Ninth Circuit Upholds ERISA Claim for Recovery of Residential Treatment Benefits

June 18, 2024

On June 6, 2024, in N.C., individually and on behalf of minor A.C., v. Premera Blue Cross (Premera), the Ninth Circuit Court of Appeals (Ninth Circuit) affirmed the district court’s grant of summary judgment in favor of plaintiff-appellee N.C. regarding their ERISA claim for recovery of residential treatment benefits.

Premera (the defendant) challenged the district court’s conclusion on de novo review that A.C.’s 14-month residential treatment at Change Academy was medically necessary under the plan. Premera also challenged the district court’s consideration of two sets of guidelines from the American Academy of Child and Adolescent Psychiatry (AACAP): Principles of Care for Treatment of Children and Adolescents with Mental Illnesses in Residential Treatment Centers (Principles of Care) and Practice Parameter for the Assessment and Treatment of Children and Adolescents with Reactive Attachment Disorder and Disinhibited Social Engagement Disorder (RAD Practice Parameter).

The Ninth Circuit affirmed the district court’s decision on the grounds that it was fully within that court’s discretion to consult the AACAP guidelines because they were part of the administrative record. Moreover, the district court was permitted to supplement that record as necessary for “evidence regarding interpretation of the terms of the plan rather than specific historical facts.” Finally, the court determined that because “generally accepted standards of medical practice” is ambiguous, the district court did not abuse its discretion in considering the AACAP Principles of Care.

Regarding Premera’s challenge to the district court’s conclusion on the medical necessity of the treatment, the Ninth Circuit noted the district court’s copious citations to the record, which indicated that “A.C.’s treating providers agreed that less intensive treatment settings were ineffective and that residential treatment was necessary. And Dr. Nair, who treated A.C. at Change Academy, repeatedly recommended that he continue residential treatment.” The Ninth Circuit further noted that their prior decisions have held that protecting the reasonable expectations of insureds serves the federal policies underlying ERISA. Accordingly, the Ninth Circuit affirmed the district court’s conclusion that A.C.’s treatment at Change Academy was medically necessary.

This case provides a useful illustration of how courts approach plan participant challenges to adverse claims determinations under ERISA. It also provides a reminder to ERISA plan sponsors to review and monitor the claims and appeals processes of their plans regarding conformity to ERISA’s requirements. Particular consideration should also be paid both to the contents of claims determination communications to participants as well as any plan terms describing the process and criteria for “medical necessity” determinations.

N.C., individually & on behalf of minor A.C. v. Premera Blue Cross