D.K. v. United Behavioral Health, 2023 WL 3443353 (10th Cir. 2023)
After an employer-sponsored self-insured health plan denied claims for continued residential mental health treatment for a participant’s child, the family sued the plan and the plan’s claims administrator. Long-term residential treatment had been recommended by the child’s physicians following several years of progressive treatment for anxiety, attention deficit disorder, and depression; multiple episodes of self-harm and attempted suicide; and repeated emergency room visits and hospitalizations. Coverage was authorized for an initial 90 days but denied beyond that. A trial court ruled in favor of the family based on the “wildly inconsistent” reasons given for the denial, ordering payment for the residential treatment (see our Checkpoint article). The claims administrator appealed, contesting the conclusion that it had failed to engage with the child’s treating physicians and to provide the family with its reasoning for the denial.
The appellate court rejected the claims administrator’s attempt to distinguish ERISA’s disability claims procedure rules, which include an express requirement to explain disagreements with treating professionals’ opinions, from the health claims procedure rules (which do not contain this requirement), explaining that the inclusion of this requirement in the disability regulations simply made explicit requirements that already existed under ERISA. While administrators are not required to defer to treating physicians’ opinions, they must address such opinions—particularly those contrary to their own findings—and may not use the lack of an express requirement to “shirk their broad fiduciary responsibilities.” In addition, the denial failed to apply the terms of the plan to the child’s medical records. The claims administrator argued that its internal review notes demonstrated engagement with the providers’ opinions, cited to the medical record, and should be considered along with the denial letter. But the court reiterated that ERISA’s claims regulations require that denial letters be comprehensive to form a meaningful dialogue for full and fair review. Moreover, the plan itself required sufficient explanations in denial letters. Citing the claims administrator’s “clear and repeated procedural errors,” the court affirmed the award of benefits, rejecting the argument that the claims administrator should have been allowed to reevaluate the claim.
EBIA Comment: Plans may have valid reasons for denying claims and should be sure to sufficiently explain those reasons in denial letters. Here, the claims administrator’s “shifting and inconsistent” reasoning was inadequate. In the end, not only must the benefits be paid, but both the claims administrator and plan have incurred the expense of extensive litigation. For more information, see EBIA’s ERISA Compliance manual at Sections XXXIV.H (“‘Full and Fair Review’ Procedures for Group Health Claims and Appeals”) and XXXIV.N (“How to Protect Claim Denials From Being Reversed in Court”). See also EBIA’s Health Care Reform manual at Section XV (“Appeals Process and External Review Requirements”), EBIA’s Self-Insured Health Plans manual at Section XXVI (“Claims and Appeals”), and EBIA’s Group Health Plan Mandates manual at Section IX.G (“Disclosure of Criteria for Medical Necessity Determinations, Claims Denials, and Other Document Requests”).
Contributing Editors: EBIA Staff.