K. et al v. United Behavioral Health et al
Filing
96
MEMORANDUM DECISION AND ORDER granting in part and denying in part Defendants' 75 Motion for Summary Judgment; and granting in part and denying in part Plaintiffs' 77 Motion for Summary Judgment. Plaintiffs' Mot ion is GRANTED as to their First Cause of Action for ERISA violations. The court DENIES Plaintiffs' Motion on their Second Cause of Action for Parity Act violations. This means that the court similarly GRANTS IN PART AND DENIES IN PART Defend ants' Motion for Summary Judgment. Defendants' Motion is DENIED as to Plaintiffs' First Cause of Action for ERISA violations and GRANTED as to Plaintiffs' Second Cause of Action for violations of the Parity Act. Since Defendants' denials were arbitrary and capricious, the court will not remand the claims to Defendants and instead orders Defendants to pay for A.K.'s treatment at Discovery. Signed by Judge Dale A. Kimball on 6/22/2021. (eat)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
D.K. and A.K.,
Plaintiffs,
MEMORANDUM DECISION
AND ORDER
vs.
UNITED BEHAVIORAL HEALTH and
ALCATEL-LUCENT MEDICAL
EXPENSE PLAN FOR ACTIVE
MANAGEMENT EMPLOYEES,
Case No. 2:17-CV-01328-DAK
Judge Dale A. Kimball
Defendants.
INTRODUCTION
This matter is before the court on the parties’ Cross-Motions for Summary Judgment.
(ECF No. 75, 77.) On June 21, 2021, the court held a hearing on these motions. At the hearing,
Brian S. King represented D.K and A.K (collectively, “Plaintiffs”) and Michael H. Bernstein
represented United Behavioral Health (“UBH”) and Alcatel-Lucent Medical (“ALM”)
(collectively, “Defendants”). The court took the matter under advisement. Now being fully
informed, the court issues the following Memorandum Decision and Order.
BACKGROUND
The Plan & Its Terms
The plan (the “Plan”) at issue is self-funded by Nokia of America Corporation (formerly
known as Alcatel-Lucent USA Inc.). It is undisputed that the Plan is an employee welfare benefit
plan governed by ERISA and that at all relevant times, Plaintiff D.K., A.K.’s father, was a
member of the Plan. Defendant UnitedHealthcare (“United”) and United’s affiliate,
UnitedHealthcare Behavior Health (“UHB”), are some of the Plan’s designated claim
administrators.
There are three provisions in the Plan that are germane to this case: the provision
detailing “Medical Necessity”; the conditions for qualifying for care in a “Residential Treatment
Facility”; and the definition of “Custodial Care.” Those provisions are quoted in turn.
Medically Necessary: (Rec. 27)
Medically Necessary treatment must meet the following criteria:
(i) . . . accepted by the health care profession in the U.S. as the most appropriate
level of care
(ii) . . . the safest and most effective level of care for the condition being treated.
(iii) . . . appropriate and required for the diagnosis or treatment of the accidental
injury, Illness, or Pregnancy.
(iv) There is not a less intensive or more appropriate place of service . . .
(v) . . . provided in a clinically controlled research setting using a specific research
protocol that meets standards equivalent to that as used by the National Institute of
Health for a life-threatening or seriously debilitating condition. The treatment must
be considered safe with promising efficacy as demonstrated by accepted clinical
evidence reported by generally recognized medical professionals or publications.
Residential Treatment Facility: (Rec. 36–37)
To qualify for Residential Treatment the following conditions must be met:
• The member is not in imminent or current risk of harm to self and others and/or
property.
AND
• Co-occurring behavior health and physical condition can be safely managed.
AND
• The “why now” factors leading to admission cannot be safely efficiently, or
effectively addressed and/or treated in a less intensive setting due to acute
changes in the member’s signs and symptoms and/or psychological and
environmental factors. Examples include:
o Acute impairment of behavioral or cognition that interferes with activities of
daily living to the extent that the welfare of the member or others is
endangered.
o Psychological and environmental problems that are likely to threaten the
member’s safety or undermine engagement in a less intensive level of care
without the intensity of services offered in this level of care.
2
Custodial Care: (Rec. 19)
Treatment or service prescribed by a medical professional, that could be rendered
safely and reasonably by a person not medically skilled, or that is designed mainly
to help the patient with daily living activities. These activities are the following:
(a) Personal care such as help in: walking, getting in and out of bed, bathing, eating
by spoon, tube or gastronomy, exercising and dress;
(b) Homemaking, such as preparing meals or special diets;
(c) Moving the patient;
(d) Acting as a companion or sitter;
(e) Supervising medication that can usually be self-administered; or
(f) Treatment or services that any person may be able to perform with minimal
instruction including, but not limited to, recording temperature, pulse, and
respirations, or administration and monitoring of feeding systems.
A.K.’s Mental Health Disorders & Treatment Before Long-Term Residential Treatment
Beginning in 2010, A.K. began having issues with her mental health. Initially, A.K.
struggled with fairly typical bouts of anxiety, Attention Deficit Disorder (“ADD”), and
depression. A.K.’s symptoms escalated quite quickly, and she began secretly cutting herself with
razor blades. A.K.’s parents did not discover that she had been cutting herself until February
2012, when she cut herself so severely that she was frightened into showing her parents. That
same month, A.K. began seeing a therapist. Despite the therapy, A.K. attempted suicide by
cutting herself on March 4, 2012.
The same day that A.K. attempted suicide, she was admitted to Seay Behavior Center
(“Seay”), an inpatient unit where she received treatment for her mental health disorders. On
March 13, 2012, A.K. transitioned to Seay’s day patient program and, on March 23, 2012, A.K.
was discharged from Seay.
On March 31, 2012, A.K. ran away from home and, when the police found A.K., she was
readmitted to Seay’s in-patient unit. After two weeks at Seay’s in-patient unit, A.K. was
discharged to Cedar Crest Residential Center (“Cedar Crest”), a sub-acute inpatient mental
health provider. While at Cedar Crest, providers diagnosed A.K. with “major depressive
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disorder, severe and recurrent.” On May 21, 2012, A.K. was discharged from Cedar Crest.
Following this discharge, A.K. began attending a day program at Children’s Medical Center
(“Children’s Medical”), resumed seeing her therapist, and started seeing a psychiatrist to manage
her medications.
In September 2012, A.K. started cutting herself again. Some of these cutting events
required visits to the emergency department. Due to her escalating and recurring pattern of selfharm, A.K. was re-enrolled in the day program at Children’s Medical. Despite the treatment at
Children’s Medical, A.K.’s self-harm continued to escalate. A.K. was again discharged from the
Children’s Medical day program on October 6, 2012.
A month later, A.K. became upset with her parents and ran away from home. When she
returned home, her anger toward her parents escalated and A.K. threatened—and then
attempted—to commit suicide by strangulation. That same evening, A.K. was again admitted to
Children’s Medical. This time, however, A.K. was admitted to Children’s Medical’s inpatient
program. A.K. only stayed a few days at the in-patient unit.
From October 18, 2012, to December 13, 2012, A.K. received treatment at Meridell
Achievement Center (“Meridell”), a residential treatment center. After discharge from Meridell,
A.K. transitioned to a day patient program at The Excel Center (“Excel”). Things were
seemingly improving for A.K. until she failed an exam in March 2013. After failing her exam,
A.K. began engaging in self-harming behaviors again.
On March 8, 2013, A.K. was admitted to the University Behavior Center (“University”)
for major depressive disorder and suicidal ideation. A.K.’s stay at University lasted only one
month. The day after being discharged, A.K. was readmitted to the hospital due to suicidal
ideation. Following her discharge from the hospital, A.K. continued to cut herself until she was
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readmitted to University on May 4, 2013. After a week-long stay at University, A.K. restarted
the program at Meridell for residential treatment.
Treatment Professionals Recommend Long-Term Residential Treatment for A.K.
In May 2013, while A.K. was at Meridell, the treating professionals began suggesting to
A.K.’s parents that A.K. would need long-term residential treatment to treat her mental health
disorders. A.K.’s parents then contacted Mr. William Johnson, A “Care Advocate Lead” at
Optum Healthcare (a subsidiary of UnitedHealth Group). Mr. Johnson counseled A.K.’s parents
to identify long-term treatment programs in order to request coverage. While A.K.’s parents
searched for a long-term treatment program, Defendants decided they would stop coverage for
A.K. at Meridell on July 30, 2013. Three days after leaving Meridell, A.K. cut herself again—
nearly severing her femoral artery and requiring 12 stitches. This self-harm incident required that
A.K. be readmitted to the inpatient program at Children’s Medical.
On August 14, 2013, A.K. was transferred from Children’s Medical to Meridell. Again,
A.K.’s treatment team at Meridell recommended that A.K. be placed in a structured, long-term
residential treatment program. Specifically, Ms. Kimberly Weaster, M.Ed., opined that A.K.
would need “ongoing specialized residential treatment . . . upon discharge from Meridell.” Dr.
Andrew Diedrich also wrote that “[b]ased on [his] experience with [A.K.], it [was] [his] clinical
recommendation that she needs a long-term residential placement.” Dr. K.K. Riedel, M.D., also
recommended that A.K. received “a long-term residential treatment center placement to
accomplish the goals necessary for her to succeed and have a chance at sustaining a healthy life.”
Defendants Approval & Denials for Coverage for Treatment at Discovery
Following the treating team’s advice that A.K. receive long-term residential care, A.K.’s
parents hired a consultant to help find appropriate long-term residential treatment options. This
5
consultant eventually homed in on two facilities. A.K.’s parents informed Mr. Johnson (Optum
Healthcare’s Care Advocate) of these options and Mr. Johnson told A.K.’s parents to submit a
request for coverage to Defendants. A.K.’s parents submitted their request for long-term
treatment. Eventually, Defendants notified A.K.’s parents that it had approved A.K.’s treatment
at Discovery Girls Ranch (“Discovery”) for an initial 90 days and that a review should be
conducted after the 90 days to see if continued treatment would be necessary. (Rec. 2027.) On
November 4, 2013, A.K. enrolled at Discovery. (Rec 2035.)
All told, in the 20 months between her first suicide attempt on March 4, 2012 and her
admission to Discovery, A.K. had: 11 psychiatric emergency room visits; five in-patient
hospitalizations (totaling 58 days); four stints of residential treatment centers lasting 38 days, 57,
days, 63 days, and 79 days (totaling 237 days); six enrollments into partial hospitalization
programs (totaling 69 days); weekly individual therapy; family therapy; medication management
from a psychiatrist; and some DBT therapy. None of this—or the sum of all these forms of
treatment—had proven sufficient to keep A.K. from regressing to her self-harming ways.
Discovery and long-term residential treatment were the professionals’ recommended—and
obvious— next steps.
Near the end of the 90-days, Defendants informed A.K.’s parents that they would be
denying coverage for treatment at Discovery beginning on February 9, 2014. This Adverse
Benefit Decision stated:
I have reviewed your child’s treatment plan that was submitted by Discovery Ranch
for Girls, and I have determined that coverage is not available under your child’s
benefit plan for the requested services of long term residential treatment. Based
upon current clinical member appears to require Mental health Residential
Treatment Center long term Level of Care but due to excluded service a denial will
be submitted.
6
(Rec. 442–43.) A.K.’s parents did not anticipate this denial—especially a denial based on the
service being unavailable under the plan since they received prior approval for treatment at
Discovery. So, A.K.’s parents requested more information about why the coverage was denied.
Defendants responded by stating that the service was not covered due to the provision titled
“Alternative treatment facilities accessed or Out-of-Network is excluded.” Defendants had,
however, retroactively eliminated this provision from the Plan.
On June 25, 2014, A.K.’s parents appealed the first denial of coverage, pointing out that
the provision that Defendants relied on to deny coverage had been removed. On August 1, 2014,
Defendants responded again, affirming their denial of coverage. This denial, performed by a
different reviewer, stated:
Based upon current medical records, the member appears to require Mental Health
Residential long term level of care but due to excluded service, a denial will be
submitted.. . . We are unable to authorize benefit coverage for Long Term
Residential treatment as the member’s benefit contract does not provide mental
health coverage for this type of treatment or service.
(Rec. 1904–05.) Notably, this language is nearly identical to the first denial decision letter.
On September 25, 2014, A.K.’s parents appealed the second denial, reminding
Defendants that the exclusion for “Alternative Treatment Facilities Accessed or Provided Out-ofNetwork” had been deleted from the Plan. Defendants acknowledged that these denials were
erroneous. (Rec. 468.) Upon recognizing—and admitting—that these first two denials were an
error, Defendants conducted another review of the submitted claims.
On December 10, 2014, Defendants submitted a third denial letter after conducting a new
medical necessity review. In this denial letter, Defendants stated that they reviewed several
documents (e.g., medical records, letters from K.K., the Plan’s Guidelines, etc.) and concluded
7
that the coverage would be denied because the treatment was not medically necessary.
Specifically, the relevant portion of the letter states:
As of the last covered day, . . . medical necessity was not met. UBH Leve of Care
Guidelines for Residential Treatment requires evidence of active treatment. It
requires that the physician is seeing the patient two times per week. The attending
psychiatrist during your daughter’s stay at Discovery Ranch assessed her only on a
monthly basis. The guideline also requires the treatment plan is targeted and
addresses the “why now” reason for the admission. The purpose of the admission
was to consolidate her gains, as she had a history of regressing when not in a
structured environment. However, on admission the attending psychiatrist found
little evidence of active psychiatric illness. She was described as having had
Dysthymia, in partial remission, Major Depressive Disorder, in remission but
having an Anxiety Disorder and what is termed a rule out for Group B Traits
(meaning personality issues). The treatment record indicates no evidence of
ongoing self-injurious behavior in the three months prior to the adverse
determination (or for that matter during her most recent treatment at Meridell, thus
providing objective evidence of significantly improved ability to control selfinjurious behavior. The “why now” reason for the admission had been addressed.
When the “why now” reason for admission has been addressed, the care is
considered custodial.
(Rec. 2004.) The letter also made a brief mention that A.K.’s treatment at Discovery was mainly
“focus[ed] on her personality issues” and that “personality issues are a long-term issue and are
not expected to respond within a reasonable amount of time. As such the focus of the treatment,
the personality issues, also would be considered custodial.” (Rec. 2004.)
On February 5, 2015, A.K.’s parents file another appeal. On March 6, 2015, Defendants
provided Plaintiffs with a fourth and final, internal denial letter. The letter states that the claims
administrator reviewed the medical record, case management notes, appeal letter, and the Level
of Care Guidelines before addressing why UBH was denying coverage. The denial portion of the
letter states:
As of the last covered day, 01/31/2014, medical necessity was not met. Optum
Level of Care Guidelines for Residential Treatment requires evidence of active
treatment, including that the psychiatrist see the patient twice a week, whereas in
this case your daughter was seen once a month. On admission, she was described
as having had Dysthymia, in partial remission, Major Depressive Disorder in
8
remission but having an Anxiety Disorder and what is termed a rule out for Group
B Traits (meaning personality issues). These diagnoses did not change and
medication changes were minimal. There was no evidence of self-injurious
behavior. This would appear to address the goals of admission which were to
consolidate your daughter’s gains so that she could control her self injurious
behavior. When this was achieved, care became custodial, which is not a covered
service. Finally, reimbursable residential treatment is defined as a 24 hour/7day
assessment and diagnostic services with active behavior health treatment. For all
the reasons noted above, the services provided by Discovery Ranch were not
consistent with this requirement.
(Rec. 2052–54.) This denial letter’s language is almost identical to the reasoning and language
from the third denial letter. Having exhausted their internal appeal obligations, Plaintiffs
requested an independent, external review.
The external review upheld Defendants' third and fourth denial rationale—namely, that
medical necessity was not met. (Rec. 2597–607.) Specifically, this external review stated:
The patients’ providers prior to her hospitalization recommended a lengthy
residential program, but the records provided for review do not indicate that as of
02/2014 through 11/2014 she continued to meet criteria for the most appropriate
level of care. She had improved. She could have been treated in a therapeutic school
environment for example. She was able to focus on school work. She required
structure and support but this could be obtained out of an acute residential setting
with coordinated therapeutic school, outpatient providers and either a residential
based school or family and individual therapy supports. There is not evidence
during this time period that remainder in a residential setting was the safest and
most effective level of care. She continued to have residential resistant behaviors.
She continued to act out behaviorally. These could have been managed at a
therapeutic school with intensive outpatient behavioral supports for individual and
family.
(Rec. 2606.) This fifth, external review was the final decision before Plaintiffs brought the
present suit.
Procedural History
On December 29, 2017, Plaintiffs filed the present action. (ECF No. 1.) In their Third
Amended Complaint, Plaintiffs assert two causes of action. (ECF No. 39.) In the First Cause of
Action, Plaintiffs assert an ERISA claim for recovery of benefits under 29 U.S.C. §
9
1132(a)(1)(B). (ECF No. 39.) The Second Cause of Action alleges a violation of the Mental
Health Parity and Addiction Equity Act (the “Parity Act”) under 29 U.S.C. §1132(a)(3). (ECF
No. 39.) On February 18, 2021, both parties filed cross-motions for summary judgment, seeking
summary judgment on both claims. (ECF No. 75, 77.) During the hearing on these motions,
Plaintiffs abandoned their Parity Act claim.
DISCUSSION
Since Plaintiffs abandoned their Parity Act claim, the court focuses only on Plaintiffs’
ERISA claim. Thus, this Order will proceed by discussing: (A) which standard of review applies
in this instance; (B) the merits of Plaintiffs’ ERISA claim; and (C) the appropriate relief that
should be awarded.
A. Standard of Review
The Supreme Court has held that “a denial of benefits challenged under [ERISA] must be
reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary
discretionary authority to determine eligibly for benefits or to construe the terms of the plan.”
Firestone Tire and Rubber Co. v. Brunch, 489 U.S. 101, 115 (1989). When a plan gives an
administrator this discretion, a court applies a “deferential standard of review, asking only
whether the denial of benefits was arbitrary and capricious.” Weber v. GE Grp. Life Assurance
Co., 541 F.3d 1002, 1010 (10th Cir. 2008) (citation and internal quotation marks omitted). A
plan administrator may forfeit the deferential standard when it fails to follow certain ERISA
procedures.
Plaintiffs claim that the deferential standard is forfeited “if [the claims administrator] fails
to comply with ERISA’s procedural requirements.” (ECF No. 77 at 31.) The ERISA procedural
standards are lengthy, and a full recitation of the procedures is not necessary here. Relevant to
10
this action are ERISA’s requirements that the plan administrator: (1) provide adequate notice,
“setting forth the specific reasons for [a] denial”; (2) afford a “full and fair review. . . of the
decision denying the claim”; (3) give “[t]he specific reason. . . for the adverse determination”;
(4) “[r]eference the specific plan provisions upon which the determination is based”; and (5) in
the context of denials for lack of medical necessity, explain “the scientific or clinical judgment
for the determination, applying the terms of the plan to the claimant’s medical circumstances.”
29 U.S.C. § 1133; 29 C.F.R. § 2560.503-1.
Plaintiffs seem to argue that almost any failure to comply with these procedural
requirements results in de novo review of the claim unless the failure is a de minimis violation or
done for good cause. Plaintiffs cite Rasenack v. AIG Life Insurance Co., 585 F.3d 1311, 1361–17
(10th Cir. 2009), 29 C.F.R. § 2590.715-2719(b)(2)(ii)(F)(1)–(2), and Halo v. Yale Health Plan,
Dir. of Benefits & Records Yale Univ., 819 F.3d 42 (2d Cir. 2016) to support this claim. The
court is unpersuaded that any of these citations supports Plaintiffs’ claim that the de novo
standard should apply in this instance.
First, the claims administrator in Rasenack did indeed forfeit the deferential standard but
not for generally failing to comply with ERISA’s procedures. 585 F.3d at 1315–16. Rather,
Rasenack’s holding that the claim was subject to de novo review was based upon the
administrator’s failure to issue a claim determination within its self-imposed time limits. Id.
Specifically, the court held that “where the plan and applicable regulations place temporal limits
on the administrator's discretion and the administrator fails to render a final decision within those
limits, the administrator's ‘deemed denied’ decision is by operation of law rather than the
exercise of discretion, and thus falls outside the Firestone exception.” Id. at 1316 (citing
Firestone Tire & Rubber Co., 489 U.S. at 115). Thus, the administrator’s failure resulted in the
11
claim being “deemed denied” due to procedural issues, not a substantive determination of the
claim’s merits. Id. That is not what happened here when Defendants stated that they reviewed the
medical records and found a lack of medical necessity.
Second, and relatedly, 29 C.F.R. § 2590.715-2719(b)(2)(ii)(F)(1)–(2) does not provide
that any ERISA procedural violation results in an administrator forfeiting the deferential
standard. Subsection (F) deals with when ERISA deems that the internal claims and appeals
process is exhausted. Specifically, Subsection (F)(1) states that a claimant may seek relief under
section 502(a) of ERISA for an administrator’s failure to comply with all of the requirements of
paragraph (b)(i). This challenge, however, must be “on the basis that the plan or issuer has failed
to provide a reasonable internal claims and appeals process that would yield a decision on the
merits of the claim.” Id. (emphasis added). Thus, it is only when the internal decision process
does not yield a decision on the merits of the claim that an administrator’s determination is done
“without the exercise of discretion.” Id. In this instance, UBH’s decision was—at least for the
final three reviews—based on the merits regarding the medical necessity of A.K.’s claim and,
therefore, does not result in Defendants forfeiting the deferential standard.
Third, Plaintiffs cites the Second Circuit’s opinion in Halo v. Yale Health Plan, Dir. of
Benefits & Records Yale Univ. to support their contention that the alleged ERISA procedural
violations in this instance warrant de novo review. 819 F.3d 42 (2d Cir. 2016). This argument,
urging courts in this district to adopt Halo’s reasoning, has been frequently rejected by the Utah
District Court judges—including this very court. See Joel S. v. Cigna, 356 F. Supp. 3d 1305,
1313 (D. Utah 2018); James C. v. Aetna Health & Life Ins. Co., Case No. 218-cv-00717-DBBCMR, 2020 WL 6382043, at *6 (D. Utah Oct. 30, 2020); H. v. Cigna Behavioral Health, Case
No. 2:17-cv-110-TC, 2018 WL 4082275, at *8 n.3 (D. Utah August 27, 2018); C. v.
12
ValueOptions, Case No. 1:16-cv-93-DAK, 2017 WL 4564737, at *4 (D. Utah October 11, 2017)
(10th Cir. Nov. 9, 2017).
All these courts rejected the Halo framework and then looked to the Tenth Circuit
precedent for determining the correct standard of review. The court finds Judge Barlow’s opinion
persuasive on the Tenth Circuit precedent for when the deferential standard is forfeited:
Under Tenth Circuit precedent, de novo review is appropriate despite a plan's
conferral of discretion on a plan administrator if: the administrator fails to exercise
discretion within the required timeframe; the administrator fails to apply its
expertise to a particular decision; the case involves serious procedural irregularities;
the case involves procedural irregularities in the administrative review process; or
where the plan members lack notice of the conferral of administrator discretion over
the plan.
James C., 2020 WL 6382043, at *7 (footnotes and quotation marks omitted). None of those
situations are present here. Accordingly, the court will apply the deferential arbitrary and
capricious standard.
B. ERISA Claim
Now that the court has determined the standard of review, it must determine if
Defendants’ adverse benefits decisions were arbitrary and capricious under the terms of the Plan.
Under this standard, the administrator’s “decision will be upheld unless it is not grounded on any
reasonable basis.” Kimber v. Thiokol Corp., 196 F.3d 1092, 1098 (10th Cir. 1999) (emphasis in
original) (citation omitted). “This standard is a difficult one for a claimant to overcome.” Tracy
O. v. Anthem Blue Cross Life & Health Ins., 807 F. App'x 845, 853–54 (10th Cir. 2020) (citation
omitted). The arbitrary and capricious review of an ERISA benefits decision looks to whether the
decision: “(1) . . . was the result of a reasoned and principled process, (2) is consistent with any
prior interpretations by the plan administrator, (3) is reasonable in light of any external standards,
and (4) is consistent with the purposes of the plan.” Id. at 854 (citations omitted). Additionally,
13
failure to “consistently apply the terms of an ERISA plan” and inconsistent interpretations with
the “plans unambiguous language” are considered arbitrary and capricious. Id. (citations
omitted).
In this case, Plaintiffs raise three reasons why Defendants’ determinations were arbitrary
and capricious: (1) medical necessity was met under the terms of the Plan; (2) Defendants
incorrectly disregarded A.K.’s treating physicians’ opinions; and (3) Defendants did not
articulate how they applied the terms of the Plan to A.K.’s medical history or current condition.
The court will add another consideration, and discuss (4) the implications of UBH’s inconsistent
denial rationales. Plaintiffs certainly raised this fourth issue but the court wishes to address it
separately. This court will discuss each issue in turn.
1. Medically Necessary
The court divides Plaintiffs’ medically necessary arguments into two categories: (i) the
“why now” factors and (ii) the “Custodial Care” portions of the Plan and how the reviewers
interpreted those terms. Additionally, the court will not redefine the relevant terms of the Plan
here, as those are detailed above. See BACKGROUND, supra.
i.
The “Why Now” Factors
Plaintiffs take aim at the third and fourth letters’ reasoning that coverage would be denied
because the “why now” reasons for admission had been addressed. According to Plaintiffs, the
“why now” factors had not been addressed because the purpose of admission was not to ensure
that A.K. stopped self-harming behavior while at Discovery, but rather to provide long-term care
until she had developed the tools to break the cycle of relapsing into self-harming behavior upon
leaving inpatient care. The final three reviews stated that this admission goal had been satisfied
because she had improved or had not shown self-harming behavior.
14
The court finds that, under the deferential standard, the final three reviewers did not
abuse their discretion because the evidence could reasonably be interpreted to show that A.K.
could have been discharged to a lower level of care because her most pressing admission factors
had allegedly subsided. Indeed, the evidence can support a finding that during her first 90 days at
Discovery that A.K. had improved in important ways. The court notes, however, that this is a
particularly hard issue: at some point during long-term residential treatment, a patient must be
discharged to a lower level of care to see if the treatment helped stop self-harming behavior.
There is no sure way to tell if discharge would be appropriate after three months, or six months,
or a year. The court cannot properly say that the final three reviewers arbitrarily or capriciously
found that A.K.’s three months of treatment had met the “why now” factors and that a lower
level of care would be appropriate.
For the foregoing reasons, the court finds that the final three reviewers did not abuse their
discretion in interpreting the “why now” factors as used in their denial rationales.
ii.
Custodial Care
Plaintiffs argue that the third and fourth denial letters arbitrarily concluded that because
the “why now” factors of A.K.’s admission had been addressed that her care became
“Custodial.” Plaintiffs state this is an incorrect conclusion because the care A.K. received at
Discovery does not meet the Plan’s definition of “Custodial Care.” As noted above, the Plan
defines “Custodial Care” as:
Treatment or service prescribed by a medical professional, that could be rendered
safely and reasonably by a person not medically skilled, or that is designed mainly
to help the patient with daily living activities. These activities are the following:
(g) Personal care such as help in: walking, getting in and out of bed,
bathing, eating by spoon, tube or gastronomy, exercising and dress;
(h) Homemaking, such as preparing meals or special diets;
(i) Moving the patient
(j) Acting as a companion or sitter;
15
(k) Supervising medication that can usually be self-administered; or
(l) Treatment or services that any person may be able to perform with
minimal instruction including, but not limited to, recording temperature,
pulse, and respirations, or administration and monitoring of feeding
systems.
(Rec. 19.) According to Plaintiffs, the mere fact that A.K. was no longer exhibiting self-injurious
behavior does not demonstrate that her care, for example, “could be rendered . . . by a person not
medically skilled” or was “designed to mainly help the patient with daily living activities.” (Rec.
19.) Defendants do not rebut this argument in any of their summary judgment papers. Without
the help of Defendants’ briefing, the court is persuaded by Plaintiffs’ arguments.
The treatment and care that A.K. received at Discovery continued to include physician
visits, counseling, therapy, medication changes, etc. Those are not services that can be rendered
by a medically unskilled person. Additionally, A.K.’s care had nothing to do with her assisting
her with daily activities. There is no evidence that A.K. was being assisted with any of the things
listed in (m)–(r) aboveor that anything that is remotely like those services. Therefore, the care
A.K. received at Discovery was not Custodial Care as defined by the Plan. In short, under the
Plan, treatment does not automatically become Custodial Care just because it is not medically
necessary. Such an interpretation of the Plan’s terms is erroneous and a denial based thereon is
arbitrary.
For the foregoing reasons, the court concludes that Defendants abused their discretion in
finding that A.K.’s care had become “Custodial” under the Plan.
2. A.K.’s Treating Professionals’ Opinions
“Nothing in [ERISA] itself . . . suggests that plan administrators must accord special
deference to the opinions of treating physicians. Nor does [ERISA] impose a heightened burden
of explanation on administrators when they reject a treating physician's opinion.” Black &
16
Decker Disability Plan v. Nord, 538 U.S. 822, 831 (2003). However, “[p]lan administrators . . .
may not arbitrarily refuse to credit a claimant's reliable evidence, including the opinions of a
treating physician.” Id. at 834. The Tenth Circuit phrases this rule as a “narrow principle that
fiduciaries cannot shut their eyes to readily available information when the evidence in the
record suggests that the information might confirm the beneficiary's theory of entitlement and
when they have little or no evidence in the record to refute that theory.” Gaither v. Aetna Life
Ins. Co., 394 F.3d 792, 807 (10th Cir. 2004)
Id.
If benefits are denied . . . the reason for the denial must be stated in reasonably clear
language, . . . [and] if the plan administrators believe that more information is
needed to make a reasoned decision, they must ask for it. There is nothing
extraordinary about this: it's how civilized people communicate with each other
regarding important matters.
Plaintiffs claim that Defendants’ decisions were arbitrary because Defendants
disregarded and failed to engage with the opinions of A.K.’s treating professionals. The court
finds that the claims administrators clearly reviewed the treating professionals’ opinions. For
example, Defendants third denial letter states that the administrator reviewed: (1) a “[l]etter from
K.K. detailing the reasons she believed the decision was in error”; (2) “correspondence from
K.K. with exhibits”; (3) the IPRO letter; (4) “Note from Kimberly Weater”; (5) letter from
Andrew Dieterich MD; (6) “Letter from Tim Lowe PhD and Ryan Williams MD of Discovery
Ranch”; and (7) “Attending Physician Progress notes.” (Rec. 2004.) The fourth denial letter is
less detailed but still states that the administrator reviewed the medical record, case management
notes, and appeal letterpresumably from K.K., including attachments. (Rec. 2052–54.) Lastly,
the fifth, external determination states that it was based upon a review of the appeal information,
denial letters, correspondence between K.K. and UBH, submitted medical information,
submitted criteria, and the Summary Plan Description. Again, these files likely included A.K.’s
17
treating professionals’ opinions. (Rec. 2606.) Thus, the evidence shows the claims administrators
did not disregard the treating professionals’ opinions. Whether Defendants engaged with those
opinions is an entirely different matter.
In this instance, the evidence shows the administrators did not engage with A.K.’s
treating physicians’ opinions. As noted above, A.K. received extensive out- and in-patient
treatment in the 20 months leading up to her admission to Discovery. None of that treatment was
sufficient to keep A.K. from reverting to self-harming behavior. During that time, several
physicians recommended that A.K. receive long-term care. All of A.K.’s medical history and her
treating professionals’ opinions stand in stark contrast to the denial letters’ scant reasoning. For
example, the only reference to all of A.K.’s treatment and professionals’ opinions is a passing
reference stating that the purpose of the treatment was to “consolidate” A.K.’s “gains.” This
language comes directly from Dr. Riedel’s September 10th letter to the IPRO. That is it. There is
no more acknowledgement of A.K.’s serious mental health history. Indeed, this strikes the court
as an instance where Defendants “shut their eyes to readily available information when the
evidence in the record suggests that the information might confirm the [Plaintiffs’] theory of
entitlement.” Gaither, 394 F.3d at 807.
Thus, the court finds that Defendants abused their discretion by not fairly engaging with
A.K.’s treating professionals’ opinions.
3.
Applying the Terms of the Plan to A.K.’s Medical History
Plaintiffs argue that Defendants abused their discretion by failing to apply the specific
terms of the Plan to any specific portion of A.K.’s medical records. The law is not very clear on
what level of specificity is required from claims administrators in applying a plan’s terms to the
medical records. Plaintiffs relied upon Judge Parrish’s reasoning from Raymond M., wherein
18
claims denials were deemed arbitrary and capricious because the letters “contain[ed] neither
citations to the medical record nor references to the report by [the plaintiff’s] doctors” and were
merely “conclusory statements without factual support.” 463 F. Supp. 3d at 1282. 1
In Raymond M., Judge Parrish draws the standard of review from McMillan v. AT&T
Umbrella Benefit Plan No. 1, 746 F. App'x 697 (10th Cir. 2018). 2 In McMillan, the Tenth Circuit
took issue with a plan administrator’s denial of short-term disability benefits. Id. at 705–06. The
court stated that the problem with the denials was “the lack of any analysis, let alone a reasoned
analysis. For example, the reviews by [the claims administrators] contain[ed] nothing more than
conclusory statements that [the plaintiff] could travel without any discussion whatsoever.” Id. at
706 (emphasis in original). Indeed, a review of the facts in that case indicates that the reviewers
did not do any analysis about the patient’s ability to travel. Id. at 699–705. Thus, McMillan
concluded that when a claims administrator makes a health conclusion it must provide reasoning
and citation to the record. Id.
Extrapolating from McMillan, Judge Parrish concluded that the denial letters in Raymond
M. similarly failed to fulfill their obligation to conduct a fair review of the claims. Raymond M.,
463 F. Supp. 3d at 1282. For example, the most detailed of denial letters from Raymond M.
states:
You are a 17 year old female admitted to the mental health residential treatment
service level of care on 12/21/2015. On admission, you were withdrawn and not
fully cooperative with the treatment programming. You were treated with
individual, group, family, horse, and milieu therapies. You successfully ventured
away from the facility several times without incident and had not engaged in any
1
This case is currently on appeal to the Tenth Circuit. Raymond M. v. Beacon Health Options,
Appeal No. 21-4041(Mar. 30, 2021).
2
Judge Parrish also relies on Kerry W. v. Anthem Blue Cross & Blue Shield, 444 F. Supp. 3d
1305, 1313 (D. Utah 2020). That case similarly draws its standard from McMillan v. AT&T
Umbrella Benefit Plan No. 1, 746 F. App'x 697 (10th Cir. 2018). Thus, the court does not discuss
Kerry W since the standard is what is at issue here.
19
self-harming behaviors. You were not psychotic or aggressive and you have a
supportive family. As of 01/19/2016 it was not medically necessary for your
symptoms to be treated with residential treatment service monitoring and they could
have been safely addressed in a less restrictive level of care such as in outpatient
treatment with individual treatment, family work and medication management.
Id. at 1264. It is this denial letter that prompted Judge Parrish to hold that the “denial letters
contain[ed] neither citations to the medical record nor references to the reports . . . concerning
the state of [the patient’s] condition.” Id. at 1282. Thus, Judge Parrish concluded the denial was
arbitrary. Id.
Here, the denial letters similarly do not contain any specific citation to the medical record
whatsoever. Instead, the denial letters simply contain general statements about A.K.’s condition
on admission and minimal statements about her treatment while at Discovery. As noted, there is
no specific reference to any of her medical history or professionals’ opinions prior to her
admission to Discovery. For example, the letters generally state: (1) that when A.K. was
admitted she was diagnosed as having “Dysthymia, in partial remission, Major Depressive
Disorder in remission but having an Anxiety Disorder and what is termed a rule out for Group B
Traits (meaning personality issues)”; (2) A.K.’s diagnoses upon admission “did not change”
during her first three months; (3) A.K.’s “medication changes were minimal”; (4) “[t]here was no
evidence of self-injurious behavior”; (5) A.K.’s “goals of admission”to consolidate her gains
and control self-injurious behaviorappeared to have been met; (6) because her goals had been
met care became custodial; and (7) the Plan’s guidelines for Residential Treatment required
“evidence of active treatment, including that the psychiatrist see the patient twice a week,
whereas [A.K.] was seen once a month.” (Rec. 2052–54.) Of these seven statements, only two
make a general reference to A.K.’s condition: that her diagnoses “did not change” and there was
no evidence of self-injurious behavior. Neither of these statements are supported by citations to
20
the record or explained in the context of A.K.’s prior, extensive mental health medical history.
Additionally, the letters do not explain or cite to any evidence to support its conclusion that
A.K.s goals of admission had been met and that she would not return to self-harming behavior
upon discharge. Without any support, the court finds that these conclusory statements result in an
arbitrary denial of A.K.’s treatment.
At the hearing, Defendants urged the court to look at the claims administrators’ notes and
not just the denial letters sent to Plaintiffs. Defendants claim that these notes are more
substantive and explain in more detail A.K.’s medical history and the reason why coverage for
Discovery was no longer medically necessary. Plaintiffs’ counsel argues that it would be
improper for the court to consider these documents as they were not provided to Plaintiffs. The
court agrees with Plaintiffs.
The court was unable to find any Tenth Circuit case law that speaks to this issue. The
First Circuit has, however, discussed “whether a plan administrator may defend a denial of
benefits on the basis of a different reason than that articulated to the claimant during the internal
review process.” Glista v. Unum Life Ins. Co. of Am., 378 F.3d 113, 115 (1st Cir. 2004). In
deciding this issue, the Glista court declined to adopt a “hard-and-fast rule” on this issue, instead
opting to take this on a case-by-case basis. Id. In finding that the administrator could not rely on
reasons that had not been articulated to the claimant, the Glista court considered the following:
(1) would “traditional insurance law place[] the burden on the insurer to prove that the
applicability” of a similar benefits exclusion rationale; (2) did the plan “expressly provide that
participants ‘must receive a written explanation of the reasons for the denial’”; (3) did the
administrator give an “explanation for why it did not explain earlier” its unstated reason for
21
denying the claim; and (4) did the facts of the situation require that the controversy be resolved
quickly? Id. at 131
The court finds Glista persuasive and will rely on its reasoning. Here, the court must hold
Defendants to their denial rationales articulated in the denial letters because two of the Glista
considerations are satisfied. First, the Plan requires “written notification from the applicable
Claims Administrator” that would include: “(a) The specific reason or reasons for the denial;
[and] (b) specific reference to any pertinent Plan provisions on which the denial was based[.]”
(Rec. 129–30.) In fact, if a denial was “based on Medical Necessity,” the notification must
provide “an explanation of the scientific or clinical judgment of the determination, applying the
terms of the Plan to the Participant’s circumstances.” (Rec. 129–30.) As explained above, that
did not happen here. Second, Defendants have not given any reason why they did not include
their full reasoning for the denial in the letters sent to Plaintiffs. Without any reason justifying
their failure to explain their internal reasoning for denying A.K.’s claims, Defendants cannot
now rely on those rationales.
Even were the court to consider those additional materials, the court is unpersuaded that
the internal documents make any difference. The internal documents behind the third denial
letter are, in fact, more detailed. (Rec. 1544–46.) This document details A.K.’s medical history
quite thoroughly, noting her in-patient admissions, partial hospitalizations, residential treatment
center stays, emergency room visits, out-patient treatment, and her history of regressing after
discharge. (Rec. 1545.) The problem with these records—besides the fact that they were not
communicated to Plaintiffs—is that they undermine the denial letters’ conclusions and
assertions. For example, the internal document states “[t]he chart [from Discovery] is absent of
treatment plan updates that review her progress in attaining her objectives. Updated goals or
22
objectives are never stated. Of significance is the absence of notes relating to her progress in
controlling suicidal threats, runaway behavior and self-injurious behavior.” (Rec. 1545
(emphasis added).) In the third denial letter, however, Defendants assert that “[t]he treatment
record indicates no evidence of ongoing self-injurious behavior.” (Rec. 2004.) This is misleading
because it suggests that A.K. had not had self-injurious or suicidal thoughts when the record
actually indicates that there was simply an absence of notes on that subject. A lack of notes about
self-injurious behavior does not mean A.K. was not struggling with such thoughts or behavior.
As the aphorism goes, absence of evidence is not evidence of absence. Additionally, the third
denial letter expressly states that “[t]throughout the treatment, the attending psychiatrist did not
change [A.K.’s] diagnoses.” (Rec. 2004.) That statement is directly contrary to Defendants
internal documents noting that “[t]he Master Treatment Plan changed the diagnosis to Major
Depressive Disorder, recurrent and severe, Reactive Attachment Disorder and Anxiety Disorder
NOS.” (Rec. 1545.) Similar problems are present in the fourth denial letters’ internal supporting
notes. (Compare Rec. 2575–76 with Rec. 2052–53.) Thus, the internal documents that were not
shared with Plaintiffs actually work to show that the denial letters’ rationales were unsupported
by the record, including Defendants own notes.
For the foregoing reasons, the court concludes that the denials were arbitrary because
they lacked “any analysis, let alone a reasoned analysis,” consisting of “nothing more than
conclusory statements.” See McMillan, 746 Fed. App'x at 706 (emphasis omitted).
4. Inconsistent Denial Letters
As noted above, one of the factors that a court must consider in ERISA benefits decision
is the consistency of the denial reason between the administrators. See Tracy O., 807 F. App'x at
853–54. Plaintiffs argue that the first two denial letters are wildly inconsistent with the last three
23
denials. Defendants attempt to distance themselves from the first two letters by: (1) claiming that
those letters did not constitute a medical necessity review; (2) asserting that the last three denials
were consistent; and (3) arguing that the first two denials were based upon different versions of
the Plan. The court will address each argument in turn.
First, the court is concerned at Defendants argument that the first two reviewers did not
conduct a medical necessity review. This argument is unsupported by the evidence. This is
manifest by looking at the first two denial letters and the supporting internal documents. The first
two denial letters clearly state that the reviewers looked at the medical records:
Based upon current clinical [sic] member appears to require Mental Health
Residential Treatment Center long term level of care.
***
Based upon current medical records, the member appears to require Mental Health
Residential long term level of care.
(Rec. 442, 1904.). The plain language indicates that the claims administrator reviewed the
records and that A.K. appeared to require additional long-term care. Indeed, Defendants have not
pointed to any portion of the Plan or the record that demonstrates there was any meaningful
difference in the reviews’ underlying the denial letters. The internal document supporting the
second denial letter states that A.K. “does meet [the criteria] for continued [mental health
Residential Treatment level of care]; but long term residential care as defined below is not a
covered service.” (Rec 1872.) Therefore, the first and second denial letters stand in direct
opposition to the final three letters. These conflicting reasons alone are enough for the court to
find that the Defendants’ denials were arbitrary.
Second, the final external denial letter’s rationale is different from the third and fourth
denial letters, contrary to Defendants’ assertions. While it is true that all three of the final
reviewers found that medical necessity was not met, their reasoning for why it was not met
24
differed. Specifically, the external review focused mainly on the Plan’s requirement that
treatment be the “most appropriate, safest, and most effective level of care.” (Rec. 2606.) The
external reviewer’s opinion was, in short, that A.K.’s “remainder in a residential setting” was not
“the safest and most effective level of care” because her conditions “could have been managed at
a therapeutic school with intensive outpatient behavioral supports.” (Rec. 2606.) This reasoning
is different than the third and fourth reviewers’ assertions that A.K.’s care had “become
custodial.” (Rec. 2004, 2053.) As noted above, A.K.’s care did not meet the Plan’s definition of
custodial care. This custodial care error is only further illustrated by the external reviewer not
making that same misinterpretation.
Third, Defendants did not show that the outdated version of the Plan would require a
different type of claims review process. In fact, it appears from the record that the only
difference in the plan was that the exclusion for residential treatment care had been deleted.
Thus, Defendants’ assertion that it should not be held to account for an interpretation based on an
old version of the Plan is not well taken because the Plan was—in all relevant and important
ways—the same as the Plan upon which the final three reviews were based.
For the foregoing reasons, the court finds that the Defendants’ shifting and inconsistent
denial rationale is arbitrary and capricious.
C. Appropriate Relief
“[W]hen a reviewing court concludes that a plan administrator has acted arbitrarily and
capriciously in handling a claim for benefits, it can either remand the case to the administrator
for a renewed evaluation of the claimant's case, or it can award a retroactive reinstatement of
benefits.” DeGrado v. Jefferson Pilot Fin. Ins. Co., 451 F.3d 1161, 1175 (10th Cir. 2006)
(citations and internal quotation marks omitted). “The remedy when an ERISA administrator
25
fails to make adequate findings or to explain adequately the grounds of her decision is to remand
the case to the administrator for further findings or explanation.” Id. at 1288 (citation omitted).
On the other hand, remand is unnecessary only when “the evidence clearly shows that the
administrator's actions were arbitrary and capricious, or the case is so clear cut that it would be
unreasonable for the plan administrator to deny the application for benefits on any ground.” Id.
(citations and quotation marks omitted).
In this instance, the court finds that Defendants’ denials were, in part, arbitrary and
remand is not required. Although Defendants “fail[ed] to make adequate findings or to explain
adequately the grounds of [their] decision”—which would require remand—that is not the basis
for the court’s decision to decline to remand this case. Id. Instead, the court basis its decision on
the fact that Defendants’ denials were arbitrary and capricious. The denials were arbitrary
because Defendants gave inconsistent denial rationales and erroneously interpretated and applied
the Plans’ terms. These two types of denials fall into the category of denials for which remand is
not necessary according to Caldwell. Accordingly, the court will not remand these claims to
Defendants and instead orders Defendants to pay for A.K.’s treatment at Discovery.
CONCLUSION
For the foregoing reasons the court GRANTS IN PART AND DENIES IN PART
Plaintiffs Motion for Summary Judgment. (ECF No. 77.) Plaintiffs’ Motion is GRANTED as to
their First Cause of Action for ERISA violations. The court DENIES Plaintiffs’ Motion on their
Second Cause of Action for Parity Act violations. (ECF No. 77.) This means that the court
similarly GRANTS IN PART AND DENIES IN PART Defendants’ Motion for Summary
Judgment. (ECF No. 75.) Defendants’ Motion is DENIED as to Plaintiffs’ First Cause of Action
for ERISA violations and GRANTED as to Plaintiffs’ Second Cause of Action for violations of
26
the Parity Act. Since Defendants’ denials were arbitrary and capricious, the court will not
remand the claims to Defendants and instead orders Defendants to pay for A.K.’s treatment at
Discovery.
DATED this 22nd day of June, 2021.
BY THE COURT:
DALE A. KIMBALL
United States District Judge
27
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