M. S. v. Premera Blue Cross

553 F.Supp.3d 1000

M. S., L. S., and C.J.S., Plaintiffs,

v.PREMERA BLUE CROSS, Microsoft Corporation, and the Microsoft Corporation Welfare Plan, Defendants.

Case No. 2:19-cv-00199-RJS-CMR

United States District Court, D. Utah.

Signed August 10, 2021

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

Gwendolyn Cecilia Payton, Pro Hac Vice, Kilpatrick Townsend & Stockton LLP, Seattle, WA, for Defendant Premera Blue Cross.

Gwendolyn Cecilia Payton, Kilpatrick Townsend & Stockton LLP, Seattle, WA, Timothy C. Houpt, Mark D. Tolman, Jones Waldo Holbrook & McDonough, Salt Lake City, UT, for Defendants Microsoft Corporation, Microsoft Corporation Welfare Plan.

MEMORANDUM DECISION AND ORDER

ROBERT J. SHELBY, United States Chief District Judge

This case arises under the Employee Retirement Income Security Act of 1974 (ERISA). Plaintiffs M.S., L.S., and C.J.S. filed this lawsuit against Defendants Premera Blue Cross (Premera), Microsoft Corporation (Microsoft), and Microsoft Corporation Welfare Plan (the Plan) after the Plan's claim administrator denied the S. Family's claim for residential treatment benefits rendered to their minor son, C.S., for oppositional defiant disorder, autism spectrum disorder, pervasive developmental disorder, and anxiety. The S. Family and Defendants cross-move for summary judgment on the S. Family's three claims: (1) denial of benefits, (2) violations of the Parity Act, and (3) statutory penalties under ERISA. For the reasons stated below, both motions are GRANTED in part and DENIED in part.

BACKGROUND¹

The S. Family lives in King County, Washington. Microsoft employed M.S. and provided the Family with group health coverage through a self-funded benefit plan. C.S. was a beneficiary of the Plan. Before addressing the legal issues presented, the court first discusses the relevant Plan language, C.S.’s medical treatment, and the procedural history of the case.

I. The Plan

The Plan designates Microsoft as the Named Fiduciary and Plan Administrator.² Pursuant to the Plan documents, Microsoft delegated its claim procedure duties to the claim administrator, Premera.³

The Plan requires mental health treatment to be "medically necessary" for coverage.⁴ The Plan defines "medically necessary" as covered services meeting certain criteria, including:

(1) It is essential to the diagnosis or treatment of an illness, accidental injury, or condition that is harmful or threatening to the enrollee's life or health, ....

(2) It is appropriate for the medical condition as specified in accordance with authoritative medical or scientific literature and generally accepted standards of medical practice.

(3) It is a medically effective treatment of the diagnosis as demonstrated by the following criteria:

(a) There is sufficient evidence to draw conclusions about the positive effect of the health intervention on health outcome.

(b) The evidence demonstrates that the health intervention can be expected to produce its intended effects on health outcomes.

(c) The expected beneficial effects of the health intervention on health outcomes outweigh the expected harmful effects of the health intervention.

(4) It is cost-effective, as determined by being the least expensive of the alternative supplies or levels of service that are medically effective and that can be safely provided to the enrollee. A health intervention is cost-effective if no other available health intervention offers a clinically appropriate benefit at a lower cost.

(5) It is not primarily for research or data accumulation.

(6) It is not primarily for the comfort or convenience of the enrollee, the enrollee's family, the enrollee's physician or another provider.

(7) It is not recreational, life-enhancing, relaxation or palliative therapy, except for treatment of terminal conditions.⁵

As used in this definition, "generally accepted standards of medical practice," means "standards that are based on credible scientific evidence published in peer reviewed medical literature that is generally recognized by the relevant medical community, Physician Specialty Society recommendations, the views of physicians practicing in relevant clinical areas, and any other relevant factors."⁶

Premera uses the McKesson InterQual Criteria as a factor to determine whether residential treatment care is appropriate for a mental health condition.⁷ These criteria require all the following for extended stays (sixteen days or more) at a residential treatment center due to serious emotional disturbance:

• At least one of the following factors related to functioning present within the last week:

• School refusal or daily resistance to school attendance,

• An interpersonal conflict, defined as any of the following:

• hostile or intimidating in most interactions,

• persistently argumentative when given direction,

• poor or intrusive boundaries causing anger in others and requiring frequent staff intervention,

• threatening, or

• unable to establish positive peer or adult relationships.

• Improved independent functioning, requiring both

• Discharge planned within the next week, and

• Therapeutic passes planned to transition to alternate level of care.

• Repeated privilege restriction or loss of privileges,

• Unable or unwilling to follow instructions or negotiate needs, or

• Unresponsive to staff direction or limits.

• All of the following interventions within the last week:

• Behavioral contract or symptom management plan,

• Clinical assessment at least one (1) time per day,

• Individual or group or family therapy at least three (3) times per week,

• Individual or family psychoeducation,

• Psychiatric evaluation at least one (1) time per week, and

• School or vocational program.

• At least one of the following symptoms present within the last week:

• Aggressive or assaultive behavior,

• Angry outbursts,

• Depersonalization or derealization,

• Destruction of property,

• Easily frustrated and poor impulse control,

• Homicidal ideation without intent,

• Hypervigilance or paranoia,

• Non-suicidal self-injury,

• Persistent rule violations, or

• Psychiatric medication refractory or resistant and symptoms increasing or persisting.⁸

Premera also uses separately formulated InterQual Criteria to determine whether services rendered at skilled nursing facilities and inpatient rehabilitation facilities are medically necessary.⁹ Premera does not use any separately formulated criteria beyond the language of the Plan to determine whether inpatient hospice services are medically necessary.¹⁰

In the event a claim for benefits is denied "in whole or in part," the Plan provides that Premera will send the claimant a written notice including: (1) the specific reason or reasons for denial; and (2) reference to the specific Plan provisions on which the denial is based.¹¹ The Plan also provides for this written notice to be provided by Premera when a claimant appeals the denial.¹² The Plan states Premera will send the claimant notice of "the specific reason or reasons for denial" if it denies the claimant's appeal.¹³

II. C.S.’s Medical History and Treatment

When C.S. began attending kindergarten, he started exhibiting violent and aggressive behavior.¹⁴ At age five, C.S. began receiving ongoing behavioral, social, occupational, and language therapies.¹⁵ After several evaluations, C.S. was diagnosed with anxiety, emotional issues, and Pervasive Developmental Disorder—Not Otherwise Specified.¹⁶

Throughout his teenage years, C.S. became increasingly socially isolated and addicted to electronics, the internet, and technology.¹⁷ C.S. also displayed aggressive and violent behavior centered on parental boundaries on his technology use.¹⁸ C.S.’s violent behavior was severe enough that it sometimes required local police assistance and for C.S.’s therapist, Dr. Erin Milhelm, to implement a "Safety Intervention Plan" to help keep C.S.’s family safe during his episodes.¹⁹ C.S. would also sometimes threaten self-harm or suicide during his outbursts and would become aggressive with family members beyond his parents.²⁰ Because of C.S.’s episodic violence and aggression, his parents found it "extremely difficult" to enforce boundaries and rules.²¹

In late 2016, C.S.’s parents met with an educational consultant to guide them in their selection of therapeutic programs for him.²² They eventually decided to send C.S. to "Pacific Quest," an outdoor behavioral health program in Hawaii.²³ The Family enrolled C.S. at Pacific Quest on June 15, 2017.²⁴ On July 17, 2017, C.S. left the program.²⁵ A therapist at Pacific Quest explained C.S. left "due to escalations both verbal and physical[ ] with staff."²⁶

While at Pacific Quest, C.S. received a psychological assessment by Todd Corelli, PhD.²⁷ Dr. Corelli concluded his evaluation noting,

In summary, [C.S.] struggles with several significant issues. These include poor coping skills, emotional immaturity, anger outburst[s], oppositional and defiant behaviors, anxiety, and social difficulties that are consistent with Autism Spectrum Disorder. Given the seriousness of these test findings, it is recommended that following his stay at Pacific Quest, [C.S.] go onto a longer term residential program that can continue addressing each of these issues in depth. [C.S.] requires placement in a structured, therapeutic, residential school outside of the home where he understands expectations and is given direct in vivo feedback when he gets overwhelmed. He will need a variety of therapeutic interventions, including individual, group, and family therapy.... Such a program will also need to provide [C.S.] with an academic environment that includes small class sizes with individualized attention and instruction.²⁸

After C.S.’s discharge from Pacific Quest, his parents enrolled C.S. in Daniels Academy for mental health residential treatment.²⁹ Although C.S. was initially unable to transfer directly to Daniels Academy from Pacific Quest due to his "poor emotional regulation," he later...