E.D. began experiencing symptoms of anorexia nervosa when she was a preteen. Her condition worsened, and the Dwyers brought her to a residential treatment facility. Although her weight increased, E.D. still exhibited a number of concerning symptoms. Initially, United approved full hospitalization benefits for E.D. But the insurer then decided to lower its coverage to partial hospitalization. The Dwyers appealed. United rejected the Dwyers’ appeal and stepped down E.D. to partial hospitalization. Even at the lower level of hospitalization, E.D. was receiving a substantial amount of treatment and spending hours every day at the facility. Based on some showing of improvement, E.D. was approved for a three-day weekend pass so she could leave the facility and visit her home. Her doctors wanted to see how E.D. would fare outside of the tightly controlled clinical environment. Unfortunately, the three days at home were filled with difficult, negative experiences. E.D. lost two pounds. She broke down crying on a shopping trip because of her terrible body image, and, upon her return to Avalon Hills, she was continuously walking in an unnatural gait.  For reasons difficult to understand, United then decided it was appropriate to discharge E.D. entirely. E.D.’s doctors immediately objected, asserting that she could not be stepped down further due to the poor performance on the weekend home, the ongoing fluctuations in her body weight, and her inability to receive the care she needed at the outpatient level. Again, United rejected the Dwyers’ appeal. Mr. Dwyer nevertheless decided to keep E.D. at Avalon Hills until the end of her treatment, and paid out-of-pocket for it himself. The Dwyers brought a claim for denial of benefits under ERISA.  The District Court granted summary judgment in favor of United.  But the U.S. Fifth Circuit reversed:

“Our review under ERISA is twofold: We look to both substance and procedure. In looking to substance, we ask whether the beneficiary was substantively entitled to the claimed benefits under the terms of the plan. On procedure, we ask whether the ERISA fiduciary employed full and fair review of the claim as required by law.

“The terms of Mr. Dwyer’s plan specify that United would cover a Health Service if it is Medically Necessary. To qualify as Medically Necessary, a claimed health care service must be: (i) In accordance with Generally Accepted Standards of Medical Practice; (ii) Clinically appropriate, in terms of type, frequency, extent, site and duration, and considered effective for your Sickness, Injury, Mental Illness, substance-related and addictive disorders, disease or its symptoms; (iii) Not mainly for your convenience or that of your doctor or other health care provider; and (iv) Not more costly than an alternative drug, service(s) or supply that is at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of your Sickness, Injury, disease or symptoms. All agree that E.D.’s treatment was in accordance with the first requirement (generally accepted medical standards) and the third requirement (not for her convenience). United contends that, in July 2015, E.D.’s continued partial hospitalization at Avalon Hills was not clinically appropriate (the second requirement) and was more costly than the therapeutically equivalent treatment of partial hospitalization (the fourth requirement)…. United’s denial letters are not supported by the underlying medical evidence. In fact, they are contradicted by the record.

“Second, procedure. Under ERISA, when health benefits are terminated, the beneficiary is entitled to the procedural right of a full and fair review by the appropriate named fiduciary. To comply with the statute, this review must be based on a meaningful dialogue between the beneficiary and administrator. This meaningful dialogue has been described as an ongoing, good faith exchange of information to ensure that the terms of the plan are applied accurately and the benefits are dispensed fairly…. In this case, however, United not only failed to engage in a meaningful dialogue with Mr. Dwyer; the ERISA fiduciary engaged in no dialogue at all. The July 2015 denial letter failed to state the specific reason or reasons for the adverse determination and the specific plan provisions on which the determination is based in violation of 29 C.F.R. §2560.503-1(g)(1)(i) and (ii). Also, because this was a denial on the basis of medical necessity, E.D. was entitled to an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the claimant’s medical circumstances. 29 C.F.R. §2560.503-1(g)(1)(v)(B). No explanation was provided or offered.”

 

Dwyer v. United Healthcare, No.23-50439, 2024 WL 4230125 (5th Cir. Sept. 19, 2024).