Court Opinion

ID: 4235352
Source: CourtListenerOpinion
Date Created: 2018-01-09 21:00:35.448557+00
Date Added: 2024-06-11T14:42:33.981893
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                             JAN 9 2018
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

KRYSTEN C.,                                      No.   16-16958

              Plaintiff-Appellant,               D.C. No. 3:15-cv-02421-RS

 v.
                                                 MEMORANDUM*
BLUE SHIELD OF CALIFORNIA,

              Defendant-Appellee.

                    Appeal from the United States District Court
                       for the Northern District of California
                     Richard Seeborg, District Judge, Presiding

                     Argued and Submitted December 8, 2017
                            San Francisco, California

Before: THOMAS, Chief Judge, and LUCERO** and OWENS, Circuit Judges.

      Plaintiff Krysten C. appeals the district court’s order granting summary

judgment in favor of Defendant Blue Shield in her ERISA action challenging the

denial of her claim for medical benefits. We have jurisdiction pursuant to 28

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
            The Honorable Carlos F. Lucero, United States Circuit Judge for the
U.S. Court of Appeals for the Tenth Circuit, sitting by designation.
U.S.C. § 1291. Because the parties are familiar with the factual and procedural

history of the case, we need not recount it here. We affirm.

                                           I

      Krysten has standing to bring her claim under ERISA. Blue Shield argues

that Krysten has not paid and is not obligated to pay Monte Nido for the medical

services she received. Blue Shield references an agreement between Monte Nido

and Blue Shield’s Mental Health Services Administrator which bars Monte Nido

from charging the unpaid portion of the bill to Krysten. However, Krysten has

contractually agreed with Monte Nido that “treatment is ultimately the

responsibility of the client, including treatment provided after an insurance denial.”

The agreement between Monte Nido and Blue Shield’s Mental Health Services

Administrator is a separate dispute, unrelated to Krysten’s individual contractual

rights and obligations.

                                          II

      We review de novo the district court’s grant of summary judgment in favor

of Blue Shield. Dytrt v. Mountain States Tel. & Tel. Co., 921 F.2d 889, 893 (9th

Cir. 1990). We review de novo the district court’s legal determinations and its

interpretation of the terms of an ERISA plan. Metropolitan Life Ins. Co. v. Parker,

436 F.3d 1109, 1113 (9th Cir. 2006); Cisneros v. Unum Life Ins. Co. of America,

                                          2
134 F.3d 939, 942 (9th Cir. 1998). We review the district court’s findings of fact

for clear error. Parker, 436 F.3d at 1113.

      When a plan grants discretionary authority to determine benefit eligibility to

the administrator, as Krysten’s plan does, the administrator’s decision is reviewed

for abuse of discretion. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115

(1989). The test for abuse of discretion is whether the Court is “left with a definite

and firm conviction that a mistake has been committed.” Salomaa v. Honda Long

Term Disability Plan, 642 F.3d 666, 676 (9th Cir. 2011). The Court must

“consider whether application of a correct legal standard was ‘(1) illogical, (2)

implausible, or (3) without support in inferences that may be drawn from the facts

in the record.’” Id. (quoting United States v. Hinkson, 585 F.3d 1247, 1262 (9th

Cir. 2009)).

      The ERISA “abuse of discretion” standard is unique. The Court is required

to weigh certain factors, including an administrator’s conflict of interest and any

procedural irregularities. Abatie v. Alta Health & Life Ins. Co., 458 F. 3d 955, 965

(9th Cir. 2006) (en banc) (“[I]f a benefit plan gives discretion to an administrator

or fiduciary who is operating under a conflict of interest, that conflict must be

weighed as a ‘facto[r] in determining whether there is an abuse of discretion.’”)

(emphasis added) (citing Firestone, 489 U.S. at 115); id. at 972 (“A procedural

                                           3
irregularity, like a conflict of interest, is a matter to be weighed in deciding

whether an administrator's decision was an abuse of discretion.”).

      The district court did not err in its abuse of discretion analysis. Blue

Shield’s decision on Krysten’s appeal in less than two hours without consulting

Monte Nido constituted a procedural irregularity. However, the error was made

harmless when Blue Shield allowed Krysten and Monte Nido to submit records and

re-considered her appeal. Krysten was therefore afforded “a reasonable

opportunity for a full and fair review of a claim and adverse benefit

determination,” including “the opportunity to submit written comments,

documents, records, and other information relating to the claim for benefits.” 29

C.F.R. § 2560.503-1(h)(2)(ii). The district court gave appropriately brief

consideration to the procedural irregularity, which was ultimately harmless.

      Krysten contends that Blue Shield’s procedure was irregular for other

reasons, but these arguments are without merit. It was appropriate for Dr. Carlton

to consult on both the denial of Krysten’s appeal and the review of Krysten’s

appeal because ERISA does not mandate new decision-makers for a review of an

appeal. 29 C.F.R. §§ 2560.503-1(h)(3)(ii), (v). It was also acceptable for Dr.

Battin to make the final decisions on Krysten’s appeals because he consulted with

board-certified psychiatrists. 29 C.F.R. § 2560.503-1(h)(3)(iii). Lastly, it was not

                                            4
irregular for Blue Shield to decline a live examination of Krysten, as there is no

rule or regulation requiring such an examination. Because none of these facts

constitute a procedural irregularity under ERISA, the district court did not err when

it applied an abuse of discretion standard.

                                          III

      Given that the district court did not err in applying the abuse of discretion

standard, it did not err in concluding that the administrator did not abuse its

discretion when it determined that partial hospitalization, and not ongoing

residential treatment, was the most appropriate level of care under the Plan.

      Under the Plan, treatments that are medically necessary include only those

that are (1) “furnished under generally accepted professional standards to treat

illness, injury or medical condition”; (2) “consistent with Blue Shield medical

policy”; (3) “consistent with the symptoms or diagnosis”; (4) “not furnished

primarily for the convenience of the patient, the attending Physician or other

provider”; and (5) “furnished at the most appropriate level which can be provided

safely and effectively to the patient.” The Plan states: “If there are two or more

Medically Necessary services that may be provided for the illness, injury or

medical condition, Blue Shield will provide Benefits based on the most cost-

effective service.”

                                              5
      Given that partial hospitalization satisfies the definition of medical

necessity, the district court therefore did not err when it granted summary

judgment in favor of Blue Shield.

      AFFIRMED.

                                          6
Krysten C. v. Blue Shield of California, No. 16-16958                      FILED
OWENS, Circuit Judge, dissenting:                                           JAN 9 2018
                                                                       MOLLY C. DWYER, CLERK
                                                                    U.S. COURT OF APPEALS
      I respectfully dissent. On August 29, 2014, Blue Shield informed  Krysten

C. that she had “improved” and no longer met its internal criteria for residential

treatment. Blue Shield did not, however, specify how Krysten had “improved”

since August 22, 2014, when it last approved coverage based on its findings that

Krysten was still battling significant medical issues that interfered with her ability

to perform simple tasks, such as grocery shopping or preparing a meal.

      Blue Shield’s internal notes from August 29 may shed some light: there,

Blue Shield’s physician advisor remarked that “the reason for the request of

continued [residential treatment] is that ‘it’s a long weekend’ and because the

member’s ex-boyfriend is coming to visit.” When Blue Shield summarily denied

Krysten’s expedited appeal, it again noted internally that the only reason given for

continued residential treatment was the long weekend and the ex-boyfriend’s visit,

with “no clinical justification offered.” In a case of such “medical and psychiatric

complexity” where the plan administrator “operates under a conflict of interest,” I

fear that Blue Shield’s decision to read Krysten’s request in the most frivolous

light “raise[s] questions about the thoroughness and accuracy of the benefits

determination,” Pac. Shores Hosp. v. United Behavioral Health, 764 F.3d 1030,

1040 (9th Cir. 2014). That is especially true here, as just one week prior, Blue
Shield concluded that residential treatment was appropriate. I do not believe that

Blue Shield’s later consideration of Krysten’s clinical record rendered this

procedural irregularity harmless, as Blue Shield continued to rely on its initial,

procedurally irregular determination that Krysten had “improved.” Accordingly, I

would reverse and remand for further proceedings.