Rachel Condry v. Unitedhealth Group, Inc. ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS SEP 16 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
RACHEL CONDRY; et al., No. 20-16823
Plaintiffs-Appellees, D.C. No. 3:17-cv-00183-VC
TERESA HARRIS,
MEMORANDUM*
Intervenor-Plaintiff-
Appellee,
v.
UNITEDHEALTH GROUP, INC.; et al.,
Defendants-Appellants.
RACHEL CONDRY; et al., No. 20-16857
Plaintiffs-Appellants, D.C. No. 3:17-cv-00183-VC
TERESA HARRIS,
Intervenor-Plaintiff-
Appellant,
v.
UNITEDHEALTH GROUP, INC.; et al.,
Defendants-Appellees.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Appeal from the United States District Court
for the Northern District of California
Vince Chhabria, District Judge, Presiding
Argued and Submitted July 26, 2021
San Francisco, California
Before: McKEOWN and NGUYEN, Circuit Judges, and LAMBERTH,** District
Judge.
The parties in these cross-appeals challenge six rulings below. After
explaining why we have appellate jurisdiction over these cross-appeals, we will
address each challenged ruling.
1. We have jurisdiction over these cross-appeals under 28 U.S.C. § 1291. At
the time the district court granted in part and denied in part the parties’ cross-
motions for summary judgment, its ruling was undoubtedly interlocutory. See
Dannenberg v. Software Toolworks Inc., 16 F.3d 1073, 1074 (9th Cir. 1994). The
same is true of the district court’s partial grant and partial denial of the plaintiffs’
class-certification motion, as well as the district court’s denial of Teresa Harris’s
motion for permissive intervention. See Microsoft Corp. v. Baker, 137 S. Ct. 1702,
1706 (2017); Perry v. Proposition 8 Official Proponents, 587 F.3d 947, 955
(9th Cir. 2009). But after the district court issued those three rulings, the parties
resolved all outstanding claims pursuant to a partial settlement agreement. See The
**
The Honorable Royce C. Lamberth, United States District Judge for
the District of Columbia, sitting by designation.
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parties set forth the terms of that agreement in a “Stipulated Proposed Final
Judgment and Order,” and the district court entered the proposed order as written.
By resolving all outstanding claims in the litigation, the parties transformed the
three interlocutory rulings into final (and thus appealable) decisions. See 28 U.S.C.
§ 1291.
This case is distinguishable from Microsoft Corp. v. Baker, where the
Supreme Court held that the court of appeals did not have jurisdiction under
§ 1291. 137 S. Ct. at 1706–07. Unlike in Microsoft, the parties here did not reserve
the right to revive the claims dismissed with prejudice if the court of appeals
reversed the district court’s denial of class certification. See id. And because the
parties here resolved all claims in the litigation before noting their cross-appeals,
exercising jurisdiction over these cross-appeals would not “subvert the balanced
solution Rule 23(f) put in place for immediate review of class-action orders.” Id. at
1707. Thus, because all claims below have been resolved—either by a ruling on
the merits from the district court or pursuant to the terms of the partial settlement
agreement—and because the parties did not engage in gamesmanship to
manufacture appellate jurisdiction, see Brown v. Cinemark USA, Inc., 876 F.3d
1199, 1201 (9th Cir. 2017), we have jurisdiction under 28 U.S.C. § 1291.11
This is true even though the parties reserved their right to seek attorney’s fees.
See Budinich v. Becton Dickinson & Co., 486 U.S. 196, 202 (1988) (holding that
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2. We lack jurisdiction to review Harris’s motion for permissive intervention
and for intervention as a matter of right. With respect to Harris’s motion for
permissive intervention, we review the district court’s denial for abuse of
discretion. Perry, 587 F.3d at 955 (citing League of United Latin Am. Citizens v.
Wilson, 131 F.3d 1297, 1307 (9th Cir. 1997)). “Absent a finding of abuse of
discretion, we must dismiss the appeal for lack of jurisdiction.” Id. Here, the
district court reasonably determined that granting Harris’s motion to intervene
would unfairly prejudice UnitedHealth Group Inc. (“United”). By the time Harris
moved to intervene, the district court had already ruled on the parties’ cross-
motions for summary judgment. As the district court aptly recognized, adding a
new plaintiff at this late stage in the litigation would likely prompt another motion
to dismiss, another period for discovery, and more summary judgment motions.
The district court’s refusal to permit the litigation to continue along that path was
hardly an abuse of discretion. We thus lack jurisdiction to review the district
court’s denial of Harris’s motion for permissive intervention. See id.As for Harris’s motion to intervene as a matter of right, we lack jurisdiction
to review the district court’s denial because Harris’s appeal of that denial was
untimely. The denial of a motion to intervene as a matter of right “must be
“an unresolved issue of attorney’s fees for the litigation in question does not
prevent [a] judgment on the merits from being final”).
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appealed on an interlocutory basis[.]” United States v. City of Oakland, 958 F.2d
300, 302 (9th Cir. 1992). But Harris waited roughly nine months to appeal the
district court’s denial of her motion. We thus lack jurisdiction to review the denial
of her motion to intervene as a matter of right. See Hamer v. Neighborhood
Housing Servs. of Chi., 138 S. Ct. 13, 17 (2017); 28 U.S.C. § 2107(a).
3. We affirm the district court’s grant of summary judgment to United on
Rachel Condry’s and Felicity Barber’s reimbursement claims (Count 2).2 The
plaintiffs correctly note that the Affordable Care Act requires health insurance
issuers to cover comprehensive lactation services in full. See 42 U.S.C. § 300gg-
13(a)(4) (requiring health-insurance issuers to provide coverage in full for
“preventive care and screenings . . . as provided for in comprehensive guidelines
supported by the Health Resources and Services Administration”); Women’s
Preventive Services Guidelines, Health Res. & Servs. Admin., https://www.hrsa.
gov/womensguidelines/index.html (last visited Sept. 9, 2021) (determining that
“comprehensive lactation support and counseling” is a type of “preventive
service”). But as the applicable regulations clarify, plan administrators that offer
participants access to in-network lactation-services providers are not required to
cover lactation services that are provided by an out-of-network provider. 29 C.F.R.
2
The district court referred to these claims as the “coverage of lactation services
claims.”
5
§ 2590.715-2713(a)(3)(i).
At summary judgment, United presented undisputed evidence showing that
Condry and Barber sought care from out-of-network lactation-services providers
even though there were in-network lactation specialists located nearby.
Accordingly, United has no obligation under the Affordable Care Act to reimburse
Condry and Barber for the cost of out-of-network lactation services. United’s
denial of Condry’s and Barber’s requests for reimbursement was thus proper, so
we affirm the district court’s grant of summary judgment to United on Condry’s
and Barber’s reimbursement claims.
4. There is no Article III jurisdiction over Condry’s and Barber’s full-and-
fair-review claims (Count 1).3 Showing why that is so requires a brief description
of the full-and-fair-review claim and its relationship to the reimbursement claim.
While the reimbursement claim challenges United’s denial of the plaintiffs’
requests for reimbursement, the full-and-fair-review claim challenges the process
by which United denied those requests. Specifically, the full-and-fair-review claim
alleges that United sent the plaintiffs denial letters with cursory and confusing
explanations for United’s denial of their request for reimbursement. In so doing,
the plaintiffs argue, United failed to comply with the claims-processing rules set
forth in the Employee Retirement Income Security Act (“ERISA”). Without a clear
3
The district court referred to these claims as the “claims processing claims.”
6
reason for the denial, the plaintiffs say, they cannot meaningfully contest the
denial, which means that they cannot be reimbursed. Thus, both the full-and-fair-
review claim and the reimbursement claim are means of obtaining the same
desired end: reimbursement from United.
But as explained above, Condry and Barber are not entitled to any
reimbursement from United. By seeking out-of-network care when they could have
gone to in-network providers, Condry and Barber relieved United of its obligation
under the Affordable Care Act to reimburse them. See 29 C.F.R. § 2590.715-
2713(a)(3)(i); 2 SER 72–73. Thus, a ruling in favor of Condry and Barber on their
full-and-fair-review claims and an order directing United to send them a clearer
denial letter could not possibly lead to reimbursement.
Put in Article-III-standing terminology, a favorable ruling on Condry’s and
Barber’s full-and-fair-review claims could not redress any concrete injury. See,
e.g., Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990) (holding that to support
Article III jurisdiction, “a litigant must have suffered, or be threatened with, an
actual injury traceable to the defendant and likely to be redressed by a favorable
judicial decision”). Indeed, because neither Condry nor Barber is entitled to
reimbursement, any harm caused by a confusing denial letter is no more than a
“bare procedural violation.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016);
accord TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2213–2214 (2021). And it is
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well established that a bare procedural violation of ERISA, “without some concrete
interest that is affected by the deprivation,” does not satisfy the injury-in-fact
requirement of Article III standing. Spokeo, Inc., 136 S. Ct. at 1549 (quoting
Summers v. Earth Island Inst., 555 U.S. 488, 496 (2009)); see Thole v. U.S. Bank
N.A., 140 S. Ct. 1615, 1622 (2020) (“There is no ERISA exception to Article III.”).
In sum, because a favorable ruling on Condry’s and Barber’s full-and-fair-
review claims could not redress a concrete injury, there is no Article III jurisdiction
over those claims. See id. We thus vacate the district court’s grant of summary
judgment to Condry and Barber on their full-and-fair-review claims and remand
with instruction to dismiss those claims for lack of standing.
5. The partial settlement agreement mooted Bishop’s, Hoy’s, and Endicott’s
full-and-fair-review claims, so we vacate the district court’s grant of summary
judgment to those plaintiffs on those claims and remand with instruction to dismiss
those claims as moot.
After the district court issued its summary-judgment ruling, the parties
entered into a partial settlement agreement. Pursuant to that agreement, United
agreed to reimburse Hoy and Bishop for the cost of out-of-network lactation
services, plus pre-judgment interest. Because Hoy and Bishop brought their full-
and-fair-review claims with the aim of getting reimbursed, United’s agreement to
pay their costs in full is thus an “intervening circumstance” that deprived Hoy and
8
Bishop of a “personal stake in the outcome” of their full-and-fair-review claim.
Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 72 (2013) (quoting Lewis, 494
U.S. at 477–78). Their claims are thus moot. See id.The same is true for Endicott’s full-and-fair-review claim. As the Stipulated
Final Judgment and Order reflects, Endicott agreed to settle her reimbursement
claim. As part of that agreement, Endicott dismissed her reimbursement claim with
prejudice. Because Endicott has already settled and dismissed with prejudice her
reimbursement claim, a clearer denial letter could not lead to reimbursement from
United. Thus, the partial settlement agreement mooted Endicott’s full-and-fair-
review claim as well.
When a claim becomes moot during the course of the litigation, the
established practice is “to reverse or vacate the judgment below and remand with a
direction to dismiss.” United States v. Munsingwear, Inc., 340 U.S. 36, 39 (1950).
Accordingly, we vacate the district court’s grant of summary judgment to Hoy,
Bishop, and Endicott on their full-and-fair-review claims and remand with
instruction to dismiss those claims as moot.
6. We reverse the district court’s grant of class certification to the Denial
Letter Class and dismiss the Denial Letter Class claim. Though we have concluded
that all the named plaintiffs’ individual full-and-fair-review claims must be
dismissed for lack of standing or mootness, this conclusion is not necessarily fatal
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to the Denial Letter Class claim. Where, as here, a named plaintiff’s claims
become moot after a class was certified, the mooting of her individual claim will
not result in dismissal of the class claim so long as the class was properly
certified. See Franks v. Bowman Transp. Co., Inc., 424 U.S. 747, 753–57
(1976). Accordingly, to determine whether the Denial Letter Class claim may
proceed, we must consider on the merits whether the district court properly
certified the Denial Letter Class.
It did not. By focusing exclusively on the remark codes used in United’s
denial letters, the district court applied the incorrect legal standard for determining
whether United complied with ERISA’s claims-processing rules. See 29 U.S.C.
§ 1133. Under our precedent, courts must consider the entire course of
communication between the plan administrator and the plan participant to
determine whether the denial letter provided a sufficiently clear reason for the
denial. See, e.g., Harlick v. Blue Shield of Cal., 686 F.3d 699, 720 (9th Cir. 2012)
(considering “extensive communication” between insured, insured’s mother, and
insurance provider in determining whether insurance provider provided a specific
reason for the denial); Saffon v. Wells Fargo & Co. Long Term Disability Plan,
522 F.3d 863, 870–71 (9th Cir. 2008) (considering reports sent to insured’s
medical provider in conjunction with the termination letters).
Under this legal standard, class certification of the Denial Letter Class was
10
improper. Given the individualized inquiry required to evaluate the sufficiency of
the denial letters, the class representatives’ claims are not typical of the class
members’ claims. See Fed. R. Civ. P. 23(a)(3). Thus, because there is no typicality,
certification of the Denial Letter Class was an abuse of discretion. See id. And
because the Denial Letter Class was not properly certified before the partial
settlement agreement mooted Bishop’s, Hoy’s, and Endicott’s claims, the class
claim must also be dismissed as moot. See U.S. Parole Comm’n v. Geraghty, 445
U.S. 388, 404 (1980).
7. Because certification of the Denial Letter Class was an abuse of
discretion, and the full-and-fair-review class claim thus must be dismissed as moot,
we vacate the district court’s grant of permanent injunctive relief in favor of the
Denial Letter Class.
8. We dismiss the Claims Reprocessing Class claim as moot. Though all the
named plaintiffs’ individual reimbursement claims either lack standing or are
moot, the mooting of a named plaintiff’s individual claim after the denial of class
certification will not result in dismissal of the class claim, so long as the denial of
class certification is reversed on appeal. Id. Here, however, the Claims
Reprocessing Class claim must be dismissed as moot because the district court’s
denial of class certification was not an abuse of discretion. As the district court
correctly recognized, United did not take a uniform approach to resolving claims
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for out-of-network comprehensive lactation services. The claims of the named
plaintiffs thus are not typical of the claims of the class, as they must be for class
certification. See Fed. R. Civ. P. 23(a)(3). Accordingly, because the district court
properly denied class certification to the Claims Reprocessing Class before
Bishop’s, Hoy’s, and Endicott’s claims became moot, the class claim must also be
dismissed as moot. See Geraghty, 445 U.S. at 404.
***
In sum, we DISMISS Teresa Harris’s appeal of the district court’s denial of
her motion to intervene; AFFIRM the district court’s grant of summary judgment
to United on Rachel Condry’s and Felicity Barber’s reimbursement claims (Count
2); VACATE AND REMAND the district court’s grant of summary judgment to
Rachel Condry and Felicity Barber on their full-and-fair-review claims (Count 1)
with instruction to dismiss those claims for lack of standing; VACATE AND
REMAND the district court’s grant of summary judgment to Jance Hoy, Laura
Bishop, and Christine Endicott on their full-and-fair-review claims (Count 1) with
instruction to dismiss those claims as moot; VACATE the district court’s grant of
class certification to the Denial Letter Class and REMAND with instruction to
dismiss the Denial Letter Class claim as moot; VACATE the permanent injunctive
relief awarded to the Denial Letter Class; and REMAND with instruction to
dismiss the Claims Reprocessing Class claim as moot. Each party shall bear its
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own costs.
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