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Charles W. v. Regence Bluecross Blueshield of Oregon

United States District Court, D. Utah

September 27, 2019

v. CHARLES W. and ZOE W., Plaintiffs,

          ORDER

          TENA CAMPBELL U.S. DISTRICT COURT JUDGE

         Plaintiff Charles W. (Chuck)[1] was insured by Defendant Regence BlueCross BlueShield of Oregon (Regence). Chuck’s daughter, Plaintiff Zoe W., was a covered dependent. On June 11, 2014, Zoe was admitted to an inpatient mental health program at New Haven Residential Treatment Center (New Haven) in Spanish Fork, Utah. Regence initially declined to pay for this treatment. Later, after Chuck appealed the denial, Regence agreed to pay for the treatment from June 11 to August 21 but refused to pay for any treatment beyond that period. Ultimately, Zoe remained at New Haven from June 2014 to June 2015.

         Following a second appeal, Regence upheld its denial of benefits beyond August 21. Plaintiffs filed this action on July 20, 2017. They argue Regence was obligated to cover Zoe’s treatment for the duration of her stay at New Haven. The parties have filed cross-motions for summary judgment to resolve this dispute. (See ECF Nos. 27-28.) For the reasons stated below, Plaintiffs’ motion is granted, and Regence’s motion is denied.

         I. ADMINISTRATIVE RECORD

         A. Zoe’s Treatment

         Chuck and Zoe’s mother divorced when Zoe was two years old. (Administrative Record (AR) 174.) Zoe lived with her mother for four years, until her mother died of ovarian cancer. She then began to live with her father. (AR 174.)

         In 2013, Zoe attempted suicide, and was hospitalized for two weeks at the Portland Providence Medical Center, followed by four weeks of inpatient residential treatment at the Children’s Farm Home. (AR 175.) After her discharge, she began using drugs. (AR 175.) She also engaged in self-harm and made additional suicide attempts, leading Chuck to admit Zoe to New Haven on June 11, 2014. (AR 168.)

         On June 18, Regence contacted New Haven to discuss the types of services they offered. (AR 13730.) Regence also “asked about [the] typical length of stay” and informed New Haven that the Milliman Care Guidelines (“MCG”), which Regence relied on to evaluate mental health treatment claims, “expects most [patients] can meet treatment goals within 30 days.” (AR 13730.) Then, on June 19, Regence informed Chuck that it would not be covering the costs of treatment because New Haven “does not provide the necessary intensity of service for coverage of mental health residential treatment.” (AR 182.)

         While at New Haven, Zoe was evaluated by psychiatrist William Bunn about once a month. For example, on June 26, 2014, Dr. Bunn recorded that “[Zoe] reports that she has been doing ‘OK’ and has been stable. She is getting to know the girls and staff and feels comfortable with the treatment. She denies any depressive symptoms-feels like her medications are working and not interested in any changes at this time.” (AR 1733.) Dr. Bunn’s July notes state, “[Zoe] seems to be doing well, mood has been stable, denies depression, [but] also seems to be avoiding per staff. She claims she just likes to be alone in her room where it is quiet. She is working hard in therapy. No other concerns.” (AR 1590.) On August 21, Dr. Bunn noted that “[Zoe] has struggled a bit-passive resistance to treatment, staff and therapist pushing her to work on her issues. She underreports her emotions.” But Zoe had agreed to begin reducing one of her medications, Wellbutrin. (AR 1337.) On September 18, Dr. Bunn wrote that Zoe “says her mood is OK, and she hasn’t had any self-harm issues or desires. Seems to be working hard in her therapy, still very guarded regarding her expression of emotions.” (AR 1169.) In October, Zoe was “doing OK.” She told Dr. Bunn that “she constantly feels like she is in a dreamstate or there is a thick paine [sic] of glass in front of her view.” They discussed whether to decrease her medications, but Zoe “still want[ed] to take the Zoloft [because she was] afraid of getting depressed.” (AR 972.) And at his November 6 evaluation, Dr. Bunn noted that Zoe “seems to be about baseline.” Zoe agreed to try decreasing her medication, “with the understanding if she gets depressed we will go back on the medication.” (AR 849.)

         At each of these sessions, Dr. Bunn also reported that Zoe had no suicidal or homicidal ideation.

         While Zoe was at New Haven, the facility staff completed approximately five or six observation reports regarding Zoe every day. These reports discuss her schoolwork, her physical health, how much or how little she was sleeping, whether she was engaged during group therapy sessions, the extent of her participation in fieldtrips and community activities, and whether she was making progress in family therapy with Chuck. The reports indicate Zoe’s mood, progress, and mental health all had ups and downs while at New Haven.[2] But one note in particular must be flagged. On November 21, 2014, the staff raised concerns that Zoe had again engaged in self-harm: “[Zoe] had signs of self-harm [that] another staff notice[d]. Staff searched her room and found a pencil sharpener without a blade that had pencil shaving inside. Staff could not find the blade anywhere. Also found interesting letters and notes that may have caused the action.” (AR 740.)

         Zoe was discharged from New Haven on June 15, 2015, “having successfully completed the program.” (AR 1977, 1980.)

         B. First Appeal to Regence

         On December 10, 2014, Chuck appealed Regence’s decision to deny coverage for Zoe’s stay at New Haven. (AR 168.) In support, he submitted the records from New Haven and Dr. Bunn regarding Zoe’s first six months in the program. He also provided letters from Dr. Bunn and from Dr. Amy Stoeber, who had been Zoe’s treating psychologist before she entered New Haven.

         Dr. Stoeber stated that Zoe had exhibited symptoms of Major Depressive Disorder, Social Phobia, Attachment Disorder, and possibly an Axis II Personality Disorder before entering New Haven. (AR 226.) Dr. Stoeber also stated that she believed Zoe would benefit more from residential treatment than from outpatient treatment:

. . . [Zoe] is a strong candidate for residential treatment because she benefits greatly from the structure without a chance of absconding. Also, when in residential treatment, she is unable to disconnect from treatment through the use of drugs or alcohol.
. . . I do not believe she will benefit from outpatient therapy until she has a significant amount of . . . time in residential treatment to gain stability on medication, therapy, and gain further insight.

         (AR 226.)

         Separately, Dr. Bunn wrote:

[Zoe’s] diagnosis at the time of admission was Depression, Unspecified, Cannabis Use Disorder, Borderline Personality Disorder Features, Parent-Child Relationship Problems, [and] Difficulties with Attachment. Currently she continues to display many depressive symptoms: low energy, excessive sleep, isolation from others in the community, feeling hopeless, and anhedonia.
She continued to display a pattern of severe impairment which demonstrated the clinical need for 24-hour structure, supervision, and active treatment to prevent a continued deterioration of her condition and subsequent necessity of inpatient care if not in residential treatment. It was felt by her treatment team prior to this admission that a lesser restrictive environment would not be able to provide the level of care she needed. Her admission was and is medically necessary.

         (AR 229.)

         Regence submitted Zoe’s records to Dr. Diane Stein for review. Dr. Stein evaluated the records based on the MCG, 18th Edition, Residential Acute Behavioral Health Level of Care, Child or Adolescent. (AR 309.) Based on the MCG, Dr. Stein determined that it was medically necessary for Zoe to be admitted to New Haven in June 2014. (AR 309.) But she also concluded that, by August 21, 2014, Zoe had met all of the requirements to be discharged from residential treatment. (AR 309-10.) Dr. Stein wrote, “As of 8-21-14, [Zoe] was sufficiently stable, with good response to medication taper to step down to [Partial Hospitalization Program (PHP) level of care], and she met [the discharge] criteria.” (AR 311.)

         Based on Dr. Stein’s conclusions, on January 13, 2015, Regence informed Chuck that it was partially reversing its decision to refuse coverage for Zoe, and would cover her treatment from June 11, 2014, to August 21, 2014. (AR 18553.) But it maintained that it would provide no coverage after that date. (AR 1853.)

         C. Second Appeal to Regence

         On July 9, 2015, Chuck appealed for the second time. (AR 6167.) In support, Chuck provided an additional letter from Dr. Bunn, jointly signed by Sarah Engler, the clinical director of New Haven. They wrote:

Zoe’s insurance covered [treatment] until August 2014. At that time she had not met [her] treatment goals and it was not medically indicated for her to be released. She was still exhibiting self-harm tendencies, was still very depressed and unmotivated. . . . Most importantly, at that time, she continued to express feelings of hopelessness and frustration, despite medication changes and trials.
Because of the above, it was felt that she continued to display a pattern of severe impairment which demonstrated the need for 24-hour structure, supervision, and active treatment to prevent a continued deterioration of her condition and subsequent necessity of inpatient care if not in residential treatment. The treatment team continued to feel that admission to a less-restrictive environment would not be able to provide the level of care she needed. Her admission continued to be medically necessary.

         (AR 1952.)

         Regence then asked an independent entity, AllMed Healthcare Management, to review the records. (AR 1863.) Their reviewer, Dr. Kenneth Marks, concluded:

[A]s of 8/22/14, the patient was not suicidal, there were no thoughts or attempts at suicide or self-harm, there was no functional impairment, and she was able to complete her activities of daily living. Therefore, she could continue to receive her care at a lower level of care. She has no medical problems, nor were there any concerns regarding medication side-effects, and she had no current substance abuse problem.
Per the submitted MCG, the criteria for discharge from residential acute behavioral health level of care include the following: no recent suicide attempt or act of serious harm to self; no thoughts of suicide, homicide, or thoughts or intent to harm oneself or others; no impairment of essential functions; no adverse medication effects are absent or manageable (sic); medical comorbidities are manageable; and substance withdrawal is absent or manageable. As mentioned above, the patient had met all of these criteria by the date of 8/22/14. Therefore, based on the submitted guidelines and clinical information provided, medical necessity ...

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