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HARROW v. PRUDENTIAL INS. CO. OF AMERICA

December 23, 1999

DEBRA HARROW, ADMINISTRATOR OF THE ESTATE OF STANLEY HARROW, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
PRUDENTIAL INSURANCE COMPANY OF AMERICA; JOHN DOES NO. 1-10, INDIVIDUALLY AND IN THEIR FIDUCIARY CAPACITIES AS PLAN ADMINISTRATORS OF THE PRUDENTIAL HEALTHCARE PLANS, DEFENDANTS.



The opinion of the court was delivered by: Bissell, District Judge.

OPINION

This matter is before this Court on a motion for summary judgment by defendant, Prudential Insurance Company of America ("Prudential"). Prudential argues that the plaintiff's decedent, Stanley Harrow, failed to exhaust his administrative remedies prior to instituting this lawsuit. Plaintiff filed this class action Complaint on May 21, 1998. The two-count Complaint alleges wrongful denial of benefits in violation of 29 U.S.C. § 1132(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), and breach of fiduciary duty in violation of 29 U.S.C. § 1104(a).

The defendant filed a motion to dismiss for failure to exhaust administrative remedies returnable January 25, 1999. That motion was denied by this Court without prejudice. Plaintiff also filed a motion for class certification on May 21, 1998 pursuant to Fed.R.Civ.P. 23(a) and 23(b)(1), (2) and (3). This motion was adjourned without date in order for discovery to be undertaken. Plaintiff filed a renewed motion for class certification on June 10, 1999, and the parties then engaged in a discussion with this Court regarding whether summary judgment on the issue of exhaustion of administrative remedies should precede class certification. This Court finds that it does.

The original named plaintiff in this action, Stanley Harrow, passed away on June 25, 1999. The plaintiff's motion to substitute Debra Harrow, Administrator of the Estate of Stanley Harrow, as the named plaintiff in this action was granted by this Court on October 28, 1999. This Court has jurisdiction pursuant to 28 U.S.C. § 1331.

FACTS

Mr. Harrow was an insured under the Prudential HealthCare HMO Plan (the "Plan"). (Compl., ¶ 14; Plaintiff's Exh. E, Response 1). Mr. Harrow's estate seeks to represent the following class:

  all persons covered by a Prudential insurance plan or
  policy under an employee welfare benefit plan who
  have (i) been diagnosed by a physician as being
  either organically, structurally, or psychologically

  impotent; (ii) have had Viagra prescribed by a
  physician for their impotence; and (iii) have been
  denied insurance coverage for all or a portion of
  their Viagra prescription.

(Compl., ¶ 26). The Complaint alleges that Mr. Harrow filled a prescription for the drug Viagra at a pharmacy on April 21, 1998 and that Prudential has illegally denied him insurance coverage. (Id., ¶ 18). The Harrows paid cash for the prescription. (Id.)

The Prudential HealthCare HMO Plan includes a review procedure which provides for an initial complaint, then a two-step grievance procedure, and finally appeal to the Pennsylvania Department of Health. (Orr Cert., Exh. A). Mr. Harrow and his wife called Prudential's claims department after his pharmacy informed them of the rejection of coverage for their Viagra pills. (Harrow Dep. at 52). The Harrows were told that Prudential did not cover the cost of the pills because it was a new drug. (Id., at 53). They were also informed that they should keep the receipt for their pills, because they could be reimbursed for the cost if Prudential ever approved it. (Id.) The Harrows did not pursue any action beyond this initial inquiry to Prudential. (Id. at 54). They never refilled the prescription for Viagra. (Id. at 53).

In June 1998, Prudential made public statements that it would not cover Viagra. (Cave Dep. at 93). Dr. Lisa Head and Anthony Kotin have been deposed on the issue of Prudential's appeals process. (Defendant's Exhs. C, D). At Dr. Head's deposition, she stated that the fact that Prudential's policy was to deny coverage of Viagra would not mean that all appeals would be automatically denied.

  Q: Under those circumstances, would you expect any
    appeal to be successful?
  A: I would expect that the appeal would go through
    the process that we've outlined in previous
    testimony and that they would be given a fair
    assessment of the information available by that
    committee. . . . I would expect that it would go
    through the process. I don't know that that would
    be upheld in every circumstance.

(Head Dep. at 62, 63, Defendant's Exh. C). However, there is evidence from internal e-mails within Prudential that perhaps the policy was more uniform than suggested by Dr.'s Head and Kotin. For example, one e-mail message stated "I'm carboning others just to ensure that we are clear that there is no local authority to approve coverage for Viagra even on a single case exception basis or for a specific claimant." (Gottsch Decl., Exh. I). Finally, there is no evidence that any formal appeal from a denial of Viagra coverage was ever taken by any person who might arguably be a class member.

ANALYSIS

I. Standard

Federal Rules of Civil Procedure 56(c) provides that summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir.) (en banc), cert. dismissed, 483 U.S. 1052, 108 S.Ct. 26, 97 L.Ed.2d 815 (1987). In deciding a motion for summary judgment, a court must construe all facts and inferences in the light most favorable to the nonmoving party. See Boyle v. Allegheny Pennsylvania, 139 F.3d 386, 393 (3d Cir. ...


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