We will customarily uphold an administrator’s decision if it is “grounded on any reasonable basis.” This deference is tempered where, as here, the plan administrator has a structural conflict of interest, being the entity that both funds and administers the benefits plan.
Other case-specific factors heighten our judicial scrutiny of an administrator’s benefits decision, including procedural irregularities, the quality and quantity of the medical evidence, and the administrator’s reliance on a paper review of the claimant’s medical records.
Yox v. Providence Health Plan, 2016 U.S. App. LEXIS 16600 (9th Cir.) (September 9, 2016)
This recent 9th Circuit opinion offers a good overview of factors that might lead to a reversal of a claim denial even under the very forgiving abuse of discretion standard.
After a seizure-induced fall fractured the plaintiff’s jaw, her group health plan covered the costs for initial surgeries. Nonetheless, the plan denied preauthorization for additional trauma-related dental services under the Plan.
Failure to Follow Procedural Guidelines
The Court noted that Providence did not follow important procedural requirements.
For example, Providence failed to adequately notify Yox of her right to bring a civil action under ERISA § 502(a). See 29 C.F.R. § 2560.503-1(g)(1)(iv) and (j)(4). Moreover, Providence also failed to consult a professional with “appropriate training and experience in the field of medicine involved in the medical judgment.” See 29 C.F.R. § 2560.503-1(h)(3)(iii).
Ignoring these regulations “contravenes the purpose of ERISA” and weighs in favor of finding an abuse of discretion. Abatie, 458 F.3d at 974.
Failure to Meet Procedural Obligations
In assessing the substance of her claim. Providence continually asserted that the plaintiff’s treatment was dental rather than medical. Yet, it provided no evidentiary basis for its decision.
Furthermore, Providence failed to consult with adequately trained professionals when analyzing her preauthorization request. In addition, Providence arbitrarily refused to address the clinical evaluation submitted by her treating dentist. See Black & Decker Disability Plan v. Nord, 538 U.S. 822, 834, 123 S. Ct. 1965, 155 L. Ed. 2d 1034 (2003). When Providence did address the evaluation provided by another dentist, it discounted the dentist’s opinion as “insufficient” without further explanation.
Providence’s conclusory opinion does not satisfy its duty under ERISA. See Salomaa, 642 F.3d at 680. “An administrator does not do its duty under the statute and regulations by saying merely ‘we are not persuaded’ or ‘your evidence is insufficient.’”).
Presence of Structural Conflict of Interest
Based upon the foregoing, the Court concluded that a structural conflict of interest played a role in the benefits denial.
Because of this manifest conflict of interest, we must view Providence’s decision with heightened skepticism; it is simply not enough for us to “scan the record for medical evidence supporting” Providence’s decision, even if such evidence exists. Montour, 588 F.3d at 630. The district court did not err in factoring Providence’s conflict of interest into its abuse of discretion analysis.
Note: The district court’s decision was also affirmed on its ruling that the scope of the plaintiff’s claim did not include the expanded services she requested after starting her internal appeal.
Providence never had a chance for first review of the additional claim, because the appeals process addresses only the scope of the initial denial. That Providence did not change its appeals process to include Yox’s expanded claim is not arbitrary, nor does it conflict with the plain language of the Plan. See Schikore v. BankAmerica Supplemental Ret. Plan, 269 F.3d 956, 960 (9th Cir. 2001).
Practice Pointer - The plaintiff attacked the benefit denial on three grounds - procedural, substantive, and structural flaws. The first two issues helped support the finding of a structural conflict of interest.
Treating Physician Rule - Although plan administrators are not bound to give any special weight to the opinions of treating physicians, they may not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician. Black & Decker Disability Plan v. Nord, 538 U.S. 822, 834 (U.S. 2003)
Claims Regulations – See, Department of Labor, Employee Benefits Security Administration, http://www.dol.gov/ebsa/faqs/faq_claims_proc_reg.html, Question B-4
Ninth Circuit Authority - The key case on judicial review of benefit decision is Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. Cal. 2006).
Scholarship - I co-authored a law review article that might be helpful in this context: “Weighing Medical Judgments: Explaining Evidentiary Preferences for Treating Physician Opinions in ERISA Cases after Black and Decker v. Nord” , 13 Michigan State Law School Journal of Medicine and Law 157 (2009)