Wise v. Monterey County Hospitality Association Health and Welfare Plan

Background

Benjamin Wise sued United HealthCare Services, Inc. and UnitedHealthCare Insurance Co. (collectively, “UHC”) and MAXIMUS Federal Services, Inc. over the denial of coverage for a MyoPro Motion G, a myoelectric elbow-wrist-hand orthosis. The device detects neurological signals through sensors and amplifies weak signals to help move the limb. Wise had a brachial plexus injury that left his left arm weakened and numb, and he sought long-term use of the device for daily activities and restoring functional capacity.

Wise’s employer participated in the Monterey County Hospitality Association Health & Welfare Plan, an employee benefit plan governed by the Employee Retirement Income Security Act (ERISA). The plan’s coverage document included an exclusion for “Unproven Service(s),” defined as services determined not to be effective or not to have a beneficial effect on health outcomes because of insufficient clinical evidence from specified studies. UHC denied coverage, and after Wise appealed, MAXIMUS conducted California’s independent medical review. Three physician reviewers concluded that the MyoPro was not likely to be more beneficial for treating Wise’s condition than any available standard therapy.

The parties each sought judgment under Federal Rule of Civil Procedure 52. The court conducted a bench trial based on the record and applied de novo review, meaning it independently evaluated whether the benefit denial was correct. The court also declined to consider most evidence offered outside the administrative record because the parties had not shown that the additional evidence was necessary for adequate review.

Wrongful-Denial Claim Against UHC

The court held that UHC improperly denied coverage under ERISA § 502(a)(1)(B). Because UHC relied on an exclusion, UHC had the burden of proving by a preponderance of the evidence that the exclusion applied. The court interpreted the ambiguous “and/or” language in the exclusion in Wise’s favor and construed the exclusion narrowly. It held that the exclusion required affirmative evidence that the treatment was ineffective and lacked a beneficial effect on health outcomes; a mere absence of evidence was not enough.

The court found that UHC did not meet that burden. UHC relied primarily on its Omnibus Codes and three publications. The Omnibus Codes were not binding plan terms, and the studies involved stroke patients, rehabilitation uses, or both. They did not provide affirmative evidence that the MyoPro would be ineffective or provide no health benefit for Wise, whose condition and intended use differed from those studied. The MAXIMUS reviewers’ conclusion that the device was not likely to be more beneficial than standard therapy also addressed a different question and did not establish that the plan’s “Unproven Service(s)” exclusion applied.

Wrongful-Denial Claim Against MAXIMUS

The court ruled that MAXIMUS did not improperly deny benefits under ERISA § 502(a)(1)(B). MAXIMUS did not apply the plan’s coverage terms or decide whether the plan entitled Wise to coverage. Instead, it made the factual determination required by California law: whether the requested therapy was likely to be more beneficial for Wise than any available standard therapy.

The court concluded that MAXIMUS correctly determined that the MyoPro was not likely to be more beneficial than available standard therapy. The three independent reviewers identified limited evidence concerning long-term, functional use of the device by someone with Wise’s lower motor neuron injury. The court found the reviewers’ assessments highly credible. It gave substantially less weight to Dr. Brandon Green’s contrary opinion because he was Myomo’s chief medical officer, and it found that the medical literature and prior MAXIMUS decisions cited by Wise did not sufficiently address Wise’s condition and intended use.

Fiduciary-Duty Claims

The court ruled that Wise could not recover from UHC under ERISA § 502(a)(3) for breach of fiduciary duty. Wise’s fiduciary-duty allegations were based on the same denial of MyoPro coverage for which ERISA § 502(a)(1)(B) provided an adequate remedy. The court also rejected Wise’s request for an injunction governing UHC’s treatment of future plan members, concluding that the request raised standing problems and was too indefinite to administer properly.

The court ruled that MAXIMUS did not breach a fiduciary duty under ERISA § 502(a)(3). It did not decide whether MAXIMUS was a functional fiduciary because Wise’s claims failed for other reasons. MAXIMUS’s decision was correct, Wise had not shown a separate harm, and the cited ERISA claims-processing regulation applied to benefit plans rather than MAXIMUS. The court also concluded that another federal regulation did not apply because California’s independent medical review system met the relevant minimum protections, and MAXIMUS did not apply the plan’s provisions.

Disposition

The court found that UHC improperly denied Wise coverage for the MyoPro under ERISA § 502(a)(1)(B); UHC did not breach its fiduciary duty under ERISA § 502(a)(3); MAXIMUS did not improperly deny coverage under ERISA § 502(a)(1)(B); and MAXIMUS did not breach its fiduciary duty under ERISA § 502(a)(3).