Andrew C. v. Oracle America Inc. Flexible Benefit Plan

Background

Andrew C. was admitted to Change Academy Lake of the Ozarks (CALO) for residential mental-health treatment after a violent altercation with his parents led to juvenile detention and residential treatment as a probation condition. He remained at CALO for more than a year. Robert C., Andrew’s father and a participant in the Oracle plan, sought benefits for the treatment.

The plan covered certain inpatient mental-health services, including services at a residential treatment facility, but excluded custodial care. It also excluded services that were inconsistent with generally accepted medical practice, the plan administrator’s level-of-care guidelines, or best practices. The plan referred to Optum guidelines, including a general Level of Care Guideline and a more specific guideline for Oppositional Defiant Disorder.

UnitedHealthcare initially denied coverage. On appeal, it approved the first 30 days of treatment but denied coverage for the period afterward, stating that Andrew no longer required residential stabilization and instead needed excluded custodial care. Later internal and external reviews reached similar conclusions. The parties filed cross-motions for judgment on the claim for health benefits. The court had previously ruled that it would review the claim under a de novo standard, meaning it would independently decide entitlement to benefits from the administrative record without deferring to the insurer.

Court’s Analysis

The court found by a preponderance of the evidence that Andrew was entitled to coverage under the plan. It concluded that Andrew met the applicable criteria for residential treatment because his mood, emotional, and cognitive problems produced aggressive and impulsive behavior that could not safely be managed at home or in a less restrictive setting. The court also found that he needed the structure of residential treatment to participate in therapeutic interventions.

The court relied substantially on the opinions of Andrew’s treating therapist, psychiatrist, CALO treatment professionals, and a psychologist who evaluated him after treatment. Those professionals described continuing problems with aggression, emotional regulation, and impulsivity, and recommended residential treatment. The treatment records showed that Andrew improved in some respects but continued to have episodes of aggression and volatility during the relevant period.

The court gave little weight to the opinions of UnitedHealthcare’s internal and external reviewers. It found that those reviewers did not adequately address the treatment records, the opinions of treating professionals, or Andrew’s continued behavioral incidents. The court also found that the reviewers’ reliance on Andrew’s medical stability and lack of imminent risk of harm did not justify denying residential coverage because those conditions were prerequisites for several less intensive levels of care as well.

The court rejected the defendants’ argument that CALO’s services themselves were custodial. The denial letters had stated that Andrew needed custodial care, not that CALO was an uncovered facility or that its services were merely custodial. The court noted that the plan did not define custodial care and that CALO provided individual, family, and group therapy, along with structured interventions addressing Andrew’s aggression and emotional difficulties. The record did not support treating that care as merely custodial.

The court did not decide whether the Optum guidelines were inconsistent with generally accepted medical standards. It held that this issue was unnecessary to resolve because Andrew was entitled to benefits even under the guidelines used by the defendants. The court also noted that it lacked the expert testimony and other evidence needed to decide that broader question in this case.

Disposition

Upon de novo review, the court found that Andrew was entitled to coverage for residential treatment provided from February 28, 2014, to February 12, 2015, at CALO. It granted plaintiffs’ motion for judgment and denied defendants’ cross-motion. The court reserved the breach-of-fiduciary-duty claim and directed the parties, within 30 days, to meet and confer about proceedings on that claim and submit a proposed schedule. The order terminated Docket Nos. 70 and 71.