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University of Wisconsin Hospital and Clinics, Inc. v. Air Products and Chemicals, Inc.

United States District Court, W.D. Wisconsin

May 1, 2018

UNIVERSITY OF WISCONSIN HOSPITAL AND CLINICS, INC., and UNIVERSITY OF WISCONSIN MEDICAL FOUNDATION, INC., Plaintiffs,
v.
AIR PRODUCTS AND CHEMICALS, INC., AS SUCCESSOR PLAN ADMINISTRATOR TO EPCO CARBON DIOXIDE PRODUCTS, INC., HEALTH PLAN, Defendant.

          OPINION AND ORDER

          WILLIAM M. CONLEY, District Judge.

         After consuming a No. of alcoholic drinks, Brennan Cain fell down the basement stairs of his sister's house in the early morning hours of December 25, 2010. Despite receiving extensive treatment at the University of Wisconsin Hospital, Cain tragically died from injuries resulting from that fall. In an initial lawsuit before this court, plaintiffs University of Wisconsin Hospital and Clinics, Inc. and University of Wisconsin Medical Foundation, Inc. (collectively, “UWHC”), as assignees of his claims for reimbursement, challenged the decision by the administrator of his employee health benefits plan to deny coverage for Cain's injuries.[1] See Univ. of Wis. Hosps. & Clinics Auth. v. EPCO Carbon Dioxide Prods., Inc. Health Care Plan, No. 12-cv-031-wmc, slip op. (W.D. Wis. Apr. 18, 2015). In that case, the court remanded the administrator's decision for reconsideration, finding that the original denial under the coverage exclusion for “accidental bodily Injury sustained or Illness contracted as a result of alcohol or drug use” was arbitrary and capricious absent an investigation and ruling out of possible causes for Cain's fall and resulting injuries other than alcohol intoxication. (Id., dkt. #52.) In this case, plaintiffs again challenge the denial of their claim under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., this time naming as defendant the administrator of the plan's successor, defendant Air Products and Chemicals, Inc. (“Air Products”).[2]

         Before the court are plaintiffs' motion for judgment on the pleadings (dkt. #12), defendant's motion for summary judgment (dkt. #18), and plaintiffs' motion for partial summary judgment (dkt. #32). Based on the undisputed facts, the court finds that the plan administrator has now sufficiently investigated the possible causes of Cain's fall. The court further finds that the administrator reasonably interpreted and applied the facts to the relevant coverage exclusion. Accordingly, the plan's denial of coverage was not arbitrary and capricious, and the court will grant summary judgment to defendant.

         UNDISPUTED FACTS[3]

         A. The Plan

         On December 25, 2010, Brennan Cain was an employee of EPCO Carbon Dioxide Products, Inc. (“EPCO”) and an employee-participant of the EPCO Employee Health and Welfare Plan (the “Plan”). After acquiring EPCO, Air Products became the administrator of the Plan. Accordingly, Air Products handled Cain's claim on remand.

         The Plan grants its administrator, Ms. Elizabeth Reese, “sole authority and discretion to interpret and construe the terms of the Plan and to determine any and all questions in relation to . . . payment of benefits or claims under the Plan[.]”

         B. The injury

         The afternoon of December 24, 2010, Cain worked at EPCO for a total of six hours. Somewhere between 6:30 and 7:00 p.m., Cain and his girlfriend, Beth Sutton, arrived at his sister and brother-in-law's house. That night, Cain and Sutton went to two bars with his sister and brother-in-law, Temple and Patrick Palmer, before returning home sometime between 11:00 p.m. and midnight.

         Around 12:30 a.m. on December 25, 2010, Cain went to the basement to sleep. Having consumed “several” alcoholic drinks, Sutton recalled that he was “staggering a little bit at that time.” At approximately 2:30 a.m., Cain returned upstairs to convince Sutton to come to bed.[4] She followed Cain to the basement stairs, but as he stepped down from the threshold, Cain lost his balance, fell down the stairs and landed on the floor, knocking himself unconscious. Cain received emergency medical treatment on the scene and was then rushed to the University of Wisconsin Hospital. There, he underwent treatment for Level I head trauma, but never recovered. Cain passed away at the hospital due to his injuries on October 5, 2011.

         At the time he fell down the stairs, Cain was wearing slippers with rubber soles. There were no objects lying on the stairs, although the first step leading down into the basement was shorter than the rest, with a height of approximately three to four inches. At 4:21 a.m., the hospital measured Cain's blood alcohol content (“BAC”), which was still 0.25g/dL, or roughly three times the legal driving limit in Wisconsin.[5]

         After Cain presented his claim for reimbursement, a third party claim manager, Cottingham & Butler, reviewed the emergency room report and ruled out a stroke as the cause of his fall. Eric Wiesemann, the administrator of the plan at that time, then denied Cain's claim under General Limitation 52, which excludes coverage for “accidental bodily Injury sustained . . . as a result of alcohol or drug use.” In anticipation of litigation, the Plan also referred Cain's claim to Dr. Christopher Long, a board-certified toxicologist, who wrote a letter opining that Cain's alcohol use was a cause of his injuries. After the Plan Administrator denied Cain's appeal, plaintiffs sued EPCO in state court. EPCO then properly removed the case to this court because a federal question was presented under ERISA.

         C. EPCO lawsuit

         In the initial lawsuit involving Cain's claim for benefits, the court granted summary judgment to plaintiffs, explaining that, as the then administrator, EPCO did not conduct a sufficient investigation into the circumstances surrounding Cain's fall before ruling that it resulted from his alcohol use. For example, the court found that the administrator should have arranged for an examination of the allegedly irregular stairs at Palmers' house, inquired about Cain's ability to traverse the stairs when sober, examined the footwear Cain was wearing when he fell or at least spoke to Sutton, who witnessed Cain's fall. See EPCO, No. 12-cv-031-wmc, slip op. at *4, *7. Ordering that the matter be remanded for further review, the court further noted that the plan administrator should clarify his interpretation of the phrase “as a result of, ” as found in the alcohol exclusion. See Id. at *7 n.3.

         D. The investigation on remand[6]

         On remand, Elizabeth Reese, the Plan's new administrator for Air Products as EPCO's successor, conducted an additional investigation into the circumstances surrounding Cain's fall. Among other things, Reese interviewed Temple Palmer at her home on August 7, 2014, who confirmed that: (1) no changes had been made to the stairs since they were carpeted in the late 1990s; (2) Ms. Palmer's family used the stairs on a daily basis in various types of footwear; (3) Ms. Palmer's insurance company told her that the stairs were up to code and did not cause the accident; and (4) the slippers Mr. Cain was wearing when he slipped had rubber soles and were in good condition.[7] At Palmer's home, Reese also walked the basement stairs and took pictures of them.

         The administrator next considered an expert report prepared by Kenneth Graham, Ph.D., a forensic toxicologist, who reviewed Cain's claim at the request of the administrator. Dr. Graham opined that the “effects associated with Mr. Cain's significant alcohol intoxication were direct causes of his inability to safely negotiate the flight of stairs . . . and the subsequent injuries he sustained from his fall.” In reaching his conclusion, Dr. Graham specifically dismissed the notion that Cain's personal tolerance for alcohol would have minimized the impairment of his executive functions required to navigate safely a flight of stairs.

         In addition, the administrator considered more than 3, 553 pages of documents that Mark Sweet, counsel for UWHC, submitted to supplement the record. Among these documents were two expert reports prepared by Dr. Richard Tovar. In the first report, Dr. Tovar concluded that after reviewing Cain's records, “[a]lthough the alcohol played a large roll in his fall, there were other factors such as potentially unfamiliar terrain such as the stairs, and the use of foot appliances, that is the slippers, which could have enhanced his lack of coordination resulting in a fall.” A week after his first report, Dr. Tovar also submitted a second, in which he still opined that “the alcohol did play a role in his fall, but [a] much more decreased [role than he had first opined] in light of the new information by Ms. Sutton that Mr. Cain was a chronic drinker.”

         Finally, the administrator also reviewed a report plaintiffs submitted from Robert Wozniak, an engineer who examined the Palmers' basement stairs. Wozniak noted in his report that Cain's slippers were in good condition, but stated that the stairs were not up to code and may have contributed to Cain's fall.

         E. The administrator's decision after reconsideration

         In a decision dated November 25, 2014, the administrator again denied Cain's claim for benefits. Specifically, Ms. Reese found:

The preponderance of the evidence supports that Mr. Cain's significant alcohol intoxication was the direct cause of his inability to safely navigate the flight of stairs or quickly react to his loss of footing, was the direct cause of the subsequent injuries sustained from the fall, and that the accident would not have occurred in the absence of alcohol. Thus, medical expenses arising from such fall[s] are excluded from coverage under Item 52 of the General Limitations Section of the Plan.

         In her written decision, the administrator also attempted to address the two primary concerns the court raised in the EPCO lawsuit. First, the administrator interpreted the “as a result of alcohol . . . use” coverage exclusion to mean that alcohol need not be the “but for” cause of any accident. The administrator reached this conclusion after reviewing the text of other exclusions in the Plan. She reasoned that the Plan uses “sole” or “solely” where a finding of “but for” causation is required, as opposed to “as a result of” language in the relevant provision here.

         Second, the administrator ruled out other possible causes for Cain's fall. With respect to the condition of the basement stairs, the administrator explained that she personally walked them with no difficulty and further credited Ms. Palmer's belief that the stairs were safe. Additionally, concerning fatigue, the administrator noted that Cain had been working only six hours the day before his fall, had never fallen due to fatigue at any other time even when he worked more than six hours, and was not too tired to socialize. Finally, the administrator explained that Cain's slippers did not appear unusual, at least based on the pictures she reviewed and Ms. Palmer's statement that Cain had worn the rubber-soled slippers with no concern on other occasions.

         OPINION

         Because the Plan expressly grants the administrator discretionary authority to interpret its terms and determine whether claims are eligible for benefits, the parties agree that the arbitrary and capricious standard of review applies here. See Wetzler v. Ill. CPA Soc. & Found. Ret. Income Plan, 586 F.3d 1053, 1057 (7th Cir. 2009) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). Under this deferential standard, “an administrator's interpretation is given great deference and will not be disturbed if it is based on a reasonable interpretation of the plan's language.” Id. Only if an administrator's decision is “downright unreasonable” can the court reverse her decision. Blickenstaff v. R.R. Donnelley & Sons Co. Short Term Disability Plan, 378 F.3d 669, 677 (7th Cir. 2004). Still, because the administrator applied a provision excluding coverage for benefits, defendant has the burden of showing that the exclusion applies. See, e.g., Fuja v. Benefit Tr. Life Ins. Co., 18 F.3d 1405, 1408 (7th Cir. 1994).

         The court is to consider “reasonableness” in light of the following factors: “the impartiality of the decision making body, the complexity of the issues, the process afforded the parties, the extent to which the decision makers utilized the assistance of experts where necessary, and finally the soundness of the fiduciary's ratiocination.” Chalmers v. Quaker Oats Co., 61 F.3d 1340, 1344 (7th Cir. 1995). Rather than address these factors head on, plaintiffs take a scatter-shot approach to challenging the administrator's decision on remand on both procedural and substantive grounds. While keeping the applicable reasonable factors in mind, the court will address plaintiffs' arguments in turn.

         I. Procedural Challenges

         To begin, plaintiffs contend that the plan administrator committed a variety of procedural errors. As plaintiffs acknowledge, those purported errors would not themselves entitle plaintiffs to a remedy or alter the standard of review. (Pls.' Opp'n Br. (dkt. #27) 13.) Instead, any procedural violations would be considered in determining whether the plan administrator's decision was arbitrary and capricious. See Weitzenkamp v. Unum Life Ins. Co. of Am., 661 F.3d 323, 329 n.3 (7th Cir. 2011).

         A. Timing of the administrator's decision

         Plaintiffs first challenge the administrator's compliance with 29 C.F.R. § 2560.503-1(f)(1), which states in pertinent part that:

if a claim is wholly or partially denied, the plan administrator shall notify the claimant . . . of the plan's adverse benefit determination within a reasonable period of time, but not later than 90 days after receipt of the claim by the plan, unless the plan administrator determines that special circumstances require an extension of time for processing the claim. If the plan administrator determines that an extension of time for processing is required, written ...

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