Argued and Submitted, Pasadena, California: January
Appeal from the United States District Court for the Central District of California. D.C. No. 2:10-cv-05828-PSG-CW. Philip S. Gutierrez, District Judge, Presiding.
Health Care Law
The panel reversed the district court's judgment in an action under the Employee Retirement Income Security Act concerning a claims administrator's refusal to pay for more than three weeks of inpatient hospital treatment for anorexia nervosa.
Reviewing for an abuse of discretion, the panel concluded that the claims administrator improperly denied benefits under the ERISA plan in violation of its fiduciary duty. The panel concluded that it need not reach contentions that de novo review was warranted by procedural errors in the benefits denial, that materials outside the administrative record should have been considered by the district court, and that the claims administrator operated under a conflict of interest. The panel held that, even conducting an abuse of discretion review uninfluenced by any procedural irregularity or conflict of interest, and considering only the record that the administrator had before it when making its benefits determination, the administrator improperly denied benefits.
Elizabeth K. Green, Lisa S. Kantor (argued), and Peter S. Sessions, Kantor & Kantor LLP, Northridge, California, for Plaintiff-Appellant.
Robert Claude Bohner, Douglas J. Collodel (argued), and David Michael Humiston, Sedgwick LLP, Los Angeles, California, for Defendants-Appellees.
M. Patricia Smith, Solicitor of Labor, Timothy D. Hauser, Associate Solicitor for Plan Benefits Security Division, Elizabeth Hopkins, Counsel for Appellate and Special Litigation, and Candyce Phoenix (argued), Trial Attorney, United States Department of Labor, Washington, D.C., for Amicus Curiae Secretary of Labor.
Before: William A. Fletcher, Milan D. Smith, Jr., and Paul J. Watford, Circuit Judges. Opinion by Judge W. Fletcher.
W. FLETCHER, Circuit Judge:
An employee of Wells Fargo, whom we will call Jane Jones, was covered under the Wells Fargo & Company Health Plan (the " Plan" ), governed by the Employee Retirement Income Security Act of 1974 (" ERISA" ). United Behavioral Health (" UBH" ) is a third-party claims administrator of the Plan. Jones was admitted to Pacific Shores Hospital (" PSH" ) for acute inpatient treatment for severe anorexia nervosa. UBH refused to pay for more than three weeks of inpatient hospital treatment. UBH based its refusal in substantial part on mischaracterizations of Jones's medical history and condition. PSH continued to provide inpatient treatment to Jones after UBH refused to pay. Jones assigned to PSH her rights to payment under the Plan.
PSH sued the Plan and UBH, seeking payment for the additional days of inpatient treatment. We conclude that UBH abused its discretion in refusing to pay for these days of treatment.
The Plan is self-insured by Wells Fargo, which is both the sponsor and administrator of the Plan. Wells Fargo contracts with third-party administrators to review claims made under the Plan. The third-party administrator responsible for reviewing mental health and substance abuse claims, including anorexia nervosa, is OptumHealth Behavioral Solutions, which is a trade name of UBH.
Jones was admitted to PSH on January 25, 2010. Jones's brother had recently
sent an email to Jones's entire family saying that he felt that he was planning her funeral. Jones's 17-year-old daughter feared for her mother's life. UBH's case management notes listed Jones's " Reason for admission" as " severe depression, SI [Suicidal Ideation], and anorexia." Jones's admitting diagnoses were (1) " Major Depressive Disorder, Recurrent, Severe Without Psychotic Features" ; (2) " Anorexia Nervosa" ; (3) " pneumonia" ; and (4) " Problems with primary support group." UBH initially authorized four days of inpatient hospital treatment.
UBH case notes for January 27 provide:
UR [Utilization Review, referring to Dy Wolpert, an Advanced Practice Registered Nurse employed by PSH] reported on 01/27/10:
Presenting problem: SI [ Suicidal Ideation ] w/ plan to OD [ Overdose ]. Laxative abuse, taking 130 Sena-S laxatives per day. Skeletal in appearance. Weighs just 88 lbs @ 66 inches tall. 65% of IBW [Ideal Body Weight]; BMI [Body Mass. Index] is 13.52. Pneumonia. Fainting due to laxative abuse. Eating 200 calories per day. Also purges by self-induced vomiting, and that's worsening. . . .
Suicide risk: SI w/ plan to OD on tylenol.
Hx [History] of SI / attempts / gestures / interventions. In 2007 took whole bottle of laxatives in a suicide attempt.
UBH case notes for January 27 describe Jones's condition as " Emergent - Life Threatening." The " Treatment Plan" in the January 27 notes provides:
Tx [Treatment] Plan: stabilize medically. Taper her off laxatives, refeeding. She'll have pancreatitis and anemia from refeeding, says UR [Nurse Wolpert]. Have to go slow on carbs and fat, goal of 2-2.5 lbs per wk weight gain.
D/C [Discharge] Criteria: step down to RTC [Residential Treatment Center] @ 85% of IBW, when no longer purging, when no SI, and once through laxative taper. . . .
ELOS [Estimated Length of Stay]: 4 wks of IP [Inpatient].
UBH case notes two days later provide:
UR [Nurse Wolpert] reported on 01/29/10: admitted with active SI w/ plan to OD or starve herself to death.
. . . .
she's on a laxative taper from 130 laxatives a day.
. . . .
active SI continues, no psychosis.
. . . .
she's at 75.5 lbs. . . .
(Emphasis added.) Hospital staff were checking on Jones every fifteen minutes as a " suicide precaution" and were supervising her for 2 1/2 hours after every meal. Her laxative taper was " down to 50 tablets of Sena per day from 130 tabs per day." UBH authorized two more days of inpatient treatment.
UBH case notes for February 3 provide:
very anxious about being tapered off laxatives,
positive for SI w/ plan and intent to overdose or starve to death.
. . . .
sleep improving, ADLs [Activities of Daily Living] improved.
eating 100%. weight @ 79 lbs.
. . . .
irritable, dysphoric, ruminative, hopeless.
(Emphasis added.) UBH authorized four more days of inpatient treatment, through
February 4, and scheduled another review date for February 5.
UBH case notes for February 5 provide:
UR [Nurse Wolpert] reported: Laxative taper? we've been aggressive with the taper. she's been down to 5 tablets per day for about a wk, and then she'll go down to 3 tablets a day for a wk. Probably about 2.5 wks more to taper off.
. . . .
Medical stability? pt's abnormal labs are typical for an anorexic. It's as they get better that potential medical problems can set in: anemia, [e]dema, start having cardiac problems, their ...