FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PACIFIC SHORES HOSPITAL,

Assignee,

Plaintiff-Appellant,

v.

UNITED BEHAVIORAL HEALTH;

WELLS FARGO & COMPANY HEALTH

PLAN,

Defendants-Appellees.

No. 12-55210

D.C. No.

2:10-cv-05828-

PSG-CW

OPINION

Appeal from the United States District Court

for the Central District of California

Philip S. Gutierrez, District Judge, Presiding

Argued and Submitted

January 7, 2014—Pasadena, California

Filed August 20, 2014

Before: William A. Fletcher, Milan D. Smith, Jr.,

and Paul J. Watford, Circuit Judges.

Opinion by Judge W. Fletcher
2 PACIFIC SHORES HOSPITAL V. UBH

SUMMARY*

Health Care Law

The panel reversed the district court’s judgment in an

action under the Employee Retirement Income Security Act

concerning a claims administrator’s refusal to pay for more

than three weeks of inpatient hospital treatment for anorexia

nervosa.

Reviewing for an abuse of discretion, the panel concluded

that the claims administrator improperly denied benefits

under the ERISA plan in violation of its fiduciary duty. The

panel concluded that it need not reach contentions that de

novo review was warranted by procedural errors in the

benefits denial, that materials outside the administrative

record should have been considered by the district court, and

that the claims administrator operated under a conflict of

interest. The panel held that, even conducting an abuse of

discretion review uninfluenced by any procedural irregularity

or conflict of interest, and considering only the record that the

administrator had before it when making its benefits

determination, the administrator improperly denied benefits.

COUNSEL

Elizabeth K. Green, Lisa S. Kantor (argued), and Peter S.

Sessions, Kantor & Kantor LLP, Northridge, California, for

Plaintiff-Appellant.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
PACIFIC SHORES HOSPITAL V. UBH 3

Robert Claude Bohner, Douglas J. Collodel (argued), and

David Michael Humiston, Sedgwick LLP, Los Angeles,

California, for Defendants-Appellees.

M. Patricia Smith, Solicitor of Labor, Timothy D. Hauser,

Associate Solicitor for Plan Benefits Security Division,

Elizabeth Hopkins, Counsel for Appellate and Special

Litigation, and Candyce Phoenix (argued), Trial Attorney,

United States Department of Labor, Washington, D.C., for

Amicus Curiae Secretary of Labor.

OPINION

W. FLETCHER, Circuit Judge:

An employee of Wells Fargo, whom we will call Jane

Jones, was covered under the Wells Fargo & Company

Health Plan (the “Plan”), governed by the Employee

Retirement Income Security Act of 1974 (“ERISA”). United

Behavioral Health (“UBH”) is a third-party claims

administrator of the Plan. Jones was admitted to Pacific

Shores Hospital (“PSH”) for acute inpatient treatment for

severe anorexia nervosa. UBH refused to pay for more than

three weeks of inpatient hospital treatment. UBH based its

refusal in substantial part on mischaracterizations of Jones’s

medical history and condition. PSH continued to provide

inpatient treatment to Jones after UBH refused to pay. Jones

assigned to PSH her rights to payment under the Plan.

PSH sued the Plan and UBH, seeking payment for the

additional days of inpatient treatment. We conclude that

UBH abused its discretion in refusing to pay for these days of

treatment.
4 PACIFIC SHORES HOSPITAL V. UBH

I. Background

The Plan is self-insured byWells Fargo, which is both the

sponsor and administrator of the Plan. Wells Fargo contracts

with third-party administrators to review claims made under

the Plan. The third-party administrator responsible for

reviewing mental health and substance abuse claims,

including anorexia nervosa, is OptumHealth Behavioral

Solutions, which is a trade name of UBH.

Jones was admitted to PSH on January 25, 2010. Jones’s

brother had recently sent an email to Jones’s entire family

saying that he felt that he was planning her funeral. Jones’s

17-year-old daughter feared for her mother’s life. UBH’s

casemanagement notes listed Jones’s “Reason for admission”

as “severe depression, SI [Suicidal Ideation], and anorexia.” 

Jones’s admitting diagnoses were (1) “Major Depressive

Disorder, Recurrent, Severe Without Psychotic Features”;

(2) “Anorexia Nervosa”; (3) “pneumonia”; and (4) “Problems

with primary support group.” UBH initially authorized four

days of inpatient hospital treatment.

UBH case notes for January 27 provide:

UR [Utilization Review, referring to Dy

Wolpert, an Advanced Practice Registered

Nurse employed by PSH] reported on

01/27/10:

Presenting problem: SI [Suicidal Ideation] w/

plan to OD [Overdose]. Laxative abuse,

taking 130 Sena-S laxatives per day. Skeletal

in appearance. Weighs just 88 lbs @ 66

inches tall. 65% of IBW [Ideal Body
PACIFIC SHORES HOSPITAL V. UBH 5

Weight]; BMI [Body Mass Index] is 13.52. 

Pneumonia. Fainting due to laxative abuse. 

Eating 200 calories per day. Also purges by

self-induced vomiting, and that’s

worsening. . . .

Suicide risk: SI w/ plan to OD on tylenol.

Hx [History] of SI / attempts / gestures /

interventions. In 2007 took whole bottle of

laxatives in a suicide attempt.

(Emphasis added.)

UBH case notes for January27 describe Jones’s condition

as “Emergent - Life Threatening.” The “Treatment Plan” in

the January 27 notes provides:

Tx [Treatment] Plan: stabilize medically. 

Taper her off laxatives, refeeding. She’ll have

pancreatitis and anemia from refeeding, says

UR [Nurse Wolpert]. Have to go slow on

carbs and fat, goal of 2–2.5 lbs per wk weight

gain.

D/C [Discharge] Criteria: step down to RTC

[Residential Treatment Center] @ 85% of

IBW, when no longer purging, when no SI,

and once through laxative taper. . . .

ELOS [Estimated Length of Stay]: 4 wks of

IP [Inpatient].

(Emphasis added.)
6 PACIFIC SHORES HOSPITAL V. UBH

UBH case notes two days later provide:

UR [Nurse Wolpert] reported on 01/29/10:

admitted with active SI w/ plan to OD or

starve herself to death.

. . . .

she’s on a laxative taper from 130 laxatives a

day.

. . . .

active SI continues, no psychosis.

. . . .

she’s at 75.5 lbs . . . .

(Emphasis added.) Hospital staff were checking on Jones

every fifteen minutes as a “suicide precaution[]” and were

supervising her for 2 1⁄2 hours after every meal. Her laxative

taper was “down to 50 tablets of Sena per day from 130 tabs

per day.” UBH authorized two more days of inpatient

treatment.

UBH case notes for February 3 provide:

very anxious about being tapered off

laxatives,

positive for SI w/ plan and intent to overdose

or starve to death.

. . . .

sleep improving, ADLs [Activities of Daily

Living] improved.

eating 100%. weight @ 79 lbs.

. . . .

irritable, dysphoric, ruminative, hopeless.
PACIFIC SHORES HOSPITAL V. UBH 7

(Emphasis added.) UBH authorized four more days of

inpatient treatment, through February 4, and scheduled

another review date for February 5.

UBH case notes for February 5 provide:

UR [Nurse Wolpert]reported: Laxative taper?

we’ve been aggressive with the taper. she’s

been down to 5 tablets per day for about a wk,

and then she’ll go down to 3 tablets a day for

a wk. Probably about 2.5 wks more to taper

off.

. . . .

Medical stability? pt’s abnormal labs are

typical for an anorexic. It’s as they get better

that potential medical problems can set in:

anemia, [e]dema, start having cardiac

problems, their potassium can drop. . . . she

has pancreatitis.

. . . .

ELOS: 2–2.5 more wks.

(Emphasis added.) UBH authorized inpatient treatment for

an additional two days, through February 6.

UBH case notes for February 8 provide:

Clinical Review Summary: CA [Care

Advocate, an employee of UBH] reviewed

this acute IP [Inpatient] eating disorder case

w/ UBH Regional Medical Director, Dr.

Murray Zucker. CA requested Dr. Zucker to

conduct a P2P [Peer-to-Peer Review] of this
8 PACIFIC SHORES HOSPITAL V. UBH

pt’s case due to medical and psychiatric

complexity.

(Emphasis added.)

On February 9, Nurse Wolpert reported to UBH by

voicemail:

still depressed with a lot of anxiety,

positive for SI w/ plan to starve herself or OD.

. . . .

laxative taper down to 3 tabs per night.

severe body image disturbance.

poor insight, and judgment impaired.

currently 84 lbs.

(Emphasis added.) UBH treatment notes for February 9

recorded: “we’re repeating her labs. 1550 cal, 84 grams of

protein. q15 min checks. meal supervision, and post-meal

supervision 2.5 hrs.” (Emphasis added.)

Also on February 9, UBH Regional Director Dr. Zucker

conducted a peer-to-peer review, speaking by telephone to

Dr. Nomi Fredrick, Jones’s attending physician at PSH. Dr.

Zucker wrote a summary of the conversation. (There is no

summary of the conversation written by Dr. Fredrick.) Dr.

Zucker wrote:

Case Summary of Peer/Admin. Review: 43

yo female adm 1/26 for severe lax abuse (over

100/d). malnutrition, restric[ti]ng, physical

consequences, and depression with s/i. Pt

5'5", adm.[w]t. “75 or 81”, present 84 . . . . 

MD [Dr. Fredrick] recounts many stressors,
PACIFIC SHORES HOSPITAL V. UBH 9

old and n[]ew (husb. just lost job, dtr. going

away to school, 6 prior pregnancies ending in

miscarriage, chroni[]c depression and s/i (no

prior attempts).

MD insists need for cont. stay: medical

stabilization, suicidal risk, further wt gain.

MD . . . states pt threatens to “OD by

laxatives and starve myself to death if I leave

now.” . . . [Ho]wever, on fur[th]er questioning

she reports that pt has no immed plan, has not

gathered means, has made no prep, and

ther[e] is[ ]no 1:1 [one-to-one observation] or

even line of site [sic] in the program. MD

states pt is “grieving the l[o]ss of her

pregnancies.” She also reports she is doing

“integrated trauma work” and I suggested

th[is is] longterm tx [treatment] that can be

done as OP [outpatient] when she is medically

stable.

I advised the following:

1. prepare for d/c [discharge] 2/12.

. . . .

Decision and Rationale: Schedule [P]2P

[Peer-to-Peer Review] on []2/12 if pt not

d/ced [discharged].

(Emphasis added.)

On February 10, UBH case notes indicate that Nurse

Wolpert
10 PACIFIC SHORES HOSPITAL V. UBH

left VM [Voice Mail] [with UBH] verbalizing

his disagreement with UBH Dr. Zucker’s P2P

[Peer-to-Peer] review determinations on

02/09/10. UR Wolpert does not agree that the

pt has lessening medical necessity for

continued acute Mh IP LOC [Mental health

Inpatient Level of Care]. And Wolpert does

not believe the pt will be at sufficient body

weight come Friday 2/12 to be safely d/c’d

[discharged] to a lower LOC [Level of Care].

On February 12, Nurse Wolpert reported to UBH:

pt is off laxative taper.

having difficult time psychologically being

off the laxatives.

feels gross, severe body image disturbance.

. . . .

still c/o [complains of] SI w/plan to starve or

OD.

(Emphasis added.) UBH treatment notes for February 12

recorded: “still keeping cal plan @ 1550, . . . . d/c

[discharge] criteria: prov [provider] wants pt @ 75% of IBW

[Ideal Body Weight], around 90–95 lbs.” (Emphasis added.) 

Up to this date, UBH’s notes had consistently listed Jones’s

weight at admission as 88 pounds. On February 12, for the

first time, her weight at admission was listed at 81 pounds. 

UBH authorized inpatient treatment through February 14.

On February 16, Dr. Zucker conducted a second

telephone peer-to-peer review with Dr. Fredrick. After his

conversation with Dr. Fredrick, he wrote a summary. (Again,
PACIFIC SHORES HOSPITAL V. UBH 11

there is no summary of the conversation written by Dr.

Fredrick.) Dr. Zucker wrote:

Case Summary of Peer/Admin Review: 43

yo female with AN [anorexia nervosa] and

many prior tx [treatment] failures at all levels

originally presenting with severe wt loss, lab

abnl. [abnormal], depression,lax[ative] abuse,

and now at day 21 with minimal wt gain

desp[it]e diet of 2100 cal. MD [Dr. Fredrick]

states: has been do[in]g well (but doesn’t

explain why not d/c’ed [discharged] as

discussed last review) until dietician raised

cals today, VS [Vital Signs] stab[le], lab

normal, not express[]ing s/i, was compl[ian]t

with diet, and finished laxative taper, without

refeeding sxs [symptoms]. . . . Family is

supportive and she will return home. plan is

for f/u [follow up] at PHP [Partial

Hospitalization Program].

I explained that given pt’s chronicity, d/c

criteria are lower wt than usual and there does

not seem to be an approach to this obvious

axis II[personality disorder] pathology. Cont.

progress can occur at the PHP level.

Decision and Rationale: DECISION: no atu

[authorization] of cont. IP [Inpatient] days

beyond LCD [Last Covered Date] of 2/14/10.

RATIONAL[E]: After review of all available

information and after discussion with your

treating physician, Ifind that continued stay at
12 PACIFIC SHORES HOSPITAL V. UBH

the Inpatient level past the last covered day of

2/14/10 does[ ]not meet UBH Medical

Necessity/Level of Care Guidelines. You are

no longer a danger to yourself or others, your

medical issues have stabilized, necessary

continued weight restoration [c]an occur in

the Outpatient setting, longstanding eating

disorder think[in]g[ ]and behaviors can be

addressed in the Outpatient setting. Partial

Hospital care is available.

(Emphasis added.)

UBH formally notified PSH of its decision not to pay for

acute inpatient treatment beyond February 14 in a letter dated

February 18. On February 23, Nurse Wolpert requested on

Jones’s behalf an “urgent appeal” of Dr. Zucker’s denial of

benefits coverage for inpatient hospital treatment after

February 14. On either February 23 or 24, the appeal was

referred byUBH to Dr. Barbara Center of Prest & Associates. 

Dr. Center spoke by telephone to Dr. Fredrick on February 24

and on the same day sent written findings to UBH. Dr.

Center wrote:

Case Summary:

The patient is a 43-year old female who was

admitted to inpatient psychiatric / eating

disorder level of care on 1/25/10. The patient

has a long history of chronic eating disorder

behaviors. At the time of this admission, the

patient was 5'5" tall and weighed 84 pounds. 

She is described as taking 75 to 100 laxatives

daily. The patient was not suicidal,
PACIFIC SHORES HOSPITAL V. UBH 13

homicidal, or psychotic. The patient reported

some vague suicidal thoughts, including

thoughts of overdosing on the laxatives that

she had been abusing.

The patient has an extensive history of prior

treatment, including a previous stay at this

facility in 2006 and a stay at [another facility]

in 2005. It is unclear to what extent the

patient has been following up near her home

in [another state]. . . . The patient’s medical

history is remarkable for acute pancreatitis

which was diagnosed on admission. . . .

Following admission, the patient had slow

weight gain. . . . The patient was compliant

with her meal plan and gained eight pounds

over the course of her stay. . . .

Findings / Opinions: . . . .

1. By the current last covered date, 2/14/10,

the patient 83 lbs (67 percent ideal body

weight). While this is a very low body

weight, the patient reportedly has a history

of chronic very low body weight. Issues

related to her abuse of laxatives have been

successfullyaddressed and the patient was

medically stable. The patient was

compliant with her meal plan and steadily

gaining weight. She was motivated for

recovery.
14 PACIFIC SHORES HOSPITAL V. UBH

2. The patient was not suicidal, homicidal, or

psychotic.

3. In the opinion of this reviewer, the patient

does not meet United Behavioral Health

medical necessityguidelines for continued

stay at the acute inpatient psychiatric level

of care after the current last covered date,

2/14/10 (UBH continued service criteria,

nos. 1, 2, and 9, not met). Treatment at

the partial hospital level of care should be

considered.

(Emphasis added.)

On February 24, the same day UBH received Dr. Center’s

report, Dr. William Barnard, UBH Assistant Medical

Director, denied PSH’s appeal. In a letter addressed to Jones,

he wrote:

As requested, I have completed a first level

urgent appeal review on 2/24/2010 on a

request we received on 2/23/2010.

This review involved a telephone

conversation with your provider. After fully

investigating the substance of the appeal,

including all aspects of clinical care involved

in this treatment episode, I have determined

that benefit coverage is not available for the

following reason(s):
PACIFIC SHORES HOSPITAL V. UBH 15

(Emphasis added.) Dr. Barnard then quoted nearly verbatim

the three numbered paragraphs contained in Dr. Center’s

report.

Dr. Zucker made a number of obvious mistakes in his

summaries of his two peer-to-peer reviews. In his February

9 summary, written after his first review, Dr. Zucker wrote

that Jones’s weight at admission had been either 75 or 81

pounds. Both weights are contradicted by information then

in the administrative record. Jones’s admission weight was

never listed as 75 pounds. From January 25, the date of her

admission, until February 12, three days after Dr. Zucker’s

summary, Jones’s weight on admission was consistently

listed in UBH treatment notes as 88 pounds. On February 12,

her admission weight was changed in UBH notes to 81

pounds. Dr. Zucker also wrote in his report that Jones had

made “no prior attempts” at suicide. This statement is

contradicted in the administrative record. UBH’s January 27

treatment notes state, “In 2007 took whole bottle of laxatives

in a suicide attempt.”

Dr. Zucker minimized the risk of suicide. He wrote in his

February 9 summary, “[Ho]wever, on fur[th]er questioning

[Dr. Fredrick]reports that pt has no immed[iate] plan, has not

gathered means, has made no prep, and ther[e] is no 1:1 or

even line of site [sic] in the program.” But Dr. Fredrick’s

“reports,” “on further questioning” by Dr. Zucker, do not

undermine her assessment that Jones was at risk for suicide. 

Repeated entries in UBH treatment notes indicate that Jones

continued to have active suicidal ideation, with plans either

to overdose or starve herself to death. Given that Jones was

in acute inpatient care, she did not have access to large

quantities of Tylenol or laxatives, her planned means of

overdosing. So long as Jones remained in acute inpatient
16 PACIFIC SHORES HOSPITAL V. UBH

care, she would not have been able to “gather[] means” or

otherwise “prep” for suicide. The lack of line-of-sight

supervision did not support Dr. Zucker’s implicit suggestion

that the hospital did not itself believe that Jones was at risk

for suicide, for UBH treatment records indicate that PSH staff

continued to check Jones every fifteen minutes as a

precaution against suicide.

In Dr. Zucker’s February 16 summary, written after his

second peer-to-peer review, he again made a number of

obvious mistakes, despite his self-described review of “all

available information.” Dr. Zucker wrote that Jones had a

chronically low weight. He then relied on this “chronicity”

to refuse further authorization of inpatient treatment. Dr.

Zucker wrote that Jones was “now at day 21 with minimal wt

gain desp[it]e diet of 2100 cal.” This statement is

contradicted in the administrative record. UBH treatment

notes nowhere indicate that Jones had been eating 2100

calories per day. UBH notes on January 27 indicate that, at

the time of her admission, Jones was eating just 200 calories

per day, and that her treatment plan required “go[ing] slow on

carbs and fat.” Notes on February 9 indicate that Jones was

eating only 1550 calories per day. Three days later, on

February 12, the hospital was “still keeping cal plan @

1550.”

Dr. Zucker wrote in his February 16 summary, “MD

states: [patient] has been do[in]g well . . . un[ti]l dietician

raised cals today.” One may possibly infer from this

statement that Jones’s calories were raised “today” to 2100

calories, from 1550 calories on February 12 (though Dr.

Zucker does not specify the number of calories by which

Jones’s “cals” were raised). But this does not support Dr.

Zucker’s rationale for discontinuing coverage after February
PACIFIC SHORES HOSPITAL V. UBH 17

14. First, it is unclear whether “today” means February 14,

the last date for which UBH authorized payment, or February

16, the date of Dr. Zucker’s conversation with Dr. Fredrick

and of his report. Read in context, the later date seems more

likely. Even if Dr. Zucker meant February 14 when he wrote

“today,” this would mean only that Jones’s caloric intake was

raised to 2100 on the last day of her then-three-week stay. 

On either reading, Dr. Zucker’s statement—that Jones had

minimal weight gain after 21 days “desp[it]e diet of 2100

cal[ories]”—makes no sense.

Dr. Zucker wrote further that Jones’s laboratory test

results were “normal,” and that she had “finished laxative

taper without refeeding [symptoms].” But according to UBH

notes, as of February 16, the date of Dr. Zucker’s summary,

Jones’s most recent lab results came from tests performed on

February 12. Those tests showed elevated levels of amylase

and lipase related to Jones’s “acute pancreatitis”—a condition

caused by refeeding. Jones’s amylase levels on February 12

were higher than they had been on February 5, when UBH

case management notes already described her labs as

“abnormal.”

Finally, Dr. Zucker wrote in his February 16 summary,

“MD states [patient] . . . not express[]ing s/i.” We have only

Dr. Zucker’s summary of his conversation with Dr. Fredrick

to support this statement. We know from UBH treatment

notes that on February 12, only two days before the February

14 cut-off date, that Jones “still c/o [complains of] SI w/plan

to starve or OD.” There is nothing in UBH’s treatment notes,

as distinct from Dr. Zucker’s recounting of his conversation

with Dr. Fredrick, to indicate that Jones was no longer

experiencing suicidal ideation two days later.
18 PACIFIC SHORES HOSPITAL V. UBH

Dr. Center also made a number of obvious mistakes. She

wrote, “At the time of this admission, the patient was 5'5" tall

and weighed 84 pounds.” There is nothing in the

administrative record to support an admission weight of 84

pounds. From January 25 to February 12, UBH treatment

notes repeatedly indicate that Jones’s admission weight was

88 pounds. On February 12, the treatment notes indicate that

her admission weight was 81 pounds. Dr. Center wrote

further, “She is described as taking 75 to 100 laxatives daily.” 

This is contradicted in the administrative record. UBH

treatment notes repeatedly indicate that Jones was taking 130

Sena-S laxatives per day when she was admitted.

Dr. Center wrote further, “The patient was not suicidal,

homicidal, or psychotic. The patient reported some vague

suicidal thoughts, including thoughts of overdosing on the

laxatives that she had been abusing.” This is contradicted in

the administrative record. On admission, Jones was actively

suicidal, and she continued to have specific (not “vague”)

suicidal ideation until at least February 12. UBH treatment

notes on January 27 state that Jones had attempted suicide in

2007 by overdosing on a “whole bottle of laxatives.” UBH

treatment notes on January 27, January 29, February 3,

February 9, and February 12 consistently record Jones’s

suicidal ideation and plan to commit suicide through overdose

or starvation. Nowhere in UBH treatment notes after

February 12 is there any statement that Jones no longer had

suicidal ideation.

Dr. Center also wrote, “The patient’s medical history is

remarkable for acute pancreatitis which was diagnosed on

admission.” This, too, is contradicted in the administrative

record. UBH treatment notes are specific in stating that Jones

did not have pancreatitis on admission. Rather, as her
PACIFIC SHORES HOSPITAL V. UBH 19

January 27 treatment plan stated, PSH expected that Jones

would later develop pancreatitis as a consequence of her

treatment. As stated by Nurse Wolpert, “She’ll have

pancreatitis and anemia from refeeding.” Treatment notes

indicate that Jones was suffering from pancreatitis on January

29, four days after being admitted to PSH, but not before.

Finally, Dr. Center wrote, “Following admission, the

patient had slow weight gain. . . . By the current last covered

date, 2/14/10, the patient [weighed] 83 lbs. . . . The patient

was . . . steadily gaining weight.” These statements are

contradicted in Dr. Center’s own report, as well as in the

administrative record. According to the inaccurate numbers

recited by Dr. Center, upon which she ostensibly relied, Jones

did not “steadily gain[] weight.” Dr. Center wrote that Jones

weighed 84 pounds at admission on January 25, even though

there is nothing in UBH notes to indicate that this was Jones’s

admission weight. Dr. Center then notes that Jones weighed

83 pounds on February 14. To state the obvious, this is a loss

rather than a gain. If Jones’s weight at admission was 88

pounds, as indicated in UBH treatment notes up to February

12, Jones lost five pounds between the date of her admission

and February 14. Or if Jones’s admission weight was 81

pounds, as indicated in treatment notes of February 12, she

did gain weight; but she did not do so steadily. On this

assumption, she started out at 81 pounds on January 25 and

dropped to 75.5 pounds on January 29. She then weighed 79

pounds on February 3, and 84 pounds on February 9. UBH

treatment notes do not give a weight after February 9, but Dr.

Center wrote that Jones weighed 83 pounds on February 14,

one pound less than she weighed five days earlier, on

February 9.
20 PACIFIC SHORES HOSPITAL V. UBH

Dr. Barnard wrote in his February 26 letter to Jones that

he had decided on February 24 to deny her appeal “[a]fter

fully investigating the substance of the appeal, including all

aspects of clinical care involved in this treatment episode.” 

After referring to his own “full investigation,” Dr. Barnard

quoted almost verbatim from Dr. Center’s erroneous report,

which Dr. Center had sent to UBH earlier that same day.

On February 25, one month after her admission to PSH

and eleven days after UBH ceased paying for her treatment,

Jones was discharged. After her discharge, Jones assigned to

PSH her right to payment under the Plan. PSH brought suit

under 29 U.S.C. § 1132(a)(1)(B), alleging that UBH and the

Plan had wrongfully denied benefits to Jones. The district

court held that, despite numerous errors in Dr. Zucker’s and

Dr. Center’s reports, the administrative record provided a

reasonable basis for determining that acute inpatient care was

not necessary after February 14. The court concluded that it

was “not left with a definite and firm conviction that UBH’s

benefits determination was in error,” and therefore could not

disturb that decision. This appeal followed.

II. Standard of Appellate Review

We review de novo the district court’s choice and

application of the standard of review of an ERISA plan

administrator’s decision. Abatie v. Alta Health & Life Ins.

Co., 458 F.3d 955, 962 (9th Cir. 2006) (en banc). We review

for clear error the district court’s underlying findings of

disputed fact. Id.
PACIFIC SHORES HOSPITAL V. UBH 21

III. Discussion

A. Standard of Review of UBH’s Benefits Denial

We begin by addressing the standard under which we

should review the denial of benefits by UBH. “The essential

first step of the analysis . . . is to examine whether the terms

of the ERISA plan unambiguously grant discretion to the

administrator.” Id. at 963. When the terms of the plan do not

grant discretion to determine eligibility for benefits or to

construe the terms of the plan, we review de novo the

administrator’s denial of coverage. Id. When a plan

unambiguously confers such discretion, we review a denial of

benefits for abuse of discretion. Id. If there are procedural

irregularities or if an administrator operates under a conflict

of interest, we consider the irregularities or conflict as a

factor in determining whether there has been an abuse of

discretion. Id. at 965, 972.

The district court concluded that the Plan unambiguously

granted discretion to the administrator. It then reviewed

UBH’s denial of benefits for abuse of discretion. PSH does

not challenge the district court’s determination that the Plan

explicitly grants discretion to Wells Fargo, and derivatively

to its third-party administrator UBH. However, PSH makes

three arguments in favor of less deferential review of UBH’s

denial of benefits.

First, PSH contends that there were procedural

irregularities in UBH’s benefits denial such that we should

review the denial de novo. Even when a plan confers

discretion on an administrator, if that administrator engages

in “wholesale and flagrant violations of the procedural

requirements of ERISA,” its decision is subject to de novo
22 PACIFIC SHORES HOSPITAL V. UBH

review. Id. at 971. However, most procedural errors are not

sufficiently severe to transform the abuse-of-discretion

standard into a de novo standard. Anderson v. Suburban

Teamsters of N. Ill. Pension Fund Bd. of Trustees, 588 F.3d

641, 647 (9th Cir. 2009). Instead, we weigh any procedural

errors as a factor in determining whether UBH abused its

discretion. Id.; Abatie, 458 F.3d at 972.

It is painfully apparent that UBH did not follow

procedures appropriate to Jones’s case. UBH treatment notes

describe her case as requiring evaluation by UBH Regional

Director Dr. Zucker due to its “medical and psychiatric

complexity.” Yet the treatment notes in UBH’s

administrative record, upon which UBH ostensibly made its

decision in this “complex” case, are based entirely on

telephone conversations and voicemail messages. No PSH

hospital records were ever put into the administrative record. 

No UBH doctor or other claims administrator ever examined

Jones. The choice to conduct only a paper review “raise[s]

questions about the thoroughness and accuracyof the benefits

determination.” Montour v. Hartford Life & Accident Ins.

Co., 588 F.3d 623, 634 (9th Cir. 2009) (alteration in original)

(quoting Bennett v. Kemper Nat’l Servs., Inc., 514 F.3d 547,

554 (6th Cir. 2008) (internal quotation marks omitted)).

Moreover, Dr. Zucker’s “peer-to-peer” evaluations and

coverage decisions, made after telephone conversations with

Dr. Fredrick, were based on obvious factual errors that could

easily have been corrected if only the UBH administrative

record, let alone PSH hospital records, had been consulted. 

Similarly, Dr. Center’s “independent” evaluation and

coverage decision were based on obvious factual errors that

could easily have been corrected if the UBH administrative

record had been consulted. See Saffon v. Wells Fargo & Co.
PACIFIC SHORES HOSPITAL V. UBH 23

Long Term Disability Plan, 522 F.3d 863, 873 (9th Cir. 2008)

(explaining that an administrator’s decision was entitled to

less deference because the administrator “took various of

[claimant’s] doctors’ statements out of context or otherwise

distorted them in an apparent effort to support a denial of

benefits”).

Second, PSH argues that materials outside the

administrative record—specifically, Jones’s hospital

records—should be considered by the court in any review of

UBH’s benefits denial. PSH requested that the district court

expand the record beyond the administrative record compiled

by UBH and consider these records. UBH vigorously

opposed this request. The district court declined to consider

any documents beyond the administrative record. When

reviewing for abuse of discretion a plan administrator’s

benefits determination, our review is typically limited to the

contents of the administrative record. See Abatie, 458 F.3d

at 969–70. However, when procedural irregularities are

apparent in an administrator’s determination, we may

consider extrinsic evidence to determine the effects of the

irregularity. “[T]he court may, in essence, recreate what the

administrative record would have been had the procedure

been correct.” Id. at 973.

There was good reason for the district court to consider

hospital records, in addition to the administrative record

compiled by UBH, in a case involving a confessedly high

degree of “medical and psychiatric complexity.” All the

information in UBH’s administrative record concerning

Jones’s medical condition is based on telephone

conversations and voice mail messages, with the predictable

result that the administrative record contains conflicting (and

necessarily incorrect) information about some of the most
24 PACIFIC SHORES HOSPITAL V. UBH

important issues in the case, such as Jones’s weight at various

times during her treatment. Where the administrator makes

a coverage determination based solely on an administrative

record such as this one—and where actual medical records

would be helpful to determining the accuracy of the medical

facts upon which the administrator makes its coverage

determination—expansion of the record in the district court

is appropriate.

Third, PSH contends that UBH, even though a third-party

administrator, was operating under a conflict of interest, and

that we should consider that conflict as a factor in

determining whether there was an abuse of discretion. PSH

points to UBH’s self-interest in continuing its contractual

relationship with Wells Fargo, and to Wells Fargo’s selfinterest, as a direct funder of the Plan, in minimizing benefit

payments authorized under the Plan by UBH.

However, we need not reach these contentions. Even

conducting an abuse of discretion review uninfluenced by any

procedural irregularity or conflict of interest—and

considering only the record that UBH had before it when it

made its benefits determination—we hold that UBH

improperly denied benefits to Jones.

In reviewing for abuse of discretion, we consider all of

the relevant circumstances in evaluating the decision of the

plan administrator. As we wrote in our en banc decision in

Abatie, “A straightforward abuse of discretion analysis allows

a court to tailor its review to all the circumstances before it.” 

458 F.3d at 968 (emphasis added). The Supreme Court in

Glenn, decided two years after Abatie, made clear that abuse

of discretion review, whether or not including conflict of

interest as a factor, entails a review of all the circumstances. 
PACIFIC SHORES HOSPITAL V. UBH 25

The Court cautioned against talismans or formulas that would

“falsif[y] the actual process of judging,” 554 U.S. at 119

(alteration in original) (internal quotation marks omitted), and

endorsed a process in which reviewing courts consider all

relevant factors, of which, depending on the circumstances,

conflict of interest may be one, id. at 117 (“[W]hen judges

review the lawfulness of benefit denials, they will often take

account of several different considerations of which a conflict

of interest is one.”).

We wrote twenty-three years ago in Horan v. Kaiser Steel

Retirement Plan, 947 F.2d 1412 (9th Cir. 1991), that we will

uphold a plan administrator’s decision if it is grounded in

“any reasonable basis.” Id. at 1417 (internal quotation marks

omitted); see also Sznewajs v. U.S. Bancorp Amended &

Restated Supplemental Benefits Plan, 572 F.3d 727, 734–35

(9th Cir. 2009). This language in Horan could be read to

mean that we should make an “any reasonable basis”

determination without looking at all the circumstances of the

case. To take a simple example, factors favoring discharge

from the hospital might provide reasonable bases if

considered in isolation. A patient might be eating well, have

proper blood sugar levels, have no infections, and have a

supportive family. Those factors, considered in isolation,

would support discharge. But if the reason for the patient’s

hospitalization is severe congestive heart failure, those factors

would not be reasonable bases to support discharge. In the

wake of Glenn, we have recognized that this unrealistic

reading of the any-reasonable-basis test is not “good law

when . . . an administrator operates under a structural conflict

of interest.” Salomaa v. Honda Long Term Disability Plan,

642 F.3d 666, 674 (9th Cir. 2011). It is also not “good law”

even when an administrator is not operating under a conflict

of interest and we are performing a “straightforward abuse of
26 PACIFIC SHORES HOSPITAL V. UBH

discretion analysis.” See Abatie, 458 F.3d at 968; cf.

Conkright v. Frommert, 559 U.S. 506, 521 (2010) (“Applying

a deferential standard of review does not mean that the plan

administrator will prevail on the merits. It means only that

the plan administrator’s interpretation will not be disturbed if

reasonable.” (internal quotation marks omitted)). In all

abuse-of-discretion review, whether or not an administrator’s

conflict of interest is a factor, a reviewing court should

consider “all the circumstances before it,” Abatie, 458 F.3d at

968, in assessing a denial of benefits under an ERISA plan.

B. UBH’s Benefits Denial

“A plan administrator abuses its discretion if it renders a

decision without any explanation, construes provisions of the

plan in a way that conflicts with the plain language of the

plan, or fails to develop facts necessary to its determination.” 

Anderson, 588 F.3d at 649. “[T]he test for abuse of discretion

in a factual determination (as opposed to legal error) is

whether ‘we are left with a definite and firm conviction that

a mistake has been committed.’” Salomaa, 642 F.3d at 676

(quoting United States v. Hinkson, 585 F.3d 1247, 1262 (9th

Cir. 2009) (en banc)). “[A]n administrator . . . abuses its

discretion if it relies on clearly erroneous findings of fact in

making benefit determinations.” Taft v. Equitable Life

Assurance Soc’y, 9 F.3d 1469, 1473 (9th Cir. 1994).

The Plan documents provide two sets of guidelines

relevant to Jones’s eligibility for coverage of acute inpatient

treatment at PSH. First, UBH level-of-care guidelines

provide that acute inpatient care is warranted when any one

of six criteria are met:
PACIFIC SHORES HOSPITAL V. UBH 27

1. Serious and imminent risk of harm to self

or others due to a behavioral health condition,

as evidenced by, for example:

. . . .

b. Current suicidal ideation with intent,

realistic plan and/or available means, or

other serious life threatening, selfinjurious behavior(s).

. . . .

2. Serious and acute deterioration in

functioning from a behavioral health

condition that significantly interferes with the

member’s ability to safely and adequately

care for themselves in the community.

3. Severe disturbance in mood, affect, or

cognition that results in behavior that cannot

be managed safely in a less restrictive

environment.

4. Imminent risk of deterioration in

functioning due to the presence of severe,

multiple and complex psychosocial stressors

that are significant enough to undermine

treatment at a lower level of care.

5. Recommended behavioral health treatment

of a member with a serious medical condition

requires 24-hour management.
28 PACIFIC SHORES HOSPITAL V. UBH

6. Community support services that might

otherwise augment ambulatory mental health

services and avoid the need for hospitalization

are unavailable.

In its initial authorization of inpatient hospital treatment for

Jones, UBH found that at least the fifth of these criteria, a

“serious medical condition [that] requires 24-hour

management,” was satisfied.

“Continued Service” guidelines under the Plan are used

to determine whether previously authorized care should be

continued at its current level “as a member’s severity of

illness changes.” In order to maintain a current level of care,

each of ten criteria must be met.

1. The member continues to meet the criteria

for the current level of care.

2. The member is presenting with symptoms

and a history that demonstrate a

significant likelihood of deterioration in

functioning/relapse if transitioned to a less

restrictive or less intensive level of care . . . .

3. The treatment being provided is

appropriate and of sufficient intensity to

address the member’s condition and support

the member’s movement towards recovery.

4. The member is actively participating in

treatment . . . .
PACIFIC SHORES HOSPITAL V. UBH 29

5. The treatment plan is accompanied by

ongoing documentation that the member’s

symptoms are being addressed by active

interventions; the interventions focus on

specific, realistic, achievable treatment and

recovery goals . . . .

6. Where clinically indicated, the provider

and member collaborate to assess the need to

create/update the member’s advance directive.

7. Measurable and realistic progress has

occurred or there is clear and compelling

evidence that continued treatment at this level

of care is required to prevent acute

deterioration or exacerbation that would then

require a higher level of care. . . .

8. Where clinically indicated and with the

member’s documented consent, the member’s

family/social support system is actively

participating in treatment. . . .

9. The member cannot effectively move

toward recovery and be safely treated in a

lower level of care . . . .

10. There is an appropriate discharge plan to

a less restrictive level of care . . . .

In denying coverage for Jones’s inpatient treatment beyond

February 14, UBH found that criteria 1, 2, and 9 were no

longer met.
30 PACIFIC SHORES HOSPITAL V. UBH

Because coverage for acute inpatient treatment is

indicated whenever any one of the six criteria for that level of

care is met, the continued presence of any one of the six

level-of-care criteria necessarily satisfies all ten of the

continued service criteria. This may be seen by examining

the level-of-care guidelines for residential treatment—the

level of care immediately below acute inpatient treatment,

which is the care Jones was receiving at PSH. These

guidelines provide that residential care is appropriate only if,

among other things, “[t]he member is not at immediate risk

of serious harm to self or others,” and “[t]he member . . . does

not require 24-hour nursing care and monitoring.” Similarly,

the level of care guidelines for “Partial Hospital/Day

Treatment,” the level of care below residential care—and the

level that Dr. Zucker concluded was appropriate for Jones

after February14—also provide that partial hospital treatment

is appropriate only if “[t]he member is not at immediate risk

of serious harm to self or others.”

UBH’s decision that Jones no longer qualified under UBH

guidelines for acute inpatient care as of February 14 therefore

necessarily rested on determinations that Jones no longer

presented a “[s]erious and imminent risk of harm to

[her]self,” and that her condition no longer warranted 24-hour

monitoring and care. These determinations in turn rested on

Dr. Zucker’s and Dr. Center’s findings of fact, which were

endorsed by Dr. Barnard. As discussed above, Dr. Zucker

and Dr. Center made several critical factual errors, upon

which they based their conclusion that Jones could safely be

discharged.

UBH owed a fiduciary duty to Jones under ERISA. The

Supreme Court has described that duty as follows:
PACIFIC SHORES HOSPITAL V. UBH 31

[A plan administrator’s] fiduciary

responsibility under ERISA is simply stated. 

The statute provides that fiduciaries shall

discharge their duties with respect to a plan

“solely in the interest of the participants and

beneficiaries,” [29 U.S.C.] § 1104(a)(1), that

is, “for the exclusive purpose of (i) providing

benefits to participants and their beneficiaries;

and (ii) defraying reasonable expenses of

administering the plan,” § 1104(a)(1)(A).

Pegram v. Herdrich, 530 U.S. 211, 223–24 (2000). 

Fiduciaries must discharge their duties “with the care, skill,

prudence, and diligence under the circumstances then

prevailing that a prudent man acting in a like capacity and

familiar with such matters would use in the conduct of an

enterprise of a like character and with like aims.” Id. at 224

n.6 (quoting 29 U.S.C. § 1104(a)(1)(B)).

UBH fell far short of fulfilling its fiduciary duty to Jones. 

Dr. Zucker, UBH’s primary decisionmaker, made a number

of critical factual errors. Dr. Center, as an ostensibly

independent evaluator, made additional critical factual errors. 

Dr. Barnard, UBH’s final decisionmaker, stated that he

arrived at his decision to deny benefits “after fully

investigating the substance of the appeal.” He then rubberstamped Dr. Center’s conclusions. There was a striking lack

of care by Drs. Zucker, Center, and Barnard, resulting in the

obvious errors we have described. What is worse, the errors

are not randomly distributed. All of the errors support denial

of payment; none supports payment. The unhappy fact is that

UBH acted as a fiduciary in name only, abusing the discretion

with which it had been entrusted.
32 PACIFIC SHORES HOSPITAL V. UBH

Conclusion

Reviewing for abuse of discretion, we conclude that UBH

improperly denied benefits under the Plan in violation of its

fiduciary duty under ERISA.

REVERSED.