Elizabeth W. v. Empire HealthChoice Assurance, Inc.
709 F. App'x 724
| 2d Cir. | 2017Background
- Elizabeth W., an ERISA plan beneficiary, received partial hospitalization program (PHP) treatment for anorexia nervosa at Oliver Pyatt after outpatient care failed.
- Empire HealthChoice insured the plan and initially authorized PHP coverage and eight continued pre-certifications.
- After 59 days, Anthem UM (Empire’s subcontracted utilization manager) physician concluded PHP was no longer medically necessary; Empire ceased coverage effective July 3, 2014.
- Elizabeth appealed internally; three independent reviewing doctors upheld the denial. She sued under ERISA § 502(a)(1)(B) for wrongful denial of benefits.
- The district court granted summary judgment for Empire; the Second Circuit affirmed, applying the arbitrary-and-capricious standard and finding Empire’s denial supported by substantial evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review | Denial should be reviewed de novo | Plan grants discretionary authority; apply arbitrary-and-capricious | Arbitrary-and-capricious applies (plan grants discretion) |
| Whether PHP remained "medically necessary" | Continued PHP was needed given ongoing symptoms and treatment needs | Reviewers found improvement and recommended less intensive outpatient care | Denial upheld; reviewers’ conclusions supported by substantial evidence |
| Weight of conflicting evidence | Conflicting clinical evidence shows denial arbitrary | Conflicting evidence acknowledged but substantial evidence supports denial | Conflicting evidence does not render decision arbitrary when substantial evidence exists |
| Effect of structural conflict of interest | Empire’s dual role and reviewer statistics show bias | Empire subcontracted reviews to Anthem UM and insulated reviewers; no evidence conflict affected decision | Conflict considered but did not taint decision; no evidence it affected outcome |
Key Cases Cited
- Hobson v. Metro. Life Ins. Co., 574 F.3d 75 (2d Cir. 2009) (standard for reviewing ERISA benefit denials and role of plan discretion)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (U.S. 1989) (default de novo review for benefit determinations unless plan grants discretion)
- Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243 (2d Cir. 1999) (language that confers discretion need not use magic words)
- Krauss v. Oxford Health Plans, Inc., 517 F.3d 614 (2d Cir. 2008) (examples of plan language that clearly confer discretionary authority)
- Pagan v. NYNEX Pension Plan, 52 F.3d 438 (2d Cir. 1995) (appellate review when no disputed material facts)
- Durakovic v. Bldg. Serv. 32 BJ Pension Fund, 609 F.3d 133 (2d Cir. 2010) (definition of substantial evidence in ERISA review)
- Roganti v. Metro. Life Ins. Co., 786 F.3d 201 (2d Cir. 2015) (conflicting evidence does not make a supported decision arbitrary)
- McCauley v. First Unum Life Ins. Co., 551 F.3d 126 (2d Cir. 2008) (consideration of conflict of interest and steps to mitigate it)
- Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (U.S. 2008) (treatment of structural conflicts in ERISA benefit decisions)