Lukas et al v. United Behavioral Health et al

Filing 57

MEMORANDUM of DECISION and ORDER signed by Judge William B. Shubb on 4/14/2011. Plaintiffs are to take nothing on their claims and Judgment is entered in favor of defendants. This action is TERMINATED. (Marciel, M)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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JENNIFER LUKAS AND JOYCE
WATTERS,

NO. CIV. 2:09-2423 WBS DAD

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Plaintiffs,

MEMORANDUM OF DECISION

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v.
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UNITED BEHAVIORAL HEALTH AND
IBM MEDICAL AND DENTAL
EMPLOYEE WELFARE BENEFIT
PLANS,

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Defendants.
/

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----oo0oo----

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Plaintiffs Jennifer Lukas and Joyce Watters brought

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this Employee Retirement Income Security Act of 1974 (“ERISA”)

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action against defendants United Behavioral Health (“UBH”) and

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IBM Medical and Dental Employee Welfare Benefit Plans (“Plan”1),

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arising from defendants’ adverse benefit determination for

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1

The caption of the Complaint uses “Plans.” The Summary
Plan Description uses “Plan.” For consistency, the court will
use “Plan.”
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Lukas’s residential treatment for an eating disorder, substance

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abuse, and major depression at Alta Mira Treatment Center (“Alta

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Mira”) on the ground that it was not medically necessary.

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On March 10, 2011, the court held a bench trial in

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accordance with the procedures outlined in Kearney v. Standard

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Insurance Co., 175 F.3d 1084 (9th Cir. 1999), and Friedrich v.

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Intel Corp., 181 F.3d 1105 (9th Cir. 1999).

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in evidence all of plaintiffs’ 47 exhibits and all of defendants’

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475 exhibits.2

The court received

Plaintiffs had previously objected to a

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declaration from Rosemarie Barnes,3 the Plan Administrator, and

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the Plan’s supplemental responses to plaintiffs’ interrogatories,

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set two, (see Defs.’ Exs. 474-75), because plaintiffs had not

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conducted discovery on the issues raised in those two exhibits.

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(See Pls.’ Objection to & Mot. to Strike Defs.’ Exhibit List;

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Green Decl. in Supp. Thereof (Docket No. 29).)

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to continue the trial in order to allow plaintiffs to conduct

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further discovery on the identity of IPRO’s physician and other

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matters.

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it was made clear to plaintiffs that declining the court’s

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invitation would result in the court accepting these two exhibits

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into evidence.

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of fact and conclusions of law pursuant to Federal Rule of Civil

The court offered

Plaintiffs declined the court’s invitation even though

This memorandum constitutes the court’s findings

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When possible, this Order refers to the Bates number of
the exhibits. Plaintiffs’ 47 exhibits are bates-numbered Lukas
1-807. Defendants’ first 470 exhibits are bates-numbered AR
00149-01598 and Lukas 665-807. Defendants’ remaining five
exhibits are declarations authenticating their exhibits, a
declaration from Rosemarie Barnes, the Plan Administrator, and
the Plan’s supplemental responses to plaintiffs’ interrogatories,
set two.
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Barnes testified at the trial.
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Procedure 52(a).

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I.

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Factual and Procedural Background
A.

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2007 and 2008 Summary Plan Descriptions
Lukas, eighteen years old at the time of her treatment,

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is a dependent of her mother, Watters, an employee of

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International Business Machines Corporation (“IBM”) and a

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participant of the Plan.4

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Plan is IBM Managed Mental Health Care Program (“MMHC”).

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00242.)

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One of the programs offered by the
(AR

Plaintiffs are enrolled in IBM PPO Plus, and Alta Mira

is an out-of-network provider.
For reimbursement, “out-of-network care must meet

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medical necessity criteria and is subject to review by the mental

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health plan administrator.”

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network inpatient care, a participant must pre-certify treatment

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and, if the care is deemed medically necessary, the care is

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covered at fifty percent of the usual and prevailing rate.

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certification “does not guarantee that [] care meets the criteria

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for medical necessity.”

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remains “subject to review by the mental health plan

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administrator upon claims submission.”

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(Id.)

With respect to out-of-

Pre-

Out-of-network inpatient care

(Id. (emphasis added).)

Benefits for treatment is based on medical necessity.

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(AR 00247.)

(AR 00248.)

“Medical Necessity” is defined as follows:

To be medically necessary[,] treatment must:
•
•

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Be medically required.
Have a strong likelihood of improving your
diagnosed psychiatric or substance abuse

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Because the treatment at issue occurred in late 2007
and early 2008, the 2007 and 2008 Summary Plan Descriptions are
applicable to this action. The court will refer to the 2007
Summary Plan Description unless otherwise noted.
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•
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•

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•

condition.
Be the least intensive level of appropriate
care
for
your
diagnosed
condition
in
accordance with:
–- Generally accepted psychiatric and
mental health practices.
-The
professional
and
technical
standards adopted by the administrator.
Not be rendered mainly for the convenience of
the member, the member’s family or the
provider.
Not be custodial care. . . .

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(Id. (emphases added).)
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Alternate levels of care, such as residential, “may be
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approved by the mental health plan administrator in lieu of
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inpatient treatment as clinically-appropriate and cost
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effective.”

(AR 00251.)

If an alternate level of care is

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proposed, the administrator will “[d]etermine if an alternate
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level of care is medically necessary” and “[d]etermine if
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alternate care is a clinically appropriate alternative to
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hospitalization.”

(Id.)

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The administrator for MMHC is UBH, a managed behavioral
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health care organization.

(AR 00242; see also AR 00302.)

UBH’s

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“2007 Level of Care Guidelines: Mental Health” for residential
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treatment provide that “[a]ny one of the following criteria must
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be met”:
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1.
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2.

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3.
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Presence of a pattern of severe impairment in
psychosocial functioning due to a behavioral health
condition.
Presenting signs and symptoms of a behavioral
health condition that clearly demonstrate a
clinical need for 24-hour structure, supervision,
and active treatment.
(This criterion is not
intended for use solely as a long-term solution to
maintain
the
stabilization
acquired
during
treatment in a residential facility/program.)
Deterioration of the member’s behavioral health
condition
with
the
likelihood
of
requiring
inpatient care if the member is not in a
residential treatment program. (This criterion is
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not intended for use solely as a long-term solution
to maintain the stabilization acquired during
treatment in a residential facility/program.)

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(AR 00950 (emphasis added).)

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B.

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Treatment Prior to Alta Mira
The Plan paid for Lukas’s intensive outpatient,

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residential, inpatient, and ambulatory detoxification treatment

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during the seven months prior to Lukas’s admission at Alta Mira.

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(See, e.g., Pls.’ Opening Trial Brief 5:7-8; 7:22-24 (Docket No.

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30).)

This ERISA action only concerns Lukas’s entitlement to

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benefits for her residential treatment at Alta Mira from October

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23, 2007, to January 6, 2008.5

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is relevant to this action, although the parties disagree as to

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the extent.

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1.

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However, Lukas’s prior treatment

Summit Eating Disorders and Outreach Program
(March 5, 2007, to June 7, 2007)

On March 5, 2007, Lukas was admitted to Summit Eating

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Disorders and Outreach Program (“Summit”), an in-network

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provider.

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outpatient treatment there for the next three months.

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outpatient treatment is a higher level of care than outpatient

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treatment, but a lower level of care than inpatient or

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residential treatment.

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subject to periodic authorizations by UBH.

Lukas received primarily intensive
Intensive

Lukas’s benefits under the Plan were

When she was admitted (see AR 01332-33; Lukas 359,

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(AR 01302.)

386), Lukas was diagnosed with bulimia nervosa, generalized

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The Complaint alleges that Lukas began treatment on
October 23, 2007, and ended treatment on January 6, 2008.
However, the evidence indicates that Lukas began treatment on
October 28, 2007, and ended treatment on February 9, 2008.
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anxiety disorder, “amenorrhea/fatigue/cold intolerance,” and

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problems with her primary support group.

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her food intake to 200 to 500 calories per day and exercised

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daily for one to three hours.

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week.

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laxative per day.

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several times the previous summer from weakness.

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pounds, down from 190 pounds in August 2006.

Lukas was restricting

She purged five to six times per

Lukas also took eighteen to twenty fiber pills and one

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2.

Lukas stated that she had “blacked out”
She weighed 125

She was 5' 6".

Sober Living by the Sea (June 13, 2007 to
September 9, 2007)

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For the next three months, Lukas was treated at a

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residential level of care at Sober Living by the Sea (“Sober

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Living”), an “accommodated”6 out-of-network residential treatment

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center.

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were subject to periodic authorizations by UBH.

Benefits under the Plan for the residential treatment

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The precipitating event for treatment at Sober Living

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was Lukas had reportedly failed at intensive outpatient

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treatment.

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past eighteen months.

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previous thirty days and had been drinking alcohol daily to the

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point of “blackout.”

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to Sober Living she did not have drug or alcohol cravings.

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admission, she claimed that she had experienced thoughts of

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suicide in her lifetime and had attempted suicide in the past.

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She had been restricting her food intake to 300 to 400 calories

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per day.

Lukas had been using cocaine nearly daily over the
She had spent $1,000 on drugs in the

However, Lukas reported that upon admission
At

She had been binging, purging, and using laxatives.

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This means that Sober Living was considered an innetwork provider for purpose of Lukas’s benefits.
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She was diagnosed with bulimia nervosa, alcohol dependence,

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cocaine dependence, and problems with her primary support group.

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(See AR 01346; Lukas 452, 465, 468, 471.)

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On August 27, 2007, UBH’s medical director reviewed

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Lukas’s case. (AR 01360.)

The notes stated: “[Lukas] [is]

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currently in [an] accommodated [out-of-network] dual [diagnosis]

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[residential treatment center] for [an] eating disorder, bulimia

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and substance dependence.

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70 days [with] minimal progress.

[Lukas] has been in [the] program over
[Lukas] has been restricting.

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[The weight] on admission was 132 and [is] now 123.4.”

It was

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recommended by UBH’s medical director that the case be referred

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to a primary care physician unless there was significant

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progress.

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physician at Sober Living was pleased with the progress to date.

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However, Lukas was continuing to report drug cravings.

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“If I was not here I would be using.”

By September 7, 2007 (AR 01363), the attending

She said,

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Lukas was then discharged from Sober Living on

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September 9, 2007, in order to enter an ambulatory detoxification

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program.

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that Lukas would have to be re-admitted and that there was “no

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guarantee” that the benefits would continue if Lukas was not

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committed to or motivated for treatment.

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She had relapsed on alcohol.

3.

UBH informed Sober Living

(AR 03164-65.)

First House Detox Services (September 9, 2007, to
September 19, 2007)

On September 9, 2007, Lukas entered First House Detox

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Services (“First House Detox”), an out-of-network provider

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providing ambulatory detoxification treatment.

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Lukas cut and burned herself.

While there,

She also restricted her food
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intake.

(AR 01367-68.)

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4.

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Sober Living (September 19, 2007, to September 20,
2007)

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On September 19, 2007, Lukas returned to Sober Living.

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However, on September 20, 2007, Lukas was discharged from Sober

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Living in order to enter College Hospital for inpatient care.

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nurse at Sober Living had determined that Lukas was in danger of

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harming herself.

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kill herself and that she had a plan to overdose or drink until

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she died.

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her bed.

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A

Lukas had told the nurse that she wanted to

The staff at Sober Living found a razor blade under
(AR 01369-71.)
5.

College Hospital (September 20, 2007, to September
23, 2007)

The September 21, 2007, initial facility-based review

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(AR 01370-75; see also Lukas 412) indicates that Lukas was

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admitted to College Hospital for inpatient care with diagnoses of

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(1) major depressive disorder (recurrent, severe without

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psychotic features), (2) polysubstance dependence, (3) a self-

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inflicted burn on the left wrist, and (4) problems related to her

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social environment.

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ideation over the past three and a half months.

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her “high risk.”

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included fifteen-minute checks and monitoring one hour after

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meals and bathroom restrictions to prevent purging.

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discussed with College Hospital the possibility of an extended

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stay in order to allow time for a complete assessment and

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recommendation or a transfer to another residential center other

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than Sober Living because of the inefficacy of Sober Living.

Lukas reported that she experienced suicidal
UBH considered

Lukas was subject to safety precautions that

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UBH

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6.

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Sober Living (September 23, 2007, to October 5,
2007)

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Lukas returned to Sober Living with a more positive

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attitude and motivation for treatment.

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25, 2007, case staffing note (AR 01375) indicates that UBH

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considered the possibility of transferring Lukas to a different

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residential treatment center.

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on cocaine and alcohol.

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her and recommended a higher level of care.

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(AR 01376).

A September

In early October, Lukas relapsed

(AR 01378-79.)

Sober Living discharged
(AR 01380; see also

Lukas 460.)
7.

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First House Detox (October 5, 2007, to October 28,
2007)

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Lukas was again admitted to First House Detox.

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01378-82.)

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weeks, Watters and UBH exchanged calls about residential

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treatment centers.

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continue Lukas’s treatment at First House Detox until Watters

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could find a residential treatment center for Lukas.

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also indicated that Sober Living was not willing to re-accept

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Lukas.

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C.

UBH considered her “high risk.”

(AR

For the next few

Watters informed UBH that she planned to

Watters

Treatment at Alta Mira
Lukas entered Alta Mira on October 28, 2007, and would

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remain there until February 9, 2008.7

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an out-of-network residential treatment center, and provided the

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treatment at issue in this ERISA action.

(Lukas 7.)

Alta Mira is

The October 23, 2007, Intake Assessment at Alta Mira

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On January 22, 2008, she was transferred to Alta Mira’s
transitional living program. (Lukas 7, 657.)
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(AR 00991-01000) indicates that the “primary issues/precipitating

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event for seeking help” were anorexia and drug and alcohol abuse.

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It was noted that Lukas had no current or significant past health

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issues.

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had previously taken antidepressants and sleeping pills.

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had some problems sleeping.

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was 5' 6" and weighed 120 pounds.

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appetite, food, exercise, purging, and body image.

She was not currently taking medication, although she

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Lukas

The assessment indicates that she
Lukas had issues with her

She stated that she did not currently drink alcohol or

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use drugs.

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for approximately three weeks.

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symptoms, such as sweats, chills, vomiting, or seizures.

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been dependent on Klonopin, Ambien, and Valium, but it does not

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appear that she was currently taking these medications.

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She had not used cocaine for four months and alcohol
She did not have detoxification
She had

With respect to her psychological background, she was

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depressed and had feelings of “hopelessness/worthlessness” and

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had thoughts of suicide (“fantasy”), but denied any plan or

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intention to commit suicide at that time.

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never attempted suicide.

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included shopping, “compulsion (lying, cheating),” and

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co-dependency.

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with “sex/love” and possibly “intensity (run late, wait to fill

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up gas tank).”

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with, inter alia, physical abuse, emotional abuse, and sexual

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abuse.

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She said that she had

Addictive or compulsive behaviors

There was some addictive or compulsive behavior

Under trauma, the assessment indicates issues

The October 30, 2007, History and Physical Exam (AR

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1003-06) revealed for the first time that Lukas was molested by

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her mother’s boyfriend at age four and had been raped three times
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at the ages of seventeen and eighteen years old.

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conditions and vital signs were normal.

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cocaine dependency, anorexia nervosa, major depression, and

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general anxiety disorder.

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she had previously used heroin and ecstasy.

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status was good and there were no barriers to recovery.

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detoxification was required, no activity restrictions imposed,

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and her diet was to be regular.

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Her physical

She was diagnosed with

She revealed for the first time that
Her functional
No

Lukas’s treatment plans initially addressed, inter

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alia, anorexia, purging, alcohol/cocaine/heroin abuse, anxiety,

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and depression.

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Throughout the next three months Lukas was occasionally resistant

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to treatment, defensive, and uncooperative.

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01011-13, 01015-17, 01019-22, 01027, 01029-30, 01032, 01034,

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01037, 01041-43, 01046, 1050-57, 01060, 01182 (“Individual

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Session Progress Notes”).)

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verbally abusive to staff.

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indicate that Lukas had “serious” issues with self-hatred,

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worthlessness, low self-esteem, and abandonment.

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identified on a couple of occasions the risk of “relapse” with

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respect to her eating disorder, suicidal ideation, or substance

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abuse.

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cravings.

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on November 8, 2007, stated that Lukas was eating “normally.”

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(AR 01055.)

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use alcohol or drugs while in treatment.

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532-34, 546-548 (laboratory results).)

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(See AR 01063-75 (“Treatment Plans”).)

(See generally AR

On a few occasions, she was also
The Individual Session Progress Notes

The therapist

There were a few instances in which she reported drug
Despite the possibility of relapse, a handwritten note

The laboratory results indicate that Lukas did not
(AR 1007-10; Lukas

In addition to her individual therapy sessions, Lukas
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participated in group therapy sessions and a “food and mood”

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group.

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Therapy”); AR 01043, 01049 (“Progress Notes for Expressive Arts

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Therapy”); AR 01025, 01033, 01038, 01058 (“Progress Notes for

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Food and Mood Group”); AR 01028, 01036, 01044, 01059 (“Group

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Progress Notes for Expressive Arts and Movement Therapy”); AR

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01017, 01045 (“Group Progress Notes for Somatic Movement and

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Expressive Arts Therapy”).)

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she was verbally abusive and angry toward other patients.

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Progress Notes for Food and Mood Group; Individual Session

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Progress Notes.)

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redirect her behavior.

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(See AR 01018 (“Progress Note for Somatic Movement

During a few of her group sessions
(See

However, she was responsive to instructions to

Lukas’s family participated in her treatment.

(See

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generally AR 01026, 01031, 01035, 01039, 01047-48; Lukas 560-61

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(“Family Meeting and Program Summaries”).)

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and programs, Lukas and her parents primarily focused on their

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relationship with each other.

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of their emotions, Lukas’s perception of her mother’s lack of

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trust, and Lukas’s criticism of her parents’ parenting skills.

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They also addressed Lukas’s desire for a car and Watters’s anger

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that Lukas had spent $10,000 from a trust to buy drugs.

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In family meetings

Major issues addressed include all

In early January, it was noted that Lukas participated

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“fully” in her treatment and ate a variety of foods.

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(“Discharge Summary”).

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treatment at Alta Mira.

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D.

(AR 01076

On February 9, 2008, Lukas completed her
(Lukas 7.)

Adverse Benefit Determination
On October 28, 2007, Watters confirmed in a voicemail

that her daughter had been admitted to Alta Mira.
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On October 29,

1

2007, UBH advised Watters that the “case” on her daughter would

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be closed because, as Alta Mira is an out-of-network treatment

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center, UBH was no longer managing Lukas’s benefits.

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suggested that Watters continue to use UBH as a point of contact.

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(AR 01382-86.)

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by an out-of-network provider, UBH would no longer be in

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discussion with Lukas’s provider and would not decide whether to

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authorize further residential treatment on a periodic basis as it

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did before.

UBH

In other words, because Lukas was being treated

Watters would have to submit a claim for out-of-

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network benefits.

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that the out-of-network benefits policy would apply. (AR 00966,

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01300.)

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UBH then followed up with a letter confirming

On March 6, 2008, UBH denied Lukas’s claim because it

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determined that the sixty days for out-of-network inpatient

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substance abuse treatment had already been exhausted.

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AR 01388, AR 01451.)

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denial over the telephone.

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(AR 01320,

It appears that Watters was informed of the

Watters then called UBH and filed a first-level appeal,

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arguing that the determination was in error because the primary

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diagnosis was for an eating disorder and substance abuse was a

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secondary diagnosis.

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Spikol, a UBH psychologist, agreed with Watters about the primary

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diagnosis.

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appeared that medical necessity criteria for Residential

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Treatment for 10/23/07 through 1/6/08 may not have been met.

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Therefore, the chart is referred for review by an appeal

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reviewer.”

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(AR 01320, 01453.)

(AR 01389.)

On May 14, 2008, Harvey

However, Spikol also stated that “[i]t

Dr. Melinda Privette, UBH Associate Medical Director
13

1

and Board Certified Psychiatrist, then handled the appeal.

2

May 21, 2008, Dr. Privette informed Watters that her daughter’s

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first-level appeal was denied.

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On

The letter stated in part:

A request was made for Residential Treatment Level of
Care Certification for 10/23/07 to 01/06/08.
The
clinical information was reviewed, as well as the
provider records, and the applicable Medical Necessity
Guidelines.
Based upon the review . . . it is my
determination that Medical Necessity Requirements for the
Residential Treatment Level of Care are not met. Care
could have occurred with Outpatient providers.

8
9

The above determination for Residential Treatment Mental
Health Services is based on the following UBH Level of
Care Guidelines criteria.

10
(AR 00971-72, 01077-81.)
11
While Dr. Privette’s letter is relatively short, her
12
case management notes further explained her decision.

(AR

13
01390.)

Dr. Privette first provided a “Case Summary of

14
Peer/Admin Review,” which stated in part:
15

27

Clinical information reviewed, including case records and
the provider records. [Lukas] is an 18 year old female
with diagnoses of anorexia nervosa, polysubstance
dependence ([alcohol], cocaine, Heroine [IV], opiates),
[major depressive disorder] and [general anxiety
disorder].
She was admitted to the facility after
[substance abuse] treatment. Admission records indicate
that [Lukas] was 5' 6", and 120 pounds, at her ideal body
weight.
She was noted to have depressed mood, poor
sleep, sober from cocaine for 4 months and [alcohol] for
24 days.
Her vital signs were stable and she had no
medical complications. She had no [suicidal ideation],
no [homicidal ideation], no psychosis and no episodes of
behavioral dyscontrol during the entire time period. She
did have some occasional disruptive behavior in groups,
but responded to redirect. She noted that her parents
had divorced when she was two and she lived with her
mother and stepfather.
The step father [sic] was
described as controlling and subject to rage outbursts,
and [] [Lukas] described her mother as an overweight
bulimic that would have rages when [Lukas] did not make
all As or was not perfect (e.g., keeping her room clean).
[Lukas] had a history of molestation at age 4, and was
raped three times between age of 17 and 18.

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During the time period in question, including admission,

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there is no indication that [Lukas] had any eating
disorder symptoms.
Her height and weight were not
recorded, there was no indication that her caloric intake
was of concern or monitored, there was no indication that
she was purging or required any supervision with meals or
bathroom privileges.
Family session occurred by
telephone and focused on [Lukas]’s relationship with her
parents, and her desire to get a car and go to college.
They were also frustrated that she had spent 10K of her
trust fund on drugs.
She attended various groups
including Somatic Movement therapy and Expressive Arts
therapy as well as individual therapy. She went to a
Food and Mood group and they had activities such as
shopping at and [sic] organic grocery store, buying the
facilities [sic] nutritional supplements, and cooking in
the kitchen.
Records indicate that [Lukas] complained of drug cravings
at times, and was occasionally disruptive to peers and
counselors in groups.
There is no evidence of severe impairment or need for
[mental health] residential treatment for eating disorder
or otherwise based upon [level of care] guidelines.

12
(Id. (third alteration in original).)

Under “Decision and

13
Rationale,” Dr. Privette wrote, inter alia:
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There is no evidence that you had a severe impairment in
your functioning due to psychiatric illness, or that you
had signs and symptoms of a psychiatric illness that
requires the 24 hour structure and supervision of a
residential level of care. There is no evidence that you
would have deteriorates [sic] if your care continued in
less restrictive level of care. There is no evidence
that you were under your ideal body weight, had any
eating disorder symptoms, had any medical complications,
or received any focused, individualized eating disorder
treatment.

21
Following the first-level appeal denial, Watters
22
requested and received UBH’s case file on Lukas.

UBH’s case file

23
included, inter alia, UBH’s case management notes.8

On July 30,

24
2008, Watters filed a second-level appeal with the Plan
25
26
8

27
28

Watters received UBH’s case management notes only
through January 2008. Dr. Privette’s internal medical review had
been conducted in May 2008 and thus Watters did not receive this
specific case management note.
15

1

Administrator.

2

the first-level appeal based on UBH’s level of care guidelines:

3

(AR 01460-65.)

Watters addressed the denial of

9

[B]ased on the supporting documentation (“Exhibits D, F,
G, H, and K”) it should be clear that the decision for a
higher level of care and continuation of treatment was
made by the member’s provider at the time of service.
The determination of medical necessity was made by the
member’s provider, documented, communicated to UBH, and
discussed between UBH, the Provider, and myself.
As
such, denial of coverage based on a retrospectively
determined lack of medical necessity should not be valid,
as the medical necessity was determined, documented, and
communicated before the care was received by the member,
in accordance with the benefit plan’s policies on out of
network care.

10

Watters enclosed some of UBH’s case management notes and a letter

11

from Victoria Green, an MPT Primary Therapist at Alta Mira.

4
5
6
7
8

12

The letter from Green attempted to address why

13

residential care was necessary for Lukas.

14

stated that Lukas entered Alta Mira for the following “acute”

15

issues: (1) extensive history of anorexia, (2) bulimia nervosa,

16

(3) compulsive exercising, (4) post-traumatic stress disorder due

17

to childhood trauma, and (5) substance abuse.

18

the “containment” and “safety” of residential treatment were

19

“imperative” to make “headway on [Lukas’s] eating disorder in

20

light of the above serious issues.”

21

specifically address why residential care was necessary:

22
23
24
25
26
27
28

The letter first

Green stated that

Green then attempted to

[Lukas’s] daily food intake needed to be calibrated,
monitored, and supervised. The treatment plan required
intake of three full, nutritious, balanced meals a day
provided by our experienced kitchen.
Consumption of
these meals needed to be overseen by staff. In addition,
she required supervision for two hours after each meal to
prevent purge episodes.
Since compulsive exercise is a major factor in Ms. Lukas’
eating disorder she was placed on a no-exercise contract
during the weight stabilization phase of treatment. She
required constant monitoring to avoid the elimination of
caloric intake through running and other forms of
16

1
2

exercise. When her weight and food behaviors stabilized,
appropriate exercise was gradually reintroduced under the
supervision of the fitness director who monitored her
every workout.

3
4
5
6
7
8
9

Jennifer required daily blind weigh-ins to guard against
sudden dramatic weight plunges which happen so often in
eating order treatment and can be very challenging to
reverse.
The treatment outlined can be done effectively only in a
residential setting due to the need for containment and
constant supervision. In any other setting the above
treatment is subject to sabotage and relapse. Even the
most willing client cannot necessarily follow through in
the detail and consistency required for successful early
recovery of such a complex eating disorder.

10
On August 27, 2008, Barnes, the Plan Administrator,
11
wrote to Terri Giorgio of IPRO, a medical review company.

Barnes

12
requested that IPRO “provide an independent review of the medical
13
necessity and efficacy of inpatient mental health care” for
14
anorexia nervosa, cocaine dependency, and major depression.

(AR

15
01313.)

IPRO was paid $735.00.

(Lukas 758.)

16
IPRO had the claim reviewed by a physician that it
17
retained.

The physician upheld the adverse benefit determination

18
in a two-page handwritten statement that was unsigned.

(Lukas

19
805-7.)

The name of the physician was redacted when IPRO

20
provided the handwritten statement to plaintiffs in this
21
litigation.

Dr. Monty M. Bodenheimer, Medical Director of Health

22
Care Assessment at IPRO, then reviewed the clinical conclusions
23
of the physician.

(Defs.’ Ex. 475.)

On September 9, 2008, Dr.

24
Bodenheimer informed Angel Keys of the results of IPRO’s medical
25
review.

(Lukas 759-62; AR 01305-07.)

26
The letter from Dr. Bodenheimer indicates that the
27
physician reviewed, inter alia, Alta Mira medical records,
28
17

1

Watters’s second-level appeal letter, and the letter from Green

2

of Alta Mira.

3

physician were that Lukas had a history of alcohol abuse, cocaine

4

abuse, depression, and anxiety and that she had an approximate

5

four-year history of binging and purging with increased exercise.

6

Moreover, over the past year she had restricted her diet, used

7

laxatives, and had cold intolerance and amenorrhea.

8

relying on UBH’s level of care guidelines, the physician

9

concluded:

10
11
12
13
14
15
16
17
18
19

Dr. Bodenheimer stated that the findings of the

Expressly

After a thorough review of all submitted documents, it is
now concluded that the insurer’s denial should be upheld.
There was not enough current justification in the
documentation presented to meet medical necessity
criteria for residential level of care. It was not clear
that there was such severe impairment in psychosocial
functioning to necessitate this level of care, nor why
treatment could not have been conducted within a less
restrictive setting.
There is no clear demonstration
that this patient requires 24 hour/day supervision,
structure and treatment for her disorders. There also is
no indication that this patient has deteriorated in
signs, symptoms or functioning.
She may in fact require residential care for the
treatment of bulimia and anorexia, but the submitted
documentation does not justify that level of care.
The letter, which did not reveal the name of the

20

physician, stated that the physician, who is licensed to practice

21

in New York, is a Board Certified Child and Adolescent

22

Psychiatrist, a director of a child and adolescent outpatient

23

emergency services, an Associate Professor of Psychiatry at a

24

medical school, and an associate division chief for child and

25

adult psychiatry in a major medical center.

26

many professional associations, has received several professional

27

awards and honors, has made numerous presentations at national

28

meetings, and has published in medical journals, such as American
18

He is a member of

1

Journal of Psychiatry and Journal of American Academy of Child

2

and Adolescent Psychiatry.

3

material conflict and determined that none existed.

IPRO screened him for a potential

Barnes testified at the trial that she examined IPRO’s

4
5

medical review.

Keys later e-mailed Barnes, asking Barnes if she

6

should prepare a denial letter.

7

(AR 01303.)

8

based on IPRO’s medical review, she had to deny the appeal.

9

01328-30.)

Barnes said that she should.

On September 19, 2008, Barnes informed Watters that,
(AR

The denial letter repeated most of what the letter

10

from IPRO had contained.

11

of the physician and did not provide his name.

12

letter did not repeat the physician’s findings that Lukas had a

13

history of alcohol abuse, cocaine abuse, depression, and anxiety,

14

that she had an approximate four-year history of binging and

15

purging with increased exercise, and that over the past year she

16

had restricted her diet, used laxatives, and had cold intolerance

17

and amenorrhea.

18

conclusion, which the court has quoted above.

19

letter did not state that the physician had expressly stated that

20

he was relying on UBH’s level of care guidelines.9

21

then informed Watters that the denial was based on the definition

22

of medical necessity and the letter provided the definition.

23

II.

However, the

The letter then repeated the physician’s
However, the

The letter

Discussion
The parties dispute two primary issues, one a matter of

24
25

The letter repeated the qualifications

interpretation of the Summary Plan Description and the other a

26
27
28

9

However, by including the physician’s conclusion, the
letter implied that the physician had applied UBH’s level of care
guidelines.
19

1

matter of application of the Summary Plan Description.

2

the parties dispute whether the Summary Plan Description’s

3

definition of medical necessity incorporates UBH’s level of care

4

guidelines.

5

treatment at Alta Mira met the definition of medical necessity.

6

First,

Second, the parties dispute whether Lukas’s

Under any standard of review, the court finds that

7

UBH’s level of care guidelines were expressly incorporated into

8

the Summary Plan Description’s definition of medical necessity.

9

UBH is the administrator of MMHC.

The definition of medical

10

necessity requires that the treatment “[b]e the least intensive

11

level of appropriate care for [the participant’s] diagnosed

12

condition in accordance with” the “professional and technical

13

standards adopted by the administrator.”

14

Summary Plan Description also states that if an alternate level

15

of care is proposed, the administrator will “[d]etermine if an

16

alternate level of care is medically necessary.”

17

The court turns to the remaining issue of whether Lukas’s

18

treatment at Alta Mira met the definition of medical necessity,

19

which incorporates UBH’s level of care guidelines.

20
21

A.

(AR 00248.)

The

(AR 00251.)

Standard of Review
A court applies a de novo standard of review to a

22

challenge to an ERISA plan’s adverse benefit determination unless

23

the plan confers discretion on the plan administrator.

24

Hewlett-Packard Co. Emp. Benefits Org. Income, 349 F.3d 1098,

25

1102 (9th Cir. 2003); see also Kearney, 175 F.3d at 1089 (“That

26

means the default is that the administrator has no discretion,

27

and the administrator has to show that the plan gives it

28

discretionary authority in order to get any judicial deference to
20

Jebian v.

1

its decision.”).

The word “discretion” need not appear to grant

2

discretionary authority.

3

Ins. Co., 458 F.3d 955, 963 (9th Cir. 2006).

See, e.g., Abatie v. Alta Health & Life

4

If discretionary authority is granted to the plan

5

administrator, then “a reviewing court applies an ‘abuse of

6

discretion’ or--what amounts to the same thing--an ‘arbitrary and

7

capricious’ standard.”

8

Abatie, 458 F.3d at 963.

9

the district court is limited to the administrative record.

Jebian, 349 F.3d at 1103; see also
Under the abuse of discretion standard,
See

10

Jebian, 349 F.3d at 1110 (“While under an abuse of discretion

11

standard our review is limited to the record before the plan

12

administrator, this limitation does not apply to de novo

13

review.”) (internal citation omitted).

14

Here, the 2007 and 2008 Summary Plan Descriptions

15

provide: “The Plan Administrator retains exclusive authority and

16

discretion to interpret the terms of the benefit plans described

17

herein.”

18

Accordingly, because the 2007 and 2008 Summary Plan Descriptions

19

confer discretionary authority on the Plan Administrator, the

20

court will apply an abuse of discretion standard of review to the

21

Plan Administrator’s determination that Lukas’s treatment at Alta

22

Mira was not medically necessary.

23

Jebian, 349 F.3d at 1102-03; Kearney, 175 F.3d at 1089.

(AR 00150, 00614; see also AR 00301, 00772.)

See Abatie, 458 F.3d at 963;

“Applying a deferential standard of review [] does not

24
25

mean that the plan administrator will always prevail on the

26

merits.

27

interpretation ‘will not be disturbed if reasonable.’”

28

v. Frommert, --- U.S. ----, ----, 130 S. Ct. 1640, 1644 (2010)

It means only that the plan administrator’s

21

Conkright

1

(quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111

2

(1989)); see also Salomaa v. Honda Long Term Disability Plan, ---

3

F.3d ----, ----, 2011 WL 768070, at *7-8 (9th Cir. Mar. 07, 2011)

4

(“We now know that the administrator’s decision cannot be

5

disturbed if it is reasonable. . . . Reasonableness does not mean

6

that we would make the same decision.”).

7

held that abuse of discretion in a factual determination in the

8

ERISA context exists when “‘we are left with a definite and firm

9

conviction that a mistake has been committed,’ and we may not

The Ninth Circuit has

10

merely substitute our view for that of the fact finder.”

11

*8 (quoting United States v. Hinkson, 585 F.3d 1247, 1262 (9th

12

Cir. 2009) (en banc)).

13

application of a correct legal standard was ‘(1) illogical, (2)

14

implausible, or (3) without support in inferences that may be

15

drawn from the facts in the record.’”

16

F.3d at 1262).

17

Id. at

“[The court] consider[s] whether

Id. (quoting Hinkson, 585

Other factors may also need to be considered in

18

applying the abuse of discretion standard.

19

administrator or decisionmaker is also the party from whose

20

pocket the claim would have to be paid, such as an insurer or an

21

employer sponsoring a self-funded plan, the court must determine

22

whether the denial of benefits was improperly affected by this

23

conflict of interest.

24

was not improperly influenced has, logically, been placed on that

25

administrator.”

26

1295 (9th Cir. 2010).

27

Firestone as “requir[ing] abuse of discretion review whenever an

28

ERISA plan grants discretion to the plan administrator, but a

“If the plan

The burden of proving that its decision

Muniz v. Amec Const. Mgt., Inc., 623 F.3d 1290,
In Abatie, the Ninth Circuit read

22

1

review informed by the nature, extent, and effect on the

2

decision-making process of any conflict of interest that may

3

appear in the record.”

4

of a conflict of interest does not actually alter the standard of

5

review itself, only its application.10

6

& Acc. Ins. Co., 588 F.3d 623, 631 (9th Cir. 2009).

Abatie, 458 F.3d at 967.

The existence

Montour v. Hartford Life

The weight afforded to the conflict factor will vary

7
8

case to case.

“A district court, when faced with all the facts

9

and circumstances, must decide in each case how much or how

10

little to credit the plan administrator’s reason for denying

11

insurance coverage.

12

(that is, may cause the court to find an abuse of discretion more

13

readily) than a minor, technical conflict might.”11

An egregious conflict may weigh more heavily

Abatie, 458

14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

10

A court may consider evidence outside the
administrative record to decide the nature, extent, and effect on
the decision-making process of any conflict of interest. Abatie
v. Alta Health & Life Ins. Co., 458 F.3d 955, 970 (9th Cir.
2006).
11

In Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105,
117 (2008), the Supreme Court explained:
In such instances, any one factor will act as a
tiebreaker when the other factors are closely balanced,
the degree of closeness necessary depending upon the
tiebreaking
factor’s
inherent
or
case-specific
importance. The conflict of interest at issue here, for
example, should prove more important (perhaps of great
importance) where circumstances suggest a higher
likelihood that it affected the benefits decision,
including, but not limited to, cases where an insurance
company administrator has a history of biased claims
administration. It should prove less important (perhaps
to the vanishing point) where the administrator has taken
active steps to reduce potential bias and to promote
accuracy,
for
example,
by
walling
off
claims
administrators from those interested in firm finances, or
by imposing management checks that penalize inaccurate
decisionmaking irrespective of whom the inaccuracy
benefits.
23

1

F.3d at 968; see also Montour, 588 F.3d at 631 (“[T]he existence

2

of a conflict [is] a factor to be weighed, adjusting the weight

3

given that factor based on the degree to which the conflict

4

appears improperly to have influenced a plan administrator’s

5

decision.”).

6

“The level of skepticism with which a court views a

7

conflicted administrator’s decision may be low if a structural

8

conflict of interest is unaccompanied, for example, by any

9

evidence of malice, of self-dealing, or of a parsimonious
Abatie, 458 F.3d at 968; see also id.

10

claims-granting history.”

11

at 969 n.7 (“For example, the administrator might demonstrate

12

that it used truly independent medical examiners or a neutral,

13

independent review process; that its employees do not have

14

incentives to deny claims; that its interpretations of the plan

15

have been consistent among patients; or that it has minimized any

16

potential financial gain through structure of its business (for

17

example, through a retroactive payment system.”).

18

court may afford greater weight to a conflict when “the

19

administrator provides inconsistent reasons for denial; fails

20

adequately to investigate a claim or ask the plaintiff for

21

necessary evidence; fails to credit a claimant’s reliable

22

evidence; or has repeatedly denied benefits to deserving

23

participants by interpreting plan terms incorrectly or by making

24

decisions against the weight of evidence in the record.”

25

968-69 (internal citations omitted).

Conversely, a

Id. at

26

In addition to the conflict factor, the Ninth Circuit

27

identified other factors as including “the quality and quantity

28

of the medical evidence, whether the plan administrator subjected
24

1

the claimant to an in-person medical evaluation or relied instead

2

on a paper review of the claimant’s existing medical records,

3

whether the administrator provided its independent experts ‘with

4

all of the relevant evidence[,]’ and whether the administrator

5

considered a contrary SSA disability determination, if any.”

6

Montour, 588 F.3d at 630 (quoting Metro. Life Ins. Co. v. Glenn,

7

554 U.S. 105, 118 (2008)) (alteration in original).

8

A procedural irregularity is a matter to be weighed in

9

deciding whether a plan administrator’s decision was an abuse of

10

discretion.

11

show that it has engaged in an ‘ongoing, good faith exchange of

12

information between the administrator and the claimant,’ the

13

court should give the administrator’s decision broad deference

14

notwithstanding a minor irregularity.

15

F.3d at 1107).

16

irregularity may weigh more heavily.”12

17

B.

Abatie, 458 F.3d at 972.

“When an administrator can

Id. (quoting Jebian, 349

On the other hand, “[a] more serious procedural
Id.

Medical Records, IPRO’s Medical Review, UBH’s Case

18

Management Notes

19

It is clear from Lukas’s medical records from Alta Mira

20

that Lukas suffered from cocaine dependency, anorexia nervosa,

21

major depression, and general anxiety disorder.

22

Alta Mira medical records are lacking in any indication that

23

Lukas restricted her food intake, binged, purged, excessively

However, the

24
25
26
27
28

12

“Even when procedural irregularities are smaller . . .
and abuse of discretion review applies, the court may take
additional evidence when the irregularities have prevented full
development of the administrative record. In that way the court
may, in essence, recreate what the administrative record would
have been had the procedure been correct.” Abatie, 458 F.3d at
973.
25

1

exercised, used drugs or alcohol, harmed herself, or experienced

2

suicidal ideation at Alta Mira.

3

indicate a few occasions of reported urges or cravings during

4

three months in treatment.

5

The medical records only

Lukas’s medical records from Alta Mira stand in

6

contrast to UBH’s case management notes and Lukas’s medical

7

records from her treatment at Summit, Sober Living, and College

8

Hospital the preceding seven months.13

9

that period, Lukas restricted her food intake, binged, purged,

10

excessively exercised, used drugs and alcohol, harmed herself,

11

and experienced suicidal ideation.

12

and cravings.

13

outpatient, residential, inpatient, and ambulatory detoxification

14

treatment.14

15

At different times in

She also often reported urges

Accordingly, UBH periodically authorized intensive

Watters attached a letter from Green, an Alta Mira MPT

16

Primary Therapist, to her second-level appeal letter.

The letter

17

from Green stated that Lukas entered Alta Mira for the “acute”

18
19
20
21
22
23
24
25
26
27
28

13

Plaintiffs have not provided medical records from First
House Detox. Lukas was treated here in mid-September and in the
three weeks preceding her admission at Alta Mira.
14

Plaintiffs argue that the fact that UBH previously
authorized residential treatment means that Lukas’s treatment at
Alta Mira also met UBH’s level of care guidelines. Plaintiffs
primarily rely on the first criterion in UBH’s level of care
guidelines, which requires a presence of a pattern of severe
impairment in psychosocial functioning. (Pls.’ Reply to Defs’
Opp’n to Pls.’ Trial Brief at 7:25-8:2 (“Defendants’ approval of
prior claims for Ms. Lukas’s treatment at Sober Living By The Sea
demonstrates that she did qualify for residential treatment
benefits under the UBH Guidelines less than a month prior to her
admission at Alta Mira.”) (Docket No. 48).) While Lukas’s prior
treatment is relevant, nothing in the definition of medical
necessity or UBH’s level of care guidelines forecloses the
possibility that a claimant may no longer need residential
treatment, despite having previously needed it.
26

1

issues of (1) an extensive history of anorexia, (2) bulimia

2

nervosa, (3) compulsive exercising, (4) post-traumatic stress

3

disorder due to childhood trauma, and (5) substance abuse.

4

concluded that Lukas needed residential treatment without

5

explaining why she needed it.

6

provide additional Alta Mira medical records indicating that

7

Lukas experienced symptoms while in treatment.

8

the additional Alta Mira medical records that plaintiffs have

9

offered and the court has treated as part of the administrative

10

(AR 01460-65.)

Green

Green did not

Moreover, none of

record indicate that Lukas experienced symptoms.
IPRO’s medical review considered, inter alia, the Alta

11
12

Mira medical records, some of UBH’s case management notes, and

13

the letter from Green.

14

Dr. Bodenheimer, IPRO’s medical director, and a physician, who is

15

a Board Certified Child and Adolescent Psychiatrist, a director

16

of a child and adolescent outpatient emergency services, an

17

Associate Professor of Psychiatry at a medical school, and an

18

associate division chief for child and adult psychiatry in a

19

major medical center.15

20

professional associations, has received several professional

21

awards and honors, has made numerous presentations at national

22

meetings, and has published in medical journals, such as American

23

Journal of Psychiatry and Journal of American Academy of Child

24

and Adolescent Psychiatry.

IPRO’s medical review was conducted by

The physician is a member of many

IPRO’s medical review recognized that Lukas had a

25
26
27
28

15

IPRO did not reveal the name of the physician to the
Plan Administrator. As previously stated, plaintiffs declined
the court’s invitation to continue the trial in order to allow
for additional discovery.
27

1

history of alcohol abuse, cocaine abuse, depression, and anxiety

2

and that she had an approximate four-year history of binging and

3

purging with increased exercise.

4

recognized that in the past year she had restricted her diet,

5

used laxatives, and had cold intolerance and amenorrhea.

6

However, in light of the lack of evidence in the Alta Mira

7

medical records, IPRO’s medical review concluded:

8
9
10
11

The medical review also

It was not clear that there was such severe impairment in
psychosocial functioning to necessitate this level of
care, nor why treatment could not have been conducted
within a less restrictive setting. There is no clear
demonstration that this patient requires 24 hour/day
supervision, structure and treatment for her disorders.
There also is no indication that this patient has
deteriorated in signs, symptoms or functioning.

12
(Lukas 759-62; AR 01305-07.)
13
C.

Structural Conflict of Interest

14
The Summary Plan Description states that the Plan is
15
“[s]elf insured by IBM and funded by employee and employer
16
contributions.”

(AR 00302.)

The Plan Administrator has

17
discretion to determine benefits eligibility.

Accordingly, the

18
Plan Administrator operates under a structural conflict of
19
interest.

Muniz, 623 F.3d at 1295; see also Huss v. IBM Medical

20
and Dental Plan, No. 07 C 7028, 2009 WL 780048, at *6 (N.D. Ill.
21
Mar. 20, 2009) (“In addition, the conflict of interest resulting
22
from IBM’s dual role of funding the Plan and deciding claims
23
under the Plan must be considered as a factor in determining
24
whether Barnes abused her discretion as the plan’s
25
administrator.”) (internal quotation marks omitted).
26
The court must decide how much weight to afford to this
27
factor because the weight afforded to a conflict factor varies
28
28

1

case to case, informed by the nature, extent, and effect on the

2

decision-making process of the conflict.

3

at 631; Abatie, 458 F.3d at 967-68.

4

structural conflict of interest warrants increased skepticism.

5

However, the court finds that the effect of the structural

6

conflict of interest was minimal for the following five reasons.

7

First, the structural conflict of interest is

See Montour, 588 F.3d

The court finds that the

8

unaccompanied by any evidence of malice, self-dealing, or

9

parsimonious claims-granting history.

10

See Abatie, 458 F.3d at

968-69.
Second, while the reason for the denial changed from

11
12

exhaustion of substance abuse benefits to medical necessity, the

13

court finds that this one-time change in the grounds for denial

14

between the initial adverse benefit determination and first-level

15

appeal determination does not amount to “inconsistent reasons for

16

denial.”

17

determinations relied on the same grounds of medical necessity.

Id.

The first-level appeal and second-level appeal

18

Third, the Plan Administrator did not fail to

19

adequately investigate the claim or ask plaintiffs for necessary

20

evidence.

21

requested from Alta Mira and Watters was informed of her right to

22

provide additional documents.

23

additional documents.

24

Dr. Privette, in conducting a first-level appeal medical review,

25

should have requested more medical records if the medical records

26

did not address Dr. Privette’s concerns that there were no

27

indications that Lukas had eating disorder symptoms because

28

“[h]er height and weight were not recorded, there was no

Id.

The record indicates that medical records were

Watters accordingly offered

Plaintiffs’ only argument seems to be that

29

1

indication that her caloric intake was of concern or monitored,

2

[and] there was no indication that she was purging or required

3

any supervision with meals or bathroom privileges.”

4

Even if Dr. Privette erred,16 Watters attached the letter from

5

Green to her second-level appeal letter.

6

addressed the concerns raised by Dr. Privette, although Green

7

only offered conclusory statements.

8
9

(AR 01390.)

The letter from Green

Fourth, the Plan Administrator did not fail to credit
the claimant’s reliable evidence.

Id.

Even though IPRO

10

ultimately concluded that residential treatment was not medically

11

necessary, the letter from Green was properly considered by IPRO

12

when it conducted a medical review on the second-level appeal.

13

Fifth, the Plan Administrator has provided affirmative

14

evidence of neutrality.

See Metro. Life Ins. Co., 554 U.S. at

15

117; Abatie, 458 F.3d at 969, 969 n.7.

16

Administrator, provided a declaration and testified on the issue

17

of the structural conflict of interest.

18

Barnes identified the following steps that she has taken to

19

reduce potential bias and to promote accuracy.

20

Administrator, makes the initial benefit determination.

21

first-level appeal benefit determination is decided by an

22

associate in UBH that had no role or input in the initial benefit

23

determination.

24

Barnes testified that she then assigns the second-level appeal to

Barnes, the Plan

(Defs.’ Ex. 474.)

UBH, not the Plan
The

The second-level appeal is assigned to Barnes.

25
26
27
28

16
Plaintiffs have not specified what additional medical
records Dr. Privette would have received had she asked for them.
As noted earlier, none of the additional Alta Mira medical
records that the court treats as part of the administrative
record indicate that Lukas experienced symptoms while in
treatment.

30

1

IPRO, a wholly independent medical review company, for external

2

review.

3

IPRO retains a consultant physician.

Thereafter,

4

IPRO’s medical director conducts “his own review of the clinical

5

conclusions of that physician and affixes his signature to the

6

medical review report upon his satisfaction that the physician

7

reviewer has rendered an accurate, impartial decision.”

8

Ex. 474.)

9

case sent to them for medical necessity review separately and

10

without consideration of other claims, appeal, any set reserve

11

amount, and the cost to IBM Plan to approve or deny a claim or

12

IPRO’s future assignment of appeal reviews from IBM Plan.”17

13

(Id.)

14

medical director has approved those recommendations, the office

15

of the Plan Administrator receives a medical report from the IPRO

16

medical director.

17

final appeals decision based on those recommendations and

18

notif[ies] the claimant of that decision.”

(Defs.’

IPRO’s medical director and the physician “analyze the

Once the physician has made his recommendations and IPRO’s

19

Barnes states that she “thereafter make[s] the

(Id.)

Barnes is “separate from and not involved with those

20

persons responsible for IBM Plan’s financial operations or

21

decisions.

22

separately from, and without consideration of, the financial

23

affairs of IBM Plan.”

Appeal investigations and decisions are made

(Id.)

In sum, the court finds that the structural conflict of

24
25
26
27
28

17

Barnes testified that from 2005 to 2009 IPRO supported
the decision to deny medical benefits in 348 of 594 medical
reviews that the she referred to IPRO. In other words, IPRO
upheld the decision 58.6 percent of the time and overturned the
decision 41.4 percent of the time.
31

1

interest warrants increased skepticism.

2

the structural conflict of interest was lessened for reasons

3

outlined above.

4

D.

However, the effect of

Procedural Irregularities

5

1.

Initial Adverse Benefit Determination

6

A plan administrator is required to provide a written

7

or electronic notification of an initial adverse benefit

8

determination.

9

benefit determination must include, in a manner calculated to be

29 C.F.R. § 2560.503-1(g)(1).

The adverse

10

understood by the claimant, (i) the specific reason or reasons

11

for the adverse determination, (ii) reference to the specific

12

plan provision on which the determination is based, and (iii) a

13

description of any additional material or information necessary

14

for the claimant to perfect the claim and an explanation of why

15

such material or information is necessary.

16

2560.503-1(g)(1)(i)-(iii).

17

what is required:

18

Id. §

As the Ninth Circuit characterized

23

[T]his regulation calls for [] a meaningful dialogue
between
ERISA
plan
administrators
and
their
beneficiaries. If benefits are denied in whole or in
part, the reason for the denial must be stated in
reasonably clear language, with specific reference to the
plan provisions that form the basis for the denial; if
the plan administrators believe that more information is
needed to make a reasoned decision, they must ask for it.
There is nothing extraordinary about this; it’s how
civilized people communicate with each other regarding
important matters.

24

Booton v. Lockheed Med. Ben. Plan, 110 F.3d 1461, 1463 (9th Cir.

25

1997).

19
20
21
22

26

Here, UBH violated ERISA procedures by failing to send

27

a written denial notification.

It appears that Watters was told

28

over the telephone that the substance abuse benefits were
32

1

exhausted.

The court will apply increased skepticism as a result

2

of this procedural irregularity.

3

procedural violation was slight because Watters had no difficulty

4

in appealing the initial benefit determination.

However, the effect of this

5

2.

First-Level Appeal Denial

6

A claimant must have a “reasonable opportunity” to

7

appeal and be provided a “full and fair review.”

29 C.F.R. §

8

2560.503-1(h)(1).

9

upon request and free of charge, reasonable access to, and copies

10

of, all documents, records, and other information relevant to the

11

claimant’s claim for benefits.”

“Full and fair” review includes “provid[ing],

Id. § 2560.503-1(h)(2)(iii).

12

In notifying a claimant of an adverse benefit

13

determination on appeal, the plan administrator must provide (1)

14

the specific reason or reasons for the determination, (2)

15

reference to the specific provisions on which the determination

16

is based, and (3) a statement that the claimant is entitled to

17

receive all documents, records, and information relevant to the

18

claim.

Id. § 2560.503-1(j)(1)-(3).

19

In the case of a group health plan, the notification

20

must also provide, if the adverse determination was based on

21

medical necessity, “either an explanation of the scientific or

22

clinical judgment for the determination, applying the terms of

23

the plan to the claimant’s medical circumstances, or a statement

24

that such explanation will be provided free of charge upon

25

request.”

26

Id. § 2560.503-1(j)(5)(ii).
In her letter, Dr. Privette explained that the first-

27

level appeal denial was based on UBH’s level of care guidelines.

28

However, Dr. Privette did not provide “either an explanation of
33

1

the scientific or clinical judgment for the determination,

2

applying the terms of the plan to the claimant’s medical

3

circumstances, or a statement that such explanation [would] be

4

provided free of charge upon request.”

5

2560.503-1(j)(5)(ii).

6

case file, she did not receive Dr. Privette’s internal medical

7

review.

8

Operating Eng’rs Health & Welfare Trust Fund, No. C 98-2084, 1999

9

WL 1069756, at *4 (N.D. Cal. Aug. 24, 1999) (“Without the medical

10

reviewer’s rationale, the claimant is left to shoot at a cloaked

11

target and cannot deploy her arguments and evidence in a fashion

12

that will meaningfully address the administrator’s concerns.”).

13

Id. §

Moreover, when Watters requested UBH’s

See id. § 2560.503-1(h)(2)(iii); Teen Help, Inc. v.

The court will apply increased skepticism because of

14

these procedural irregularities related to the first-level

15

appeal.

16

procedural irregularities were minor considering the “meaningful

17

dialogue,” Booton, 110 F.3d at 1463, the parties engaged in on

18

the second-level appeal.

19

directly addressed UBH’s level of care guidelines.

20

from Green also attempted to address why residential treatment

21

was necessary.

However, the court finds that the effect of these

Watter’s second-level appeal letter
The letter

22

3.

Second-Level Appeal Denial

23

“The claims procedures of a group health plan will not

24

be deemed to provide a claimant with a reasonable opportunity for

25

a full and fair review of a claim and adverse benefit

26

determination unless,” inter alia, “the appropriate named

27

fiduciary shall consult with a health care professional who has

28

appropriate training and experience in the field of medicine
34

1

involved in the medical judgment” when an adverse benefit

2

determination is based on medical judgment.

3

2560.503-1(h)(3)(iii).

4

29 C.F.R. §

Here, the Plan Administrator requested that IPRO, an

5

independent medical review company, conduct an independent

6

medical review.

7

Bodenheimer and a physician.

8

skepticism because the Plan Administrator did not know the name

9

of the physician.

The medical review was conducted by Dr.
The court will apply increased

However, while IPRO did not reveal the name of

10

the physician to the Plan Administrator, IPRO informed the Plan

11

Administrator of the physician’s qualifications, as described

12

above.

13

screened the physician for a material conflict and determined

14

that none existed.

15

an expert “who ha[d] appropriate training and experience in the

16

field of medicine involved in the medical judgment.”

17

2560.503-1(h)(3)(iii).

18

IPRO also told the Plan Administrator that it had

Thus, the Plan Administrator consulted with

Id. §

However, claims procedures are also required to

19

“[p]rovide for the identification of medical . . . experts whose

20

advice was obtained on behalf of the plan in connection with a

21

claimant’s adverse benefit determination, without regard to

22

whether the advice was relied upon in making the benefit

23

determination.”

24

But cf. Simonia v. Glendale Nissan/Infiniti Disability Plan, 378

25

Fed. App’x 725, 727 (9th Cir. 2010) (“Even assuming that Hartford

26

violated 29 C.F.R. § 2560.503-1(h)(3)(iv) by failing to identify

27

the “Rehabilitation Clinical Case Manager” by name, Simonia

28

points to no prejudice resulting from such violation that would

Id.

§ 2560.503-1(h)(3)(iv) (emphasis added).

35

1

merit any relief.

2

explained the underlying methodology for its conclusion, we are

3

satisfied that Hartford substantially complied with ERISA claims

4

procedures and therefore provided Simonia’s claim the requisite

5

full and fair review.”).

6

Because the 2007 Assessment of Employability

The Plan Administrator did not provide the name of the

7

physician to plaintiffs.

8

procedures.

9

Action No. AW-09-1762, 2010 WL 1759579, at *7 (D. Md. Apr. 30,

10

2010) (“[T]he Court believes that the statute’s plain language

11

requiring identification of a medical consultant compels an

12

administrator to reveal more than merely the consultant’s

13

qualifications. . . . The Court does not find, however, that this

14

failure to provide the name requires a remand or denial of

15

summary judgment.

16

ERISA’s identification requirement and in any case, Gaines has

17

not shown how lack of access to the names of the reviewing

18

physicians has deprived her of an appropriate claim decision.”);

19

Hernandez ex rel. Hernandez v. Prudential Ins. Co., Nos.

20

2:99-CV-898B, 26EBC1423, 2001 WL 1152835, at *7 (D. Utah Mar. 28,

21

2001).

22
23

E.

This resulted in a violation of ERISA

See Gaines v. Guardian Life Ins. Co. of Am., Civil

Guardian has substantially complied with

Other Factors
The court turns to the remaining factors identified in

24

Montour in applying the abuse of discretion standard.

25

court finds that the quality and quantity of the medical evidence

26

was more than adequate.

27

medical records from Alta Mira are extensive, covering three

28

months of treatment.

See Montour, 588 F.3d at 630.

First, the

Lukas’s

The Plan Administrator also had UBH’s case
36

1

management notes from the prior seven months of treatment.

2

Other factors to consider in the abuse of discretion

3

standard of review include whether the plan administrator

4

subjected the claimant to an in-person medical evaluation or

5

relied instead on a paper review of the claimant’s existing

6

medical records.

7

in-person medical evaluation.

8

conducting a paper review is lessened by the fact that UBH took

9

an active role in managing Lukas’s treatment prior to Alta Mira.

10

UBH’s case management notes were detailed and reflect an in-depth

11

understanding of Lukas’s medical condition and history.

12

Id.

The Plan Administrator did not conduct an
However, the significance of only

The court finds that the Plan Administrator provided

13

its independent experts with all of the relevant evidence.

14

IPRO received some of UBH’s case management notes, in addition to

15

the Alta Mira medical records for Lukas.

16

Watters’s second-level appeal letter, which included the letter

17

from Green.

18

documents were considered.

19
20

F.

Id.

IPRO also received

IPRO’s medical review indicates that all of these

Conclusion
The court finds that the Plan Administrator did not

21

abuse her discretion even when applying increased skepticism

22

warranted under the Montour and Abatie factors.

23

the Plan Administrator’s decision to be supported by the lack of

24

evidence in the medical records indicating that residential

25

treatment was medically necessary and IPRO’s medical review

26

concluding that the level of care was not medically necessary.

27

The court finds that the Plan Administrator’s application of the

28

definition of medical necessity, including UBH’s level of care
37

The court finds

1

guidelines, was not (1) illogical, (2) implausible, or (3)

2

without support in inferences that may be drawn from the facts in

3

the record.

4

See Salomaa, 2011 WL 768070, at *7-8.

In other words, it was not illogical, implausible, or

5

without support in inferences that may be drawn from the facts in

6

the record for the Plan Administrator to conclude that there was

7

not (1) a presence of a pattern of severe impairment in

8

psychosocial functioning due to a behavioral health condition,18

9

(2) presenting of signs and symptoms of a behavioral health

10

condition that clearly demonstrated a clinical need for 24-hour

11

structure, supervision, and active treatment, or (3)

12

deterioration of Lukas’s behavioral health condition with the

13

likelihood of requiring inpatient care if Lukas was not in a

14

residential treatment program.

15

///

16

///

17

///

18
19
20
21
22
23
24
25
26
27
28

18

Plaintiffs request that this court judicially notice a
decision of an administrative law judge of the Maryland Office of
Administrative Hearings. (Pls.’ Request for Judicial Notice Ex.
A (Docket No. 42).) In that decision, the administrative law
judge interpreted UBH’s level of care guidelines. Applying a de
novo standard of review, the judge held that the “presence of a
pattern of severe impairment” in psychosocial functioning due to
a psychiatric illness allows for a consideration of observations
over a period of time to determine a pattern. That judge
considered a two-year period prior to the residential treatment
to determine whether a pattern of severe impairment existed.
This court can consider the legal reasoning of the administrative
judge without judicially noticing the opinion. The court notes
that this administrative law opinion does not stand for the
proposition that a previous determination that UBH’s residential
level of care guidelines were met forecloses the possibility that
they will not be met in the future. The pattern of severe
impairment in psychosocial functioning must still be present.
38

1

IT IS THEREFORE ORDERED that plaintiffs take nothing on

2

their claims, and that judgment be entered in favor of the

3

defendants and against the plaintiffs in this action.

4

DATED:

April 14, 2011

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