Mitchell Sgro applied for disability benefits from MetLife, which decided benefit claims for his employer’s ERISA plan. Sgro asserted that MetLife refused to evaluate his claim because he did not send copies of medical records. Sgro eventually paid $412 for the copies. MetLife denied his claim after receiving them.
Sgro sued his employer and MetLife in a
Sgro argued that a
The regulation doesn't require insurers to insure against additional risks. Cf. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 730, 758, 105 S. Ct. 2380, 85 L. Ed. 2d 728 (1985) (state law that requires health insurers to insure against mental health problems "regulates insurance"). Nor does the regulation require insurers to offer their insureds additional benefits in the event that the insureds take ill. Cf.
KentuckyAss'n, 538 at 338 (state law that requires health insurers to permit their insureds to see "any willing provider" in the state "regulates insurance"). Nor does the regulation substantially affect the likelihood that a disputed claim will ultimately be deemed valid. Cf. Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 361, 122 S. Ct. 2151, 153 L. Ed. 2d 375 (2002) (state law requiring HMOs to offer participants the option of having an independent physician review a denial of coverage "regulates insurance"); UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 364, 119 S. Ct. 1380, 143 L. Ed. 2d 462 (1999) (state law requiring insurers to accept late-filed claims unless the delay prejudiced them "regulates insurance"). U.S.
There is one way that the
regulation could affect insurers' risks: By requiring insurers to pay copying costs, the regulation does make it slightly easier for insureds to file claims. If that causes more insureds to file claims, and if some of those additional claims are meritorious, then the regulation will cause insurers to pay more benefits than they otherwise would absent the regulation. But this possibility is too remote and speculative to "substantially" affect the risk pooling arrangement between insurers and their insureds. California KentuckyAss'n, 538 at 342. U.S.
The Ninth Circuit also rejected the position that the defendants violated the ERISA claims procedures (29 C.F.R. § 2560.503-1) by “requir[ing] payment of a fee or cost as a condition to making a claim.” The Court explained that the copy charges were not a “condition” of making a claim:
The plan merely required Sgro to provide documentation, which is quite different from "condition[ing]" his application on a payment. A "condition" is something that's required of every application; the cost of providing documents, by contrast, depends on decisions made by the beneficiary and could be zero in some cases. For example, if Sgro had copies of the documents on hand at the time he applied for benefits, he could have submitted those copies; or, if his doctors were willing to make copies for him for free, he could have submitted those. In either case, he would have avoided any additional cost. So photocopying costs weren't a "condition" for Sgro to make a claim.
Sgro's reading of the regulation would require plan administrators to pay for a number of other expenses that are typically borne by beneficiaries. To apply for benefits, a claimant must spend time putting together his application or pay someone else to do so; he may require additional medical tests; if he doesn't speak English, he'll need a translator; he may need postage to mail in his application. All these are costs incurred in claiming benefits, but none is a "condition" of making a claim. Nothing in this regulation forbids defendants from requiring Sgro to provide, at his own expense, the documents needed to prove his disability. We therefore affirm the dismissal of Sgro's claim that defendants violated this regulation.
The Court also addressed Sgro’s claim under 29 U.S.C. § 1132(c)(1) for failure to provide claims materials that he requested. He alleged that that the defendants did not provide a complete copy of his claim file (including “claim activity records and investigation notes”). The Court upheld the dismissal of this claim as directed to MetLife, since MetLife was not the plan administrator. As the Court held, “Even if Sgro did ask MetLife for the records, that company can’t be liable under section 1132(c)(1). That section only gives Sgro a remedy against a plan ‘administrator,’ and MetLife isn’t the plan administrator.” The court ruled that Sgro would be allowed to amend his complaint, if he could do so in good faith, to allege that he had requested the claims materials from the plan administrator (the employer).
The case is Sgro v. Danone Waters of North America, Inc., 2008 U.S. App. LEXIS 13973 (9th Cir. Jul. 2, 2008).