F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

P A C I F I C S H O R

E S H O S P I T A L , Assig nee, Plaintiff-Appellant
,

v

.

U N I T E D B E H A

V I O R A L H E A L T H ; W E L L S F A

R G O & C O M P A

N Y H E A L T H P L A N , Defendants-Appellees

. N o. 12-55210

D.C. No. 2:10-cv-05828- PSG-CW

OPI NI ON

A ppeal from the United States District Court for the Central District of California Philip S. Gutierrez , District J udg e, Presiding

Arg ued and Submitted J anuary 7, 2014—Pasadena, California

F iled Aug ust 20, 2014

B efore: W illiam A. F letcher, Milan D. Smith, J r., and Paul J . W atford, Circuit J udg es.
Opinion by

J udg e W

. F letcherP A C I F I C S H O R E S H O S P I T A L V

. UB H 2

SUMMARY *

Health Care Law

The panel reverse d t he d istrict court’s judg ment in an action und er the Employ ee Retirement I ncome Security A ct concerning a claims adm i n i s trator’s refusal to p ay for more than three weeks of inpatient hospital treatment for anorex ia

nervosa.
Reviewing for an a

b use of d iscretion, the panel concluded that the claims administrato r i m properly denied benefits under the ERI SA p lan in violation of its fiduciary duty . The panel concluded that it n eed not reach contentions t h a t d e

novo review was warranted by proce d u r a l errors in the benefits denial, that materials outside the admi n i s trative record should have been considered b y the district c ourt, a nd that the claims administrator operated under a c o nflict o f interest. The p anel held that, even conductin g a n a b use o f discretion review uninfluenced by any procedural irreg ularity

or c onflict of interest, and considering only the record that the administra t o r had b efore it when making its benefits determination, the administrator improperly denied benefits.

COUNSEL

Eliz ab et h K

. Green, L isa S. K antor (arg ued), and Peter S. Sessions, Kantor & Kantor L L P, Northridg e, C a lifornia, for Plaintiff-Appellant.

* T h is su m m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.P A C I F I C S H O R E S H O S P I T A L V

. UB H 3

Robert Claude B ohner, Doug las J

. Collodel (arg ued), a nd David Michael Humiston, Sedg wick L L P, L os Ang eles, California, for Defendants-Appellees.

M. Patricia Smith, Solic itor of L abor, Timothy D. Hauser, A s s o ciate Solicitor for Plan B enefits Security Division, Eliz abeth H opkins, Counsel for Appe l l a te and Special L itig ation, and Candy ce Pho e n i x (arg ued), Trial Attorney
, United St a t e s Department of L abor, Washing ton, D.C., for Amicus Curiae Secretary

of L abor.

OP INION

W

. F L ETCHER, Circuit J udg e:

An employ ee of W ells F arg o, whom we will call J ane J ones, w as covered under the W el l s F arg o & Company Health Plan (the “Plan”), g overned by the Em p l oy ee Retirement I n c ome Security Act of 1974 (“ERI SA”). United B ehavioral Health (“UB H”) is a third-party cl a i ms administrator of the Plan. J ones was admitted t o P a c i fic Shores Hospital (“PSH”) for acute inpatient treat m ent for

severe anorex ia nervosa. UB H refused to pay for more than three weeks of inpatient hospit a l t r e atment. UB H based its refusal in substantial part on mischaracteriz ations of J ones’s medical histor y a n d condition. PSH continued to provide inpatient treatment to J ones after UB H r efused to pay

. J ones assig ned to PSH her rig hts to pay ment under the Plan.

PSH sued the Plan a

nd UBH
, s e eking pay

ment for the additional d ay s of inpatient treatment. W e conclude that UB H abused its discretion in refusing to pay for these day s o f
treatment.P A C I F I C S H O R E S H O S P I T A L V

. UB H 4

I . B ackg round

The Plan is self-insured by Wells F arg o, which is both the
sponsor and a dministrator of the Plan. W ells F arg o contracts with third-party

administrators to r eview claims made under the Plan. The third-party a dministrator responsible for reviewing mental hea l t h and substance abuse claims, includin g anorex ia n ervosa, is OptumHealth B ehavioral Solutions, which is a trade name of UB H.

J ones was a dmitted to PSH on J anuary 25, 2010. J ones’s brother had recently sent a n email to J o nes’s e ntire family
say ing that he felt that he w as p lanning h er funeral. J o nes’s 17-y ear-old daug hter feared for her mother’s life. UB H ’s

c a s e m a n ag ement notes listed J o nes’s “Reason for a dmis s i o n ” as “severe depression, SI [ Suicidal I d eation]
, and anorex ia.” J ones’s admitting diag noses w ere (1) “Major Depressive Disorder, Recurrent, Severe Without P s y chotic F eatures”; (2) “Anorex ia Nervosa”; (3) “pneumonia”; and (4) “Problems with primary support g roup.” UB H initially authoriz ed four day s of inpatient hospital treatment.

UB H case notes for J anuary 27 provide:

U R [ Utiliz ation Review, referring to Dy W o lpert, an Advanced Practice Re gistered Nurse employ ed by P S H ] reported on 01/27/10:

Presenting problem: SI [ Suicidal Ideation ] w/ plan to OD [ Ov e r d

o se ]

. Laxative abuse, taking 1 30 Sena-S laxatives p er day

. Skeletal in appeara

n c e

. W eighs just 88 lbs @ 66 inches tall. 65% of I B W [ I deal B odyP A C I F I C S H O R E S H O S P I T A L V

. UB H 5

W e ig h t] ; B MI [ B ody Mass I ndex ] is 13. 52. P n eumonia. F ainting d

ue to lax ative abus e. Eating 200 calories p er day

. A l s o purg es b y

s e l f

- i n d u c e d v o m i t i n g , a n d t h a t ’ s worsening

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

Hx [ History ] of SI / attempts / g estu res / interventions. In 2007 took whole bottle of laxatives in a suicide attempt.

(Emphasis added.)

UB H case n otes for J anuary 27 describe J ones’s condition

as “Emerg ent - L ife Threatening .” The “Treatment Plan” in the J anuary

27 notes provides:

Tx [ Tre a tment] Plan: stabiliz e medically

. Taper her off lax atives, refeeding

. She’ll have pancreatitis a nd anemia from refeeding
, say s UR [ Nurse W olpert]

. Have to go s low on carbs and fat
, g oal of 2–2.5 lbs p e r wk w eig ht
g ain.

D/C [Discharg e] Cr i t e r ia: step down to RTC [ Residential T r eatment C enter] @ 85% o f I B W
, when no long er pu r gi n g, when no SI
, and once throug h lax a tive taper. . . .

EL O S [ Estimated L eng th o f Stay ] : 4 wks o f I P [ I npatient]

. (Emphasis added.)P A C I F I C S H O R E S H O S P I T A L V

. UB H 6

UB H case notes two day s later provide:

UR [ Nurse W olpert] reported on 01/29/10: admitted with a ctive S

I w / plan to OD or starve herself to death

.

. . . . she’s o n a lax ative taper from 1 30 lax atives a day

.

. . . . active SI continues, no psy chosis.

. . . . she’s at 75.5 lbs

. . . . (Emphasis added.) H ospi t a l staff were checking o n J ones every fifteen minutes as a “suicide precaut ion[ ] ” and were supervising her for 2 1⁄2 hours after every meal. Her lax ative taper w as “down to 50 tablets of Sena per day from 130 tabs
p e r day .” UB H authoriz ed two more day s of inpatient
treatment.

UB H case notes for F ebruary 3 provide:

ver y anx ious about being tapered off lax atives, positive for SI w/ plan and intent to overdose or starve to death.

. . . . sl e e p improving
, ADL s [ Activities of Daily L iving ] improved. eating 100%. weight @ 79 lbs

.

. . . . irritable, dy sphoric, ruminative, hopeless.P A C I F I C S H O R E S H O S P I T A L V

. UB H 7

(Emphasis added.) UB H authoriz ed four more day s o f inpatient treatment, throug h F ebruar y 4
, and scheduled another review date for F ebruary 5.

UB H case notes for F ebruary 5 provide:

UR [Nurse W olpe rt] reported: L ax ative taper? we’ve been ag g ressive with the tap e r

. she’s been down to 5 tablets per day for about a wk, and then she’ll g o down to 3 tablets a day for

a w k. Probably about 2.5 wks more to taper off.

. . . . Medical stability ? p t’s a bnor m a l labs a

re ty pical for an anorex ic. I t’s a s they g et better that potential me d i c a l problems can set in: anemia, [ e] dema, start havi n g cardiac problems, their potass i u m c a n drop.

. . . she has pancreatitis

.

. . . . EL O S: 2–2.5 more wks.

(Emphasis added.) UB H a uthoriz ed inpatien t t r eatment for an additional two day s, throug h F e bruary 6.

UB H case notes for F ebruary 8 provide:

Clinical Review Sum m ary: CA [ Car e Advocate, a

n e mploy ee of U B H] reviewed this acute I P [ I n

patie n t ] eating disorder case w/ UB H Re g ional Medical Director, Dr. M u rr a y Z ucker. CA requested Dr. Z ucker to conduct a P2P [ Peer-to-Peer Review] o f t h isP A C I F I C S H O R E S H O S P I T A L V

. UB H 8

p t ’s case due to medical and psychiat r i c complexity.

(Emphasis added.)

On F eb r u a r y 9, Nurse W olpert reported to UB H b y voicemail:

still depressed with a lot of anx iety
, positive for SI w/

plan to starve herself or OD.

. . . . lax ative taper down to 3 tabs per nig h t. severe body

imag e disturbance. poor insig ht, and judg ment impaired. currently 84 lbs.

(Emphasis added.) UB H treatment not e s for F ebruary 9 recorded: “we’re repeating her labs. 1 550 ca l
, 8 4 grams o f protein. q15 min c hecks. meal supervi s ion, and post-meal supervision 2.5 hrs.” (Emphasis added.)

Also o n F ebruary 9, U B H Reg ional Director Dr

. Z ucker conducted a peer-to-peer review, speaking b y telephone to Dr. N omi F redrick, J o nes’s attending phy sician at PSH. Dr. Z u cker wrote a summary of the conversation. ( T h e r e is no summary of the conversation w rit t en by Dr. F r edrick.) Dr. Z u cker wrote:

Case Sum m ary of P eer/Adm in. Review : 43
y o female adm 1/26 for severe lax abuse (over 1 0 0/d). malnutrition, restric[ ti] ng , phy sica l

c o n sequences, and depression with s/i. Pt 5 '5 ", a d m. [ w ] t. “75 or 81”
, present 84

. . . . MD [ Dr. F redrick] re c o unts many stressors,P A C I F I C S H O R E S H O S P I T A L V

. UB H 9

o ld and n[ ] e w (husb. just lost job, dtr. g oin g away to school, 6 prior preg nancies ending in miscarriag e, chroni[ ]c depression and s/i ( no prior attempts)

.

MD insists n eed for cont. stay : medic al stabiliz ation, suicidal risk, further wt g ain.

MD

. . . states pt threatens to “OD b y lax atives and starve my self to death if I leave now.”

. . . [ Ho ] wever, on

fur [ th ] er questioning she reports that pt has no immed plan, has not gathered me a n s , has m ade no prep, and ther [ e ] is [ ] no 1:1 [ one-to-one o bservation ] or

even line of site [ sic] in the p r ogram. MD
st a t es pt is “g r ieving the l[ o] ss of her
preg n ancies.” She also reports she is doing “integ rated trauma work” and I sug g ested th[ is is] long term tx [ treatment ] that can be done as OP [ o u tpatient] when she is medically stable.

I advised the following : 1. prepare for d/c [ discharg e ] 2/12.

. . . . Decision and Rationale : Schedule [ P] 2P [ Peer-to-Peer Review] o n [] 2 /12 if pt n o t d/ced [ discharg ed]

. (Emphasis added.)

On F ebruary 10, U B H case notes i n d i c a t e that Nurse W o lpertP A C I F I C S H O R E S H O S P I T A L V

. UB H 10

left VM [ Voice Mail] [ with U B H] verbaliz ing his disag reement with UB H Dr. Z ucker’s P2P [ Peer-to-Peer] review d e termina t ions on 02/09/10. UR W olpert does not a g ree that the
p t has lessening medical necessity for continued ac ute Mh I P L OC [ Mental health I npatient L eve l o f Care]

. And W olpert does
not believe the pt will b e at sufficient body weig ht come F riday 2/12 to be safely d/c’d [ discharg ed] to a lower L OC [ L e vel of Care]

.

On F ebruary 12, Nurse W olpert reported to UB H:

pt is off lax ative taper. having difficult time psy chologi cally being off the lax atives. feels g ross, severe body

imag e disturbance.

. . . . still c/o [ complains of

] SI w/plan to starve or OD

. (Emphasis added.) UB H treatment notes for F ebruary 12 recorded: “ still keep i n g c a l plan @ 1550
, . . . . d/c [ discharg e] c riteria: prov [ p rovider] wants pt @ 75% of I B W [ I deal B ody W eig ht]
, around 90–95 lbs.” (Emphasis added.) Up to this d a t e , U B H’s notes had consistently listed J ones’s weig ht at admission a s 88 pound s

. On F ebruary 12, for the fi r st time, her weig ht a t admission was listed at 8 1 pounds. UB H authoriz e d inpatient treatment throug h F ebruary 14.

On F ebruary 16, D r. Z ucker condu cted a second tel ephone peer-to-peer r eview with Dr. F redrick. A fter his conversation with Dr. F redrick, he wrote a summary

. (Ag ain,P A C I F I C S H O R E S H O S P I T A L V

. UB H 11

there is no summary of the co n v e r s a t ion written by Dr. F redrick.) Dr. Z

ucker wrote:

Case Sum m ary of P eer/Adm in Review : 43
y o female with AN [ a norex ia nervosa] a nd
many prior tx [ treatment] failures at all levels

o r ig inally presenting with severe wt loss, la b abnl. [ abnormal]
, d e p r e s s i o n , l a x[a tive] abuse, and n o w a t d ay 21 with minimal wt gain desp [ it ] e diet of 2100 cal. MD [ Dr. F redrick]
states: has been do[ i n] g well (but doesn’t

ex p lain w hy not d

/c’ed [ d ischarg ed] a s discussed last review) u n til dietician raised cals today
, V S [ Vital Sig ns] s t ab[ le]
, lab normal, not e x press[ ] ing s/i
, was compl[ ian] t with diet, and finished lax ative taper, without refeeding sxs [ symptoms ]

. . . . F amily is support i v e and she will return home. plan is for f/u [ follow u p ] a t PHP [Partial Hospitaliz ation Prog ram]

.

I ex plained that g iv e n pt’s chronicity
, d/c criteria are lower w t than usual and there does
not seem to be an approach to this obvious

ax is I I [personality disorder] patholog y

. Cont.
prog r ess can occur at the PHP level.

Decision and Rationale: DECI SI ON: no atu [ authoriz ation] of cont. I P [ I npatient] day s bey o nd L CD [L ast Covered Date] of 2/14/10.

RATI ONAL [ E ]: After review of all available information and after discussio n with y our treating phy sician, I find that continued stay atP A C I F I C S H O R E S H O S P I T A L V

. UB H 12

the I npatient level past the last covered day o f 2/14/10 does[ ] not mee t U B H Medical Necessity /L evel of Care G uidelines. You a re no long er a dang er to y ourself or others, y our medical issues have stabiliz ed, necessary continued w eig ht restoration [ c] an occur in the Outpatient s etting
, long standing eating disorder think[ in] g [ ] and behaviors can be address e d i n the Outpatient setting

. Partial Hospital care is available.

(Emphasis added.)

UB H formally notified PSH of its decision n o t to pay for
acute inpatient treatment bey ond F ebruary 14 in a letter dated F ebruary 18. On F ebruary 23, Nu r s e W olpert requested on J ones’s behalf an “urg e nt appeal” of Dr. Z ucker’ s d en ial o f benefits coverag e f

or inpatient hospital treatment a fter F ebruary 14. On either F ebruary 23 or 2 4
, the a ppeal was referred b y UB H to Dr. B arbara Center of Prest & Associates. Dr. Center spoke by telephone to Dr. F r edrick on F ebruary 24 and on the sam e day sent written finding s to UB H. Dr. Center wrote:

Case Sum m ary:

The patient is a 43-y ear old female wh o was ad mitted to inpatient psy chiatric / eating disorder level of care on 1 /25/10. The patient has a long history o f chronic eating d isorder b e h a viors. At the time of this admission, th e patient was 5'

5" tall and weighed 84 pounds. She is described as taking 7 5 to 100 laxatives daily. The patient w a s n ot suicidal,P A C I F I C S H O R E S H O S P I T A L V

. UB H 13

homicidal, or psychotic. The patient reported

some vague suicidal thoughts, including thoughts of overdosing on the l a xatives that she had been abusing.

The patient has an ex tensive h istory o f p rior treatment, including a p revious stay at this facility in 2006 and a stay at [ a nother facility ] i n 2 0 0 5

. I t is u nclear to what ex tent the patient has bee n following up near her home in [ another state]

. . . . T

h e patient’s medical history is r e markable for acute pancreatitis which was diagnosed on admission.

. . .

F ollowing admission, the patient had sl o w

we i g ht gain

. . . . The patient w as compliant with her meal plan and g ained e ig ht pou nds over the course of her stay

. . . .

F indings / Opinions:

. . . .

1. By the current last covered date, 2/14/10, the patient 8 3 l b s (

67 percent ideal b o dy weight)

. W hile this is a v ery low body weig ht, the patient reportedly has a history of chronic very low bo d y w e ig ht. I ssues related to her abuse of lax atives have been successfully addressed and the patient was medically stable. The pa t i e nt was compliant with her meal plan and steadily gaining weight. She was m o tivated for
recovery

.P A C I F I C S H O R E S H O S P I T A L V

. UB H 14

2. The patient w a s not suicidal
, homicidal, o r

psy chotic.

3. I n the opinion of this reviewer, the patient does not meet United B ehavioral Health medical necessit

y g u i d e l i nes for continued stay at the acute inpatient psy chiatric level of c are after the current last covered date, 2/14/10 (UB H continued serv i ce c riteria,

nos. 1, 2, and 9, not met). T reatmen t at the partial hospital level of care should be considered.

(Emphasis added.)

On F e bruary 24, the same day UB H r eceived Dr. Center’s report, D r. W illiam B arnard, UB H Assistant Medical Director, denied PSH’s appeal. I n a letter addressed to J ones, he wrote:

As requested, I have c ompleted a first le v el
urg ent appeal revi ew o n 2/24/2010 on a request we received on 2/23/2010.

T h i s r e v i e w i n v o l v e d a t e l e p h o n e conversation with y our prov i d e r

. After fully investigating the substance of the appeal, including all aspects of clinical care involved in this treatment episode
, I h a v e determined that benefit coverag e i s n ot a v ailable f or the following reason(s):P A C I F I C S H O R E S H O S P I T A L V

. UB H 15

(Emphasis added.) Dr. B arnard then quoted nearly verbatim the three nu m bered parag raphs c ontained in Dr. Center’s report.

Dr. Z ucker made a number of obvious mistakes i n h is summaries of his two p e er

- t o

- peer r e v iews. I n his F ebruary 9 summary , written after his first review, Dr. Z ucker wrote that J ones’s w eig ht at admi s s i on had been either 75 o r 81 pounds. B oth weig hts are contradicted by informa t i on then in the adm i n i s t rative record. J ones’s admission weig ht was

never listed as 75 pounds. Fr o m J anuary 25, the date of her admi s s i on, until F ebruary 12, three day s after Dr. Z ucker’s

s u m mary , J ones’s weig ht on admission was consistently listed in UB H treatment notes as 88 p ounds. On F e bruary 12, her admission weig ht w as chang ed in UB H notes to 81 pounds. Dr. Z ucker also wrote in his report that J o n es h ad made “no prior attempts” at suic i d e. This statement is contradicted in the administrative record. UB H’s J anuary 27
treatment notes state, “I n 2007 took w hole bottle of lax a tives in a suicide attempt.”

Dr. Z ucker minimiz ed the risk of suicide. H e wrote in his F ebruary 9 summary , “ [Ho] wever, on fur[ th] er questi oning [ Dr. F redrick] r eports that pt has no immed[ iate] p lan, has not g athered means, has made no prep, a n d t h er[ e] is no 1:1 o r

even line of s i t e [ s ic] in the prog ram.” B ut Dr. F redrick’s “reports,” “on further questioning ” by Dr. Z uc k e r , do not undermine her assessment that J ones was at risk for suicide. Repeated entries in UB H treatment n otes indicate that J ones continued to have active suicidal idea t i o n, with plans either to overdose or starve herself to death. Given that J ones was in acute inpatient care, she did n ot have access to l ar g e quantities of T y lenol or l a x a t i ves, her planned means o f overdosing

. So long as J ones remained in acute inpat ientP A C I F I C S H O R E S H O S P I T A L V

. UB H 16

care, she would not h a v e b een able to “g ather[ ] means” o r otherwise “ prep” for suicide. The lack of l i ne-of-sig ht supervision did not support Dr. Z ucker’s implicit sug g estion that the hospital did not itself believe that J one s w a s a t risk for suicide, for UB H treatment records indicate that PSH staff continu e d t o check J ones every fifteen minutes a s a precaution ag ainst suicide.

I n Dr. Z ucker’s F ebruary 1 6 sum m a r y , w ritten after his second peer-to-peer review, h e ag ain made a number o f obvious m i s t akes, despite his self-described review of “ all available information.” Dr. Z ucker w rote that J ones had a chronically low we i gh t

. He then relied on this “chronicity”
to refuse fu r t her authoriz ation of inpatient treatment. Dr. Z u cker wrote that J o nes was “now at day 21 with minimal wt g ain desp [ it ] e diet o

f 2100 ca l .” This statement is contradicted in the a dministrative r e cord. UB H treatment notes nowhere indicate that J ones had be e n e a ting 2100 calories per day

. UB H notes on J a nuary 27 indi c a t e t h a t, at the time of her admission, J ones was eating just 200 calories
per day
, and that h e r treatment plan required “g o[ ing ] slow on carbs and fat.” Notes on F ebrua r y 9 indicate that J ones was eating only 1550 calories per day

. Three day s late r , o n F ebruary 12, t he hospital was “still keeping cal p lan @ 1550.”

Dr. Z ucker wrote in h is F ebruar y 16 summary , “MD
states: [ patient] has b een d o[ in] g wel l

. . . un[ ti] l dietician raised cals today

. ” One may possibly i n f e r f rom this
statement t h at J ones’s calories w ere raised “today ” to 2100 calories, from 1550 calories on F e bruary 12 (th o u gh Dr. Z u cker does not specify the number of calories b y wh i ch J o n e s’s “cals” were raised). B ut this does not support Dr. Z u cker’s rationale for discontinuing coverag e after F ebruaryP A C I F I C S H O R E S H O S P I T A L V

. UB H 17

14. F irst, it is u n c l e a

r whether “today ” means F ebruary 14, the last date for which U B H a uthoriz ed pay

ment, or F ebruary 16, the date of Dr. Z ucker’s co n v e r sation with D r. F redrick and of his r eport. Read in c ontex t, the later date seems more likely

. Even if Dr. Z ucker meant F ebruary 14 when he wrote “today
, ” this would mean o n ly that J ones’s caloric intake was raised to 2100 on t h e last day of her then-three-week stay

. On either reading
, Dr. Z ucker’s statement—that J ones h ad minimal weig h t g a in after 21 day s “desp[ it] e diet of 2100 cal[ ories] ”—makes no sense.

Dr. Z ucker wrote further that J ones’s laboratory test results w ere “normal,” and that she had “finished lax ative taper w ithout refeeding [ sy mptoms] .” B ut according to UB H

n o t e s, as of F ebruary 16, the d a te of Dr. Z ucker’s sum m a ry , J ones’s most recent lab results came from tests performed on F ebruary 12. Those tests showed elevated levels of amy lase and lipase r e l a

t ed to J ones’s “ acute pancreatitis”—a condition caused by refeeding . J ones’s amy lase levels on F ebruary

12

w e r e h igher than they had been on F ebruary 5, when UB H

c a se manag ement n otes already described her labs a s “abnormal.”

F inally
, Dr. Z u cker wrote in his F ebruary 1 6 s u m m a r y , “MD states [ patient]

. . . n ot e x press[ ] ing s/i.” W e have only Dr. Z ucker’s summary

of h is conversation with Dr. F redrick
to support this statement. W e know from UB H trea t m ent notes that on F ebruary 12, o nly two day s before the F ebruary 14 cut-off date, that J ones “still c/o [ complains of] SI w/plan
to starve or OD.” There is nothing in UB H’s treatment notes,

as distinct from Dr. Z ucker’s recounting of his conversation

w ith D r. F redrick, to indicate that J ones was n o lon ge r

ex p eriencing

suicidal ideation two day s later.P A C I F I C S H O R E S H O S P I T A L V

. UB H 18

Dr. Center also made a number of obvious mistakes. She wrote, “At the time of this admission, the patient was 5' 5" tall and w eig hed 84 pounds.” There is nothing in the administrative record to support an admission weig ht o f 84
pou nds. F rom J anuary 25 to F ebruary 12, UB H treatment notes repeatedly indic a te that J ones’s admission weig ht was 88 pounds. On F ebruary 12, the treatment notes indicate that her admi s s i o n w eig ht was 81 pounds. Dr. Center wrote further, “She is described as taking 75 to 100 lax atives daily

. ” This is c ontradicted in the administrative record. UB H
treatment notes repeatedly indicate that J ones was taking 130 Sena-S lax atives per day

when she was admitted.

Dr. Center wrote further
, “The p atient was n o t suicidal, homicidal, or psy chotic. T h e patient reported some v ag ue suicidal thoug hts, including thoug hts of o v e r d o sing o n the lax atives that she h ad b een abusing .” T h is is contradicted in the administrative record. On admission, J ones was actively suicidal, a

nd she continued to have spe c ific (not “vag ue”) suicidal ideation until a t least F ebruary 1 2

. U BH treatment notes on J anuary 27 state that J ones had attempted suicide in 2007 by overdosing on a “whole bottle of l ax atives.” UB H
treatment notes on J a n u a r y 27, J anuary 2 9, F ebruary 3, F ebruary 9, a nd F ebruary 12 c onsistently record J ones’s suicidal ide a

t i o n and plan to commit suicide throug h overdose

or starvation. Nowhere in U B H treat m e nt notes a fter F ebruary 12 is the r e any statement that J ones no long er h ad suicidal ideation.

Dr. Center also wrote, “The patient’s medical history is remarkable for acut e p ancreatitis which was diag n osed on admission.” This, too, i s c ontradicted in the administrative record. UB H treatment notes are specific in stating that J ones did not h a v e pancreatitis on a dmission. Rather, a s herP A C I F I C S H O R E S H O S P I T A L V

. UB H 19

J anuary 27 treatment plan stated, PSH ex pected that J ones would later develop pancreatitis as a conseq u e n ce of her
treatment. As stated b y Nurse W olpert, “Sh e ’ l l h ave pancreatitis a

nd anemia f

r om refeeding .” Treatment notes indicate that J ones was suffering from pancreatitis on J anuary 29, four day s after being

admitted to PSH, but not before.

F inally
, Dr. Center wrote, “F ollowing admissio n , the patient had slow weig ht g ain.

. . . B y the current last covered date, 2/14/10, the patient [ w eig hed] 83 lbs.

. . . T h e p atient

was

. . . steadily g a ining wei gh t.” These statements a re contradicted in Dr. Center’s own report, as we l l a s i n the administrative record. According to the inaccurate numbers recited by Dr. Center, upon which she ostensibly relied, J ones did not “steadily g ain[ ] weig h t.” Dr. Center wrote that J ones weig hed 84 pounds at admission on J anuary 25, even thoug h there is nothing in UB H notes to indicate that this was J ones’s admission weig ht. Dr. Center then notes that J ones weig h ed 83 pounds on F ebruary 14. T o state the obvious, this is a loss rather than a g ain. I f J ones’s weig ht a t a d m ission was 88 pounds, as indicated in UB H treatment notes up to F ebruary 12, J o nes lost five pounds between the date of her admission and F eb ruary 14. Or if J ones’s admission weig ht was 81 pounds, as indicated in tre a t m ent notes of F ebruary 12, she did g ain weig ht; b ut she did not d o so stead i l y

. O n this assumption, she started out at 8 1 p o u n d s on J anuary 2 5 a nd dropped to 75.5 p ounds o n J anuary 2 9. She then weig hed 79 pounds on F ebruary 3
, and 84 pou n d s o n February 9. UB H
treatment notes do n ot g ive a weig ht after F ebruary 9, but Dr. Center wrote that J o nes weig hed 83 pounds o n F ebruary 14,

one p o u nd less than she weig hed five day s e arlier, on F ebruary 9.P A C I F I C S H O R E S H O S P I T A L V

. UB H 20

Dr. B a

rnard w rote in h i s F ebruary 2 6 letter to J o nes that he had decided on F eb r u a r y 24 to d eny her appeal “ [ a] fter fully investig a ting t h e s u bstance of the appeal, including all aspects of clinical care involved in t h i s treatment episode.” After referring to his own “full investig ation,” Dr. B arn a r d quoted a lmost verbatim from Dr. Center’s erroneous r e p o r t , which Dr. Center had sent to UB H earlier that same day

.

On F ebruary 25, one month after h er admission to PSH and eleven day s after UB H ceased pay ing for her t r eatment, J ones was discharg ed. After her discharg e, J ones assig ned to PSH her rig ht to pay

ment under the Plan. PSH b ro u g ht suit under 29 U.S.C. § 1132(a)(1)(B ), alleg ing that UB H and the Plan had wrong fully denied benefits to J ones. The district
court held that, despite numerous errors in Dr. Z ucker’s a nd Dr. Center’s reports, the administrative r e c ord provided a reasonable basis for determining that acute inpatient care was not necessary after F ebruary 14. The court concluded that it

was “not left with a definite and firm conviction that UB H ’s benefits d etermination was in error,” and therefore c ould not disturb that decision. This appeal followed.

I I . Standard of Appellate Review

W e revie w de novo the district court’s choice a nd application of the standard of review of an ERI SA p lan adminis t r ator’s d ecision. Abatie v. Alta Health & Life Ins. Co.
, 4 58 F

. 3d 955, 9 62 (9th Cir. 2006) (en banc). W e r eview for clear er r o r t he district court’s underly ing f inding s o f disputed fact. Id.P A C I F I C S H O R E S H O S P I T A L V

. UB H 21

I I I

. Discussion

A. Standard of Review of UB H’s B enefits Denial

W e beg in by a ddressing the standard under which we should review the d enial of benefits by UB H

. “The essential first step of the analy sis . . . is to ex amine whether the terms of the ERI SA plan unambig uously g rant disc r e t i on to the administrator.” Id

. at 963. W hen the terms of the plan do not g rant discretion to determine el i g ibility for benefits or to construe the terms of the plan, w e r e view de n ovo the administrator’s denial of coverag e. Id

. When a p lan unambig uously confers such d iscretion, w e review a denial o f ben e fits for abuse of discretion. Id. I f there are procedural irreg ularities or if an administrator operates u nder a co n flict of interest, we c onsider the irreg ularities or c onflict as a factor in determining whether the r e h as been an abuse o f discretion. Id. at 965, 972.

The district court concluded that the Plan unambig uously
g ranted discretion to the administrat o r. I t then reviewed UB H’s denial of benefits for abus e of discretion. PSH does
not c halleng e the d istrict court’s determination that the Plan

ex p licitly g rants d i s c retion to Wells F arg o, a nd derivatively
to its third-party administrator UB H. However, PSH makes three a rg uments in favor of less deferential review o f UB H ’s denial of benefits.

F irst, PSH contends t hat there were procedural irreg ular i t i e s in UB H’s b enefits denial such that we should review the d e nial d e novo. Even when a p l an confers discretion on an adminis t rator, if that administrator eng ag e s in “wholesale and flag rant v iolations of the procedural requirements of ERI SA,” i ts decision is subject to de novoP A C I F I C S H O R E S H O S P I T A L V

. UB H 22

review. Id. at 9 71. However, most procedural errors are not sufficiently severe to transform the abuse-o f-discretion standard into a d e n ovo standard. Anderson v. Suburban Teamsters of N. I

ll. Pension F

u nd Bd. of Trustees
, 588 F .3d 641, 647 (9th Cir. 2009). I n s tead, we weig h any procedural

e r r ors as a f

actor in determining whether UB H a bused its discretion . Id. ; Abatie , 458 F .3d at 972.

I t is painfully apparent t hat UB H did n o t f ollow procedures appropriate to J ones’s case. UB H treatment notes describe her c ase as requiring e v a l u ation by UB H Reg ional Directo r Dr. Z ucker d

ue to its “medical and psy chiatric complex ity

. ” Yet the t reatment notes in UB H ’s administrative record, upon w hich UB H ostensibly made its decision in this “c o mplex ” case, are based entirely on telephone conversations and voicemail messag es. No PSH hospital r ecords w ere ever p ut into the administrative record. No UB H doctor o r other c laims administrator ever ex a mined J ones. The choice to conduct only a p aper r eview “raise[ s] questions a

bout the thoroug hness and accuracy of the benefits determination.” Montour v. Hartford Lif e & Accident Ins. Co.
, 588 F .3d 6 23, 634 (9th Cir. 2 009) (alteration in orig inal) (quoting Bennett v. Kemper Nat’l Servs., Inc.
, 514 F .3d 547, 554 (6th Cir. 2008) (internal quotation marks omitted)).

Moreover, D r. Z ucker’s “peer-to-peer” evaluations a nd
coverag e decisions, made after telephone conversations with Dr. F redrick, were based on obvious factual errors that could easily have b een corrected if only the UB H admin i s t rative record, l et a l o ne PSH hospital r ecords, had been consulted. Similarly
, Dr. Center’s “independent” e valuation a nd

cov e r ag e decision were based on obvious f actual errors that could e asily have b een co rr ec ted if the UB H administrative record had been consulted. See Saffon v. W ells Fargo & Co.P A C I F I C S H O R E S H O S P I T A L V

. UB H 23

Long Term Disability Plan
, 522 F .3d 863, 873 (9th Cir. 2 008) (ex plaining t h a t an administrator’s decision was entitled to less deference because the administrator “took various o f [ c laimant’s] doctors’ statements o u t of contex t or otherwise distorted them in an appa r e n t effort to support a denial o f benefits”).

Second, PSH arg ues that materials outside t h e

a d m i n i s t r a t i v e r e c o r d

— s p e c i f i c a l l y , J o n e s ’ s h o s p i t al records—should be considered b y the court in any review o f UB H’s benefits denial. PSH requested that the district court

ex p and the r ecord bey ond the administrative r ecord compiled b y UB H and consider these records. UB H vig orou s l y opposed this request. The district court declined to consider
any documents bey o nd the administrative record. W h en reviewing for abuse o f discret i o n a plan administrator’s benefits determination, our r e v iew is ty pically limited to the
contents of the administrative record. S ee Abatie
, 4 5 8 F .3d
at 969–70. However, when procedural irregu l a rities a re apparent in an adminis trator’s determination, we may consider ex trinsic evidence to d eter m i n e the effects of the irreg ularity

. “[ T] he court may
, in essence, recreate what the adminis t r a tive record would have b een had the procedure been correct.” Id. at 973.

Ther e wa s g ood reason for the d istrict court to consider hospital records, in addition t o t he administrative record compiled by UB H, in a case invol v i n g a confessedly hig h deg ree of “me d i cal and psy chiatric complex ity

. ” All the information in UB H’s administrative record concerning J ones’s medica l co n d i t i o n i s b a s e d o n t e l e phone conversations and voice mail messag es, with the predictable result that the administrative record contains conflicting (and necessarily incorrect) information about some of the m ostP A C I F I C S H O R E S H O S P I T A L V

. UB H 24

important issues in the case, such a s J ones’s weig ht at v arious times during her treatment. W here the a dministrator mak e s

a coverag e determination based solely o n an administrat i v e record such as this one—and where actual medical records would be helpful to determining the accuracy o f the medical facts u pon which the administrator makes it s c o v erag e determination—ex pan sion o f the r ecord in the district court is appropriate.

Third, PSH contends that UB H, even thoug h a third-party administrator, was operating under a conflict of interest, a nd that we should consider that conflict a s a f actor in determining whether there was an abuse of dis c r etion. PSH points to UB H’s self-interest in continuing its c ontractu al relationship with W ells F arg o, and t o W ells F arg o’s selfinterest, as a direct funder of the Plan, in minimiz ing benefit
pay ments authoriz ed under the Plan by UB H.

However, we n eed not r e a c h these contentions. Even conducting an a

buse of discretion review uninfluenced by any p r o c e d u r a l i r r egu l a

rity or conflict of interest—a n d considering only the record that UB H h a d b e fore it when it mad e its benefits determination—we hold that UB H improperly denied benefits to J ones.

I n reviewing for abuse of discretion, we consider all o f the rel ev a n t circumstances in evaluating the decision of the plan administra t o r

. As w e wrote in our en banc decision in Abatie
, “A straig h tforward abuse of d i s c r e tion a naly sis a llows

a court to tailor its review to all the c ircumstances before it

. ” 458 F .3d at 968 (emphasis added). T he Supreme Court in Glenn
, decided two y ears after Abatie
, made clear that abuse of discretion review, w he t her or not including conflict o f interest as a factor, entails a review of all the circumstances.P A C I F I C S H O R E S H O S P I T A L V

. UB H 25

The Court cautioned a g ainst talismans or formulas that would “falsif[ y ] the actual process of judg ing ,” 554 U.S. at 1 1 9 (alteration in orig inal) (internal quot a t i o n marks omitted), a

nd endorsed a p rocess in w h i c h r eviewing courts consider all relevant factors, of whic h, depending on the circumstances, conflict of interest m a y b e o ne, id. at 117 (“[ W ] hen judg e s review the lawfulness of benefit denials, they will often take
account o f several different considerations of which a conflict of interest is one.”).

W e wrote twenty

- three y ears ag o in Horan v. Kaiser Steel Retirement Plan
, 947 F .2d 1412 (9th Cir. 1991), that w e will

u p h o l d a plan administrator’s decision if it is g rounded in

“ any reasonable basis.” Id. at 1417 (internal quotation marks omitted); see also S

z n e wajs v. U.S. Bancorp Amended & Restated Supplemental Benefits P lan
, 572 F .3d 727, 734–35 (9th Cir. 2009). This lang uag e in H o r an c ould be r ead to

mean that we should ma k e an “any reasonable basis” determination without looking at all the circumstances of the

case. To take a simple ex a mple, f actor s favoring discharg e from the hospital mig ht provide reasonable bases if considered in isolation. A patient mig ht be eating w ell, have
proper blood sug ar levels, have n o infecti o n s , and h ave a supportive family

. Those f a c tors, considered in isolation, would suppor t d i scharg e. B ut if the r eason for the patient’s h o s p i taliz ation is severe cong estive heart failure, those fact o r s would not be reaso n ab l e b a ses to support discharg e

. I n the wake of Glenn
, we have recog niz e d that this unrealistic reading of the any -reasonable-basis test is not “ go o d law when

. . . an a dministrator operates under a structural conflict of interest.” Salomaa v. H o n da Long Term Disability Plan
, 642 F .3d 666, 674 (9th Cir. 2011). I t is also not “g ood law”

even when an a dministrator is not operating under a conflict of interest and we are performing a “straig htforward abuse o fP A C I F I C S H O R E S H O S P I T A L V

. UB H 26

discret i o n analy sis.” S ee Abatie
, 458 F .3d at 9 68; c f. Conkright v. Frommert
, 559 U.S. 506, 5 21 (2010) (“Apply ing

a defer e n t i a l standard of review does n ot mean that the p lan administrator will prevail o n the mer i t s

. I t means only that the plan a dministrator’s interpretation will not be disturbed if reasonable.” (internal qu o t ation marks omitted)). I n all abuse-of-discretion review, whether or not an administrator’s conflict of interest is a factor, a reviewing cour t s hould consider “all the circumstances before it,” Abatie
, 458 F .3d at 968, in assessing a denial of benefits under an ERI SA plan.

B . UB H’s B enefits Denial

“A plan administrator abuses its discretion if it renders a decision without any ex planation, c o n strues p rovisions o f the plan in a way that conflicts with the plain lang uage of the plan, or fails to develop facts necessary to its determination.” Anderson
, 588 F .3d at 649. “[ T] he test for abuse o f discretion in a factual determination ( as opposed t o l e g al error) is whether ‘we a

re left w ith a d efinite a

n d firm c onviction that

a mistake h as been committed.’” Salomaa
, 6 4 2 F .3d at 676 (quoting United States v. Hinkson
, 585 F .3d 1 247, 1262 (9th Cir. 2 009) (en banc)). “[ A ] n a d m i n istrator

. . . a buses its discretion if it relie s o n clearly erroneous finding s of fact in making benefit determinations.” Taft v. Equitable Life Assurance Soc’y , 9 F .3d 1469, 1473 (9th Cir. 1994).

The Plan d ocuments provide two sets of g uidelines relevant to J o nes’s elig ibility for coverag e of acute inpatient
treatment at PSH. F irst, UB H level-of-care g uidelines provid e that acute inpatient care is warranted w hen any o ne of six criteria are met:P A C I F I C S H O R E S H O S P I T A L V

. UB H 27

1. Serious and imminent risk of harm to self

or others due to a behavioral h ealth condition, as evidenced by , for ex ample:

. . . .

b. Current suicidal i deation with intent, realistic p l a n and/or available means, o r other serious life threatening
, se l f

injurious behavior(s).

. . . .

2. Serious a

n d acute deterioration in f u n c t i o n i n g f

r o m a b e h a v i o r a l h e a l t h condition that sig nificantly interferes with the member’s a

bility to safely and adequ a tely care for themselves in the community

.

3. Severe disturbance in mood, affect, o r cog nition that results in b ehavior that canno t be manag ed safely in a less rest ri c tive environment.

4. I mminent risk o f d eterioration in functioning d

ue to the p r e s ence of severe, multiple and complex psy chosocial stressors that are sig nificant enoug h 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 manag e ment.P A C I F I C S H O R E S H O S P I T A L V

. UB H 28

6. Community support servic e s t hat mig ht otherwise aug ment ambulatory mental health services and avoid the need for hospitaliz ation are unavailable.

I n its initial authoriz a tion of inpatient hospital treatment for J ones, UB H found t h a t a t least the fifth of these criteria, a “serious medical condi t i o n [ t h a t ] r e q u i r e s 2 4 -hour
manag ement,” was satisfied.

“Continued Service” g uidelines under the Plan are used
to determine whether previously au thoriz ed care should be continued at its current level “as a member’s severity o f illness chang es.” I n o rder to maintain a current level o f 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 sy mptoms

a n d a h i s t o r y t h a t d e m o n s t r a t e a sig nificant likelihood of d eterioration in functioning /relapse if transitioned to a less restrictive or less intensive level of care . . . .

3

. The treatment being provided i s appropriate a n d of sufficient intensity to ad d r ess the member’s condition and support the member’s movement towards recovery

.

4. The member is activ ely participating in
treatment . . . .P A C I F I C S H O R E S H O S P I T A L V

. UB H 29

5. The treatment plan is accompanied b y ong oing documentation that the me mber’s
sy mptoms are being addressed by activ e interventions; th e interventions focus on specific, realistic, achievable treatment a nd
recovery g oals . . . .

6

. W h ere clinically indicated, the provid e r and member collaborate to ass e ss the need to create/update the member’s advan c e d i r e c t i v e

.

7. Measurable and realistic prog ress has occurred or there is clear a n d compelling evidence that continued treatment at this level of care is required to prevent a cute deterioration or ex acerbation that would then require a higher level of care. . . .

8. W here clinically indicated a nd with the member’s d o cumented consent, the member’s family /social sup p ort sy stem is actively participating in treatment. . . .

9. The member cannot ef f ectively move toward recovery and be safely treat ed in a lower level of care . . . .

10. There is a

n a ppropriate discharg e plan to a less restrictive level of care . . . .

I n deny ing coverag e for J on e s ’ s inpatient treatment bey ond F ebruary 14, UB H f

ound that c riteria 1
, 2, and 9 were no long er met.P A C I F I C S H O R E S H O S P I T A L V

. UB H 30

B e cause coverag e for acute inpatient trea t m ent is indicated whenever any one o f the six criteria for that level o f

care is met, the conti n u e d p r e sence of any one of the six level-of-care criteria neces sarily satisfies a ll ten of the continued service criteria. T his may be seen by ex am ining the level-of-care g uidelines for residential treatme n t

— the level of care immediately below acute inpatient tre a t ment, which is the care J ones was receiving at PSH. T h e se g uidelines provide that residential c a re is appropriate only if,
among other thing s, “[ t] h e member is not at imme d i a te risk of serious harm to self or o thers,” and “[ t] he member

. . . does
not require 24-hour nursing care and monitoring .” Similarly
, the l e v e l of care g uidelines f or “Partial Hospital/Day Treatment,” the level of care below residential care—and the level that D r. Z ucker concluded wa s a p p r opriate for J ones after F ebruary 14—also provi d e t h a t p artial hospital treatment is appropriate only if “[ t] he member is not at immediate risk of serious harm to self or others.”

UB H’s d ecision that J ones no long er qualified u n d e r UB H
g uidelines for a cute inpatient care a s of F ebruary 14 therefore necessarily rested on determinations that J ones n o long er presented a “[ s] e r ious a n d i m m inent risk of harm to [ her] self,” and that her condition no long er warranted 24-hour monitoring and care. These determinations in turn rested on Dr. Z ucker’s a

nd Dr. Center’s fi n d i n g s of fact, which were endorse d by Dr. B arnard. As discussed above, D r. Z ucker and D r. Center made several critical factual er r o r s , upon which they based their conclusion that J ones could safely be discharg ed.

UB H owed a fiduciary duty to J ones under ERI SA. The Supreme Court has described that duty as follows:P A C I F I C S H O R E S H O S P I T A L V

. UB H 31

[ A p l a n a d m i n i s t r a t o r ’ s ] f i d u c i a r y resp o n s ibility under ERI SA is simply stated. The statute p rovides that fiduciaries shall discharg e their d u t i e s with respect to a plan “so lely in the interest of the participants a nd beneficiaries,” [ 29 U. S

. C.] § 1104(a)(1), that is, “for the ex c lusive purpose of (i) providing benefits to participants and their beneficiaries; and (ii) defray

ing reasonable ex penses o f administering the plan,” § 1104(a)(1)(A).

Pegram v. Herdrich
, 530 U.S. 211, 2 2 3

– 24 (2000). F iduciaries must discharg e their duties “with the care, s kill, prudence
, and dilig ence u nder the circumstances then
p r evailing that a prudent man acting in a like capacit y a n d familiar with such matters would us e 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 )).

UB H fell far short o f fulfilling its fiduciary duty to J ones. Dr. Z uc ker, UB H’s primary decisionmaker, made a number of c ritical factual errors. Dr. Center, a s a n ostensibly independent evaluator, made additional critical factual e rrors. Dr. B arnard, UB H’s final dec i s i o n maker, stated that he

ar r i v e d at his decision to d eny benefits “after f ully investig atin g t h e s ubstance of the appeal.” He then rubberstamped Dr. Center’s conclusions. There was a striking lack of care by Drs. Z ucker, Center, and B arnard, resulting in the obvious errors we have described. W hat is worse, the errors

are n ot randomly distributed. All of the errors support denial of pay ment; none supports pay

ment. T he unhappy fact is that UB H acted as a fiduciary in name only
, abusing the discretion with which it had been entrusted.P A C I F I C S H O R E S H O S P I T A L V

. UB H 32

Conclusion

Reviewing for abuse o f discretion, we conclude that UB H improperly denied benefits under the P l a n in violation of its fiduciary duty under ERI SA.

REVERSED.