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Grace F. v. Aetna Life Insurance Co.

United States District Court, N.D. California

May 1, 2017

GRACE F., et al., Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant. AVIVA B., et al., Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant. BRIAN K., et al., Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant. DANIEL B., et al, Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant. ELAINE L., et al., Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant. EVAN P., et al., Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant. M.M., et al., Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant. RYAN B., et al., Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant. SAMANTHA W., et al., Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant. SUSANNA R., et al., Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant. TALYA B., et al., Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant. TRISTAN W., et al., Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant.

          ORDER RE: STANDARD OF REVIEW RE: DKT. NO. 186

          MAXINE M. CHESNEY United States District Judge.

         Before the Court is plaintiffs' “Memorandum Regarding Standard of Review, ” filed August 29, 2016. Defendant Aetna Life Insurance Company (“Aetna”) has filed opposition, to which plaintiffs have replied. The matter came on regularly for hearing on November 4, 2016. Brian S. King of Brian S. King, PC and David M. Lilienstein of DL Law Group appeared on behalf of plaintiffs. Heather L. Richardson of Gibson, Dunn & Crutcher LLP appeared on behalf of Aetna.

         At the November 4 hearing, the Court afforded Aetna the opportunity to file additional documentation and afforded both parties the opportunity to file supplemental briefing. On January 13, 2017, Aetna filed additional documentation as well as a supplemental opposition and, on February 15, 2017, filed an additional declaration. On February 17, 2017, plaintiffs filed their supplemental reply.

         The Court, having considered the papers filed by the parties, [1] as well as the arguments of counsel at the hearing, rules as follows.

         BACKGROUND

         Each of the above-titled related actions asserts a claim under the Employee Retirement Income Security Act of 1974 (“ERISA”), specifically, 29 U.S.C. § 1132(a)(1)(B), and is brought by (1) an individual who, as a minor, received mental health treatment at a residential treatment center and (2) the minor's parent or parents, who sought coverage for such treatment under an employer-sponsored health plan, which, in each instance, was administered by Aetna. Aetna denied each claim on the ground that the services rendered were not medically necessary. Plaintiffs, in challenging Aetna's decisions, allege that Aetna “fail[ed] to correctly apply its LOCAT [Level of Care Assessment Tool] criteria.” (See Third Amended Complaint, Case No. 12-2819, ¶¶ 4, 26.)[2]

         By order filed July 22, 2016, the Court approved the parties' stipulation, whereby it was agreed that, prior to any briefing on the merits of plaintiffs' claims, the parties would first file briefing setting forth their respective positions as to the applicable standard by which Aetna's decisions are to be reviewed. Plaintiffs contend the Court should, in each case, review de novo Aetna's decision to deny benefits, whereas Aetna argues abuse of discretion is the applicable standard of review.

         LEGAL STANDARD

         Under ERISA, a plan participant or beneficiary may bring a civil action “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan[.]” See 29 U.S.C. § 1132(a)(1)(B). The Supreme Court has held that a “denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). “[I]f the plan does confer discretionary authority as a matter of contractual agreement, then the standard of review shifts to abuse of discretion.” Abatie v. Alta Health Life Ins. Co., 458 F.3d 955, 963 (9th Cir.2006) (emphasis omitted). Although “[t]here are no ‘magic' words” that must appear in the plan document, “for a plan to alter the standard of review from the default of de novo to the more lenient abuse of discretion standard, the plan must unambiguously provide discretion to the administrator.” See id. The plan administrator “bears the burden of proving the [p]lan's grant of such discretionary authority.” See Prichard v. Metropolitan Life Ins. Co., 783 F.3d 1166, 1169 (2015).

         DISCUSSION

         In their opening memorandum, plaintiffs argued a de novo standard of review should apply here because, according to plaintiffs, Aetna had not “carried its burden of proving that the documents governing the relationship between the parties establish discretionary authority.” (See Pl.'s Mem. at 4:17-19.)

         The primary issue in the initial round of briefing was whether the plan documents submitted by Aetna in each of the twelve cases were “formal plan documents, ” see Prichard, 783 F.3d at 1169, i.e., documents constituting the “benefit plan” itself, see Firestone, 489 U.S. at 115. In particular, although, for each plaintiff's plan, Aetna had submitted the summary plan description and, for some plans, the administrative services agreement as well, a question remained as to whether Aetna had made a showing sufficient to support a finding that those documents were cognizable as formal plan documents.

         With the benefit of the additional documentation provided by Aetna, the parties now agree as to the standard of review applicable to seven of the twelve cases, but continue to disagree as to the standard of review applicable to the other five.

         A. Plaintiffs Grace F., Daniel B., Ryan B., Brian K., Elaine L., ...


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