B. v. California Physicians Service

Background

Erica B. brought an action under the Employee Retirement Income Security Act (ERISA) on behalf of herself and her daughter. She alleged that California Physicians Service improperly denied her daughter’s covered mental-health claims for services provided between June 17, 2021, and June 16, 2022.

The order addressed only which standard of review would apply to those benefit claims. Under de novo review, the court independently evaluates the benefit decision. Under abuse-of-discretion review, the court examines whether the plan administrator acted within the discretion granted by the plan.

The Parties’ Positions

Both parties agreed that de novo review applies to claims for dates of service on or after October 1, 2021, because of California’s ban on discretionary clauses. They disagreed about claims for dates of service from June 17 through September 30, 2021.

Erica B. argued that de novo review should apply to the earlier claims as well. She argued that the relevant contract policies were not in the administrative record and were unsigned, that the original plan document from the employer had to reserve discretionary authority, and that an evidence-of-coverage document could not itself confer discretion.

California Physicians Service argued that the October 1, 2020 Group Health Service Contract between it, identified in the opinion as Blue Shield, and Equation Technologies Inc. governed the earlier claims. The contract was effective from October 1, 2020, through September 30, 2021. It incorporated an Evidence of Coverage document that stated Blue Shield had authority to interpret the plan, determine benefits, and determine eligibility for benefits.

Court’s Analysis

The court explained that ERISA benefit denials are ordinarily reviewed de novo unless the plan unambiguously gives the administrator or fiduciary discretionary authority to determine eligibility or interpret the plan. When the plan clearly grants that authority, abuse-of-discretion review applies.

The court concluded that the 2020 Group Health Service Contract was a governing plan document for the claims at issue. It rejected the argument that the court could not consider the contract because it was not in the administrative record, explaining that the administrative-record limitation did not control the initial determination of the applicable review standard. The court also found that the fact the document was unsigned did not require ignoring the defendant’s sworn declaration that the contract was in effect during the relevant period.

The court determined that the contract incorporated the Evidence of Coverage and that the Evidence of Coverage clearly and unambiguously gave Blue Shield discretion as claims administrator and fiduciary. The court rejected the argument that an Evidence of Coverage document could never confer discretion, explaining that ERISA does not require a single plan document and that plan documents may incorporate other documents. The court distinguished cases involving summary documents that were not incorporated into the plan.

Ruling

The court determined that the abuse-of-discretion standard applies to claims with dates of service before October 1, 2021. It determined that the de novo standard applies to claims on or after October 1, 2021. The order did not resolve whether the underlying mental-health benefit claims were properly denied.