Professional Negligence Law Reporter

The Eighth Circuit Court of Appeals held that a third-party plan administrator did not act improperly by denying a plan participant’s claim for benefits after he underwent surgery for a complication of previous weight loss surgery, a non-covered service.

Darrin Shafer underwent bariatric surgery in April 2015. He began working for Zimmerman Transfer, Inc., several months later and became a participant in its self-insured employee benefit plan. Benefit Plan Administrators of Eau Claire (BPA) served as the plan’s third-party administrator until January 2020.

In 2017, Shafer went to a hospital ER, where he was diagnosed as having a bowel obstruction resulting from the surgery. He underwent another procedure, which was initially certified by BPA. Nevertheless, BPA later denied Shafer’s claim for benefits. Several subsequent reviews of the claim confirmed the denial of benefits.

Shafer sued BPA and Zimmerman, seeking health insurance benefits under ERISA. The parties moved and cross-moved for summary judgment. The district court granted the defendants’ cross-motion.

Affirming, the Eighth Circuit noted that in determining whether a plan administrator’s interpretation of a plan was reasonable, several factors should be considered, including whether the interpretation is contrary to the plan’s clear language, conflicts with ERISA’s substantive or procedural requirements, renders any language in the plan meaningless, and is consistent with the plan’s goals. Moreover, the court said, it should be determined whether the administrator has consistently followed the interpretation. Here, the court reasoned that the plaintiff’s plan specifically excludes coverage of treatment for complications of weight reduction surgery, and the fact that the plaintiff’s treatment was medically necessary does not make it a covered expense. The court also found that imposing coverage limitations is not inconsistent with the plan’s goal in that the plan must allocate limited resources among all of its participants.

Finally, the court rejected the plaintiff’s argument that the reviewers of his claim had a conflict of interest because BPA had paid them. The plaintiff has not shown how this purported conflict of interest impacted the claims decision, the court found, adding that such a conflict adds little weight to the abuse of discretion analysis here.

Consequently, the court concluded that the district court’s ruling was proper.

Citation: Shafer v. Zimmerman Transfer, Inc., 2023 WL 3857343 (8th Cir. June 7, 2023).