FILED
NOT FOR PUBLICATION
JAN 9 2018
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
KRYSTEN C., No. 16-16958
Plaintiff-Appellant, D.C. No. 3:15-cv-02421-RS
v.
MEMORANDUM*
BLUE SHIELD OF CALIFORNIA,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Richard Seeborg, District Judge, Presiding
Argued and Submitted December 8, 2017
San Francisco, California
Before: THOMAS, Chief Judge, and LUCERO** and OWENS, Circuit Judges.
Plaintiff Krysten C. appeals the district court’s order granting summary
judgment in favor of Defendant Blue Shield in her ERISA action challenging the
denial of her claim for medical benefits. We have jurisdiction pursuant to 28
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Carlos F. Lucero, United States Circuit Judge for the
U.S. Court of Appeals for the Tenth Circuit, sitting by designation.
U.S.C. § 1291. Because the parties are familiar with the factual and procedural
history of the case, we need not recount it here. We affirm.
I
Krysten has standing to bring her claim under ERISA. Blue Shield argues
that Krysten has not paid and is not obligated to pay Monte Nido for the medical
services she received. Blue Shield references an agreement between Monte Nido
and Blue Shield’s Mental Health Services Administrator which bars Monte Nido
from charging the unpaid portion of the bill to Krysten. However, Krysten has
contractually agreed with Monte Nido that “treatment is ultimately the
responsibility of the client, including treatment provided after an insurance denial.”
The agreement between Monte Nido and Blue Shield’s Mental Health Services
Administrator is a separate dispute, unrelated to Krysten’s individual contractual
rights and obligations.
II
We review de novo the district court’s grant of summary judgment in favor
of Blue Shield. Dytrt v. Mountain States Tel. & Tel. Co., 921 F.2d 889, 893 (9th
Cir. 1990). We review de novo the district court’s legal determinations and its
interpretation of the terms of an ERISA plan. Metropolitan Life Ins. Co. v. Parker,
436 F.3d 1109, 1113 (9th Cir. 2006); Cisneros v. Unum Life Ins. Co. of America,
2
134 F.3d 939, 942 (9th Cir. 1998). We review the district court’s findings of fact
for clear error. Parker, 436 F.3d at 1113.
When a plan grants discretionary authority to determine benefit eligibility to
the administrator, as Krysten’s plan does, the administrator’s decision is reviewed
for abuse of discretion. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115
(1989). The test for abuse of discretion is whether the Court is “left with a definite
and firm conviction that a mistake has been committed.” Salomaa v. Honda Long
Term Disability Plan, 642 F.3d 666, 676 (9th Cir. 2011). The Court must
“consider whether application of a correct legal standard was ‘(1) illogical, (2)
implausible, or (3) without support in inferences that may be drawn from the facts
in the record.’” Id. (quoting United States v. Hinkson, 585 F.3d 1247, 1262 (9th
Cir. 2009)).
The ERISA “abuse of discretion” standard is unique. The Court is required
to weigh certain factors, including an administrator’s conflict of interest and any
procedural irregularities. Abatie v. Alta Health & Life Ins. Co., 458 F. 3d 955, 965
(9th Cir. 2006) (en banc) (“[I]f a benefit plan gives discretion to an administrator
or fiduciary who is operating under a conflict of interest, that conflict must be
weighed as a ‘facto[r] in determining whether there is an abuse of discretion.’”)
(emphasis added) (citing Firestone, 489 U.S. at 115); id. at 972 (“A procedural
3
irregularity, like a conflict of interest, is a matter to be weighed in deciding
whether an administrator's decision was an abuse of discretion.”).
The district court did not err in its abuse of discretion analysis. Blue
Shield’s decision on Krysten’s appeal in less than two hours without consulting
Monte Nido constituted a procedural irregularity. However, the error was made
harmless when Blue Shield allowed Krysten and Monte Nido to submit records and
re-considered her appeal. Krysten was therefore afforded “a reasonable
opportunity for a full and fair review of a claim and adverse benefit
determination,” including “the opportunity to submit written comments,
documents, records, and other information relating to the claim for benefits.” 29
C.F.R. § 2560.503-1(h)(2)(ii). The district court gave appropriately brief
consideration to the procedural irregularity, which was ultimately harmless.
Krysten contends that Blue Shield’s procedure was irregular for other
reasons, but these arguments are without merit. It was appropriate for Dr. Carlton
to consult on both the denial of Krysten’s appeal and the review of Krysten’s
appeal because ERISA does not mandate new decision-makers for a review of an
appeal. 29 C.F.R. §§ 2560.503-1(h)(3)(ii), (v). It was also acceptable for Dr.
Battin to make the final decisions on Krysten’s appeals because he consulted with
board-certified psychiatrists. 29 C.F.R. § 2560.503-1(h)(3)(iii). Lastly, it was not
4
irregular for Blue Shield to decline a live examination of Krysten, as there is no
rule or regulation requiring such an examination. Because none of these facts
constitute a procedural irregularity under ERISA, the district court did not err when
it applied an abuse of discretion standard.
III
Given that the district court did not err in applying the abuse of discretion
standard, it did not err in concluding that the administrator did not abuse its
discretion when it determined that partial hospitalization, and not ongoing
residential treatment, was the most appropriate level of care under the Plan.
Under the Plan, treatments that are medically necessary include only those
that are (1) “furnished under generally accepted professional standards to treat
illness, injury or medical condition”; (2) “consistent with Blue Shield medical
policy”; (3) “consistent with the symptoms or diagnosis”; (4) “not furnished
primarily for the convenience of the patient, the attending Physician or other
provider”; and (5) “furnished at the most appropriate level which can be provided
safely and effectively to the patient.” The Plan states: “If there are two or more
Medically Necessary services that may be provided for the illness, injury or
medical condition, Blue Shield will provide Benefits based on the most cost-
effective service.”
5
Given that partial hospitalization satisfies the definition of medical
necessity, the district court therefore did not err when it granted summary
judgment in favor of Blue Shield.
AFFIRMED.
6
Krysten C. v. Blue Shield of California, No. 16-16958 FILED
OWENS, Circuit Judge, dissenting: JAN 9 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I respectfully dissent. On August 29, 2014, Blue Shield informed Krysten
C. that she had “improved” and no longer met its internal criteria for residential
treatment. Blue Shield did not, however, specify how Krysten had “improved”
since August 22, 2014, when it last approved coverage based on its findings that
Krysten was still battling significant medical issues that interfered with her ability
to perform simple tasks, such as grocery shopping or preparing a meal.
Blue Shield’s internal notes from August 29 may shed some light: there,
Blue Shield’s physician advisor remarked that “the reason for the request of
continued [residential treatment] is that ‘it’s a long weekend’ and because the
member’s ex-boyfriend is coming to visit.” When Blue Shield summarily denied
Krysten’s expedited appeal, it again noted internally that the only reason given for
continued residential treatment was the long weekend and the ex-boyfriend’s visit,
with “no clinical justification offered.” In a case of such “medical and psychiatric
complexity” where the plan administrator “operates under a conflict of interest,” I
fear that Blue Shield’s decision to read Krysten’s request in the most frivolous
light “raise[s] questions about the thoroughness and accuracy of the benefits
determination,” Pac. Shores Hosp. v. United Behavioral Health, 764 F.3d 1030,
1040 (9th Cir. 2014). That is especially true here, as just one week prior, Blue
Shield concluded that residential treatment was appropriate. I do not believe that
Blue Shield’s later consideration of Krysten’s clinical record rendered this
procedural irregularity harmless, as Blue Shield continued to rely on its initial,
procedurally irregular determination that Krysten had “improved.” Accordingly, I
would reverse and remand for further proceedings.