- Filing. Published in U.S. District Court for the District of Utah on May 29, 2020 (Case no. 2:18-cv-048-JNP-EJF).
- Backgroun After several other treatment programs, Plaintiffs’ daughter Amanda received care at a residential treatment center called New Haven but was denied care which was upheld on appeal. She experienced both MH and addiction issues, including several suicide attempts. The Court references too that her birthmother committed suicide by hanging when she was 4 years old, and she also “had rope burns and bruises around her neck, indicating that her birthmother also intended to hang Amanda.” Amanda was diagnosed with Major Depressive Disorder, PTSD and several other conditions. Defendants Beacon Health Options (BHO served as the TPA) and Chevron MH/SUD Health Plan were sued after Amanda’s care was only covered for the first month out of a 10 month stay at New Haven. Beacon used two types of medical guidelines, one for “admission” and one for “continued care” (both of which were very detailed) to deny Amanda the additional coverage. Plaintiffs filed an ERISA fiduciary breach of care action 1132(a) and sought $100,000 in unreimbursed, out-of-pocket expenses. Plaintiffs moved for summary judgment and argued they are entitled to a reinstatement of benefits based on the following issues:
- Failing to consider Amanda’s substance use disorder;
- Applying improper medical necessity criteria that are inconsistentwith the Plan, are internally contradictory, and fall below generally accepted standards of care; and
- Failing to give a reasoned explanation for the denial that is supported by substantial evidence.
Also, “Plaintiffs contend that the appropriate standard of review is de novo because of alleged serious procedural irregularities in BHO’s adverse benefits determination process.” They also seek prejudgment interest and attorney’s fees and costs.
Defendants also moved for summary judgment in part because they believe in part that they have discretion under the plan terms to interpret and make coverage determinations so an “arbitrary and capricious standard of review is appropriate.”
- Holding. Judge Jill N. Parrish made the following rulings:
- Defendant’s motion for Summary Judgement is denied.
- The Court determined that serious procedural irregularities throughout BHO’s claims denial process warrant a de novo standard of review in this case. However, the substantive defects in BHO’s adverse benefits determination call for a reversal of BHO’s denial of benefits and remand to the administrator even under an arbitrary and capricious standard of review.
- The Court remanded the case to BHO to reconsider Plaintiffs’ claim for benefits consistent with this decision.
- The Court denied Plaintiffs’ request for prejudgment interest but granted their request for attorney’s fees and costs.
- Analysis. In Judge Parrish’s well thought out opinion, here are a couple of highlights that clarifies ERISA’s legal protections:
- Administrator Duties:
- At the initial adverse benefits determination stage, subsection (g) of the regulations requires administrators to make certain pieces of information available to claimants, including (1) “[t]he specific reason or reasons for the adverse determination;” (2) “[r]eference to the specific plan provisions on which the determination is based;” (3) “[a] description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary;” (4) “[a] description of the plan’s review procedures and the time limits applicable to such procedures;” and (5) for denialsbased on lack of medical necessity, “an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the claimant’s medical circumstances.” See 2560.503-1(g)(1)(i)-(v).
- Administrator Review Failures:
- Serious procedural irregularities in BHO’s adverse benefits determination warrant de novo review in this case for two reasons. First, BHO reviewersentirely failed to consider whether RTC care was medically necessary to treat Amanda’s substance use disorder, which is akin to failing to respond to an insured’s claim for benefits or appeal of a denial of benefits within ERISA’s deadlines. Second, BHO’s review presents multiple other procedural irregularities, including declining to reveal the identity and relevant credentials of the reviewers who made the medical necessity determinations, failing to engage in a “meaningful dialogue” with Plaintiffs by not taking the information provided in their appeal into account, and falling short of providing specific reasons to explain the clinical judgment of its medical necessity determination. Such deficiencies are serious violations of ERISA’s minimum procedural requirements. However, …. shortfalls in the merits of BHO’s adverse benefits determination warrant reversal and remand even under an arbitrary and capricious review standard.
Plaintiffs are entitled to summary judgment because BHO’s denial of benefits was arbitrary and capricious. Specifically, BHO’s denial was arbitrary and capricious because BHO: (1) failed to address the medical necessity of Amanda’s substance abuse treatment; (2) applied acute-level medical necessity criteria to evaluate whether Amanda’s diagnoses, conditions, and symptoms warranted RTC care, which is inconsistent with the Plan’s definition of RTC care as subacute; (3) did not offer a reasoned analysis that applies appropriate medical necessity criteria to Amanda’s circumstances; and (4) failed to consider ample medical evidence in Amanda’s record that is contrary to BHO’s lack of medical necessity determination, including the opinions of Amanda’s treating physicians. Accordingly, the court remands this case to BHO to reconsider Plaintiffs’ claim for benefits consistent with this decision