Boyd et al v. Sysco Corporation et al

Filing 56

OPINION AND ORDER. Signed by the Honorable R. Bryan Harwell on 12/1/2015. (hcic, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Wayne Boyd and
Whitfield R. Boyd,

)
)
)
Plaintiffs,
)
)
v.
)
)
Sysco Corporation,
)
Sysco Corporation Group Benefit )
Plan, and United Behavioral
)
Health,
)
)
Defendants.
)
______________________________)

Civil Action No.: 4:13-cv-00599-RBH

OPINION AND ORDER

Pending before the court are the parties’ memoranda in support of judgment.1 Plaintiffs
assert entitlement to certain benefits pursuant to the Employee Retirement Income Security Act
of 1974 (“ERISA”), ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) (i.e., a claim for benefits)2,
and request attorney’s fees pursuant to ERISA § 502(g), 29 U.S.C. § 1132(g), and prejudgment
interest.3
The parties entered into a Joint Stipulation agreeing to certain relevant portions of the
administrative record and certain relevant portions of the plan documents. However, Plaintiffs do
not stipulate that this is the complete record due to “Defendants’ many errors and omissions in

1

Plaintiffs’ Memorandum in Support of Judgment (ECF No. 46) and Defendants’ Memorandum in Support
of Judgment (ECF No. 47); Plaintiff’s Reply (ECF No. 52) and Defendant’s Reply (ECF No. 51).
2

This Court granted the defendants’ motion for summary judgment on September 3, 2015 as to the second
cause of action which was an ERISA penalty claim pursuant to 29 U.S.C. § 1132(c). (ECF No. 55) The case is now
before the Court on the claim for benefits.
3

Under Local Rule 7.08, “hearings on motions may be ordered by the Court in its discretion. Unless so
ordered, motions may be determined without a hearing.” The issues have been briefed and the administrative record
has been submitted by the parties, and the Court believes no hearing is necessary.

compiling the record”. (Jt. Stipulation, ECF No. 48, p. 4) Plaintiffs also object to the defendants’
inclusion in the record of a document entitled “Practice Guideline for the Treatment of Patients
with Substance Use Disorders, Second Edition”, by the American Psychiatric Association (APA),
UBH 916-923, on the basis that it was not furnished to the plaintiffs in response to the limited
requests for production of documents authorized by the Court and was disclosed for the first time
on the day before the deadline for filing memoranda in support of judgment. The parties also do
not agree on the appropriate scope of this Court’s review. The defendants assert that an abuse
of discretion scope of review applies because the plan documents confer discretion upon them to
interpret the plan. They also assert that the Plan Administrator has delegated that discretion to
UBH, the Claims Administrator. The plaintiffs contend that, although the Plan language appears
to vest discretion in Sysco, “repeated procedural and substantive violations by Defendant mean
that this Court should review the administrative denials de novo.” (Jt. Stipulation, p. 2, ECF No.
48) The parties agree that the standard of review is not affected by a conflict of interest, as the
Plan is self-funded by Sysco, and UBH is the claims administrator. The parties also agree that
the Court may dispose of this matter based upon the joint stipulation, the attachments thereto, and
the memoranda in support of judgment, except that the plaintiffs assert that the Court may also
need to reference Plaintiff’s Motion for Discovery and related filings, Defendants’ discovery
responses to the limited discovery allowed by the Court, and the plaintiffs’ motion to compel.4

4

The Fourth Circuit has recognized that the parties to an action for ERISA benefits may agree to waive the
summary judgment standard and submit their case to the district court on the merits by way of cross-motions for
judgment. See Bynum v. Cigna Healthcare of N.C., Inc., 287 F.3d 305, 311 n.14 (4th Cir. 2002), abrogated on other
grounds by Carden v. Aetna Life Ins. Co., 559 F.3d 256 (4th Cir. 2009).

2

Procedural Overview
Plaintiff Wayne Boyd’s employer, Sysco Corporation, (“Sysco”) established an employee
welfare benefit plan to provide various benefits to employees and their families. The plan is
entitled “Sysco Corporation Group Benefit Plan” (“the Plan”) (UBH 0870-0900). Under the Plan
documents, Sysco is the plan administrator, and the Plan Administrator may delegate its duties and
discretionary authority to a third party Claims Administrator.5 Defendant United Behavioral Health
(UBH) is the Plan’s designated Claims Administrator for mental health and substance abuse claims.
(2009 Benefits Guide-Summary Plan Description (SPD) (UBH 0018)). Wayne Boyd was a participant
in the Plan and his son, Whitfield R. Boyd (“Boyd”) was a covered beneficiary.

The Plan provides6 that a covered medical expense “must be medically necessary, must
meet accepted standards, must be covered by the Healthcare Program.” (UBH 103) The Plan does
not cover services that “are not medically necessary, as determined by the claims administrator.”
(UBH 106)

The Glossary of Key Terms for Healthcare Program contains the following

definitions:
Medically Necessary. A treatment, confinement or service prescribed by a physician which is
determined by the Claims Administrator to be necessary and appropriate for the diagnosis, care
or treatment of the disease or injury involved, non-experimental or non-investigational and not in
conflict with accepted medical standards.
(UBH 0155)
The Plan provides for an initial claims determination and an appeal within the Plan. (UBH
0880-0881)

5

The Plan defines the term “Claims Administrator” with respect to benefits provided on a self-insured basis
as “the person or entity providing claims processing, payment, and other administrative services to the Plan”. (UBH
0875)
6

The appeal letters do not contain any references to these plan provisions.

3

Factual Background and Filing of Claim
A.

Plaintiff Whitfield Boyd’s Claim for Benefits for Residential Substance Abuse

Treatment.
This case involves Boyd’s claim for mental health/substance abuse benefits under the Plan
for treatment received by him at a residential rehabilitation program, Narconon Vista Bay,
California, from July 23, 2010 through August 26, 2010.7 The administrative record contains an
affidavit by Wayne Boyd which was submitted to UBH on November 19, 2012 by counsel for
the plaintiff8 in which Mr. Boyd summarizes the history of his son’s drug addiction and the
unsuccessful treatments that he underwent before his stay at Narconon at Three Rivers Rehab in
Columbia, South Carolina in 2006,9 Wilmington Treatment Center in Wilmington, North Carolina
in 200810, and a methodone clinic. He states that he put his son on the plane to California on
July 13, 2010 for detox treatment; that he notified UBH on the next day (July 14, 2010) by
telephone; and that the UBH representative told him that the Narconon treatment would be
covered but that a $400 penalty would be imposed for going out of network. (UBH 0904) The
affidavit does not mention August West Family Services, the medical dotoxification facility where
Boyd received treatment beginning on July 13, 2010, immediately prior to the Narconon stay.
The affidavit simply states that Narconon Vista Bay agreed to accept Boyd the day after his

7

Boyd resided at a Narcocon facility from July 23, 2010 through December of 2010. However, the claim
before the Court is for July 23, 2010 through August 21 or 26, 2010.
8

The November 19, 2012 letter from counsel appears to be the first written appearance of counsel for the
plaintiffs. Before that date, they apparently did not have counsel.
9

Boyd was treated at the Three Rivers Rehab for “a little over two weeks”. (UBH 0901)

10

The Wilmington program was a thirty-day program, after which Boyd was released to a half-way house.
However, he started using drugs while in the half-way house and was “kicked out”. (UBH 0902)

4

parents called. It then states: “They met him in San Francisco and escorted him to a medical
facility to help him start the initial detox.”

(UBH 903) The record is not clear as to the

connection, if any, between August West and Narconon.
At the time of his admission to August West on July 13, 2010, Boyd had been using “3x2
[Xanax] bars x 1 year” and “Suboxone x 2 years.” The Suboxone dose was 24 mg daily. (UBH
0793, 0798) He was, upon admission, “poly drug dependent: Xanax + Suboxone.” (UBH 0793)
Those facts are listed under “Axis I,” which is the category in the DSM for acute conditions
needing treatment. (UBH 0793) Under close supervision by physicians at August West, Boyd was
tapered off of Suboxone and Xanax and prescribed phenobarbital for alcohol withdrawal. (UBH
0794-798) The records reflect tremors, sweats, diarrhea, anxiety/agitation, muscle cramping and
sleeplessness. (UBH 0801) Boyd went through withdrawal for ten days, with the withdrawal
symptoms gradually decreasing over the course of the ten day medical treatment (UBH 0799). The
taper (i.e., a physician prescribing smaller and smaller dosages of the drugs to which he was
addicted) lasted through July 22, 2014, the date on which Boyd took his last tapered dose of
suboxone. (UBH 0797) The July 22 medical record states that Boyd “completed his detox protocol
and will transition to [Narconon] tomorrow to begin his program.” (UBH 0799) Boyd then
transferred directly to the longer-term rehab program at Narconon. Upon admission, Boyd’s doctor
noted his “second failed rehab.” He also noted “opiate dependence” and “new tracks” (i.e, new
needle marks in Boyd’s arms). (UBH 0611) Boyd completed a drug history upon his arrival at
Narconon that showed his oxycontin use started eight years prior, and his Xanax use started six
to seven years prior. (UBH 0625). The history given at Narconon also showed use of heroin,
cocaine, crack cocaine, hashish, marijuana, LSD, PCP, and Ecstacy. (UBH 0625) The Narconon

5

records reflect that Boyd had continued using oxycontin and Xanax right up until July 12, 2010,
the day before his trip to California. (UBH 0625) In the thirty days leading to that admission, he
had used more than one drug twenty-seven out of thirty days. (UBH 0626). Boyd stayed in the
Narconon program for its full course, successfully completed it, and was discharged on December
18, 2010. According to Boyd, “I can state with no hesitation that my rehab at Narconon saved
my life.” (UBH 0255)
B. UBH Case Notes.
The internal UBH Case Notes indicate that Wayne Boyd called UBH on October 7, 2010
and stated that he was “looking for benefits for OON facility where his son is staying” and that
the facility had been billing the wrong insurance company.

(UBH 0314) In a Retrospective

Review on July 7, 2011, the case was summarized as follows:
23 yr old mbr admitted for treatment of opiate dependence. Med record:
8271117590464. Drug of choice: oxycontin 80 mg/heroin .2, both daily. Previous
treatment is two programs, level of care not indicated. The information is primarily
intake information. There are no clinical progress notes by any mental health staff
so it is not clear what kind of treatment occurred, interventions used or when the
member was discharged. Hence no decision can be made re: med nec for
continued treatment at this level of care or what kind of care was provided . . .
Will advise claims dept to obtain a complete med record.” (UBH 0316)
In a Retrospective Review dated August 9, 2011, the case manager’s assessment is as
follows:
THE TREATMENT MODEL DOES NOT MEET UBH LEVEL OF CARE
GUIDELINES AND BEST PRACTICE GUIDELINES AS DEFINED BY THE
APA11. THE MODEL FOR THIS PROGRAM . . . DOES NOT MEET LEVEL
OF CARE GUIDELINES AS DEFINED BY UBH. IT IS A DRUG-FREE
EDUCATIONAL PROGRAM, COMPRISED OF A PRESCRIBED SERIES OF

11

American Psychiatric Association

6

COURSES AND WORKSHOPS. DETOXIFICATION IS ACCOMPLISHED BY
SAUNA, EXERCISE, AND NUTRITIONAL SUPPLEMENTS.
Level of Care Guidelines not met: “Any one of the following”, 2a, b; 3, 5a, 7b.
Also, the treatment model is not consistent with APA Best Practices Guidelines
(can be found at www.psychiatryonline.com-Section I, Executive Summary, B,
General Treatment Principles.
The reviewer also noted that medical records had been received by UBH on 6-24-11. However,
the note does not indicate which medical records had been received.
UBH conducted another retrospective review on October 6, 2011, and the reviewer
summarized the case as follows:
CCR review of a course of RTC for a 23 yo male using Xanax, Valium, Suboxone.
The medical record documents the patient’s progress through New Life
detoxification, and the various courses and assignment, as well as scattered progress
notes about behaviors on the unit. In general, he appeared to complete assignments
successfully. Discharge information is not included, and some notes indicate
continued participation as late as 12-15-10 . . .
(UBH 0318)
The case manager’s assessment was the same as the one on August 9, 2011, as follows:
THE TREATMENT MODEL DOES NOT MEET UBH LEVEL OF CARE
GUIDELINES AND BEST PRACTICE GUIDELINES AS DEFINED BY THE
APA. THE MODEL FOR THIS PROGRAM . . . DOES NOT MEET LEVEL OF
CARE GUIDELINES AS DEFINED BY UBH. IT IS A DRUG-FREE
EDUCATIONAL PROGRAM, COMPRISED OF A PRESCRIBED SERIES OF
COURSES AND WORKSHOPS. DETOXIFICATION IS ACCOMPLISHED BY
SAUNA, EXERCISE, AND NUTRITIONAL SUPPLEMENTS.
Level of Care Guidelines not met: “Any one of the following”, 2a, b; 3, 5a, 7b.
Also, the treatment model is not consistent with APA Best Practices Guidelines
(can be found at www.psychiatryonline.com-Section I, Executive Summary, B,
General Treatment Principles.
Id.
The notes indicate that the medical record was received by UBH on 9-29-11. Again, it is unclear
what records were received.

7

C. Denial of Claim
A Provider Explanation of Benefits dated October 12, 2011 indicated that the claim was
denied on the basis that the “service has been determined to not be medically necessary.” (UBH
0305) This was followed by an adverse determination letter12 by T.C. Ghosh, MD dated October
18, 2011 that “coverage was not available for your treatment with Narconon Vista Bay for dates
of service 7/23/10-08-26/10.” (UBH 0297) Dr. Ghosh indicated in the letter that neither the
diagnosis nor the diagnosis code was available. He stated that he had reviewed “your medical
record for the dates of service” but does not indicate which records were reviewed.
He stated that coverage was not available for the following reasons:
THE TREATMENT MODEL DOES NOT MEET UBH LEVEL OF CARE
GUIDELINES AND BEST PRACTICE GUIDELINES AS DEFINED BY THE
APA. THE MODEL FOR THIS PROGRAM . . . DOES NOT MEET LEVEL OF
CARE GUIDELINES AS DEFINED BY UBH. IT IS A DRUG-FREE
EDUCATIONAL PROGRAM, COMPRISED OF A PRESCRIBED SERIES OF
COURSES AND WORKSHOPS. DETOXIFICATION IS ACCOMPLISHED BY
SAUNA, EXERCISE, AND NUTRITIONAL SUPPLEMENTS.
Level of Care Guidelines not met: “Any one of the following”, 2a, b; 3, 5a, 7b.
Also, the treatment model is not consistent with APA Best Practices Guidelines
(can be found at www.psychiatryonline.com-Section I, Executive Summary, B,
General Treatment Principles.
(UBH 0293)
This is a verbatim quote from the Retrospective Reviews dated August 9, 2011 and October 6,
2011. He then quoted from the 2011 UBH Level of Care Guidelines Substance Use Disorders:
Residential Rehabilitation, as follows:

12

Defendants characterize the October letter of Dr. Ghosh as an appeal letter and cite UBH internal notes
indicating that Wayne Boyd called on September 26, 2011 requesting the status of the appeal. (UBH 0317-0318)
However, the internal notes also reflect that the medical record was not received until September 29, 2011 (UBH
0319) The notes also indicate that “denial issued 10/18 will have instruction on how to file appeal.” (UBH 0320)
Therefore, it appears to the Court that the Ghosh letter should be considered to be the initial denial, which was
followed by the internal appeal denial by Dr. Gruber.

8

A residential rehabilitation program is appropriate when a member lacks the
motivation or social support system to remain abstinent, but does not require the
structure and intensity of services provided in a hospital.
Any one of the following criteria must be met . . .
1. The member continues to use substances despite appropriate motivation and
recent treatment in an intensive outpatient program or partial hospital/day treatment
program.
2. The member continues to use substances, and the member’s functioning has
deteriorated to the point that the member cannot be safely treated in a less
restrictive level of care.
3. The member continues to use substances, is at risk of exacerbating a serious cooccurring medical condition, and cannot be safely treated in a lower level of care.
4. The member is at risk of developing withdrawal symptoms which cannot be
safely treated in a lower level of care.
5. Severe impairment in the member’s family or social support system has
heightened the risk that the member will use substances if not in residential rehabilitation.
6. The member is experiencing withdrawal symptoms that do not compromise the
member’s medical status, but are of extreme subjective severity accompanied by the
lack of resources or functional social supports to manage the symptoms.
And all of the following . . .
1. The member is not at imminent risk of serious harm to self or others.
2. Within 48 hours of admission, the following occurs:
a. A psychiatrist/addictionologist completes a comprehensive evaluation of the
member.
b. The treating psychiatrist/addictionologist and, whenever possible, the member
do the following:
i. Develop a treatment plan . . .
ii. Project a discharge date; and
iii. Develop an initial discharge plan . . .
3. Subsequent psychiatric evaluations and consultations are available 24 hours a
day. Visits with the treating psychiatrist/addictionologist occur at least 2 times per
week. . .
5.a. . . . Active treatment is indicated by services that are all of the following:
i. Supervised and evaluated by a physician. . .
iv. Unable to be provided in a less restrictive setting; and are
v. Focused on interventions that are based on generally accepted standards of
medical practice and are known to address the critical presenting problem(s),
psychosocial issues and stabilize the member’s condition to the extent that the
member can be safely treated in a lower level of care. . .

9

It is unclear what medical records were reviewed by Dr. Ghosh, as they are not listed in
the letter. Contrary to the assertions by the defendants, the letter does not indicate Dr. Ghosh’s
medical specialty, if any, or other qualifications or certifications. Also, Dr. Ghosh does not
specifically apply Boyd’s situation to the 2010 Level of Care Guidelines; he simply states a
conclusion that the treatment model (of Narconon) does not meet the 2011 guidelines.
D. Plaintiff Appeals the Denial Within the Plan.
Plaintiff filed an appeal of the decision within the Plan. (The record does not appear to
include the written letter of appeal which is referenced at UBH 0321). By letter dated May 23,
2012, the appeal was denied by Nelson Gruber, MD, Associate Medical Director, Board Certified
in General Psychiatry, Diplomate, American Board of Psychiatry & Neurology. Dr. Gruber’s
letter indicates that medical records were reviewed but does not specifically indicate what records
were reviewed. The letter states:
The member’s condition did not meet United Behavioral Health Level of
Care Guidelines for the Substance Abuse Residential Rehabilitation Level
of Care as evidenced by the following:
Based on the available information - at the time of admission, the member
was motivated, had already apparently been through detoxification and some
programming and was sober. He acknowledged his addiction and wanted
to pursue recovery. There was no report of notable cravings or of dangerous
ideations, substance related toxicities or medical issues, of acute or post
acute withdrawal symptoms. The member was caring for himself and was
fully functional. His mood was happy, upbeat and positive. The member
reported feeling well and was physically stable. The member had strong
family support. The member remained in this stable and positive condition
throughout his time in the program. Based on the available information, the
member could safely and effectively have been treated at a lower level of
care.
The following United Behavioral Health Level of Care Guidelines for the
Substance Abuse Residential Rehabilitation Level of Care were considered:

10

1. There is a risk of harm to self or others or pervasive impairment in
functioning due to continued and severe substance use which prohibits
treatment from occurring safely in a less restrictive environment.
2. There are serious concomitant medical conditions due to continued
substance use, which would prohibit treatment from occurring safely at a
lower level of care and requires 24-hour monitoring.
3. There is risk of further withdrawal symptoms, which cannot be safely
managed without requiring 24-hour monitoring.
4. There is no living environment that is supportive of abstinence and that
does not place the member at high risk of substance induced dangerous
behavior.
5. There are withdrawal symptoms that do not compromise the member’s
medical status, but are of extreme subjective severity accompanied by the
lack of resources or functional social supports to manage the symptoms.
This determination does not mean that you did not require additional health care
or that you needed to be discharged.
(UBH 0291-0292)
The letter does not contain a diagnosis or diagnosis code and does not
indicate what version of the UBH guidelines that he used.
E. Independent Review
By letter dated November 19, 2012, counsel for the plaintiffs notified UBH of his
representation and requested an independent external review by an Independent Review
Organization (“IRO”)13 of the determinations of 10/19/12 and 5/23/12.

(UBH 0906-0912)

Plaintiff’s counsel also requested a full copy of the administrative record. He enclosed, as a

13

The Patient Protection and Affordable Care Act (PPACA), 42 U.S.C. § 300gg-19(b) (2013), [as amended
by the Healthcare and Education Reconciliation Act of 2010 (HCERA)] amended Part A of title XXVII of the Public
Health Service Act (PHS Act) related to group health plans and health insurance issuers in the group and individual
markets and sets forth requirements relating to internal and external review processes. 29 C.F.R. § 2590.715-2719.
ERISA was also amended to provide that “the provisions of part A of title XXVII of the Public Health Service Act,
42 U.S.C. §§ 300gg et seq. (as amended by the PPACA) shall apply to group health plans . . . as if included in this
subpart. . .” 29 U.S.C. § 1185d(a) (2012). In Department of Labor Technical Release 2011-02, “[c]laimants must
be allowed to submit to the IRO additional information in writing that the IRO must consider when conducting the
external review . . .” See Katherine T. Vukadin, Hope or Hype?: Why the Affordable Care Act’s New External
Review Rules for Denied ERISA Healthcare Claims Need More Reform, 60 Buff. L. Rev. 1201 (2012).

11

“supplement to the administrative record” medical records from Boyd’s treatment at Three Rivers,
medical records from Boyd’s treatment at the Wilmington Treatment Center, medical records from
Boyd’s treatment at August West beginning July 13, 2010, medical records from Boyd’s treatment
at Narconon beginning July 23, 2010, and affidavits of Whitfield Boyd and Wayne Boyd.
The case was referred to Advanced Medical Reviews for the Independent External Review.
In a report dated January 28, 2013 and provided to the plaintiffs by letter dated February 6, 2013,
the denial decision was upheld. The report states that the dates of service were July 23, 2010
through December 18, 2010. It lists the medical records reviewed, including the following:
7. Admission medical evaluation by author illegible dated 7/13/2010, 8. Physician
orders by author illegible dated 7/13/2010, 9. Progress notes by author illegible
dated 7/13/2010-7/22/2010 multiple dates, 10. Discharge summary by Bernard J.
Gottschalk, MD dated 3/1/2008, 11. Integrated progress note by Tom Foushee, MA
dated 2/3/2008-2/29/2008 multiple dates, 12. Progress note by author illegible dated
2/2/2008-2/14/2008 multiple dates, 13. Physician orders by author illegible dated
2/2/2008-2/14/2008 multiple dates, 14. Continuing care/discharge summary by
author illegible dated 2/2/2008, 15. Nurse admission note by author illegible dated
2/2/2008, 16. Discharge summary by Phyllis Mobley, MD dated 6/27/2006, 17.
Physician’s orders by author illegible dated 6/14/2006-6/27/2006 multiple dates.
(UBH 0256)
The reviewer also indicated that he had considered a case referral form from UBH, letters
and faxes from Plaintiffs’ counsel, the letters of Ghosh and Gruber, the 2012 level of care
guidelines for U.S. behavioral health plan, the Benefits guide summary plan description, and the
Practice Guidelines for Treatment of Patients with Substance Use Disorders Second Edition dated
2010. The reviewer does not state in the list of medical records reviewed that he considered any
records from Narconon Vista Bay. However, the reviewer includes some information about
Narconon in the “Patient Clinical Information”:

12

The patient is a 25-year-old male who was admitted to residential rehabilitation
treatment for substance use disorders at Narconon Vista Bay from 7/23/2010
through 12/18/2010 with diagnosis of 304.00 Opioid Dependence. This was his
third episode of residential substance abuse rehabilitation treatment. He was
admitted to Three Rivers in 2006 and Wilmington Treatment Center in 2007. He
has never attended outpatient treatment. His substance abuse history began at age
14 and included alcohol, marijuana, cocaine, heroin, benzodiazepines, and
hallucinogens. He had two prior DUI arrests and was hospitalized in 2007
following an accidental drug overdose. His longest period of voluntary abstinence
was for approximately two months in 2007. His current drugs of choice at the
time of admission were Xanax and Suboxone. The amounts and duration were not
documented. His last drug use was between 7/12/2010 and 7/17/2010. Urine drug
screen was negative on 7/24/2010. He had no psychiatric history and no chronic
medical conditions. He was unemployed and living with his parents who were
sober and supportive. The patient was admitted to the residential program under
a “Standard Treatment Plan” consisting of four phases with a pre-determined length
of stay: Phase One (5 weeks), Phase Two (6 weeks), Phase Three (5 weeks), and
Phase Four (2 days to 1 week). He received drug and alcohol education, relapse
prevention management, healthy lifestyle modeling, life skills group, individual case
management, group sessions, and treatment planning. The medical record provided
contains a record of “documentation of services” but no progress notes or formal
treatment plan with updates. According to the discharge summary the patient did
well and was discharged to a program in Lake Tahoe (level of care not specified).
(UBH 0257)
The reviewer then found that the treatment failed to meet the UBH 2012 Level of Care
Guidelines for Residential Rehabilitation for Substance Use Disorders14 and the APA Best Practice
Guidelines for Treatment of Patients with Substance Use Disorders for the dates of service. He
found:
The patient is a 25-year-old male with a history of substance abuse since age 14
and no prior outpatient treatment experience. There were no complicating medical
or psychiatric comorbidities. His last drug use was at least one week prior to
admission. He was motivated and cooperative and had no known contraindication
to ambulatory care. The admission was not medically necessary. Consistent with

14

Again, the treatment was in 2010, but even the external reviewer did not use 2010 guidelines. It is
unclear if the external reviewer was sent the correct guidelines by UBH.

13

the recommendations of the APA Best Practice Guidelines. “Patients should be
treated in the least restrictive setting that is likely to be safe and effective.”.
(UBH 0257)
The reviewer then applied the 2012 guidelines:
Any ONE of the following criteria must be met
1. The member continues to use alcohol or drugs, and the member’s functioning has deteriorated
to the point that the member cannot be safely treated in a less restrictive level of care; or
-This criteria was not met. This was the patient’s third episode of residential substance abuse
rehabilitation treatment. He had never attended outpatient treatment. There was no history of
continued use of substances while in a less restrictive level of care.
2. The member continues to use alcohol or drugs, is at risk of exacerbating a serious cooccurring medical condition, and cannot be safely treated in a lower level of care; or
-This criterion was not met. The patient has no co-occurring medical conditions or complications.
3. There is a high risk of harm to self or others due to continued and severe alcohol or drug use
which prohibits treatment from safely occurring in a less restrictive level of care; or
-This criterion was not met. The patient was not suicidal, homicidal, or psychotic and had no
psychiatric history. There was no evidence of high risk of harm to self or others due to continued
substance abuse.
4. There is a high risk that continued use of alcohol or drugs will exacerbate a co-occurring
medical condition to the extent that treatment in a less restrictive level of care cannot be safely
provided; or
-This criteria was not met. The patient has no co-occurring medical conditions or complications.
5. There is a high risk of developing severe withdrawal symptoms which cannot be safely treated
in a lower level of care; or
-This criteria was not met. The patient had no history of withdrawal.
6. The member is experiencing withdrawal symptoms that do not compromise the member’s
medical status to the extent that treatment in an inpatient setting is indicated, but the symptoms
are of extreme subjective severity and the member lacks resources or a functional social support
system needed to manage the symptoms in a lower level of care.
-This criterion was not met. At the time of admission the patient was stable. There was no
history of continued use of substances while in a less restrictive level of care. The OptumHealth
2012 Level of Care Guidelines for Residential Rehabilitation for Substance Use Disorders were
not met. The Medical Expenses Not Covered” section of the Summary Plan Description (SPD)
states “Services and supplies which are not medically necessary, as determined by the claims
administrator” are “not covered under the medical benefits of this Healthcare Program”.
(UBH 0257)
The report indicates that a specialist in psychiatry served as the independent reviewer but
does not provide his or her name.

14

F. Plaintiffs File an Action in Federal Court.
Plaintiffs initiated this action on March 6, 2013 for failure to pay benefits under 29 U.S.C.
§ 1132(a)(1)(B) and for failure to provide requested information pursuant to 29 U.S.C. §§
1024(b)(4), 1132(a)(1)(A), and 1132(c).
During the litigation in this Court, the plaintiffs filed a motion for discovery on the basis
that the defendants had produced an incomplete administrative record. The Court allowed limited
discovery, including a request for production of claims management guidelines that were relied
upon in making the benefit determination or which constitute a statement of policy or guidance
regarding the plan, without regard to whether such advice or statement was relied upon in making
the benefit determination. The defendants initially responded to this request for production by
stating, “Included within the administrative record already produced.” (ECF No. 46-2, p. 3) The
defendants responded for a second time to the request for production in the same manner. (ECF
No. 46-2, p. 13) By a Third Supplemental Responses to Plaintiffs’ Request for Production, served
in September of 2014, defendants produced a UBH “Coverage Determination Guideline” entitled
“Residential Rehabilitation for Substance Use Disorders” dated August 2010. (ECF No. 46-4)
This document states: INSTRUCTIONS FOR USE.

This Coverage Determination Guideline

provides assistance in interpreting behavioral health benefit plans that are managed by United
Behavioral Health . . . When deciding coverage, the enrollee specific document must be
referenced.” The document also states as “Key Points” the following:
Diagnosed Substance Use Disorders may require residential rehabilitation.
Dependence Disorders according to the DSM, are characterized by a maladaptive
pattern of substance use, leading to clinically significant impairment or distress as
manifested by three or more of the following occurring at any time within the same
12-month period:
Increase in tolerance and/or diminished effect of substance
15

Symptoms of withdrawal
Increases in amount of use
A desire and failure to control substance use
Spending a great deal of time in substance related activities
Important social, interpersonal and occupational activities are neglected and
A known physical or mental condition has worsened with the continued use of
substances.
United Behavioral Health maintains that the treatment of Substance Use Disorders in a
residential setting should be consistent with nationally recognized scientific evidence as
available, and prevailing medical standards and clinical guidelines.
Patients with Substance Use Disorders should be treated in a level of care that is most
likely to prove safe and effective. Choice of residential rehabilitation is driven by the
dominance of substance use in the patient’s daily life and by the absence of a support
system and a safe substance-free environment. The following should also be considered:
A history of continued and severe substance use despite appropriate motivation and
recent treatment in an intensive outpatient or partial hospital program.
Risk of harm to self or others and/or pervasive impairment in functioning due to
continued and severe substance use which prohibits treatment from occurring safely
in a less restrictive environment.
The risk of exacerbation of serious concomitant medical conditions due to
continued substance use, which prohibits treatment from occurring safely at a lower
level of care and requires 24-hour monitoring.
Risk of withdrawal symptoms, which cannot be safely managed without requiring
24-hour monitoring.
Withdrawal symptoms that do not compromise the patient’s medical status, but are
of extreme subjective severity accompanied by the lack of resources or functional
social supports to manage the symptoms.
The record contains no indication that this 2010 guideline was ever used in any
assessment by any of the reviewers, even though it appears to be relevant.
II. Plaintiffs’ Claim for Benefits
Plaintiffs’ argument is twofold. First, they argue that, while the scope of review in this
case would normally be “abuse of discretion”, instead it should be de novo as a result of
numerous instances of alleged noncompliance with ERISA’s procedural and substantive
requirements. Secondly, Plaintiffs assert that regardless of whether the claims administrator’s

16

decision is reviewed de novo or using the abuse of discretion standard, they would be entitled to
benefits.
A. Scope of Review
Where an ERISA plan confers upon its administrator discretionary authority in the exercise
of its power, the administrator’s denial of benefits is reviewed under an abuse-of-discretion
standard. Booth v. Wal-Mart Stores, Inc. Assocs. Health & Welfare Plan, 201 F.3d 335, 341 (4th
Cir. 2000). Such a discretionary decision “will not be disturbed if reasonable, even if the court
itself would have reached a different conclusion.” Id. (citing Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 111 (1989)). The administrator’s decision is reasonable “if it is the result
of a deliberate, principled reasoning process and if it is supported by substantial evidence,”
Bernstein v. CapitalCare, Inc., 70 F.3d 783, 787 (4th Cir. 1995), which is “evidence which a
reasoning mind would accept as sufficient to support a particular conclusion.” English v. Shalala,
10 F.3d 1080, 1084 (4th Cir. 1993) (citation omitted). In weighing the reasonableness of the plan
administrator’s determination, the Court may consider, but is not limited to, the following factors:
(1) the language of the Plan; (2) the purposes and goals of the Plan;
(3) the adequacy of the materials considered to make the decision
and the degree to which they support it; (4) whether the fiduciary’s
interpretation was consistent with other provisions in the Plan and
with earlier interpretations of the Plan; (5) whether the
decisionmaking process was reasoned and principled; (6) whether the
decision was consistent with the procedural and substantive
requirements of ERISA; (7) any external standard relevant to the
exercise of discretion; and (8) the fiduciary’s motives and any
conflict of interest.

Booth, 201 F.3d at 342-43; Champion v. Black & Decker (U.S.) Inc., 550 F.3d 353, 359 (4th
Cir. 2008); Williams v. Metropolitan Life Ins. Co., 609 F.3d 622, 630 (4th Cir. 2010).

17

As to the claim for benefits, the court must apply an abuse of discretion standard.
The Plan documents confer on Sysco discretion to interpret the plan.

“The Plan

Administrator has the sole, full and exclusive responsibility and discretionary authority to control and
manage the operation and administration of the Plan (except to the extent the Claims or Appeals
Administrator has such discretionary authority) and to interpret and construe the Plan and any disputed
or doubtful terms . . .”

(UBH 0884-885) The Plan Administrator may delegate its duties and

discretionary authority to a third party Claims Administrator.15

The plaintiffs argue that numerous alleged violations of ERISA procedural requirements
require that the Court engage in a de novo review. Plaintiffs cite Abatie v. Alta Health & Life
Insurance Co., 458 F.3d 955, 970 (9th Cir. 2006) (“Because an administrator cannot contract
around the procedural requirements of ERISA, decisions taken in wholesale violation of ERISA
procedures do not fall within an administrator’s discretionary authority.) and Rasenack ex rel.
Tribolet v. AIG Life Ins. Co., 585 F.3d 1311, 1317 (10th Cir. 2009), citing Finley v. HewlettPackard Co. Employee Benefits Org. Income Prot. Plan, 379 F.3d 1168, 1173-74 (10th Cir. 2004)
(Benefits determination reviewed de novo where the final determination was made in violation of
timing requirements. However, “a plan administrator is in substantial compliance with a deadline
if the delay is: ‘(1) inconsequential; and (2) in the context of an on-going, good-faith exchange
of information between the administrator and the claimant.’”). Plaintiffs assert that Defendants
violated ERISA’s procedural requirements by (1) taking fifteen months to decide the claim; (2)
ignoring the request for relevant materials in the claims file, depriving Plaintiffs of the opportunity

15

The Plan defines the term “Claims Administrator” with respect to benefits provided on a self-insured basis
as “the person or entity providing claims processing, payment, and other administrative services to the Plan”. (UBH
0875)

18

to address them; (3) failing to keep a reliable administrative record and omitting key documents
from that record; (4) issuing benefits decisions that failed to list or cite any medical records on
which they were based, failed to cite the plan provision on which they are based, failed to
consider the key documents in the record, and were otherwise incomprehensible.
Defendants assert that the remedy provided by the regulations for any failure to establish
or follow claims procedures required by ERISA is to excuse a claimant’s failure to exhaust
administrative remedies, citing 29 C.F.R. § 2560.503-1(l). They further assert that “the typical
remedy when a fiduciary is found to have committed serious procedural irregularities that do not
demonstrate substantial compliance with the ERISA guidelines is to remand the claim to the plan
administrator for a full and fair review under the correct procedures, rather than to heighten the
standard of review.” Arnold ex rel. Hill v. Hartford Life Ins. Co., 527 F.Supp.2d 495 n. 4 (W.D.
Va. 2007), citing Berry v. Ciba-Geigy Corp., 761 F.2d 1003, n. 4 (4th Cir. 1985) and Wertheim
v. Hartford Life Ins. Co., 268 F.Supp.2d 643, 664 (E.D.Va. 2003) (Remand may cause delay, but
it “fosters the strong policy favoring the internal administrative resolution of ERISA claims and
ensures that plaintiff receives all of the procedural protections to which he is entitled under the
regulations.”) The Court agrees with the defendants that the effect of any procedural irregularities
would be to excuse a failure by a claimant to exhaust administrative remedies and possibly to
remand the case, rather than to change the standard of review by this Court of the plan
administrator’s decision. Therefore, the Court finds that an abuse of discretion standard would
apply to a review of the matter on its merits. However, due to the Court’s concern regarding
irregularities in the administrative review process by the claims administrator, UBH, the Court
remands the matter as further explained below.

19

B. Were the denials inconsistent with the procedural and substantive requirements of
ERISA?
Fiduciaries’ noncompliance with ERISA’s “procedural and substantive requirements” is one
of the factors listed in Booth indicating an abuse of discretion. 201 F.3d at 342-43. Even where
the overall standard of review is abuse of discretion, whether a benefits denial letter complied
with the applicable ERISA regulations “is a question of law, and therefore, subject to de novo
review." Brogan v. Holland, 105 F.3d 158, 165 (4th Cir. 1997). However, as long as there is
“substantial compliance” with the ERISA regulations, a procedural defect will not invalidate a plan
administrator’s decision. Id.
Were the Denials Communicated in a Timely Manner?
The Court will first discuss Plaintiffs’ assertion that UBH failed to inform them of its coverage
decision within the time frame required by ERISA. The required time frame for notification of a
benefits decision by group health plans is set out in 29 C.F.R. § 2560.503-1(f)(2)(iii).16 For “preservice claims”, the plan administrator must notify the claimant of its benefits decision “within a
reasonable period of time appropriate to the medical circumstances, but not later than 15 days after
receipt of the claim by the plan.” Id. at subsection (A). This period may be extended under certain
circumstances by an additional fifteen days. “If such an extension is necessary due to a failure of the
claimant to submit the information necessary to decide the claim, the notice of extension shall
specifically describe the required information, and the claimant shall be afforded at least 45 days from

16

Plaintiffs contend that the applicable regulation is 29 C.F.R. § 2560.503-1(f)(2)(i) for urgent care claims,
for which the plan requires a shorter turnaround for claims processing. The Court disagrees. The Summary Plan
Description defines an “urgent care claim” as “any pre-service claim or concurrent care decision (described below)
that must be reviewed quickly in order to avoid jeopardizing your life, health, or ability to regain maximum function
or would, in the opinion of a physician with knowledge of your medical condition, subject you to severe pain that
cannot be adequately managed without the care or treatment that is the subject of the claim. An example of this type
of claim would be a request for prior approval of a diagnostic test for appendicitis.” (UBH 0131-0132)

20

receipt of the notice within which to provide the specified information.”

Id.

For “post-service

claims”, the administrator is allowed 30 days after receipt of the claim to notify the claimant of a
decision. Section 2560.503-1(f)(2)(iii)(B). The period may be extended under some circumstances for
an additional 15 days, and if the extension is necessary due to the failure of the claimant to furnish
information then the notice shall specifically describe the information and the claimant shall be given
at least 45 days after receipt of the notice to provide specified information.
Defendants contend that, even if Wayne Boyd did call UBH on July 14, 2010 as he stated in
his affidavit, Plaintiffs’ claim was a post-service claim regarding Boyd’s admission to August West
and that an authorization to enter Narconon could only have been given after he successfully
completed detox at August West. They contend that the first call from Wayne Boyd that related to the
Narconon stay was on October 7, 2010, after Boyd began his stay there on July 23, 2010. Defendants
also assert that the time to notify a claimant about a post-service denial does not begin to run until
after the denying party receives a written claim. See 29 C.F.R. 2560.503-1(f)(2)(iii). Here, Defendants
assert that Narconon first notified UBH in writing about the claim on January 24, 2011, when it
submitted a barebones invoice. (UBH 303–04.) They further contend that UBH issued an explanation
of benefits requesting additional information from Narconon on March 22, 2011 (UBH 303–04) and
that when Narconon provided records on June 24, 2011, they were incomplete. (UBH 317, 534–598.)
Finally, they assert that Narconon submitted additional records on September 29, 2011 (UBH 318,
328–533), and once it had sufficient information to consider the claim UBH issued an explanation of
benefits of the claim as not medically necessary on October 12, 2011. (UBH 305–06)
The Court finds based on the affidavit of Wayne Boyd that he called UBH on July 14, 2010
and made a pre-service claim for the anticipated treatment at Narconon. Although the UBH internal
case notes do not contain any notation concerning the call, the plaintiff has asserted that a “telephone

21

communication . . . did not appear to be documented in the record, as well as other internal
communications among persons considering the claim that were absent (from the administrative record)
but that would typically be found in the record.” (Jt. Cert., ECF No. 48, p, 2)

The Court cannot

rely on the absence of a notation in the UBH notes to find that Wayne Boyd did not make the July
telephone call. However, the record also reflects that Narconon apparently did not send complete
information concerning the claim to UBH until September of 2011. Therefore, the Court cannot find
that the claims administrator did not process the claim on time.
Did Defendants repeatedly lose documents and fail to properly compile the administrative record?
Plaintiffs contend that both during the administrative phase and during the litigation, Defendants
have “shown little grasp that a Plan even existed, or whether the administrative record was complete.”
(Pl. Memor., ECF No. 46, p. 18) The record does support the plaintiffs’ allegations to some extent.
For example, the denial and appeal letters did not reference a plan provision17, and Plaintiffs’ counsel
objected during this litigation that the administrative record did not contain the governing plan
document. See affidavit of Blancey Coskrey submitted in support of Plaintiffs’ Motion for Discovery,
ECF No. 15-2. Defendants then added the plan document to the administrative record. Plaintiffs’
counsel also objected during the litigation in this Court to the omission from the administrative record
of the November 19, 2012 letter to UBH from Plaintiffs’ counsel and the Wayne Boyd affidavit, a
January 14, 2013 letter from the outside reviewer to Boyd, the letter of January 18, 2014 from
Plaintiffs’ counsel to the reviewer, and an enclosure to the second denial letter dated May 23, 2012.
Plaintiffs also object to the inclusion in the record of the APA document relied upon by Dr. Ghosh.

17

The failure of Dr. Ghosh and Dr. Gruber to reference any provision of the Plan is discussed hereinbelow.

22

Defendants indicate that they did not have all of the letters between Plaintiffs’ counsel and the
external reviewer but agreed to add them to the record. Defendants also contend that the plaintiffs’
criticisms are not relevant because they relate to matters that occurred after the internal denial and
review had taken place. The defendants apparently did not have all of the letters between Plaintiffs’
counsel and the external reviewer. However, the Court is troubled by the failure of the administrative
record assembled by the defendants to contain the Plan document or the letter requesting the external
review with attachments. This would seem to indicate that the internal reviewers may not have had
the plan document, which they had the duty to interpret. The over-all sloppiness in assembling the
record would not seem to be the fault of their legal counsel, who simply rely on the administrator to
provide them with the record. Therefore, the Court finds that the plaintiffs’ complaints about the
omissions from the administrative record are well-founded and weigh in favor of a finding that they
were denied a full and fair review. The Court finds that the APA standards were properly included
in the record because a link to those standards was provided in the letter of Dr. Ghosh.
Failure of UBH to Respond to Plaintiffs’ Request for the Documents Underlying its Decision
In the November 2012 letter requesting an external review, Plaintiffs’ counsel also requested
“a full copy of the administrative record . . . (The request) includes all documentation or other
information in the possession of the company relevant to the claim, including specifically any
information that was not used, not considered, or rejected.” (UBH 0906) It is uncontroverted that
Defendants never complied with this request. ERISA requires plans to maintain reasonable claims
procedures. Included in this duty is providing claimants with a reasonable opportunity for a full and
fair review. 29 U.S.C. § 1133. In providing the opportunity for a full and fair review, the procedures
must “[p]rovide that a claimant shall be provided, upon request and free of charge, reasonable access

23

to, and copies of, all documents, records, and other information relevant to the claimant’s claim for
benefits.” 29 C.F.R. § 2560.503-1(h)(2)(iii).
A document, record, or other information shall be considered “relevant” to a claimant’s
claim if such document, record, or other information
(i) Was relied upon in making the benefit determination;
(ii) Was submitted, considered, or generated in the course of making the benefit
determination, without regard to whether such document, record, or other information
was relied upon in making the benefit determination;
(iii) Demonstrates compliance with the administrative processes and safeguards required
pursuant to paragraph (b)(5) of this section in making the benefit determination; or
(iv) In the case of a group health plan or a plan providing disability benefits,
constitutes a statement of policy or guidance with respect to the plan concerning
the denied treatment option or benefit for the claimant’s diagnosis, without regard
to whether such advice or statement was relied upon in making the benefit
determination.
Id. at (m)(8)(emphasis added).

Defendants contend that the right to request documents refers only to the time frame after
the initial denial but before the internal review and that Plaintiffs did not request the documents
until after the internal review had occurred. (ECF No. 51, p. 13) Defendants do not cite any case
law in support of this argument. The Tenth Circuit addressed related issues in Metzger v. UNUM
Life Ins. Co., 476 F.3d 1161, 1166-68 (10th Cir. 2007). It found that “the regulations mandate
provision of relevant documents, including medical opinion reports, at two discrete stages of the
administrative process. First, relevant documents generated or relied upon during the initial claims
determination must be disclosed prior to or at the outset of an administrative appeal. See 29
C.F.R. § 2560.503-1(h)(2)(iii). Second, relevant documents generated during the administrative
appeal–along with the claimant’s file from the initial determination–must be disclosed after a final
decision on appeal. See 29 C.F.R. § 2560.503-1(i)(5).” The Tenth Circuit cited the Department
of Labor’s description of the amendments of 2000 which included subsection (m)(8) as follows:
(The Department) believes that this specification of the scope of the required
24

disclosure of “relevant” documents will serve the interests of both claimants and
plans by providing clarity as to plans’ disclosure obligations, while providing
claimants with adequate access to the information necessary to determine whether
to pursue further appeal. ERISA Claims Procedure, 65 Fed. Reg. 70,246, 70,252
(Nov. 21, 2000) (emphasis added by Tenth Circuit)
See also, Skipp v. Hartford Life Ins. Co., No. CCB-06-2199, 2008 WL 346107 at *10 (D.
Md. Feb. 6, 2008) This is consistent with the Fourth Circuit’s observation in Ellis v. Metropolitan
Life Ins. Co., 126 F.3d 228, 235 (4th Cir. 1997) (internal citations omitted)(emphasis added):
Both the specific minimum procedural review requirements of subsection (g)(1) and
the notice requirements of the decision on review of subsection (h)(3) have been
read as ensuring that a full and fair review is conducted by the administrator, that
a claimant is enabled to prepare an appeal for further administrative review
or recourse to the federal courts, and that the courts can perform the task,
entrusted to them by ERISA, of reviewing a claim denial. Compliance that
substantially fulfills these goals suffices.
In the absence of definitive Fourth Circuit guidance, this Court finds the reasoning of the
Tenth Circuit to be persuasive. In addition to requiring an administrator to provide documents
to the claimant upon request after the denial of benefits, documents must also be provided upon
request after the internal plan appeal, so that the claimant can fully evaluate the advisability of
requesting an external review or appealing to federal court. Here, the claimant’s counsel requested
the full administrative record after the conclusion of the internal appeal and before the independent
external review occurred, and the administrator ignored the request. This would support a finding
that the administrator failed to comply with the procedural requirements of ERISA.
Did the Denial Letter Fail to Comply with ERISA Requirements?
ERISA requires a claims administrator to provide in its denial letter the “specific reasons”
for the denial of benefits and to afford the claimant a reasonable opportunity for a “full and fair

25

review”.

29 U.S.C. § 1133.

The corresponding regulation sets forth what the notice must

contain:
The notification shall set forth, in a manner calculated to be understood by the
claimant-(i) The specific reason or reasons for the adverse determination;
(ii) Reference to the specific plan provisions on which the determination is based;
(iii) A description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary;
(iv) A description of the plan’s review procedures and the time limits applicable
to such procedures, including a statement of the claimant’s right to bring a civil
action under section 502(a) of the Act following an adverse benefit determination
on review;
(v) In the case of an adverse benefit determination by a group health plan or a plan
providing disability benefits,
(A) If an internal rule, guideline, protocol, or other similar criterion was
relied upon in making the adverse determination, either the specific rule,
guideline, protocol, or other similar criterion; or a statement that such a
rule, guideline, protocol, or other similar criterion was relied upon in
making the adverse determination and that a copy of such rule, guideline,
protocol, or other criterion will be provided free of charge to the claimant
upon request; or
(B) If the adverse benefit determination is based on a medical necessity or
experimental treatment or similar exclusion or limit, either an explanation of the
scientific or clinical judgment for the determination, applying the terms of the plan
to the claimant’s medical circumstances, or a statement that such explanation will
be provided free of charge upon request.
29 C.F.R. § 2560.503-1(g)(1).
“Several circuit courts of appeal, including our own, have warned plan administrators to
provide ‘specific reasons,’ rather than question-begging conclusions, to support their decisions.”
O’Dell v. Zurich American Ins. Co., No. 2:13-12894, 2015 WL 5724376 at * 25 (S.D.W.Va.
September 29, 2015), citing Weaver v. Phoenix Home Life Mut. Ins. Co., 990 F.2d 154, 158 (4th
Cir. 1993) (emphasis in original), and Sellers v. Zurich Am. Ins. Co., 615 F. Supp.2d 816, 821-22
(E.D. Wisc. 2009) (A “bare unsupported conclusion” that did not “explain how [the plan

26

administrators] reached the[ir]conclusion” did not meet ERISA’s requirements). See Weaver v.
Phoenix Home Life Mut. Ins. Co., 990 F.2d 154 (4th Cir. 1993) (reason given by Plan was a
conclusion).
Here, both UBH letters failed to even refer to any specific plan terms on which the denial
was based and failed to give specific reasons for the denial, much less even reference the 2010
guidelines. Defendants assert that the 2010 and 2011 guidelines were substantially similar. While
this is good argument by counsel, there is nothing in the record by any reviewer making this
statement or conclusion, and the Court should not be forced to speculate and attempt to compare
2011 and 2012 guidelines to the 2010 guidelines. No one has submitted any plan language that
allows the substitution of one year’s standard for another. The internal reviewers also failed to
provide the types of information needed to establish eligibility.
Defendants assert that both decisions by UBH specifically discuss concepts included in the
medical necessity definition and level of care guidelines. Dr. Ghosh found the Narconon treatment
model did not meet the UBH Level of Care Guidelines, as he characterized the program as educational
and referred to detoxification being accomplished by the use of nutritional supplements and saunas.
Dr. Gruber based his decision on the fact that Boyd did not need to be treated at the higher residential
level of care, finding instead that services could safely have been provided at a lower level of care.
However neither reviewer states a specific basis for the denial, indicates what medical records were
reviewed, or applies the guidelines to any medical evidence. They also do not reference any plan
provision. Instead of focusing on Dr. Ghosh’s rationale that the treatment model failed to meet the
UBH guidelines, Dr. Gruber found that Boyd did not need the residential level of care and could have
utilized outpatient treatment. Defendants argue this is consistent with the SPD, which discusses levels
of care for mental health services. (UBH 171; see also UBH 115 (requiring that for treatment to be

27

medically necessary it must be appropriate for the diagnosis, care, or treatment of the disease
involved).) However, neither Ghosh nor Gruber mentioned the SPD at all.

This Court cannot

consider new arguments made in this Court to support the denial of benefits. In fact, the Court’s
review “is limited to the reason stated in the denial notice.” Schindler v. Unum Life Ins. Co., No.
3:12-cv-00293-JFA, 2013 WL 4499146 at * 24 (D.S.C. August 19, 2013), citing Thompson, 30
F. App’x at 164 and Hall v. Metropolitan Life Ins. Co., 259 F. App’x 589, 593 (4th Cir. 2007).
The safeguards in 29 U.S.C. § 1133 and the implementing regulations “have been
read as ensuring that a full and fair review is conducted by the administrator, that
a claimant is enabled to prepare an appeal for further administrative review or
recourse to the federal courts, and that the courts can ... review[ ] a claim denial.”
Ellis18, 126 F.3d at 236–37 (emphasis added). For that reason, this court has
previously held, albeit in an unpublished opinion, that 29 U.S.C. § 1133 and 29
C.F.R. § 2560.503–1 require that judicial review be “limited to whether the
rationale set forth in the initial denial notice is reasonable.” Thompson v. Life Ins.
Co. of N. Am., 30 Fed.Appx. 160, 164 (4th Cir.2002) (unpublished) (emphasis
added); see also Robinson v. Aetna Life Ins. Co., 443 F.3d 389, 393 (5th Cir.2006)
(holding that under § 1133 the administrative review must focus on the specific
reason for the administrator's decision cited in the initial denial notice); Abatie v.
Alta Health & Life Ins. Co., 458 F.3d 955, 974 (9th Cir.2006) (“[A]n administrator
that adds, in its final decision, a new reason for denial, a maneuver that has the
effect of insulating the rationale from review, contravenes the purpose of ERISA.”);
McCarthy v. Nat'l City Corp., 419 F.3d 437, 446 (6th Cir.2005) (holding that an
administrator was not in substantial compliance with § 1133 where the initial denial
notice omitted one of the grounds later relied on for the denial of benefits); Abram
v. Cargill, Inc., 395 F.3d 882, 886 (8th Cir.2005) (noting that ERISA's procedural
requirements are intended to generate a “meaningful dialogue” between claim
administrators and beneficiaries and to avoid beneficiaries being “sandbagged by
post-hoc justifications of plan decisions”) (internal quotations omitted); Juliano v.
Health Maint. Org. of N. J., Inc., 221 F.3d 279, 287 (2d Cir.2000) (same).
Id.

The Supreme Court has held that ERISA “sets forth a special standard of care upon a plan
administrator, namely, that the administrator discharge [its] duties in respect to discretionary claims

18

Ellis v. Metropolitan Life Ins. Co., 126 F.3d 228 (4th Cir. 1997).

28

processing solely in the interests of the participants and beneficiaries of the plan; it simultaneously
underscores the particular importance of accurate claims processing by insisting that administrators
provide a full and fair review of claim denials, and it supplements marketplace and regulatory
controls with judicial review of individual claim denials.” Metropolitan Life Ins. Co. v. Glenn,
554 U.S. 105, 115 (2008) (internal citations and quotations omitted). The Fourth Circuit has
described the procedural framework of ERISA as follows:
In enacting ERISA, Congress established procedural safeguards to ensure that
fiduciaries would administer employee benefit plans solely in the interest of the
participants and beneficiaries. Fiduciaries must provide full and fair reviews of
claims for benefits. Plan administrators are required to state the reason(s) for a
denial and provide the specific plan provision(s) that formed the basis of the
decision. Fiduciaries must notify claimants of their decisions in writing and in
language likely to be understood by one of ordinary intelligence. The decision
must be objectively reasonable and based on substantial evidence.
These procedural safeguards are at the foundation of ERISA. Fiduciary compliance
is essential to upholding the administrative integrity of this statutory scheme. For
these reasons, courts generally find abuse of discretion where a fiduciary neglects
his responsibilities.
Thompson v. Life Ins. Co. of North America, 30 F. App’x 160, 163 (4th Cir. 2002) (internal
quotations and citations omitted).
The Fourth Circuit has further explained that “[n]ot all procedural defects will invalidate
a plan administrator’s decision if there is ‘substantial compliance’ with the regulation.

To

substantially comply with the regulation, the Trustees must have supplied the beneficiary ‘with
a statement of reasons that, under the circumstances of the case, permitted a sufficiently clear
understanding of the administrator’s position to permit effective review.’” Brogan v. Holland, 105
F.3d 158 at 165 (4th Cir. 1997).

29

Here, the Court finds that the administrative denial by Dr. Ghosh dated October 18, 2011
failed to substantially comply with the ERISA regulation. First, it does not reference any plan
provision and states that no diagnosis or diagnosis code was available. Ghosh applied the 2011
UBH guidelines to the claim instead of the 2010 guidelines which were in effect at the time the
claim was filed. Dr. Ghosh did not apply the guidelines to the medical record or even indicate
which medical records were reviewed.

The review by Dr. Gruber suffered from similar

deficiencies and also denied the claim on different grounds from Dr. Ghosh.19 If the reviewer on
the internal appeal denies the claim on different grounds from the initial denial, then regulations
and case law require that the Plan afford the claimant another internal appeal, which did not
occur. Therefore, the Court finds that the failure by the claims administrator to comply with the
ERISA regulatory requirements regarding the contents of the denial notice and the insertion of a
new ground for denial by Dr. Gruber militates in favor of a remand of the case back to the claims
administrator to begin the review process anew and comply with ERISA.
In considering the above failures by UBH to comply with the requirements of ERISA, the
Court finds that it must remand this matter to the claims administrator for a “full and fair review”.
C. Did the defendants fail to consider many medical records and the affidavits of the Boyds?
Plan administrators are fiduciaries. As part of the fiduciary duty to beneficiaries, ERISA
“requires a balance between ‘the obligation to guard the assets of the trust from improper claims,
as well as the obligation to pay legitimate claims.’ Harrison v. Wells Fargo Bank, N.A., 773 F.3d

19

The plaintiff focuses much discussion concerning the alleged failure by the external reviewer to satisfy
the requirements of the regulation. However, this Court is not reviewing the IRO’s decision. The IRO is not vested
with discretion to interpret the plan and is not an entity regulated by ERISA. Therefore, the Court will not review
the IRO decision or consider the rationale of the decision or the medical evidence recited by it.

30

15, 20-21 (4th Cir. 2014).

“While the primary responsibility for providing medical proof of

disability undoubtedly rests with the claimant, a plan administrator cannot be willfully blind to
medical information that may confirm the beneficiary’s theory of disability where there is no
evidence in the record to refute that theory. ERISA does not envision that the claims process will
mirror an adversarial proceeding where ‘the [claimant] bear[s] little or no responsibility to seek
clarification when the evidence suggests the possibility of a legitimate claim.’ Rather, the law
anticipates, where necessary, some back and forth between administrator and beneficiary.” Id. at
21 (internal citations omitted).
An administrator must use a “deliberate, principled reasoning process and . . . support its
decision with substantial evidence. A complete record is necessary to make a reasoned decision,
which must ‘rest on good evidence and sound reasoning; and . . . result from a fair and searching
process. A searching process does not permit a plan administrator to shut his eyes to the most
evident and accessible sources of information that might support a successful claim.” Id. (internal
citations omitted) The Fourth Circuit emphasized, however, that it adopted a “narrow principle”
and that the decision did not “undercut claimant’s responsibility to provide medical information
nor impose a duty on plan administrators to fish for medical information on the mere possibility
that it may be helpful in some remote way.” Id. at 24-25.
Plaintiffs assert that Defendants failed to consider the August West medical records between
July 13 and 23 for Boyd’s medically supervised drug withdrawal. They also assert that the IRO
erroneously failed to consider the affidavits of Boyd and his father. First, as already noted, this
Court is not reviewing the decision by the IRO. Therefore, as it is clear that the plaintiffs’
affidavits were submitted for the first time to the IRO and were not submitted to Drs. Ghosh and

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Gruber, the plaintiff can show no error relating to the failure of UBH to consider the affidavits.
Regarding the August West records, it is not clear when they were submitted for the first time,
as Ghosh and Gruber do not mention them. As already noted, they do not list any medical records
that were reviewed. In order to evaluate whether the treatment met the internal guidelines20, the
internal reviewers should have listed the medical records reviewed and requested information from
the plaintiffs concerning Boyd’s previous detox treatment at August West.
Plaintiffs also assert that UBH failed to consider an internal guideline that Defendants
failed to disclose to the plaintiffs until responding to discovery during this lawsuit.

This

document is entitled “Residential Use Determination for Substance Abuse Disorders” and is
attached as Exhibit D to the Plaintiff’s Memorandum in Support of Judgment. (ECF No. 46-4, pp.
7-22) Defendants contend this is an educational document that was not included in the
administrative record because it was not relied upon. Defendants contend that the document
educates reviewers about residential treatment and guides them in applying the Level of Care
Guidelines. They cite the document as follows: “When the requested residential rehabilitation
service or procedure is limited or excluded from the enrollee’s benefit document, or is otherwise
defined differently, it is the terms of the enrollee’s benefit document that prevails.” (Exhibit D
to Pls.’ Br. At 4) Defendants further contend that the document makes clear that treatment at

20

For example, one of the criteria listed in the level of care guidelines is “[r]isk of withdrawal symptoms,
which cannot be safely managed without requiring 24-hour monitoring.” (2010 Guidelines, p. 1, UBH 0235) Also,
although the defendants now assert that the remaining requirements of the guideline were not met such as an
evaluation by a psychiatrist/addictionologist, a treatment plan, and a discharge plan, there has been no evaluation of
such by the claims administrator. The record does indicate that “[u]pon admittance the client received an immediate
medical exam and psychosocial assessment in our drug withdrawal facility . . .” (Letter of Narconon Vista Bay dated
Dec. 31, 2010, p. 1, UBH 0539) The Narconon letter also references supervision by “the medical director &
residential RN”; “[t]he client’s strong subjective drive to use the substance in larger amounts and over a long period
despite its negative effects such as physical deterioration from persistent use such as skin changes, liver and cognitive
damage & depression.” Id. The letter also refers to “Treatment Goals” and “Treatment Plan”. Id., p. 2.

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Narconon would fall outside the scope of coverage because the document specifically excludes
services that in the reasonable judgment of UBH is “not consistent with generally accepted
standards of medical practice . . . , not consistent with services backed by credible research . .
. , and is not consistent with United Behavioral Health’s level of care guidelines . . .” The
document lists the following services as being inappropriate for the treatment of substance use
disorders:

“A mis-match between the severity of symptoms and the choice of residential

rehabilitation . . . The patient’s co-occurring symptoms have stabilized and the substance use
disorder can likely be managed in a less restrictive level of care.” Id. at 12-13.
In reviewing the document, the Court observes that it has a “Guideline Number” and was
approved in August of 2010. The guideline’s “Key Points” regarding residential rehabilitation
states that the DSM would find Dependence Disorders “as manifested by three or more of the
following occurring at any time within the same 12-month period: Increase in tolerance and/or
diminished effect of substance, symptoms of withdrawal, increases in amount of use; a desire and
failure to control substance use, spending a great deal of time in substance related activities,
important social, interpersonal and occupational activities are neglected and a known physical or
mental condition has worsened with the continued use of substances.” It also provides other
factors that arguably would be present with Boyd. This internal “educational” document for
reviewers was never disclosed to Plaintiffs’ counsel until during this litigation and was not even
mentioned by Ghosh or Gruber. Nor do Ghosh and Gruber mention the UBH 2010 guideline
document. UBH should have disclosed this internal guideline to Plaintiff’s counsel upon his
request made in November of 2012. See 29 C.F.R. § 2560.503-1(h)(2)(iii), discussed above.
“Thus, a participant who is denied access to internal guidelines that relate to her unsuccessful

33

claim for benefits may be able to show that she was denied full and fair review of the denial by
the claims administrator.” Mondry v. American Family Mut. Ins. Co., 557 F.3d 781, 798 (4th Cir.
2009). Here, the request for information regarding the claim was not made until after the internal
appeal had been completed and counsel appeared for the plaintiffs.

However, as discussed

hereinabove, the rationale behind the regulation applies, not only to the time immediately after
the initial denial but also to the time after the internal appeal. The claims administrator should,
in this Court’s opinion, consider all internal guidelines, not just the ones less favorable to the
claimant.21 See Doe v. Travelers Ins. Co., 167 F.3d 53 at 60 (1st Cir. 1999) ( The court found
that failing to provide the claimant with a copy of mental health guidelines did not violate 29
U.S.C. § 1132(c) but that “[t]his does not mean that the failure to provide ‘a full and fair review’
required by the regulations is without consequences or that no ‘pertinent document’ need ever be
produced for such review without a specific reference. The district court thought the denial of
Doe’s claim flawed by just such missteps in this case–an issue we have found it unnecessary to
reach.”) On remand, the claims administrator should consider the internal guideline that was
produced late and determine its applicability.
D. Does UBH have a history of biased claims administration?

21

An administrator’s internal guidelines for healthcare benefits should be added to the administrative record
when they are relevant to determining whether the administrator abused its discretion. Tebo v. Sedgwick Claims
Management Services, Inc., 848 F.Supp.2d 39, 48 (D. Mass. 2012). See Mullins v. AT&T Corp., 290 Fed. App’x 642
(4th Cir. 2008) (In connection with the claim, counsel requested the policy and all other plan documents and sought
discovery in district court of the claims-processing manual, protocols, or internal guidelines. The plaintiff argued that
“she could not demonstrate that the materials considered by Connecticut General were inadequate or challenge the
quality of its decisionmaking process without being able to see . . . the information and processes that Connecticut
General itself had determined were necessary for resolving disability claims.” The Fourth Circuit agreed and ordered
production to the plaintiff of “all claims-processing documents that are relevant to her claim for long-term disability
benefits, including those documents setting forth procedures”. The First Circuit has held that internal guidelines are
relevant where they have been authenticated, have been adopted by the administrator, concern the plan provisions in
question and the issues in the case, are used consistently, and “were known or should have been known by those who
made the decision to deny the claim.” Glista v. Unum Life Ins. Co. of America, 378 F.3d 113, 123 (1st Cir. 2004).

34

Plaintiffs cite an unpublished Ninth Circuit case, Lukas v. United Behavioral Health, 504
Fed. Appx 628 (9th Cir. 2013) in support of their argument that UBH has a history of biased
claims administration. A district court within this circuit has also found that UBH engaged in
“unprincipled and unreasonable claims review” regarding the level of care guidelines for inpatient
mental health treatment. L.B. ex rel. Brock v. United Behavioral Health, Inc., 47 F. Supp.2d 349,
n. 6 (W.D.N.C. 2014). See also, Allen G. V. United Behavioral Health, No. A-112-CA-335-SS,
2013 WL 10939274 (W.D. Tx. March 13, 2013) (case involving level of care guidelines for
mental health residential treatment where court found Plaintiffs were denied a full and fair
review). The Court finds that UBH appears to have failed in other cases to provide claimants with
a full and fair review, and this further supports this Court’s remand of the case to the claims
administrator.
III. Attorney’s Fees and Costs
Plaintiff has requested attorneys’ fees and costs pursuant to 29 U.S.C. § 1132(g). Section
1132(g) states in part that “[i]n any action under this subchapter . . . by a participant, beneficiary,
or fiduciary, the court in its discretion may allow a reasonable attorney’s fee and costs of action
to either party.” 29 U.S.C. § 1132(g)(1). The Fourth Circuit has adopted a five-factor test to guide
courts’ discretion in determining whether an attorneys’ fee award is warranted under ERISA. The
five factors are: (1) degree of opposing parties’ culpability or bad faith; (2) ability of opposing
parties to satisfy an award of attorneys’ fees; (3) whether an award of attorneys’ fees against the
opposing parties would deter other persons acting under similar circumstances; (4) whether the
parties requesting attorneys’ fees sought to benefit all participants and beneficiaries of an ERISA
plan or to resolve a significant legal question regarding ERISA itself; and (5) the relative merits

35

of the parties’ positions. Quesinberry v. Life Ins. Co. Of N. Am., 987 F.2d 1017, 1029 (4th Cir.
1993). The Court, in its discretion, is denying the request for attorney’s fees without prejudice
at this time to encourage and afford the parties an opportunity to mediate the case again.
Mediation should occur within sixty days of this order.
Conclusion
For the reasons stated above, the case will be remanded to the claims administrator to
consider the administrative record22 and the relevant plan provisions and internal guidelines for
the correct year and begin the review process anew. The plaintiffs’ request for attorney’s fees is
denied without prejudice to their right to request same after mediation if they cannot resolve the
case, and any renewed request should be filed within ten (10) days after mediation. The Court
has not made a decision as to any entitlement to attorney’s fees. To afford time to mediate, the
Court will stay the case for sixty (60) days. If the case is not resolved, then it will be remanded
in accordance with this order, and Plaintiffs’ counsel may file another request for attorney’s fees
for the Court to consider.
IT IS SO ORDERED.
Florence, SC
December 1, 2015

s/ R. Bryan Harwell
R. Bryan Harwell
United States District Judge

22

The claims administrator shall consider the entire administrative record before this Court, including the
affidavits and the medical records submitted by the plaintiff’s attorney to the plan at the time the external review was
requested. See Brodish v. Federal Express Corp., 384 F. Supp.2d 827, 834 (D. Md. 2005), citing Estate of Bratton
v. National Union Fire Inc. Co. of Pittsburgh, 215 F.3d 516, 521 n. 5 (5th Cir. 2000).

36