Turner v. Fallon

• Court: Court of Appeals for the First Circuit
• Decided: October 20, 1997
• Docket: 97-1253
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS 

                                FOR THE FIRST CIRCUIT

                                 ____________________



        No. 97-1253



                      RONALD J. TURNER, AS ADMINISTRATOR OF THE

                   ESTATE OF CHARLOTTE M. TURNER, AND INDIVIDUALLY,



                                Plaintiff, Appellant,



                                          v.



                         FALLON COMMUNITY HEALTH PLAN, INC.,



                                 Defendant, Appellee.



                                 ____________________



                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                   [Hon. Nathaniel M. Gorton, U.S. District Judge]
                                              ___________________



                                 ____________________



                                        Before



                                Boudin, Circuit Judge,
                                        _____________



                             Hill,* Senior Circuit Judge,
                                    ____________________



                         and Pollak,** Senior District Judge.
                                       _____________________



                                 ____________________



            Burton  Chandler with  whom  Seder &  Chandler  was on  brief  for
            ________________             _________________

        appellant.

            Daly D.E. Temchine with  whom Thomas I. Elkind and Epstein  Becker
            __________________            ________________     _______________

        & Green, P.C. were on brief for appellee.
        _____________


____________________



                                   October 20, 1997

                                 ____________________


____________________



        *Of the Eleventh Circuit, sitting by designation.



        **Of the Eastern District of Pennsylvania, sitting by designation.



BOUDIN,  Circuit Judge.   Ronald  Turner,  on behalf  of
                          _____________



            himself and  as administrator of  the estate of  his deceased



            wife,  Charlotte Turner, brought  this suit  in Massachusetts



            state  court  against  Fallon  Community  Health  Plan,  Inc.



            ("Fallon").   The gravamen  was Fallon's  refusal to  provide



            coverage  for a treatment regime proposed by Charlotte Turner



            and her  doctor to  address her  metastasized breast  cancer.



            After  the case  was removed  to federal district  court, the



            district  court  granted  summary  judgment for  Fallon,  and



            Ronald Turner appealed.



                 The  pertinent facts are  largely undisputed.   In 1991,



            Charlotte  Turner  was  diagnosed with  breast  cancer.   The



            disease was  at first  treated by  surgery, chemotherapy  and



            radiation.   In May  1993, tests showed  that the  cancer had



            metastasized, was beyond  control by conventional  therapies,



            and  threatened Charlotte Turner  with death within  12 to 18



            months.   Ronald Turner was  employed by General  Motors, and



            Charlotte  Turner was  covered by  the  health coverage  that



            Fallon  provided  for   family  members  of   General  Motors



            employees.



                 Fallon  is  a   health  maintenance  organization   that



            provides  or reimburses  health care  for its  members.   Its



            "Member  Handbook," which  is  presented  as  "part  of  [the



            member's]  contract with [Fallon],"  describes in  detail the



            various   medical   costs   that   Fallon   will   cover  for


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beneficiaries.  Among the express exclusions set forth in the
                                              __________



            handbook was "bone  marrow transplant for treatment  of solid



            tumors  . .  . ."    Dr. Ronald  Hochman, Charlotte  Turner's



            oncologist at  Fallon, nevertheless concluded  that Charlotte



            Turner's  only hope was an autologous bone marrow transplant,



            a  procedure  by which  the  patient's  own  bone  marrow  is



            extracted,  stored and  then reintroduced  after the  patient



            receives high dosage chemotherapy.   Marrow is the source  of



            vital white blood cells needed to fight infection and without



            the transplant procedure, the high dosage  chemotherapy would



            impair the bone marrow's ability to continue to produce white



            blood cells.



                 In May  1993, Fallon approved Charlotte Turner's request



            that she  be evaluated by  Dana Farber  Cancer Institute  for



            possible participation in its bone marrow transplant program.



            Fallon continued to assert that a bone  marrow transplant was



            not a covered procedure for  solid tumor cancer but said that



            if the treatment was recommended by  Dana Farber, the request



            for   coverage   would  be   reviewed   further  by   Fallon.



            Ultimately, Dana Farber concluded  that Charlotte Turner  was



            not  eligible for  the Dana  Farber  protocol because  cancer



            cells  had already been  detected in Charlotte  Turner's bone



            marrow.



                 Charlotte   Turner  then  asked   Fallon  to  cover  her



            examination  for   eligibility  to  enter   a  program  being


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conducted by  the Duke  University Medical Center.   In  this



            program,   Duke   not   only   removed    bone   marrow   for



            reimplantation,  in aid of high dosage chemotherapy, but also



            employed procedures to  attempt to "purge" the  marrow of its



            cancer cells.  Fallon declined to  cover the cost of a "third



            opinion."   Charlotte  Turner then  had  herself examined  by



            doctors at the  Duke program who concluded that  she might be



            eligible to  participate, subject  to further  testing.   The



            cost of her  participation in  the program  was estimated  at



            $100,000.



                 In July  1993, Charlotte  Turner and  Dr. Hochman  asked



            Fallon to  pay for  her inclusion in  the Duke  program.   In



            August 1993,  Fallon's Transplant  Committee met to  consider



            Charlotte Turner's  request and the broader  question whether



            coverage should be extended, on a case-by-case basis, to bone



            marrow  transplants to treat solid tumor cancers either under



            the Dana  Farber protocol or  the Duke program or  both.  Dr.



            Hochman supported Charlotte Turner's application for coverage



            to the Duke program.



                 The  Transplant  Committee  decided  that,  despite  its



            handbook  exclusion, it would  in the future  extend coverage



            for  the  Dana  Farber  protocol   if  it  concluded  in  the



            particular case that  the treatment was critically  necessary



            and showed  a strong  likelihood of  success.  It  concluded,



            however,  that  the  Duke  program  had  as yet  produced  no


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adequate  data  suggesting  a   likelihood  of  success,  and



            therefore declined to  extend coverage for the  Duke program.



            At Charlotte Turner's  request, Fallon's Grievance  Committee



            held a  hearing in September  1993 to review the  decision of



            the  Transplant Committee,  but in  early  October 1993,  the



            Grievance Committee  upheld the  denial of  coverage for  the



            Duke program.



                 Immediately after the Grievance Committee's decision  in



            October 1993,  Charlotte Turner  underwent conventional  low-



            dosage chemotherapy without bone marrow transplantation.  She



            died on August 17, 1994.  Ronald  Turner then brought suit in



            the Massachusetts superior  court against Fallon  charging it



            with breach of  contract, wrongful death and  other state-law



            claims.  Fallon removed the case to federal district court on



            the ground that state-law claims were preempted under ERISA--



            the  Employee  Retirement  Income Security  Act  of  1974, 29



            U.S.C.    1001 et seq.   See  Metropolitan Life  Ins. Co.  v.
                           ______    ___  ___________________________



            Taylor, 481 U.S. 58, 66-67 (1987). 
            ______



                 Ronald Turner  responded by  amending  his complaint  to



            delete  the state  claims  and to  substitute  a claim  under



            ERISA.    The  amended single-count  complaint  charged  that



            Fallon's  denial of  coverage for  the  Duke program  "denied



            Charlotte of the rights and benefits due under the policy and



            was arbitrary, illegal, capricious, unreasonable and not made



            in good faith  and was a breach of  [Fallon's] fiduciary duty


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which  it owed to  Charlotte."  The  complaint sought damages



            and a trial by jury.



                 In  March  1996,  Fallon  moved  for  summary  judgment.



            Ronald  Turner opposed  the  motion  and  asked  for  further



            discovery, which Fallon in turn opposed.  The  district court



            then ruled  that a civil  ERISA action could be  brought by a



            plan beneficiary  only  (in the  words  of the  statute)  "to



            recover benefits due  to 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).  Concluding that  Ronald Turner's



            damage action was  not authorized by  ERISA, the court  ruled



            that the case had to  be dismissed and that further discovery



            would be futile.



                 Ronald  Turner  then  sought  reconsideration  and  also



            sought  to amend  the complaint  to  reassert the  previously



            withdrawn state-law claims.  He argued that if ERISA provided



            no federal remedy, it ought not be read to preempt his state-



            law  claims.  Alternatively, he urged that if ERISA preempted



            the  state-law claims,  then  a federal  remedy  ought to  be



            inferred  or created  by  the  court  to permit  damages  for



            wrongful withholding of treatment under the employee benefits



            plan.  The district court wrote a thoughtful  opinion denying



            these requests.


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On this appeal, we begin with Ronald Turner's claim that



            ERISA should be read  to confer a claim for damages where, as



            charged in  the amended complaint, a beneficiary  of the plan



            has  been  denied "the  rights  and  benefits due  under  the



            policy" or has suffered "a breach of . . . fiduciary duty" in



            the withholding of  those benefits.  ERISA is a comprehensive



            federal statute that governs not only pension  plans but also



            nonpension benefit plans, including the General Motors health



            benefits plan at issue in this case.



                 ERISA   sets  forth  a   half  dozen  civil  enforcement



            provisions.   29  U.S.C.    1132(a).   Under  the first  such



            provision, a beneficiary may bring a federal civil action "to



            recover  benefits due to 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."



            Id.    1132(a)(1)(B).   The relief  expressly provided  is to
            ___



            secure benefits  under the  plan rather  than  damages for  a



            breach of the plan.  Here, treatment coverage is no longer of



            any significance.  



                 The other pertinent remedial provision authorizes  civil



            action  by   a  beneficiary  "to  obtain   other  appropriate



            equitable  relief" to  address  violations  of  ERISA  or  to



            enforce the  plan.  29  U.S.C.   1132(a)(3)(B).   The Supreme



            Court recently held in  Varity Corp. v. Howe, 116 S. Ct. 1065
                                    ____________    ____



            (1996),  that  this  provision  may  permit  equitable relief


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against  a plan administrator  for breaches of  the fiduciary



            duty imposed  on such  administrators by ERISA.   See  id. at
                                                              ________



            1075-79.     But  this  provision  is  expressly  limited  to



            providing equitable relief, and equitable relief is not being



            sought in this case.



                 Ronald  Turner points  to  no  other  specific  remedial



            provision in ERISA that might  arguably be brought into  play



            in this case.   In fact, the Supreme Court  has stressed that



            ERISA  does  not  create  compensatory   or  punitive  damage



            remedies  where an administrator  of a plan  fails to provide



            the benefits  due under  that plan.   See  Massachusetts Mut.
                                                  ___  __________________



            Life  Ins. Co.  v. Russell,  473  U.S. 134  (1985); see  also
            ______________     _______                          _________



            Drinkwater v. Metropolitan  Life Ins. Co., 846  F.2d 821, 825
            __________    ___________________________



            (1st Cir.), cert. denied, 488 U.S. 909 (1988).  This is not a
                        ____________



            minor  technicality:   damage awards  may increase  effective



            coverage but  may  also add  significantly  to the  costs  of



            coverage.



                 The lack of  an express damage  remedy under ERISA  does



            not necessarily  end  the story.    The federal  courts  have



            regularly  inferred  or  created remedies  in  the  shadow of



            federal statutes, although the practice has waned somewhat in



            recent  years.    See,  e.g.,  Northwest  Airlines,  Inc.  v.
                              __________   __________________________



            Transport Workers, 451  U.S. 77, 94 (1981).   But the Supreme
            _________________



            Court has adamantly ruled that ERISA's express remedies are a



            signal to courts not to  create additional remedies of  their


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own.   Russell, 473 U.S. at 145-48.   See also Reich v. Rowe,
                   _______                        ________ _____    ____



            20 F.3d  25, 31-33 (1st  Cir. 1994); Drinkwater, 846  F.2d at
                                                 __________



            824.  



                 In  the alternative, Ronald Turner argues that ERISA, if



            it provides no  damage remedy of its own  either expressly or



            by  implication, should  at least  not be  taken  to preclude



            existing  state  remedies.     Absent  preemption,  a  health



            benefits plan like Fallon's  could certainly be treated as  a



            contract enforceable under state law and subject to the usual



            contractual   remedies,   including   compensatory   damages.



            Depending on the  jurisdiction, state law might  provide even



            more substantial relief, including punitive damages.  



                 ERISA  contains a  vague but  broadly  worded preemption



            provision.   With exceptions  not relevant here,  it provides



            that  the pertinent subchapter  of ERISA shall  supersede any



            and  all "State  laws insofar  as they  may now  or hereafter



            relate to  any employee benefit  plan" covered by ERISA.   29



            U.S.C.    1144(a).    However  this  general  language  might



            otherwise  have been read, the Supreme Court has construed it



            to preclude  state claims  to enforce  rights under  an ERISA



            plan or obtain damages for the wrongful withholding of  those



            rights, Pilot  Life Ins. Co.  v. Dedeaux, 481 U.S.  41, 52-57
                    ____________________     _______



            (1987), and this construction has been repeatedly followed.1 



                                
            ____________________



                 1See, e.g.,  Ingersoll-Rand Co.  v. McClendon, 498  U.S.
                  _________   __________________     _________

            133, 144 (1990); Carlo v. Reed Rolled Thread Die Co., 49 F.3d
                             _____    __________________________

            790, 794 (1st Cir. 1995); Rosario-Cordero v. Crowley Towing &
                                      _______________    ________________



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The  Supreme Court has  recently set some  new limits on



            preemption  by holding  that  certain  state  laws  were  not



            sufficiently "related" to  ERISA to deserve preemption.   See
                                                                      ___



            De Buono v.  NYSA-ILA Medical & Clinical Servs.  Fund, 117 S.
            ________     ________________________________________



            Ct.  1747, 1752-53 (1997); California Div. of Labor Standards
                                       __________________________________



            Enforcement v. Dillingham  Constr., N.A., 117 S. Ct. 832, 842
            ___________    _________________________



            (1997).    But  neither  of these  cases  involved  a state's



            attempt to  provide state remedies  for what is in  essence a



            plan  administrator's  refusal  to   pay  allegedly  promised



            benefits.  It would be difficult to think of a state law that



            "relates" more closely  to an employee benefit  plan than one



            that affords  remedies for  the breach  of obligations  under



            that plan.



                 Ronald  Turner more or less admits that existing Supreme



            Court precedent  is  against  him, both  as  to  an  implicit



            federal cause of action and  the preemption of state  claims.



            But he  says that it  is grossly unjust  to deny  any remedy,



            either state or federal, to compensate in damages the victim,



            family  or  estate of  one  who  has  been wrongfully  denied



            promised  health-care benefits.  Further, he argues that this



            gap provides  a cruel  incentive for  plan administrators  to



            withhold treatment or delay it as long as possible, since the


____________________



            Transp.  Co., 46  F.3d  120,  126 (1st  Cir.  1995); Nash  v.
            ____________                                         ____

            Trustees of  Boston Univ.,  946 F.2d 960,  964 n.8  (1st Cir.
            _________________________

            1991); Wickman v. Northwestern Nat'l Ins. Co., 908 F.2d 1077,
                   _______    ___________________________

            1082 (1st Cir.), cert. denied, 498 U.S. 1013 (1990).
                             ____________



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claim  for benefits may be mooted by the beneficiary's death.


There are in reality two quite different problems of law



            and policy entangled  in this argument.  The  one that Ronald



            Turner  seeks  to  present  is  the  case  of  a  beneficiary



            wrongfully  denied promised  benefits.   There  is reason  to



            doubt that that is the true problem in this case (a  point to
                                                   ____



            which we will return), but such cases are easy to imagine and



            certain  to occur.   Compensatory damages are  a conventional



            and  potent remedy  that might  indeed  deter misconduct  and



            mitigate loss,  although the cost  of the plan would  also be



            increased.  



                 On the other hand, some might think it perverse to dwell



            on damage remedies, which apply where the patient has died or



            already suffered injury,  and might urge instead  that courts



            improve access  to equitable  relief.   This remedy,  already
                               _________



            available  under  ERISA,  can address  a  wrongful  denial of



            benefits  while  the  patient is  still  alive  and unharmed.



            Although  Ronald Turner  says that  such  judicial relief  is



            readily frustrated by exhaustion of remedies rules, a failure



            to exhaust is easily forgiven  for good reason, and no reason



            is better than an  imminent threat to life or health.   E.g.,
                                                                    ____



            Portela-Gonzalez v.  Secretary of the  Navy, 109 F.3d  74, 77
            ________________     ______________________



            (1st  Cir. 1997); see also  DePina v. General Dynamics Corp.,
                              ________  ______    ______________________



            674 F. Supp. 46, 49 (D. Mass. 1987). 


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In all events,  it is certainly a matter  for reasonable



            debate whether  a damage  remedy should  be added,  either by



            judicial interpolation or by Congress.  But only the  Supreme



            Court could alter the existing case law that precludes such a



            remedy.  And  whether or not Congress ever  thought about the



            impact on  health care  in particular  when it wrote  ERISA's



            remedies and preemption provisions, Congress is well equipped



            to revisit  the issue and  alter the statutory  language that



            now stands as a bar.



                 Although   the  question  of  a  damages  remedy  is  an



            important one, it likely has  n