ERISA-Fifth Circuit Holds That An Administrator’s Factual Determinations As To Benefit Entitlement Is Subject To A Deferential Review In District Court

In Ariana M v. Humana Health Plan of Texas, Incorporated, No. 16-20174 (5th Cir. 2017), Plaintiff (Ariana M) challenges the denial by Defendant (Humana Health Plan of Texas) of coverage for continued partial hospitalization.  After reviewing the administrative record, the district court granted Defendant’s motion for summary judgment.  The Fifth Circuit Court of Appeals (the “Court”) affirmed the district court’s decision.

In this case, Plaintiff is a dependent eligible for benefits under the Eyesys Vision Inc. group health plan (the “Plan”), which is insured and administrated by Defendant.  The Plan’s benefits include coverage for partial hospitalization for mental health treatment.  However, benefits are payable only for treatments that are “medically necessary”, as defined in the Plan.  The Plaintiff has a long history of mental illness, eating disorders, and engaging in self-harm.  On April 15, 2013, Plaintiff was admitted to Avalon Hills’s intensive partial hospitalization program.

Defendant initially found the treatment medically necessary and approved partial hospitalization through April 19, 2013, ultimately extending authorization through June 4, 2013, for a total of 49 days.  On June 5, 2013, Defendant denied continued partial hospitalization treatment, finding that it was no longer medically necessary.

Plaintiff filed her Complaint on November 7, 2014.  On February 12, 2015, Plaintiff filed a motion to determine the standard of review, arguing that Defendant’s denial of benefits should be reviewed de novo.  Defendant responded, conceding that de novo review applies to plan term interpretations; however, Defendant also noted that under law, even when de novo review applies, factual determinations are reviewed for abuse of discretion.  The district court agreed with Defendant on this point, and eventually granted Defendant’s motion for summary judgment.  Plaintiff appealed.

In affirming the district court’s decision, the Court noted that Plaintiff had argued on appeal that the district court erred by applying an abuse of discretion, instead of a de novo, standard to assess Defendant’s factual determinations. The Court disagreed.  It said that, in this Circuit, even when the plan does not grant discretion to an administrator, the rule is that a district court rejects an administrator’s factual determinations in the course of a benefits review only upon the showing of an abuse of discretion.