941 F. Supp. 2d 892
W.D. Tenn.2013Background
- ERISA beneficiary claim by Morrison plaintiffs for inpatient treatment denial at Remuda Ranch.
- Regions funded the plan; BCBS administered claims and had discretionary authority to determine benefits.
- Remuda Ranch treated eating disorders; plan definitions include hospital, psychiatric specialty hospital, and preadmission certification.
- Denials were based on Remuda Ranch being a residential facility, lack of preadmission certification, and nonparticipating/out‑of‑network status with BCBS.
- Administrative appeals occurred in 2009–2010 culminating in Regions Benefits Administrative Committee denial; court applies arbitrary and capricious review.
- Court resolves standard of review and ultimately upholds the denial; grant of defendants’ cross-motion for judgment on the administrative record
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review for denial of benefits | Plaintiffs seek de novo review of BCBS decision; contest Regions’ lack of discretionary authority. | Defendants contend arbitrary and capricious review applies to BCBS and Regions under the plan’s delegation. | Arbitrary and capricious review applies to both BCBS and Regions decisions. |
| Whether Remuda Ranch qualifies as hospital or psychiatric specialty hospital | Remuda Ranch inpatient center meets psychiatric acute hospital criteria. | Remuda Ranch is not a hospital; only a residential facility; not covered. | Remuda Ranch not a hospital but could qualify as psychiatric specialty hospital; plan denial supported if not participating/out-of-network. |
| Preadmission certification denial validity | Denial should be evaluated for medical necessity and process; not simply absence of certification. | Denial based on lack of preadmission certification. | BCBS failure to provide medical-necessity rationale; however not fatal to plaintiffs’ claim; denial not supported by substantial evidence. |
| Nonparticipating, out-of-network provider status | Ambiguity in plan about participation; contra proferentem arguments allowed. | Remuda Ranch was nonparticipating/out-of-network; plan excludes such facilities. | Substantial evidence supports nonparticipating/out-of-network status; denial affirmed. |
| Adequacy of notice under ERISA § 1133/2560.503-1 | Notices lacked grounds for denial; several notices inadequate. | Substantial compliance; remand unnecessary. | Remand unnecessary; at least one reasonable basis exists for denial; notices need not be perfect. |
Key Cases Cited
- Majestic Star Casino, LLC Group Health Benefit Plan v. Shelby Cnty. Health Care Corp., 581 F.3d 355 (6th Cir. 2009) (arbitrary and capricious review when plan grants discretionary authority)
- Bruch v. Firestone Tire & Rubber Co., 489 U.S. 101 (Supreme Court 1989) (ERISA benefits review standard; de novo vs. deferential)
- Wilkins v. Baptist Health Care Sys., Inc., 150 F.3d 609 (6th Cir. 1998) (evidence-based review under ERISA; not a rubber stamp)
- Kovach v. Zurich American Ins. Co., 587 F.3d 323 (6th Cir. 2009) (plan interpretation must be reasonable; substantial evidence required)
- Cox v. Standard Ins. Co., 585 F.3d 295 (6th Cir. 2009) (arbitrary and capricious standard; reasoned explanation required)
- Sckwalm v. Guardian Life Ins. Co. of Am., 626 F.3d 299 (6th Cir. 2010) (notice and procedural adequacy in ERISA review)
- Perez v. Aetna Life Ins. Co., 150 F.3d 550 (6th Cir. 1998) (contract interpretation in ERISA context; de novo law)
- McCartha v. Nat'l City Corp., 419 F.3d 437 (6th Cir. 2005) (contractual interpretation under ERISA review)