Bain et al v. United Healthcare Inc., et al

Filing 59

ORDER re 57 Joint Letter of November 3, 2016. Signed by Judge Edward M. Chen on 11/9/2016. (emclc2, COURT STAFF) (Filed on 11/9/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DAVID BAIN, et al.,

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Plaintiffs,

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ORDER RE JOINT LETTER OF
NOVEMBER 3, 2016

v.

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UNITED HEALTHCARE INC.,

Docket No. 57

Defendant.

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For the Northern District of California

United States District Court

Case No. 15-cv-03305-EMC

The Court has reviewed the parties’ joint letter of November 3, 2016, and hereby rules as

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follows.
To the extent Mr. Bain seeks reconsideration of the Court’s ruling that the standard is

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review is abuse of discretion,1 the Court denies Mr. Bain relief. First, Alexander H. v. Oxford

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Health Insurance Inc., 833 F.3d 1299 (11th Cir. 2016), is not binding authority as it was issued by

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the Eleventh Circuit. Second, even if it were, nothing in Alexander H. constitutes a ruling that the

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standard of review should be de novo where an external review was conducted. In fact, as UHI

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argues, if anything, the Eleventh Circuit indicated to the contrary. See id. at ---, nn. 8, 10 (noting

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that the district court held that the external review “removed [the insurance company’s] discretion

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to deny benefits” and thus applied de novo review; stating that “[w]e . . . deem it prudent to give

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the district court, in the first instance, the opportunity to reconsider its view that de novo review

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applies” because, contrary to what the district court had concluded, the external review was not

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binding on the issue of medical necessity).
As for the issue regarding the scope of discovery – i.e., what discovery on conflict of

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The Court notes that, in the letter, Mr. Bain claims that he is not; however, he reserves the right
to challenge the standard of review and therefore the Court addresses the issue here.

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interest should be permitted – the Court concludes that the fact of the external review does not

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automatically immunize UHI from discovery into a possible conflict of interest with respect to the

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external reviewer. It is plausible that external reviewers are “repeat players” who may therefore

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have biases. Thus, it is fair for Mr. Bain to conduct some narrowly targeted discovery to see if the

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external review process was tainted by a conflict of interest.
That being said, if the external review process was not tainted by a conflict of interest, and

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UHI simply abided by the results of the external review, then it is not clear how Mr. Bain could

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argue that a UHI internal structural conflict (e.g., failing to wall off the claims department from

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the finances department) or a UHI-retained expert financial conflict (i.e., hiring biased outside

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reviewers) improperly affected the decision-making on his claim.
Accordingly, the Court rules that, at this juncture in the proceedings, Mr. Bain may take

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For the Northern District of California

United States District Court

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discovery as to a conflict of interest with respect to the external review process only. He may not

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take discovery as to any UHI internal structural conflict or to a financial conflict of interest on the

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part of UHI-retained experts. Mr. Bain may ask for leave to expand discovery to the latter topics

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only if there is sufficient evidence to support a conclusion that the external review process was

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tainted.

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This order disposes of Docket No. 57.

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IT IS SO ORDERED.

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Dated: November 9, 2016
______________________________________
EDWARD M. CHEN
United States District Judge

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