158 F. Supp. 3d 1239
D. Utah2016Background
- Joseph and Gail F. (the F. Family) sought ERISA benefits for long‑term residential treatment for their minor daughter N.F., who received care at two non‑network Utah residential programs (Moonridge and New Haven) from May 2012 to March 1, 2013.
- Sinclair Services Company sponsors a self‑funded employee health plan (Basic in 2012; Plus as of Jan 1, 2013) administered by Sinclair, which has discretionary authority to determine benefits.
- The Plan has an Out‑of‑Area Program (covers non‑network care when no network provider exists within 50 miles of the beneficiary’s residence) and a separate Use of Network Providers During Travel provision requiring use of network providers when a beneficiary travels to an area where a network is available (unless emergency).
- Administrator denied pre‑2013 claims on the ground that N.F. traveled to Utah (an area with a network residential provider) and therefore benefits were payable only for in‑network providers; denied post‑Jan‑1‑2013 claims because the amended Plus Plan excluded residential treatment altogether.
- The F. Family appealed administratively and then sued under 29 U.S.C. § 1132(a)(1)(B); both parties moved for summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Administrator’s pre‑2013 denial (relying on "area" = state in Travel provision) was arbitrary and capricious | "Area" should be read consistent with Out‑of‑Area definition (50‑mile radius); denial is unreasonable | "Area" reasonably means a state; Utah had network residential provider so out‑of‑network care is excluded | Court: "area" is ambiguous; state‑level reading is a reasonable interpretation; denial not arbitrary and capricious |
| Whether conflict of interest, procedural irregularity, or fiduciary breach warrants de novo review | Administrator funded plan and denied claims; failed to address medical appropriateness; ergo reduce deference or apply de novo review | Administrator argues no serious procedural defects and decision was based on plan interpretation, not medical judgment | Court: applied arbitrary‑and‑capricious review, gave conflict little weight, found no serious procedural irregularity or fiduciary breach requiring de novo review |
| Whether the Plus Plan’s post‑Jan‑1‑2013 exclusion of residential treatment violates the Mental Health Parity and Addiction Equity Act (Parity Act) | Exclusion is a separate treatment limitation applicable only to mental health benefits and thus violates the Parity Act | Exclusion applies across the board; plan still covers analogous skilled nursing services so parity is satisfied | Court: exclusion singles out residential mental‑health care and violates the Parity Act; remanded to Administrator to determine remedies and benefits for post‑Jan‑1‑2013 period |
| Whether post‑Jan‑1‑2013 Parity claim is properly before the court despite pleading/formal‑party errors | Pre‑litigation appeals and complaint gave fair notice; Basic and Plus are part of same plan document | Administrator contends complaint limited to pre‑Jan‑1‑2013 and Plus Plan not named separately | Court: claim is properly before court; parties had notice and plans are not treated as wholly separate for pleading purposes |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (standard of review for ERISA benefit denials)
- Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (conflict of interest as a factor in arbitrary‑and‑capricious review)
- LaAsmar v. Phelps Dodge Corp. Life, Accidental Death & Dismemberment & Dependent Life Ins. Plan, 605 F.3d 789 (10th Cir.) (deferential review where plan grants discretion)
- Weber v. GE Group Life Assurance Co., 541 F.3d 1002 (10th Cir.) (arbitrary‑and‑capricious standard explained)
- Flinders v. Workforce Stabilization Plan of Phillips Petroleum Co., 491 F.3d 1180 (10th Cir.) (adjusting review for conflicts and procedural irregularities)
- Adamson v. Unum Life Ins. Co. of Am., 455 F.3d 1209 (10th Cir.) (consideration of administrator conflicts and incentives)
- Spradley v. Owens‑Ill. Hourly Employees Welfare Benefit Plan, 686 F.3d 1135 (10th Cir.) (remand vs. judgment; administrative‑record review)
- Scruggs v. ExxonMobil Pension Plan, 585 F.3d 1356 (10th Cir.) (district court discretion to remand to plan administrator)