September 6, 2018 Boston, Massachusetts. Where the United States District Court for the District of Massachusetts upheld the denial of ERISA health plan coverage for the time a plaintiff spent at a mental health residential treatment facility, the First Circuit Court of Appeals reversed.  Doe v. Harvard Pilgrim Health Care, Inc.,  —F.3d.—, 2018 WL 4237288 (1st Cir. 2018). In the First Circuit appeal, Jonathan M. Feigenbaum on brief for United Policyholders and Health Law Advocates, Inc., amici curiae. Jane Doe was represented by attorneys Mala M. Rafik and Sarah E. Burns., both of Boston.

Doe v. HPHC Decision

Jane Doe’s insurer, Harvard Pilgrim Health Care (‘HPHC’), had concluded that a portion of the time Jane Doe, a college student, was receiving care at a psychiatric residential treatment facility was not medically necessary. Jane was insured under the health care benefits plan established by the employer of Doe’s parent. HPHC contended certain care was not medically necessary. After several unsuccessful administrative appeals, Doe sued HPHC  under the Employee Retirement Income Security Act (‘ERISA’). 29 U.S.C. §§1001–1461. On de novo review, court agreed with HPHC’s determination that continued residential treatment was not medically necessary for Doe.  The First Circuit disagreed with the District Court’s conclusion. “We conclude that the administrative record upon which the district court based its finding should have been supplemented. We therefore reverse in part, vacate in part, and remand for further proceedings. …”

Three Important Take-Aways From the Opinion

  1. The ERISA healthcare fiduciary must consider all available information when making a benefit decision. The fiduciary (claims decider) may not turn a blind-eye to readily available information to deny coverage. This could include information not in the insurance company file, but the insurance company has reason to know the information exists. The Court reached a rather unremarkable determination that once the health insurer agreed that it would consider medical evidence not originally in the claim file pre-suit, but had been available, and the fiduciary agreed to consider it, and agreed to stay the litigation, the health insurer could not disavow the additional medical opinions, because the opinions conflicted with the insurance company’s denial strategy.
  2. The First Circuit reiterated that ERISA administrative reviews can be opened again, and the claim record may be supplemented.  This has real world effect in that lay persons often appeal ERISA health care claim denials and don’t understand the difficulty of ERISA litigation. Most people are unaware that if the information is not before the insurance company for review prior to suing, many courts will bar introduction of the information during the lawsuit. Under Doe, if the claim is denied again before suing but the ERISA plan or the court will allow reopening of the claim record, the court can assure that the claimant receives “Full and Fair Review” under the ERISA statute. 29 U.S.C. §1133.  As approximately 175 million Americans earn healthcare coverage through ERISA plans, the process is so important to the well-being of our citizens.
  3. For ERISA litigators, the First Circuit made a significant ruling. “[W]e now hold that when a district court examines the denial of ERISA benefits de novo, we review the court’s factual findings only for clear error.”  Doe v. Harvard Pilgrim Health Care, Inc.,  —F.3d.—, 2018 WL 4237288  at *7 (1st Cir. 2018). How this standard will affect the role District Courts will undertake to make findings of fact will develop in the lower courts. This may lead to detailed fact finding and trials that take place, for example, in the Seventh Circuit. Only time will tell.