J.G. v. University of San Francisco Welfare Benefit Plan

Background

K.G. sued the University of San Francisco Welfare Benefit Plan over the denial of health benefits for residential treatment at Innercept Treatment Center. The claims arise under the Federal Mental Health Parity and Addiction Equity Act and the Employee Retirement Income Security Act of 1974 (ERISA). Anthem denied benefits for treatment from March 20, 2021, through June 15, 2021, on the ground that the treatment was not medically necessary.

The Plan sought summary judgment on the standard of review that should apply to Anthem’s benefit denials after March 20, 2021. The Plan argued that Anthem’s decisions should receive abuse-of-discretion review because the Plan allegedly gave Anthem discretionary authority to administer the Plan. The court had previously denied the Plan’s motion under Rule 12(c) because it could not consider the evidence submitted with that motion; the parties later agreed to treat the motion as one for summary judgment without additional briefing.

Legal Standard

Under ERISA, a court ordinarily reviews a denial of benefits de novo, meaning it independently evaluates the denial without deferring to the plan administrator. A more deferential abuse-of-discretion standard applies only when the benefit plan unambiguously gives the administrator or fiduciary discretion to determine eligibility or interpret the Plan’s terms. The Plan bears the burden of proving that such authority was clearly delegated.

Analysis

The Plan relied on four documents: the Master Plan Document/Master Summary Plan Description, the 2020 Benefit Booklet, the 2021 Benefit Booklet, and the Administrative Services Agreement.

The court declined to rely on the 2021 Benefit Booklet because the Plan did not establish that it was in effect during the relevant period, applied to K.G.’s claims, or formed the basis for Anthem’s denials. The denial materials instead relied on the 2020 Benefit Booklet.

The court held that the Master Document and the 2020 Benefit Booklet together constituted the Plan’s written instrument. The Master Document satisfied three of the four requirements for such an instrument but did not state the basis on which payments are made. The 2020 Benefit Booklet supplied that missing information.

The Master Document gave the Plan Administrator discretionary authority, but it identified the University of San Francisco—not Anthem—as the Plan Administrator. It also required any delegation to be in writing, to identify the delegate, and to describe the delegated responsibility. The court therefore found that the Master Document did not unambiguously delegate to Anthem discretion to determine eligibility for benefits or interpret Plan terms.

The 2020 Benefit Booklet identified Anthem Blue Cross as the claims administrator and described claims-review and appeal procedures. But the court found that it did not clearly state that Anthem had discretion to grant or deny benefits. Accordingly, the booklet did not support deferential review.

The court also rejected the argument that the Administrative Services Agreement was a Plan document capable of conferring discretion on Anthem. The court found that the agreement’s provisions concerning claims payments and amendments did not provide information about where K.G. stood under the Plan or establish rules under which beneficiaries would be entitled to care. The court further found that the Master Document did not clearly and unequivocally incorporate the Administrative Services Agreement because it referred generally to insurance contracts or other governing documents without identifying the agreement by title or guiding the reader to it.

Ruling

The court concluded that the Plan failed to show that its written instrument unambiguously delegated discretionary authority to Anthem. The court therefore held that the default de novo standard of review applies to Anthem’s denials of K.G.’s Innercept claims after March 20, 2021. The opinion states this ruling but does not expressly state that the summary-judgment motion was granted or denied.