James C. v. Aetna Health & Life Ins. Co.

499 F.Supp.3d 1105

JAMES C.; Merilee C. ; and J.C., Plaintiffs,

v.AETNA HEALTH AND LIFE INSURANCE COMPANY; and Lockheed Martin Corporation Group Benefits Plan, Defendants.

Case No. 2:18-cv-00717-DBB-CMR

United States District Court, D. Utah.

Signed October 30, 2020

Brian S. King, Brian S. King PC, Nediha Hadzikadunic, Gross & Rooney, Salt Lake City, UT, for Plaintiffs.

David N. Kelley, Madelyn L. Blanchard, Scott M. Petersen, Fabian Vancott, Salt Lake City, UT, for Defendants.

MEMORANDUM DECISION AND ORDER DENYING [45] DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT AND GRANTING IN PART AND DENYING IN PART [47] PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

David Barlow, United States District Judge

Defendant Aetna Health and Life Insurance Company (Aetna) denied Plaintiffs’ claims for health care reimbursement under an employee welfare benefits plan. Plaintiffs contend their claims were wrongly denied under the Employee Retirement Income Security Act of 1974 (ERISA).¹ Before the court are the parties’ cross-motions for summary judgment. Having considered the briefing and relevant law, the court denies Defendants’ Motion for Summary Judgment² and grants in part and denies in part Plaintiffs’ Motion for Summary Judgment.³

I. BACKGROUND

James C. was a participant in the Lockheed Martin Corporation Group Benefits Plan (the Plan), a self-funded employee welfare benefits plan governed by ERISA.⁴ James C. and Merilee C. are the parents of J.C., who was eligible for benefits under the Plan as a beneficiary.⁵ Aetna is the third-party claims administrator for the Plan.⁶ Under the Plan, "the claims administrator has the full discretionary authority to interpret and construe the terms of the Plan and to decide questions related to the payment of benefits."⁷ "The decision of the claims administrator shall be final and binding to the full extent permitted by law."⁸

The Plan covers medically necessary services, including mental health care, as detailed in the Plan's "What is Covered" section.⁹ Some medically-necessary treatments are subject to limitations and exclusions.¹⁰ Among other services, "[t]reatment in wilderness programs or other similar programs" are specifically excluded behavioral health services.¹¹ The Plan defines a behavioral health provider as "[a] licensed organization or professional providing diagnostic, therapeutic or psychological services for behavioral health conditions."¹²

The Plan requires precertification for some medical expenses, including "stays in a residential treatment facility for treatment of mental disorders, alcoholism or drug abuse."¹³ It cautions, however, that failure to obtain precertification for treatment could result in claims reimbursed at reduced rates or not paid at all, depending on the circumstances.¹⁴ The Plan explains:

Covered expenses will be reduced if you do not obtain a required precertification before incurring non-emergency medical expenses. This means the LM HealthWorks Plan claims administrator will reduce the covered expense, or your expenses may not be covered.¹⁵

The Plan provides a context-specific application of the foregoing general language as shown in this chart.¹⁶

If Precertification Is:	Then the Expenses Are:
Requested and approved	Covered.
Requested and denied	Not covered, but may be appealed. For more information, please refer to the "Appeals Process " section.
Not requested, but would have been covered if requested	Not covered, but may be appealed. For more information, please refer to the "Appeals Process" section.
Not requested, and would not have been covered if requested	Not covered, but may be appealed. For more information, please refer to the "Appeals Process " section.

From November 9, 2015 to January 21, 2016, J.C. received treatment at Outback Therapeutic Expeditions (Outback), a behavioral health program in Utah.¹⁷ After the treatment was completed, Plaintiffs submitted claims for Outback.¹⁸ Aetna denied the claims because it was not provided information about the treatment despite having requested information about the services provided at Outback.¹⁹ Outback appealed and Aetna upheld the denial, stating:

Based upon our review of the information provided we are upholding the original benefit determination. Under the plan, benefits are not available for wilderness programs or other similar programs. The member was admitted to this program with a pattern inconsistent with the contract requirements. There is therefore no coverage. The member may refer to their certificate of coverage or member handbook for specific details regarding their health care benefit coverage. This denial of coverage is based solely upon the reasons set forth above. No other basis for exclusion (e.g., medical necessity of the service or supply) that may be applicable to the circumstances was evaluated at this time.²⁰

After receiving additional information, Aetna changed its basis for denial of claims for coverage in January 2017, stating that Plaintiffs had not obtained the required precertification for the Outback services.²¹ On May 10, 2017, Plaintiffs appealed arguing that failure to precertify the treatment merely meant a $300 reduction in benefits.²² On June 7, 2017, Aetna upheld the denial, stating in relevant part:

You are appealing about the denial of coverage for the residential treatment facility services received at the Outback Therapeutic Expeditions on November 9, 2015 to January 21, 2016.

The plan provisions require precertification for inpatient residential treatment. We review the authorization requests for medical necessity before services are performed. Our records do not indicate a requested precertification for this stay in a residential treatment facility. Therefore, no benefits are payable.

Please reference your [Summary Plan Description] on page 9 under the section entitled "Precertification" which states in part:

When you are receiving care for inpatient stays, certain tests and procedures and outpatient surgeries, precertification is required by the LM HealthWorks Plan claims administrator.... If you do not precertify, your benefits may be reduced or the plan may not pay any benefits at all.²³

On August 1, 2017, Merilee C. submitted a second-level appeal, again arguing that lack of precertification should lead only to a $300 benefits reduction, not outright denial.²⁴ In this appeal, Merilee also requested a full, fair, and thorough review; she requested that Aetna provide her with the particular provision in the Plan supporting the denial decision; and she requested copies of all documents under which the Plan is operating.²⁵ Aetna again upheld the denial on August 30, 2017, stating:

In the appeal, you requested a second level appeal. You indicated that your plan does not have a provision to deny 100 percent of inpatient residential claims. You feel that the reduction for failure to precertify the services is $300.

...

According to the plan provisions, precertification is required for residential treatment. Therefore, based on the plan provisions the claims were correctly denied.²⁶

Aetna did not explain why the $300 reduction provision did not apply to the Outback circumstances.²⁷ Aetna never engaged in a medical necessity evaluation for J.C.’s treatment at Outback.²⁸

Immediately after discharge from Outback on January 21, 2016, J.C. was admitted to Monarch School (Monarch), a therapeutic boarding school in Montana.²⁹ J.C. was discharged from Monarch approximately fourteen months later, on March 16, 2017.³⁰ Aetna denied Plaintiffs benefits for Monarch for failure to obtain precertification and because Aetna did not receive requested information from the health care provider.³¹

On May 10, 2017, Merilee C. submitted a level-one appeal arguing, in part, that the Plan does not authorize "a 100% pre-certification penalty in cases where pre-certification was not obtained."³² Merilee also provided medical records and requested that Aetna provide her with all governing Plan documents.³³ On June 15, 2017, Aetna upheld denial of benefits for lack of precertification.³⁴ Merilee C. submitted a level-two appeal on August 7, 2017.³⁵ Aetna again upheld its denial on September 14, 2017, stating:

In the appeal, you requested we allow coverage for the inpatient residential treatment provided by Monarch School from January 21, 2016 to March 16, 2017 for [J.C.]. You stated that your plan does not contain a provision to deny coverage for failure to obtain precertification.

...

Please refer to page 10 under the section entitled What Happens If You Do Not Precertify in your [Summary Plan Description], where it states "Covered expenses will be reduced if you do not obtain a required precertification before incurring nonemergency medical expenses. This means the LM HealthWorks Plan claims administrator will reduce the covered expense, or your expenses may not be covered. You will be responsible for the unpaid balance of the bills.

If you receive care from an out-of-network provider (with the exception of emergency services), you are responsible for requesting precertification of your care with the LM HealthWorks Plan claims administrator before receiving services.... If you or your provider's request for precertification treatment is not approved, the benefit payable may be significantly reduced, or your expenses may not be covered.

You are required to obtain precertification prior to incurring services. The plan will not cover inpatient treatment without an authorization.³⁶

Aetna never addressed the medical necessity of J.C.’s treatment at Monarch.³⁷

II. LEGAL STANDARD

A. Summary Judgment Standard.

Summary judgment must be granted "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."³⁸ "When both parties move for summary judgment in an ERISA case, thereby stipulating that no trial is necessary, summary judgment is merely a vehicle for deciding the case; the factual determination of eligibility of benefits is decided solely on...