Lukas et al v. United Behavioral Health et al

Filing 74

ORDER signed by Senior Judge William B. Shubb on 3/15/13 ORDERING that plaintiffs be awarded benefits for Lukas' stay in Alta Mira at 50 percent of the usual and prevailing rate for 45 days for a total of $12,825.00. Plaintiffs shall foll ow the procedures set forth in Local Rule 293 for recovering their attorney fees. Any request for prejudgment interest on the award of benefits is to be determined on plaintiffs' application for attorney fees. (Meuleman, A) Modified on 3/18/2013 (Meuleman, A).

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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NO. CIV. 2:09-2423 WBS-DAD

JENNIFER LUKAS and JOYCE
WATTERS,

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ORDER
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Plaintiffs,
v.

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UNITED BEHAVIORAL HEALTH AND
IBM MEDICAL AND DENTAL
EMPLOYEE WELFARE BENEFIT
PLANS,
Defendants.
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After a bench trial in this action on March 10, 2011,

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the court issued a memorandum constituting its findings of fact

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and conclusions of law, (Docket No. 57), and then entered

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judgment in favor of defendants, United Behavioral Health (“UBH”)

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and Dental Employee Welfare Benefit Plans (“Plan”), (Docket No.
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58).

Plaintiffs appealed the judgment.

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Ninth Circuit Court of Appeals reversed the judgment, holding

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that defendants were obligated to award benefits to plaintiffs

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for Lukas’s residential treatment for an eating disorder and co-

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morbid conditions at Alta Mira Treatment Center (“Alta Mira”).

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(Mem. at 6 (Docket No. 68).)

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instructions to the district court to direct an award of benefits

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to plaintiffs and to conduct any further proceedings consistent

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with its order.

(Id.)

(Docket No. 61.)

The

The Ninth Circuit remanded with

It also transferred consideration of

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plaintiffs’ motion for attorney fees to the district court.

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(Docket No. 69.)
One of the programs offered by the Plan is IBM Managed

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Mental Health Care Program (“MMHC”).

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(“AR”) 00242.)

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Mira is an out-of-network provider.

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“[e]ligibility for coverage of dependents, health care providers,

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facilities and treatments and supplies is determined solely by

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the provisions of the Plan.”

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portion of the Plan, payment of benefits for out-of-network

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mental health inpatient care is covered at fifty percent of the

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usual and prevailing rate, after payment of a $250 deductible has

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been made, for up to thirty days.

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00717.)

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day.

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(Administrative Record

Plaintiffs are enrolled in IBM PPO Plus, and Alta
The Plan provides that

(AR 00301, 00772.)

Under the MMHC

(AR 00245, 00247, 00712,

One-and-a-half residential days equals one inpatient

(AR 00405.)
“ERISA generally preempts common law theories of

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contract law.”

Cinelli v. Sec. Pac. Corp., 61 F.3d 1437, 1444

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(9th Cir. 1995); see DeVoll v. Burdick Painting, Inc., 35 F.3d

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408, 412 (9th Cir. 1994) (noting that “[t]he Ninth Circuit has
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held that ERISA preempts common law theories of breach of

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contract implied in fact, promissory estoppel, estoppel by

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conduct, fraud and deceit, and breach of contract” and declining

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to imply federal promissory estoppel remedy for claims regarding

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an ERISA plan (internal quotation marks and citation omitted)).

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“Because 29 U.S.C. § 1102 provides that ‘[e]very employee benefit

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plan shall be established and maintained pursuant to a written

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instrument,’ courts have [also] held that oral agreements or

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modifications cannot be used to contradict or supersede the

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written terms of an ERISA plan.”

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Bethlehem Steel Corp., 112 F.3d 982, 986 n.2 (9th Cir. 1997); see

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Parker v. BankAmerica Corp., 50 F.3d 757, 769 (9th Cir. 1995)

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(“[U]nder ERISA, a party cannot maintain a claim for equitable

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estoppel if recovery would contradict the written provisions of

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the plan.”).

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Richardson v. Pension Plan of

The Ninth Circuit has allowed exceptions where the

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application of general contract principles is not inconsistent

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with ERISA’s purpose, such as with federal equitable estoppel.

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Cinelli, 61 F.3d at 1444.

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strong preference for the written plan, we do not allow an

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estoppel claim to lie where it would contradict the written terms

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of the plan.”

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approved the reasoning of the Fifth Circuit in Rodrigue v. W. &

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S. Life Ins. Co., 948 F.2d 969, 971 (5th Cir. 1991), that the

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ERISA writing requirement protects a plan’s actuarial soundness

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by precluding plan administrators from contracting to pay

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benefits to persons not entitled to them under the express terms

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of the plan.

Id.

But, “consistent with the ERISA’s

In adopting this rule, the Ninth Circuit

Greany v. W. Farm Bureau Life Ins. Co., 973 F.2d
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812, 822 (9th Cir. 1992).
Plaintiffs ask the court to depart from the plain

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language of the Plan and award benefits for Lukas’s stay at Alta

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Mira at the rate for in-network providers, which for mental

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health care is unlimited after a $250 deductible.1

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00245-46, 00711.)

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should receive benefits at this higher rate.

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that defendants did not impose any of the plan-mandated benefit

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restrictions and paid one-hundred percent of the cost of Lukas’s

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treatment at Sober Living by the Sea (“Sober Living”), an out-of-

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network provider of residential mental health care.

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claim that UBH told them that it could arrange for an

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“accommodation”--or contract with an out-of-network provider--

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with Alta Mira, as it did with Sober Living.

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contend that Watters, Lukas’s mother, was informed by multiple

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representatives of defendants that inpatient mental health

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benefits “are unlimited” (but that the location and length of

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treatment depend on clinical review) and that she was shown a

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plan summary comparison charts indicating that benefits were not

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limited to thirty days.

(See AR

Plaintiffs offer several theories why they
First, they contend

Second, they

Third, plaintiffs

Of paramount importance, plaintiffs do not address

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ERISA’s preemption of common law contract doctrine and offer no

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theory allowing the court to deviate from the plain language of

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“Lukas” in any citation references the bates stamps on
documents produced by plaintiffs during the litigation. The
documents were filed under seal on December 23, 2010. (Docket No
35.)
The daily rate paid by plaintiffs for Lukas’s stay at
Alta Mira was $570. (Lukas 7.) Defendants did not argue that
this rate is not the “usual and prevailing rate” for the
treatment Lukas received.
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the Plan.

Secondarily, as defendants point out, plaintiffs cite

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nothing in the administrative record to support their contention

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that defendants paid for Sober Living in full.

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record indicates that Sober Living may have accepted a fee less

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than the amount charged for its services.2

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01415.)

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that they were told that inpatient mental health benefits “are

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unlimited” is perhaps the most troubling: it could be read to

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suggest that inpatient mental health benefits provided by non-

In contrast, the

(AR 01410, 01412,

The UBH documentation which plaintiffs indicate reveals

(See AR 01347.)

However, the

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network providers are unlimited.

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documentation is unclear whether the case manager made that

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statement regarding in-network providers, non-network providers,

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or failed to make a distinction.

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occurred while Lukas was at Sober Living; it was not in relation

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to her stay at Alta Mira.

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Moreover, this conversation

(Id.)

Plaintiffs identify two additional references to

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accommodation in the record.3

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manager told Watters that Casa Palmera was not an in-network

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provider, but noted that there had been accommodations in the

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past.

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for October 11, 2007, states that Watters was aware of the out-

(AR 01383.)

On October 12, 2007, the UBH case

However, the entry immediately proceeding it,

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Defendants also note that some of the bills from Sober
Living were disallowed because they were not authorized by UBH.
(AR 01415-16.)
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Several other references to accommodation or a contract
identified by plaintiffs are in handwritten notes not in the
administrative record. There is no indication as to who made the
notes and, for the reasons explained below, the court may not
consider evidence outside of the administrative record in
deciding the award of benefits. Regardless, they do not reveal
any statements by defendants that Lukas’s stay at Alta Mira would
be covered at the in-network rate.
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of-network benefit and that if such benefits are to be accessed,

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notification would have to come first.

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2007, the notes indicate that the case manager and Watters

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discussed the accommodation process and benefit availability, but

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the case manager explained that benefits were contingent on

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medical necessity and an assessment report from the receiving

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facility.

On October 23,

(AR 01385.)
Other evidence in the record contradicts plaintiffs’

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(Id.)

claim that they understood Lukas’s treatment at Alta Mira would

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be covered at the in-network provider rate.

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24, 2007, reports that Lukas was scheduled to be admitted to Alta

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Mira on October 28 and that Watters was aware that the out-of-

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network benefit would apply.

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told Watters that because Alta Mira is out-of-network, Lukas’s

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“case” would be closed and UBH would no longer be managing her

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benefits.

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11, 2007, confirming that UBH would not authorize services at the

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in-network benefit level and that reimbursement would be

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considered according to the non-network benefit level.

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00966.)

(AR 01386.)

The entry on October

On October 29, the case manager

UBH sent plaintiffs a letter on November

(AR

Even if plaintiffs had advanced a theory to allow the

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court to disregard the Plan’s plain language and defendants fully

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covered the cost of Lukas’s stay at Sober Living, the record does

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not show defendants ever indicated to plaintiffs that unlimited

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mental health benefits would be available for Lukas’s stay at

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Alta Mira or that they promised to make an accommodation for her

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stay there.

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several discussions of the accommodation process.

At the most, the evidence in the record reveals

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It does not

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establish that defendants indicated that care from an out-of-

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network provider would not be limited as set forth in the Plan.

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Defendants object to the court’s consideration of

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additional evidence offered by plaintiffs that is outside the

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administrative record.

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evidence when reviewing a claim to recover benefits under the

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terms of an ERISA plan.

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Funds for S. Cal., 382 F.3d 897, 904 (9th Cir. 2004).

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exceptions to this rule are when a court determines whether a

Generally, a court may not consider such

Banuelos v. Constr. Laborers’ Trust
The two

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plan administrator’s decision was affected by a conflict of

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interest and when the standard of administrative review is de

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novo.

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extrinsic evidence for the purposes of determining that there is

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a conflict of interest and the standard of review in this action

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is abuse of discretion.

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agree that district court correctly applied abuse of discretion

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standard).)

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extrinsic evidence when construing ambiguous plan provisions.

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McDaniel v. Chevron Corp., 203 F.3d 1099, 1114 n.10 (9th Cir.

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2000).

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argued--that any provision of the Plan is ambiguous.

Id.

Plaintiffs do not ask the court to consider this

(See Mem. at 2 (noting that parties

Courts have also allowed the consideration of

But there is no evidence here--and plaintiffs have not

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Even considering the evidence plaintiffs point to--two

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benefit summary charts--it does not suggest that defendants told

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plaintiffs that they would be entitled to benefits exceeding the

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limitations in the Plan for out-of-network providers.

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benefits summary charts indicate that benefits for out-of-network

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providers are limited to thirty days.

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is no discrepancy between the Plan documents and these summaries.
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The

(See Lukas 62-64.)

There

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Thus, while it is true that “[c]ourts will generally bind ERISA

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defendants to the more employee-favorable of two conflicting

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documents-even if one is erroneous,” Banuelos, 382 F.3d at 904,

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there are no conflicting documents in this case.

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Although plaintiffs did not bring a claim for equitable

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estoppel, the court nonetheless addresses the theory.

The

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requirements of a federal estoppel claim relating to an ERISA

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plan are a material misrepresentation, reasonable and detrimental

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reliance upon the representation, extraordinary circumstances,

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that the provisions of the plan at issue were ambiguous such that

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reasonable persons could disagree as to their meaning or effect,

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and finally, that representations were made involving an oral

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interpretation of the plan.

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Disability Plan, 686 F.3d 1044, 1054 (9th Cir. 2012); Pisciotta

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v. Teledyne Indus., Inc., 91 F.3d 1326, 1331 (9th Cir. 1996).

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Plaintiffs cannot meet these requirements.

Renfro v. Funky Door Long Term

First, as

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explained above, there is no convincing evidence that defendants

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stated that benefits for Lukas’s stay at Alta Mira, an out-of-

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network provider, would not be limited as set forth in the Plan

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or that they promised that an accommodation would be provided.

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Second, plaintiffs identified no ambiguity in the Plan.

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explained above, the plan summary charts produced by plaintiffs

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track the benefit restrictions in the Plan for non-network

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providers and do not create any ambiguity.

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point to no extraordinary circumstances.

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cannot avail himself of a federal ERISA estoppel claim based upon

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statements of a plan employee which would enlarge his rights

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against the plan beyond what he could recover under the
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As

Third, plaintiffs

Finally, “[a] plaintiff

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unambiguous language of the plan itself.”

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Bureau Life Ins. Co., 973 F.2d 812, 822 (9th Cir. 1992).

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plaintiffs’ request for repayment of benefits as if Alta Mira

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were an in-network provider would contradict the plain language

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of the Plan.

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theory therefore fails.

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Greany v. W. Farm
Here,

Any request for benefits based on an estoppel

IT IS THEREFORE ORDERED that plaintiffs be awarded

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benefits for Lukas’s stay at Alta Mira at fifty percent of the

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usual and prevailing rate for forty-five days for a total of

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$12,825.00 (($570.00/2) X 45).

Plaintiffs shall follow the

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procedures set forth in Local Rule 293 for recovering their

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attorney fees.

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of benefits is to be determined on plaintiffs’ application for

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attorney fees.

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DATED: March 15, 2013

Any request for prejudgment interest on the award

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_________________________________________
WILLIAM B. SHUBB
UNITED STATES DISTRICT JUDGE

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