                           UNITED STATES DISTRICT COURT
                           FOR THE DISTRICT OF COLUMBIA


                                                )
CAROLINA ZALDUONDO                              )
                                                )
              Plaintiff,                        )
                                                )
       v.                                       )   Civil No. 10-1685 (RCL)
                                                )
AETNA LIFE INSURANCE CO.                        )
                                                )
             Defendant.                         )
                                                )


                                MEMORANDUM OPINION

       Plaintiff Carolina Zalduondo brings this ERISA action against Aetna Life Insurance

Company, alleging improper denial of coverage for her arthroscopic hip surgery. Defendants

now move for summary judgment. Upon consideration of the defendant’s Renewed Motion [55]

for Summary Judgment, the plaintiff’s Opposition [58] thereto, and the defendant’s Reply [59]

the Court will GRANT the Motion and dismiss the case with prejudice.

I.     BACKGROUND

       Plaintiff Zalduondo is a member of the WPP Group USA, Inc. employee healthcare

benefit plan, of which defendant Aetna is a service provider that administers and adjudicates

claims for benefits. Zalduondo began suffering from extreme pain in her hip in 2009, rendering

her almost unable to walk.     Pl.’s Statement of Undisputed Material Facts in Supp. of its

Opposition to Def.’s Renewed Mot. for Summ. J. (“Pl.’s SUMF”) ¶ 37, ECF No. 58. She visited

orthopedist Dr. Terri McCambridge, who correctly identified the source of the pain as two labral

tears in Zalduondo’s hip, which needed to be repaired through arthroscopic hip surgery. Id. at

¶ 39. McCambridge referred Zalduondo to Dr. Andrew Wolff, an orthopedic surgeon who was
widely regarded as an expert in arthroscopic hip surgery. Id. Zalduondo discovered that Aetna

did not cover Dr. Wolff as an in-network physician, however, and she sought referrals for other

surgeons who would be covered at the in-network rate. Administrative Record (“AR”) 67.

While Dr. Wolff was an overwhelming favorite, other orthopedic surgeons were suggested; none

of which were in Aetna’s network. Id.

       Concluding that none of the in-network orthopedic surgeons in the area could perform

her surgery, Zalduondo requested that Aetna cover Dr. Wolff’s services at the in-network rate.

Pl.’s SUMF ¶ 42. On September 1, 2009, Aetna denied her request for coverage because it

concluded that in-network providers were available who could perform the surgery. AR 81.

Aetna referred her to DocFind, Aetna’s online directory of in-network physicians, and provided

three names of in-network providers listed on DocFind that Aetna claimed could treat her

condition. Id. Zalduondo contacted the offices of these physicians. Id. at 67–68. According to

her, two of the offices informed her that the doctors did not perform arthroscopic hip surgery and

the other office informed her that the doctor was a pediatric orthopedic surgeon and “was not

able to confirm his ability” to perform Zalduondo’s surgery. Id.

       Based on this knowledge, Zalduondo proceeded to have Dr. Wolff perform the surgery

on September 16, 2009. Pl.’s SUMF ¶ 47. Aetna responded by covering some of Dr. Wolff’s

services at a reduced, out-of-network rate and denying coverage of the labral repairs entirely

because it deemed them “experimental or not medically necessary.” AR 260–279. Zalduondo

appealed the former decision on October 1, 2009, and provided Aetna with an explanation of

why the three in-network doctors it recommended were insufficient. Id. at 67–68. On November

18, Aetna affirmed its appeal, stating that it had reviewed DocFind and had again concluded that

Zalduondo had in-network options available to her that could have performed the surgery



                                                2 
 
instead. Id. at 85. As examples, it listed two new doctors, Brian Evans and Mark Zawadsky,1

who shared an office. Id. The administrative record indicates that two people in this office

informed Aetna “that these MDs perform [h]ip arthroscopies with labral repairs.” AR 60. Aetna

also informed Zalduondo that she had 60 days to file a second-level appeal. Id. at 87.

              On January 8, 2010, Zalduondo sent Aetna a short letter that she said “serv[ed] as [her]

official request for a second level appeal.” AR 88. However, she stated that she had retained

counsel to assist her with the appeal, which she said would include challenges to “several of

Aetna’s more recent decisions regarding coverage in this matter,” and asked for an extension to

file the appeal. Id. Rather than grant her request for an extension, Aetna apparently construed

this letter as the second-level appeal itself, because on January 27, 2010, it mailed Zalduondo a

letter informing her that it denied her second-level appeal. Id. at 99. The letter again referred

her to Mark Zawadsky as an example of a physician who could treat her injury. Id.

              Zalduondo’s newly retained counsel, Denise Clark, then filed her client’s official second-

level appeal on February 4, after the 60-day window for filing the appeal had expired. Id. at 107.

Clark explained that the office of Drs. Zawadsky and Evans informed Zalduondo that neither

doctor performed hip arthroscopies to make labral repairs.2 Id. While the title of her letter

specifically indicated that it was appealing “the denial of in-network preferred benefit level,” Ms.

Clark also included a section challenging Aetna’s refusal to cover the labral repairs because of

their being deemed “experimental or not medically necessary.” Id. at 108. Aetna responded to




                                                            
1
 Before visiting Dr. McCambridge, Zalduondo twice visited Dr. Zawadsky, who misdiagnosed her injury. Pl.’s
SUMF ¶ 38.
2
  In her letter Clark noted that she called the office herself and was told that while Dr. Zawadsky specialized in knee
replacements, he had performed 25 hip arthroscopies over the last ten years. Id. She did not deem this to be enough
for him to be considered qualified, however. Id.

                                                               3 
 
this letter on February 15, 2010, stating that it had received the Clark letter but that Zalduondo

had exhausted all her appeal rights after the January 27 final decision. Id. at 103.

              Zalduondo invoked this Court’s jurisdiction by filing a claim under ERISA challenging

both Aetna’s refusal to pay for Dr. Wolff’s services at the in-network preferred benefit rate and

Aetna’s denial of coverage of the labral repairs for being experimental.3 On April 24, 2013, this

Court denied Aetna’s motion for summary judgment without prejudice, ruling that it could not

yet determine the level of discretion it owed to Aetna’s decisions because Aetna had not yet

supplied the official plan document.                           Aetna has since supplemented the record with this

document [54] and filed a renewed motion for summary judgment [55].

II.           LEGAL STANDARD

              A.             Summary Judgment

              “[C]ourt[s] shall grant summary judgment if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.”

Fed.R.Civ.P. 56(a); Accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The

mere existence of any factual dispute will not defeat summary judgment; the requirement is that

there be no genuine dispute about a material fact. Anderson, 477 U.S. at 247–48. A fact is

“material” if, under the applicable law, it could affect the outcome of the case. Id. A dispute is

“genuine” if the “evidence is such that a reasonable jury could return a verdict for the non

moving party.” Id. If the moving party satisfies its burden of demonstrating the absence of a

genuine issue of material fact, the burden shifts to the nonmoving party to present specific facts

showing a genuine issue for trial. Fed.R.Civ.P. 56(e); Anderson, 477 U.S. at 252.



                                                            
3
 A more complete procedural history of this case is available in this Court’s previous opinion, Zalduondo v. Aetna
Life Ins. Co., 2013 WL 1769718 (D.D.C. Apr. 25, 2013).

                                                                    4 
 
       B.      ERISA Standard of Review


       This Court has jurisdiction to hear this matter under the Employee Retirement Income

Security Act of 1974, Pub.L.No. 93-406, 88 Stat. 829 (codified in scattered sections of 29

U.S.C.) (“ERISA”). ERISA provides participants of employee benefit plans with “a panopoly of

remedial” devices when they believe they have been wronged under the terms of their plans.

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 108 (1989). Zalduondo specifically

invokes 29 U.S.C. § 1132(a)(1)(B), which empowers her to bring a civil action “to recover

benefits due to [her] under the terms of [her] plan, to enforce [her] rights under the terms of the

plan, or to clarify [her] rights to future benefits under the terms of the plan.”


       In Firestone, the Supreme Court held that district court review of a denial of benefits

under § 1132(a)(1)(B) is to be de novo “unless the benefit plan gives the administrator or

fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of

the plan. Firestone, 489 U.S. at 115. When the plan grants this discretion, courts must apply a

“more deferential arbitrary and capricious standard.” Pettaway v. Teachers Ins. & Annuity Ass’n

of Am., 644 F.3d 427, 433 (D.C. Cir. 2011). Our circuit applies this standard simply by asking

whether the agency’s decision was reasonable. Id. at 435 (quoting Wagener v. SBC Pension

Benefit Plan––Non Bargained Program, 407 F.3d 395, 402 (D.C. Cir. 2005)); Block v. Pitney

Bowes, Inc., 952 F.2d 1450, 1452 (D.C. Cir. 1992). “A decision will be found . . . reasonable if

it is the result of a deliberate, principled reasoning process and if it is supported by substantial

evidence.” Buford v. UNUM Life Ins. Co. of Am., 290 F. Supp. 2d 92, 100 (D.D.C. 2003)

(internal quotation marks omitted); see also Ass’n of Data Processing Serv. Org. v. Bd. of

Governors of Fed. Reserve System, 745 F.2d 677, 684 (D.C. Cir. 1984) (Scalia, J.) (equating the

substantial evidence test with the arbitrary or capricious test). “Substantial evidence means

                                                   5 
 
‘more than a scintilla but less than a preponderance.’” Buford, 290 F. Supp. at 100 (quoting

Leonard v. Southwestern Bell Corp. Disability Income Plan, 341 F.3d 696, 701 (8th Cir. 2003)).

When determining whether the evidence was substantial, courts may only consider materials that

were before the plan administrators at the time they made the decision. Block, 952 F.2d 1450.


III.   ANALYSIS

       A. Deferential Review

       The Court finds, and Plaintiff concedes, that the plan gives Aetna the discretion described

in Firestone, thus entitling it to review under the arbitrary and capricious standard. In its

previous opinion, this Court observed that the Summary Plan Description (“SPD”) explicitly

conferred this discretion, stating “the Plan Administrator has delegated to Aetna the discretionary

authority to construe and interpret the terms of the Plan, and to make final, binding

determinations concerning availability of benefits under the Plan.”          Zalduondo, 2013 WL

1769718, at *2 (quoting AR 248). However, in light of Cigna Corp. v. Amara, 131 S.Ct. 1866

(2011) the Court doubted whether it could rely on the SPD alone in the absence of the actual plan

document. Zalduondo, 2013 WL 1769718, at *14 (observing that the Court in Amara rejected

enforcement of the terms of SPDs as part of the the terms of the Plan itself). Consequently, it

deferred judgment on whether the arbitrary and capricious standard applied until Aetna could

demonstrate that the Plan documents did not conflict with the SPD. Id.

       Having reviewed the Plan documents, the Court and both parties now agree that the SPD

is incorporated within the Plan. The Plan states “[t]he benefits offered under the Plan may be

described in and subject to . . . summary plan descriptions . . . which are . . . incorporated in the

Plan by reference.” Thus, the SPD’s grant of discretion to Aetna will be considered part of the

Plan for the purposes of our analysis and we will only review Aetna’s denial of coverage under


                                                 6 
 
an arbitrary and capricious standard. See Pettaway v. Teachers Ins. & Annuity Ass’n of Am., 644

F.3d 427, 433–34 (D.C. Cir. 2011) (looking, post-Amara, to both the SPD and the Plan document

to determine the level of deference owed to the claims adjudicator).


              B. Reduced Coverage of Dr. Wolff’s Services at the Out-Of-Network Rate


              The evidence supporting Aetna’s decision not to cover Dr. Wolff’s services at the in-

network rate is substantial enough to meet the reasonableness test required by our circuit. Aetna

based its determination that Zalduondo could have had her surgery performed by in-network

doctors on a review of its DocFind directory. When Aetna chose not to cover Dr. Wolff’s

services at the in-network rate, it had not yet been informed that all three of the orthopedic

surgeons it previously recommended based on DocFind were not actually options. Zalduondo

did not supply this information until her first appeal, after the surgery was complete. If Aetna,

when it reviewed this appeal, had again simply assumed that any orthopedic surgeon listed on

DocFind could have performed her surgery, Aetna’s decision at this stage might have been

unreasonable. Aetna relied on more, however. The administrative record indicates that two

people in the Zawadsky and Evans office told Aetna that the doctors performed hip arthroscopies

with labral repairs.4 Such evidence rises above a “scintilla,” and thus makes Aetna’s decision

reasonable.


              Aetna’s second-level appeal review also satisfies this test. While it may have been

unreasonable to construe Zalduondo’s January 8 letter as her actual appeal and not a request for

an extension, Aetna was under no obligation grant the requested extension, even if it had so


                                                            
4
 The truth of this information is not for the Court to decide. The Court must only ask whether Aetna had substantial
evidence when it determined that Drs. Zawadsky and Evans could have performed the surgery. At the time, Aetna
had no evidence contradicting this information.

                                                               7 
 
construed it. By the time Zalduondo’s counsel sent the actual second-level appeal on February 4,

the 60-day window to file the appeal had already expired. Thus, Aetna was under no obligation

to even conduct this second review and could have simply denied the appeal after letting the time

limit lapse.5 The Court cannot review the information presented in the letter from Zalduondo’s

counsel for these purposes because it was not before Aetna at the time it made its second-level

appeal decision and was sent after the 60-day window had expired. Consequently, Aetna’s

decision to deny coverage of Dr. Wolff’s services at the in-network rate was not arbitrary or

capricious because it was based on substantial evidence.


C. Denial of Coverage for the Labral Repairs as “Experimental or Not Medically

Necessary”


              Finally, Zalduondo challenges Aetna’s refusal to cover any of the labral repair costs

because it deemed them to be “experimental or not medically necessary.” Aetna objects that she

has not exhausted administrative remedies with regard to this claim because her formal appeals

only concerned the reduced coverage of Dr. Wolff’s services at the out-of-network rate.

Zalduondo claims that she has constructively exhausted her administrative remedies because she

sought an appeal of this determination in the February 4 letter from Zalduondo’s counsel and

received in response a letter stating that all appeal rights had been exhausted.


              While ERISA does not explicitly require exhaustion of administrative remedies, it is well

established that plaintiffs seeking to recover benefits under ERISA plans must exhaust available

                                                            
5
  The evidence before Aetna at the time it conducted this second review was not materially different from the
evidence before it during the first review. Zalduondo had not yet informed Aetna that Zawadsky and Evans’ office
told her they could not perform the surgery. Aetna did not have this information until Zalduondo’s attorney supplied
it after Aetna’s second-level review was complete. The information is therefore outside the scope of our review.
Thus, even if the decision to conduct the review based on Zalduondo’s letter was unreasonable, the review itself
would not have been unreasonable.

                                                               8 
 
administrative remedies under those plans before bringing a lawsuit in federal Court. Commc’ns

Workers of Am. v. Am. Tel. & Tel. Co., 40 F.3d 426, 431–32 (D.C. Cir. 1994). The exhaustion

requirement “prevents premature or unnecessary judicial interference with plan administrators.”

Cox v. Graphic Commc’n Conference of Int’l Bd. of Teamsters, 603 F.Supp. 2d 23, 29 (D.D.C.

2009). Furthermore, requiring plan participants to exhaust their administrative remedies enables

plan administrators or fiduciaries to manage plans efficiently, correct their errors outside of

court, interpret applicable plan provisions, and assemble a factual record that would assist a

reviewing court in evaluating their actions. Makar v. Health Care Corp. of Mid-Atlantic (Care

First), 872 F.2d 80, 83 (4th Cir. 1989). Participants who request a review and do not receive a

response are deemed to have constructively exhausted their administrative remedies and can

proceed directly to court for a determination of their claim on the merits. Heller v. Fortis

Benefits Ins. Co., 142 F.3d 487, 492 (D.C. Cir. 1998); see also 29 C.F.R. § 2560.503-1(l)

(allowing constructive exhaustion of administrative remedies when there has been a failure to

follow reasonable claims procedures).


       The Court agrees with Aetna that the letter from Zalduondo’s counsel does not suffice as

a separate appeal of the determination that the procedure was experimental. The title of this

letter was “Second Level Appeal of the Denial of In-Network Preferred Benefit Level,” making

no reference to the refusal to cover the labral repairs in their entirety. That objection was only

raised in a single paragraph toward the end of the letter. To consider paragraphs enmeshed in

letters about other topics to be a separate appeal––as the plaintiff asks we do here––would place

an unreasonable burden on claims adjudicators. Under such a framework, Aetna would need to

initiate a brand new appeal procedure sua sponte every time an appellant raises a collateral

argument in an appeal letter to avoid waiving the defense of exhaustion of administrative


                                                9 
 
remedies. If Zalduondo wanted to raise a separate appeal, she needed to be much more explicit

about her intent. Consequently, Zalduondo has not exhausted administrative remedies with

respect to this question.


IV.    CONCLUSION

       In summary, because Aetna’s refusal to cover Dr. Wolff’s services as “in-network” was

not unreasonable and because Zalduondo has not exhausted her administrative remedies with

respect to the determination that her labral repairs were experiemental, the Court must grant

Aetna’s motion for summary judgment and dismiss this case with prejudice.

       A separate Order consistent with this Memorandum Opinion shall issue this date.

       Signed by Royce C. Lamberth, Chief Judge, on July 10, 2013.




                                             10 
 
