Court Opinion

ID: 2979486
Source: CourtListenerOpinion
Date Created: 2015-09-22 18:51:43.175057+00
Date Added: 2024-06-11T11:44:17.608278
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 11a0005n.06

                                            No. 09-4152                                   FILED
                                                                                       Jan 04, 2011
                           UNITED STATES COURT OF APPEALS                        LEONARD GREEN, Clerk
                                FOR THE SIXTH CIRCUIT

MEREDITH SOLOMON,                                 )
                                                  )
       Plaintiff-Appellant,                       )
                                                  )    ON APPEAL FROM THE UNITED
v.                                                )    STATES DISTRICT COURT FOR THE
                                                  )    NORTHERN DISTRICT OF OHIO
MEDICAL MUTUAL OF OHIO,                           )
                                                  )
       Defendant-Appellee.                        )

       Before: MERRITT, GIBBONS, and COOK, Circuit Judges.

       COOK, Circuit Judge. In an action brought pursuant to the Employee Retirement Income

Security Act (ERISA), Meredith Solomon sought reimbursement from Medical Mutual of Ohio

(MMO) for charges she incurred for treatment of her cocaine addiction. The district court upheld

MMO’s benefits determination and granted summary judgment to MMO. Solomon now appeals,

arguing that the district court erred by applying arbitrary and capricious rather than de novo review,

accepting MMO’s interpretation of the insurance plan (the Plan), and rejecting her equitable-estoppel

argument. We affirm.

                                                  I.

       In January 2007, following significant weight loss, multiple overdoses, and a family

intervention, Solomon decided to seek treatment for her cocaine addiction. Medical insurance
No. 09-4152
Solomon v. Medical Mutual of Ohio

coverage instructions printed on an MMO-issued identification card led Solomon to peruse the First

Health Network (First Health) website, which listed the Hanley Center (Hanley) as an in-network

treatment facility. It turned out that, unbeknownst to Solomon, the outdated website failed to show

that MMO had removed Hanley from its provider network at the end of the previous year. Solomon

checked into Hanley and, despite being warned that the Plan would not cover her treatment there,

stayed nearly two months. After checking out, Solomon participated in Hanley’s outpatient therapy.

In all, she incurred charges in excess of $40,000.

       The Plan limits coverage to services deemed “Medically Necessary,” defined in part as “the

most appropriate . . . level of service which can be safely provided” to diagnose or treat the

member’s condition, and distinguishes between multiple such “level[s] of service.” Relevant here

is the distinction between “inpatient” care and “residential” care. A facility offering inpatient drug

abuse treatment “mainly provides detoxification and/or rehabilitation treatment.” By contrast, a

facility offering residential treatment “provid[es] an individual treatment plan for the chemical,

psychological and social needs of each of its residents,” and its “[r]esidents do not require care in

an acute or more intensive medical setting.” Plan eligibility for inpatient care coverage requires that

a member meet both of the following requirements:

•      establish medical necessity by showing “that [her] medical symptoms or [c]ondition
       require [sic] that the services cannot be safely or adequately provided to [her] as an
       [o]utpatient,” and
•      obtain MMO’s pre-approval for inpatient admission for drug abuse treatment.

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Solomon v. Medical Mutual of Ohio

The plan excludes all coverage for residential care: “[R]esidential care rendered by a Residential

Treatment Facility is not covered.”

       Within days of Solomon’s admission to Hanley, MMO informed her that the Plan did not

cover her treatment. Solomon contends that her mental and physical condition at that time prevented

her from disputing the coverage decision. Months later, after checking out of the facility and while

still participating in outpatient care, Solomon submitted an insurance claim to MMO. MMO’s initial

Explanation of Benefits denied Solomon’s claim because her “benefit plan [did] not provide

coverage for this service.” Following Solomon’s internal appeal, MMO’s review prompted a

redetermination that she “[did] not meet medical necessity criteria for inpatient rehabilitation

services” because, among other reasons, she was psychiatrically and medically stable and did not

exhibit severe risk factors. Finding that Solomon’s treatment could thus have been handled “in a less

restrictive level of care,” MMO affirmed its determination to deny her claim.

       Following this internal determination, Solomon triggered her right to review by an

independent doctor. According to Dr. Edward M. Lukawski of Lumetra, an Independent Review

Organization, Solomon’s condition necessitated an “acute level of care” for her first two days of

treatment but only “residential treatment” for the remainder of her stay. After receiving Dr.

Lukawski’s assessment, MMO paid Hanley for the two medically necessary days of Solomon’s stay

at the out-of-network rate and denied the remainder of her claim because Plan benefits excluded

coverage of “inpatient admission for residential treatment for . . . substance abuse.”

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No. 09-4152
Solomon v. Medical Mutual of Ohio

       Solomon objected to the use of the out-of-network rate for the allowed days because the

outdated website misled her. Upon further consideration, MMO agreed to pay for the first two days

of Solomon’s stay at the in-network rate because of First Health’s error. MMO refused, however,

to pay an in-network rate for any reimbursable expenses incurred after First Health updated its

website.

       Having exhausted the appeals process, Solomon sought relief in state court. MMO removed

the case to federal court on preemption grounds and Solomon amended her complaint to allege a

wrongful denial of benefits under ERISA.        When Solomon later failed to file a requested

supplemental brief supporting her motion for summary judgment, the district court interpreted

Solomon’s silence as conceding MMO’s supplemental arguments, found that MMO’s reasons for

resolving Solomon’s claims satisfied arbitrary and capricious review, dismissed Solomon’s claim

with prejudice, and granted summary judgment to MMO. Solomon then moved to file her

supplemental brief instanter and vacate the grant of summary judgment. In denying both motions,

the district court clarified that even if it had considered the arguments in Solomon’s supplemental

brief, it still would have found in favor of MMO because the Plan excluded coverage for the

residential treatment Hanley provided, and the Plan required pre-approval of any inpatient care.

Solomon now appeals.

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Solomon v. Medical Mutual of Ohio

                                                   II.

        Solomon first challenges the standard of review the district court employed in reviewing

MMO’s resolution of her claims. Courts review the decision of a plan administrator de novo

“‘unless the benefit plan gives the administrator or fiduciary discretionary authority to determine

eligibility for benefits or to construe the terms of the plan,’” in which case arbitrary and capricious

review applies. Haus v. Bechtel Jacobs Co., 491 F.3d 557, 561 (6th Cir. 2007) (quoting Firestone

Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). “[D]iscretion is the exception, not the rule

and . . . the arbitrary and capricious standard does not apply unless there is a clear grant of discretion

to determine benefits or interpret the plan.” Wulf v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th

Cir. 1994). This court reviews de novo the standard of review applied by the district court. Shelby

Cnty. Health Care Corp. v. Majestic Star Casino, 581 F.3d 355, 364 (6th Cir. 2009).

        Because the MMO Plan includes a clear grant of discretion in Section 7.6, titled “Retention

of Discretion,” the court here rightly reviewed using the arbitrary and capricious standard. That

section reads as follows: “Medical Mutual shall have the exclusive right to interpret the terms of the

Certificate, Schedule of benefits, riders and Amendments. The decision about whether to pay any

claim, in whole or in part, is within the sole discretion of Medical Mutual and such decisions shall

be final and conclusive.” To the extent that Solomon attempts to argue that this language does not

does qualify as a clear grant of discretion, we consider the argument forfeited because Solomon

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No. 09-4152
Solomon v. Medical Mutual of Ohio

offered it for the first time in her reply brief. See Bridgeport Music, Inc. v. WB Music Corp., 520
F.3d 588, 595 n.4 (6th Cir. 2008).

       “[E]ven when the plan documents confer discretionary authority on the plan administrator,

when the benefits decision is made by a body other than the one authorized by the procedures set

forth in a benefits plan, federal courts review the benefits decision de novo.” Shelby Cnty., 581 F.3d

at 365 (internal quotation marks and citation omitted). Relying on Sanford v. Harvard Industries,

Inc., 262 F.3d 590 (6th Cir. 2001), and Wintermute v. Guardian, 524 F. Supp. 2d 954 (S.D. Ohio

2007), Solomon argues that despite any clear grant of discretion, the district court still should have

applied de novo review because MMO did not act as the final decisionmaker with respect to her

claim. But Solomon misconstrues these cases. In both, the courts settled on de novo review as the

appropriate standard not simply because an outside entity acted as the final decisionmaker, but

because the defendant-administrators violated plan procedures in making the benefits determination.

See Sanford, 262 F.3d at 596–97 (applying de novo review where defendant-administrator violated

plan appeal procedures); Wintermute, 524 F. Supp. 2d at 959–60 (applying de novo review where

an “unauthorized body without discretionary authority” rendered decision).

       Unlike the defendants in Sanford and Wintermute, MMO followed Plan procedures in

assessing Solomon’s claim. After Solomon exhausted the internal appeal process, she specifically

requested external review of her claim—as permitted under the terms of the Plan. MMO accordingly

submitted her information to an Independent Review Organization and received Dr. Lukawski’s

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No. 09-4152
Solomon v. Medical Mutual of Ohio

opinion as to medical necessity. Moreover, Dr. Lukawski did not “make a policy interpretation

decision,” as Solomon mistakenly contends. Although Dr. Lukawski’s report quoted portions of the

Plan, he opined only on the medical necessity of different types of care; he did not recommend a

coverage decision. This requested, external-review opinion on medical necessity—which was

almost entirely consistent with MMO’s internal-review coverage determination—then triggered

MMO to notify Solomon of its determination that the Plan entitled her to coverage for the period of

acute detoxification as shown on the Hanley billing submitted with the claim. MMO, not “a body

other than the one authorized by the procedures set forth in [the] benefits plan,”

determined—according to Plan procedures—the coverage applicable to Solomon’s claim. See

Shelby Cnty., 581 F.3d at 365 (internal quotation marks and citation omitted). Because the Plan

grants MMO discretion to construe its terms, and MMO, in doing so, followed Plan procedures, the

district court properly reviewed under the arbitrary and capricious standard.

                                                III.

       Solomon next challenges MMO’s interpretation of the Plan. Under arbitrary and capricious

review, we uphold an administrator’s decision “when it is possible to offer a reasoned explanation,

based on the evidence[,] for a particular outcome.” Cox v. Standard Ins. Co., 585 F.3d 295, 299 (6th

Cir. 2009). A court “must accept a plan administrator’s rational interpretation of a plan even in the

face of an equally rational interpretation offered by the participants.” Morgan v. SKF USA, Inc., 385
F.3d 989, 992 (6th Cir. 2004). While deferential, arbitrary and capricious review does not compel

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No. 09-4152
Solomon v. Medical Mutual of Ohio

courts to merely rubber stamp the administrator’s decision. Balmert v. Reliance Standard Life Ins.

Co., 601 F.3d 497, 501 (6th Cir. 2010). When an administrator both evaluates and pays claims, a

conflict of interest exists that must be weighed in determining whether the administrator met the

arbitrary and capricious standard. Calvert v. Firstar Fin., Inc., 409 F.3d 286, 292–93 (6th Cir.

2005).

         MMO maintains that Hanley qualifies as a “Residential Treatment Facility” and that, other

than during the initial detoxification portion of her stay that constituted acute care, Solomon received

residential care. Accepting that Hanley may meet the definition of Residential Treatment Facility,

Solomon argues that it also qualifies as a “Drug Abuse Treatment Facility” at which she received

inpatient care. We turn to the Plan language. The chief difference between a Residential Treatment

Facility offering residential treatment and a Drug Abuse Treatment Facility offering inpatient care

is that a Drug Abuse Treatment Facility “mainly provides detoxification and/or rehabilitation

treatment for Drug Abuse,” while a Residential Treatment Facility treats “[r]esidents [who] do not

require care in an acute or more intensive medical setting” and “provid[es] an individual treatment

plan for the chemical, psychological and social needs of each of its residents,” (emphasis added).

As the district court found, while “the Plan is certainly not a model of clarity, and the use of two

terms—‘residential’ and ‘inpatient’—in the Plan could generate confusion,” Solomon v. Med. Mut.

of Ohio, No. 1:09 CV 3, 2009 WL 3086483, at *5 (N.D. Ohio Sept. 23, 2009) (decision on motion

to vacate judgment), MMO offered a rational interpretation of the Plan to label Hanley a Residential

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No. 09-4152
Solomon v. Medical Mutual of Ohio

Treatment Facility offering non-covered residential treatment, see Morgan, 385 F.3d at 992. As the

bills Solomon submitted to MMO demonstrate, other than during the initial portion of her stay,

Hanley did not “mainly provide[]” detoxification and rehabilitation treatment (as required to meet

the definition of a Drug Abuse Treatment Facility offering inpatient care); it offered a significant

amount of individual and group therapy, primary care, and nutritional counseling (fitting the

description of a Residential Treatment Facility offering residential rather than more acute care).

       Even if we accept Solomon’s position that her stay at Hanley constitutes inpatient care, the

Plan’s provision that “[a]ll Covered Services must be Medically Necessary unless otherwise

specified,” would still foreclose coverage because Dr. Lukawski opined that treatment after

Solomon’s first two days of stay did not qualify as medically necessary acute care. The balance of

her stay qualified as medically necessary—but Plan-excluded—residential care. Buttressed by Dr.

Lukawski’s independent review, MMO’s decision to deny this aspect of Solomon’s claim could not

be called arbitrary and capricious.1

                                                  IV.

       Finally, Solomon presses the view that MMO should have covered her outpatient treatment

at the in-network rate rather than the out-of-network rate. It was not her fault, she contends, that the

       1
        Because Solomon’s claim fails for these reasons, we need not address whether MMO could
also deny Solomon coverage for failing to obtain written pre-certification at Hanley, as the Plan
requires for inpatient drug abuse treatment.

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No. 09-4152
Solomon v. Medical Mutual of Ohio

website listing Hanley as in-network was out-of-date. We read this as a federal-law estoppel claim

because ERISA preempts all state laws that relate to any employee benefit plan. Helfman v. GE Grp.

Life Assurance Co., 573 F.3d 383, 389–90 (6th Cir. 2009).

       This court reviews de novo whether Solomon establishes the elements of an estoppel claim.

See Smiljanich v. GM Corp., 302 F. App’x 443, 447–48 (6th Cir. 2008). “In order to establish an

estoppel claim: (1) there must be conduct or language that amounts to a representation of material

fact; (2) the party to be estopped must be aware of the true facts; (3) the party to be estopped must

have the intent that the representation be acted on or the party seeking estoppel must reasonably

believe that the party to be estopped so intends; (4) the party asserting the estoppel must be unaware

of the true facts; and (5) the party seeking estoppel must reasonably or justifiably rely on the

representation to his detriment.” Riverview Health Inst. LLC v. Med. Mut. of Ohio, 601 F.3d 505,

521 (6th Cir.), cert. denied, 131 S. Ct. 220 (2010). In addition, the “[p]rinciples of estoppel . . .

cannot be applied to vary the terms of unambiguous plan documents; estoppel can only be invoked

in the context of ambiguous plan provisions.” Id. (second alteration in original) (internal quotation

marks and citation omitted).

       Solomon points to no provision qualifying for estoppel treatment. Though this Court has

permitted application of estoppel absent qualifying ambiguity, it has done so only “where the

plaintiff can demonstrate the traditional elements of estoppel, including that the defendant engaged

in intended deception or such gross negligence as to amount to constructive fraud.” Bloemker v.

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No. 09-4152
Solomon v. Medical Mutual of Ohio

Laborers’ Local 265 Pension Fund, 605 F.3d 436, 444 (6th Cir. 2010). Solomon’s case lacks such

intended deception or constructive fraud by MMO. The inaccurate information appeared on the

website of third-party First Health, not on MMO’s; Solomon does not allege that MMO knew of

First Health’s error; and she fails to present facts or cite legal authority that either supports a finding

that MMO owed a duty to ensure the accuracy of First Health’s website or that otherwise justifies

holding MMO responsible for First Health’s mistake. The district court thus did not err in rejecting

Solomon’s estoppel argument and affirming MMO’s benefits determination.2

                                                   V.

        For the above reasons, we AFFIRM the judgment of the district court.

        2
         Solomon additionally requests remand to the district court for a determination as to her
entitlement to attorney’s fees under 29 U.S.C. § 1132(g)(1), without any argument to justify such a
remand or explain why the district court might find such an award appropriate, particularly in view
of the disposition here. As such, we bypass this request as forfeited. See United States v. Hurley,
278 F. App’x 574, 577 (6th Cir. 2008).

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No. 09-4152
Solomon v. Medical Mutual of Ohio

        MERRITT, Circuit Judge, concurring. Due to the technical nature of the facts and law

presented in this ERISA appeal, I write separately in hopes of providing added clarification. Under

ERISA case law, a court must defer to the claims decision of a health insurer when the insurance

policy gives the insurer authority to determine if the insured is eligible for benefits. Metro. Life Ins.

Co. v. Glenn, 554 U.S. 105, 111 (2008). This is so notwithstanding the insurer’s inherent conflict

of interest: the insurer saves money if it denies the claim. Id. at 112–16. This case asks whether

an insurer’s decision to deny a claim loses the benefit of deferential review when that decision was

supported by the recommendation of a neutral arbitrator during an external administrative appeal

permitted by the policy. We hold that it does not. A contrary holding would afford less deference

to the conflicted decisions of insurers when a neutral arbitrator reaches the same conclusion. Such

a result would be absurd—and certainly is not mandated by ERISA or its interpreting case law. The

meaning of this reasoning for this case is that we may only overturn Medical Mutual’s denial of

Solomon’s claim if Medical Mutual acted arbitrarily and capriciously. It did not, so we affirm.

        Solomon submitted a claim to Medical Mutual for approximately $40,000 for the two months

she stayed at the Hanley Center for drug-addiction treatment. Medical Mutual denied her claim in

its entirety. It explained that her treatment was not “medically necessary,” as required by her policy.

Solomon then filed an external appeal, which, under state law, was submitted to a randomly selected,

neutral arbitrator—a so-called “independent review organization.” See Ohio Rev. Code Ann. §

3923.67(A), (D); id. § 3901.80(C) (providing for random selection). Solomon’s policy expressly

                                                 - 12 -
No. 09-4152
Solomon v. Medical Mutual of Ohio

provided for this external appeal process. The neutral reviewer, Dr. Edward Lukawski, concluded

that only the first two days of Solomon’s stay at Hanley were medically necessary as inpatient care,

the only kind of drug treatment covered by Hanley’s policy. Relying upon Dr. Lukawski’s

conclusion, Medical Mutual denied Solomon’s claim for all but her first two days.

       Solomon’s primary argument on appeal to this Court is that we should not review Medical

Mutual’s denial of the bulk of her claim under the deferential arbitrary-and-capricious standard

because it was effectively Dr. Lukawski, and not Medical Mutual, who made the decision, and

deference to external reviewers is not appropriate. She cites two cases, Sanford v. Harvard

Industries, Inc, 262 F.3d 590 (6th Cir. 2001), and Wintermute v. Guardian, 524 F. Supp. 2d 954

(S.D. Ohio 2007), which the majority opinion properly distinguishes as holding that deference is

improper when the decisionmaker was completely unauthorized by the policy—not that deference

is improper when an external reviewer plays any role in forming the claims decision. Aside from

her lack of authority, Solomon’s argument is unpersuasive because the fact that a neutral expert came

to the same conclusion as the insurer should make us more likely, not less likely, to defer to the

insurer’s determination. Thus, we review the denial under the arbitrary-and-capricious standard.

       Under this standard, Solomon’s case quickly falls apart. Nowhere in her briefs does Solomon

argue that her stay at Hanley was medically necessary as inpatient care. The only drug treatment that

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No. 09-4152
Solomon v. Medical Mutual of Ohio

her policy covers is medically necessary inpatient care. Accordingly, Medical Mutual’s decision to

deny all but the first two days of her claim for this reason was not arbitrary and capricious.3

       Finally, Solomon appeals a collateral claim regarding the rate at which Medical Mutual

reimbursed her for her outpatient treatment. As with Solomon’s primary claim, I agree with the

majority opinion’s reasoning and disposition of that issue.

       3
        Medical Mutual also gives two independent reasons why it believes its decision to deny
Solomon’s claim was not arbitrary and capricious: (1) Solomon did not obtain preapproval, as
required by her policy, before seeking treatment at Hanley; and (2) Hanley provided “residential
treatment,” which Solomon’s policy never covers, rather than “inpatient treatment,” which her policy
covers only when medically necessary. Although the majority opinion agrees with Medical Mutual’s
second argument, we need not agree with either argument to affirm, because Solomon’s lack of
medical necessity alone is dispositive.

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