C. et al v. Valueoptions et al
MEMORANDUM DECISION AND ORDER granting Defendants' 21 Motion for Summary Judgment; and denying Plaintiffs' 22 Motion for Summary Judgment. The parties shall bear their own fees and costs. Signed by Judge Dale A. Kimball on 10/11/2017. (eat)
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
BRIAN C. and RHONDA C., individually
and as guardians of A.C.,
Case No. 1:16CV93DAK
CONOCOPHILLIPS MEDICAL AND
DENTAL ASSISTANCE PLAN,
Judge Dale A. Kimball
This matter is before the court on Plaintiffs’ appeal of Defendants ValueOptions and
ConocoPhillips Medical and Dental Assistance Plan’s denial of medical benefits under an
employee benefits plan governed by the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. §§ 1001 et seq. The parties filed cross motions for summary judgment.
On October 3, 2017, the court held a hearing on the motions. At the hearing, Plaintiffs were
represented by Brian S. King and Nediha Hadzikadunic, and Defendants were represented by
Belinda D. Jones, Henry I. Willett, and Erik A. Christiansen. The court took the matter under
advisement. Having fully considered the evidence in the administrative record and law relevant
to the motions, the court enters the following Memorandum Decision and Order.
Plaintiffs appeal Defendants’ denial of medical benefits for residential treatment for their
teenage daughter, A.C. A.C.’s family had health coverage under the ValueOptions and
ConocoPhillips Medical and Dental Assistance Plan (“The Plan”).
AC was diagnosed with Attention Deficit/Hyperactivity Disorder (“ADHD”) when she
was five years old and received Section 504 accommodation under the Rehabilitation Act of
1973. A.C. experienced anxiety and behavioral problems and continued treatment and therapy
throughout her elementary and middle school years. In eighth grade, A.C. began having truancy
issues at school and her therapists began managing her medication more closely.
In 2014, at the age of 16, A.C. was seeing a much older boy with whom she smoked
marijuana and had sex. In September 2014, Plaintiffs discovered A.C. in their home engaging in
such conduct. A.C. ran away from home and was missing for six days. In October 2014, A.C.’s
boyfriend brought her home and she informed her parents that she had been living in a drug
house. A.C. stated that she would commit suicide and her parents took her to the Memorial
Herman emergency room. A.C. was admitted to the West Oaks Psychiatric Hospital for seven
days of observation. On October 14, 2014, Plaintiffs placed A.C. in a wilderness program called
Second Nature Blueridge in Georgia. A.C. remained at Second Nature until December 24, 2014.
On December 29, 2014, five days after her release from Second Nature, Plaintiffs
admitted A.C. to Solstice Residential Treatment Center in Utah. A.C.’s intake assessment and
evaluation diagnosed her as having major depressive disorder, generalized anxiety disorder,
oppositional defiant disorder, combined-type ADHD, and parent-child relation problem.
However, Solstice did not believe that A.C. exhibited any symptoms in the “severe” category and
did not diagnose A.C. with any psychosis, medical physical conditions, or substance abuse
Shortly after A.C.’s admittance, Plaintiffs submitted a claim for coverage of A.C.’s
treatment at Solstice. Defendants reviewed the request for authorization for residential treatment
services for “medical necessity.” The Plan provides coverage for “medically necessary” services,
which are defined as services that are: (1) appropriate and required for the diagnosis or treatment
of the sickness, injury, or pregnancy; and (2) the least expensive and most appropriate diagnostic
or treatment alternative.
The Plan’s clinical criteria for admission to residential treatment requires the following
six criteria to be met for admission:
1. The child/adolescent demonstrates symptomatology consistent with a DSMIV-TR (or most current DSM), (Axes I-IV) diagnosis which requires, and can be
reasonably be expected to respond to, therapeutic intervention.
2. The child/adolescent is experiencing emotional or behavioral problems in the
home, community and/or treatment setting and is not sufficiently stable either
emotionally or behaviorally, to be treated outside of a highly structured 24-hour
3. The child/adolescent demonstrates a capacity to respond favorably to
rehabilitative counseling and training in areas such as problem solving, life skills
development, and medication compliance training.
4. The child/adolescent has a history of multiple hospitalizations or other
treatment episodes at other levels of care and/or recent inpatient stays with a
history of poor treatment adherence or outcomes.
5. Less restrictive or intensive levels of treatment have been tried and were
unsuccessful, or are not appropriate to meet the individual’s needs.
6. The family situation and functioning levels are such that the child/adolescent
cannot safely remain in the home environment and receive community-based
In addition to the admission criteria, the existence of any of the exclusion criteria is
sufficient to preclude treatment at the residential treatment level of care. The exclusion criteria
relevant to the present case is whether “[t]he child/adolescent can be safely maintained and
effectively treated at a less intensive level of care.”
On January 9, 2015, Defendants denied coverage in a letter, stating:
You are a 16 year old female, admitted to mental health residential
treatment program on 12/29/2014 for treatment of depression,
anxiety, and behavioral issues, as a step down from a wilderness
setting. You do not have any severe medical problems. Your
medications can be monitored at a lower level of care. At
admission, you reportedly have suicidal ideations, but no
plan/intent to harm self. It was also reported to not be of danger to
others, nor any psychotic symptoms. There were no behavior
issues related to aggression reported in the clinical. You do not
require treatment in mental health residential treatment program
with 24 hour nursing care for treatment of your symptoms of
depression, anxiety, and other behavioral issues. Further treatment
of your mood symptoms and any unresolved family issues can be
safely and effectively treated in less restrictive level of care such as
an Intensive Outpatient Program, which normally meets three days
Defendants determined that A.C. did not present with severity of symptoms warranting
residential treatment and recommended that an appropriate level of care would be intensive
outpatient therapy. Defendants also notified Plaintiffs of their right to request reconsideration.
Plaintiffs sought all of the reconsideration and appeals available to them. However,
Defendants’ analysis of the issue did not change substantially throughout the levels of review.
Dr. Sanjay Vaswani conducted the initial review. After a request for a formal reconsideration, a
second physician upheld Dr. Vaswani’s denial. Plaintiffs then requested a level one appeal.
Another ValueOptions physician reviewed A.C.’s records and determined that she did not need
residential treatment. Finally, on Plaintiffs’ level two appeal, the Benefits Committee found that
there was insufficient documentation to establish that the criteria for residential treatment had
been met. Specifically, the denial identified a failure to meet residential treatment criteria 2, 4,
and 5, and found that residential treatment services were not medically necessary. Rather, the
appeals administrator determined that outpatient services would have been more appropriate.
After fully exhausting the administrative process, Plaintiffs brought the present lawsuit.
Plaintiffs argue that Defendants wrongfully denied their claim for residential treatment
benefits for their daughter A.C. Before reaching the merits, the parties dispute the applicable
standard of review.
I. Standard of Review
The parties dispute whether the case should be reviewed under a de novo or arbitrary and
capricious standard of review. ERISA itself does not specify the standard of review that should
be used. However, the United States Supreme Court has held that a denial of benefits challenged
under ERISA, “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.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115
(1989). When the plan grants discretionary authority to the administrator, the denial of benefits
is reviewed under the “arbitrary and capricious” standard. Chambers v. Family Health Corp.,
100 F.3d 818, 825 (10th Cir. 1996).
The parties agree that the language of the Plan provides discretion and, based on the Plan
language alone, an arbitrary and capricious standard of review applies. Nonetheless, Plaintiffs
contend that the court should employ the de novo standard of review based on the number of
alleged procedural irregularities in this case. Plaintiffs assert that Defendants’ analysis was
cursory and not responsive to the issues Plaintiffs raised and that Defendants failed to provide the
reviewers’ credentials. In addition, Plaintiffs state that they sought information about the
doctors’ denial and approval rates over the prior three years for residential treatment claims, and
Defendants did not provide the information. As such, Plaintiffs argue that Defendants failed to
engage in a meaningful dialogue as required by ERISA.
However, Defendants provided Plaintiffs with a full and fair review, did not breach any
fiduciary duty, and did not operate under any conflict of interest. Defendants timely and properly
communicated their decisions to Plaintiffs and described the specific reasons for the decisions.
ERISA requires only that a plan administrator give specific reasons, not the reasoning behind the
reasons. The documents demonstrate that Defendants were considering Plaintiffs’ submitted
information and arguments. A disagreement in the application of the correct criteria does not
equate to a failure to consider Plaintiffs’ arguments. Moreover, Defendants were not required to
provide the denial rates to Plaintiffs because there was no conflict of interest alleged and such
information was not particularly relevant. The 60 Minutes program on residential treatment did
not apply to Defendants.
Even if there could be considered to be some technical violation of ERISA’s regulatory
requirements, the court concludes that there was substantial compliance with ERISA’s regulatory
requirements in this case. Plaintiffs assert, however, that substantial compliance may no longer
be enough in the Tenth Circuit. In Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 631-32 (10th
Cir. 2003), the Tenth Circuit held that as long as an ERISA plan administrator substantially
complied with the claim procedure regulations, it did not forfeit the abuse of discretion standard
of review if the ERISA plan language provided discretionary authority. But Gilbertson was
applying the 1977 version of ERISA’s claim procedure regulations and the regulations were
amended in 2000. Since 2000, the Tenth Circuit has not addressed substantial compliance
despite reviewing several ERISA cases.
Plaintiffs contend that the court should adopt the standard adopted by the Second Circuit
in Halo v. Yale Health Plan, 819 F.3d 42 (2d Cir. 2016). However, other district courts in the
Tenth Circuit have continued to apply the substantial compliance standard to the amended
regulations. Jaremko v. ERISA Admin. Comm., No. 10-1137, 2012 U.S. Dist. LEXIS 80108, at
*6 (D. Kan. June 11, 2012); Cleary v. Boeing Co. Emp. Health & Welfare Benefit Plan, No. 11cv-403, 2013 U.S. Dist. LEXIS 107571, at *20-21 (D. Colo. July 31, 2013). This court agrees
that there is no basis for changing the Tenth Circuit’s standard when the Tenth Circuit has not
done so. However, even if the court applied Halo, the court finds any violation of the regulatory
requirements in this case was inadvertent and harmless.
The Plan provides for residential treatment if it is medically necessary. Plaintiffs argue
that the Plan’s decision to deny coverage must be reversed because the medical records
demonstrate that A.C.’s condition met the medical necessity requirements for residential
treatment and Defendants wrongfully relied on acute inpatient criteria to deny coverage for
A.C.’s residential treatment. Defendants argue that their denial of residential treatment benefits
was a reasonable interpretation of the Plan’s medical necessity requirements.
Although Plaintiffs argue that Defendants improperly relied on the clinical criteria for
acute inpatient benefits, the record shows that Defendants used the appropriate criteria. Just
because the denial correspondence addressed whether A.C. was a harm to herself or others, does
not necessarily mean that the acute inpatient criteria was applied. Each letter specifically
referenced the application of residential treatment criteria and enclosed a copy of the residential
The fact that the letters reference whether A.C. was a threat to herself or others is merely
a reflection of the fact that she was screened for current risks because she was noted to have
exhibited mild suicide ideation with no intent or plan. This assessment was reviewed clinically
and reported in the denial letters. This assessment, however, does not support Plaintiffs’
argument that Defendants used the wrong criteria.
Under the residential treatment criteria, there are six criteria for admission that must be
met. Defendants reasonably determined that A.C. did not meet admission criteria 2 and that
exclusion criterion 3 applied because A.C. could be treated effectively at a lower level of care.
There is no evidence specifically demonstrating that within only five days of being released from
a wilderness program A.C. needed fully structured 24-hour per day care. A.C. was capable of
being released from the wilderness program to her home environment. There appeared to be no
problems at A.C.’s home during the five days she was there. Upon admission at Solstice,
Solstice clinicians determined that A.C. had no psychosis, medical/physical issues, or substance
abuse concerns. A.C. was emotionally and behaviorally stable upon her admission and she
remained so throughout her treatment. A.C. attended home visits without incident while in
treatment. The evidence supports the doctors’ views that A.C. could have been treated with
intensive outpatient therapy after she completed the wilderness program. Plaintiffs’ position
incorrectly relies on A.C.’s condition as she went into the wilderness program and assumes that
she received no benefit from that intensive program. The records do not fully support that
Four separate health care professionals reviewed Plaintiffs’ request for authorization for
residential treatment benefits. Each reviewed the clinical records and each determined that
residential treatment was not medically necessary because A.C. was stable and did not require a
highly structured 24-hour therapeutic environment. Under the arbitrary and capricious standard
of review, Defendants’ decision need not be the only logical one nor even the best one. The
decision need only be sufficiently supported by the facts. Both parties have cited to evidence in
the record supporting their positions. The court concludes that the determination was sufficiently
supported by the facts. In fact, given the proximity of the residential treatment to the wilderness
program and the lack of any evidence that there were problems at home during the five days that
A.C. was at home, the court concludes that Defendants’ decision was reasonable under any
standard of review.
Finally, Plaintiffs seek attorney fees and prejudgment interest. However, Plaintiffs are
not entitled to attorney fees or prejudgment interest because Defendants’ denial of benefits was
reasonable. Attorney fees are not appropriate because there was no culpability or bad faith.
Based on the above reasoning, the court concludes that Defendants’ decision to deny
benefits under the Plan was reasonable and supported by substantial evidence in the record.
Accordingly, Defendants’ Motion for Summary Judgment [Docket No. 21] is GRANTED and
Plaintiffs’ Motion for Summary Judgment [Docket No. 22] is DENIED. The parties shall bear
their own fees and costs.
DATED this 11th day of October, 2017.
BY THE COURT:
Dale A. Kimball,
United States District Judge
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