Filed: Nov. 01, 2018
Latest Update: Nov. 01, 2018
Summary: ORDER DENYING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY ADJUDICATION RE: STANDARD OF REVIEW; DIRECTIONS TO PARTIES Re: Dkt. No. 73 MAXINE M. CHESNEY , District Judge . Before the Court is plaintiffs Brian H.and Alex H.'s "Motion for Partial Summary Adjudication re: Standard of Review," filed August 24, 2018, by which motion plaintiffs ask the Court to review de novo, rather than for an abuse of discretion, a decision to deny them benefits under an ERISA plan. Defendants 1 have filed oppositio
Summary: ORDER DENYING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY ADJUDICATION RE: STANDARD OF REVIEW; DIRECTIONS TO PARTIES Re: Dkt. No. 73 MAXINE M. CHESNEY , District Judge . Before the Court is plaintiffs Brian H.and Alex H.'s "Motion for Partial Summary Adjudication re: Standard of Review," filed August 24, 2018, by which motion plaintiffs ask the Court to review de novo, rather than for an abuse of discretion, a decision to deny them benefits under an ERISA plan. Defendants 1 have filed opposition..
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ORDER DENYING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY ADJUDICATION RE: STANDARD OF REVIEW; DIRECTIONS TO PARTIES Re: Dkt. No. 73
MAXINE M. CHESNEY, District Judge.
Before the Court is plaintiffs Brian H.and Alex H.'s "Motion for Partial Summary Adjudication re: Standard of Review," filed August 24, 2018, by which motion plaintiffs ask the Court to review de novo, rather than for an abuse of discretion, a decision to deny them benefits under an ERISA plan. Defendants1 have filed opposition, to which plaintiffs have replied. Having read and considered the papers filed in support of and in opposition to the motion, the Court rules as follows.
1. The ERISA plan here at issue, the Blue Shield PPO Health Plan (hereinafter, "the Plan"), contains language sufficient to grant Blue Shield, the plan administrator, discretionary authority to determine eligibility for and entitlement to benefits thereunder. (See Administrative Record (hereinafter "AR") at BSC000059 (providing "Blue Shield shall have the power and authority to construe and interpret the provisions of this Plan, to determine the Benefits of this Plan and determine eligibility to receive Benefits under this Plan"));2 see also, e.g., Bergt v. Ret. Plan for Pilots Employed by Markair, Inc., 293 F.3d 1139, 1142 (9th Cir. 2002) (holding plan "unambiguously" gave "broad discretion" to plan administrator by granting plan administrator "`power' and `duty' to `interpret the plan and to resolve ambiguities, inconsistencies and omissions' and to `decide on questions concerning the plan and the eligibility of any Employee'").
2. Contrary to plaintiffs' argument, § 10110.6 of the California Insurance Code, which precludes enforcement of a discretionary clause in a "policy . . . that provides or funds life insurance or disability insurance coverage," see Cal. Ins. Code § 10110.6(a), is not applicable, as the Plan provides health insurance. (See AR at BSC 000021); Bain v. United Healthcare Inc., 2016 WL 4529495, at *9 (N.D. Cal. Aug. 30, 2016) (holding "Section 10110.6 does not void the discretionary clause" where coverage is provided by "a health care service plan and not a disability insurance policy").3
3. Contrary to plaintiffs' argument, the "ultimate decisionmaker" (see Mot. at 6:6) was not Blue Shield's Mental Health Administrator (hereinafter, "MHSA"), to which discretionary authority arguably has not been granted. Although the initial decision denying plaintiffs' claims was made by MHSA (see AR at BSC000022, BSC000825-26), the final decision was made by Blue Shield (see id. at BSC000060-61, BSC000827-28, BSC001740-42), to which, as discussed above, discretionary authority has been granted.4
4. Contrary to plaintiffs' argument, Blue Shield's decision denying plaintiffs' claims does not constitute a "gross deviation from the Plan terms" (see Mot. at 3:4-28, 4:1-4, 7:3), nor did Blue Shield "utterly fail[] to follow applicable procedures" (see id. at 7:6-7). In particular, contrary to plaintiff's argument, nothing in the Plan precludes Blue Shield from applying the "Magellan Medical Necessity Criteria Guidelines" in determining whether services are "medically necessary" under the Plan. (See AR at BSC000067-68 (broadly defining "Medically Necessary")); see also Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 971 (9th Cir. 2006) (holding de novo review applies "[w]hen an administrator engages in wholesale and flagrant violations of the procedural requirements of ERISA, and thus acts in utter disregard of the underlying purpose of the plan").
5. Contrary to plaintiff's argument, the existence of a structural conflict of interest, i.e. where, as here, the same entity "acts as both the plan administrator and the funding source for benefits," see Abatie, 458 F.3d at 965, does not require the Court to review Blue Shield's denial of plaintiffs' claims with "heightened skepticism" (see Reply at 8:8-10). Rather, although a structural conflict should be weighed as a "factor" in determining whether a plan administrator has abused its discretion, see Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 115 (2008), courts need not accord such factor significant weight in the absence of evidence of bias. See Abatie, 458 F.3d at 968 (holding level of skepticism by which court views decision by administrator with structural conflict "may be low" if conflict "unaccompanied, for example, by any evidence of malice, of self-dealing, or of a parsimonious claims-granting history"). At this stage of the proceedings, no such additional evidence has been offered.
CONCLUSION
For the reasons set forth herein, plaintiffs' motion is hereby DENIED. The Court, taking into account all relevant factors, will review Blue Shield's decision for abuse of discretion.
In light of the above, the parties are hereby DIRECTED to submit, no later than November 16, 2018, a proposed schedule for the filing of their respective briefs and hearing on the merits.
IT IS SO ORDERED.