Fifth Circuit: Claimant Must Wait for Actual Claim Denial to File Suit

In an unpublished opinion, the Fifth Circuit affirmed the dismissal of a class action suit that alleged the claim administrator, wrongfully denied payment of medical claims “immediately,” instead of waiting for the participant to fail to provide requested information. In this case, the plaintiff’s son was in an auto accident, and the administrator requested information regarding no-fault benefits before processing the medical claim. The self-funded plan at issue contained detailed provisions regarding Coordination of Benefits, primacy of coverage and information and records the insured is required to produce upon request.  The plan also specifically provided that no-fault was primary.  Instead of providing the information regarding no-fault as requested, the plaintiff commenced a putative class action suit asserting his claim (and those of the other class members) had been wrongfully denied. The only problem was that the claim had not actually been denied. One month after the suit was filed, the administrator again requested information about no-fault benefits, and whether they had been paid or denied.  It also advised that the claim could not be processed until the information was received. So as of one month after the complaint was filed, the administrator advised it could not process the claim, much less deny it.  In an amended complaint, the plaintiff amended his claims slightly, now claiming the administrator breached its obligations by “immediately” denying the claim, rather than waiting and denying based upon the failure to provide the requested information.  The district court dismissed the claim and denied a motion to file a second amended complaint. Applying a de novo standard, the Fifth Circuit disposed of the ERISA 502(a)(3) claim on the basis that the plaintiff had adequate mechanism for redress under 502(a)(1)(B) because plaintiff could have sued the plan directly.  The Fifth Circuit then turned to whether the plaintiff “had stated a claim under section 502(a)(1)(B) for the administrator’s purportedly immediate ‘denial’ of medical claims pending receipt of no-fault information.” The Fifth Circuit’s use of quotes around “denial” should have been a tip off. The district court held that the Plan was allowed to seek information and that the request for that information was not a “denial.”  Holding that the administrator acted in accordance with the terms of the Plan, the district court had dismissed the complaint. The Fifth Circuit affirmed in all respects, and went on to note the plaintiff’s own submissions contradicted his claims of “denial.”  The district court also denied the plaintiff’s motion for leave to file a second amended complaint, which the Fifth Circuit held up as well – noting that a second amended complaint would be “futile.”

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