Khani v. Regence BlueShield, 2:09-cv-01067

Khani, Boeing employee, is eligible for Boeing Plan benefits; the Plan covers medically necessary or preventive treatment.
The Boeing Plan sets criteria for medical necessity, including diagnosis/treatment necessity, consistency with symptoms/diagnosis, essentiality, alignment with good medical practice, professional acceptance, and inpatient only when outpatient is unsafe.
Certain services are excluded, notably obesity services unless advance written medical necessity guidelines are followed; Regence serves as the plan's medical/service administrator.
Regence pre-approved obesity services (bariatric surgery) for Khani, which she underwent in February 2006.
On June 28, 2007, Khani underwent incisional hernia repair, panniculectomy, and abdominal wall reconstruction; the incisional hernia repair was agreed as medically necessary and covered, while Regence refused pre-approval for the panniculectomy as primarily cosmetic.
Khani prepaid $6,000 for the panniculectomy after Regence denied coverage; subsequent appeals followed, including a second external review; Regence later indicated certain charges were paid in error and sought refunds.

Issue	Plaintiff's Argument	Defendant's Argument	Held
ERISA standard of review and discretion	Khani entitled to review under abuse of discretion standard with potential conflict	Defendants argue deferential review under abuse of discretion with no/low conflict	Summary judgment denied; record shows potential conflict and need for de novo/abuse review depending on evidence
Scope of the administrative record and refunds	Record should include all relevant charges and refunds tied to the panniculectomy/abdominoplasty	Record excludes some billing details; decisions based on non-record evidence	Defendants failed to show entitlement to judgment; amply reviewable under administrative record
Remedy and trial procedure	Trial on the administrative record in bench; depositions limited	Protection order opposition; discovery appropriate within ERISA framework	Summary judgment denied; protective order granted; matter to be tried on the administrative record

Montour v. Hartford Life & Accident Ins. Co., 588 F.3d 623 (9th Cir. 2009) (abuse of discretion review in ERISA with potential conflict of interest standard variations)
Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006) (conflict of interest considerations in abuse-of-discretion review)
Kearney v. Standard Ins. Co., 175 F.3d 1084 (9th Cir. 1999) (framework for bench trial on the administrative record under ERISA)