E.W. v. Health Net Life Ins. Co.

86 F.4th 1265

E.W.; I.W., Plaintiffs-Appellants, v. HEALTH NET LIFE INSURANCE COMPANY; Health Net of Arizona, Inc., Defendants-Appellees The National Health Law Program; the Kennedy Forum, Amici Curiae.

No. 21-4110

United States Court of Appeals, Tenth Circuit

FILED November 21, 2023

Appeal from the United States District Court for the District of Utah (D.C. No. 2:19-CV-00499-TC)

Brian S. King (Tera J. Peterson with him on the briefs), Brian S. King P.C., Salt Lake City, Utah, for Plaintiffs-Appellants.

Michael W. Lieberman (Samuel Hunt Ruddy with him on the brief), Crowell & Moring LLP, Washington, DC, for Defendants-Appellees.

Abigail K. Coursolle, National Health Law Program, Los Angeles, California, filed an amicus curiae brief for the National Health Law Program and the Kennedy Forum.

Before HOLMES, Chief Judge, McHUGH and EID, Circuit Judges.

HOLMES, Chief Judge.

Plaintiff-Appellant E.W. was a participant in an employer-sponsored health insurance plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461. E.W.'s daughter, Plaintiff-Appellant I.W., was a beneficiary of E.W.'s plan. From September 2016 through December 2017, I.W. received treatment in connection with mental health challenges and an eating disorder at Uinta Academy ("Uinta"), an adolescent residential treatment center in Utah. In January 2017, Defendants-Appellees Health Net Insurance Company and Health Net of Arizona, Inc. (collectively, "Health Net," "Defendants," or "Appellees") began covering I.W.'s treatment under E.W.'s ERISA plan (the "Plan"). The Plan only covered treatment that was medically necessary under a definition provided in the Plan for purposes of all types of medical treatment.

Effective February 23, 2017, Health Net determined I.W.'s care at Uinta was no longer medically necessary, and it denied coverage from that day forward. In assessing whether to discontinue coverage, Health Net applied the McKesson InterQual Behavioral Health 2016.3 Child and Adolescent Psychiatry Criteria (the "InterQual Criteria"), which are designed to determine whether continued care at a residential treatment center is medically necessary. As relevant here, under the InterQual Criteria, care is medically necessary if, within the previous week, the patient satisfies any one of several criteria relevant to either a serious emotional disturbance or an eating disorder. Health Net determined I.W. did not satisfy the InterQual Criteria within the relevant period and notified Plaintiffs in a letter dated March 1, 2017.

Plaintiffs allegedly did not receive Health Net's March 2017 denial letter, and I.W. remained at Uinta until December 2017, when she was formally discharged. After receiving notice in May 2018 that Health Net had denied coverage effective February 23, 2017, Plaintiffs appealed the decision. Health Net again determined I.W. did not satisfy the InterQual Criteria during the relevant period and upheld its initial denial. Plaintiffs then appealed to an external reviewer, which upheld the decision to deny coverage.

Having exhausted their administrative remedies, Plaintiffs filed suit in the District of Utah, asserting two claims. First, they alleged Health Net violated ERISA, 29 U.S.C. §§ 1104(a)(1), 1132(a)(1)(B), 1133(2), by failing to comply with its fiduciary obligations to act solely in I.W.'s interest and by failing to conduct a full and fair review of her claim for benefits. Second, Plaintiffs alleged Health Net violated the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 ("MHPAEA" or the "Parity Act"), 29 U.S.C. §§ 1132(a)(3), 1185a(a)(3)(A)(ii), by imposing limitations on coverage for mental health treatment that it did not apply to analogous medical or surgical treatment. Defendants filed a motion to dismiss for failure to state a claim, which the district court denied as to the ERISA claim but granted with respect to the MHPAEA claim. Both parties then filed cross motions for summary judgment on the remaining ERISA claim. The district court denied Plaintiffs' motion and granted summary judgment to Health Net.

Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm the district court's decision granting summary judgment to Health Net on Plaintiffs' ERISA claim, but we reverse its decision dismissing the MHPAEA claim, and we remand for further proceedings consistent with this opinion.

I

A

I.W. began experiencing behavioral and mental health challenges when she was eleven years old, shortly after her family moved from Utah to Arizona. She had trouble making friends, and her grades began to drop substantially. As a result, she became depressed, engaged in self-harm, and developed anorexia and bulimia.

In 2015, a psychiatrist diagnosed I.W. with "[m]ajor [d]epression" and "[g]eneralized anxiety disorder," R., Vol. 32, at 252 (Adult Evaluation Rep. by Dr. Daniel Amen, dated Oct. 23, 2015), in response to which she began therapy and psychiatric treatment. However, I.W.'s mental health continued to decline, and in 2016, she attempted suicide on five occasions, leading her counselor and psychiatrist to "recommend[] a higher level of care," id., Vol. 32, at 264 (Letter of Med. Necessity from Dr. Lisa Bravo, dated Aug. 15, 2018). I.W. was admitted to ViewPoint Center, a psychiatric hospital for teens, where she underwent an eight-week evaluation. In a report generated following her stay at ViewPoint, I.W.'s treatment team diagnosed her with persistent depressive disorder with recurrent major depressive episodes, generalized anxiety disorder, an unspecified eating disorder, mild attention deficit hyperactivity disorder, parent-child relational problems, non-suicidal self-injury, and suicidal behavior disorder. The treatment team recommended that I.W. enter a residential treatment center or therapeutic boarding school.

In September 2016, I.W. was admitted to Uinta, an adolescent mental health residential treatment center. During I.W.'s time at Uinta, staff provided monitoring and treatment in connection with her eating disorder. For periods during the first eight months of her stay, Uinta staff placed I.W. "on arms" during meals, meaning that staff supervised her to ensure she did not restrict her food intake or purge what she ate. E.g., id., Vol. 13, at 224 (Uinta Daily Log for I.W., dated Apr. 17, 2017).

I.W. also continued to struggle behaviorally. In February 2017, staff caught her recreationally drinking Benadryl and cough syrup, and I.W. subsequently "romanticiz[ed] ... g[etting] high" several months later. Id., Vol. 41, at 31 (Uinta Therapy Progress Notes for I.W., dated Aug. 4, 2017). I.W. also maintained a sexual relationship with a peer in violation of Uinta's rules. And she continued seeking attention by faking fainting spells, a behavior that predated her admission to Uinta.

Approximately seven months into her stay at Uinta, I.W.'s treatment team prepared a "Treatment Plan Review" ("TPR"), which summarized her progress toward each treatment goal. Id., Vol. 13, at 208-09 (Uinta Treatment Plan Rev. for I.W., dated Apr. 12, 2017). The TPR reported that I.W. was "developing skills to effectively manage her anxiety" and that "her level of anxiety ha[d] decrease[d]" but that she still struggled to manage her anxiety without assistance from staff members. Id. at 208. It also reported continuing signs of an eating disorder, including further weight loss, and it stated that I.W. remained "on arms" during and after meals. Id. Accordingly, the TPR recommended that I.W. "continue her treatment at Uinta" and explained that "[i]f she [was] ... discharge[d] at [that] time, it [was] highly probable that [she] would relapse and re-engage in unhealthy and risky behaviors." Id. at 209.

On December 14, 2017, approximately fifteen months after I.W. entered Uinta, her treatment team concluded that she had "met her therapy goals" and recommended discharging her from the residential treatment center. Id., Vol. 5, at 51 (Uinta Discharge Summ. for I.W., dated Dec. 14, 2017). Upon returning home, the treatment team recommended that I.W. "participate in an Intensive Out-Patient Program" and "continue to participate in individual and family therapy on a weekly basis." Id.

B

From the date she was admitted to Uinta through December 31, 2016, an insurance provider that is not a party to this litigation covered I.W.'s treatment. Starting on January 1, 2017, I.W.'s treatment was covered by an insurance plan issued by Defendant-Appellee Health Net Life Insurance Company and administered by Defendant-Appellee Health Net of Arizona, Inc., through its subsidiary Managed Health Network, LLC. See id., Vol. 4, at 270 (Letter from Health Net to I.W., dated Nov. 19, 2018). The Plan is governed by ERISA. See id., Vol. 1, at 14-15 ¶¶ 2-3 (Compl., filed July 16, 2019). I.W.'s father, E.W., participated in the Plan through his employer, and I.W. was a beneficiary. Id. at 15 ¶ 3.

Except for preventive services, the Plan only covered services that were "[m]edically [n]ecessary," id., Vol. 4, at 142 (Health Net Evid. of Coverage), which the Plan defined as:

health care services that a Physician, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing or treating an Illness, Injury, disease or its symptoms, and that are:

1. In accordance with generally accepted standards of medical practice;

2. Clinically appropriate, in terms of type, frequency, extent, site and duration, and considered effective for the patient's Illness, Injury or disease; and

3. Not primarily for the convenience of the patient, Physician, or other health care Provider, and not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient's Illness, Injury or disease.

Id. at 244. The Plan defined "generally accepted standards of...