Ian C. v. UnitedHealthcare Insurance Co.
No. 22-4082. 12/5/2023. D.Utah. Judge Phillips. Employee Retirement Security Income Act—Mental Health and Substance Abuse Treatment—Benefits Denial—Arbitrary and Capricious Standard of Review.
December 5, 2023
A.C. experienced mental health and substance abuse problems since childhood. When he was 17, A.C. was admitted to Catalyst Residential Treatment (Catalyst), an inpatient residential treatment center. A.C.’s father, Ian C., claimed coverage for A.C.’s treatment through his employer-sponsored health plan, UnitedHealthcare Insurance Company (United) (plan). The plan authorized United, as the claims fiduciary, to determine A.C.’s eligibility for benefits under the plan. After initially covering A.C.’s treatment at Catalyst, United later denied coverage. Ian C. internally appealed the adverse benefit determination, which United upheld. Ian C. then filed this case against United, alleging that United’s denial violated his right to receive a full and fair review of his claim under 29 USC §§ 1133(2) and 1104(a)(1) of the Employee Retirement Income Security Act (ERISA). On cross-motions for summary judgment, the district court decided in favor of United.
On appeal, the Tenth Circuit initially determined that the arbitrary-and-capricious review standard applies in this case because United’s ERISA plan authorizes the administrator to determine benefits on a discretionary basis. Under D.K. v. United Behavioral Health, 67 F.4th 1224 (10th Cir. 2023), the administrator is required to include its reasons for coverage denial within the denial letter. Accordingly, the Tenth Circuit focused on United’s two denial letters to Ian C., the first from Dr. Jones communicating the initial denial decision, and the second from Dr. Person affirming the denial on appeal. Ian C. argued that United’s denial of benefits for A.C.’s treatment at Catalyst was arbitrary and capricious because United overlooked A.C.’s substance abuse as an independent ground for coverage. Ian C. challenged United’s view that A.C.’s substance abuse was secondary to his mental-health condition, maintaining that substance abuse was central to A.C.’s treatment, and United was thus required to address that portion of his condition when it denied benefits. The plan covers services for mental health and substance abuse at a residential treatment facility that are medically necessary as determined by United, or its designee, at its discretion. Under ERISA, after the administrator issues an adverse benefit determination, the claimant is entitled to a “full and fair review,” and ERISA regulations prohibit the second reviewer from showing any deference to the first reviewer. Here, after Dr. Jones initially denied benefits for A.C.’s treatment at Catalyst, Ian C. appealed, appending a large amount of evidence for the second reviewer to consider, including the Substance Abuse Guidelines. The case record is replete with evidence of A.C.’s substance abuse and the treatment he received for it at Catalyst, but Dr. Person affirmed Dr. Jones’s adverse benefit determination without mentioning any of the evidence or arguments that Ian C. raised. Accordingly, because Dr. Person tacitly rejected A.C.’s substance abuse as an independent ground for coverage, her denial was arbitrary and capricious.
The district court’s finding that United’s decision was not arbitrary and capricious was reversed, and the case was remanded for further consideration.