M. et al v. Blue Cross and Blue Shield of Massachusetts

Filing 82

MEMORANDUM DECISION AND ORDER -denying 60 Motion for Summary Judgment ; granting in part and denying in part 61 Motion for Summary Judgment. Plaintiffs' request for attorney fees and costs is GRANTED. Defendants decision denying Plaintiffs benefits for services at Waypoint is REVERSED and this matter is remanded to Blue Cross for further proceedings consistent with this Order. See Order for further details. Signed by Judge Clark Waddoups on 3/24/21. (jrj)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

SCOTT M. and LAURI M., individually and
as guardians of C.M., a minor,

MEMORANDUM DECISION
AND ORDER

Plaintiffs,
v.

Case No. 1:17-cv-00009

BLUE CROSS AND BLUE SHIELD OF
MASSACHUSETTS d/b/a, Blue Cross Blue
Shield HMO Blue,

Judge Clark Waddoups

Defendant.

I. INTRODUCTION
This action arises under the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001, et seq., and involves Defendant’s denial of insurance coverage for
the residential treatment of C.M., a minor. Before the court are Defendant and Plaintiffs’ crossmotions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.
(ECF Nos. 60, 61.) Having considered the parties’ briefs, oral argument, and relevant case law,
the court DENIES Defendant’s Motion for Summary Judgment and GRANTS in part and
DENIES in part Plaintiffs’ Motion for Summary Judgment.

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II. BACKGROUND
Plaintiffs sought care for C.M.’s mental health and substance use conditions at Waypoint
Academy, a residential treatment center located in the State of Utah. During the relevant time,
Plaintiffs had health coverage under a group health benefit plan (“the Plan”) sponsored by Scott
M.’s employer and insured by Defendant Blue Cross Blue Shield of Massachusetts (“Blue
Cross”). Rec. 00744.1 The Plan provides coverage for medically necessary mental and physical
health and/or substance abuse care for its subscribers and beneficiaries.2 Rec. 00767 – 00768.
Blue Cross denied coverage, however, for C.M.’s fourteen-month stay at Waypoint. Rec. 00123,
00194 – 00196. Plaintiffs now seek to recover all unreimbursed, out-of-pocket expenses due to
Blue Cross’s adverse benefits determination, as well as an award of pre- and post-judgment
interest and attorney fees.
A. The Plan and Blue Cross’s Medical Necessity Criteria
The Plan requires that all health care services “be required services that a health care
provider, using prudent clinical judgment, would provide to a patient in order to prevent or
evaluate or to diagnose or to treat an illness, injury, disease, or its symptoms.” Rec. 00767.
The Plan further details that the required services must be:
•

Furnished in accordance with generally accepted standards of professional medical
practice (as recognized by the relevant medical community);

1 All references denoted “Rec.” refer to pages in the administrative record, which were submitted at ECF Nos. 59
and 76, and numbered from 0001 to 00849.
2 The Plan states that its “coverage for medically necessary mental health and substance abuse treatment” is in
accordance with “federal and state mental health parity laws.” Rec. 00013.

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•

Clinically appropriate, in terms of type, frequency, extent, site, and duration; and they
must be considered effective for your illness, injury, or disease;

•

Consistent with the diagnosis and treatment of your condition and in accordance with
Blue Cross Blue Shield HMO Blue medical policies and medical technology
assessment criteria;

•

Essential to improve your net health outcome as beneficial as any established
alternatives that are covered by Blue Cross Blue Shield HMO Blue;

•

Consistent with the level of skilled services that are furnished and furnished in the
least intensive type of medical care setting that is required by your medical condition;
and

•

Not more costly than an alternative service or sequence of services at least as likely to
produce the same therapeutic or diagnostic results to diagnose or treat your illness,
injury, or disease.

Id.
The Plan provides for inpatient, intermediate and outpatient services to treat a mental
health condition. Rec. 00794 – 00796. The Plan states that intermediate care “may include (but
is not limited to),” acute residential treatment, partial hospital programs and intensive outpatient
treatment. Rec. 00795 – 00796. The Schedule of Benefits for covered Mental Health and
Substance Abuse Treatment refers to Inpatient admission at a General Hospital, Inpatient
admissions in a Mental Hospital or Substance Abuse Facility and Outpatient Services. Rec.
00113-00115. Neither the Plan nor the Schedule of Benefits makes any reference to subacute
residential treatment.
The Plan defines Covered Providers as:
•

Hospital and Other Covered Facilities. These kinds of health care providers are:
alcohol and drug treatment facilities; ambulatory surgical facilities; chronic disease
hospitals (sometimes referred to as a chronic care or long term care hospital for
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medically necessary covered services); community health centers; day care centers;
detoxification facilities; free-standing diagnostic imaging facilities; free-standing
dialysis facilities; free-standing radiation therapy and chemotherapy facilities; general
hospitals; independent labs; limited services clinics; mental health centers; mental
hospitals; rehabilitation hospitals; and skilled nursing facilities.
•

Physician and Other Covered Professional Providers. These kinds of health care
providers are: certified registered nurse anesthetists; chiropractors, clinical specialists
in psychiatric and mental health nursing; dentists; licensed audiologists; licensed
dietitian nutritionists (or a dietitian or a nutritionist or dietitian nutritionist who is
licensed or certified by the state in which the provider practices); licensed hearing
instrument specialists; licensed independent clinical social workers; licensed marriage
and family therapists; licensed mental health counselors; licensed speech-language
pathologists; nurse midwives; nurse practitioners; occupational therapists;
optometrists; physical therapists, physicians, physician assistants; podiatrists,
psychiatric nurse practitioners; psychologists; and urgent care centers.

Rec. 00761 – 00762.
While the Plan states that Blue Cross “decides which health care services and supplies
that [a claimant] receive[s] . . . are medically necessary and appropriate for coverage,” Rec.
00767 (emphasis in original), a member can initiate an appeal or grievance within one year of the
receipt of the service or claim denial. Rec. 00825 – 00827. The Plan also provides that a member
may request an external review of an adverse benefit determination after completion of the
internal appeals process, or when a Plan fails to make a timely decision on an appeal. Rec. 00829
– 00830.
B. C.M.’s Condition
C.M. has struggled with mental health and substance use disorder conditions for many
years. C.M. began to show symptoms of anxiety in the fifth grade when he refused to attend
school. Rec. 00200. Over the years, C.M.’s behavior and condition continued to deteriorate.
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C.M. was eventually diagnosed with Major Depressive Disorder, Anxiety Disorder and
Attentional Deficit Hyperactivity Disorder (“ADHD”). Rec. 00161. He also has been diagnosed
with Cannabis Use Disorder (severe), Alcohol Abuse, and Amphetamine Abuse. Rec. 00238.
To accommodate his symptoms and assist with his education, C.M. received an
individual education plan (“IEP”), to little avail. Rec. 00202. C.M. continued to struggle with
anxiety and depression while trying different combinations of ADHD and anti-depressant/mood
medications. Rec. 00200. As he matured, his symptoms significantly worsened. He lacked
self-control and had frequent emotional outbursts, refused to attend school and was often
severely depressed. Rec. 00245, 00534.
After struggling with passive suicidal ideation, in January 2014, when C.M. was fourteen,
he attempted suicide for the first time. Rec. 00235. C.M. made additional suicide attempts
involving overdosing and planning to slit his wrists. Rec 00241, 00245.
In March 2014, C.M. was admitted to the dual diagnosis program at McLean Hospital, an
acute-psychiatric hospital, to address his mental health issues that were leading to his suicidal
ideations and attempts, as well as his substance use disorder. Rec. 00235. C.M. reported cutting
himself on a weekly basis as a coping mechanism to deal with his depression. Rec. 00235,
00245-00246. C.M. acknowledged ongoing drug use and expressed no interest in stopping
marijuana use. Rec. 00235. C.M. remained in the Adolescent Residential Treatment Center at
McLean Hospital for two weeks. Rec. 00201. Upon his release, C.M. participated in significant
outpatient therapy that included individual therapy, psychopharmacological treatment, family
therapy, and a bridge program to help him reenter high school. Rec. 00238 – 00239.

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Despite this intensive outpatient treatment plan, in May 2014, C.M. made another suicide
attempt, this time overdosing on barbiturates and alcohol. Rec. 00201. C.M.’s parents, Scott and
Lauri, removed C.M. from the school setting and C.M. completed the year with the help of a
tutor. Plaintiffs hired an education consultant to obtain an IEP for C.M. and he continued
extensive outpatient therapy.
In August 2014, C.M. was again admitted to McLean in its dual-diagnosis program
following another overdose. Rec. 00202. C.M. claimed the overdose was accidental. However,
one of his therapists, Dr. Robert Tella, who had previously worked with C.M., believed the
overdose was intentional. Rec. 00245-00246.
Plaintiffs again put in place an exhaustive outpatient treatment program. The program
included individual therapy, family therapy, neuropsychological assessments, a course of
cognitive-behavior therapy, psychopharmacologic therapy and group therapy. C.M. refused to
participate in group therapy. Rec. 00246.
In October 2014, C.M. took LSD and attempted to hang himself from a light fixture in his
bedroom. Rec. 00202. This last suicide attempt, while key to prompting Plaintiffs to admit C.M.
to Waypoint residential treatment center, was not disclosed to Blue Cross at the time of its initial
benefits determination or during the internal appeals process. Indeed, Plaintiffs did not disclose
the October 2014 suicide attempt until submitting their appeal of Blue Cross’s denial decision to
the external reviewer on March 27, 2015. Rec. 00197. The external reviewer had full knowledge
of the October 2014 suicide attempt.
Having exhausted their intensive outpatient options and fearing for their son’s life and
well-being after the October 2014 suicide attempt, Plaintiffs arranged for C.M. to be admitted to
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Waypoint on October 23, 2014. Waypoint is licensed by the State of Utah as a mental health
facility, providing treatment for adolescents. Rec. 00148, 00337-00346. It is a subacute treatment
facility.
At the time of his admission to Waypoint, C.M. was diagnosed with Major Depressive
Disorder, Anxiety Disorder Unspecified, and Attention Deficit Hyperactivity Disorder. Rec.
00161. Waypoint also notated that C.M. had a “High Risk Factor for Adolescent Boys: Severe
Depression and Hard Drug Use.” Rec. 00190. C.M. denied that he had a problem with abusing
illicit substances, but while receiving treatment at Waypoint, he acknowledged that his substance
use was worse than he had historically reported. Rec. 00427-00428, 00517. C.M.’s substance use
disorder is a key factor to the court’s analysis.
C. Blue Cross’s Denial of Benefits
Blue Cross received claims for services that C.M. received while at Waypoint, including
individual, group and family therapies. Plaintiffs did not seek pre-authorization of C.M.’s
charges at Waypoint, as required by the Plan. On October 27, 2014, Blue Cross wrote to
Plaintiffs and stated that C.M.’s care was not eligible for coverage because: “[W]e have
determined that your child’s clinical condition does not meet the medical necessity criteria
required for acute psychiatric inpatient stay in the area of immediate safety risk.” Rec. 00123
(emphasis added). Blue Cross made no mention of C.M.’s substance abuse diagnosis, instead,
only addressing his psychiatric diagnoses.
The Blue Cross letter stated that it relied upon the InterQual® Criteria to reach the
conclusion that C.M.’s claim should not be paid. Id. Blue Cross provided Plaintiffs with an
InterQual® two-page Review Summary, which details C.M.’s medical history, including
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references to his numerous suicide attempts and his prior hospitalization in a dual diagnosis
program for psychiatric issues and substance abuse. Rec. 00127. Although Plaintiffs’ Plan does
not refer to a subacute standard of care, the InterQual® Summary states that the “Requested
Level of Care” is “Psychiatric Subacute Care.” Id.
Blue Cross then applied the InterQual® criteria for Adolescent Psychiatry. For subacute
residential treatment, this criteria requires as clinical indications, social risks and level of care:
•

A current psychiatric diagnosis that cannot be managed at a less intensive level of
care.

•

“Chronic/Persistent danger to self/others” demonstrated by one factor including “selfmutilation,” or behaviors that are unmanageable. The behaviors must be present for at
least six months and expected to persist without treatment.

•

Unsuccessful treatment within the last year of intensive outpatient treatment or at
least three psychiatric inpatient admissions.

•

A support system who is unable to manage the intensity of symptoms or unable to
ensure safety.

•

Discharge or transfer from a psychiatric hospitalization and unable to maintain
behavioral control for more than 48 hours and improvement expected within the next
two weeks.

Rec. 00129-00130. Despite including this subacute criteria, however, Blue Cross used an acute
level standard of care in denying C.M.’s claims. Rec. 00123.
In its enclosures, Blue Cross also included references to the InterQual® criteria for
“Substance Use Disorders and Dual Diagnosis.” Rec. 00141 – 00143. Blue Cross, however,
never addressed C.M.’s substance use disorder or dual diagnosis under any such InterQual®
criteria. Rather, Blue Cross relied exclusively on the InterQual® criteria for Adolescent
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Psychiatry, despite knowing that C.M. had a substance use disorder and was enrolled in a dual
diagnosis program as recently as August 2014. Rec. 00127.
Lauri appealed the denial of coverage in a letter dated December 8, 2014. In her letter,
Lauri stated that she did not receive a full copy of the criteria relied upon by Blue Cross to deny
the claim and requested that, in the event Blue Cross maintained its denial, it provide a complete
copy to her. Rec. 00131. Lauri also noted that Blue Cross appeared to be using an acute
residential care criteria and explained that Waypoint provides subacute or intermediate
residential care. Lauri highlighted that the reviewer used the wrong criteria to evaluate C.M.’s
treatment. Rec. 00132. Lauri included a copy of a psychiatric evaluation completed for C.M. by
Brian L.B. Willoughby, Ph.D., which indicated a “high risk for suicidal ideation/intent and
continued risk behaviors (e.g., cutting, substance abuse)” for C.M. Rec. 00154. She also included
copies of up-to-date medical records compiled by Waypoint. Rec. 00156-00192. At this point in
the appeals process, Lauri did not include letters from C.M.’s treating physicians, Dr. Robert
Tella and Dr. Jedidiah M. Bopp. She also did not include any information regarding C.M.’s most
recent suicide attempt in October 2014.
One day after receiving Lauri’s appeal, in a letter dated December 12, 2014, Blue Cross
maintained its denial of C.M.’s treatment, stating “the member’s clinical condition does not meet
the medical necessity criteria required for an acute residential psychiatric stay in the areas of
symptoms/behaviors, social risk, and functioning.” Rec. 00194 (emphasis added). The denial did
not focus on C.M.’s substance abuse diagnosis, instead stating that “the member did not have
thoughts of self-harm or suicide, behavior was safe, and he was never at risk of needing
hospitalization.” Rec. 00194 – 00195.

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On March 27, 2015, Plaintiffs requested an external appeal of Blue Cross’s denial of
coverage. Plaintiffs provided the external reviewer, Imedecs, a detailed history of C.M.’s
behavior and treatment interventions together with letters and documentation from his providers
outlining their reasons for recommending a higher level of care than intensive outpatient
treatment. Rec. 00197-00466. Such documentation included letters from Dr. Robert Tella and
Dr. Jedediah M. Bopp, Ph.D., C.M.’s two primary treating physicians, detailing their interactions
and observations of C.M. These observations included the following:
From March 2013 through October 2014, Dr. Tella worked with C.M. and his family.
He provided individual and family therapy, school consultation and collaborations with other
therapists and providers. Reflecting on the family’s efforts, Dr. Tella explained that “[C.M.’s]
condition worsened throughout the course of this comprehensive outpatient treatment program.
The seriousness of his attempts to harm himself also grew in intensity to the point of presenting a
lethal risk.” Rec. 00246. Because of the increasing risk, Dr. Tella recommended that “without
residential care and treatment, [C.M.]’s conditions would continue to worsen and threaten his
prognosis and life.” Id.
Dr. Bopp worked with C.M. as the program therapist at the McLean Hospital Acute
Residential Treatment dual-diagnosis program and as C.M.’s private psychotherapist. Rec.
00205. Dr. Bopp warned that “[C.M.] requires round-the-clock therapeutic support to both teach
him the skills necessary to manage his illness, but perhaps more importantly, to keep him safe
and alive so he can learn those skills.” Rec. 00206. Importantly, like the non-disclosure of
C.M.’s October 2014 suicide attempt, Blue Cross did not receive Dr. Tella’s or Dr. Bopp’s
observations until after the internal appeals process had been completed. However, Blue Cross

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knew that both individuals were C.M.’s treating physicians at the time Blue Cross first denied
C.M.’s claim and could have contacted them for further information or input. Rec. 00127.
Despite these letters and the additional indicia that C.M. was suffering from mental
health issues and a substance use disorder, Imedecs upheld Blue Cross’s denial of coverage on
May 27, 2015. Specifically, like Blue Cross, Imedecs determined that “[a]cute residential
psychiatric treatment at Waypoint Academy from 10-23-14 forward was not medically
necessary.” Rec. 00670 (emphasis added). Imedecs also opined that there was “no evidence
presented in the medical record” that C.M. required “24 hour supervision associated with
[residential treatment center] care.” Id. Like Blue Cross, Imedecs also failed to address C.M.’s
substance abuse diagnosis or consider a dual diagnosis treatment. Rec. 00669. Like Blue Cross,
Imedecs only used the InterQual® Adolescent Psychiatry criteria, completely ignoring the
InterQual® guidelines for substance abuse and dual diagnosis. Id.
Plaintiffs have exhausted all remedies under the Plan and have now brought suit to
recover their out-of-pocket expenses incurred at Waypoint.
III. LEGAL STANDARD
A. Summary Judgment Standard
Federal Rule of Civil Procedure 56 permits the entry of summary judgment “if the
pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue of material fact and that the moving party is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). In an ERISA case, when both
parties move for summary judgment, the parties “stipulate that no trial is necessary” and
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“summary judgment is merely a vehicle for deciding the case; the factual determination of
eligibility of benefits is decided solely on the administrative record, and the non-moving party is
not entitled to the usual inferences in its favor.” LaAsmar v. Phelps Dodge Corp. Life,
Accidental Death & Dismemberment and Dependent Life Ins. Plan, 605 F.3d 789, 796 (10th Cir.
2010) (quoting Bard v. Boston Shipping Ass’n, 471 F.3d 229, 235 (1st Cir. 2006)).
B. Standard of Review
The parties disagree regarding the standard of review the court is to employ in reviewing
Blue Cross’s denial of benefits to Plaintiffs. Blue Cross argues that the court must employ an
arbitrary and capricious standard because the Plan delegates discretionary authority to Blue
Cross to interpret and apply the Plan’s guidelines. Plaintiffs, by contrast, argue that the court
should apply a de novo review because the Plan did not afford discretionary authority to Blue
Cross and even if it did, Blue Cross violated ERISA’s minimal procedural requirements to such
an extensive degree that a de novo review is warranted.
1. The Plan Delegates Discretionary Authority to Blue Cross
In ERISA cases, “a denial of benefits challenged under § 1132(a)(1)(B) must be reviewed
under a de novo standard unless the benefit plan expressly gives the plan administrator or
fiduciary discretionary authority to determine eligibility for benefits or to construe the plan’s
terms.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 102, 109 S.Ct. 948, 103 L.Ed.2d 80
(1989). “Where the plan gives the administrator discretionary authority, however, ‘we employ a
deferential standard of review, asking only whether the denial of benefits was arbitrary and
capricious.’” Eugene S. v. Horizon Blue Cross Blue Shield of New Jersey¸ 663 F.3d 1124, 1130
(10th Cir. 2011) (quoting LaAsmar, 605 F.3d at 796). The Tenth Circuit is “comparatively liberal
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in construing language to trigger the more deferential standard of review under ERISA.” Nance
v. Sun Life Assur. Co. of Canada, 294 F.3d 1263, 1268 (10th Cir. 2002) (collecting cases).
Indeed, the Tenth Circuit has found that an administrator retained discretion “where plan
language defines ‘needed’ services as those determined by the plan administrator to meet certain
tests, McGraw v. Prudential Ins. Co. of Am., 137 F.3d 1253, 1256 (10th Cir. 1998), or where
plan language entitled the plan administrator to label a procedure ‘experimental,’ Chambers v.
Family Health Plan Corp., 100 F.3d 818, 825 (10th Cir. 1996).” Eugene S., 663 F.3d at 1132.
The Tenth Circuit does not require “any magic words, such as ‘discretion,’ ‘deference,’
‘construe’ or ‘interpret’ in order to find discretionary authority.” Gust v. Coleman Co., 740 F.
Supp. 1544, 1550 (D. Kan. 1990), aff’d, 936 F.2d 583 (10th Cir. 1991).
Here, the Plan states that Blue Cross “decides which health care services and supplies . . .
are medically necessary and appropriate for coverage. It will do this by using all of the
guidelines described below.” Rec. 00767. The Plan further states that if Blue Cross “determines
that the proposed setting is not medically necessary for your condition,” Blue Cross will call the
health care facility. Rec. 00778. Finally, the Plan states that “[n]o benefits are provided for: . . .
A service or supply that is not considered by [Blue Cross] to be medically necessary for you.”
Rec. 00813. The court concludes, under Tenth Circuit precedent, the Plan language is sufficient
to grant Blue Cross discretionary authority.3

3 Plaintiffs argue that the court should adopt the reasoning of Stephanie C. v. Blue Cross Blue Shield of Mass. HMO
Blue, Inc., 813 F.3d 420, 428 (1st Cir. 2016), wherein the First Circuit found that language, identical to the language
in Plaintiffs’ Plan, failed to grant discretionary authority to Blue Cross. The First Circuit thus concluded that Blue
Cross’s benefits denial should have been reviewed under a de novo, rather than an abuse of discretion standard.
Plaintiffs ask this court to apply the heightened First Circuit approach to the present case. The court must reject
Plaintiffs’ invitation. Under the Tenth Circuit’s “comparatively liberal [approach] in construing language to trigger
the more deferential standard of review under ERISA”, Eugene S. v. Horizon Blue Cross Blue Shield of New Jersey,
663 F.3d 1124, 1132 (10th Cir. 2011) – an approach which is controlling – the court finds the language to be
sufficient to have granted discretionary decision-making authority to Blue Cross.

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2. However, Due to Substantial Procedural Irregularities,
A De Novo Standard of Review Applies
Having determined that the Plan delegates discretionary authority to Blue Cross, the
court’s next query is whether ERISA’s procedural regulations have been sufficiently observed as
to uphold an arbitrary and capricious standard of review. Blue Cross argues that any procedural
irregularity was so minimal as to not deprive Plaintiffs of a full and fair review of their claims.
Plaintiffs, by contrast, argue that the procedural irregularities were so severe that a de novo
review is warranted. Having reviewed the record and the parties’ arguments, the court finds that
extensive procedural irregularities existed throughout the denial and appeals process, as
described below. Thus, the court must employ a de novo standard of review.
ERISA’s procedural regulations require the claims administrator, at the preliminary
denial stage, to “provide the claimant with a comprehensible statement of reasons for the denial,”
and during the appeals process, to engage in a “full and fair review” that represents “a
meaningful dialogue between ERISA plan administrators and their beneficiaries.” Gilbertson v.
Allied Signal, Inc., 328 F.3d 625, 635 (10th Cir. 2003) (citation omitted). This “full and fair
review requires knowing what evidence the decision-maker relied upon, having an opportunity to
address the accuracy and reliability of the evidence, and having the decision-maker consider the
evidence presented [by the claimant] . . . prior to reaching and rendering his decision.” Sandoval
v. Aetna Life & Cas. Ins. Co., 967 F.2d 377, 382 (10th Cir. 1992) (citation and internal quotation
marks omitted). These requirements “further the overall purpose of [ERISA’s] internal review
process: to minimize the number of frivolous lawsuits; promote consistent treatment of claims;
provide a nonadversarial dispute resolution process; and decrease the cost and time of claims

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settlement.” Spradley v. Owens-Illinois Hourly Employees Welfare Ben. Plan, 686 F.3d 1135,
1140 (10th Cir. 2012) (citation and internal quotation marks omitted).
Under Tenth Circuit precedent, a claim administrator’s adverse benefits determination is
only afforded a “deferential standard of review to the extent the administrator actually exercised
a discretionary power vested in it by the terms of the Plan.” Rasenack ex rel. Tribolet v. AIG Life
Ins. Co., 585 F.3d 1311, 1315 (10th Cir. 2009). A “plan administrator is not entitled to the
deference of arbitrary and capricious review when . . . the administrator made no decision to
which a court may defer.” LaAsmar, 605 F.3d at 798. If a claims administrator fails to render a
decision on a demand for benefits, “the remedies [are] ‘deemed exhausted’ by operation of law
rather than the exercise of administrative discretion, and Firestone’s rule of deference does not
apply.” Rasenack, 585 F.3d at 1316 (quoting 29 C.F.R. § 2560.503-1(l). Instead, de novo review
applies.
“When applying a de novo standard, the court reviews a denial of benefits to determine
whether the administrator made a correct decision.” Niles v. Am. Airlines, Inc., 269 Fed. App’x
827, 832 (10th Cir. 2008) (unpublished) (citing Hoover v. Provident Life and Accident Ins. Co.,
290 F.3d 801, 808-09 (6th Cir. 2002)). Under this standard, the court is not required to decide
whether “‘substantial evidence’ or ‘some evidence’ supported the administrator’s decision; it is
whether the plaintiff’s claim for benefits is supported by a preponderance of the evidence based
on the district court’s independent review.” Id. at 833. In other words, in the court’s independent
review, “the administrator’s decision is accorded no deference or presumption of correctness.”
Id. at 832. Using this lens by which to evaluate Plaintiffs’ claim, the court finds that a reversal of
Blue Cross’s denial decision is proper.

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IV. ANALYSIS
ERISA provides:
In accordance with regulations of the [Department of Labor], every employee
benefit plan shall –
(1) provide adequate notice in writing to any participant or beneficiary whose claim
for benefits under the plan has been denied, setting forth the specific reasons for
such denial, written in a manner calculated to be understood by the participant,
and
(2) afford a reasonable opportunity to any participant whose claim for benefits has
been denied for a full and fair review by the appropriate named fiduciary of the
decision denying the claim.
29 U.S.C. § 1133. In 2002, the Department of Labor established ERISA regulations which “set[]
forth minimum requirements for employee benefit plan procedures pertaining to claims for
benefits by participants and beneficiaries.” 29 C.F.R. § 2560.503-1(a).
Subsection (g) of the regulations require that administrators make certain information
available to claimants, including (1) “[t]he specific reason or reasons for the adverse
determination;” (2) “[r]eference to the specific plan provisions on which the determination is
based;” (3) “[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;” (4)
“[a] description of the plan’s review procedures and the time limits applicable to such
procedures;” and (5) for denials based on lack of medical necessity, “an explanation of the
scientific or clinical judgment for the determination, applying the terms of the plan to the
claimant’s medical circumstances.” See id. § 2560.503-1(g)(1)(i)-(v).

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Subsection (h) requires the administrator to provide claimants with “a reasonable
opportunity to appeal” through a process that must “take[] into account all comments,
documents, records, and other information submitted by the claimant relating to the claim” and
provide “reasonable access to, and copies of, all documents, records, and other information
relevant to the claimant’s claim for benefits.” See id. § 2560.503-1(h)(2)-(3)(iii), (iv). Relevant
information is any material “relied upon in making the benefit determination” or “submitted,
considered, or generated in the course of making the benefit determination.” See id. § 2560.5031(m)(8).
These procedural regulations were effectuated to aid in the “full and fair review” required
under ERISA. Unfortunately, in the present case, these procedural regulations were not
sufficiently observed, as detailed below.
A. Failure to Address Substance Use Disorder or Dual Diagnosis
Blue Cross violated ERISA regulations when it failed to address C.M.’s substance use
disorder, either independently or in a dual diagnosis capacity. Blue Cross told Plaintiffs that it
was employing InterQual® criteria to evaluate C.M.’s condition. Blue Cross then included a list
of InterQual® criteria products which it had at its disposal to evaluate C.M.’s condition. Rec.
00141. “Adolescent Psychiatry” and “Substance Use Disorders & Dual Diagnosis” are both
listed as available criteria for evaluation. Blue Cross, however, chose to only employ the
“Adolescent Psychiatry” criteria, despite knowing of C.M.’s extensive substance use disorder
and previous enrollment in a dual diagnosis program at McLean Hospital.
There is no question that C.M. suffered from a substance use disorder. The record reflects
that C.M.’s outpatient treating physicians knew about his substance use disorder in the months
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leading up to C.M.’s admission at Waypoint. Specifically, McLean Hospital records state that
C.M. was:
presenting for treatment of comorbid depression, anxiety, and significant cannabis
dependence among other substance use. It appears significant depression has long
preceded drug use, but that things have acutely worsened over past 2 months, with
[C.M.] attempting suicide three times in that time course. Biologically it appears
there are sig neurovegetative sx of depression, worsening anxiety, insomnia and
poor concentration; likely sig substance use makes these more difficult to treat. . .
[C.M.] warrants Resi LOC for ongoing assessment, treatment and stabilization.
Rec. 00237. C.M. was hospitalized in the dual-diagnosis program for substance abuse as well as
for psychiatric needs. Rec. 00235.
Additionally, medical records indicate that he was being treated for substance use
disorder at Waypoint. On October 23, 2014, Waypoint noted that C.M. had a “High Risk Factor
for Adolescent Boys: Severe Depression and Hard Drug Use.” Rec. 00190. On October 27, 2014,
Waypoint reported that C.M. “[r]eports history of substance use including marijuana, alcohol,
cocaine and LSD.” Rec. 00173. On November 5, 2014, Waypoint noted that C.M. “has a history
of substance abuse. He has had two hospitalizations at McLean Hospital in Boston. These were
within the last year. The first was due to a suicide gesture, and the second was due to depression
and issues relating to substance abuse.” Rec. 00164. Blue Cross clearly was on notice that C.M.
had a significant substance abuse issue that was being addressed at the residential treatment
center.
Even Blue Cross recognized that C.M. was being treated for a substance use disorder. In
its preliminary denial letter, Blue Cross stated: “We received the following information
regarding this request: anxiety disorder, depression, ADHD, and substance use.” Rec. 00123.
Using its own InterQual® criteria, Blue Cross noted that C.M. had been “[a]dmitted to mclean
again in august 2014 for dual diagnosis treatment” and that he has “daily cannabis and alcohol
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use, is reporting periods of time for two weeks where he used cocaine daily . . . [and] also
reportedly took some lsd with some friends at school on the 10/17/14 and had a negative
experience with this.” Rec. 00127.
And yet, despite this vast evidence of C.M.’s substance use disorder, and Blue Cross’s
knowledge of such disorder, Blue Cross only applied the InterQual® Adolescent Psychiatry
criteria, stating “we have determined that the member’s clinical condition does not meet the
medical necessity criteria required for acute psychiatric inpatient stay in the area of immediate
safety risk.” Rec. 00123. In its second level of appeal, Blue Cross stated that “the member has
engaged in substance abuse” and “we have determined that the member’s clinical condition does
not meet the medical necessity criteria required for an acute residential psychiatric stay in the
areas of symptoms/behaviors, social risk, and functioning.” Rec. 00194.
These two sentences are the sum total of Blue Cross’s analysis of C.M.’s substance use
diagnosis. Nowhere in the initial denial stage or appeals process did Blue Cross address C.M.’s
substance use disorder or dual diagnosis, or provide an analysis concerning the medical necessity
of his treatment for that condition. Indeed, rather than also applying the Substance Use Disorder
and Dual Diagnosis criteria which was listed within the materials originally given to Plaintiffs,
Rec. 00114, Blue Cross chose to ignore that criteria and simply evaluate C.M.’s condition based
on the Adolescent Psychiatry criteria. Blue Cross’s failure to address C.M.’s substance use
disorder or dual diagnosis in its initial denial of benefits violates subsection (g) of ERISA’s
procedural regulations because Blue Cross did not provide the “specific reason or reasons for the
adverse determination” for benefits related to C.M.’s substance use diagnosis. See 29 C.F.R. §
2560.503-1(g)(1)(i); see also Raymond M. v. Beacon Health Options, Inc., 463 F. Supp. 3d 1250,

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1270 (D. Utah 2020) (finding that administrator’s failure to consider a substance use disorder
warranted reversal and remand).
By failing to consider and analyze C.M.’s substance use disorder or dual diagnosis, Blue
Cross did not provide “an explanation of the scientific or clinical judgment for the determination,
applying the terms of the plan to the claimant’s medical circumstances” as required by Section
2560.503-1(g)(1)(v)(B). Further, by failing to consider the separate diagnosis, Blue Cross did not
“take into account all comments, documents, records, and other information submitted by the
claimant relating to the claim,” which violates Section 2560.503-1(h)(2)(iv) of ERISA. Simply
put, ERISA’s procedural safeguards exist to require administrators to engage in a “meaningful
dialogue” with claimants through a “full and fair review.” Blue Cross’s failure to consider
C.M.’s independent substance use condition or dual diagnosis violates these procedural
safeguards and such violations warrant reversal of Blue Cross’s denial of benefits.
B. Failure to Apply or Explain the Subacute Level of Care
In the InterQual® Review Summary which was given to Plaintiffs, Blue Cross notated
the following information concerning C.M.’s condition:
•

“Started experimenting with drugs and alcohol. Two suicide attempts, hospitalized in
march or april 2014, admitted to mclean. Admitted to mclean again in august for 2014
dual diagnosis treatment. Member reports intermittent suicidal ideation since seventh
grade.” Rec. 00127.

•

“[M]ember has a history of cutting and self harm. Member says he hasn’t cut since
august 2014.” Id.

•

“[D]aily cannabis and alcohol use, is reporting periods of time for two weeks where
he used cocaine daily, parents are not reporting this, member also reportedly took

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some lsd with some friends at school on the 10/17/14 and had a negative experience
with this.” Id.
After listing this indicia, Blue Cross stated that the Requested Level of Care was
“Psychiatric Subacute Care.” Id. Blue Cross then enclosed the Adolescent Psychiatry InterQual®
criteria, which lists both Psychiatric Subacute Care/Psychiatric Residential Treatment Center,
Psychiatric Therapeutic Group Home, and Psychiatric Intensive Community-Based Treatment
levels of care. However, in denying C.M.’s claim, Blue Cross stated that C.M. did not qualify for
“acute psychiatric inpatient stay” and instead qualified for “treatment at an intensive outpatient
program level of care.” Rec. 00123. Blue Cross did not explain how or under which criteria C.M.
failed to qualify for either subacute or acute care. This one sentence is the extent of Blue Cross’s
explanation to Plaintiffs.
Upon seeing the acute reference, Plaintiffs notified Blue Cross that a subacute level of
care analysis should have been applied when evaluating C.M.’s claim instead of an acute
analysis. Plaintiffs made this assertion throughout the claims and appeals process, Rec. 00132
and 00199, and now argue that unlike the acute treatment C.M. received at McLean hospital in
the Adolescent Residential Treatment Center, Waypoint is a subacute treatment center – a center
that treats patients at a more intense level than outpatient programming but not as intense as
those at acute treatment centers. Plaintiffs contend that because the Plan provides for
intermediate treatment, Blue Cross should have analyzed C.M.’s level of care at a subacute level.
Blue Cross counters by arguing that it applied the correct InterQual Adolescent Psychiatric
Residential Treatment criteria and under that criteria, C.M. did not qualify for treatment under
either an acute or subacute level of care and therefore, the distinction is irrelevant. Moreover,
Blue Cross argues that C.M. did not satisfy the conditions of the subacute standard of care
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because he had not been immediately discharged from a psychiatric hospital prior to entering
Waypoint.
Blue Cross’s argument misses the point. ERISA procedural regulations are implemented
to secure a full and fair review of a claimant’s case. They exist to enable the claims administrator
and the claimant to have a “meaningful exchange” regarding the claims process and to ensure
that the claimant is aware of why his claim has been accepted or denied. Here, Blue Cross has
failed to engage in this meaningful dialogue and has violated several procedural safeguards,
which, had they been respected, would have placed Plaintiffs on notice of why C.M.’s case was
being reviewed under an acute level of care. Indeed, it was arguably not until receiving Blue
Cross’s briefing in the instant motions for summary judgment that the acute/subacute level of
care analysis was explained to Plaintiffs. By failing to properly observe the procedural
regulations, Plaintiffs were not allowed to meaningfully engage with Blue Cross, as evidenced
by their repeated requests to analyze C.M.’s case under a subacute level of care – requests that
were unequivocally ignored by Blue Cross at all stages of review and appeal.
As previously explained, section (g) requires that claims administrators provide both the
“specific reason or reasons for the adverse determination,” 29 C.F.R. § 2560.503-1(g)(1)(i), and
“an explanation of the scientific or clinical judgment for the determination, applying the terms of
the plan to the claimant’s medical circumstances.” Id. § 2560.503-1(g)(1)(v)(B). From their very
first letter to Blue Cross regarding the adverse benefits determination, Plaintiffs requested that
C.M.’s claim be reviewed on a subacute level. Rec. 00132. At the second level of review,
Plaintiffs again requested that the review be addressed under a subacute level of review. Rec.
00199. At each phase, Plaintiffs asked why Blue Cross was using an acute analysis when
subacute applied. And at each and every phase, there was no response from Blue Cross. Blue
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Cross’s failure to engage with Plaintiffs and tactically ignore the issue of subacute level of care
was a violation of ERISA’s procedural safeguards to such a degree that reversal of Blue Cross’s
denial decision is appropriate.
C. Failure to Assess All Medical Information
Finally, the court finds that Blue Cross violated ERISA procedural safeguards by failing
to address and evaluate all relevant available medical information concerning C.M. The record
shows that there was substantial contrary evidence to support a finding that C.M.’s treatment at
Waypoint was medically necessary. “The court must view the substantiality of the evidence
supporting the administrator’s denial ‘based upon the record as a whole,’ by ‘tak[ing] into
account whatever in the record fairly detracts from its weight.’” Raymond M., 463 F. Supp. at
1283 (citations and internal quotations marks omitted). In other words, it is improper for claims
administrators to “cherry-pick” the information that is helpful to their decision to deny a benefits
claim while simultaneously “shut[ting] their eyes to readily available information” that “might
confirm the beneficiary’s theory of entitlement” to benefits. Gaither v. Aetna Life Ins. Co., 394
F.3d 792, 807 (10th Cir. 2004). To do so would classify the administrator’s decision as
arbitrary because the claims “administrator . . . ignored evidence that was relevant to her
decision” and “based her decision on a skewed reading of [the claimant’s] medical records.”
Caldwell v. Life Ins. Co. of N. Am., 287 F.3d 1276, 1284 (10th Cir. 2002); see also James F. v.
Cigna Behavioral Health, Inc., 2010 WL 5395075, at *6 (D. Utah Dec. 23, 2010) (reversing a
denial of benefits because the administrator “selectively reviewed the medical information and
ignored relevant evidence”).

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Here, it is apparent Blue Cross arbitrarily cherry-picked information in the record to
support its denial of benefits and ignored substantial evidence that C.M.’s treatment at Waypoint
was indeed medically necessary. The record contains substantial evidence that C.M. struggled to
manage his mental health as well as his substance use disorder, all of which had been relayed to
Blue Cross for its determination. To name a few:
•

On November 26, 2014, Blue Cross’s own InterQual ® Summary states: “Started
experimenting with drugs and alcohol. Two suicide attempts, hospitalized in march or
april 2014, admitted to mclean. Admitted to mclean again in august for 2014 dual
diagnosis treatment. Member reports intermittent suicidal ideation since seventh
grade.” Rec. 00127.

•

The November 26, 2014 InterQual® Summary also states: “mood depressed, affect
flat, eye contact avoidant, speech is very slow . . . member has a history of cutting and
self harm. Member says he hasn’t cut since august 2014.” Id.

•

Further, the Summary describes C.M.’s substance abuse as “daily cannabis and
alcohol use, is reporting periods of time for two weeks where he used cocaine daily,
parents are not reporting this, member also reportedly took some lsd with some
friends at school on the 10/17/14 and had a negative experience with this.” Id.

•

The InterQual® Summary also lists C.M.’s psychiatrists, Dr. Jedd Bob and Dr. Tella
as well as his therapist, Dr. Suz Rabin. It appears Blue Cross did not follow up with
any of these providers – each of whom independently recommended residential
treatment – in making its medical necessity determination.

•

C.M.’s treating physician, Dr. Willoughby, indicated that C.M. is “at high risk for
suicidal ideation/intent and continued risk behaviors (e.g., cutting, substance abuse)”
and that C.M. “has required inpatient hospitalization.” Rec. 00153.

•

Dr. Willoughby’s report also states that C.M. “has reported increased sadness, cutting
behaviors, anxiety, and suicidal ideation. In March 2014, he required hospitalization
McLean Hospital’s Dual Diagnosis program following suicidal ideation and
polysubstance use behaviors.” Rec. 00151.

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•

Waypoint’s medical records, to which Blue Cross had access, indicate C.M. “has
emotional outbursts, and lacks self-control. . . He was hospitalized on two occasions
for an overdose and an accidental overdose.” Rec. 00159

•

Waypoint’s records also alerted Blue Cross that C.M. “has a history of substance
abuse. He has had two hospitalizations at McLean Hospital in Boston. These were
within the last year. The first was due to a suicide gesture, and the second was due to
depression and issues relating to substance abuse.” Rec. 00164.

The court notes that these are not the only, nor even the most compelling indicia of
C.M.’s mental health and substance abuse struggles. As is detailed in the record as a whole,
which was only compiled for the external review of C.M.’s claim, C.M.’s treating physicians,
psychiatrists and education consultants unequivocally advised that C.M. needed residential
treatment as soon as possible – advice, which Plaintiffs heeded.
Of the only treating physician record that was submitted to Blue Cross – that of Dr.
Willoughby – it appears that Blue Cross ignored it in its entirety.4 While ERISA does not require
plan administrators to afford special deference to the opinions of treating physicians,
administrators “may not arbitrarily refuse to credit a claimant’s reliable evidence, including the
opinions of a treating physician.” Black & Decker Disability Plan v. Nord, 538 U.S. 822, 831,
834, 123 S. Ct. 1965, 155 L. Ed. 2d 1034 (2003). Here, Dr. Willoughby stated that C.M. was
“at high risk for suicidal ideation/intent and continued risk behaviors (e.g., cutting, substance

4 There is a dispute between the parties as to the correct date of Dr. Willoughby’s letter. Rec. 00150-155. The
letter is dated May 20, 2013, but references C.M.’s hospital stays in 2014 and that C.M. is a “14-year, 10-month-old
boy”, which was C.M.’s age in May 2014, not May 2013. Accordingly, the court concludes that the date of the letter
was inadvertently mistyped and should read May 20, 2014. This conclusion makes Dr. Willoughby’s letter even
more relevant due to its proximity to C.M.’s fall 2014 admission into Waypoint. Irrespective of the date, Blue
Cross should have considered Dr. Willoughby’s treating physician letter, which states that C.M. is “at high risk for
suicidal ideation/intent and continued risk behaviors (e.g., cutting, substance abuse) . . .” Rec. 00154. If there were
concerns as to date or authenticity, Blue Cross had every option to contact Dr. Willoughby or confer with Scott and
Lauri themselves. Indeed, Lauri’s letter states “if there are any questions, please contact me.” Blue Cross’s refusal
to consider the Willoughby letter highlights its insufficient dialogue with Scott and Lauri – a dialogue that is
required under ERISA guidelines.

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abuse)” and that C.M. “has required inpatient hospitalization.” Rec. 00153. Dr. Willoughby
further stated:
Since his previous evaluation in October 2011, [C.M.] has experienced a
significant decline in psychological health. His depressive and anxiety symptoms
have intensified, especially within the past several months. C.M. has reported
increased sadness, cutting behaviors, anxiety, and suicidal ideation. In March
2014, he required hospitalization McLean Hospital’s Dual Diagnosis program
following suicidal ideation and polysubstance use behaviors. He was discharged
from McLean following a month stay, though has continued to show signs of
marked emotional distress.
Rec. 00151.
In its denial letter, Blue Cross neither referred to Dr. Willoughby’s report, nor indicated
that Blue Cross had either considered the report or made contact with Dr. Willoughby to resolve
any concerns. Simply put, the opinions of treating physicians “may not be ignored, especially
when treating physicians – in contrast to reviewers evaluating a medical file – have ‘a greater
opportunity to know and observe the patient as an individual.’” Dewsnup v. Unum Life Ins. Co.
of Am., 2018 WL 6478886, at *10 (D. Utah Dec. 10, 2018) (quoting Nord, 538 U.S. at 832). Blue
Cross’s failure to address Dr. Willoughby’s letter was violative of ERISA procedural
safeguards.5

5 This is even more compelling considering the substantial evidence in the record, developed after Blue Cross made
its claim determination, highlighting the unanimous advice and reasoning of every one of C.M.’s treating physicians
that he needed immediate inpatient treatment. See, e.g., Letter from Dr. Robert Tella: “It is critical to understand
that [C.M.’s] condition worsened throughout the course of this comprehensive outpatient treatment program. The
seriousness of his attempts to harm himself also grew in intensity, to the point of presenting a lethal risk. It is my
impression that without residential care and treatment, [C.M.]’s condition would continue to worsen and threaten his
prognosis and life.” Rec. 00246; Letter from Dr. Jedediah M. Bopp, stating “While his family went to herculean
efforts to support [C.M.] and to keep [C.M.] safe, it is clear to me that [C.M.] requires round-the-clock therapeutic
support to both teach him the skills necessary to manage his illness, but perhaps more importantly, to keep him safe
and alive so he can learn these skills.” Rec. 00248. Blue Cross had knowledge of and access to both of these
physicians from its very first consideration of Plaintiffs’ claim but failed to contact them.

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Blue Cross reviewers cited no evidence throughout the claims review process that they
either considered the treating physicians’ opinions, or asked Plaintiffs for further support, even
though the latter was amenable to such. Instead, Blue Cross only prepared conclusory statements
that C.M.’s “clinical condition does not meet the medical necessity criteria required for acute
psychiatric inpatient stay in the area of immediate safety risk.” Rec. 00123. While the Plan states
that Blue Cross “decides which health services and supplies that you receive (or you are planning
to receive) are medically necessary and appropriate for coverage”, Rec. 00767, Blue Cross “may
not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating
physician.” Nord, 538 U.S. at 834. Should Blue Cross have had further questions about Dr.
Willoughby’s diagnosis, Blue Cross should have contacted Dr. Willoughby directly, or at the
very least, contacted Plaintiffs for further clarification of the date of the letter and treatment.
Because Blue Cross’s denial letters repeatedly failed to indicate that they considered C.M.’s
treating physician opinion at all, the court finds that Blue Cross’s decision violated ERISA’s
procedural safeguards and must therefore be reversed.
D. MPHAEA Violation
Finally, Plaintiffs contend that Blue Cross violated the Mental Health Parity and
Addiction Equity Act (“the Parity Act”) by failing to cover subacute residential care while
simultaneously covering subacute treatment for medical/surgical conditions such as inpatient
skilled nursing, rehabilitation and hospice care. Blue Cross counters that there was no Parity Act
violation because Blue Cross did not deny Plaintiffs’ claim for benefits based on a residential
treatment exclusion, or subacute residential treatment exclusion, but rather because C.M.’s
condition did not meet the initial InterQual® criteria for residential treatment. Because the court
has determined that reversal of Blue Cross’s benefits decision is appropriate given the serious
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procedural irregularities in the claims and appeals process, the court does not reach the issue of
whether the Parity Act was violated.
V. REMEDY
1. Reversal and Remand
If, upon review of the administrative record, the court determines that a plan
administrator improperly denied benefits, the court must determine the appropriate remedy. See
Spradley v. Owens-Ill. Hourly Emp. Welfare Benefit Plan, 686 F.3d 1135, 1142 (10th Cir. 2012).
The court “may either remand the case to the plan administrator for renewed consideration of the
claimant’s case or . . . order an award of benefits.” Flinders v. Workforce Stabilization Plan of
Philips Petro. Co., 491 F.3d 1180, 1194 (10th Cir. 2007) (citations omitted), abrogated on other
grounds by Metro Life Ins. v. Glenn, 554 U.S. 105, 128 S. Ct. 2343, 171 L.Ed.2d 299 (2008).
Remand is the appropriate remedy when the administrator “failed to make adequate factual
findings or failed to adequately explain the grounds for the decision.” Spradley, 686 F.3d at
1142.
Here, Blue Cross failed to make adequate findings because it did not evaluate C.M.’s
substance use diagnosis and the medical necessity of a subacute level of treatment. Moreover,
Blue Cross was not able to fully evaluate C.M.’s claims as a more complete record was not
submitted until March 27, 2015, five months after Plaintiffs’ appeal of Blue Cross’s denial of
benefits. The record contains letters and statements of therapists and psychologists which are
critical to analyzing whether C.M.’s treatment was “medically necessary.” The court hereby
remands the case for Blue Cross to provide a full and fair evaluation of Plaintiffs’ claims. Blue
Cross should consider the medical records, the services rendered by Waypoint, the appropriate
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level of care, and all applicable diagnoses. On remand, Blue Cross shall state and list expressly
the levels of care being applied, list each relevant criteria and state in detail the facts considered
in applying the criteria with citations to the administrative record. The review shall include a
dual analysis for both substance abuse and subacute care and explain, again with reference to the
administrative record, how each has been considered and applied. Blue Cross shall identify each
of the reviewers and their credentials. The court will retain jurisdiction over this matter until the
review on remand is completed and the parties have stated to the court that the review has fairly
and completely applied the correct criteria and applicable provisions as required by the Plan. The
Plaintiffs may raise with the court by further motion any failure by Blue Cross to comply with
the court’s order on remand.
2. Prejudgment Interest
An award of prejudgment interest is appropriate when it “serves to compensate the
injured party and its award is otherwise equitable.” Allison v. Bank One-Denver, 289 F.3d 1223,
1243 (10th Cir. 2002), as amended on denial of reh’g (June 19, 2002). Because the court
remands this matter to Blue Cross, the court reserves ruling on an award of prejudgment interest.
3. Attorney Fees and Costs
Under the ERISA statutory scheme, the court “in its discretion may allow a reasonable
attorney’s fee and costs of action,” 29 U.S.C. § 1132(g)(1), when a “claimant has achieved some
degree of success on the merits.” Cardoza v. United of Omaha Life Ins. Co., 708 F.3d 1196, 1207
(10th Cir. 2013) (citation and internal quotation marks omitted). The Tenth Circuit has provided
the following factors to guide the court’s determination:

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(1) the degree of the opposing party’s culpability or bad faith; (2) the opposing
party’s ability to satisfy an award of fees; (3) whether an award of fees would
deter others from acting under similar circumstances; (4) whether the party
requesting fees sought to benefit all participants and beneficiaries of an ERISA
plan or to resolve a significant legal question regarding ERISA; and (5) the
relative merits of the parties’ positions.
Gordon v. U.S. Steel Corp., 724 F.2d 106, 109 (10th Cir. 1983). “No single factor is dispositive
and a court need not consider every factor in every case.” Cardoza, 708 F.3d at 1207.
In weighing the relevant factors, the court finds that an award of attorney fees in this case
is appropriate. First, while the court has not found bad faith on the part of the plan administrator,
Blue Cross failed to properly evaluate C.M.’s substance use disorder, failed to apply or discuss
the reasoning behind its failure to apply a subacute level of care, and committed other serious
procedural irregularities. Second, Blue Cross has the ability to satisfy an award of attorney fees.
Third, awarding attorney fees against Blue Cross can reasonably be expected to deter plans and
administrators from disregarding ERISA’s minimum procedural regulations in the future. And
fourth, Plaintiffs have successfully proven on multiple grounds that Blue Cross’s decision
violated many of ERISA’s procedural regulations. Accordingly, the court awards Plaintiffs their
reasonable attorney fees and costs, as defined by 28 U.S.C. § 1920, incurred in prosecuting this
matter.
ORDER
For the foregoing reasons:
1. Defendant’s motion for summary judgment is DENIED (ECF No. 60);

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2. Plaintiffs’ motion for summary judgment is GRANTED IN PART and DENIED IN PART
(ECF No. 61);
a. The court DENIES Plaintiffs’ request for an order awarding benefits under the Plan;
b. The court reserves ruling on Plaintiff’s request for prejudgment interest; and
c. The court GRANTS Plaintiffs’ motion to find Blue Cross violated ERISA’s
procedural regulations and remands this case for reconsideration;
3. Plaintiffs’ request for attorney fees and costs is GRANTED. Within twenty-one days of this
order, Plaintiffs’ counsel should submit a petition for reasonable attorney fees and costs
associated with this action, including an affidavit indicating a calculation of fees, an accounting
of time, and costs.
4. Defendant’s decision denying Plaintiffs benefits for services at Waypoint is REVERSED and
this matter is remanded to Blue Cross for further proceedings consistent with this Order.

DATED this 24th day of March, 2021.

BY THE COURT:

______________________________
CLARK WADDOUPS
United States District Judge

31