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Statute of Limitations and Standard of Review – D. Utah

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  • Statute of Limitations and Standard of Review – D. Utah

    Here’s a new case out of the District of Utah, Stacy S., individually and as guardian of M.K., a minor, v. The Boeing Company Employee Health Benefit Plan (Plan 626), et. al. This case presents several issues which the court rules upon. The court first turns to the plan’s 180 day statute of limitations. The plaintiff admits that she missed the 180 day deadline to file suit, but the parties agree that that deadline was no included in the final denial letter. The court concludes that is unenforceable.

    Additionally, the court agrees with the conclusion in William G. that giving meaning to the word “including” in Section (g)(1)(iv) must mean that a civil action is one of the “review procedures” for which a time limit must be provided. “[T]he word ‘including’ cannot be easily removed or changed since it modifies the word ‘description,’ which is followed by a prepositional phrase explaining what must be described—the plan’s review procedures and applicable time limits for those procedures. The resulting conclusion is that any benefit determination requires notification of a time limit for filing a civil action.

    • • •

    Additionally, as the First Circuit Court of Appeals noted, “[c]laimants are obviously more likely to read information stated in the final denial letter, as opposed to included (or possibly buried) somewhere in the plan documents, particularly since, as was the case here, plan documents could have been given to a claimant years before his claim for benefits is denied.” Reading Sections (g) and (j) to require notification of the time limit for a district court action in final benefit determinations supports Congress’ intent to facilitate claimant’s easy access to important information, and it avoids the “counterintuitive” approach that the court in Michael C.D. noted. When taking into account Congress’ policy considerations, this interpretation does not do violence to the text of the regulation.

    Given the plain language of Sections (g) and (j), the court concludes a final benefit determination must notify the claimant of the time limit for filing a civil action.
    The court finds that the remedy is to apply what would normally be the state law analogous statute of limitations.

    The better rule is that a plan administrator who fails to notify claimants of the time limit cannot rely on that time limit to bar a late-filed civil action. The court therefore will not apply the Plan’s 180-day time limit to Plaintiff’s civil action.

    Where no contractual time limit applies to an ERISA case, the court applies “the most closely analogous statute of limitations under state law.” In Utah, the most analogous statute of limitations for an ERISA plan is the six-year time limit for a breach of contract action. In this case, ValueOptions notified Plaintiff of its final denial of her claim on May 1, 2014. Plaintiff filed her civil action on June 5, 2015, well within the six-year statute of limitations. As a result, Plaintiff’s action was timely filed and the court must address Plaintiff’s arguments on the merits of the denial of benefits.
    The court then turns to whether or not the arbitrary and capricious standard applies and concludes that it does.

    There is no meaningful difference between the authority to “determine” benefits and the authority to “make benefit determinations.” Both terms inherently require some exercise of discretion. The authority to make benefit determinations requires an analysis of the factors for coverage under the Plan, in contrast to cases in which a claim is “deemed denied” by operation of law. Thus, the court concludes the Plan grants discretionary authority to ValueOptions, and an arbitrary and capricious standard applies.
    Finally, the court rules that the defendants’ decision to deny was not arbitrary and capricious.

    The Plan in this case provides six criteria for admission to RTC services, including whether the patient is “not sufficiently stable,” can “respond favorably” to counseling and training, has “a history of poor treatment adherence or outcome,” or has options for lower levels of care that are “appropriate to meet the individual’s needs.” The Plan lists eleven criteria for “continued stay” at an RTC, including whether the treatment is “appropriate to the individual’s changing condition,” care is rendered in “a clinically appropriate manner,” and the family is “actively involved in the treatment.” Plaintiff argues ValueOptions ignored M.K.’s behaviors while at Aspen that met all of these criteria, including having auditory and visual hallucinations, attempting to choke herself with the thread of an unraveled glove, scratching herself on the arm, stuffing paper in her ears in an attempt to “keep the voices out,” and attempting to choke herself with weather stripping from a window.

    The record shows ValueOptions took these reports into account but did not conclude they required RTC services. The initial reviewing physicians focused on M.K.’s behavior after her discharge from the hospital, which would have provided the basis for RTC admission. One physician noted that between her discharge and her admission to Aspen, M.K. had only one instance of self-injurious behavior. The physician’s report stated that, even given this event, which involved M.K. using a knife to scratch her arms, she could have remained at home. Additionally, the Allmed physician reviewed all of M.K.’s records from Aspen and determined the criteria for RTC services were not met because the instances of M.K.’s self-injurious behavior were “superficial at best and did not require 24-hour intense supervision to control.”

    The criteria for admission to RTC services and continued stay are highly subjective. ValueOptions’ determination that M.K. did not meet these criteria relied on the physicians’ well-detailed reports about M.K.’s history of treatment and other available options. The contrary report from M.K.’s outpatient therapist—who provided therapy to M.K. only until 2012—evinces a difference of opinion concerning the criteria, but does not show the medical opinions ValueOptions relied upon were unreasonable. Thus, the court concludes ValueOptions provided a full and fair review of Plaintiff’s claim.
    The opinion is attached below.
    Attached Files