852 F.3d 105
1st Cir.2017Background
- Stephanie C. (mother) sought ERISA-plan reimbursement for residential treatment of her son M.G. at Gateway Academy (Utah), an out-of-network private school/program addressing behavioral/psychiatric issues.
- BCBS denied coverage for Gateway charges, citing (1) an express Certificate exclusion for services "performed in educational . . . settings," and (2) lack of medical necessity based on InterQual criteria and BCBS organizational policy.
- Administrative reviewers (BCBS psychiatrists) upheld the denial; Stephanie exhausted internal appeals and sued under ERISA § 502(a)(1)(B).
- On initial appeal this court held the plan did not unambiguously confer discretion and remanded for de novo review; on remand the district court reviewed de novo and upheld BCBS on two independent grounds.
- On further appeal the First Circuit assumed de novo review (but noted the choice of standard would not change the outcome) and affirmed: Gateway was an educational setting excluded by the Certificate, and, alternatively, the Gateway stay failed InterQual/BCBS policy requirements for medical necessity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appellate review should be de novo or more deferential | Stephanie: because the district court resolved cross-motions for summary judgment, appellate review should be de novo | BCBS: factual findings by the district court reviewing the administrative record should be reviewed for clear error | Court assumed de novo (favorable to Stephanie) but left standard open because outcome same under either standard; affirmed judgment |
| Whether Gateway is an "educational setting" excluded by the Plan | Stephanie: Gateway's educational aspects were not the substantive purpose of enrollment; also argued improper notice of this ground | BCBS: Gateway plainly provided scholastic classes, used "student"/"campus" terminology, so exclusion applies; notified subscriber (father) by telephone; Certificate permits notice to subscriber | Court: Gateway is an educational setting per plain Certificate language; telephone notice to subscriber was sufficient and Stephanie waived new written-notice argument on appeal; exclusion dispositive |
| Whether Gateway treatment was "medically necessary" under Plan/InterQual criteria | Stephanie: M.G. met InterQual clinical indications (aggression, sexually inappropriate conduct) and prior treatments failed or were insufficient | BCBS: M.G. did not meet InterQual nonclinical thresholds (no record of unsuccessful treatment within prior year; not discharged/transferred from psych hospitalization within 24 hours); BCBS reasonably applied InterQual plus its organizational policy | Court: Although clinical indications were met, Stephanie failed to prove required unsuccessful-treatment history or 24-hour hospitalization transfer; BCBS reasonably applied InterQual and its organizational policy; alternative ground for denial affirmed |
| Whether BCBS properly relied on organizational policy to select specific InterQual level-of-care criteria | Stephanie: "organizational policy" should mean provider policies, not insurer policy; BCBS used a stricter subacute criterion improperly | BCBS: organizational policy refers to the decisionmaker (BCBS) and it reasonably chose the psychiatric subacute criteria for adolescent acute residential treatment | Court: "Organizational policy" reasonably read to mean BCBS policy; BCBS's practice was not unreasonable and controlled level-of-care analysis |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (standard for ERISA review; de novo unless plan grants discretionary authority)
- Stephanie C. v. Blue Cross Blue Shield of Mass. HMO Blue, Inc., 813 F.3d 420 (1st Cir. 2016) (prior appeal holding plan did not unambiguously confer discretion; remand for de novo review)
- Bard v. Boston Shipping Ass'n, 471 F.3d 229 (summary judgment is a vehicle to decide ERISA benefit-denial cases on the administrative record)
- Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510 (discussing scope of district-court factfinding when review confined to administrative record)
- Tsoulas v. Liberty Life Assurance Co., 454 F.3d 69 (district-court factual determinations from stipulated administrative record reviewed for clear error)