HIRSH v. BOEING HEALTH AND WELFARE BENEFIT PLAN et al

Filing 19

MEMORANDUM AND OPINION. SIGNED BY HONORABLE J. CURTIS JOYNER ON 6/14/10. 6/18/10 ENTERED AND COPIES MAILED, E-MAILED.(fdc) (Additional attachment(s) added on 1/31/2012: # 1 memo.) (fdc, ).

Case 2:09-cv-03120-JCJ Document 24-1 Filed 01/20/12 Page 1 of 27

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
JOEL E. HIRSH
vs.
BOEING HEALTH AND WELFARE
BENEFIT PLAN, a/k/a THE
BOEING TRADITIONAL MEDICAL
PLAN, and BOEING EMPLOYEE
BENEFITS PLAN COMMITTEE

: CIVIL ACTION
:
:
: NO. 09-CV-3120
:
:
:
:
:

MEMORANDUM AND ORDER
JOYNER, J.

June 14, 2010

This action is now pending before this Court for
resolution of the parties’ cross-motions for summary
judgment. For the reasons outlined in the paragraphs which
follow, the motions shall be granted in part and denied in
part.
Background Facts
Plaintiff Joel Hirsh is an employee of the Boeing
Company and, as such, he and his family have health care
coverage under the Boeing Health and Welfare Plan,
otherwise known as the Boeing Traditional Medical Plan
(hereinafter “Plan”). Since he was a small child, Mr.
Hirsh’s son A.H. has required psychiatric and/or mental
health treatment.1

1

In 2006 when he was 15 years old, A.H.

More recently, A.H. has been diagnosed as suffering from, inter
alia, major depressive disorder with psychotic features, anxiety
disorder with obsessive thoughts and polysubstance dependence, as

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began receiving that treatment on an inpatient basis, at a
number of different facilities.2
On or about March 7, 2007, A.H. entered in-patient
treatment at Innercept Academy, located in Coer D’Alene,
Idaho. With the exception of several brief visits home to
Wynnewood,Pennsylvania, A.H. remained at Innercept until
April 19, 2008, when his parents transferred him to the
King George School (“KGS”), a therapeutic boarding school
in Vermont. A.H. apparently received in-patient treatment
at the King George School until sometime in April 2009.
well as a variety of learning disorders. As of November, 2007, he
also demonstrated a “[p]ersistent danger of self harm/suicide,
delusional impairment in reality testing, compulsive need to self
medicate with illegal substances, inability to regulate personal
hygiene and the danger of self injurious behavior or elopement.”
(AR0060-AR0062).
2

Indeed, the Administrative Record reflects that between June 22,
2006 and August 8, 2006, A.H. was placed in the wilderness
program at Three Rivers Montana in Belgrade, Montana. On or about
August 9, 2006, A.H. was transferred to Logan River Academy in
Logan, Utah where he remained through November 8, 2006. The
plaintiff and his wife paid slightly more than $20,000 to Three
Rivers Montana for A.H.’s participation in the wilderness
program, none of which was reimbursed by the plan. Although A.H.
was eventually asked to leave the Logan River Academy, Mr.
Hirsh’s insurance did pay for his treatment and stay there.
Immediately after his removal from Logan River, A.H. was admitted
to the Northern Idaho Behavior Health (“NIBH”) facility in Coeur
d’Alene, Idaho. NIBH charged about $28,000 per month but it was a
contracted “in-network” provider under the plan and thus most of
the NIBH bill was paid by the plan. A.H. was transferred from
NIBH to Innercept Academy on March 7, 2007, primarily because two
of his treating therapists from NIBH were on staff there and
because it was academically accredited which would enable A.H. to
complete 10th grade there. (AR0647-AR0682). As noted, aside from
a few visits home to Pennsylvania, A.H. remained at Innercept
until April, 2008 when he transferred to the King George School
in Vermont. He stayed at King George for approximately one year-through April, 2009.

2

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Despite Plaintiff’s repeated submissions of bills and
doctor’s reports, and appeals for payment of A.H.’s inpatient expenses from Innercept and KGS, the defendants
have refused coverage and/or reimbursement for any of
A.H.’s treatment at KGS and have refused to pay anything
more than $13,753 for the care which he received at
Innercept.3
On July 13, 2009, Plaintiff commenced this lawsuit
pursuant to Section 502 of the Employee Retirement Income
Security Act, 29 U.S.C. §1132 (“ERISA”) seeking to recover
the full amount of benefits due under the Plan, together
with counsel fees, interest, and costs of suit. In reliance
on the administrative record, both parties now move for the
entry of judgment in their favor pursuant to Fed. R. Civ.
P. 56.
Standards Governing Summary Judgment Motions
Fed. R. Civ. P. 56(c)(2) dictates the general standard
for determining motions for summary judgment:
“The judgment sought should be rendered if the
pleadings,the discovery and disclosure materials on
file, and any affidavits show that there is no genuine
3

According to the complaint in this matter, Innercept billed Mr.
Hirsh approximately $38,000 for A.H.’s treatment between March 7,
and June 30, 2007, and $85,000 for the care he received between
July 10, 2007 and April 19, 2008. (Pl’s Complaint, ¶s 11-12, 17).
The complaint further avers that Mr. Hirsh paid the King George
School some $91,400 for the services which it provided to A.H. in
the one-year period between April 2008 and April 2009.
(Complaint, ¶24).

3

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issue as to any material fact and that the movant is
entitled to judgment as a matter of law.”
An issue is genuine only if there is a sufficient
evidentiary basis on which a reasonable jury could find for
the non-moving party, and a factual dispute is material
only if it might affect the outcome of the suit under
governing law. Kaucher v. County of Bucks, 456 F.3d 418,
423 (3d Cir. 2006), citing Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202
(1986). The summary judgment standard requires us to
resolve all ambiguities and to view all facts and draw all
factual inferences in favor of the non-moving party.
Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct.
2548, 91 L. Ed. 2d 265 (1986); Gardner v. Unum Life
Insurance Co. of America, 354 Fed. Appx. 642, 648, 2009
U.S. App. LEXIS 26363 at *14 (3d Cir. Dec. 4, 2009);
Lawrence v. City of Philadelphia, 527 F. 3d 299, 310 (3d
Cir. 2008). Under Fed. R. Civ. P. 56(a) and (b), a
summary judgment motion may be filed by either the party
claiming relief or the defending party and the same
principles apply when there are cross-motions for summary
judgment. See, Lawrence, supra.
Discussion

4

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Congress enacted ERISA to “protect ... the interests
of participants in employee benefit plans and their
beneficiaries” by setting out substantive regulatory
requirements for employee benefit plans4 and to “provide for
appropriate remedies, sanctions and ready access to the
Federal courts.” Aetna Health, Inc. v. Davila, 542 U.S.
200, 208, 124 S. Ct. 2488, 2495, 159 L. Ed. 2d 312 (2004)
quoting 29 U.S.C. §1001. The purpose of ERISA is to provide
a uniform regulatory regime over employee benefit plans.
Id.
ERISA “permits a person denied benefits under an
employee benefit plan to challenge that denial in federal
court.” Barinova v. ING, No. 08-4189, 2010 U.S. App. LEXIS
2368 at *7 (3d Cir. Feb. 4, 2010), quoting Metropolitan
Life Insurance Co. v. Glenn, 554 U.S. 105, 128 S. Ct. 2343,

4

Under 29 U.S.C. §1002(1),

[t]he terms ‘employee welfare benefit plan’ and ‘welfare plan’
mean any plan, fund, or program which was heretofore or is
hereafter established or maintained by an employer or by an
employee organization, or by both, to the extent that such plan,
fund, or program was established or is maintained for the purpose
of providing for its participants or their beneficiaries, through
the purchase of insurance or otherwise, (A) medical, surgical or
hospital care or benefits or benefits in the event of sickness,
accident, disability, death or unemployment, or vacation
benefits, apprenticeship or other training programs or day care
centers, scholarship funds, or prepaid legal services, or (B) any
benefit described in section 186(c) of this title (other than
pensions on retirement or death, and insurance to provide such
pensions).

5

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2346, 171 L. Ed. 2d 299, 305 (2008). To this end, Section
502(a)(1)(B) provides the following, in relevant part:
(a) Persons empowered to bring a civil action
A civil action may be brought (1) by a participant or beneficiary ....
(B) to recover benefits due to him under the
terms of his plan, to enforce his rights
under the terms of the plan, or to clarify
his rights to future benefits under the
terms of the plan;
Such claims may be brought against an ERISA plan
itself or against the persons who are shown to have control
over the plan in their fiduciary capacity. Rieser v.
Standard Life Insurance Company, Civ. A. No. 03-5040, 2004
U.S. Dist. LEXIS 11556 at *16 (E.D.Pa. June 24, 2004),
citing Curcio v. Hancock Mutual Life Insurance Co., 33 F.3d
226, 233 (3d Cir. 1994). A plaintiff seeking to recover
under Section 502(a)(1)(B) must demonstrate that the
benefits are “actually due,” that is, he or she must have a
right to benefits that is legally enforceable against the
plan. Hooven v. Exxon Mobil Corp., 465 F.3d 566, 574 (3d
Cir. 2006). However, the ERISA statute itself fails to
state the appropriate standard of review to be applied in
actions challenging benefits denials under Section
502(a)(1) and it has therefore been left to the courts to

6

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carve out the appropriate standards. In so doing, the
Supreme Court looked to trust law for guidance, recognizing
that the proper standard of review of a trustee’s decision
depends on the language of the instrument creating the
trust. Conkright v. Frommert, U.S. , 130 S. Ct. 1640, 176
L. Ed. 2d 469, 475 (2010). Under trust law, if the trust
documents give the trustee power to construe disputed or
doubtful terms, the trustee’s interpretation will not be
disturbed if reasonable. Id.
Based on these considerations, the Supreme Court
decreed that “a denial of benefits challenged under
§1132(a)(1)(B) is to be reviewed under a de novo standard
unless the benefit plan gives the administrator or
fiduciary discretionary authority to determine eligibility
for benefits or to construe the terms of the plan.” Id.,
quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101,
115, 109 S. Ct. 948, 103 L. Ed. 2d 80 (1989). When the
administrator has this authority, courts apply an arbitrary
and capricious standard of review. Doroshow v. Hartford
Life and Accident Insurance Co., 574 F.3d 230, 233 (3d Cir.
2009); Abnathya v. Hoffman-LaRoche, Inc., 2 F.3d 40, 45 (3d
Cir. 1993).5 But if a benefit plan gives discretion to an

5

At least in the ERISA context, the “arbitrary and capricious”

7

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administrator or fiduciary who is operating under a
conflict of interest, that conflict must be weighed as a
factor in determining whether there is an abuse of
discretion. Firestone, 489 U.S. at 115, 109 S. Ct. at 957.
Such a conflict of interest is created where the entity
that administers the plan, such as an employer or an
insurance company, both determines whether an employee is
eligible for benefits and pays benefits out of its own
pocket. Metropolitan Life Ins. v. Glenn, 128 S. Ct. at
2346.6

standard of review and the “abuse of discretion” standard are
practically identical. Estate of Schwing v. The Lilly Health
Plan, 562 F.3d 522, 526, n.2 (3d Cir. 2009). Under these
standards, a reviewing court may overturn an administrator’s
decision to deny benefits “if it is without reason, unsupported
by substantial evidence or erroneous as a matter of law.” Orr v.
Metro Life Insurance Co., Civ. A. No. 1:CV-04-557, 2007 U.S.
Dist. LEXIS 67855 at *31-*32 (M.D. Pa. Sept. 13, 2007), quoting
Abnathya, supra.
6

Indeed, in the Firestone and Glenn cases, the Supreme Court
outlined the following four relevant principles for reviewing
benefits determinations made by fiduciaries and/or plan
administrators:
(1) In “determining the appropriate standard of review,” a court
should be “guided by principles of trust law;” in doing so, it
should analogize a plan administrator to the trustee of a commonlaw trust; and it should consider a benefit determination to be a
fiduciary act (i.e., an act in which the administrator owes a
special duty of loyalty to the plan beneficiaries).
(2) Principles of trust law require courts to review a denial of
plan benefits “under a de novo standard” unless the plan provides
to the contrary.
(3) Where the plan provides to the contrary by granting “the
administrator” or fiduciary discretionary authority to determine

8

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ERISA’s framework also ensures that employee benefit
plans be governed by written documents and summary plan
descriptions, which are the statutorily established means
of informing participants and beneficiaries of the terms of
their plan and its benefits. In re Lucent Death Benefits
ERISA Litigation, 541 F.3d 250, 254 (3d Cir. 2008), quoting
In re Unisys Corp. Retiree Medical Benefit ERISA
Litigation, 58 F.3d 896, 902 (3d Cir. 1995). It is
therefore incumbent upon the courts to look to the plan
documents to interpret plan obligations. In re Lucent, 541
F.3d at 254. The written terms of a plan control and
employers may not modify or supercede them orally. Gardner,
supra; In re Lucent, 541 F. 3d at 255. When a plan is clear
and unambiguous, a court must determine its meaning as a
matter of law without looking to extrinsic evidence. In re
Lucent, id., citing International Union v. Skinner Engine
Co., 188 F.3d 130, 138, 145 (3d Cir. 1999). Likewise in
considering a claim, a court may not substitute its own
judgment for that of the plan administrator. Stratton v.

eligibility for benefits, trust principles make a deferential
standard of review appropriate.
(4) If a “benefit plan gives discretion to an administrator or

fiduciary who is operating under a conflict of interest that
conflict must be weighed as a factor in determining whether there
is an abuse of discretion. Metropolitan Life Insurance Co. v.
Glenn, 128 S. Ct. at 2347-2348 quoting, inter alia, Aetna Health
v. Davila, 542 U.S. at 218 and Firestone, 489 U.S. at 111-115.

9

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E.I. DuPont de Nemours & Co., 363 F.3d 58, 69 (3d Cir.
2004). That is, the court’s review should be based on the
record available to the plan administrator and should not
represent the court’s independent judgment of the
claimant’s disability. Orr v. Metro Life Ins. Co., 2007
U.S. Dist. LEXIS at *32 citing Kosiba v. Merck & Co., 384
F.3d 58, 69 (3d Cir. 2004). See also, Mitchell v. Eastman
Kodak Co., 113 F.3d 433, 440 (3d Cir. 1997); Magera v.
Lincoln National Life Insurance Co., No. 3:08-CV-565, 2009
U.S. Dist. LEXIS 7871 at *4 (M.D. Pa. Feb. 4, 2009). Where
a court is applying “the arbitrary and capricious standard
of review, the ‘whole’ record consists of that evidence
that was before the administrator when he made the decision
being reviewed.” Magera, id., quoting Mitchell v. Eastman
Kodak, 113 F.3d at 440.
As is clearly stated in the plan documents in this
case, the Plan Sponsor of the plaintiff’s medical benefits
plan is the Boeing Company and the Plan Administrator is
the Employee Benefits Plans Committee (“EBPC”). The EBPC
may be reached and contacted at the same address as the
Boeing Company. (AR0434, AR0529, AR0969). The plan
documents further state:
As Plan Administrator, the EBPC has authority over
administration of the Plan and has all powers
necessary to enable it to carry out its duties as Plan

10

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Administrator, such as determining questions of
eligibility and benefit entitlement. The Plan
Administrator has authority to make these
determinations in its sole discretion. The Plan
Administrator’s decision upon all such matters is
final and binding.
The Plan Administrator also has been delegated
authority by the Board of Directors to amend the Plan.
The Board of Directors has authority to terminate the
Plan. The Plan Administrator may establish rules and
procedures to be followed by participants and
beneficiaries in filing applications for benefits and
in other matters required to administer the Plan. In
addition, the Plan Administrator may
•
•

•

•

Prescribe forms for filing benefit claims and for
annual and other enrollment materials.
Receive all applications for benefits and make
all determinations of fact necessary to establish
the right of the applicant to benefits under the
provisions of the Plan, including the amount of
such benefits.
Appoint accountants, attorneys, actuaries,
consultants, and other persons (who may be
employees of the Company) to advise the Plan
Administrator; also the Plan Administrator may
rely upon the opinions of counsel and upon
reports furnished by others that it selects.
Delegate these and other administrative duties
and responsibilities to persons or entities of
its choice (including delegation to employees of
the Company).
.....

(AR0529).7

7

The foregoing language is contained in the 2000 Edition of the
Plan, and was apparently undisturbed by the various amendments
made thereto between 2000 and 2007. The language in the 2008
version of the Plan is similar and likewise vests discretion to
determine benefits eligibility in the Plan Administrator:
Notwithstanding any other provision in the Plan, and to the
full extent permitted under ERISA and the Internal Revenue
Code, the Plan Administrator has the exclusive right,

11

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Included in the plan is a Mental Health and Substance
Abuse Program which “provides benefits for treatment of
mental illness (including eating disorders, such as
power, and authority, in its sole and absolute discretion,
to
•
•

•
•

•
•

•

•

Administer, apply, construe, and interpret the Plan
and all related Plan documents.
Decide all matters and questions arising in connection
with entitlement to benefits and the nature, type,
form, amount, and duration of benefits.
Amend the Plan.
Establish rules and procedures to be followed by
participants and beneficiaries in filing applications
for benefits and in other matters required to
administer the Plan.
Prescribe forms for filing benefit claims and for
annual and other enrollment materials.
Receive all applications for benefits and make all
determinations of fact necessary to establish the
right of the applicant to benefits under the
provisions of the Plan, including the amount of such
benefits.
Appoint accountants, attorneys, actuaries,
consultants, and other persons (who may be employees
of the Company) for advice, counsel and reports to
make determinations of benefits or eligibility.
Delegate its administrative duties and
responsibilities to persons or entities of its choice
such as the Boeing Service Center, the service
representatives, and employees of the Company.

All decisions that the Plan Administrator (or any duly
authorized designees) makes with respect to any matter
arising under the Plan and any other Plan documents are
final and binding. If any part of this Plan is held to be
invalid, the remaining provisions will continue in force.
(AR0434-AR0435).
Finally, the Boeing Company’s Master Welfare Plan effective
as of January 1, 2007 likewise contains similar, but not
identical language as to the Plan Administrator. (See, e.g.,
AR0969-AR0974). Because the parties have not specified precisely
which version of the Plan was in effect at the time(s) at issue
in this action, we have variously referred to and/or quoted from
each of them.

12

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anorexia nervosa or bulimia) and substance abuse (including
abuse of or addiction to alcohol, recreational, or
prescription drugs). The program is administered by Value
Options.” Value Options, which appears to be a health care
management/utilization review company is alternatively
described as the “service representative” which
“administers the program, maintains the provider network,
and operates the Boeing Helpline.” (AR0336-AR0337, AR0397,
AR0501).8
By way of a separate contract, the Boeing Company
engaged the services of Regence Blue Shield to provide
claims processing, payment and administration services
relative to the non-mental health components of the
traditional medical plan. (AR0449-AR0452). Under that
contract, Regence and Boeing further agreed that Regence
Blue Shield “shall finally determine in its discretion
whether to pay benefits and cover services, in accordance
with the procedures in the Plan.” (AR0457).9 Furthermore,

8

Again, while the wording used in the 2000 and 2008 versions of
the Mental Health and Substance Abuse Program portions of the
plan is not identical, the meaning is for all intents and
purposes, the same. For this reason, we excerpt portions of the
two versions of the plan interchangeably.
9

It is also evident from our review of the Administrative Record
that Regence Blue shield was similarly charged with reviewing
benefits determinations under the Mental Health and Substance
Abuse Program. (See, e.g., AR0685-AR0690).

13

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for services to be eligible for reimbursement under the
Mental Health Program portion of the plan, the treatment
must be determined to be “medically necessary,10” and
received from any provider contracted with the Boeing
Helpline, a licensed psychiatric doctor (M.D.), a licensed
clinical psychologist, licensed psychiatric nurse (R.N.) or
psychiatric professional at the master’s level or above, or
from a hospital or treatment facility. If the services are
provided by a network provider (i.e. one referred by the
Boeing Helpline), they will be reimbursed at the rate of
100% after the annual deductible for covered inpatient,
partial hospital, or intensive outpatient services;
10

Medically necessary means that the treatment, services, or
supply meets the following criteria in accordance with the plan
and as determined by the service representative. The treatment,
service or supply is:
•

•
•
•
•

•

Required to diagnose or treat the patient’s illness,
injury, or condition; and the condition cannot be
diagnosed or treated without it.
Consistent with the symptom or diagnosis and the
treatment of the condition.
The most appropriate service or supply that is
essential to the patient’s needs.
Appropriate as good medical practice.
Professionally and broadly accepted as the usual,
customary, and effective means of diagnosing or
treating the illness, injury, or condition.
Unable to be provided safely to the patient as an
outpatient (for an inpatient service or supply).

A treatment, service, or supply may be medically necessary in
part only. The fact that a physician furnishes, prescribes,
recommends, or approves a treatment, service, or supply does not,
by itself, make it medically necessary.
(AR0382).

14

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residential treatment may be covered under the plan when it
is authorized in place of inpatient care. For nonnetwork
providers, the reimbursement rate is only 50% of usual and
customary charges after the annual deductible for the
covered services of a non-referred provider if the care is
certified as covered by the Boeing Helpline. Where the
“mental health treatment is related to, accompanies or
results from substance abuse, the program will cover only
substance abuse treatment.” (AR0397-AR0398; AR0501-AR0502).
As is apparent from the preceding language, the plan
administrator has discretionary authority to make
determinations as to eligibility for and entitlement to
benefits. Since the EBPC appears to be part of the Boeing
Company itself, we find that the plan administrator
likewise appears to be operating under a conflict of
interest. Thus, while we apply the arbitrary and
capricious/abuse of discretion standard of review to the
claims in this case, we shall consider the conflict of
interest in that application.
The Administrative Record in this matter is voluminous
and reflective of the ongoing (and often-unnecessary in
this Court’s opinion) struggle which Plaintiff was forced
to endure with Value Options, the service representative
for the Mental Health portion of the defendant plan. To be

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sure, the record reveals that although it at first refused
certification and denied coverage for A.H.’s initial
admission to Innercept, after several months and multiple
appeals to Regence Blue Shield, Value Options (“VO”)
eventually agreed that the treatment which A.H. received at
Innercept between March 7 and July 10, 2007 was medically
necessary and approved coverage.11 However, notwithstanding
its eventual certification of care, VO determined and
subsequently Regence Blue Shield upheld the decision that
the “usual and customary charge” for the services provided
to A.H. by Innercept for that period of time was $13,753
per admission. In contrast, Innercept’s charges for that
time frame equal approximately $40,000. (AR0691).
Specifically, the letters from Regence Blue Shield
upholding the denial of payments in excess of $13,753 for

11

It is interesting that Value Options’ explanations for the
denial of benefits for A.H.’s admission to Innercept changed no
fewer than 7 times. (See, e.g., AR0122-AR0148). Examples of the
bases for VO’s denials include that Innercept “did not meet
[VO’s] standards for Residential Treatment Facilities as there is
not 24 hour a day licensed staff coverage;” “because Treatment
planning is not individualized and/or appropriate to the
individual’s condition, and/or does not include specific goals
and objectives within a reasonable timeframe,” and that VO’s
review “does not indicate the presence of self-harming behaviors
or current aggressive threatening behaviors that would meet
criteria for Residential Treatment Setting. An appropriate level
of care to the needs of the patient is Outpatient Services,”
which was later amended to “Partial Hospitalization with
Intensive/Structured setting,” and still later to “Partial
Hospitalization.” (See also, AR 0073-AR095, AR0329-AR0357,
AR0647-AR0682)).

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A.H.’s admission to Innercept explain that this amount was
calculated
“based upon the charge that is most frequently made by
providers with similar qualifications for comparable
services or supplies within the same geographic area.
When determining the profile amounts within a specific
area, the Plan utilizes the performing provider’s zip
code. Services rendered from March 7, 2007 through
June 30, 2007 processed to Coeur d’Alene, ID, zip code
83816. In addition, inpatient hospital charges from
out of state providers are reimbursed at a flat rate
per admission and are not based on the length of stay.
The usual and customary amount for A.H.ander’s
inpatient hospital admission for these behavior health
services, provided within zip code 83816 is $13,753
per admission...” (AR0685-AR0688).
Defendants rely upon the following plan language to
justify the decision to limit the reimbursement amount for
A.H.’s Innercept admission to the amount referenced above:
How the Plan Determines the Covered Charge
This plan pays benefits based on the covered charges.
A covered charge is the provider’s charge for a
covered service or supply, up to the service
representative’s maximum allowance. The amount of the
covered charge depends on whether you see a network or
a nonnetwork provider.
•

For a network provider, the service
representative determines the amount of the
covered charge for a particular service or supply
under any applicable agreement between the
service representative and the provider.

•

For nonnetwork provider, the covered charge is
based on the usual and customary charge for the
covered service or supply. This plan does not
cover or otherwise recognize any portion of a
provider’s charge that exceeds the usual and
customary charge; you are responsible for these
charges.

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Usual and Customary Charge. The usual and customary
charge is the maximum charge for a covered service or
supply the service representative will consider for
reimbursement from a nonnetwork provider. The service
representative may refer to this as the “maximum
reimbursable charge,” “maximum allowable charge,”
“reasonable and customary charge,” “allowed amount,”
or a similar term.
The usual and customary charge is the least of
•
•
•

The provider’s actual charge for the service or
supply,
The provider’s normal charge for a similar
service or supply, or
A predetermined percentile (negotiated between
each carrier and plan sponsor) of charges made by
providers of a comparable service or supply in
the geographic area where it is received.

To determine if a charge exceeds the usual and
customary charge for medical services or supplies in
situations involving unusual or complicated services
or supplies, the nature and severity of the injury or
sickness may be considered.
The service representative uses a database of provider
charges to determine the usual and customary charge in
an area. Information about the database and percentile
used to determine the usual and customary charge can
be obtained by contacting the service representative.
If you use a nonnetwork provider, you pay any charges
above the usual and customary amount.
Benefit Maximums
This plan limits the amount of money that it will pay
for certain services and for any one person covered by
this plan.
•

A benefit maximum limits the amount the plan will
pay for a specific covered service for a
specified period or visit, depending on the
service. Once a participant reaches a benefit
maximum, this plan will not cover that specific

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service or supply for the rest of the specified
period.
...
(AR0381).
Hence, it is clear that the plan does indeed grant
authority to the service representative to develop a
database to use in determining what the usual and customary
charges are for a particular service in a given region. It
is also clear from the administrative record that VO and
Regence Blue Shield decided to allow only the payment of a
flat rate per admission but that they did not apprise the
plaintiff or Innercept of this decision until October,
2007. (AR0691-AR074, AR0944). It is not clear after an
exhaustive review of the administrative record, however,
where that database is, how it was developed, how it
resulted in the calculation of the figure of $13,753 as
being the usual and customary charge for the zip code in
question, or whether it was used to determine that this
same figure should be used as the benefit maximum for
A.H.’s Innercept admission in March, 2007. Plaintiff, on
the other hand, produced and submitted to the defendants a
report from the University of New Hampshire and the
National Association of Therapeutic Schools and Programs
(NATSAP) which evinced that the amounts charged per day by

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providers like Innercept ranges nationally from a low of
$125 to a high of $700, with an average of $318, which is
about what Innercept charged for the care which A.H.
received. (AR0632- AR0646). Thus we find that the decision
limiting the expenses for the plaintiff’s son’s admission
and stay at Innercept to the flat rate of $13,753 was
unsupported by substantial evidence and without apparent
reason. We consequently conclude that this decision
constituted an abuse of discretion. See, Abnathya, 2
F.3d at 45; Orr, 2007 U.S. Dist. LEXIS at *31-*32. Further,
inasmuch as there is nothing on this record to refute the
reasonableness of this $318 per day rate, we find that for
the period between March 7 and July 10, 2007, the plan
should have paid the sum of $40,068 for A.H.’s stay at
Innercept. Thus with respect to this decision, we shall
grant Plaintiff’s motion for summary judgment and direct
that the plan reimburse him in the amount of $26,315.12
We next consider the reasonableness of Value Options’
determination that A.H. no longer required the level of
treatment which Innercept provided after July 10, 2007 and
the Plan’s refusal to pay for that care after that date.
12

Because it appears that Mr. Hirsh has already paid Innercept’s
bill in full, we direct that the plan reimburse him for the
difference between the $40,068 charged for the services provided
to A.H. between March 7 and July 10, 2007 and the $13,753
previously paid.

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The Innercept records are somewhat scant for this period of
time; however, it appears that by June 30, 2007, A.H. had
begun to make some positive changes in his life and had
begun to gain better control of his behavior, at least
within the confines of the Innercept environment. (AR0016AR0023). He was on a home visit from July 6 through July
10, 2007 which reportedly went well, although A.H.
apparently was irritable and contentious with Innercept
staff and had some issues with inappropriate boundaries
with a female peer upon his return. (AR085-AR086). The
plaintiff and his family were concerned that A.H. would not
accept boundaries should he be returned home permanently
and his doctors were concerned that he would resume his
drug use. (AR0087). Despite these concerns, VO found that
A.H. did not meet its criteria (3.30, et. seq.) for
continuing care in a residential treatment center.
Specifically, VO determined and Regence Blue Shield agreed,
that A.H. satisfied Exclusion Criteria 313 and did not meet

13

Under the Exclusion Criteria for Residential Treatment Center
Services (RTS)(Child/Adolescent) 3.301,
Any of the following criteria is sufficient for exclusion
from this level of care:
....
3.
The child/adolescent can be safely maintained and
effectively treated at a less intensive level of care.

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Continued Stay Criteria 414 because “[h]e is able to safely
be treated in a community setting while living with his
family. He is nearly at grade level and has fallen behind
since in attendance at the RTC level of care. His return
home can include the start of summer school, family
therapy, individual therapy and voluntary guidance from
the Department of Probation if necessary.” (AR0087). The
Administrative Record suggests that there was some type of
peer to peer review of A.H.’s records by a Dr. Rao, who
presumably reviewed his medical records and spoke with his
attending physician, Dr. Ullrich. Nevertheless, it is
unclear what information Dr. Rao and/or Value Options
relied upon in concluding that A.H. could be treated in a
“community setting” with “family therapy, individual
therapy and voluntary guidance from the Department of
Probation if necessary,15” or that summer school was even

(AR0333-AR0334).
14

Under the Continued Stay Criteria for Residential Treatment
Center Services (RTS)(Child/Adolescent) 3.301,
All of the following criteria are necessary for continuing
treatment at this level of care:
....
4.
All services and treatment are carefully structured to
achieve optimum results in the most time efficient manner
possible consistent with sound clinical practice.
15
The remark concerning the Department of Probation is
particularly puzzling given that there is no evidence that A.H.

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Case 2:09-cv-03120-JCJ Document 24-1 Filed 01/20/12 Page 23 of 27

available to A.H.. Rather, the notes repeatedly reference
A.H.’s moods as being “labile,” “easily frustrated,” that
he was “intimidating both with staff and peers,” and
reflect the concern of Dr. Ullrich that A.H. would resume
his illegal drug use and otherwise relapse if he were
discharged too soon. (AR0001-AR0029, AR0087-AR0089). Again,
under the arbitrary and capricious standard of review, a
reviewing court may overturn an administrator’s decision to
deny benefits if it is without reason or unsupported by
substantial evidence. See, Estate of Schwing, 562 F.3d at
526, n.2. We find this to be the case as to the decision to
deny coverage for A.H.’s Innercept care after July 10,
2007. Given that we cannot discern from the record before
us how long after July 10, 200716 A.H. may have continued to

was ever the subject of a juvenile court or other court
proceeding or convicted of any crime.
16

Indeed, it appears that on or about December 4, 2007, A.H. was
admitted for inpatient care at a psychiatric hospital due to his
reports of hearing voices, suicidal ideation, obsessive,
threatening and aggressive behaviors regarding a female peer. He
remained there until December 15, 2007 when he was discharged
back to Innercept. (AR0092-AR0095). In addition, in late
November, 2007, A.H. was evaluated by Doris Lebischak, M.D., a
psychiatrist in Wayne, Pennsylvania, who diagnosed him as then
suffering from, inter alia, “Major Depressive Disorder with
psychotic features vs. Schizoaffective Disorder #295.70,
depressive type vs. Schizophreniform disorder 295.40, Anxiety
Disorder with obsessive thoughts and Polysubstance dependence
#304.8.” Dr. Lebischak further opined that:
“A.H.’s present level of care is inpatient mental health
and acute residential treatment facility. A.H. needs a
specialized program to meet his unique educational and

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require the level of care provided by Innercept, we shall
remand this matter to the administrator for re-evaluation
of this issue.
Finally, we consider whether the refusal to cover
A.H.’s treatment at the King George School (“KGS”)in
Vermont constituted an abuse of discretion and/or was
arbitrary and capricious. In this regard, there is
virtually no evidence whatsoever as to what type of
treatment and care was available and/or provided to A.H.,
what his condition was upon admission to or during his stay
at the facility or how or if he may have benefitted from
the treatment received. It further does not appear from the
plan documents that therapeutic boarding schools are
recognized as “providers” within the meaning of the plan.
Insofar as it is incumbent upon a plaintiff seeking to
recover under Section 502(a)(1)(B)to demonstrate that the
benefits are “actually due,” (See, e.g., Hooven, supra.) we
find that as to KGS, Mr. Hirsh has failed to satisfy this
obligation. Accordingly, we find no abuse of discretion on
mental health needs. There needs to be control of expressed
emotion in the setting with small group instruction,
intensive therapeutic supports and AA/NA component with
weekly psychiatric intervention and a program that is able
to maintain and monitor hygiene and prompt as needed. A
closed unit or highly secure unit for safety concerns of
suicide, self-injury and assault risks as well as elopement
risk continues to be medically necessary.”
(AR0060-AR0063).

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the part of the plan administrator(s) in denying payment
and/or reimbursement for A.H.’s admission and stay at the
King George School.
For all of the foregoing reasons, we shall grant in
part and deny in part the parties’ cross-motions for
summary judgment. An appropriate order follows.

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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
JOEL E. HIRSH

: CIVIL ACTION
:
:
: NO. 09-CV-3120
:
:
:
:
:

vs.
BOEING HEALTH AND WELFARE
BENEFIT PLAN, a/k/a THE
BOEING TRADITIONAL MEDICAL
PLAN, and BOEING EMPLOYEE
BENEFITS PLAN COMMITTEE

ORDER
AND NOW, this 14th day of June, 2010, upon
consideration of the Motion for Summary Judgment of
Defendants Boeing Health and Welfare Plan and Boeing
Employee Benefits Plan Committee (Doc. No. 11) and
Plaintiff’s Motion for Summary Judgment (Doc. No. 12), it
is hereby ORDERED as follows:
1. Plaintiff’s Motion is GRANTED IN PART, Judgment is
entered in favor of Plaintiff in the amount of $26,315 and
this matter is REMANDED to the Plan Administrator(s) for
reconsideration of A.H.’s entitlement to benefits for the
care and treatment which he received at Innercept after
July 10, 2007. In all other respects, the Plaintiff’s
Motion for Summary Judgment is DENIED.
2. Defendants’ Motion is GRANTED IN PART and Judgment
is entered in favor of the Defendants as a matter of law as
to Plaintiff’s claim for benefits for the treatment and

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Case 2:09-cv-03120-JCJ Document 24-1 Filed 01/20/12 Page 27 of 27

care rendered to his son, A.H. at the King George School in
Sutton, VT. In all other respects, the Defendants’ Motion
for Summary Judgment is DENIED.
BY THE COURT:

s/J. Curtis Joyner
J. CURTIS JOYNER, J.

27