16-3463-cv
Elizabeth W. v. Empire HealthChoice Assurance, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
3rd day of October, two thousand seventeen.
Present:
DEBRA ANN LIVINGSTON,
GERARD E. LYNCH,
DENNY CHIN,
Circuit Judges,
_____________________________________
ELIZABETH W.,
Plaintiff-Appellant,
v. 16-3463-cv
EMPIRE HEALTHCHOICE ASSURANCE, INC.,
BANK LEUMI USA PLAN 15,
Defendants-Appellees.
_____________________________________
For Plaintiff-Appellant: PETER S. SESSIONS (Lisa S. Kantor, on the brief),
Kantor & Kantor LLP, Northridge, CA.
For Defendants-Appellees: AMANDA LYN GENOVESE (Robert S. Whitman,
Seyfarth Shaw LLP, New York, NY, on the brief),
Troutman Sanders LLP, New York, NY.
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Appeal from a judgment of the United States District Court for the Southern District of
New York (McMahon, C.J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED.
Plaintiff-Appellant Elizabeth W. (“W”) appeals from the final judgment of the United
States District Court for the Southern District of New York, entered on September 15, 2016,
granting summary judgment to Defendants-Appellees Empire HealthChoice Assurance, Inc. and
Bank Leumi USA Plan 15 (collectively, “Empire”), on W’s claim to medical benefits pursuant to
a health benefits plan governed by the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001 et seq. We assume the parties’ familiarity with the facts and
record of prior proceedings, which we reference only as necessary to explain our decision.
A. Background
W was undergoing medical treatment for anorexia nervosa as a beneficiary of an ERISA
plan that is fully insured through a group insurance policy (“Policy”) issued by Empire. After
unsuccessful outpatient treatment, W was admitted to Oliver Pyatt Center (“Oliver Pyatt”) for a
partial hospitalization program (“PHP”) on May 5, 2014. Empire initially approved coverage
under the Policy and thereafter continued to approve eight additional pre-certifications submitted
for continued PHP treatment. After 59 days, however, a doctor employed by Empire’s
third-party utilization manager, Anthem UM, concluded that PHP treatment for W was no longer
medically necessary. Empire thus ceased its coverage of W’s PHP treatment at Oliver Pyatt
beginning on July 3, 2014. W appealed the denial of coverage through Empire’s review
process, but three additional third-party doctors upheld the denial. W then brought suit in the
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district court against Empire for wrongful denial of benefits pursuant to ERISA, 29 U.S.C.
§ 1132.
B. Standard of Review
In this ERISA action, we review the district court’s grant of summary judgment based on
the administrative record de novo. Hobson v. Metro. Life Ins. Co., 574 F.3d 75, 82 (2d Cir.
2009). Summary judgment may be granted if “there is no genuine issue as to any material fact
and the moving party is entitled to judgment as a matter of law.” Id. If there are no disputed
material facts, “our task is to determine whether the district court correctly applied the law.”
Pagan v. NYNEX Pension Plan, 52 F.3d 438, 441 (2d Cir. 1995) (citation omitted).
We agree with the district court that Empire’s denial of benefits is properly reviewed
pursuant to the deferential arbitrary and capricious standard of review. The default standard of
review for a plan administrator’s underlying benefits determination is de novo. Firestone Tire
& Rubber Co. v. Bruch, 489 U.S. 101, 111–12 (1989). But if “written [ERISA] plan documents
confer upon a plan administrator the discretionary authority to determine eligibility, we will not
disturb the administrator’s ultimate conclusion unless it is ‘arbitrary and capricious.’” Hobson,
574 F.3d at 82 (quoting Pagan, 52 F.3d at 441). The district court correctly noted that “magic
words such as ‘discretion’ and ‘deference’” are not necessary to confer discretionary authority.
Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 251 (2d Cir. 1999) (citation
omitted). The plan documents here provide Empire with broad discretionary authority by
reserving to it “all . . . powers necessary or appropriate” including the “power to construe this
Contract, to determine all questions arising under this Contract, and to make and establish (and
thereafter change) rules and regulations and procedures with respect to this Contract.” J.A.
430–31; see also Krauss v. Oxford Health Plans, Inc., 517 F.3d 614, 622–23 (2d Cir. 2008)
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(citing power to “adopt reasonable policies, procedures, rules, and interpretations” as language
that clearly confers discretionary authority); Jordan v. Ret. Comm. of Rensselaer Polytechnic
Inst., 46 F.3d 1264, 1269–71 (2d Cir. 1995) (citing “power to construe” and “to determine all
questions” as language that clearly confers discretionary authority); Lidoshore v. Health Fund
917, 994 F. Supp. 229, 232–33 (S.D.N.Y. 1998) (applying arbitrary and capricious standard to
identical language). W contends that “the only relevant Policy provision in this case is the
definition of medical necessity.” Pl.-Appellant Br. 30. But this Policy provision confirms
Empire’s discretionary authority by defining “medical necessity” as care that is medically
necessary based on “our [Empire’s] criteria, and in our [Empire’s] judgment.” J.A. 393; see
Krauss, 517 F.3d at 622 (listing ability to make benefits determinations “in our judgment” as an
example of “clear language” conferring discretion).
C. Empire’s Decision
Based on the record here, we also agree with the district court’s determination that
summary judgment was appropriate under the arbitrary and capricious standard of review.
Because we agree that this standard applies, Empire’s decision to deny benefits must be upheld
unless Empire acted “without reason, unsupported by substantial evidence or erroneous[ly] as a
matter of law.” Kinstler, 181 F.3d at 249 (citation omitted). The record does not support such
a conclusion. Empire had full discretion under the Policy to determine if a treatment was
medically necessary “according to our [Empire’s] criteria, and in our [Empire’s] judgment.”
J.A. 393. Empire’s criteria for medical necessity included evaluating the “most appropriate . . .
level of service” for W, “consistent with the symptoms or diagnosis and treatment of [W’s]
condition.” Id. Four third-party doctors evaluated W’s medical records and provided
explanations that were consistent with application of Empire’s medical necessity criteria: Each
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doctor denied coverage because W’s “symptoms or diagnosis” improved and recommended that
W should be “treated with less intensive outpatient treatment” since PHP was no longer the
“most appropriate . . . level of service.” J.A. 70, 75, 106–07, 349, 393.
Empire’s decision to deny further coverage was also supported by substantial evidence.
W presented Empire’s reviewers with multiple pieces of evidence in favor of continuing PHP
treatment. Although some of the evidence in favor of continued treatment conflicts with
Empire’s ultimate conclusion, “if the administrator has cited ‘substantial evidence’ in support of
its conclusion, the mere fact of conflicting evidence does not render the administrator’s
conclusion arbitrary and capricious.” Roganti v. Metro. Life Ins. Co., 786 F.3d 201, 212 (2d
Cir. 2015) (citation omitted). Empire’s third-party doctors acknowledged the conflicting
evidence, but also noted significant progress made by W. (Indeed, after receiving 59 days of
PHP treatment, W admits that “she made consistent progress, . . . [s]he was committed to
improving, and had improved while at Oliver Pyatt, . . . was ‘more open’ and progressing in her
treatment goals[,] … she was attending programming, and her family was participating in her
treatment.” Pl.-Appellant Br. 35, 37.) Each of Empire’s third-party doctors also noted W’s
steady weight gain, general compliance with treatment, and adherence to her meal plan. J.A.
70, 75, 106, 348–49.
After weighing the conflicting evidence, there was enough “evidence that a reasonable
mind might accept as adequate to support” Empire’s decision to deny coverage for further PHP
treatment. Durakovic v. Bldg. Serv. 32 BJ Pension Fund, 609 F.3d 133, 141 (2d Cir. 2010)
(defining “substantial evidence” as “such evidence that a reasonable mind might accept as
adequate to support the conclusion reached by the administrator and requir[ing] more than a
scintilla but less than a preponderance” (citation omitted)). And though we might not have
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arrived at the same conclusion, “we are not free to substitute our own judgment for that of
[Empire’s] as if we were considering the issue of eligibility anew.” Hobson, 574 F.3d at 83–84.
Empire’s third-party doctors did not act arbitrarily in determining that W’s demonstrated
progress after 59 days of treatment indicated that PHP was no longer medically necessary as the
“most appropriate . . . level of service” and that W “[could] be treated with less intensive
outpatient treatment.” J.A. 70, 75, 106, 348–49, 393.
D. Conflict of Interest
Finally, the district court did not err in its assessment of Empire’s conflict of interest.
Empire has an inherent conflict of interest because it is “an administrator [that] both evaluates
and pays benefits claims.” Hobson, 574 F.3d at 82–83 (citation omitted). Such a conflict
should be considered in determining whether a plan administrator has abused its discretion in
denying benefits, but the significance of the conflict decreases if “the administrator has taken
active steps to reduce potential bias and to promote accuracy, for example, by walling off claims
administrators from those interested in firm finances.” McCauley v. First Unum Life Ins. Co.,
551 F.3d 126, 133 (2d Cir. 2008) (quoting Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 117
(2008)). The district court correctly concluded that Empire’s claims personnel, including the
third-party doctors at issue, were “walled off” because Empire subcontracts its review process to
an independent company, Anthem UM.
In addition to Empire’s inherent conflict of interest, W also proffered statistical evidence
regarding cases reviewed by three of the third-party doctors involved in W’s review process,
arguing that this evidence shows the bias of Empire’s third-party doctors and further establishes
Empire’s conflict of interest. The district court did not err, however, in concluding that the
proffered material is “hardly powerful evidence that Empire’s structural conflict worked against
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[W]” given that there was no indication in the material as to whether the proffered cases bore any
similarity to W’s. J.A. 881. Consistent with our precedent, we “decline[] to assign any weight
to a conflict of interest ‘in the absence of any evidence that the conflict actually affected the
administrator’s decision.’” Roganti, 786 F.3d at 218 (citation omitted). As discussed above,
Empire’s decision was based on substantial evidence, and there is no basis in the record before
us to determine that Empire’s conflict of interest tainted its decision.
E. Conclusion
We have considered W’s remaining arguments and find them to be without merit.
Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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