Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Michael W. v. United Behavioral Health

United States District Court, D. Utah

September 27, 2019

MICHAEL W., KIM W., AND G.W.; Plaintiffs,
v.
UNITED BEHAVIORAL HEALTH, and the WELLS FARGO & COMPANY HEALTH PLAN; Defendants.

          MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS

          JILL N. PARRISH UNITED STATES DISTRICT COURT JUDGE.

         Defendants United Behavioral Health (“UBH”) and Wells Fargo & Company Health Plan (collectively “Defendants”) move to dismiss the complaint filed by Michael W., Kim W., and G.W. (collectively “Plaintiffs”) for failure to state a claim. Plaintiffs’ Complaint alleges insurance coverage violations under 29 U.S.C. §1001 et. seq., the Employee Retirement Income Security Act of 1974 (“ERISA”), as enforced through 29 U.S.C. § 1132(a)(1)(B), and the Mental Health Parity and Addiction Equity Act of 2008 (“Parity Act”), codified at 29 U.S.C. § 1185a(a)(3)(A)(ii) and enforced by Plaintiffs through 29 U.S.C. § 1132(a)(3). Having considered the parties’ briefs, the facts construed in favor of Plaintiffs as the nonmovants, and reviewing the applicable law, the court grants in part and denies in part the Defendants’ Motion to Dismiss.

         I. BACKGROUND

         Plaintiff Michael W., an employee at Wells Fargo & Company, had an insurance policy through a self-funded employee welfare benefits plan (the “Plan”). United Behavioral Health (“UBH”), a division of the United Healthcare Insurance Company, was the third-party claims administrator for the Plan. The Plan covered Michael W. as the Plan participant and Kim W. and G.W. as eligible beneficiaries.

         From an early age, G.W. has been treated for mental health conditions including Attention-deficit/hyperactivity disorder (“ADHD”), depression, anxiety, and emotional instability. He suffered from panic attacks, drug abuse, and would frequently self-harm. In 2015 and 2016, G.W. attempted suicide and received acute inpatient hospitalization. He also participated in outpatient care programs and saw a therapist. But none of these treatments proved effective at improving G.W.’s mental health and substance abuse conditions. In May 2016, G.W. was involved in a hit-and-run car accident after which he had a panic attack and fled the scene. Plaintiffs then admitted G.W. to a therapy program at BlueFire Wilderness Therapy on June 26, 2016. BlueFire Wilderness Therapy (“BlueFire”) is a “licensed and accredited outdoor behavioral health program in Idaho” that offers intermediate, sub-acute level of treatment to adolescents with mental health and substance abuse problems such as those experienced by G.W. Compl. at 4 ¶ 7.[1] After completing the program at BlueFire, G.W.’s psychologist, Dr. Jeremy Chiles, “strongly recommended that [G.W.] be placed in a residential treatment center.” Id. at ¶ 13. On September 16, 2019, Plaintiffs admitted G.W. to Catalyst residential treatment center in Utah, which also provided sub-acute inpatient treatment for G.W.’s condition. G.W. remained in treatment at Catalyst until February 20, 2017.

         A. UBH’s Insurance Coverage of G.W.’s Treatment

         Plaintiffs filed insurance claims with UBH for coverage of G.W.’s treatment at BlueFire and Catalyst. UBH denied payment for all of G.W.’s treatment at BlueFire and for approximately five months of his residential care at Catalyst. Plaintiffs pursued internal and external appeals, which UBH denied. Plaintiffs allege that UBH’s denial of coverage for G.W.’s treatment at BlueFire and Catalyst caused Plaintiffs to incur over $88, 000 in medical expenses.

         1. Denial of Coverage for BlueFire Treatment

         On December 23, 2016, UBH sent Plaintiffs a letter denying payment for any of G.W.’s treatment at BlueFire. The reviewer wrote that BlueFire “used wilderness therapy as a primary treatment approach” and UBH found that wilderness therapy was not “considered a proven treatment” and “cannot be authorized for reimbursement.” Id. at 4 ¶ 6. Plaintiffs appealed on June 16, 2017, asserting that “UBH was in violation of ERISA, MHPAEA [the Parity Act], and the Patient Protection and Affordable Care Act when it denied G.’s treatment.” Id. at ¶ 9. Plaintiffs argued that the term “wilderness therapy” is an outdated classification implying a non-medical program and that BlueFire is a licensed and accredited facility that provides evidenced-based, intermediate-level treatment for mental health/substance abuse in accordance with industry standards. The appeal included peer-reviewed articles on the efficacy of outdoor behavioral health programs and a letter from G.W.’s clinical psychologist, Dr. Keith Avery. Dr. Avery wrote that “[i]t is my strong opinion that there is absolutely no outpatient program in this area that could address the complex issues that [G.W.] was exhibiting” and opined that the BlueFire program “was the best option for [G.W.’s] medical and psychological condition.” Id. at ¶ 11. Approximately eight months later, UBH sent Plaintiffs a letter upholding its denial of benefits for G.W.’s treatment at BlueFire. The letter states that Plaintiffs’ appeal was denied administratively because it was filed after the 180-day review period.[2]

         2. Partial Denial of Coverage for Catalyst Treatment

         G.W. began residential treatment at Catalyst on September 16, 2016, and remained there until February 20, 2017. UBH covered G.W.’s initial care for twenty-five days, but on October 19, 2016, UBH sent Plaintiffs a letter denying continued payment for Catalyst services effective October 11, 2016. The letter stated that UBH had found G.W. was “medically stable” and his “behavior is better, ” and based on UBH’s Level of Care Guidelines for coverage of mental health residential treatment, it determined G.W. could “continue to improve with more treatment in a less intense Level of Care.” Id. at ¶ 15. Plaintiffs appealed on April 17, 2017, arguing that UBH’s denial made no specific references to G.W.’s medical records, violated ERISA for not divulging the qualifications of the reviewer, was “superficial and ignored the complexity of [G.W.’s] condition, ” and contradicted the opinions of G.W.’s medical providers. Id. at ¶¶ 16–18. Plaintiffs’ appeal included a letter from Kim Jenkins, MSW, CADC, stating that “[o]ngoing treatment in a longer-term residential treatment center was strongly recommended” for G.W.’s diagnoses. Id. at ¶ 19. Plaintiffs also stated that G.W. had been diagnosed with traits of Borderline Personality Disorder and that his condition was likely to worsen if he did not receive continued inpatient care at a facility such as Catalyst. Id. at ¶¶ 20–21. On May 16, 2017, UBH upheld its denial of coverage for G.W.’s continued treatment at Catalyst and wrote that because G.W. “was not suicidal, homicidal or psychotic[, ]” UBH concluded “he could be safely and fully treated as an outpatient.” Id. at ¶ 22.

         Four months later, Plaintiffs requested that UBH’s denial of continued coverage at Catalyst be evaluated by an external review agency. Plaintiffs argued that UBH continued to violate ERISA because the UBH reviewer failed to adequately respond to points raised in Plaintiffs’ appeal, did not have the requisite experience working with patients such as G.W., and inappropriately used acute level criteria, such as risk of suicide, to evaluate coverage for sub-acute inpatient care at Catalyst. Id. at ¶¶ 23-25. On November 2, 2017, the external review agency upheld UBH’s denial of continued coverage. The external reviewer concluded that G.W. “could have been treated safely and effectively at a lower level of care” and treatment at Catalyst beyond twenty-five days “was not supported as medically necessary.” Id. at ¶ 26.

         B. Wit and Alexander Class Actions

         Defendants’ Motion to Dismiss urges the court to compare Plaintiffs’ Complaint with the facts and claims in a consolidated ERISA class action brought in the Northern District of California. See Wit v. United Behavioral Health, 317 F.R.D. 106, 141 (N.D. Cal. 2016). The Wit court certified three classes relevant to Plaintiffs’ case on September 19, 2016, three days after G.W. began his program at Catalyst. The Wit classes are:

Wit Guideline Class: Any member of a health benefit plan governed by ERISA whose request for coverage of residential treatment services for a mental illness or substance use disorder was denied by UBH, in whole or in part, between May 22, 2011 and June 1, 2017, based upon UBH’s Level of Care Guidelines or UBH’s Coverage Determination Guidelines. The Wit Guideline Class excludes members of the Wit State Mandate Class, as defined below.
The Wit State Mandate Class: Any member of a fully-insured health benefit plan governed by both ERISA and the state law of Connecticut, Illinois, Rhode Island, or Texas, whose request for coverage of residential treatment services for a substance use disorder was denied by UBH, in whole or in part, within the Class period, based upon UBH’s Level of Care Guidelines or UBH's Coverage Determination Guidelines, and not upon the level-of-care criteria mandated by the applicable state law. With respect to plans governed by Texas law, the Wit State Mandate Class includes only denials of requests for coverage of substance use disorder services that were sought or received in Texas. The Class period for the Wit State Mandate Class includes denials governed by Texas law that occurred between May 22, 2011 and June 1, 2017, denials governed by Illinois law that occurred between August 18, 2011 and June 1, 2017, denials governed by Connecticut law that occurred between October 1, 2013 and June 1, 2017, and denials governed by Rhode Island law that occurred between July 10, 2015 and June 1, 2017.
The Alexander Guideline Class: Any member of a health benefit plan governed by ERISA whose request for coverage of outpatient or intensive outpatient services for a mental illness or substance use disorder was denied by UBH, in whole or in part, between December 4, 2011 and June 1, 2017, based upon UBH's Level of Care Guidelines or UBH’s Coverage Determination Guidelines. The Alexander Guideline Class excludes any member of a fully insured plan governed by both ERISA and the state law of Connecticut, Illinois, Rhode Island or Texas, whose request for coverage of intensive outpatient treatment or outpatient treatment was related to a substance use disorder, except that the Alexander Guideline Class includes members of plans governed by the state law of Texas who were denied coverage of substance use disorder services sought or provided outside of Texas.

Wit v. United Behavioral Health, No. 14-CV-02346-JCS, 2019 WL 1033730, at *4 (N.D. Cal. Mar. 5, 2019). The presiding magistrate judge completed a ten-day bench trial on November 1, 2017, and on March 5, 2019, the court ruled that UBH was liable to the class under ERISA because of its breach of fiduciary duty and its arbitrary and capricious denial of insurance benefits. See id. at *51–55.

         Plaintiffs Michael W. and Kim W. declare they “did not receive any notice of a potential class action claim arising against UBH relating to G.W.’s treatment at BlueFire and Catalyst in the Summer of 2017.” ECF Nos. 30-1 ¶ 6, 30-2 ¶ 6. Moreover, Plaintiffs state that they have no desire to participate in the class action and have remained committed to pursuing their claims on an individual basis. ECF Nos. 30-1 ¶¶ 9-10, 30-2 ¶¶ 9-10.

         Michael W., Kim W., and G.W. filed their two-count Complaint on October 19, 2018, seeking recovery of benefits and other equitable relief pursuant to 29 U.S.C. §§ 1132(a)(1)(b), 1132(a)(3). Under Count One, Plaintiffs allege that Defendants breached its fiduciary duties under 29 U.S.C. § 1104 and § 1133 by failing to act solely in the interest of the Plan participants and beneficiaries when it denied G.W.’s benefits and by failing to provide a full and fair review as required under the Plan and by ERISA. Plaintiffs seek a judgment in the amount of $80, 000.00, plus prejudgment interest pursuant to Utah Code Ann. § 15-1-1, and attorney fees and costs incurred under 29 U.S.C. § 1132(g). Under Count Two, Plaintiffs allege that Defendants violated the Parity Act, as enforced through 29 U.S.C. § 1132(a)(3), because Defendants used more stringent processes, strategies, standards, or other factors to limit coverage for mental health or substance use disorder treatment as compared to medical/surgical treatment in the same classification. Plaintiffs seek “appropriate equitable relief” under the statute, including surcharge, estoppel, restitution, disgorgement, injunction, accounting, constructive trust, equitable lien, declaratory relief, unjust enrichment, and specific performance.

         II. LEGAL STANDARD

         Defendants move to dismiss Plaintiffs’ complaint under Fed.R.Civ.P. 12(b)(6). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “The burden is on the plaintiff to frame a complaint with enough factual matter (taken as true) to suggest that he or she is entitled to relief.” Robbins v. Oklahoma ex rel. Dept. of Human Servs., 519 F.3d 1242, 1247 (10th Cir. 2008) (internal quotation marks omitted). The allegations in the complaint must be “more than ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action[.]’” Id. (quoting Twombley, 550 U.S. at 555). In addition, “once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint.” Twombly, 550 U.S. at 563; see also Khalik v. United Air Lines, 671 F.3d 1188, 1190 (10th Cir. 2012) (“A plaintiff must nudge his claims across the line from conceivable to plausible in order to survive a motion to dismiss.” (alteration and internal quotation marks omitted)).

         III. ANALYSIS

         Defendants contend that Plaintiffs’ action should be dismissed for failure to state a claim. First, Defendants assert that Plaintiffs Michael W. and Kim W. lack statutory and constitutional standing to sue. Second, Defendants urge the court to dismiss or stay the Plaintiffs’ case because another pending class action lawsuit involving UBH has potential preclusive effects on this lawsuit and the court should abstain under the “first-to-file” doctrine. Third, Defendants argue that Plaintiffs have failed to sufficiently plead the elements of their Parity Act claims.

         Plaintiffs respond that Michael W. and Kim W. have statutory standing because they are Plan participants or beneficiaries and have constitutional standing because they incurred expenses for G.W.’s treatment. Next, Plaintiffs argue that the pending class action should not control their case because the two lawsuits are sufficiently distinguishable, they never received notice of the class action, and the court should afford Plaintiffs a late opt-out of the class because of their “excusable neglect.” Finally, Plaintiffs argue that they adequately pleaded violations of the Parity Act because they have alleged that UBH uses more stringent coverage criteria for mental health care as compared to medical/surgical care.

         The court address each issue below and concludes, based on the applicable law and facts construed in favor of Plaintiffs as the nonmovants, that: 1) Kim W. lacks statutory standing but Michael W. has both constitutional and statutory standing; 2) the Wit class action is pending and has no formal preclusive effects, and the circumstances do not merit abstention under the first-to-file doctrine; and 3) Plaintiffs have sufficiently pleaded their Parity Act claims concerning denial of benefits for G.W.’s care at BlueFire and Catalyst, and are entitled to discovery to prove the Defendants’ alleged coverage disparity and Parity Act violation.

         A. Standing to Sue Under ERISA

         Defendants argue that, as a threshold matter, Plaintiffs Michael W. and Kim W. do not have standing to sue to enforce benefits allegedly due to G.W. under the Plan. Defendants contend that Plaintiffs Michael W. and Kim W. lack both statutory standing and constitutional standing. The court agrees that Kim W. does not have statutory standing to sue because Plaintiffs have failed to plead her status under the insurance plan. However, the court is unpersuaded by Defendants’ argument that Michael W. lacks standing because it finds that Michael W. has statutory standing as the Plan participant and has suffered the requisite cognizable injury-in-fact required for constitutional standing.

         First, the court addresses Plaintiffs’ statutory standing to sue under ERISA. Only a “participant or beneficiary” may bring a civil action “to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1). The burden of proof is on the plaintiff to establish that he or she is a participant or beneficiary. See Mitchell v. Mobil Oil Corp., 896 F.2d 463, 474 (10th Cir. 1990). ERISA defines “participant” as

any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.

29 U.S.C. § 1002(7). ERISA defines a beneficiary to mean “a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.” Id. at § 1002(8).

         On a Rule 12(b)(6) motion to dismiss for lack of standing, Plaintiffs must state facts sufficient to prove their right to sue on the face of the complaint and the attachments thereto. See Ward v. Utah, 321 F.3d 1263, 1266 (10th Cir. 2003) (“For purposes of ruling on a motion to dismiss for want of standing, both the trial and reviewing courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party.” (emphasis added)); see also Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) (“[C]ourts must consider the complaint in its entirety, as well as . . . documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.”). Plaintiffs assert in their complaint that “Michael was a participant in the Plan and G. was a beneficiary in the Plan at all relevant times.” Compl. at ¶ 3. But the complaint does not speak to Kim W.’s legal status under the Plan. Plaintiffs’ opposition to Defendants’ Motion states that “Michael and Kim were plan participants or beneficiaries, ” but Plaintiffs fail to cite to any allegation relating to Kim W.’s status under the Plan. See ECF No. 30 at 23.[3] Because Plaintiffs have not pleaded any facts supporting Kim W.’s status under the Plan, they have not demonstrated her statutory standing to sue pursuant to ERISA. See David S. v. United Healthcare Ins. Co., No. 2:18-CV-803, 2019 WL 4393341, at *5 (D. Utah Sept. 13, 2019) (dismissing a plaintiff because “[p]laintiffs do not allege [that she] is a participant, beneficiary, or fiduciary.”); Anne M. v. United Behavioral Health, No. 2:18-CV-808 TS, 2019 WL 1989644, at *3–4 (D. Utah May 6, 2019) (same). Therefore, the court grants Defendants’ motion to dismiss Kim W.’s claims.[4]

         The next question is whether Michael W., as the Plan participant, has statutory standing. Defendants do not dispute that Michael W. was the Plan participant and G.W. is the Plan beneficiary who was denied coverage, and they concede that G.W. has standing. As a Plan participant, Michael W. “has standing to bring a civil action to enforce his rights under the terms of an ERISA plan or to enforce ERISA’s provisions.” Alexander v. Anheuser-Busch Companies, Inc., 990 F.2d 536, 538 (10th Cir. 1993) (citing Raymond v. Mobil Oil Corp., 983 F.2d 1528, 1532 (10th Cir. 1993)). But he must have “a colorable claim for vested benefits.” Felix v. Lucent Techs., Inc., 387 F.3d 1146, 1161–62 (10th Cir. 2004) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117–18 (1989)). “[T]he requirements for a colorable claim are not stringent; [Plaintiffs] need have only a nonfrivolous claim for the benefit in question.” Horn v. Cendant Operations, Inc., 69 Fed.App’x 421, 426 (10th Cir. 2003) (citing Kamler v. H/N Telecomm. Servs., Inc., 305 F.3d 672, 678 (7th Cir. 2002)). Plaintiffs have pleaded sufficient facts to establish that Michael W. has a colorable claim for vested benefits, namely, the medical expenses he personally incurred for G.W.’s care after UBH’s alleged failure to act “solely in the interest of the [Plan] participants, ” to “provide a full and fair review of claim denials, ” and to comply with the requirements of the Parity Act when it denied G.W. benefits. Compl. at ¶¶ 29–31, 40–41. Therefore, Michael W. has statutory standing to enforce his rights as the participant of the Plan.

         While status as a Plan participant confers statutory standing, it does not necessarily provide constitutional standing. For Michael W. to successfully allege standing to bring a suit in federal court under Article III, Plaintiffs’ complaint must plausibly allege three elements. First, the plaintiff must have suffered an “injury in fact, ” which is defined as “an invasion of a legally protected interest which is (a) concrete and particularized; and (b) actual or imminent, not [merely] conjectural or hypothetical.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (citations omitted). Second, there must be a “causal connection between the injury and the conduct complained of, ” which means the injury is “fairly traceable” to the Defendant, and “not the result of the independent action of some third party.” Id. And third, that it is “likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Id. In essence, standing requires that the “plaintiff has alleged such a personal stake in the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.