“Confirmed Judges, Confirmed Fears” is a blog series documenting the harmful impact of President Trump’s judges on Americans’ rights and liberties. Cases in the series can be found by issue and by judge at this link.
Trump Tenth Circuit judge Allison Eid tried to uphold a lower court decision that dismissed a claim for medical benefits by the parents of a teenaged girl under an Employee Retirement Income Security Act (ERISA) plan. The court majority rejected Eid’s argument, reversed the lower court’s grant of summary judgment against the parents, and sent the case back to the lower court in its July 2020 decision in Lyn M. v. Premera Blue Cross.
A teenager identified as L.M. has “experienced mental illness since she was a young girl,” manifested in a suicide attempt, instances of self-harm, and other problems that have required that she “attend therapy throughout most of her life.” She eventually had to be placed in a residential educational facility where she has received long-term psychiatric treatment. Her parents submitted a claim to Premera Blue Cross, under the coverage for such treatment provided by their ERISA plan.
Although Premera agreed to cover the first eleven days of L.M.’s stay as a “courtesy,” it denied the parents’ claim. The parents sued Premera, having already incurred over $80,000 in treatment costs at that point. A lower court granted summary judgment for Premera and against the parents, however, claiming that Premera’s denial was not “arbitrary and capricious.” L.M.’s parents appealed to the Tenth Circuit.
In an opinion by Judge Robert Bacharach, the Tenth Circuit reversed the lower court ruling and sent the case back for two reasons. First, the majority explained that the district court had mistakenly accepted Premera’s contention that its decision should be upheld as long as it was not “arbitrary and capricious” because the ERISA Plan Instrument gave the plan administrator discretionary authority to approve or deny applications. This was wrong, the majority went on, because Premera had failed to provide any notice to members and they therefore “had no way of knowing the Plan Instrument even existed,” much less that it granted such broad discretion to the administrator. Indeed, the majority continued, the administrator had effectively “kept secret” the Plan Instrument. The majority relied on extensive case authority from the Tenth Circuit and elsewhere about the requirement of some form of notice.
In addition, the majority ruled that the district court had erroneously interpreted a letter from Premera to suggest that it had assessed the medical necessity for L.M.’s treatment based both on the summary plan description and a “separate medical policy” that “articulates the criteria to be used” when assessing the need for residential psychiatric treatment. Although all parties agreed that both needed to be considered, the majority explained, the record showed that Premera had “failed to consider” the medical policy’s “specific criteria,” such as whether there has been significant impairment of “functioning or behavioral dyscontrol” at a severity that “requires 24/7 containment and treatment.” By failing to use the medical policy’s criteria, the majority concluded, Premera had acted “arbitrarily and capriciously” and the lower court must be reversed for that reason as well.
Trump judge Eid harshly dissented. She claimed that the majority had improperly imposed a “new duty” on ERISA plan administrators to notify members of all documents that “could affect the scope of judicial review,” like the Plan Instrument. She claimed that ERISA and relevant precedent supported her view, and that it was enough that the summary plan description stated generally that members could ask to see other plan documents and information.
The majority strongly disagreed. They explained that they were not requiring notice of all plan documents relating to the scope of judicial review, but only the document that “reserves discretionary authority” to the administrator to make coverage decisions. Members “lack notice” that is required by ERISA and the case law, the majority went on, “when the plan administrator reserves discretionary authority in a private document” without even “disclosing the document’s existence.” In addition, the majority pointed out, Eid had said nothing about its second independent ground for reversing the district court, other than noting in a footnote that the “standard of review” question must be resolved first. Even if that issue had been resolved as she argued, however, the majority noted that the lower court’s error in failing to use the medical policy’s specific criteria “alone would require reversal.”
The majority sent the case back to the district court to conduct a thorough review of the merits of Premera’s decision to deny medical insurance coverage to L.M.’s parents, which would include a “fact-intensive inquiry” and even a bench trial by the judge if necessary. If it had been up to Eid, however, L.M.’s parents would not have any opportunity at all to try to obtain coverage for their daughter’s expensive medical treatment.