calculations, and the “underlying data” are 14 not limited to legal documents. Shaver, 332 F.3d at 1202 (finding that “other 15 instruments” should be limited to “legal documents that describe the terms of the plan, its 16 financial status, and other documents that restrict or govern the plan’s operation”). 17 Defendant raised this argument in its motion to dismiss. Dkt. # 26 at 8. Plaintiffs failed 18 to respond. Dkt. # 30 at 2. Plaintiffs nonetheless attempt to justify their request by 19 noting that such information is relevant to Plaintiff’s determination as to whether they are 20 receiving the most beneficial network prices. Dkt. # 24 ¶ 46. This request does not, 21 however, inform Plaintiffs of their benefits under the plan and is therefore beyond the 22 scope of ERISA Section 104(b)(4). Hughes, 72 F.3d at 690. 23 Plaintiffs’ request for “a complete schedule or set of schedules of the negotiated 24 payment rates applicable to each of the Plans’ participating network providers . . . for 25 goods and services provided to participants that are covered by the Plans,” Dkt. # 24 ¶ 39, 26 1 is similarly untenable.2 Plaintiffs argue that such documents fall within the “other 2 instruments” category because they determine out-of-pocket costs for goods and services 3 covered by the Plans. Id. ¶ 44. Defendant contends that the price a provider has 4 negotiated for any given service does not inform Plaintiffs about their benefits, 5 particularly where the requests are not tied to any benefit claim. Dkt. # 26 at 10. The 6 Court agrees. Moreover, information on pricing, including out-of-pocket limits, co-pays, 7 deductibles, and other relevant calculations was made available to Plaintiffs through 8 summary plan descriptions that were provided. Dkt. # 26 at 11; Dkt. # 24 ¶ 49. The 9 Court finds that the schedules do not govern the operation of the plans and fall outside the 10 scope of ERISA 104(b)(4). 11 Next, Plaintiffs’ request for “a complete set of each of the contracts or agreements 12 between the Plans and each Network Provider” is, again, overly broad. Dkt. # 24 ¶ 39. 13 Plaintiffs allege that they are entitled to network provider contracts because they provide 14 pricing information, Dkt. # 24 ¶ 45, and “directly impact[]” their premiums, deductibles, 15 co-pays, and co-insurance, among other fees. Id. ¶ 36. However, as Defendant points 16 out, these contracts could not be used to determine any out-of-pocket expense for any of 17 the Plaintiffs in the absence of an actual claim. Dkt. # 26 at 11. Moreover, Defendant 18 argues that “documents relating to generalized network provider agreements for every 19 network provider for every covered service would require the plan administrator to turn 20 over information about potential plan expenditures which do not inform Plaintiffs about 21 their plan benefits.” Dkt. # 26 at 10. This broad request does not inform Plaintiffs of 22

23 2 Defendant argues that “[w]e do not possess other documents that would be responsive to [Plaintiffs’] request such as schedules of negotiated payment rates as the Plan 24 Administrator does not determine payment rates and the Plan does not contract with 25 ‘Network Providers.’” Dkt. # 26 at 3-4 (citing Dkt. # 13-2 at 2-5). The Court considers whether such documents would fall within the ERISA disclosure requirement as a matter 26 of law. 1 their benefits under the plan and does not fall within the scope of Section 1024(b)(4). 2 See Hughes, 72 F.3d at 690; Shaver, 332 F.3d at 1202; DeBartolo v. Blue Cross/Blue 3 Shield of Ill., No. 01 C 5940, 2001 WL 1403012, at *7 (N.D. Ill. Nov. 9, 2001) (finding 4 that “usual and customary” charges for medical expenses “[did] not inform plan 5 participants and beneficiaries about their rights under the plan” and thus “[was] not the 6 type of information an ERISA plan administrator is required to disclose under 29 U.S.C. 7 § 1024(b)(4)”). 8 Plaintiff’s request for “any other documents under which the Plans are maintained 9 or administered” is neither limited to legal documents nor sufficiently narrow in 10 accordance with the controlling case law. Dkt. # 24 ¶ 39. Plaintiffs’ allegation that they 11 are entitled to such documents under Section 1024(b)(4) because the documents provide 12 them “with information about and explanations on the maintenance and administration of 13 the [Plan],” Dkt. # 24 ¶ 47, ignores the binding case law that requires narrow 14 interpretation of “other instruments” and fails to show that such a broad category of 15 documents is relevant to inform each Plaintiff of his or her own plan or benefits. See 16 Hughes, 72 F.3d at 690. 17 Finally, Plaintiffs’ requests for the annual renewal documents for 2017 through 18 2019 do not pass muster. Dkt. # 24 ¶ 39. Defendant claims that “[a]nnual renewal 19 documents relate to renewal of insurance policies for insured plans . . . [and] there were 20 no such documents because the Plans are self-funded.” Dkt. # 26 at 5, n.5 (citing Dkt. 21 # 13-4 at 2-5). This raises a question of fact that cannot be resolved at this stage. 22 However, even if such documents did exist, the Court finds they do not fall within 23 Section 1024(b)(4). Plaintiffs allege that these documents are “other documents” under 24 the statute because they “include information about and explanations of pricing details 25 and the procedures under which the pricing details are determined.” Dkt. # 24 ¶ 43. 26 1 However, Defendant argues that “[g]eneralized network pricing information requests 2 unrelated to any benefit claim . . . are neither legal documents under which the Plans are 3 operated nor . . . set out a participant’s rights and duties under the Plans.” Dkt. # 26 at 7 4 (citing DeBartolo, 2001 WL 1403012 at *7). The Court finds that these documents are 5 not documents under which the plan is established or operated. 6 Plaintiffs assert that they are entitled to the documents despite the narrow 7 definition established by the Ninth Circuit because the documents they requested provide 8 individual participants with information about the plan and benefits. Dkt. # 29 at 10. 9 Plaintiffs rely primarily on Eden Surgical Center v. Budco Group, Inc. to support their 10 assertion. Id. at 12 (citing 2010 WL 2180360 (C.D. Cal. May 27, 2010)). However, the 11 requested documents at issue in Eden Surgical Center involved a fee schedule and 12 methodology for calculating costs related to a particular claim, or documents “relevant to 13 the processing and re-pricing of the subject adverse benefit determinations.” 2010 WL 14 2180360, at *1 (emphasis added). The court noted that disclosure of such documents 15 “gives full effect to the purpose of the statute, which is to let the individual participant 16 [to] know[ ] exactly where he stands with respect to the plan.” Id. at *7 (internal 17 quotations and citation omitted). The court ruled that the plaintiff was entitled to the 18 documents used in reaching the adverse benefit determination of the individual with the 19 claim at issue and information used to calculate benefits with respect to the pertinent 20 claim. Id. at *10. 21 Plaintiffs’ broad requests here exceed the purpose and scope of the statute as they 22 are not limited to information on where each Plaintiff “stands with respect to the plan.” 23 Instead their requests encompass a tremendous amount of information that is wholly 24 unrelated and irrelevant to where they stand and what their rights are under the plan. The 25 Court finds that such a distinction between the requested documents renders Eden 26 1 Surgical Center unpersuasive in the matter at hand. Plaintiffs point to two similarly 2 distinguishable cases. In one, the court found that former employees were entitled to 3 documents in connection with a claim for vested benefits where the employees “alleged 4 that their vested benefits were improperly computed.” Werner v. Morgan Equip. Co., 5 No. C-92-0393-JPV, 1992 WL 453355, at *3 (N.D. Cal. Aug. 5, 1992). In the second 6 case, the court found that employees’ request for “an administration manual that 7 contained charts essential to the calculation of retirement benefits” was permissible as it 8 was an instrument that governed the plan. Lee v. Dayton Power & Light Co., 604 F. 9 Supp. 987, 1002 (S.D. Ohio 1985). Unlike the present case, the requested documents in 10 Werner and Lee were essential to the determination of benefits. 11 Similarly, the Court is unconvinced by Plaintiffs’ reliance on nonbinding 12 Department of Labor guidance. Patelco Credit Union v. Sahni, 262 F.3d 897, 908 (9th 13 Cir. 2001) (finding that a Department of Labor advisory opinion is not binding 14 authority). The Court also finds that the Executive Order referred to by Plaintiffs is 15 inapplicable because it refers to hospitals, as opposed to plan administrators. Exec. 16 Order No. 13877, 84 Fed. Reg. 30849 (June 24, 2019). 17 The Court finds that Plaintiffs’ amendments are insufficient to remedy the 18 deficiency identified by this Court in its prior complaint. Dkt. # 23 at 6. Plaintiffs 19 continue to recite the statutory elements in conclusory fashion and fail to point to factual 20 allegations that “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 21 568. Based on this conclusion, the Court need not address subsequent arguments relating 22 to control of the requested documents, clear notice, standing, and civil penalties. Dkt. 23 # 29 at 8, 21, 23-24. For this reason, the motion to dismiss is GRANTED. 24 IV. CONCLUSION 25 For the reasons stated above, the Court finds that Plaintiffs’ complaint fails to state 26 1 a claim for relief under Rule 12(b)(6). Defendant’s motion is GRANTED and Plaintiffs’ 2 complaint is DISMISSED without prejudice. Within fourteen (14) days from the date 3 of this Order, Plaintiffs may file an amended complaint addressing the deficiencies 4 described above. If Plaintiffs do not file an amended complaint within that time, the 5 Court may dismiss this action with prejudice. 6

7 DATED this 31st day of March, 2021. 8 A 9

10 The Honorable Richard A. Jones 11 United States District Judge 12

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