M. v. United Behavioral Health
- Phyllis Hamilton
- 4:20-cv-01513
- U.S. District Court · Northern District of California
- 5
In Steven M. v. United Behavioral Health, Judge Hamilton denied UBH’s motion, requiring de novo review of its benefit-denial decision.
Steven M., S.M.’s claims for mental-health treatment under the KLA-Tencor Corporation Group Insurance Plan, and United Behavioral Health’s defense of its benefit-denial decision are affected because the court will use de novo review rather than abuse-of-discretion review.
What happened
Steven M. sued United Behavioral Health over denied mental-health treatment claims for his minor child under the KLA-Tencor Corporation Group Insurance Plan. UBH asked the court to review its benefit decision under the more deferential abuse-of-discretion standard.
Steven M. argued that the plan documents did not clearly give UBH authority to make discretionary benefit decisions. UBH relied on the plan, two confidential agreements, and its denial letters to argue that authority had been delegated to it.
The court found no clear and unambiguous delegation of discretionary authority to UBH and denied UBH’s motion. The court ordered de novo review, meaning it will review the benefit decision without deference to UBH. Judge Phyllis J. Hamilton also ordered counsel to propose a schedule for future cross-motions for summary judgment.
The detailed version
- M. v. United Behavioral Health · No. 4:20-cv-01513
- Phyllis Hamilton
- Apr. 2, 2021
Background
Steven M., a participant in the KLA-Tencor Corporation Group Insurance Plan, brought the action against United Behavioral Health (UBH) to recover damages based on the denial of mental-health treatment claims for S.M., his minor child. UBH administered the Plan and denied the claims based on medical necessity, issuing several denial letters during 2018.
The Plan was self-funded by KLA-Tencor. It gave KLA-Tencor and United Healthcare Services authority to make factual determinations and interpret the Plan, and it allowed those entities to delegate that discretionary authority. The opinion states that KLA-Tencor delegated authority to United Healthcare Insurance Company through an Administrative Services Agreement. United Healthcare Insurance Company also had a Behavioral Health Services Agreement with UBH. Neither agreement was included in the administrative record, but UBH submitted both in support of its motion.
The motion and the parties’ positions
UBH moved for summary adjudication—an early ruling on a particular legal issue—to establish that the court should review UBH’s benefit decision for abuse of discretion. Under that standard, a court gives deference to the fiduciary’s decision. Steven M. argued that de novo review was required. De novo review means that the court independently reviews the decision rather than deferring to UBH.
UBH argued that the Plan gave United Healthcare Services discretionary authority and allowed it to delegate that authority to other entities providing Plan-administration services. UBH also relied on the Administrative Services Agreement, the Behavioral Health Services Agreement, and its denial letters as evidence that it had received delegated fiduciary responsibility.
Steven M. acknowledged that the Plan delegated authority to United Healthcare Services but argued that no Plan document clearly delegated discretionary authority from United Healthcare Services to UBH. He also argued that the confidential agreements were not Plan documents and could not establish the required grant of discretion.
Court’s analysis
The court agreed with Steven M.’s interpretation. It found that none of the three documents cited by UBH—the Plan, the Administrative Services Agreement, and the Behavioral Health Services Agreement—contained a clear and unambiguous delegation of authority from United Healthcare Services to UBH.
The court further held that allowing one United entity to use affiliates to perform services did not clearly delegate discretionary authority to UBH. It also stated that, even if such a delegation existed, it would not be clear and unambiguous if it could be identified only by closely examining at least two confidential documents withheld from Plan participants. The denial letters did not establish that UBH had properly received discretionary authority.
Disposition
The court denied UBH’s motion. It ruled that the standard of review would be de novo. The court ordered counsel to meet and confer within one week and submit a proposed schedule and hearing date for cross-motions for summary judgment.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.