Plaintiffs Jennifer Lukas and Joyce Watters brought this Employee Retirement Income Security Act of 1974 ("ERISA") action against defendants United Behavioral Health ("UBH") and IBM Medical and Dental Employee Welfare Benefit Plans ("Plan"*fn1), arising from defendants' adverse benefit determination for Lukas's residential treatment for an eating disorder, substance abuse, and major depression at Alta Mira Treatment Center ("Alta Mira") on the ground that it was not medically necessary.
On March 10, 2011, the court held a bench trial in accordance with the procedures outlined in Kearney v. Standard Insurance Co., 175 F.3d 1084 (9th Cir. 1999), and Friedrich v. Intel Corp., 181 F.3d 1105 (9th Cir. 1999). The court received in evidence all of plaintiffs' 47 exhibits and all of defendants' 475 exhibits.*fn2 Plaintiffs had previously objected to a declaration from Rosemarie Barnes,*fn3 the Plan Administrator, and the Plan's supplemental responses to plaintiffs' interrogatories, set two, (see Defs.' Exs. 474-75), because plaintiffs had not conducted discovery on the issues raised in those two exhibits. (See Pls.' Objection to & Mot. to Strike Defs.' Exhibit List; Green Decl. in Supp. Thereof (Docket No. 29).) The court offered to continue the trial in order to allow plaintiffs to conduct further discovery on the identity of IPRO's physician and other matters. Plaintiffs declined the court's invitation even though it was made clear to plaintiffs that declining the court's invitation would result in the court accepting these two exhibits into evidence. This memorandum constitutes the court's findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).
I. Factual and Procedural Background
A. 2007 and 2008 Summary Plan Descriptions
Lukas, eighteen years old at the time of her treatment, is a dependent of her mother, Watters, an employee of International Business Machines Corporation ("IBM") and a participant of the Plan.*fn4 One of the programs offered by the Plan is IBM Managed Mental Health Care Program ("MMHC"). (AR 00242.) Plaintiffs are enrolled in IBM PPO Plus, and Alta Mira is an out-of-network provider.
For reimbursement, "out-of-network care must meet medical necessity criteria and is subject to review by the mental health plan administrator." (AR 00247.) With respect to out-of-network inpatient care, a participant must pre-certify treatment and, if the care is deemed medically necessary, the care is covered at fifty percent of the usual and prevailing rate. Pre-certification "does not guarantee that  care meets the criteria for medical necessity." (Id.) Out-of-network inpatient care remains "subject to review by the mental health plan administrator upon claims submission." (Id. (emphasis added).)
Benefits for treatment is based on medical necessity. (AR 00248.) "Medical Necessity" is defined as follows:
To be medically necessary[,] treatment must:
* Have a strong likelihood of improving your diagnosed psychiatric or substance abuse condition.
* Be the least intensive level of appropriate care for your diagnosed condition in accordance with:
--- Generally accepted psychiatric and mental health practices. -- The professional and technical standards adopted by the administrator.
* Not be rendered mainly for the convenience of the member, the member's family or the provider.
* Not be custodial care. . . . (Id. (emphases added).)
Alternate levels of care, such as residential, "may be approved by the mental health plan administrator in lieu of inpatient treatment as clinically-appropriate and cost effective." (AR 00251.) If an alternate level of care is proposed, the administrator will "[d]etermine if an alternate level of care is medically necessary" and "[d]etermine if alternate care is a clinically appropriate alternative to hospitalization." (Id.)
The administrator for MMHC is UBH, a managed behavioral health care organization. (AR 00242; see also AR 00302.) UBH's "2007 Level of Care Guidelines: Mental Health" for residential treatment provide that "[a]ny one of the following criteria must be met":
1. Presence of a pattern of severe impairment in psychosocial functioning due to a behavioral health condition.
2. Presenting signs and symptoms of a behavioral health condition that clearly demonstrate a clinical need for 24-hour structure, supervision, and active treatment. (This criterion is not intended for use solely as a long-term solution to maintain the stabilization acquired during treatment in a residential facility/program.)
3. Deterioration of the member's behavioral health condition with the likelihood of requiring inpatient care if the member is not in a residential treatment program. (This criterion is intended for use solely as a long-term solution to maintain the stabilization acquired during treatment in a residential facility/program.) (AR 00950 (emphasis added).)
B. Treatment Prior to Alta Mira
The Plan paid for Lukas's intensive outpatient, residential, inpatient, and ambulatory detoxification treatment during the seven months prior to Lukas's admission at Alta Mira. (See, e.g., Pls.' Opening Trial Brief 5:7-8; 7:22-24 (Docket No. 30).) This ERISA action only concerns Lukas's entitlement to benefits for her residential treatment at Alta Mira from October 23, 2007, to January 6, 2008.*fn5 However, Lukas's prior treatment is relevant to this action, although the parties disagree as to the extent.
1. Summit Eating Disorders and Outreach Program (March 5, 2007, to June 7, 2007)
On March 5, 2007, Lukas was admitted to Summit Eating Disorders and Outreach Program ("Summit"), an in-network provider. (AR 01302.) Lukas received primarily intensive outpatient treatment there for the next three months. Intensive outpatient treatment is a higher level of care than outpatient treatment, but a lower level of care than inpatient or residential treatment. Lukas's benefits under the Plan were subject to periodic authorizations by UBH.
When she was admitted (see AR 01332-33; Lukas 359, 386), Lukas was diagnosed with bulimia nervosa, generalized anxiety disorder, "amenorrhea/fatigue/cold intolerance," and problems with her primary support group. Lukas was restricting her food intake to 200 to 500 calories per day and exercised daily for one to three hours. She purged five to six times per week. Lukas also took eighteen to twenty fiber pills and one laxative per day. Lukas stated that she had "blacked out" several times the previous summer from weakness. She weighed 125 pounds, down from 190 pounds in August 2006. She was 5'6".
2. Sober Living by the Sea (June 13, 2007 to September 9,2007)
For the next three months, Lukas was treated at a residential level of care at Sober Living by the Sea ("Sober Living"), an "accommodated"*fn6 out-of-network residential treatment center. Benefits under the Plan for the residential treatment were subject to periodic authorizations by UBH.
The precipitating event for treatment at Sober Living was Lukas had reportedly failed at intensive outpatient treatment. Lukas had been using cocaine nearly daily over the past eighteen months. She had spent $1,000 on drugs in the previous thirty days and had been drinking alcohol daily to the point of "blackout." However, Lukas reported that upon admission to Sober Living she did not have drug or alcohol cravings. At admission, she claimed that she had experienced thoughts of suicide in her lifetime and had attempted suicide in the past. She had been restricting her food intake to 300 to 400 calories per day. She had been binging, purging, and using laxatives.
She was diagnosed with bulimia nervosa, alcohol dependence, cocaine dependence, and problems with her primary support group. (See AR 01346; Lukas 452, 465, 468, 471.)
On August 27, 2007, UBH's medical director reviewed Lukas's case. (AR 01360.) The notes stated: "[Lukas] [is] currently in [an] accommodated [out-of-network] dual [diagnosis] [residential treatment center] for [an] eating disorder, bulimia and substance dependence. [Lukas] has been in [the] program over 70 days [with] minimal progress. [Lukas] has been restricting. [The weight] on admission was 132 and [is] now 123.4." It was recommended by UBH's medical director that the case be referred to a primary care physician unless there was significant progress. By September 7, 2007 (AR 01363), the attending physician at Sober Living was pleased with the progress to date. However, Lukas was continuing to report drug cravings. She said, "If I was not here I would be using."
Lukas was then discharged from Sober Living on September 9, 2007, in order to enter an ambulatory detoxification program. She had relapsed on alcohol. UBH informed Sober Living that Lukas would have to be re-admitted and that there was "no guarantee" that the benefits would continue if Lukas was not committed to or motivated for treatment. (AR 03164-65.)
3. First House Detox Services (September 9, 2007, to September 19, 2007)
On September 9, 2007, Lukas entered First House Detox Services ("First House Detox"), an out-of-network provider providing ambulatory detoxification treatment. While there, Lukas cut and burned herself. She also restricted her food intake. (AR 01367-68.)
4. Sober Living (September 19, 2007, to September 20, 2007)
On September 19, 2007, Lukas returned to Sober Living. However, on September 20, 2007, Lukas was discharged from Sober Living in order to enter College Hospital for inpatient care. A nurse at Sober Living had determined that Lukas was in danger of harming herself. Lukas had told the nurse that she wanted to kill herself and that she had a plan to overdose or drink until she died. The staff at Sober Living found a razor blade under her bed. (AR 01369-71.)
5. College Hospital (September 20, 2007, to September 23, 2007)
The September 21, 2007, initial facility-based review (AR 01370-75; see also Lukas 412) indicates that Lukas was admitted to College Hospital for inpatient care with diagnoses of (1) major depressive disorder (recurrent, severe without psychotic features), (2) polysubstance dependence, (3) a self-inflicted burn on the left wrist, and (4) problems related to her social environment. Lukas reported that she experienced suicidal ideation over the past three and a half months. UBH considered her "high risk." Lukas was subject to safety precautions that included fifteen-minute checks and monitoring one hour after meals and bathroom restrictions to prevent purging. UBH discussed with College Hospital the possibility of an extended stay in order to allow time for a complete assessment and recommendation or a transfer to another residential center other than Sober Living because of the inefficacy of Sober Living.
6. Sober Living (September 23, 2007, to October 5, 2007)
Lukas returned to Sober Living with a more positive attitude and motivation for treatment. (AR 01376). A September 25, 2007, case staffing note (AR 01375) indicates that UBH considered the possibility of transferring Lukas to a different residential treatment center. In early October, Lukas relapsed on cocaine and alcohol. (AR 01378-79.) Sober ...