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D.K. v. United Behavioral Health.

No. 21-4088. 5/15/2023. D.Utah. Judge Lucero. Insurance Coverage Denials—Mental Health Treatment—Arbitrary and Capricious—Employee Retirement Income Security Act—Fiduciary Duties.

A.K. has had depression and anxiety since childhood. She attempted suicide in the seventh grade and several times thereafter and was admitted to numerous inpatient hospitalization units, partial hospitalization programs, and short-term residential treatment centers over several years. Multiple treatment professionals reported that A.K. would need long-term residential treatment to address her underlying mental health disorders, but her insurance provider United Behavioral Health (United) denied coverage for A.K.’s stay at a residential treatment facility beyond an initial three-month period. A.K.’s parents appealed United’s repeated coverage denials, which consisted of conclusory statements that did not address the evidence provided for A.K.’s care needs. After the fifth coverage denial, A.K.’s parents sued United for breach of its fiduciary duty to provide a full and fair review of claim denials. Both parties moved for summary judgment. The district court found that United acted arbitrarily and capriciously in denying coverage. It granted summary judgment for A.K.’s parents and ordered United to pay for A.K.’s residential treatment rather than remanding for United’s further internal review.

On appeal, United contended that the district court erroneously concluded that it violated the Employee Retirement Income Security Act (ERISA), alleging that it did not arbitrarily and capriciously fail to engage with A.K.’s treating physicians’ opinions. United maintained that (1) it was not required to engage with treating physician opinions; and (2) the district court erred in  looking for proof of engagement with treating physician opinions only in United’s denial letters rather than considering the reviewers’ internal notes, which would show that it engaged with the treating physician opinions. First, United is governed by ERISA, which requires administrators to follow specific procedures for benefit denials, including providing full and fair review of the evidence presented through a reasonable process, and their ERISA duties require them to address medical opinions, particularly those that may contradict their findings. Therefore, reviewers evaluating A.K. for discontinued coverage were required to specifically address her ongoing needs and levels of functioning. Here, by not explaining why it rejected or did not follow the recommendations of A.K.’s treating physicians that A.K. stay long-term at a residential treatment facility, United effectively ignored readily available medical information and thus acted arbitrarily and capriciously. Second, ERISA regulations require that denial letters be comprehensive and include requests for additional information, steps claimants may take for further review, and specific reasons for the denial. In refusing to address the treating physician opinions presented to it which could have confirmed A.K.’s need for benefits, United acted arbitrarily and capriciously. Therefore, the district court did not err by focusing its review on the denial letters in finding that United acted arbitrarily and capriciously in not engaging with the medical opinions of A.K.’s treating professionals.

United also challenged the district court’s conclusion that it failed to explain its denial by applying the terms of the plan to A.K.’s medical records. ERISA regulations require denial letters themselves to be comprehensive, so review of the explanation provided to claimants must focus on the content of the denial letters. Moreover, A.K.’s plan required that the denial letters contain sufficient explanations. Here, the district court found United’s failure to cite any facts in the medical record constituted conclusory reasoning and thus United acted arbitrarily and capriciously, and given that United was provided with extensive information, its conclusory responses without citing the medical record did not constitute a full and fair review. Accordingly, the district court correctly found that United acted arbitrarily and capriciously in not providing analysis or citations to the medical record in its denial letters.

United also argued that the district court abused its discretion when it awarded A.K. benefits outright. However, remand is unnecessary where a plan administrator’s actions were clearly arbitrary and capricious, and a reviewing court may award benefits. Here, given the administrator’s clear and repeated procedural errors in denying A.K.’s claim, it would be contrary to ERISA’s fiduciary principles to mandate a remand to allow United additional review. Therefore, the district court did not abuse its discretion in declining to remand.

The grant of summary judgment and order of benefits were affirmed.

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