Case 5:17-cv-01016-JKP Document 235 Filed 11/04/20 Page 1 of 17
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF TEXAS
`SAN ANTONIO DIVISION
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`MISSION TOXICOLOGY, LLC, et al.,
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`v.
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`UNITEDHEALTHCARE INSURANCE
`COMPANY, et al.,
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`Defendants.
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`Plaintiffs,
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`Case No. 5:17-CV-1016-JKP
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`(Consolidated with
`Case No. 5:18-CV-0347-JKP)
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`MEMORANDUM OPINION AND ORDER
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`This consolidated action involving millions of dollars in alleged damages by both sides pits
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`a group of related insurance entities against various entities performing lab services and other in-
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`volved entities and individuals. The lead case of this consolidated action arises under the Employee
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`Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 et seq. Plaintiffs, Mission Toxi-
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`cology, L.L.C. (“Mission”) and Sun Clinical Laboratory, L.L.C. (“Sun Clinical”) (collectively
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`“Plaintiffs” or “the Labs”), therein seek to recover unpaid claims from Defendants (four entities
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`related to United Healthcare (collectively “United Defendants” or “United”))1 on behalf of De-
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`fendants’ insureds. In the member case, two of the United Defendants in the lead case sue those
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`two labs, other entities, and several individuals for various claims asserted under state law. The
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`consolidated action has spawned several pending motions, two of which the Court addresses in
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`this Memorandum Opinion and Order: (1) United’s Motion for Summary Judgment on the Labs’
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`ERISA Benefits Claim (ECF Nos. 170 (redacted) and 178 (unredacted and sealed)) and (2) United’s
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`Motion to Strike Portions of the Declarations of Randy Dittmar and Lynn Murphy (Dkt. 186) (ECF
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`1 Although “United” refers collectively to multiple affiliates, the Court will generally refer to United in a singular
`sense as United does in its briefing.
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`Case 5:17-cv-01016-JKP Document 235 Filed 11/04/20 Page 2 of 17
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`No. 209).
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`The motions are fully briefed, including evidence submitted by both sides.2 The Labs have
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`responded to both the summary judgment motion, see ECF Nos. 185 (redacted), 193-1 (unredacted
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`and sealed), and the motion to strike, see ECF Nos. 216 (redacted), 221-1 (unredacted and sealed).
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`United has filed reply briefs (ECF Nos. 207 and 224) to support each motion.
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`I. BACKGROUND
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`In this action, the Labs assert a single claim against United under ERISA, 29 U.S.C. §
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`1132(a)(1)(B), “to recover benefits due to the assignee of the participants or beneficiaries of
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`ERISA plans.” See Pls.’ Second Am. Compl. (ECF No. 28) ¶ 104. The Labs “act as ERISA bene-
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`ficiaries by virtue of the assignment of benefits from the individual insureds who had contracts
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`with United” and “therefore stand as beneficiaries under United plans and seek payment of claims
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`owed under employee health and welfare benefit plans that fall within the scope of ERISA.” Id. ¶
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`9. Based upon the assignment from United’s insureds, the Labs bring their ERISA claim against
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`United to recover the insureds’ benefits.3 Id. ¶¶ 103-18. In an order denying a motion to dismiss,
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`the Court previously set out a thorough background based upon the allegations of the Second
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`Amended Complaint. See Order Denying Defs.’ Mot. Dismiss (Dkt. # 47) (ECF No. 115). There
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`is no reason to reiterate that background here.
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`2 United filed an Appendix (ECF Nos. 171, 178-1 (sealed portion)) with its motion for summary judgment. The Labs
`have likewise supported their response with an Appendix (ECF Nos. 186 (redacted as to Exs. D through H; N through
`S; V; and NN through ZZ) and 193-2 (unredacted and sealed as to exhibits redacted in ECF No. 186)), which resulted
`in United’s motion to strike Ex. W in its entirety, various specific pages of Ex. V, and various paragraphs of two
`declarations within the appendix. The Labs have also supported their response to the motion to strike with an Appendix
`(ECF Nos. 218 (redacted as to Ex. N2) and 221-2 (sealed version of Ex. N2).
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`3 Although the Labs’ response to the motion suggests that they might seek reimbursement as assignees of claims from
`a hospital and as assignees from insured members, they assert only the one claim in their Second Amended Complaint.
`“A claim not raised in the complaint but, rather, is raised only in response to a motion for summary judgment is not
`properly before the court.” See Cutrera v. Bd. of Sup’rs of La. State Univ., 429 F.3d 108, 113 (5th Cir. 2005). The
`Court thus has no occasion to consider such suggested assignment.
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`2
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`Like most cases, this one has both disputed and undisputed facts. One disputed aspect is
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`the nature and existence of a “Lab Outreach Program” in which the Labs claim to have endeavored
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`to assist vulnerable rural hospitals at the request of the Hospitals and their management company,
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`People’s Choice Hospital, LLC (“PCH”). United describes this program as made-up and fraudu-
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`lent.
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`Of course, the summary judgment context requires the Court to view the facts in the light
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`most favorable to the non-movant. Regardless of existence or nature of such a program, the parties
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`do not dispute that the Labs are non-contracted (also known as out-of-network) providers that
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`entered into arrangements with rural hospitals, Newman Memorial Hospital (“Newman”) and
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`Community Memorial Hospital (“Community” or “CMH”) (collectively “the Hospitals”), which
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`had in-network contracts with United. Further, the parties agree that, the Labs (or referred third-
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`party laboratories) performed most laboratory testing, not the Hospitals. And they agree that, after
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`such testing, Integrity Ancillary Management (“Integrity”), an entity formed by the owners of Sun
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`Clinical (Dr. Michael Murphy) and of Mission (Jesse Saucedo), would submit claims for services
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`allegedly provided by the Labs to beneficiaries of ERISA plans administered or insured by United
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`on behalf of, and using the names and billing credentials, of the Hospitals. Although the submitted
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`claim forms list the names and credentials of the Hospital providers rather than the Labs’ names
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`and credentials, the Labs provide declarations and deposition testimony that Integrity also submit-
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`ted the claims on behalf of the Labs. United vigorously disputes that fact.
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`United’s ERISA plans establish administrative remedies for members receiving an adverse
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`benefit determination. These remedies include submitting an appeal within 180 days of a claim
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`denial. With respect to service providers, United also has a two-step administrative remedy regard-
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`ing denied claims – seeking reconsideration of the denial and appealing the decision. United
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`contends that the Labs have failed to exhaust their administrative remedies because they have nei-
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`ther submitted any claim nor any appeal at issue in this action. While recognizing that United’s
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`required administrative remedies “state what they state,” the Labs dispute the factual assertion that
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`they have not submitted any claims or appeals. And this dispute lies at the heart of United’s motion
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`for summary judgment. Furthermore, some of the Labs’ evidentiary support is the crux of the
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`motion to strike. Both motions are fully briefed and ripe for ruling. The Court will first address the
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`motion to strike before considering the summary judgment motion.
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`II. MOTION TO STRIKE
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`Through its motion to strike, United attacks the Labs’ evidentiary support on two fronts:
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`(1) untimely disclosure relying on Fed. R. Civ. P. 26(a), 26(e), and 37(c)(1) and (2) inadmissible
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`evidence. It seeks to strike Exhibit W entirely, specific pages of Exhibit V, and specific paragraphs
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`of two submitted declarations – paragraphs 7, 8, 9, and 2 of a declaration from Randy Dittmar, an
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`employee of Mission and Integrity who provided information technology (“IT”) services on their
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`behalf, and paragraphs 42 to 50 of a declaration from Lynn Murphy (“LM”), CEO of Integrity and
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`wife of Dr. Murphy. Exhibit W is a spreadsheet Dittmar attaches to his declaration (ECF No. 186-
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`4) that he created from notes of Integrity employees to identify thousands of claims denied by
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`United. LM attaches Exhibit V to her declaration (ECF No. 186-2) while also relying on Exhibit
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`W in some respects. Exhibit V consists of a few Fax cover pages that contain the word “appeal”
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`and medical records that LM assembled.
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`“Prior to December 1, 2010, the proper method by which to attack an affidavit was by filing
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`a motion to strike,” but amendments to the Federal Rules of Civil Procedure changed that practice.
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`Cutting Underwater Techs. USA, Inc. v. Eni U.S. Operating Co., 671 F.3d 512, 515 (5th Cir. 2012)
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`(per curiam). “As amended in December 2010, Fed. R. Civ. P. 56(c)(2) makes motions to strike
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`unnecessary to challenge evidence presented in the summary judgment context.” Silo Rest. Inc. v.
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`Allied Prop. & Cas. Ins. Co., 420 F. Supp. 3d 562, 569 (W.D. Tex. 2019) (quoting Reitz v. City of
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`Abilene, No. 1:16-CV-0181-BL, 2018 WL 6181493, at *8 n.8 (N.D. Tex. Nov. 27, 2018)). Never-
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`theless, courts may strike presented evidence as a sanction under Fed. R. Civ. P. 37(c)(1) when
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`circumstances warrant such a sanction. Davidson v. AT&T Mobility, LLC, No. 3:17-CV-0006-D,
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`2018 WL 1609756, at *1 (N.D. Tex. Apr. 3, 2018); Campbell v. McMillin, 83 F. Supp. 2d 761,
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`765 (S.D. Miss. 2000).
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`Whether to exclude evidence under Rule 37(c)(1) lies within the Court’s sound discretion.
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`Primrose Operating Co. v. Nat’l Am. Ins. Co., 382 F.3d 546, 563 (5th Cir. 2004). Under Rule
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`37(c)(1), when “a party fails to provide information or identify a witness as required by Rule 26(a)
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`or (e), the party is not allowed to use that information or witness to supply evidence on a motion,
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`at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” While Rule
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`37(c)(1) is intended to provide “a strong inducement for disclosure of material” and “gives teeth
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`to the Rule 26(a) disclosure requirements by forbidding, during any part of the case, the use of
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`information required to be disclosed by Rule 26 that is not properly disclosed,” courts may impose
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`other appropriate sanctions in addition to or in lieu of the “self-executing” and “automatic” pre-
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`clusion sanction. Current v. Atochem N. Am., Inc., No. W-00-CA-332, 2001 WL 36101282, at *2
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`(W.D. Tex. Sept. 18, 2001) (quoting in part Fed. R. Civ. P. 37 advisory committee’s note).
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`Rule 37(c)(1) sets out a two-step analytical process that starts with determining whether a
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`party has failed to make a required disclosure or supplementation and, if so, whether that party has
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`shown substantial justification for the failure or that the failure is harmless. “The party seeking
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`Rule 37 sanctions bears the burden of showing that the opposing party failed to timely disclose
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`information.” Coene v. 3M Co., 303 F.R.D. 32, 42 (W.D.N.Y. 2014). Once that burden is satisfied,
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`Rule 37(c)(1) implicitly places the burden “on the party facing sanctions to prove harmlessness”
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`or substantial justification. See Current, 2001 WL 36101282, at *2. To evaluate substantial justi-
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`fication and harmlessness, courts examine the following “factors: (1) the importance of the evi-
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`dence; (2) the prejudice to the opposing party of including the evidence; (3) the possibility of
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`curing such prejudice by granting a continuance; and (4) the explanation for the party’s failure to
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`disclose.” Davidson, 2018 WL 1609756, at *1.
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`Although United quotes part of Fed. R. Civ. P. 26(a)(1)(A)(ii) at the beginning of its legal
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`standard, it is clear that United premises its motion to strike on alleged failures of the Labs to
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`produce or disclose documents during discovery. It argues that, although discovery commenced in
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`2018, the Labs never produced the documents attached to the declarations or supplemented its
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`discovery responses. Disclosure and discovery obligations differ materially and Rule 37(c)(1) only
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`applies to failures to disclose under Rule 26(a) or supplement under Rule 26(e). In their response
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`to the motion to strike, the Labs point out that they described documents in their initial disclosures
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`that would include the documents sought to be struck. The Labs further state that they had to locate
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`appeals records from Integrity to oppose the motion for summary judgment now before the Court.
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`Based on the information now before it, the Court finds that United has not shown that the
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`Labs failed to make a disclosure required by Rule 26(a) or any supplementation required by Rule
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`26(e). To comply with Rule 26(a)(1)(A)(ii), parties do not need to produce physical documents.
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`Disclosing parties may satisfy that rule by describing categories and location of documents. Fur-
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`thermore, the disclosure obligation under Rule 26(a)(1)(A)(ii) is limited to items in the disclosing
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`parties’ possession, custody, or control. United alleges a failure to supplement an interrogatory
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`response, but makes no effort to show that the Labs had “learn[ed] that in some material respect
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`[their] response [was] incomplete or incorrect” as required by Rule 26(e)(1) to prompt an obliga-
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`tion to supplement. Notably, the Labs had asserted objections to the interrogatory in their response
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`and United took no steps to compel any additional response. Absent a failure to disclose or sup-
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`plement, there is no basis to address whether the alleged failure was substantially justified or harm-
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`less. For these reasons, the Court finds no failure which warrants sanctions under Rule 37(c)(1)
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`and thus denies the motion to strike to the extent it relies on that rule.
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`To the extent United relies on the inadmissibility of the proffered evidence, the Court easily
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`resolves the motion against United by denying the motion while considering the filing as United’s
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`Rule 56(c)(2) objections. See Silo Rest. Inc., 420 F. Supp. 3d at 570. Such denial typically means
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`that the Court will rule on asserted objections as necessary to resolve the summary judgment mo-
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`tion. See id. In this instance, however, the Court has no reason to consider the asserted objections.
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`III. MOTION FOR SUMMARY JUDGMENT
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`United presents a single, legal basis for seeking summary judgment. It argues that the Labs
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`have failed to exhaust their administrative remedies. In response, the Labs argue that they did
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`exhaust such remedies for numerous claims and that they are excused from pursuing such remedies
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`for their claims in this action on grounds of futility. The arguments of the parties will first require
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`the Court to determine who filed the claims and appeals relative to the exhaustion issue. And after
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`addressing that issue, the Court will address whether the futility exception to exhaustion applies
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`on the facts of this case.
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`A. Summary Judgment Standard
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`“The court shall grant summary judgment if the movant shows that there is no genuine
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`dispute as to any material fact and the movant is entitled to judgment as a matter of law.”4 Fed. R.
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`Civ. P. 56(a). “As to materiality, the substantive law will identify which facts are material” and
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`4 The summary judgment standard “remains unchanged” despite 2010 amendments to Fed. R. Civ. P. 56 that replaced
`“issue” with “dispute.” Fed. R. Civ. P. 56 advisory committee notes (2010 amend.). Although the standard remains
`the same, the Court utilizes the amended terminology even when relying on caselaw that predates the amendments.
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`facts are “material” only if they “might affect the outcome of the suit under the governing law.”
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`Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Disputes over material facts qualify as
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`“genuine” within the meaning of Rule 56 when “the evidence is such that a reasonable jury could
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`return a verdict for the nonmoving party.” Id. Given the required existence of a genuine dispute of
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`material fact, “the mere existence of some alleged factual dispute between the parties will not
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`defeat an otherwise properly supported motion for summary judgment.” Id. at 247-48. A claim
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`lacks a genuine dispute for trial when “the record taken as a whole could not lead a rational trier
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`of fact to find for the nonmoving party.” Scott v. Harris, 550 U.S. 372, 380 (2007) (quoting Matsu-
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`shita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)).
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`The “party seeking summary judgment always bears the initial responsibility of informing
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`the district court of the basis for its motion.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
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`In the ERISA context, exhaustion is an affirmative defense and not a jurisdictional bar. Crowell v.
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`Shell Oil Co., 541 F.3d 295, 308-09 & n.57 (5th Cir. 2008); Martinez v. Superior Healthplan, Inc.,
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`No. SA-16-CA-870-XR, 2017 WL 10821037, at *7 (W.D. Tex. Sept. 26, 2017). When seeking
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`summary judgment on an affirmative defense, the movant “must establish beyond peradventure”
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`each essential element of the defense. Access Mediquip L.L.C. v. UnitedHealthcare Ins. Co., 662
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`F.3d 376, 378 (5th Cir. 2011), adhered to on reh’g en banc, 698 F.3d 229 (5th Cir. 2012); Fontenot
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`v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir.1986); Kirkindoll v. Nat’l Credit Union Admin. Bd.,
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`No. 3:11-CV-1921-D, 2014 WL 7178005, at *3 (N.D. Tex. Dec. 17, 2014) (asserting same prin-
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`ciple in case involving exhaustion under ERISA).
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`When considering a motion for summary judgment, courts view all facts and reasonable
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`inferences drawn from the record “in the light most favorable to the party opposing the motion.”
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`Heinsohn v. Carabin & Shaw, P.C., 832 F.3d 224, 234 (5th Cir. 2016) (citation omitted). Once the
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`movant has carried the burden to establish all elements of the exhaustion defense, the burden shifts
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`to the non-movant to establish an exception to exhaustion or a genuine dispute of material fact as
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`to exhaustion. With this shifting burden, the nonmoving party “must do more than simply show
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`that there is some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586. “Un-
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`substantiated assertions, improbable inferences, and unsupported speculation are not sufficient to
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`defeat a motion for summary judgment.” Heinsohn, 832 F.3d at 234 (citation omitted). Addition-
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`ally, the courts have “no duty to search the record for material fact issues.” RSR Corp. v. Int’l Ins.
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`Co., 612 F.3d 851, 857 (5th Cir. 2010); accord Hernandez v. Yellow Transp., Inc., 670 F.3d 644,
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`651 (5th Cir. 2012).
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`B. Summary Judgment Analysis
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`United argues that it is entitled to summary judgment because the Labs have not exhausted
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`their administrative remedies. The Labs argue that they filed numerous claims and appeals and
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`that any failure to exhaust should be excused as futile.
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`In general, the parties agree on the basic facts. However, they disagree as to whether In-
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`tegrity submitted the claims and appeals on behalf of the Labs, in contrast to simply on behalf of
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`the Hospitals. The parties also disagree as to whether the futility exception to exhaustion applies
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`on the facts.
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`Relying on paragraphs 43 and 53 of the Second Amended Complaint, United asserts that
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`the Labs did not submit to United any claims at issue in this action. They further assert that the
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`Labs did not appeal any adverse benefit decision for any claim for which they seek ERISA benefits
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`in this action. But paragraph 43 does not support the alleged fact in any way. And paragraph 53
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`merely states: “Plaintiffs, as contractors of Newman and CMH, performed medically necessary
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`Laboratory Services for United members that were billed by Newman and CMH, and their
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`respective billers, to United.” This paragraph does not preclude a factual finding that the Labs
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`submitted claims through their authorized agent, Integrity, which also happened to be the Hospi-
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`tals’ biller.
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`Although United contends that claims and appeals were only pursued by Integrity on behalf
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`of the Hospitals, the Labs counter United’s position with evidence that they submitted claims and
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`appeals through Integrity, their agent and authorized representative. In his declaration, Dr. Mur-
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`phy, owner of Sun Clinical, avers that (1) in 2015, the Labs formed a billing company, Integrity,
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`to provide billing services on their behalf; (2) Integrity was authorized to submit claims and pursue
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`appeals to United as an authorized representative of the Labs and the Hospitals; and (3) the Labs
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`had been assigned rights to pursue claims on behalf of patients and Newman. Decl. Dr. Murphy
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`(ECF No. 186-1) ¶¶ 5, 20. Saucedo, owner of Mission, reiterates that (1) “Integrity handled the
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`billing and collections for the Lab Outreach Program”; (2) Mission authorized Integrity “to handle
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`the submission of claims to United and to pursue appeals as appropriate thereafter as an agent and
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`authorized representative of Mission (as well as of Sun and the hospitals) on claims billed and
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`submitted through the Lab Outreach Program” and (3) “Integrity maintained the records of billing
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`claims and of any appeals in its regular course of business on behalf of Mission.” Decl. Saucedo
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`(ECF No. 186-3) ¶ 10. Similarly, the CEO of Integrity (L. Murphy) avers that (1) “Integrity han-
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`dled billing for laboratories and hospitals, which included submitting claims and appeals seeking
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`reimbursement for services performed from private insurance payers” and (2) when she worked at
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`Integrity, the company handled billing claims for the Hospitals as part of their Lab Outreach Pro-
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`gram managed by PCH. Decl. Murphy ¶ 4.
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`Under 29 U.S.C. § 1133(2), every ERISA plan must “afford a reasonable opportunity to
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`any participant whose claim for benefits has been denied for a full and fair review by the
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`appropriate named fiduciary of the decision denying the claim.” And in the Fifth Circuit, those
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`“seeking benefits from an ERISA plan must first exhaust available administrative remedies under
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`the plan before bringing suit to recover benefits.” Bourgeois v. Pension Plan for Employees of
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`Santa Fe Int’l Corps., 215 F.3d 475, 479 (5th Cir. 2000). But the Fifth Circuit “has recognized an
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`exception to the affirmative defense of failure to exhaust administrative remedies when such at-
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`tempts would be futile.” Id. (citing Hall v. Nat’l Gypsum Co., 105 F.3d 225, 232 (5th Cir. 1997)).
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`The exhaustion “requirement is not one specifically required by ERISA,” but courts uni-
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`formly apply it “in keeping with Congress’ intent in enacting ERISA.” Hall, 105 F.3d at 231.
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`Exhaustion serves several purposes, including “minimizing the number of frivolous ERISA suits,
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`promoting the consistent treatment of benefit claims, providing a nonadversarial dispute resolution
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`process, and decreasing the time and cost of claims settlement.” Id. In addition, “the requirement
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`also serves to provide a clear record of administrative action if litigation should ensue, and to
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`assure that judicial review is made under the arbitrary and capricious standard, not de novo.” Id.
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`United has the burden of proof regarding the affirmative defense of exhaustion of remedies.
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`Kirkindoll v. Nat’l Credit Union Admin. Bd., No. 3:11-CV-1921-D, 2014 WL 7178005, at *12
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`(N.D. Tex. Dec. 17, 2014). But, when an ERISA plaintiff has failed to exhaust administrative
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`remedies, that party has the burden to establish an applicable exception to the exhaustion require-
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`ment. McGowin v. ManPower Int’l, Inc., 363 F.3d 556, 559-60 (5th Cir. 2004). It lies within the
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`Court’s sound discretion as to “whether plaintiffs have exhausted their administrative remedies
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`under ERISA and can proceed with a lawsuit.” Harris v. Trustmark Nat’l Bank, 287 F. App’x 283,
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`294 (5th Cir. 2008) (per curiam) (citing Hall, 105 F.3d at 231).
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`In this case, the parties do not dispute that the relevant ERISA plans include appeal proce-
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`dures for denied claims. As reflected in a Certificate of Coverage attached to the Second Amended
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`Complaint, that appeal process typically requires a formal, written request to appeal and the “re-
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`quest for an appeal should include:” (1) the name and identification number of the patient, (2) date
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`of medical services, (3) name of the provider, (4) reason for paying the claim, and (5) any written
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`information to support claim payment. See ECF No. 28-2 at 82. Furthermore, the first appeal must
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`be made within 180 days of the claim denial. Id.
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`United asserts that “[t]hese types of procedures are typical in the plans [it] offers.” Mot. at
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`6. To support that assertion, it provides a sealed Summary Plan Description which shows that (a)
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`if United makes an adverse benefit determination, the member or authorized representative must
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`submit an appeal within 180 days of receiving notice of the determination, (b) that appeal should
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`include the five matters listed in the preceding paragraph, (c) if United upholds the denial, the
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`member may file a second appeal within 60 days from receiving the first appeal determination, (d)
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`if United again upholds the denial, the member may request external review of United’s determi-
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`nation, and (e) a member “cannot bring any legal action against” United to recover reimbursement
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`until 90 days after the member has “properly submitted a request for reimbursement . . . and all
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`required reviews of the [the member’s] claim have been completed.” App. 134-37.
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`Furthermore, the parties agree that United’s Care Provider Administrative Guides establish
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`administrative remedies with respect to denied claims for providers. See App. at 116-23 (Exs. L
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`and M, ECF Nos. 170-13 and 170-14). These guides provide a two-step process for providers to
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`(1) seek reconsideration of denied claims and (2) appeal the reconsideration decision. See App.
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`117, 121.
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`Several other important facts are undisputed. First, the Labs are valid assignees of the plan
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`beneficiaries, i.e., the patients or insureds. Second, the Labs are also out-of-network providers of
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`lab services. Third, Integrity submitted claims and appeals on behalf of the Hospitals. The parties’
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`views diverge, however, with respect to whether Integrity submitted claims and appeals on behalf
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`of the Labs. And that divergence occurs even though there is no apparent dispute that Integrity was
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`authorized to act on behalf of the Labs as well as the Hospitals.
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`Although the parties hotly contest whether Integrity submitted any claims or appeals on
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`behalf of the Labs, that dispute is immaterial unless Integrity submitted claims or appeals on behalf
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`of the Labs through the ERISA plans and the patients’ assignments of claims. This is an important
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`distinction that the Labs apparently disregard. And there is simply no evidence to support such
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`submissions. At most, there is evidence that the claims and appeals submitted by Integrity were
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`both on the behalf of the Hospitals and on behalf of the Labs. But there is no reasonable basis to
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`infer that the Hospitals presented their claims on behalf of the patients or that the Hospitals pre-
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`sented their claims and appeals through any administrative process set out in an ERISA plan. With-
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`out that reasonable inference, the Court similarly cannot reasonably infer that the same claims and
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`appeals made by Integrity for the Labs were in accordance with any ERISA plan of any patient
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`through any assignment.
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`To show exhaustion of administrative remedies for some claims, the Labs want to piggy-
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`back on the claims submitted on behalf of the Hospital. While the Court declines to find at this
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`time that such piggybacking is precluded in all circumstances, it does not work here, even assum-
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`ing without deciding that the Hospital claims and appeals submitted by Integrity can also be at-
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`tributed to the Labs. It necessarily fails here because providers such as the Hospitals are seeking
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`payment of claims on their own behalf, not on behalf of any patient through an assignment of
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`claims. Furthermore, as shown by the typical ERISA plans, providers and patients must pursue
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`different administrative processes even though each process starts with the filing of a claim.
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`No one disputes that this case involves thousands of claims denied by United. Technically,
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`it would seem that, to establish non-exhaustion, United would need to show that, for each denied
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`claim, the Labs failed to exhaust the administrative remedies available under the plan for that in-
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`sured. While the Labs agree that the plans “state what they state,” they dispute United’s position
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`that they have wholly failed to file any claims or appeals.
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`Because the Labs pursue their ERISA claims as assignees of the patients, this case seems
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`to (1) make the typical process set out in the Certificate of Coverage and Summary Plan Descrip-
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`tion as the pertinent process and (2) present no reason to consider the remedies set out in United’s
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`Care Provider Administrative Guides. But, as the prior paragraphs indicate, it is apparent that
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`United contends that the claims submitted and appealed on behalf of the Hospitals, fall under ad-
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`ministrative remedies for providers, not patients. There is no evidence that the Hospitals submitted
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`any claim on behalf of the patients and the Court cannot reasonably infer any such submission
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`from the facts presented. Thus, the Labs’ attempt to piggyback on the claims submitted on behalf
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`of the Hospitals is likewise insufficient to show exhaustion of administrative remedies for claims
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`of the patients.
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`As United points out, this consolidated action is not the only pending case involving the
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`Labs. In Aetna Inc. v. The People’s Choice Hospital, LLC, No. SA-18-CV-0323-OLG, the Court
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`partially granted a motion to dismiss and thus dismissed various counterclaims asserted by the
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`Labs. See ECF No. 171-2 (copy of order). The Court specifically dismissed a similar ERISA claim
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`for failure of the Labs to exhaust administrative remedies. See id. The Labs attempt to distinguish
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`Aetna on grounds that the dismissal occurred at the pleading stage based solely on their allegations,
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`rather than on factual evidence presented on summary judgment. But the submitted evidence in
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`this case does not create a genuine dispute of material fact regarding whether the Labs filed any
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`claims or appeals on behalf of the patients.
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`United has carried its summary judgment burden to show that the Labs failed to exhaust
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`their administrative remedies. The Labs rely on claims and appeals filed on behalf of the Hospitals
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`to exhaust their administrative remedies as providers. The Labs provide no evidence that they
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`pursued any administrative remedies available to the patients who assigned their claims to them.
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`And their reliance on the claims and appeals submitted on behalf of the Hospital is insufficient to
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`show that they pursued any claim or appeal on behalf of any patients who had assigned their claims
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`to the Labs. Because the Labs have not pursued any claim on behalf of the insureds through their
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`assignment of claims, United has no need to show the Labs failed to exhaust administrative reme-
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`dies available under each plan for each insured.
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`Although United has carried its burden to show an exhaustion failure, the Labs rely on a
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`futility exception to exhaustion. If they can establish that exception, they may avoid summary
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`judgment despite their failure to exhaust. But, as the Fifth Circuit stated long ago, courts are to
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`excuse exhaustion failures “only in the most exceptional circumstances.” Davis v. AIG Life Ins.
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`Co., 85 F.3d 624, No. 95-60664, 1996 WL 255215, at *2 (5th Cir. Apr. 26, 1996) (citing Commc