Bryan v. Office of Personnel ( 1999 )

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JAN 14 1999
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
__________________________
LORITA BRYAN,
Plaintiff-Appellant,
v. No. 97-6425
OFFICE OF PERSONNEL MANAGEMENT,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Oklahoma
(D.C. No. 97-CV-982)
Glen Mullins, Oklahoma City, Oklahoma, for Plaintiff-Appellant.
Robert A. Bradford (Patrick M. Ryan, United States Attorney, with him on the
brief), Assistant United States Attorney, Oklahoma City, Oklahoma, for
Defendant-Appellee.
Terry B. Dowd of Miller & Chevalier, and James R. Barnett of Gordon & Barnett,
Washington, D.C., filed a brief for amici Curiae Blue Cross and Blue Shield
Association and the Association of Federal Health Organizations.
Before ANDERSON, BRORBY, Circuit Judges, and CAMPBELL *, District
Judge.
*
The Honorable Tena Campbell, United States District Court Judge for the
District of Utah, sitting by designation.
BRORBY, Circuit Judge.
Plaintiff-Appellant, Mrs. Lorita Bryan, appeals a district court order
dismissing her suit against the Office of Personnel Management to recover health
benefits for jaw surgery, plus interest and attorney fees. The district court
determined it lacked jurisdiction to award money damages against the Office of
Personnel Management, it could not award interest in absence of a monetary
judgment, and attorney fees were not warranted under state law or the Equal
Access to Justice Act, 28 U.S.C. § 2412. We exercise jurisdiction pursuant to 28
U.S.C. § 1291 and affirm.
I. Background
In 1992, Mrs. Bryan had reconstructive maxillofacial surgery to correct a
skeletal deformity in her jaw. At the time of her surgery, Mrs. Bryan participated
in a health benefit plan for federal employees and their dependents provided
through the Office of Personnel Management (“Personnel Management”).
Pursuant to this plan, Mrs. Bryan submitted three claims for her surgery, totaling
$19,744.15, to the plan administrator, Blue Cross/Blue Shield of Oklahoma
(“Blue Cross”). Blue Cross denied the claims because it determined the surgery
was not medically necessary.
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Mrs. Bryan then embarked on a fairly lengthy appeals process. First, she
appealed to Personnel Management, which affirmed the denial of benefits because
it determined Mrs. Bryan’s surgery constituted oral surgery not covered under her
plan. Mrs. Bryan then sought judicial review of Personnel Management’s
decision in district court. The district court granted summary judgment in favor
of Personnel Management. Mrs. Bryan filed an appeal with this court but later
dismissed it voluntarily when Personnel Management offered to reconsider her
claims. Upon joint motion of the parties, the district court withdrew its earlier
decision, dismissed the complaint, and remanded the case to Personnel
Management. In April 1997, Personnel Management notified Mrs. Bryan it had
reconsidered her claims, determined the plan did cover her surgery, and Blue
Cross would provide benefits up to the contract limits. After receiving this
notification, Mrs. Bryan advised Blue Cross and Personnel Management her
attorneys were asserting a lien on any benefits she recovered and requested
information regarding payment of that lien. Neither party responded to her
letters. Mrs. Bryan also filed suit in district court, seeking to recover attorney
fees and costs under the Equal Access to Justice Act, 28 U.S.C.A. § 2412(d).
In early July, three months after Personnel Management extended coverage
to Mrs. Bryan’s surgery, Blue Cross made a payment on one of Mrs. Bryan’s three
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claims. The payment, accompanied by a brief “Explanation of Benefits,” was not
for the full amount claimed by Mrs. Bryan. 1 Rather, Blue Cross deducted certain
amounts for “noncovered charges” and coinsurance payments. The Explanation
of Benefits did not elaborate as to why some charges were “non-covered,” stating
only that “[b]enefits are not paid for services and supplies not specifically listed
as covered in ... [the] plan brochure.” Mrs. Bryan sought additional information
regarding the calculation of benefits from Blue Cross but Blue Cross failed to
provide it. Apparently out of frustration, Mrs. Bryan then amended her complaint
to request a judgment for the “benefits owed” plus interest. While her suit was
pending, Blue Cross made payments on Mrs. Bryan’s remaining two claims. On
both claims, Blue Cross paid less than the amount claimed based on deductions
for coinsurance and negotiated savings. 2 None of the payments made by Blue
Cross acknowledged Mrs. Bryan’s attorney’s lien.
Personnel Management moved to dismiss Mrs. Bryan’s complaint, arguing
sovereign immunity barred an award of money damages or interest. The district
1
Mrs. Bryan submitted a claim for $9,220.01 for the services of Dr. Markowitz.
Blue Cross paid $2,907.50 on that claim.
2
Blue Cross paid $6,150.28 of the $9,470.15 claim Mrs. Bryan submitted for the
services provided by Columbia Presbyterian Hospital and $675 of the $1,054 claim
submitted for the services of Dr. Perkins.
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court agreed and dismissed the complaint for lack of jurisdiction. The court also
determined the Oklahoma attorney fees statute relied on by Mrs. Bryan was
inapplicable and that fees were not appropriate under the Equal Access to Justice
Act because the government’s position was substantially justified. On appeal,
Mrs. Bryan argues (1) the district court had authority to review Personnel
Management’s calculation of benefits and to enter an order directing Personnel
Management to pay the full amount of benefits claimed plus interest; (2) the court
erred in allowing Personnel Management to ignore the attorney lien; and (3)
attorney fees and costs are warranted under state law and the Equal Access to
Justice Act.
II. Judicial Review
Mrs. Bryan asserts that, pursuant to federal regulation, the district court had
jurisdiction to “determine the amount of benefits owed” and enter an order
directing Personnel Management to require Blue Cross to pay that amount and
honor her attorney’s lien. See 5 C.F.R. § 890.107. Further, Mrs. Bryan asserts
she is entitled to the full amount of benefits claimed ($19,744.15) because
Personnel Management failed to provide the court with any information on an
alternative calculation. Mrs. Bryan also claims the district court failed to perform
a proper judicial review of her benefit claims. We review de novo the district
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court's order dismissing the case for lack of subject matter jurisdiction. Weaver v.
United States, 98 F.3d 518, 519 (10th Cir. 1996).
In order to bring a suit against the government or one of its agencies, a
plaintiff must have “a substantive right to the relief sought and an explicit
Congressional consent authorizing such relief.” Keesee v. Orr, 816 F.2d 545, 547
(10th Cir. 1987). Consent is a prerequisite of jurisdiction, In re Talbot (United
States v. Richman), 124 F.3d 1201, 1205 (10th Cir. 1997), and the government’s
consent “defines the terms and conditions upon which it may be sued,” Richman
v. Straley, 48 F.3d 1139, 1146 (10th Cir. 1995). A waiver of sovereign immunity
is strictly construed in favor of the sovereign. Talbot, 124 F.3d at 1206.
In this case, the Federal Employees Health Benefits Act (“Benefits Act”), 5
U.S.C. §§ 8901 through 8914, governs claims brought under Mrs. Bryan’s health
benefit plan. The regulations accompanying the Benefits Act delegate authority
to resolve benefit claims to the health benefit carrier, in this case Blue Cross. 5
C.F.R. § 890.105(a)(1). If a covered individual, such as Mrs. Bryan, disputes the
carrier’s resolution of a claim, the individual may seek reconsideration by the
carrier and further review by Personnel Management. 5 C.F.R. § 890.105(a)(1)
and (b)(3). Only after exhausting these remedies, may the covered individual
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seek judicial review of Personnel Management’s final action. 5 C.F.R.
§ 890.107(c) and (d). The regulations limit the role of the courts in a benefits
dispute:
A covered individual may seek judicial review of OPM's final action
on the denial of a health benefits claim. A legal action to review
final action by OPM involving such denial of health benefits must be
brought against OPM and not against the carrier or carrier's
subcontractors. The recovery in such a suit shall be limited to a
court order directing OPM to require the carrier to pay the amount of
benefits in dispute.
5 C.F.R. § 890.107(c).
Congress clearly intended a limited waiver of sovereign immunity in
Benefits Act disputes – courts only have jurisdiction to review final actions, after
exhaustion, and only one remedy is available. See id. Moreover, because the
Benefits Act does not specifically provide otherwise, the Administrative
Procedure Act; 5 U.S.C. §§ 500 through 706, governs judicial review of final
Personnel Management decisions. See Harris v. Mutual of Omaha Cos., 992 F.2d
706, 712 (7th Cir. 1993) (concluding the Administrative Procedure Act governs
review of a final Personnel Management decisions); Caudill v. Blue Cross & Blue
Shield, 999 F.2d 74, 79 (4th Cir. 1993) (same). Under the Administrative
Procedure Act, the court must afford considerable deference to the Personnel
Management’s findings and set aside a Personnel Management action only if it
was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
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with law.” 5 U.S.C. § 706(2)(A).
Mrs. Bryan seeks more from the district court than this limited waiver of
sovereign immunity allows. In her Amended Complaint, Mrs. Bryan alleges
“[t]he defendant has breached the terms of the plan and owes plaintiff the benefits
she is entitled to under the plan in the amount of $19,744.15” and prays for
judgment against the defendant in that amount plus interest. 3 We read this
language as a request for monetary judgment against Personnel Management – a
remedy not contemplated by the government’s waiver of sovereign immunity. See
5 C.F.R. § 890.107(c). Because the government has not consented to monetary
judgments in Benefits Act disputes, the district court correctly dismissed Mrs.
Bryan’s suit for lack of jurisdiction.
Moreover, even if we were to construe Mrs. Bryan’s complaint as a request
for judicial review, the court would still lack jurisdiction in this case because
Mrs. Bryan did not meet the terms and conditions defined in the government’s
waiver of sovereign immunity. See Richman, 48 F.3d at 1146. First, the
3
Mrs. Bryan’s complaint requests judicial review, but only in regard to Personnel
Management’s denial of attorney fees under the Equal Access to Justice Act. As
discussed below, even if we were to construe this language as a request for judicial
review of all her claims, the district court still lacked jurisdiction to hear the case.
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regulations require covered individuals to exhaust administrative remedies before
seeking judicial review. 5 C.F.R. § 890.107(d)(1). While Mrs. Bryan clearly
exhausted her administrative remedies in her first appeal regarding the issue of
overall coverage of her surgery, she never formally appealed Blue Cross’ decision
to pay only a portion of the claimed expenses. See 5 C.F.R. § 890.105(a)
(detailing administrative remedies if a covered individual disputes the carrier’s
denial of a claim or portion of a claim). Under the federal regulations, a covered
individual must submit a request for reconsideration to the carrier in writing and
give reasons why the carrier should have approved the denied claim. See 5 C.F.R.
§ 890.105(c). We do not believe Mrs. Bryan’s various requests for information fit
within this definition, especially considering that Mrs. Bryan made those requests
before Blue Cross had made payment on all three claims. Even if those letters did
amount to a request for reconsideration to Blue Cross, Mrs. Bryan still failed to
request further review by Personnel Management, as required by the regulations.
See 5 C.F.R. § 890.105(a)(1) (“A covered individual must exhaust both the carrier
and OPM review processes specified in this section before seeking judicial review
of the denied claim.”).
Second, courts may only review Personnel Management’s “final action on
the denial of a health benefits claim.” 5 C.F.R. § 890.107(c) (emphasis added).
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Because Mrs. Bryan failed to exhaust her administrative remedies, Personnel
Management never reviewed Blue Cross’ calculation of benefits. As such, there
is no “final action” by Personnel Management nor an administrative record for the
district court to review.
While we recognize the frustration experienced by Mrs. Bryan in
attempting resolve her claims, we must adhere to the terms and conditions of the
government’s waiver of sovereign immunity. 4 Talbot, 124 F.3d at 1206 (holding
that a waiver of sovereign immunity is strictly construed in favor of the
sovereign). Accordingly, we conclude the district court lacked jurisdiction to
review Mrs. Bryan’s claims and therefore could not order the payment of benefits
and/or interest, nor review Personnel Management’s/Blue Cross’s treatment of the
4
The district court speculated it would excuse exhaustion if that were the only
argument relied on by Appellee because of Mrs. Bryan’s “thwarted efforts” to recover
benefits. A court may excuse exhaustion if administrative remedies would be futile, when
administrative remedies would provide inadequate relief, or when the agency has adopted
a policy or practice of general applicability which is contrary to law. Urban v. Jefferson
County School Dist., 89 F.3d 720, 724 (10th Cir. 1996). Mrs. Bryan did not raise an
excuse of exhaustion argument before this court. See State Farm Fire & Cas. Co. v.
Mhoon, 31 F.3d 979, 984 n.7 (10th Cir 1994) (concluding appellant waived issue not
raised in his opening brief). Nevertheless, we note administrative remedies are futile or
inadequate when a plaintiff alleges “structural or systemic failure and seek[s] system-
wide reforms. Urban, 89 F.3d at 725 (internal quotation marks and citation omitted).
Mrs. Bryan’s Amended Complaint does not address such structural deficiencies but
focuses on the denial of her particular benefit claims.
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attorney’s lien. 5
III. Attorney Fees
A. Oklahoma Law
Mrs. Bryan first argues an award of attorney fees is appropriate under
Oklahoma state statute. The district court concluded the state statute was
inapplicable. We review de novo the legal conclusions underlying an award of
attorneys’ fees. Harolds Stores, Inc. v. Dillard Dep’t Stores, Inc., 82 F.3d 1533,
1553 (10th Cir.), cert. denied, 117 S. Ct. 297 (1996).
Under the Benefits Act, the provisions of contracts issued pursuant to the
Act “supersede and preempt” any state or local law which relates to health
insurance “to the extent that such law or regulation is inconsistent with such
contractual provisions.” 5 U.S.C. § 8902(m)(1). Mrs. Bryan’s health benefit plan
limits recoverable damages to “the amount of contract benefits in dispute, plus
simple interest and court costs.” Oklahoma law allows courts to award costs and
attorneys fees to the prevailing party in a dispute between an insured and insurer.
5
While we recognize the limited jurisdiction of the court in this case, we join with
the district court in expressing concern over the manner in which Personnel Management
and Blue Cross handled Mrs. Bryan’s claims.
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Okla. Stat. tit. 36, § 3629(B). Because the Oklahoma statute is inconsistent with
the terms of Mrs. Bryan’s plan, the provisions of the plan preempt and supercede
the statute. Accordingly, the district court did not err in denying attorney fees on
that basis.
B. The Equal Access to Justice Act
Mrs. Bryan next argues she is entitled to attorney’s fees under the Equal
Access to Justice Act. The Equal Access to Justice Act requires a court to award
attorney fees to prevailing, non-government parties in civil actions brought by or
against the United States, “unless the court finds that the position of the United
States was substantially justified or that special circumstances make an award
unjust.” 28 U.S.C. § 2412(d)(1)(A). Mrs. Bryan contends she is a prevailing
party because Personnel Management ultimately granted coverage of her surgery
after the parties voluntarily agreed to dismiss the suit. Further, she argues
Personnel Management’s initial position in denying coverage was not
substantially justified because the evidence clearly established her surgery was
not oral surgery. The district court disagreed, concluding Personnel
Management’s position was substantially justified. We review the district court’s
decision whether to award fees under the Equal Access to Justice Act for abuse of
discretion. Kopunec v. Nelson, 801 F.2d 1226, 1229 (10th Cir. 1986). However,
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we do not reach the substantial justification issue because we believe Mrs.
Bryan’s application was untimely and affirm the denial of fees on that basis. See
United States v. Sandoval, 29 F.3d 537, 542 n.6 (10th Cir. 1994) (“We are free to
affirm a district court decision on any grounds for which there is a record
sufficient to permit conclusions of law, even grounds not relied upon by the
district court.”).
A party seeking an award of fees and expenses under the Equal Access to
Justice Act must submit an application to the court “within thirty days of final
judgment in the action.” 28 U.S.C. § 2412(d)(1)(B). A “final judgment in the
action” is a judgment rendered by a court that terminates the civil action for
which fees may be received. Goatcher v. Chater, 57 F.3d 980, 981 (10th Cir.
1995) (quoting Melkonyan v. Sullivan, 501 U.S. 89, 96 (1991)). The so-called
“30-day EAJA clock” begins to run “after the time to appeal that effective final
judgment has expired.” Goatcher, 57 F.3d at 981 (internal quotation marks and
citation omitted); see also 28 U.S.C. § 2412(d)(2)(G) (“‘final judgment’ means a
judgment that is final and not appealable.”). The thirty-day time limitation is
jurisdictional in nature. Myers v. Sullivan, 916 F.2d 659, 666 (11th Cir. 1990).
In this case, Mrs. Bryan and Personnel Management filed a joint motion to
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voluntarily dismiss the suit and remand it for further consideration at the
administrative level. The district court granted that motion on October 8, 1996
and thereby terminated the civil action for which Mrs. Bryan seeks fees. 6 Because
Mrs. Bryan voluntarily moved to dismiss, she could not appeal the district court’s
order. 7 United States v. Procter & Gamble Co., 356 U.S. 677, 680 (1958) (stating
the general rule that “a plaintiff who has voluntarily dismissed his complaint may
6
The “final judgment” which triggered the thirty-day clock is the district court’s
dismissal, not Personnel Management’s decision to extend coverage after remand. See
Melkonyan, 501 U.S. at 95-96 (“Congress' use of ‘judgment’ in 28 U.S.C. § 2412 refers to
judgments entered by a court of law, and does not encompass decisions rendered by an
administrative agency.”). We recognize in certain social security benefit disputes, the
filing period commences “after the postremand proceedings are completed” at the
administrative level. Id. at 102 (discussing “sentence six” remand cases under the Social
Security Act). This is so because the Social Security Act requires the Secretary of Health
and Human Services to file its postremand findings with the district court and the district
court “retains jurisdiction of the civil action and contemplates entering a final judgment
following the completion of administrative proceedings.” Id. at 97-98. We find these
cases inapplicable to Mrs. Bryan’s situation. The district court did not retain jurisdiction
over Mrs. Bryan’s claims and did not contemplate the parties returning to court.
7
Exceptions to this rule exist, but are inapplicable to Mrs. Bryan’s situation. For
instance, movant may appeal an order granting voluntary dismissal where the dismissal is
with prejudice, see, e.g., Chappelle v. Beacon Communications Corp., 84 F.3d 652, 653
(2d Cir. 1996); where the dismissal disposed of fewer than all of plaintiff’s claims, see,
e.g., Chappelle, 84 F.3d at 653; or where the court imposes terms as a condition of
permitting dismissal, see, e.g., LeCompte v. Mr. Chip, Inc., 528 F.2d 601, 603-04 (5th
Cir. 1976). None of these exceptions applies here as the district court dismissed all of
Mrs. Bryan’s claims without prejudice and without condition. Moreover, even if we were
to factor in a sixty-day appeal period, Mrs. Bryan’s application would still be untimely.
See Fed. R. App. P. 4(a)(1) (stating that parties may appeal within sixty days of entry of
judgment when the government is a party).
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not sue out a writ of error.”); Coffey v. Whirlpool Corp., 591 F.2d 618, 620 (10th
Cir. 1979) (“where the dismissal is upon motion of the plaintiffs themselves ... we
will not permit those plaintiffs to appeal”). Accordingly, the “30-day clock”
began running October 6, 1996. Mrs. Bryan did not file her application for fees
in district court until June 17, 1997, well after the thirty-day cut-off.
Accordingly, we conclude Mrs. Bryan is not entitled to attorney fees or costs
under the Equal Access to Justice Act.
The order of the district court is AFFIRMED.
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