Tenth Circuit Rules Health Claims Administrators Must Engage with Treating Physician Opinions

On May 15, 2023, in D.K., et al. v. United Behavioral Health, et al., the United States Court of Appeals for the Tenth Circuit (the Tenth Circuit) found that ERISA health claims administrators must engage with treating physician opinions when reviewing claims on appeal and explain their reasoning in denial letters. While deference to a claimant’s treating physician is not required, the Tenth Circuit confirmed such evidence could not be completely ignored. The court’s opinion is grounded in ERISA’s requirement for a full and fair review of claims.

The case arose from United Behavioral Health’s (UBH) denials of mental health long-term residential treatment claims for an adolescent girl, A.K. Following a series of unsuccessful treatments (including within less than two years: eleven psychiatric emergency room visits; five inpatient hospitalizations totaling 58 days; four stints of residential treatment totaling 235 days; six enrollments into partial hospitalization programs totaling 55 days; weekly individual therapy; family therapy; and medication management) and repeated self-harm incidents, A.K.’s treatment team recommended at least one year of residential treatment at Discovery Girls Ranch (Discovery). The residential treatment was advised to help A.K. develop the skills to stay safe and succeed outside a 24-hour care setting since short-term and day treatment had proven inadequate.

UBH administered claims under a self-insured health plan sponsored by A.K.’s father’s employer. UBH approved A.K.’s admission to Discovery but denied continued treatment after three months. UBH first denied coverage based on a non-existent plan exclusion. After recognizing this error, UBH denied A.K.’s continued treatment at Discovery for lack of medical necessity. A.K.’s family appealed the denials and provided several letters from A.K.’s treatment providers supporting her need for continued treatment at Discovery and stating her high risk of self-harm if discharged early. UBH upheld its denial on appeal without discussing A.K.’s treating provider’s opinions or medical records.

ERISA sets minimum standards for employer-sponsored health plans, which are often administered by a separate entity, such as UBH. Chief among these standards are procedures to ensure a full and fair review of benefit denials, including providing written notice of the specific reasons for a denial. Here, the court found UBH’s claims process with respect to A.K.’s treatment at Discovery violated ERISA’s requirements for a full and fair review in two significant ways.

First, the court rejected UBH’s argument that it is not required to engage with treating physician opinions. After examining ERISA regulations and case law, the court concluded that while there is no requirement to defer to a treating physician’s opinion, a claims administrator may not “shut their eyes” to readily available medical information. The court clarified that this aspect of a full and fair review under ERISA applies to disability and health benefit claims alike (rejecting UBH’s argument that it only applies to disability benefit claims). Notably, the DOL filed an amicus brief in the case, confirming that UBH was required and failed to engage with A.K.’s supporting evidence.

Second, ERISA requires that denial letters be comprehensive and include requests for additional information, steps claimants may take for further review, and specific reasons for denial. In other words, claims administrators must engage in a reasonable, meaningful dialogue in their denials. The court found that UBH’s denial letters fell short of these requirements by failing to address A.K.’s providers’ opinions and failing to apply the plan terms to A.K.’s medical records. In other words, given that UBH was provided with extensive information, its conclusory responses without citing the medical record did not afford a full and fair review.

This case provides a useful illustration of ERISA’s claim procedure protections. As ERISA fiduciaries, self-insured plan sponsors have a duty to monitor the practices of their plan’s third-party administrators. This includes ensuring claim review processes and communications satisfy ERISA’s full and fair review standards. Plan sponsors should confirm these full and fair review standards are being met and consult with legal counsel for further assistance.

D.K., et al. v. United Behavioral Health, et al.»