1. Case Name: Michael D. v. Anthem Health Plans of Kentucky, Inc.

 2. Type of Treatment Services Denied: Residential Treatment

  3. Lawyers:

  1. Plaintiff: Brian King and Nediha Hadzikadunic, Brian S. King PC
  2. Defendant: Timonthy Houpt and Jessica Wilde, Jones, Waldo, Holbrook and McDonough, P.C.

4. Format: Memorandum Decision and Order Granting in Part and Denying in Part Cross-Motions for Summary Judgment

 5. Outline:

  1. ERISA Claim? Yes
  2. Class Action/or Individual Action: Individual
  3. Defendant: Insurance Company/Plan Administrator
  4. Type of Insurance Plan: Group Health Benefit Plan
  5. Type of Coverage Denial: Medical Necessity

6. Legal Issues and Causes of Action: Mike and Maddie filed their single-count Complaint seeking recovery of benefits under 29 U.S.C § 1132(a)(1)(B). Under Count One, Plaintiffs also alleged that Anthem breached its fiduciary duties under 29 U.S.C. § 1104 and § 1133 by failing to act solely in the interest of the Plan participants and beneficiaries when it denied Maddie’s benefits and by failing to provide a full and fair review as required under the Plan and by ERISA.

Ruling: Plaintiffs sought judgment in the amount of $200,000.00, plus prejudgment interest pursuant to Utah Code Ann. § 15-1-1, and attorney fees and costs incurred under 29 U.S.C. § 1132(g). The court held oral argument on the motions and, on the basis of that hearing, the parties’ briefs, and a review of the relevant law, the court granted in part and denied in part Anthem’s Motion for Summary Judgment and granted in part and denied in part Plaintiffs’ Motion for Summary Judgment.

 7. Narrative Case Description: On August 30, 2014, Maddie was admitted at Aspiro Wilderness Adventure Therapy (“Aspiro”) for stabilization and assessment. She resided there and received wilderness therapy until she was discharged on November 11, 2014. Maddie was then admitted to Uinta Academy (“Uinta”) on November 11, 2014, where she received residential treatment for over a year until her discharge on December 17, 2015. Plaintiffs submitted claims for coverage of the Aspiro medical expenses on April 29, 2015 and for the Uinta expenses on October 26, 2015. Anthem denied both claims.

Upon receipt of Plaintiffs’ claims for coverage of treatment at Aspiro, Anthem conducted a retrospective review and denied coverage. Anthem first explained that it reduced payment for the benefits at Aspiro because of the lack of precertification and that precertification was needed for certain services under the Health Care Management guidelines. Anthem later notified Plaintiffs that Maddie’s claim for benefits were denied because there were no benefits in the plan for a Wilderness Camp Program. This letter did not address the precertification issue, nor did it refer Mike to any specific section in his benefit plan. Mike appealed the denial and wrote a letter to the Kentucky Department of Insurance (“KDOI”) asking the Consumer Protection Division to investigate. KDOI contacted Anthem and asked for further information regarding the claims. KDOI and Anthem exchanged communications, and, in one response, Anthem provided a copy of the letter it allegedly sent to Mike denying his appeal for coverage of the Wilderness Camp Program at Aspiro because wilderness camps were not a covered benefit. The letter directed Mike to a specific section of his Plan benefits booklet and the EOBs, and informed Mike that he had exhausted his appeal rights with Anthem. KDOI informed Mike that it was upholding Anthem’s denial of benefits because Aspiro was a wilderness camp and therefore clearly excluded under the plan.

Anthem also denied coverage of treatment at Uinta, stating that the services were not pre-certified. Anthem then informed Mike that, after a retrospective review, it denied coverage for the Uinta expenses because Maddie’s treatment was not medically necessary. Mike appealed the denial. Anthem notified Mike that it was upholding its decision and that he had exhausted his appeal rights. Mike then requested external review of the decision by an independent review organization. The external reviewer upheld Anthem’s denial.

Mike and Maddie filed their Complaint on June 23, 2017 and sought to recover benefits allegedly due under the plan for two wrongfully denied claims on the grounds that Anthem’s decisions were arbitrary and capricious. Specifically, Plaintiffs alleged that the denial of benefits for Aspiro was wrongful because the plan did not give fair notice of the definition of wilderness camps or programs, Anthem did not offer a clear explanation as to why it considered Aspiro a wilderness camp, and Anthem gave conflicting reasoning for its denial. Additionally, Plaintiffs argued that the exclusion for wilderness camps violated MHPAEA.[1]

Anthem gave two initial reasons for denying Plaintiffs’ claims. First, it stated that Aspiro was not pre-certified and second, it stated that Aspiro was a wilderness camp and wilderness camps were not covered by the plan. Plaintiffs argued that the inconsistency in reasoning denied them the statement of Anthem’s specific reasoning that was required by law and that because Anthem’s reasoning was inconsistent, it was arbitrary and capricious. The Court; however, did not agree. The Court opined that Anthem offered both explanations at the initial denial phase, providing Plaintiffs with the opportunity to prepare a meaningful appeal and therefore declined to address this argument further.

The Court, in turn, focused on deciding whether the denial of coverage for the Aspiro treatment because it was a wilderness camp was arbitrary or capricious. The plan stated that wilderness camps were not covered benefits but did not contain any definition of wilderness camp. The Court found that the phrase wilderness camp was ambiguous as it had multiple, equally valid definitions. In correspondence with Mike, Anthem did not define wilderness camp or program but merely asserted that Aspiro was an excluded wilderness camp. Then, in correspondence with KDOI, Anthem stated it relied on “the description of the program and services to be provided by the provider requesting the pre-certification/pre-authorization, the licensing of the facility/program, and in some circumstances the diagnosis, level of intensity of service, and/or credentialing.” While this definition provided some guidance, the Court stated that it was not part of the plan and was not offered to Mike during his appeal process. The Court further concluded that because Aspiro involved an outdoor component, it was feasible that the definition provided to KDOI could apply to Aspiro, but nowhere in the record did Anthem actually apply the definition to Aspiro. The Court opined that Anthem had not met its burden and found that excluding coverage for the services provided by Aspiro was arbitrary and capricious.

Plaintiffs also alleged that Anthem’s denial of coverage for Maddie’s Uinta treatment was arbitrary and capricious because Anthem refused to engage in meaningful dialogue as required by ERISA’s claims procedure regulations and failed to properly identify and apply the plan’s medical necessity criteria to Maddie’s condition. After reviewing the record, the Court concluded that Anthem’s decision was grounded on a reasonable basis and although Anthem consistently failed to offer detailed explanations to Mike regarding his claims, it did sufficiently inform him of its decision by directing him to the RTC Guidelines that were used and the fact that Maddie did not meet the criteria based on her symptoms at the time she was released from Aspiro. Thus, the Court found that Anthem’s decision regarding the Uinta benefits was not arbitrary and capricious.

Although Plaintiffs succeeded on the merits of their challenge of the denial, the Court concluded that Plaintiffs had not actually established that the plan should have covered Maddie’s treatment at Aspiro. For this reason, the Court remanded the matter to Anthem to exercise its discretion as plan administrator and awarded attorneys’ fees to Plaintiffs for work performed by counsel on the Aspiro claim only.

 8. Additional Comments: Because the Court found that the exclusion of coverage for the care that Maddie received at Aspiro was arbitrary and capricious, it did not reach whether a blanket exclusion for wilderness camps violated the Parity Act. However, the Court briefly addressed the issues raised by Plaintiffs because it was concerned that a blanket exclusion for all wilderness camps, which in practice has only been applied to mental health treatment, may constitute a violation. The Court stated that while there is no clear law on what is required to state a claim for a Parity Act violation, the baseline standard followed by many courts is laid out in A.H. by & through G.H. v. Microsoft Corp. Welfare Plan, No. C17-1889-JCC, 2018 WL 2684387, at *6 (W.D. Wash. June 5, 2018): “To state a Parity Act violation, a plaintiff must show that: (1) the relevant group health plan is subject to the Parity Act; (2) the plan provides both medical/surgical benefits and mental health or substance use disorder benefits; (3) the plan includes a treatment limitation for mental health or substance use disorder benefits that is more restrictive than medical/surgical benefits; and (4) the mental health or substance use disorder benefit being limited is in the same classification as the medical/surgical benefit to which it is being compared.” The Court stated that this framework was difficult to apply to Plaintiffs’ challenge to Anthem’s blanket wilderness camp exclusion for two reasons. First, the wilderness camp exclusion was neutral on its face and several courts have dismissed Parity Act claims that challenge facially neutral wilderness act exclusions because it was possible that the exclusion was applied equally to mental health treatment as it was to medical and surgical treatment plans. Second, there was no clear surgical analog. The Court further stated that the exclusion at issue in this case is troubling as Anthem purported to exclude all wilderness camps and programs without offering any explanation. Anthem was fully within its right to exclude experimental or unsuccessful types of treatments but excluding mental health treatment merely because it occurred outdoors appeared to place a limitation on mental health that does not apply to medical or surgical treatments. To avoid a Parity Act violation, Anthem must to provide a detailed explanation of why wilderness camps were not covered, especially when Plaintiffs have alleged violations of the Parity Act on appeal.

 9. Website: None.

 10. All Legal Theories Presented in Case: Breach of Fiduciary Duty

 11. Successful Legal Theories in Case: Breach of Fiduciary Duty





[1] The Court did not reach the issue of whether the plan violated the Parity Act.

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