367 F. Supp. 3d 817
E.D. Ill.2019Background
- Alice F., a dependent under her father’s employer-sponsored ERISA health plan administered by HCSC, received residential mental-health treatment in 2015–2016 at two Utah facilities: Second Nature (outdoor program) and Vista (residential treatment center).
- HCSC denied coverage for the entire Second Nature stay as a non-covered "wilderness program." Alice appealed and sued under ERISA § 1132(a)(1)(B).
- HCSC also terminated payment for Vista after August 31, 2015, concluding further residential care was not "medically necessary;" Alice remained at Vista through May 15, 2016 and seeks benefits for Sept. 1, 2015–May 15, 2016.
- The parties agreed de novo review was appropriate; the Court conducted a bench trial on the papers under Fed. R. Civ. P. 52 and considered administrative and extra-record evidence as necessary.
- Court found (1) Second Nature did not qualify as a plan-defined Residential Treatment Center (RTC) because it lacked the required licensure and regulatory features, and (2) Vista care from Sept. 1, 2015 to May 15, 2016 was medically necessary under the Milliman Care Guidelines.
- Remedy: judgment for HCSC on Second Nature; judgment for Alice for unpaid benefits for Vista period (amount unresolved), prejudgment interest awarded at prime rate; attorney fees denied because HCSC’s denial was substantially justified.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Second Nature is an RTC under the Plan | Second Nature delivered RTC-level therapeutic services and 24/7 care, so it fits Plan RTC definition despite Utah "outdoor" license | Second Nature is licensed only as an Outdoor Youth/"wilderness" program and thus falls within Plan's wilderness/other-facilities exclusion | Held for Defendant: Second Nature not an RTC under Plan because it lacks required licensure and regulatory characteristics |
| Whether the wilderness-program exclusion violates the Mental Health Parity and Addiction Act | Excluding wilderness programs denies parity because they can deliver RTC-equivalent care and would create a geographic/nonquantitative limitation | The Plan’s RTC exclusion targets services that are primarily supportive (not medical/therapeutic); SNF and RTC definitions similarly exclude primarily supportive services, so parity is maintained | Held for Defendant: exclusion does not violate Parity Act given Plan’s definitions and parallel limits on SNFs |
| Whether Vista residential care after Sept. 1, 2015 was medically necessary under the Plan | Continued documented impulse-control, lying, theft, academic/family dysfunction, recurring behaviors, need for structure and family work show ongoing need for residential care | Claim reviewers found improving mood, no acute danger, and that outpatient care was appropriate; Milliman guidelines applied to justify termination | Held for Plaintiff: Court finds Vista care from Sept. 1, 2015 to May 15, 2016 was medically necessary under Milliman guidelines and Plan terms |
| Remedies: benefits, interest, attorneys' fees | Seeks full unpaid benefits for Vista period, prejudgment interest, attorneys’ fees | Disputes amount of benefits paid/owing; opposes fees because denial was substantially justified | Held: Plaintiff entitled to unpaid benefits for the Vista period and prejudgment interest (prime rate). Attorneys’ fees denied because Defendant’s position was substantially justified. Parties to meet and confer on amounts |
Key Cases Cited
- Black & Decker Disability Plan v. Nord, 538 U.S. 822 (ERISA allows actions to recover benefits and enforce plan rights)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (standard for review of benefit determinations)
- Krolnik v. Prudential Ins. Co. of Am., 570 F.3d 841 (de novo review appropriate under similar plan language)
- US Airways, Inc. v. McCutchen, 569 U.S. 88 (ERISA plans construed by ordinary contract principles)
- Ali v. Federal Bureau of Prisons, 552 U.S. 214 (ejusdem generis and related canons of statutory/contract interpretation)
- Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (attorney fee eligibility requires some success on the merits)
- Gorenstein Enterprises, Inc. v. Quality Care–USA, Inc., 874 F.2d 431 (prejudgment interest presumption in federal-law cases)
- Fritcher v. Health Care Serv. Corp., 301 F.3d 811 (awarding prejudgment interest in ERISA benefit cases)