R. BRYAN HARWELL, District Judge.
Pending before the court are the parties' memoranda in support of judgment.
The parties entered into a Joint Stipulation agreeing to certain relevant portions of the administrative record and certain relevant portions of the plan documents. However, Plaintiffs do not stipulate that this is the complete record due to "Defendants' many errors and omissions in compiling the record". (Jt. Stipulation, ECF No. 48, p. 4) Plaintiffs also object to the defendants' inclusion in the record of a document entitled "Practice Guideline for the Treatment of Patients with Substance Use Disorders, Second Edition", by the American Psychiatric Association (APA), UBH 916-923, on the basis that it was not furnished to the plaintiffs in response to the limited requests for production of documents authorized by the Court and was disclosed for the first time on the day before the deadline for filing memoranda in support of judgment. The parties also do not agree on the appropriate scope of this Court's review. The defendants assert that an abuse of discretion scope of review applies because the plan documents confer discretion upon them to interpret the plan. They also assert that the Plan Administrator has delegated that discretion to UBH, the Claims Administrator. The plaintiffs contend that, although the Plan language appears to vest discretion in Sysco, "repeated procedural and substantive violations by Defendant mean that this Court should review the administrative denials de novo." (Jt. Stipulation, p. 2, ECF No. 48) The parties agree that the standard of review is not affected by a conflict of interest, as the Plan is self-funded by Sysco, and UBH is the claims administrator. The parties also agree that the Court may dispose of this matter based upon the joint stipulation, the attachments thereto, and the memoranda in support of judgment, except that the plaintiffs assert that the Court may also need to reference Plaintiff's Motion for Discovery and related filings, Defendants' discovery responses to the limited discovery allowed by the Court, and the plaintiffs' motion to compel.
Plaintiff Wayne Boyd's employer, Sysco Corporation, ("Sysco") established an employee welfare benefit plan to provide various benefits to employees and their families. The plan is entitled "Sysco Corporation Group Benefit Plan" ("the Plan") (UBH 0870-0900). Under the Plan documents, Sysco is the plan administrator, and the Plan Administrator may delegate its duties and discretionary authority to a third party Claims Administrator.
The Plan provides
The Plan provides for an initial claims determination and an appeal within the Plan. (UBH 0880-0881)
A.
This case involves Boyd's claim for mental health/substance abuse benefits under the Plan for treatment received by him at a residential rehabilitation program, Narconon Vista Bay, California, from July 23, 2010 through August 26, 2010.
At the time of his admission to August West on July 13, 2010, Boyd had been using "3x2 [Xanax] bars x 1 year" and "Suboxone x 2 years." The Suboxone dose was 24 mg daily. (UBH 0793, 0798) He was, upon admission, "poly drug dependent: Xanax + Suboxone." (UBH 0793) Those facts are listed under "Axis I," which is the category in the DSM for acute conditions needing treatment. (UBH 0793) Under close supervision by physicians at August West, Boyd was tapered off of Suboxone and Xanax and prescribed phenobarbital for alcohol withdrawal. (UBH 0794-798) The records reflect tremors, sweats, diarrhea, anxiety/agitation, muscle cramping and sleeplessness. (UBH 0801) Boyd went through withdrawal for ten days, with the withdrawal symptoms gradually decreasing over the course of the ten day medical treatment (UBH 0799). The taper (i.e., a physician prescribing smaller and smaller dosages of the drugs to which he was addicted) lasted through July 22, 2014, the date on which Boyd took his last tapered dose of suboxone. (UBH 0797) The July 22 medical record states that Boyd "completed his detox protocol and will transition to [Narconon] tomorrow to begin his program." (UBH 0799) Boyd then transferred directly to the longer-term rehab program at Narconon. Upon admission, Boyd's doctor noted his "second failed rehab." He also noted "opiate dependence" and "new tracks" (i.e, new needle marks in Boyd's arms). (UBH 0611) Boyd completed a drug history upon his arrival at Narconon that showed his oxycontin use started eight years prior, and his Xanax use started six to seven years prior. (UBH 0625). The history given at Narconon also showed use of heroin, cocaine, crack cocaine, hashish, marijuana, LSD, PCP, and Ecstacy. (UBH 0625) The Narconon records reflect that Boyd had continued using oxycontin and Xanax right up until July 12, 2010, the day before his trip to California. (UBH 0625) In the thirty days leading to that admission, he had used more than one drug twenty-seven out of thirty days. (UBH 0626). Boyd stayed in the Narconon program for its full course, successfully completed it, and was discharged on December 18, 2010. According to Boyd, "I can state with no hesitation that my rehab at Narconon saved my life." (UBH 0255)
The internal UBH Case Notes indicate that Wayne Boyd called UBH on October 7, 2010 and stated that he was "looking for benefits for OON facility where his son is staying" and that the facility had been billing the wrong insurance company. (UBH 0314) In a Retrospective Review on July 7, 2011, the case was summarized as follows:
In a Retrospective Review dated August 9, 2011, the case manager's assessment is as follows:
The reviewer also noted that medical records had been received by UBH on 6-24-11. However, the note does not indicate which medical records had been received.
UBH conducted another retrospective review on October 6, 2011, and the reviewer summarized the case as follows:
(UBH 0318)
The case manager's assessment was the same as the one on August 9, 2011, as follows:
Id.
The notes indicate that the medical record was received by UBH on 9-29-11. Again, it is unclear what records were received.
A Provider Explanation of Benefits dated October 12, 2011 indicated that the claim was denied on the basis that the "service has been determined to not be medically necessary." (UBH 0305) This was followed by an adverse determination letter
He stated that coverage was not available for the following reasons:
(UBH 0293)
This is a verbatim quote from the Retrospective Reviews dated August 9, 2011 and October 6, 2011. He then quoted from the
It is unclear what medical records were reviewed by Dr. Ghosh, as they are not listed in the letter. Contrary to the assertions by the defendants, the letter does not indicate Dr. Ghosh's medical specialty, if any, or other qualifications or certifications. Also, Dr. Ghosh does not specifically apply Boyd's situation to the 2010 Level of Care Guidelines; he simply states a conclusion that the treatment model (of Narconon) does not meet the 2011 guidelines.
Plaintiff filed an appeal of the decision within the Plan. (The record does not appear to include the written letter of appeal which is referenced at UBH 0321). By letter dated May 23, 2012, the appeal was denied by Nelson Gruber, MD, Associate Medical Director, Board Certified in General Psychiatry, Diplomate, American Board of Psychiatry & Neurology. Dr. Gruber's letter indicates that medical records were reviewed but does not specifically indicate what records were reviewed. The letter states:
(UBH 0291-0292)
E.
By letter dated November 19, 2012, counsel for the plaintiffs notified UBH of his representation and requested an independent external review by an Independent Review Organization ("IRO")
The case was referred to Advanced Medical Reviews for the Independent External Review. In a report dated January 28, 2013 and provided to the plaintiffs by letter dated February 6, 2013, the denial decision was upheld. The report states that the dates of service were July 23, 2010 through December 18, 2010. It lists the medical records reviewed, including the following:
(UBH 0256)
The reviewer also indicated that he had considered a case referral form from UBH, letters and faxes from Plaintiffs' counsel, the letters of Ghosh and Gruber, the 2012 level of care guidelines for U.S. behavioral health plan, the Benefits guide summary plan description, and the Practice Guidelines for Treatment of Patients with Substance Use Disorders Second Edition dated 2010. The reviewer does not state in the list of medical records reviewed that he considered any records from Narconon Vista Bay. However, the reviewer includes some information about Narconon in the "Patient Clinical Information":
(UBH 0257)
The reviewer then found that the treatment failed to meet the UBH
(UBH 0257)
The reviewer then applied the 2012 guidelines:
Any ONE of the following criteria must be met
1. The member continues to use alcohol or drugs, and the member's functioning has deteriorated to the point that the member cannot be safely treated in a less restrictive level of care; or —This criteria was not met. This was the patient's third episode of residential substance abuse rehabilitation treatment. He had never attended outpatient treatment. There was no history of continued use of substances while in a less restrictive level of care.
2. The member continues to use alcohol or drugs, is at risk of exacerbating a serious cooccurring medical condition, and cannot be safely treated in a lower level of care; or —This criterion was not met. The patient has no co-occurring medical conditions or complications.
3. There is a high risk of harm to self or others due to continued and severe alcohol or drug use which prohibits treatment from safely occurring in a less restrictive level of care; or —This criterion was not met. The patient was not suicidal, homicidal, or psychotic and had no psychiatric history. There was no evidence of high risk of harm to self or others due to continued substance abuse.
4. There is a high risk that continued use of alcohol or drugs will exacerbate a co-occurring medical condition to the extent that treatment in a less restrictive level of care cannot be safely provided; or
—This criteria was not met. The patient has no co-occurring medical conditions or complications.
5. There is a high risk of developing severe withdrawal symptoms which cannot be safely treated in a lower level of care; or
—This criteria was not met. The patient had no history of withdrawal.
6. The member is experiencing withdrawal symptoms that do not compromise the member's medical status to the extent that treatment in an inpatient setting is indicated, but the symptoms are of extreme subjective severity and the member lacks resources or a functional social support system needed to manage the symptoms in a lower level of care.
—This criterion was not met. At the time of admission the patient was stable. There was no history of continued use of substances while in a less restrictive level of care. The OptumHealth 2012 Level of Care Guidelines for Residential Rehabilitation for Substance Use Disorders were not met. The Medical Expenses Not Covered" section of the Summary Plan Description (SPD) states "Services and supplies which are not medically necessary, as determined by the claims administrator" are "not covered under the medical benefits of this Healthcare Program". (UBH 0257)
The report indicates that a specialist in psychiatry served as the independent reviewer but does not provide his or her name.
Plaintiffs initiated this action on March 6, 2013 for failure to pay benefits under 29 U.S.C. § 1132(a)(1)(B) and for failure to provide requested information pursuant to 29 U.S.C. §§ 1024(b)(4), 1132(a)(1)(A), and 1132(c).
During the litigation in this Court, the plaintiffs filed a motion for discovery on the basis that the defendants had produced an incomplete administrative record. The Court allowed limited discovery, including a request for production of claims management guidelines that were relied upon in making the benefit determination or which constitute a statement of policy or guidance regarding the plan, without regard to whether such advice or statement was relied upon in making the benefit determination. The defendants initially responded to this request for production by stating, "Included within the administrative record already produced." (ECF No. 46-2, p. 3) The defendants responded for a second time to the request for production in the same manner. (ECF No. 46-2, p. 13) By a Third Supplemental Responses to Plaintiffs' Request for Production, served in September of 2014, defendants produced a UBH "Coverage Determination Guideline" entitled "Residential Rehabilitation for Substance Use Disorders" dated August 2010. (ECF No. 46-4) This document states: INSTRUCTIONS FOR USE. This Coverage Determination Guideline provides assistance in interpreting behavioral health benefit plans that are managed by United Behavioral Health . . . When deciding coverage, the enrollee specific document must be referenced." The document also states as "Key Points" the following:
The record contains no indication that this 2010 guideline was ever used in any assessment by any of the reviewers, even though it appears to be relevant.
Plaintiffs' argument is twofold. First, they argue that, while the scope of review in this case would normally be "abuse of discretion", instead it should be de novo as a result of numerous instances of alleged noncompliance with ERISA's procedural and substantive requirements. Secondly, Plaintiffs assert that regardless of whether the claims administrator's decision is reviewed de novo or using the abuse of discretion standard, they would be entitled to benefits.
Where an ERISA plan confers upon its administrator discretionary authority in the exercise of its power, the administrator's denial of benefits is reviewed under an abuse-of-discretion standard. Booth v. Wal-Mart Stores, Inc. Assocs. Health & Welfare Plan, 201 F.3d 335, 341 (4th Cir. 2000). Such a discretionary decision "will not be disturbed if reasonable, even if the court itself would have reached a different conclusion." Id. (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111 (1989)). The administrator's decision is reasonable "if it is the result of a deliberate, principled reasoning process and if it is supported by substantial evidence," Bernstein v. CapitalCare, Inc., 70 F.3d 783, 787 (4th Cir. 1995), which is "evidence which a reasoning mind would accept as sufficient to support a particular conclusion." English v. Shalala, 10 F.3d 1080, 1084 (4th Cir. 1993) (citation omitted). In weighing the reasonableness of the plan administrator's determination, the Court may consider, but is not limited to, the following factors:
Booth, 201 F.3d at 342-43; Champion v. Black & Decker (U.S.) Inc., 550 F.3d 353, 359 (4th Cir. 2008); Williams v. Metropolitan Life Ins. Co., 609 F.3d 622, 630 (4th Cir. 2010).
The Plan documents confer on Sysco discretion to interpret the plan. "The Plan Administrator has the sole, full and exclusive responsibility and discretionary authority to control and manage the operation and administration of the Plan (except to the extent the Claims or Appeals Administrator has such discretionary authority) and to interpret and construe the Plan and any disputed or doubtful terms . . ." (UBH 0884-885) The Plan Administrator may delegate its duties and discretionary authority to a third party Claims Administrator.
The plaintiffs argue that numerous alleged violations of ERISA procedural requirements require that the Court engage in a de novo review. Plaintiffs cite Abatie v. Alta Health & Life Insurance Co., 458 F.3d 955, 970 (9th Cir. 2006) ("Because an administrator cannot contract around the procedural requirements of ERISA, decisions taken in wholesale violation of ERISA procedures do not fall within an administrator's discretionary authority.) and Rasenack ex rel. Tribolet v. AIG Life Ins. Co., 585 F.3d 1311, 1317 (10th Cir. 2009), citing Finley v. Hewlett-Packard Co. Employee Benefits Org. Income Prot. Plan, 379 F.3d 1168, 1173-74 (10th Cir. 2004) (Benefits determination reviewed de novo where the final determination was made in violation of timing requirements. However, "a plan administrator is in substantial compliance with a deadline if the delay is: `(1) inconsequential; and (2) in the context of an on-going, good-faith exchange of information between the administrator and the claimant.'"). Plaintiffs assert that Defendants violated ERISA's procedural requirements by (1) taking fifteen months to decide the claim; (2) ignoring the request for relevant materials in the claims file, depriving Plaintiffs of the opportunity to address them; (3) failing to keep a reliable administrative record and omitting key documents from that record; (4) issuing benefits decisions that failed to list or cite any medical records on which they were based, failed to cite the plan provision on which they are based, failed to consider the key documents in the record, and were otherwise incomprehensible.
Defendants assert that the remedy provided by the regulations for any failure to establish or follow claims procedures required by ERISA is to excuse a claimant's failure to exhaust administrative remedies, citing 29 C.F.R. § 2560.503-1(l). They further assert that "the typical remedy when a fiduciary is found to have committed serious procedural irregularities that do not demonstrate substantial compliance with the ERISA guidelines is to remand the claim to the plan administrator for a full and fair review under the correct procedures, rather than to heighten the standard of review." Arnold ex rel. Hill v. Hartford Life Ins. Co., 527 F.Supp.2d 495 n. 4 (W.D. Va. 2007), citing Berry v. Ciba-Geigy Corp., 761 F.2d 1003, n. 4 (4th Cir. 1985) and Wertheim v. Hartford Life Ins. Co., 268 F.Supp.2d 643, 664 (E.D.Va. 2003) (Remand may cause delay, but it "fosters the strong policy favoring the internal administrative resolution of ERISA claims and ensures that plaintiff receives all of the procedural protections to which he is entitled under the regulations.") The Court agrees with the defendants that the effect of any procedural irregularities would be to excuse a failure by a claimant to exhaust administrative remedies and possibly to remand the case, rather than to change the standard of review by this Court of the plan administrator's decision. Therefore, the Court finds that an abuse of discretion standard would apply to a review of the matter on its merits. However, due to the Court's concern regarding irregularities in the administrative review process by the claims administrator, UBH, the Court remands the matter as further explained below.
Fiduciaries' noncompliance with ERISA's "procedural and substantive requirements" is one of the factors listed in Booth indicating an abuse of discretion. 201 F.3d at 342-43. Even where the overall standard of review is abuse of discretion, whether a benefits denial letter complied with the applicable ERISA regulations "is a question of law, and therefore, subject to de novo review." Brogan v. Holland, 105 F.3d 158, 165 (4th Cir. 1997). However, as long as there is "substantial compliance" with the ERISA regulations, a procedural defect will not invalidate a plan administrator's decision. Id.
The Court will first discuss Plaintiffs' assertion that UBH failed to inform them of its coverage decision within the time frame required by ERISA. The required time frame for notification of a benefits decision by group health plans is set out in 29 C.F.R. § 2560.503-1(f)(2)(iii).
Defendants contend that, even if Wayne Boyd did call UBH on July 14, 2010 as he stated in his affidavit, Plaintiffs' claim was a post-service claim regarding Boyd's admission to August West and that an authorization to enter Narconon could only have been given after he successfully completed detox at August West. They contend that the first call from Wayne Boyd that related to the Narconon stay was on October 7, 2010, after Boyd began his stay there on July 23, 2010. Defendants also assert that the time to notify a claimant about a post-service denial does not begin to run until after the denying party receives a written claim. See 29 C.F.R. 2560.503-1(f)(2)(iii). Here, Defendants assert that Narconon first notified UBH in writing about the claim on January 24, 2011, when it submitted a barebones invoice. (UBH 303-04.) They further contend that UBH issued an explanation of benefits requesting additional information from Narconon on March 22, 2011 (UBH 303-04) and that when Narconon provided records on June 24, 2011, they were incomplete. (UBH 317, 534-598.) Finally, they assert that Narconon submitted additional records on September 29, 2011 (UBH 318, 328-533), and once it had sufficient information to consider the claim UBH issued an explanation of benefits of the claim as not medically necessary on October 12, 2011. (UBH 305-06)
The Court finds based on the affidavit of Wayne Boyd that he called UBH on July 14, 2010 and made a pre-service claim for the anticipated treatment at Narconon. Although the UBH internal case notes do not contain any notation concerning the call, the plaintiff has asserted that a "telephone communication . . . did not appear to be documented in the record, as well as other internal communications among persons considering the claim that were absent (from the administrative record) but that would typically be found in the record." (Jt. Cert., ECF No. 48, p, 2) The Court cannot rely on the absence of a notation in the UBH notes to find that Wayne Boyd did not make the July telephone call. However, the record also reflects that Narconon apparently did not send complete information concerning the claim to UBH until September of 2011. Therefore, the Court cannot find that the claims administrator did not process the claim on time.
Plaintiffs contend that both during the administrative phase and during the litigation, Defendants have "shown little grasp that a Plan even existed, or whether the administrative record was complete." (Pl. Memor., ECF No. 46, p. 18) The record does support the plaintiffs' allegations to some extent. For example, the denial and appeal letters did not reference a plan provision
Defendants indicate that they did not have all of the letters between Plaintiffs' counsel and the external reviewer but agreed to add them to the record. Defendants also contend that the plaintiffs' criticisms are not relevant because they relate to matters that occurred after the internal denial and review had taken place. The defendants apparently did not have all of the letters between Plaintiffs' counsel and the external reviewer. However, the Court is troubled by the failure of the administrative record assembled by the defendants to contain the Plan document or the letter requesting the external review with attachments. This would seem to indicate that the internal reviewers may not have had the plan document, which they had the duty to interpret. The over-all sloppiness in assembling the record would not seem to be the fault of their legal counsel, who simply rely on the administrator to provide them with the record. Therefore, the Court finds that the plaintiffs' complaints about the omissions from the administrative record are well-founded and weigh in favor of a finding that they were denied a full and fair review. The Court finds that the APA standards were properly included in the record because a link to those standards was provided in the letter of Dr. Ghosh.
In the November 2012 letter requesting an external review, Plaintiffs' counsel also requested "a full copy of the administrative record . . . (The request) includes all documentation or other information in the possession of the company relevant to the claim, including specifically any information that was not used, not considered, or rejected." (UBH 0906) It is uncontroverted that Defendants never complied with this request. ERISA requires plans to maintain reasonable claims procedures. Included in this duty is providing claimants with a reasonable opportunity for a full and fair review. 29 U.S.C. § 1133. In providing the opportunity for a full and fair review, the procedures must "[p]rovide that a claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant's claim for benefits." 29 C.F.R. § 2560.503-1(h)(2)(iii).
Id. at (m)(8)(emphasis added).
Defendants contend that the right to request documents refers only to the time frame after the initial denial but before the internal review and that Plaintiffs did not request the documents until after the internal review had occurred. (ECF No. 51, p. 13) Defendants do not cite any case law in support of this argument. The Tenth Circuit addressed related issues in Metzger v. UNUM Life Ins. Co., 476 F.3d 1161, 1166-68 (10th Cir. 2007). It found that "the regulations mandate provision of relevant documents, including medical opinion reports, at two discrete stages of the administrative process. First, relevant documents generated or relied upon during the initial claims determination must be disclosed prior to or at the outset of an administrative appeal. See 29 C.F.R. § 2560.503-1(h)(2)(iii). Second, relevant documents generated during the administrative appeal-along with the claimant's file from the initial determination-must be disclosed after a final decision on appeal. See 29 C.F.R. § 2560.503-1(i)(5)." The Tenth Circuit cited the Department of Labor's description of the amendments of 2000 which included subsection (m)(8) as follows:
See also, Skipp v. Hartford Life Ins. Co., No. CCB-06-2199, 2008 WL 346107 at *10 (D. Md. Feb. 6, 2008) This is consistent with the Fourth Circuit's observation in Ellis v. Metropolitan Life Ins. Co., 126 F.3d 228, 235 (4th Cir. 1997) (internal citations omitted)(emphasis added):
In the absence of definitive Fourth Circuit guidance, this Court finds the reasoning of the Tenth Circuit to be persuasive. In addition to requiring an administrator to provide documents to the claimant upon request after the denial of benefits, documents must also be provided upon request after the internal plan appeal, so that the claimant can fully evaluate the advisability of requesting an external review or appealing to federal court. Here, the claimant's counsel requested the full administrative record after the conclusion of the internal appeal and before the independent external review occurred, and the administrator ignored the request. This would support a finding that the administrator failed to comply with the procedural requirements of ERISA.
ERISA requires a claims administrator to provide in its denial letter the "specific reasons" for the denial of benefits and to afford the claimant a reasonable opportunity for a "full and fair review". 29 U.S.C. § 1133. The corresponding regulation sets forth what the notice must contain:
29 C.F.R. § 2560.503-1(g)(1).
"Several circuit courts of appeal, including our own, have warned plan administrators to provide `
Here, both UBH letters failed to even refer to any specific plan terms on which the denial was based and failed to give specific reasons for the denial, much less even reference the 2010 guidelines. Defendants assert that the 2010 and 2011 guidelines were substantially similar. While this is good argument by counsel, there is nothing in the record by any reviewer making this statement or conclusion, and the Court should not be forced to speculate and attempt to compare 2011 and 2012 guidelines to the 2010 guidelines. No one has submitted any plan language that allows the substitution of one year's standard for another. The internal reviewers also failed to provide the types of information needed to establish eligibility.
Defendants assert that both decisions by UBH specifically discuss concepts included in the medical necessity definition and level of care guidelines. Dr. Ghosh found the Narconon treatment model did not meet the UBH Level of Care Guidelines, as he characterized the program as educational and referred to detoxification being accomplished by the use of nutritional supplements and saunas. Dr. Gruber based his decision on the fact that Boyd did not need to be treated at the higher residential level of care, finding instead that services could safely have been provided at a lower level of care. However neither reviewer states a specific basis for the denial, indicates what medical records were reviewed, or applies the guidelines to any medical evidence. They also do not reference any plan provision. Instead of focusing on Dr. Ghosh's rationale that the treatment model failed to meet the UBH guidelines, Dr. Gruber found that Boyd did not need the residential level of care and could have utilized outpatient treatment. Defendants argue this is consistent with the SPD, which discusses levels of care for mental health services. (UBH 171; see also UBH 115 (requiring that for treatment to be medically necessary it must be appropriate for the diagnosis, care, or treatment of the disease involved).) However, neither Ghosh nor Gruber mentioned the SPD at all. This Court cannot consider new arguments made in this Court to support the denial of benefits. In fact, the Court's review "is limited to the reason stated in the denial notice." Schindler v. Unum Life Ins. Co., No. 3:12-cv-00293-JFA, 2013 WL 4499146 at * 24 (D.S.C. August 19, 2013), citing Thompson, 30 F. App'x at 164 and Hall v. Metropolitan Life Ins. Co., 259 F. App'x 589, 593 (4th Cir. 2007).
Id.
The Supreme Court has held that ERISA "sets forth a special standard of care upon a plan administrator, namely, that the administrator discharge [its] duties in respect to discretionary claims processing solely in the interests of the participants and beneficiaries of the plan; it simultaneously underscores the particular importance of accurate claims processing by insisting that administrators provide a full and fair review of claim denials, and it supplements marketplace and regulatory controls with judicial review of individual claim denials." Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 115 (2008) (internal citations and quotations omitted). The Fourth Circuit has described the procedural framework of ERISA as follows:
Thompson v. Life Ins. Co. of North America, 30 F. App'x 160, 163 (4th Cir. 2002) (internal quotations and citations omitted).
The Fourth Circuit has further explained that "[n]ot all procedural defects will invalidate a plan administrator's decision if there is `substantial compliance' with the regulation. To substantially comply with the regulation, the Trustees must have supplied the beneficiary `with a statement of reasons that, under the circumstances of the case, permitted a sufficiently clear understanding of the administrator's position to permit effective review.'" Brogan v. Holland, 105 F.3d 158 at 165 (4th Cir. 1997).
Here, the Court finds that the administrative denial by Dr. Ghosh dated October 18, 2011 failed to substantially comply with the ERISA regulation. First, it does not reference any plan provision and states that no diagnosis or diagnosis code was available. Ghosh applied the 2011 UBH guidelines to the claim instead of the 2010 guidelines which were in effect at the time the claim was filed. Dr. Ghosh did not apply the guidelines to the medical record or even indicate which medical records were reviewed. The review by Dr. Gruber suffered from similar deficiencies and also denied the claim on different grounds from Dr. Ghosh.
In considering the above failures by UBH to comply with the requirements of ERISA, the Court finds that it must remand this matter to the claims administrator for a "full and fair review".
Plan administrators are fiduciaries. As part of the fiduciary duty to beneficiaries, ERISA "requires a balance between `the obligation to guard the assets of the trust from improper claims, as well as the obligation to pay legitimate claims.' Harrison v. Wells Fargo Bank, N.A., 773 F.3d 15, 20-21 (4
An administrator must use a "deliberate, principled reasoning process and . . . support its decision with substantial evidence. A complete record is necessary to make a reasoned decision, which must `rest on good evidence and sound reasoning; and . . . result from a fair and searching process. A searching process does not permit a plan administrator to shut his eyes to the most evident and accessible sources of information that might support a successful claim." Id. (internal citations omitted) The Fourth Circuit emphasized, however, that it adopted a "narrow principle" and that the decision did not "undercut claimant's responsibility to provide medical information nor impose a duty on plan administrators to fish for medical information on the mere possibility that it may be helpful in some remote way." Id. at 24-25.
Plaintiffs assert that Defendants failed to consider the August West medical records between July 13 and 23 for Boyd's medically supervised drug withdrawal. They also assert that the IRO erroneously failed to consider the affidavits of Boyd and his father. First, as already noted, this Court is not reviewing the decision by the IRO. Therefore, as it is clear that the plaintiffs' affidavits were submitted for the first time to the IRO and were not submitted to Drs. Ghosh and Gruber, the plaintiff can show no error relating to the failure of UBH to consider the affidavits. Regarding the August West records, it is not clear when they were submitted for the first time, as Ghosh and Gruber do not mention them. As already noted, they do not list any medical records that were reviewed. In order to evaluate whether the treatment met the internal guidelines
Plaintiffs also assert that UBH failed to consider an internal guideline that Defendants failed to disclose to the plaintiffs until responding to discovery during this lawsuit. This document is entitled "Residential Use Determination for Substance Abuse Disorders" and is attached as Exhibit D to the Plaintiff's Memorandum in Support of Judgment. (ECF No. 46-4, pp. 7-22) Defendants contend this is an educational document that was not included in the administrative record because it was not relied upon. Defendants contend that the document educates reviewers about residential treatment and guides them in applying the Level of Care Guidelines. They cite the document as follows: "When the requested residential rehabilitation service or procedure is limited or excluded from the enrollee's benefit document, or is otherwise defined differently, it is the terms of the enrollee's benefit document that prevails." (Exhibit D to Pls.' Br. At 4) Defendants further contend that the document makes clear that treatment at Narconon would fall outside the scope of coverage because the document specifically excludes services that in the reasonable judgment of UBH is "not consistent with generally accepted standards of medical practice . . ., not consistent with services backed by credible research . . ., and is not consistent with United Behavioral Health's level of care guidelines . . ." The document lists the following services as being inappropriate for the treatment of substance use disorders: "A mis-match between the severity of symptoms and the choice of residential rehabilitation . . . The patient's co-occurring symptoms have stabilized and the substance use disorder can likely be managed in a less restrictive level of care." Id. at 12-13.
In reviewing the document, the Court observes that it has a "Guideline Number" and was approved in August of 2010. The guideline's "Key Points" regarding residential rehabilitation states that the DSM would find Dependence Disorders "as manifested by three or more of the following occurring at any time within the same 12-month period: Increase in tolerance and/or diminished effect of substance, symptoms of withdrawal, increases in amount of use; a desire and failure to control substance use, spending a great deal of time in substance related activities, important social, interpersonal and occupational activities are neglected and a known physical or mental condition has worsened with the continued use of substances." It also provides other factors that arguably would be present with Boyd. This internal "educational" document for reviewers was never disclosed to Plaintiffs' counsel until during this litigation and was not even mentioned by Ghosh or Gruber. Nor do Ghosh and Gruber mention the UBH 2010 guideline document. UBH should have disclosed this internal guideline to Plaintiff's counsel upon his request made in November of 2012. See 29 C.F.R. § 2560.503-1(h)(2)(iii), discussed above. "Thus, a participant who is denied access to internal guidelines that relate to her unsuccessful claim for benefits may be able to show that she was denied full and fair review of the denial by the claims administrator." Mondry v. American Family Mut. Ins. Co., 557 F.3d 781, 798 (4th Cir. 2009). Here, the request for information regarding the claim was not made until after the internal appeal had been completed and counsel appeared for the plaintiffs. However, as discussed hereinabove, the rationale behind the regulation applies, not only to the time immediately after the initial denial but also to the time after the internal appeal. The claims administrator should, in this Court's opinion, consider all internal guidelines, not just the ones less favorable to the claimant.
Plaintiffs cite an unpublished Ninth Circuit case, Lukas v. United Behavioral Health, 504 Fed. Appx 628 (9th Cir. 2013) in support of their argument that UBH has a history of biased claims administration. A district court within this circuit has also found that UBH engaged in "unprincipled and unreasonable claims review" regarding the level of care guidelines for inpatient mental health treatment. L.B. ex rel. Brock v. United Behavioral Health, Inc., 47 F.Supp.2d 349, n. 6 (W.D.N.C. 2014). See also, Allen G. V. United Behavioral Health, No. A-112-CA-335-SS, 2013 WL 10939274 (W.D. Tx. March 13, 2013) (case involving level of care guidelines for mental health residential treatment where court found Plaintiffs were denied a full and fair review). The Court finds that UBH appears to have failed in other cases to provide claimants with a full and fair review, and this further supports this Court's remand of the case to the claims administrator.
Plaintiff has requested attorneys' fees and costs pursuant to 29 U.S.C. § 1132(g). Section 1132(g) states in part that "[i]n any action under this subchapter . . . by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." 29 U.S.C. § 1132(g)(1). The Fourth Circuit has adopted a five-factor test to guide courts' discretion in determining whether an attorneys' fee award is warranted under ERISA. The five factors are: (1) degree of opposing parties' culpability or bad faith; (2) ability of opposing parties to satisfy an award of attorneys' fees; (3) whether an award of attorneys' fees against the opposing parties would deter other persons acting under similar circumstances; (4) whether the parties requesting attorneys' fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; and (5) the relative merits of the parties' positions. Quesinberry v. Life Ins. Co. Of N. Am., 987 F.2d 1017, 1029 (4th Cir. 1993). The Court, in its discretion, is denying the request for attorney's fees without prejudice at this time to encourage and afford the parties an opportunity to mediate the case again. Mediation should occur within sixty days of this order.
For the reasons stated above, the case will be remanded to the claims administrator to consider the administrative record
