504 F. App'x 628
9th Cir.2013Background
- ERISA claim by Lukas and Watters against UBH and Plan for denying Lukas’s residential treatment at Alta Mira as not medically necessary.
- District court applied abuse-of-discretion standard to UBH/Plan decision and upheld denial.
- Ninth Circuit reviews de novo the choice and application of the standard of review; Abatie v. Alta Health & Life Ins. Co. involved the same standard and conflict of interest analysis.
- IBM’s dual role as evaluator and payor created a conflict of interest for the Plan Administrator.
- Procedural irregularities included lack of a written initial denial, failure to explain denial, and failure to obtain or consider requested evidence.
- On appeal, court held the Plan Administrator’s conflict of interest and procedural violations support reversal and remand with instruction to award benefits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was there abuse of discretion given conflict of interest and procedural flaws? | Lukas argues conflict and procedural missteps biased denial. | Plan contends proper abuse-of-discretion review and no prejudicial error. | Yes; abuse of discretion established due to conflict and procedural violations. |
| Did the denial provide meaningful dialogue and adequate rationale under ERISA requirements? | Appeals lacked substantial explanation; internal notes not disclosed undermining justification. | Denials rely on medical necessity guidelines and record; explanation adequate. | No; failures to provide meaningful dialogue and to disclose rationale biased the decision. |
Key Cases Cited
- Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006) (conflict of interest must be weighed in abuse-of-discretion review)
- Firestone Tire & Rubber Co. v. Brutch, 489 U.S. 101 (Supreme Court 1989) (conflict of interest factors in ERISA determinations)
- Booton v. Lockheed Med. Benefit Plan, 110 F.3d 1461 (9th Cir. 1997) (meaningful dialogue requirement in denial decisions)
- Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666 (9th Cir. 2011) (reversing abuses and directing award of benefits where appropriate)