764 F.3d 563
6th Cir.2014Background
- Janie Butler, with a long history of alcohol addiction and failed outpatient/inensive outpatient treatments, sought 30-day inpatient residential rehabilitation at Sierra Tucson in February 2005.
- UnitedHealthcare (claims administrator under the ERISA plan) denied coverage as not medically necessary, relying on internal reviewers and claim-processing guidelines that United applied inconsistently.
- John Butler (assignee) exhausted internal appeals; United’s outside reviewers either applied the wrong guideline, omitted or misstated key facts (notably prior failed outpatient treatment), and failed to explain disagreement with treating physicians’ opinions.
- The district court ordered remand for a full and fair review and required United to consider treating physicians’ letters and explain disagreements; United’s subsequent reviews again failed to comply with the court’s instructions.
- The district court ultimately concluded further remand would be futile, awarded the cost of the benefits plus prejudgment interest, and imposed statutory penalties under 29 U.S.C. § 1132(c)(1)(B) for United’s delayed disclosure of the residential-rehabilitation guideline.
- The Sixth Circuit affirmed the award of benefits (denial was arbitrary and capricious) but reversed the § 1132(c) penalties because United was not the plan “administrator” for that statute and the claim alleged violations of a regulation implementing § 1133 rather than § 1132.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether United’s denial of inpatient residential rehab was arbitrary and capricious | Butler: United ignored controlling guideline and treating physicians, misstated/omitted key facts (prior failed outpatient care); reviews lacked reasoned explanation | United: Multiple reviewing physicians agreed; denial supported by record and guideline application | Held: Denial arbitrary and capricious; benefits award affirmed (United failed to apply guideline, ignored evidence, and did not provide reasoned explanations) |
| Whether United may be assessed § 1132(c)(1)(B) penalties for failing to produce plan information | Butler: United delayed providing residential-rehab guideline and called itself administrator; penalties appropriate | United: Not the plan "administrator" under § 1132(c) (plan named employer as administrator); issue not pleaded under § 1132 | Held: Reversed penalties — United was not the plan administrator under § 1132(c) and claim alleged regulatory (§ 1133) violations, not § 1132 statutory violations |
Key Cases Cited
- Moon v. Unum Provident Corp., 405 F.3d 373 (6th Cir. 2005) (arbitrary-and-capricious review where plan grants insurer discretion)
- Baker v. United Mine Workers of Am. Health & Ret. Funds, 929 F.2d 1140 (6th Cir. 1991) (decision must reflect deliberate, principled reasoning and substantial evidence)
- Elliott v. Metro. Life Ins. Co., 473 F.3d 613 (6th Cir. 2006) (insurer must adequately explain disagreement with treating physicians)
- Evans v. UnumProvident Corp., 434 F.3d 866 (6th Cir. 2006) (failure to consider or misstating material facts can render denial arbitrary)
- Williams v. Int’l Paper Co., 227 F.3d 706 (6th Cir. 2000) (insurer cannot improperly discount claimant-submitted evidence)
- Kuhn v. Washtenaw Cnty., 709 F.3d 612 (6th Cir. 2013) (judicial estoppel requires clearly inconsistent positions)
- New Hampshire v. Maine, 532 U.S. 742 (2001) (judicial estoppel standard)
- VanderKlok v. Provident Life & Accident Ins. Co., 956 F.2d 610 (6th Cir. 1992) (limitations on statutory penalty awards under ERISA)
- Caffey v. UNUM Life Ins. Co., 302 F.3d 576 (6th Cir. 2002) (insurer not liable for § 1132(c) penalties if not plan administrator)
- Hiney Printing Co. v. Brantner, 243 F.3d 956 (6th Cir. 2001) (distinguishing claims administrator from plan administrator)