1. Case Name: Jon N. v. Blue Cross Blue Shield of Massachusetts, United States District Court, February 16, 2010. 684 F. Supp. 2d 190.
- Counsel for Plaintiff: Jonathan M. Feigenbaum, Phillips & Angley, Boston, MA, James L. Harris, Jr., Bradley R. Sidle, Brian S. King, Attorney at Law, Salt Lake City, UT
- Counsel for Defendant: Joseph D. Halpern, Blue Cross Blue Shield Law Dept., Boston, MA, Robert G. Wing, Prince Yeats & Geldzahler, Salt Lake City, UT
3. Format: Published memorandum and order.
- Type of Coverage Denial: Medical necessity.
- Defendant: Plaintiff is insured under a health insurance plan sponsored by her father’s employer and administered by Defendant.
- ERISA Claim? Yes.
- Type of Treatment Services Denied: Plaintiff’s daughter Patricia’s claims for inpatient substance abuse and mental health treatment were denied. Specific diagnoses include: major depressive disorder, bulimia nervosa, alcohol dependence, marijuana abuse, oppositional defiant disorder, and parent-child relational problem.
- Class Action/or Individual Action: Individual action.
- Type of Insurance Plan: Unclear whether the employer plan is large or small group.
- Causes of Action: Plaintiffs allege Defendant improperly denied reimbursement for treatment.
5. Legal Pointer: Treating providers at the Plaintiff’s treatment facility recommend residential treatment. However, the treatment is denied as not medically necessary. The Plaintiff appealed this decision through the internal appeals process and through two external appeals, all of which were denied (the insurer’s decision to deny treatment was upheld in every circumstance). The Plaintiff argued there was a conflict of interest
6. Legal Issues and Causes of Action: Plaintiff argues that the Defendant improperly denied treatment for Plaintiff’s residential treatment.
- Ruling: The Defendant’s motion for summary judgment is granted. The Plaintiff’s motion for summary judgment is denied.
7. Narrative Case Description: The Plaintiff had a history of emotional and behavioral health issues and was receiving outpatient therapy. Her therapist recommended residential treatment when Plaintiff’s behavior became riskier. Plaintiff was enrolled in Second Nature Wilderness Program from June to August, 2006, and then placed in residential treatment at Island View from August 2006 to June 2007. Plaintiff’s insurance plan covered medically necessary inpatient hospital care, acute or subacute residential treatment, partial hospitalization, and intensive outpatient treatment for biologically-based mental conditions. Plaintiff’s claims for residential treatment were denied.
Plaintiff appealed the denial of benefits through the Plan’s internal appeal process. The denial was upheld at each level of the appeal process by three different physicians. Plaintiff then sought external review of the decision through MAXIMUS, which upheld the denial. Defendant Blue Cross submitted Plaintiff’s claims for a second external independent review after receiving additional medical records. The second external appeal also upheld the denial of benefits as not medically necessary.
The Court first considers whether to review the denial of benefits based on a de novo review standard or an arbitrary and capricious standard. In an ERISA denial of benefits, if the administrator lacks discretion under the plan to determine eligibility for benefits or to construe the terms of the plan, the decision is reviewed on a de novo basis. If the administrator does have discretion, the decision is reviewed under the arbitrary and capricious standard. Here, the terms of the Plan explicitly give discretion to the administrator, as does the Subscriber Certificate. Thus, the Court applies the arbitrary and capricious standard.
In applying the standard, the Court also considers whether there is a conflict of interest. While the Defendant both funds the plan and evaluates benefits claims does constitute a conflict, the Court finds it is one factor among many to consider and is neutralized by the fact that the Plan sent the decision out for an independent external review on two separate occasions.
The Plaintiffs argue that the decision should be reviewed on a de novo basis due to the fact that the reviewers failed to utilize the proper criteria. The Plan reviewers applied the criteria relating to subacute treatment which the Plaintiffs argue was an abuse of their discretion because the MA Mental Health Parity Law requires coverage to be provided for intermediate inpatient care at levels less invasive than subacute treatment and that the care the Plaintiff did receive was, in fact, less intensive than subacute treatment. In support of this argument, the Plaintiffs cite a Bulletin issued by the MA Commissioners of Mental Health and Insurance. However, the Court sides with the Defendants that the Bulletin only appears to require the Plan provide coverage for some form of intermediate care, which the Plan does in fact provide. The Court also finds that the care Plaintiff received was, in fact, subacute care. Thus, the Plan’s choice to review her case according to the subacute criteria was appropriate.
The Court then considers whether the denial was arbitrary and capricious. The Court found that the decision was not arbitrary and capricious and was supported by the medical opinion of five separate specialists. The Plaintiff argued that the observations and treatment recommendations from the Plaintiff’s treating specialists should be given more weight. The Court agrees that a diagnosis provided by a treating physician is more reliable, however, the process of reviewing a claim does not rely on the nuances of personal observation. As such, the decision to deny benefits is upheld.
8. Additional Comments: None.
10. Practical Implications and Lessons Learned: In this case, the decision to deny benefits was upheld by five separate providers and in two separate independent reviews. It is unclear whether the Court’s decision would have been the same had there been fewer decisions in favor of the Defendant’s position.
11. All Legal Theories Presented in Case: Violation of ERISA.
12. Successful Legal Theories in Case: None