In the United States District Court for the District of Utah

Case 2:17-cv-00675-JNP-CMR Document 69 Filed 02/13/19 Page 1 of 25 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH MICHAEL D. AND MADELINE D., Plaintiffs, MEMORANDUM DECISION AND v. ORDER GRANTING IN PART AND DENYING IN PART CROSS-MOTIONS ANTHEM HEALTH PLANS OF FOR SUMMARY JUDGMENT KENTUCKY, INC., Defendant. Case No. 2:17-cv-675 District Judge Jill N. Parrish This ERISA case is before the court on the parties’ cross-motions for summary judgment. Defendant Anthem Health Plans of Kentucky, Inc. (“Anthem”) moved for summary judgment on June 5, 2018 (ECF No. 38). On June 9, 2018, plaintiffs Michael D. (“Mike”) and Madeline D. (“Maddie”) (collectively “Plaintiffs”) moved for summary judgment as well (ECF No. 40). I. BACKGROUND This dispute involves the denial of benefits allegedly due under a group health benefit plan provided by US WorldMeds, LLC to its employees (“the Plan”). The Plan is fully insured by Anthem and governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. section 1001, et. seq. (“ERISA”). Anthem is also the administrator of the Plan and has reserved discretionary authority to make decisions regarding coverage. Mike, as an employee of US WorldMeds, LLC, is a participant in the Plan and his daughter Maddie is a beneficiary of the Plan. A. MADDIE’S HISTORY Maddie, a very bright girl, has struggled with a variety of mental health conditions over the years, including attention deficit/hyperactivity disorder (“ADHD”), Persistent Depressive Case 2:17-cv-00675-JNP-CMR Document 69 Filed 02/13/19 Page 2 of 25 Disorder, Borderline and Narcissistic Personality Features, anxiety, suicidal thoughts, and self- harm behavior (“cutting”). On August 30, 2014, Maddie was admitted at Aspiro Wilderness Adventure Therapy (“Aspiro”) for stabilization and assessment. She resided there and received “wilderness therapy”1 until she was discharged on November 11, 2014. Maddie was then admitted to Uinta Academy (“Uinta”) on November 11, 2014, where she received “residential treatment” for over a year until her discharge on December 17, 2015. Plaintiffs first submitted claims for coverage of the Aspiro medical expenses on April 29, 2015 and for the Uinta expenses on October 26, 2015. Anthem denied both claims. B. ASPIRO TREATMENT Upon receipt of Plaintiffs’ claims for coverage of treatment at Aspiro, Anthem conducted a retrospective review and denied coverage. The “Explanation of Payment” section of the Explanation of Benefits (“EOBs”) sent to Mike from Anthem explains that Anthem reduced payment for the “benefits for this service [at Aspiro] because you were not precertified” and “[p]re- certification is needed for certain services under the Health Care Management guidelines.” Then, in a letter dated May 4, 2015, Anthem notified Plaintiffs that Maddie’s claim for benefits at Aspiro was denied because there are no benefits in the Plan for a “Wilderness Camp Program.” Anthem’s letter did not address the precertification issue, nor did it refer Mike to any specific section in his benefit plan. Mike appealed the denial of the Aspiro claims on October 1, 2015. Anthem received the appeal on October 5, 2015. Mike alleges that he did not receive a response to his appeal for coverage of the Aspiro treatment during the time prescribed by the Plan or by ERISA. Accordingly, 1 Aspiro is the self-proclaimed “pioneer of Wilderness Adventure Therapy.” It offers “short-term, intermediate treatment options for teenagers and young adults.” Anthem’s Mot. S.J. at ¶ 14. 2 Case 2:17-cv-00675-JNP-CMR Document 69 Filed 02/13/19 Page 3 of 25 on June 24, 2016, Mike wrote a letter to the Kentucky Department of Insurance (“KDOI”) asking the Consumer Protection Division to investigate. KDOI contacted Anthem and asked for further information regarding the claims. KDOI and Anthem exchanged various communications. In one response, Anthem provided a copy of the letter it allegedly sent to Mike on November 4, 2015, denying his appeal for coverage of the “Wilderness Camp Program at Aspiro” because wilderness camps are not a covered benefit. The letter directed Mike to a specific section of his Plan benefits booklet and the EOBs, and informed Mike that he had exhausted his appeal rights with Anthem. On November 16, 2016, KDOI informed Mike that it was upholding Anthem’s denial of benefits because Aspiro was a wilderness camp and therefore clearly excluded under the Plan. C. UINTA TREATMENT Anthem also denied coverage of treatment at Uinta. EOBs issued to Mike from April 27, 2015 through May 20, 2016 explain payments were not made to cover the services at Uinta because the services were not “pre-certified.” Then, in a letter dated November 10, 2015, Anthem informed Mike that, after a retrospective review, Anthem denied coverage for the Uinta expenses because Maddie’s treatment at Uinta, a “Residential Treatment Center,” was not medically necessary. Mike appealed the denial of the Uinta treatment on May 5, 2016. Anthem notified Mike through letter on June 1, 2016 that it was upholding its decision and that he had exhausted his appeal rights. Mike then requested external review of this decision by an independent review organization on September 26, 2016. The external reviewer upheld Anthem’s denial. Mike and Maddie filed their single-count Complaint on June 23, 2017 seeking recovery of benefits under 29 U.S.C § 1132(a)(1)(B). Under Count One, Plaintiffs also allege that Anthem breached its fiduciary duties under 29 U.S.C. § 1104 and § 1133 by failing to act solely in the interest of the Plan participants and beneficiaries when it denied Maddie’s benefits and by failing to provide a full and fair review as required under the Plan and by ERISA. Plaintiffs seek judgment 3 Case 2:17-cv-00675-JNP-CMR Document 69 Filed 02/13/19 Page 4 of 25 in the amount of $200,000.00, plus prejudgment interest pursuant to Utah Code Ann. § 15-1-1, and attorney fees and costs incurred under 29 U.S.C. § 1132(g). The court held oral argument on these motions on January 24, 2019. On the basis of that hearing, the parties’ briefs, and a review of the relevant law, the court grants in part and denies in part Anthem’s Motion for Summary Judgment and grants in part and denies in part Plaintiffs’ Motion for Summary Judgment. II. LEGAL STANDARD A. SUMMARY JUDGMENT STANDARD Under Federal Rule of Civil Procedure 56(a), “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” When both parties move for summary judgment in an ERISA case, thereby stipulating that a trial is unnecessary, “summary judgment is merely a vehicle for deciding the case; the factual determination of eligibility of benefits is decided solely on the administrative record, and the non-moving party is not entitled to the usual inferences in its favor.” LaAsmar v. Phelps Dodge Corp. Life, Accidental Death & Dismemberment & Dependent Life Ins. Plan, 605 F.3d 789, 796 (10th Cir. 2010) (quoting Bard v. Boston Shipping Ass’n, 471 F.3d 229, 235 (1st Cir. 2006)). B. STANDARD OF REVIEW FOR DENIAL OF BENEFITS “[A] denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). If the plan explicitly vests such discretion with the administrator, a reviewing court will apply “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) (internal citation and quotation marks omitted). The court 4 Case 2:17-cv-00675-JNP-CMR Document 69 Filed 02/13/19 Page 5 of 25 “consider[s] only the rationale asserted by the plan administrator in the administrative record and determine[s] whether the decision, based on the asserted rationale, was arbitrary and capricious.” Spradley v. Owens-Illinois Hourly Employees Welfare Ben. Plan, 686 F.3d 1135, 1140–41 (10th Cir. 2012) (citation omitted). Review under an arbitrary and capricious standard “is limited to determining whether [the plan administrator’s] interpretation was reasonable and made in good faith.” Fought v. UNUM Life Ins. Co. Of Am., 379 F.3d 997, 1003 (10th Cir. 2004) (alteration in original) (quoting Hickman v. GEM Ins. Co., 299 F.3d 1208, 1213 (10th Cir. 2002)). The court should consider “whether: (1) the decision 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.’” Flinders v. Workforce Stabilization Plan of Phillips Petroleum Co., 491 F.3d 1180, 1193 (10th Cir. 2007), abrogated on other grounds by Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008) (quoting Fought, 379 F.3d at 1003). The court “need not determine that the Plan’s interpretation was the only logical one, nor even the best one. Instead, the decision will be upheld ‘unless it is not grounded an any reasonable basis.’” Id. (quoting Finley v. Hewlett–Packard Co. Employee Benefits Org. Income Protection Plan, 379 F.3d 1168, 1176 (10th Cir. 2004)). However, if there were “procedural irregularities” the court may apply a less deferential standard. See Kellogg v.

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