1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 FRED G., Case No. 2:22-cv-05710-FLA (Ex)
12 Plaintiff, MEMORANDUM OF DECISION 13 v. FOLLOWING BENCH TRIAL
14 ANTHEM BLUE CROSS LIFE AND 15 HEALTH INSURANCE CO., et al., 16 Defendants. 17 18 19 20 21 22 23 24 25 26 27 28 1 This action arises from the denial of a request for benefits under a tax-exempt, 2 multi-employer health plan (the “Plan”), governed by the Employee Retirement 3 Income Security Act of 1974, 29 U.S.C. § 1001, et seq. (“ERISA”). Plaintiff Fred G. 4 (“Plaintiff”) brings claims against Defendant Director’s Guild of America-Producer 5 Health Plan (“Defendant” or “DGA”)1 for: (1) recovery of benefits due under an 6 ERISA benefit plan, pursuant to 29 U.S.C. § 1132(a)(1)(B) (“§ 1132(a)(1)(B)”);2 and 7 (2) breach of fiduciary duty under § 1132(a)(3). Dkt. 13. 8 This matter came to bench trial on December 6, 2024.3 Dkt. 101. After 9 evaluating the evidence and considering the parties’ arguments, the court issues the 10 following findings of fact and conclusions of law,4 pursuant to Fed. R. Civ. P. 52(a). 11 FINDINGS OF FACT 12 I. The Plan 13 The Plan provides medical benefits for its participants and their covered 14 dependents. DGA_FG 001400.5 The Plan documents consist of the DGA-Producer 15 Pension and Health Plans Health Trust Agreement (“Trust Agreement,” id. at 001239– 16 94) and Summary Plan Description (“SPD,” id. at 001295–431). Plaintiff is a Plan 17
18 1 Plaintiff originally brought this action against DGA and former Defendant Anthem 19 Blue Cross Life and Health Insurance Company (“Anthem”). Dkt. 1. On September 17, 2024, Anthem was dismissed from the action with prejudice pursuant to the 20 parties’ Notice of Settlement. Dkt. 88. 21 2 29 U.S.C. § 1132 is also commonly referred to as ERISA § 502. 22 3 In the Ninth Circuit, actions to recover benefits under ERISA are adjudicated by 23 bench trial. Kearney v. Standard Ins. Co., 175 F.3d 1084, 1095 (9th Cir. 1999). 24 4 The court’s characterization of its determinations as a “finding of fact” or “conclusion of law” is not controlling. To the extent a determination is characterized 25 as “conclusion of law” but is more properly characterized as a “finding of fact,” or 26 vice versa, substance shall prevail over form. 5 Citations to “DGA_FG” refer to the Plan’s administrative record, which was lodged 27 as Dkts. 46-1 and 65-1. Citations to “ANTHEM_FREDG” refer to Anthem’s 28 administrative record, which was lodged as Dkts. 47-1 through 47-12. 1 participant, and his son, J.G., is a beneficiary. Id. at 000001. 2 The Plan covers mental health and substance abuse services, including intensive 3 outpatient and residential treatments for substance abuse or mental health. Id. at 4 001360. All care (aside from covered preventive care services which are not at issue 5 here) must be “Medically Necessary,” as the term is defined in the Plan documents. 6 Id. at 001355. As relevant here: 7 A treatment, service or supply is Medically Necessary when it is: 8 Consistent with generally accepted medical practice within the medical community for the diagnosis or direct care of symptoms, 9 Sickness or injury of the patient, … where and at the time the 10 treatment, service or supply is rendered (the determination of “generally accepted medical practice” is the prerogative of the 11 Health Plan through consultation with appropriate authoritative 12 medical … practitioners); 13 Ordered by the attending licensed Physician…, and not solely for [the participant or beneficiary’s] convenience, [his or her] 14 Physician, Hospital or other health care provider; 15 Consistent with professionally recognized standards of care in the 16 medical community with respect to the quality, frequency and duration; and 17 The most appropriate and Cost-Efficient treatment, service or 18 supply that can be safely provided, at the most Cost-Efficient and 19 medically appropriate site and level of service. 20 Id. at 001415–16 (errors in original). Additionally, “[a] medical or dental service or 21 supply will be considered Cost-Efficient if it is no more costly than any alternative 22 appropriate service or supply when considered in relation to all health care expenses 23 incurred in connection with the service or supply.” Id. at 001412. 24 The Trust Agreement provides, in relevant part: 25 The Plan Trustees [the “Trustees”] shall have the sole complete and 26 discretionary authority [to] … (2) grant or deny, in whole or in part, particular claims for benefits filed by participants or beneficiaries, in 27 accordance with the Plan Trustees’ interpretation of the Health Plan 28 and their fact findings relative to any such claims for benefits, (3) 1 gberannetf iocri adreiensy, cino vaecrcaogred aton cpee wrsiotnhs t hcela Pimlainn gT rtou sbteee psa’ ritnicteiprparnettsa otiro n of 2 the Health Plan and their fact findings relative to any such claim for coverage, … (5) determine the type and duration of any benefits 3 payable to any participant or beneficiary, in accordance with the Plan 4 Trustees’ interpretation of the Health Plan and their fact findings relative to any dispute over the type or duration of benefits payable, 5 (6) make any and all other findings of fact, construction, 6 interpretations and decisions relative to the Health Plan, and relative to other rights, if any, of all persons, participants or beneficiaries to 7 benefits or coverage, and (7) construe and/or interpret any provisions 8 of the Health Plan. No Producer or group of Producers, the Guild, any insurance company or any other person, … or other entity shall 9 have the authority to exercise any of the powers described in this 10 subsection. … 11 Id. at 001261–62. 12 The Trustees are jointly responsible for interpreting Plan provisions and 13 establishing rules and regulations governing entitlement of benefits and administration 14 of the Plan, id. at 001251–54, but may “allocate in writing fiduciary and non-fiduciary 15 responsibilities or duties among Trustees, including the allocation and delegation of 16 such responsibilities to committees and subcommittees of the Board[.]” Id. at 001263. 17 The Trust Agreement further authorizes the Trustees to “establish such committees as 18 they in their discretion deem proper and desirable for the proper administration of the 19 Health Plan and Health Fund,” and establishes the Benefits Committee as a standing 20 committee with the authority and responsibility for, inter alia, “[a]pproving benefit 21 awards, and hearing and determining claims appeals[.]” Id. at 001265–66. 22 “The general purpose of a committee is to study and debate issues that arise in 23 the administration of the Health Plan and the Health Fund and to make 24 recommendations thereon to the Board for action by the Board.” Id. at 001265. 25 “Notwithstanding this general limitation, the Board may, by resolution duly adopted, 26 allocate and delegate to a committee the authority to take final action in specified 27 areas; and in such instances the action of the committee shall have the same binding 28 effect as action by the full Board.” Id. At the bench trial, Defendant admitted there is 1 no evidence in the record to establish that the Board delegated to the Benefits 2 Committee the authority to take final action on approving benefit awards and hearing 3 and determining claims appeals, by a resolution duly adopted by the Board. 4 The Trust Agreement also authorizes the Trustees to “designate in writing 5 persons who are not Trustees to carry out fiduciary or non-fiduciary responsibilities or 6 duties of the Trustees[.]” Id. at 001263. Anthem was the designated claim 7 administrator for the residential treatment services at issue here. Id. at 000001. For 8 appeal administration, the Plan relies on third-party medical reviewers, such as the 9 Medical Review Institute of America (“MRI”), to make decisions related to benefits 10 determinations. Id.
11 II. J.G.’s History and Medical Treatment 12 J.G. was admitted to Outback Therapeutic Expeditions (“Outback”), an outdoor 13 behavioral health program, from February 17 to May 11, 2020. Id. at 000043. In a 14 Parent Questionnaire, his mother reported that J.G. began using nicotine at age 11 to 15 12 and used it almost daily prior to his admission to Outback. Id. at 000826. He also 16 began using marijuana at age 15 and used it two to four times per week. Id. His 17 mother further reported J.G. was “often aggressive at home,” would “break things, 18 yell, [and] cuss often,” was often angry and defensive, experienced mood swings 19 often, and was quick to anger without provocation. Id. at 000825.6 20 6 J.G.’s behavioral and treatment history are further detailed in the administrative 21 record. Most notably, Plaintiff reported J.G. began to exhibit aggressive and 22 hyperactive behavior, anger, frustration, depression, and anxiety after Plaintiff “went through a very traumatic divorce process” when J.G. was nine years old. DGA_FG 23 000040. J.G.’s behavior “spiraled downward when he entered middle school in the 24 fall of 2015,” and only grew worse as he transitioned to high school, as he withdrew further from his family and his oppositional defiance at home escalated. Id. at 25 000041–42. J.G.’s physical and verbal aggression further escalated during the fall and 26 winter of 2019, to the point that he “destroyed countless items in [their] home,” “punched and kicked his closet doors until they were folded in half,” “destroyed lamps 27 and mirrors with his fists and by throwing other items at them,” “shattered [their] car 28 1 On March 25, 2020, J.G. underwent a comprehensive psychological evaluation 2 conducted by Abby Jenkins, Ph.D. (“Dr. Jenkins”), a licensed clinical psychologist. 3 Id. at 000786–804. Based on his history and test results, Dr. Jenkins diagnosed J.G. 4 with: (1) Attention-Deficit/Hyperactivity Disorder, Combined Presentation; (2) 5 Oppositional Defiant Disorder; (3) Unspecified Anxiety Disorder; (4) Cannabis Use 6 Disorder; (5) Parent-Child Relational Problem; and (6) Child Affected by Parental 7 Relationship Distress. Id. at 000801–02, 000804. Dr. Jenkins “strongly 8 recommended that following his stay at Outback, [J.G.] go on to a longer-term 9 residential therapeutic program, such as a therapeutic boarding school or boarding 10 school with collaborative supports, that can continue addressing each of the above 11 issues in depth.” Id. at 000802. Dr. Jenkins further noted that “[J.G.] remain[ed] at 12 heightened risk of emotional and behavioral dysregulation outside a structured 13 treatment setting.” Id. 14 On or around May 11, 2020, J.G. was admitted to Catalyst Residential 15 Treatment Center (“Catalyst”), a residential treatment center and boarding school 16 located in Utah.7 On May 14, 2020, Meghan Kunz (“NP Kunz”), PMHNP 17 18 visor mirror,” and “would thrash and punch the interior of the car when agitated, making driving with him incredibly dangerous for the whole family.” DGA_FG 19 000042–43, 000388–94 (photographic evidence). Plaintiff additionally reported that 20 “[J.G.] stole a large sum of money from [them] on at least two occasions,” “[J.G.] began leaving home for weeks at a time,” “[h]is drug use was also escalating and he 21 made plans to fake drug tests,” “[h]is anxiety, depression, and substance abuse had 22 gotten so out of control that [their] home environment was no longer safe, and his ability to regulate his emotions had completely dissipated,” and “[his] anger and 23 aggression had gotten so dire, that there were numerous times [they considered] 24 calling the police.” Id. 7 The precise date of J.G.’s admission to Catalyst is unclear from the evidence in the 25 record. J.G. was discharged from Outback on May 11, 2020. DGA_FG 000043. NP 26 Kunz’s psychological medical evaluation states J.G. came to Catalyst directly from Outback, but lists an admission date of “2/11/2020”—which would have been three 27 months before he was discharged from Outback. Id. at 000820, 000824. Other 28 1 (Psychiatric Mental Health Nurse Practitioner) conducted a psychiatric medication 2 evaluation of J.G. Id. at 000823. NP Kunz concurred with Dr. Jenkins’ diagnoses and 3 recommended the following pharmacological interventions: 4 MEDICATIONS: No medications will be started at this time. 5 Rationale/ Counseling/ Education Risk vs. Benefit: I highly recommend this program for the individual, family, group, and 6 recreational therapy. The academic and Substance use treatment that 7 is offered here at this program will benefit him greatly. Catalyst will also allow him to work on his emotional regulation, coping skills, 8 cognitive and behavioral issues, and solution focused motives as well 9 as other treatment approaches. 10 Id. J.G. remained at Catalyst for treatment from the date of his admission until he was 11 discharged on June 4, 2021. Id. at 000949. 12 III. Denial of Benefits and Appeals 13 In or around May 2020, Anthem received a coverage request for residential 14 psychiatric care at Catalyst for the seven day-period beginning May 15, 2020, which 15 Anthem approved as “medically necessary under [Plaintiff’s] benefit plan.” DGA_FG 16 000009–11. On May 22, 2020, Anthem approved an extension request for an 17 additional 7 days of residential psychiatric care, beginning May 22, 2020. Id. On 18
19 records from Catalyst state J.G. was admitted on “05/11/2019.” Id. at 000949. 20 Defendant, in turn, contends J.G. was admitted on May 15, 2020, which was the first date of service Plaintiff requested and Anthem approved. Dkt. 86 (Def. Opening Trial 21 Br.) at 7; DGA_FG 000001, 000009–18; ANTHEM_FREDG002582. 22 Based on the evidence submitted, the court finds: (1) J.G. was admitted to Catalyst on or around May 11, 2020; (2) Plaintiff requested approval of residential treatment 23 beginning on or around May 15, 2020; and (3) any conflicting dates reflect 24 typographical errors. The record indicates J.G. was discharged from Outback on May 11, 2020, and admitted to Catalyst directly. DGA_FG 000820, 000824. Furthermore, 25 the dates listed in Catalyst’s records, “05/11/2019” and “2/11/2020,” differ from May 26 11, 2020 (5/11/2020) by one year and one key on a keyboard number pad respectively—suggesting typographical errors. Regardless, the precise date of J.G.’s 27 admission to Catalyst is not material to the court’s ultimate findings of fact and 28 conclusions of law. 1 June 4, 2020, Anthem approved an additional 4 days of residential psychiatric care as 2 “medically necessary under [Plaintiff’s] benefit plan,” while denying 3 days of 3 requested care as “Not Medically Necessary.” Id. at 000012–17. 4 The denial letter states the claim was reviewed by David Naimark, M.D. (“Dr. 5 Naimark”), using the “MCG guideline Residential Behavioral Health Level of Care, 6 Child or Adolescent (ORG: B-902-RES)” (the “MCG Guidelines”). Id. at 000016–17; 7 see also ANTHEM_FREDG000817–22. The denial letter and Dr. Naimark’s notes 8 offered the following rationale for the denial decision: 9 The plan clinical criteria considers ongoing residential treatment medically necessary for those who are a danger to themselves or 10 others (as shown by hearing voices telling them to harm themselves or 11 others or persistent thoughts of harm that cannot be managed at a lower level of care). This service can also be medically necessary for 12 those who have a mental health condition that is causing serious 13 problems with functioning. (For example, being impulsive or abusive, very poor self care, not sleeping or eating, avoidance of 14 personal interactions, or unable to perform usual obligations). In 15 addition, the person must be willing to stay and participate, and is expected to either improve with this care, or to keep from getting 16 worse. The information we have does not show your condition is 17 likely to further improve with this care or get worse without it. For this reason, the request is denied as not medically necessary. There 18 may be other treatment options to help you, such as outpatient 19 services. You may want to discuss these with your doctor. It may help your doctor to know we reviewed the request using the MCG 20 guideline Residential Behavioral Health Level of Care, Child or 21 Adolescent (ORG: B-902-RES). 22 DGA_FG 000016; ANTHEM_FREDG000821. 23 Plaintiff submitted a level one appeal to Anthem along with supporting 24 documentation including: an appeal letter, 384 pages of medical records from 25 Outback, 21 pages of medical records from Catalyst, Dr. Jenkins’ psychological 26 assessment report, and letters of medical necessity. DGA_FG 000023–25. The Plan 27 forwarded the appeal and supporting documentation to Anthem on February 2 through 28 4, 2021, id. at 000837–40, and Kayla Fisher, M.D. (“Dr. Fisher”) conducted the 1 review, ANTHEM_FREDG000814–16. 2 Anthem upheld the denial decision in a letter, dated March 11, 2021, which 3 stated in relevant part: 4 We reviewed all the information that was given to us before with the first request for coverage. We also reviewed all that was given to us 5 for the appeal. Your doctor wanted you to stay longer in residential 6 treatment center care. You were getting this because you had been at risk for serious harm without 24 hour care. We understand that you 7 would like us to change our first decision. Now we have new 8 information from the medical record plus letters. We still do not think this is medically necessary for you. We believe our first decision is 9 correct for the following reason: after the treatment you had, you were 10 no longer at risk for serious harm that needed 24 hour care. You could have been treated with outpatient services. We based this 11 decision on the MCG guideline Residential Behavioral Health Level 12 of Care, Child or Adolescent (ORG: B-902-RES). 13 DGA_FG 000847–48. 14 On April 20, 2021, the Plan requested MRI review the level one appeal and all 15 clinical documentation received to date, and answer whether the services were 16 medically necessary as defined by the Plan. Id. at 000854–55. James Kimball, M.D. 17 (“Dr. Kimball”) conducted the review using the following medical guidelines in his 18 rationale: (1) the American Academy of Child and Adolescent Psychiatry, American 19 Association of Community Psychiatrists, Child and Adolescent Level of Care 20 Utilization System, Child and Adolescent Version 20, July 2019 (“CALOCUS”); and 21 (2) the Child and Adolescent Service Intensity Instrument, American Academy of 22 Child and Adolescent Psychiatry, September 2018 (“CASII”). Id. at 000860–61. 23 In a report, dated April 26, 2021, Dr. Kimball opined: 24 The psychiatric residential treatment from 06/02/20 to discharge is not 25 considered medically necessary in accordance with the Plan definition of medical necessity. 26 The notes indicate that the patient has a complicated psychiatric 27 history. He has a long history of aggression and anger towards family members. He had been acting out at home and using substances. He 28 1 hHaes wa ahsi sitno ray w oifl dseigrnneifsisc acnatm opu tfproamtie nFte btrreuaatrmye 2n0t 2w0i tthh rmouingihm Mala rye s2u0l2ts0. , 2 which appears to have helped the patient. He was admitted to a residential treatment facility on 05/11/20. 3 Unfortunately, it appears that very few clinical notes from the 4 residential facility have been provided for review. There are brief 5 notes from 10/16/20, 09/29/20 which seemed to indicate the patient’s participation in an activity. There are therapy notes from 05/15/20, 6 05/18/20, 05/21/20 and 05/25/20. Nursing notes were provided from 7 05/15/20. There was also a medication evaluation from 05/15/20. No other notes were provided from the residential treatment facility, 8 including an initial history and physical. 9 The notes indicate that the patient is at some risk of harm, moderate 10 functional impairment, significant comorbidity, moderately stressful environment, limited support in the environment, moderate response 11 to treatment, and incompletely engaged. As such, per the Child and 12 Adolescent Level of Care Utilization System for Psychiatric and Addiction Services, coverage of continued residential level of care has 13 not been met. It is not clear why the patient cannot be managed at a 14 lower level of care. 15 Given that residential level of care was not the most cost efficient treatment, service or supply than can be safely provided at the most 16 cost efficient and medically appropriate site and level of service, the 17 plan language of medically necessary has not been met. 18 Id. at 000861. The Plan notified Plaintiff by letter, dated May 11, 2021, that the 19 appeal was denied and that he could submit a further appeal. Id. at 000865–67. 20 On September 3, 2021, Plaintiff submitted a level two appeal along with 21 supporting documentation including: an appeal letter, a copy of Plaintiff’s prior 22 appeal, and 246 pages of additional records from Catalyst for the period between June 23 2, 2020 through June 4, 2021. Id. at 000885–1200. On September 28, 2021, the Plan 24 sent the second-level appeal and all submitted medical records to MRI for medical 25 necessity review, which was again conducted by Dr. Kimball. Id. at 001209–15. In a 26 report, dated October 4, 2021, Dr. Kimball opined again that continued residential 27 treatment was not medically necessary in accordance with the Plan’s definition of the 28 term. Id. at 001213. 1 Dr. Kimball’s report for the level two appeal reproduced many of the sentences 2 and paragraphs from his first report verbatim, and again cited CALOCUS and CASII 3 as the medical guidelines used in the review. Compare id. at 000865–67 with 4 001211–15. Both reports included a “Conflict of Interest Statement,” in which he 5 certified that he: “To the best of his[] knowledge, ha[d] not had any prior involvement 6 in the denial/appeal process for the case, regardless of whether the involvement was 7 on behalf of MRI[] or any other peer review vendor[.]” Id. at 001214. 8 By letter, dated October 7, 2021, the Plan informed Plaintiff that his appeal 9 would be presented to the Benefits Committee of the Board at its next meeting, and 10 that “[t]he Trustees will consider all of the evidence and testimony submitted in 11 support of [Plaintiff’s] appeal, but [Plaintiff would] not be entitled to make an in- 12 person appearance at the meeting.” Id. at 001224. 13 On March 1, 2022, the Benefits Committee denied Plaintiff’s appeal “pursuant 14 to Health Plan rules and determinations by Anthem and MRI confirming that the 15 residential treatment [was] not medically necessary as defined by the Health Plan.” 16 Id. at 001235–36. In its supplemental response to Plaintiff’s Interrogatory No. 7, 17 Defendant admitted that, “for mental health claims, [the Plan’s chief medical advisor, 18 Dr. Steven M. Simons,] and the Benefits Committee rely upon the medical specialties 19 of Anthem and MRI’s reviewing physicians to support the claim reasoning[.]” Dkt. 20 68-2 at 13. 21 CONCLUSIONS OF LAW 22 I. Standard of Review for Denial of Benefits 23 As a threshold matter, the parties debate the standard of review applicable to 24 this matter. “A denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed 25 under a de novo standard unless the benefit plan gives the administrator or fiduciary 26 discretionary authority to determine eligibility for benefits or to construe the terms of 27 the plan.” Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). “[F]or 28 a plan to alter the standard of review from the default of de novo to the more lenient 1 abuse of discretion, the plan must unambiguously provide discretion to the 2 administrator.” Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th Cir. 3 2006) (en banc) (citing Kearney, 175 F.3d at 1090). “ERISA plans are insufficient to 4 confer discretionary authority on the administrator when they do not grant any power 5 to construe the terms of the plan.” Id. at 964. 6 Since Anthem has been dismissed from the action already, the court focuses 7 solely on whether the Benefits Committee possessed the requisite discretionary 8 authority to warrant an abuse of discretion standard of review. See Dkt. 86 at 13 n. 4; 9 Dkt. 87 at 13. The Trust Agreement expressly gives the Board of Trustees the 10 authority to determine eligibility for benefits and to construe and/or interpret the terms 11 of the Plan. DGA_FG 001261–62. Although the Trust Agreement allows the Board 12 of Trustees to allocate and delegate responsibilities to committees and subcommittees 13 of the Board, including the authority to take final action in specified areas, any such 14 allocation or delegation must be in writing and “by resolution duly adopted.” Id. at 15 001263, 001265. 16 Defendant does not identify any separate resolution, writing, or evidence that 17 clearly establishes the Board vested the Benefits Committee with the requisite 18 discretionary authority, and admitted at trial that there is no evidence of such a 19 resolution in the record. Accordingly, the court finds the Board of Trustees did not 20 delegate its discretionary authority to the Board’s Benefits Committee 21 unambiguously, and that the denial of benefits is subject to de novo review.8 See Dan 22 C. v. Anthem Blue Cross Life and Health Ins. Co., No. 24-3203, 2025 WL 1554927, at 23 *1 (9th Cir. June 2, 2025) (affirming trial court’s ruling that the Plan’s denial of 24
25 8 Although the court finds de novo review applies here, the court’s ultimate 26 determinations remain the same under discretionary review, as the court finds below that Defendant deprived Plaintiff of the opportunities to engage in “meaningful 27 dialogue” on the issue of medical necessity and receive a “full and fair” review of the 28 denial of his claim. 1 continued residential treatment is subject to de novo review, in a parallel action 2 involving the same claims and similar facts).9 3 II. Denial of Benefits 4 A. Medical Necessity 5 Plaintiff has met his burden to prove the residential treatment at issue was 6 medically necessary with credible, persuasive evidence. Anthem determined J.G.’s 7 admission to residential psychiatric care was medically necessary when it approved 8 his initial request for such care. DGA_FG 000009 (“This approval means that, based 9 on the information given to us, the service is considered medically necessary under 10 your benefit plan”). The medical necessity of J.G.’s admission is also established by 11 evidence in the record, including independent assessments by Dr. Jenkins (id. at 12 000786–804), NP Kunz (id. at 000820–23), and Dr. Naimark 13 (ANTHEM_FREDG000816), as well as Plaintiff’s letters of medical necessity 14 (DGA_FG 000828–35).10 Accordingly, the court must determine whether (a) J.G.’s 15 16 9 The Ninth Circuit additionally recognized that “[t]hough the Plan delegates the task of ‘determining claims appeals’ to the Committee and provides that the Committee 17 ‘will have discretion to deny or grant the appeal in whole or part,’ this language falls 18 short of the unambiguous delegation contemplated by [Ninth Circuit] precedent.” Dan C., 2025 WL 1554927, at *1 (citing Ingram v. Martin Marietta Long Term 19 Disability Income Plan, 244 F.3d 1109, 1112–13 (9th Cir. 2001)). 20 10 E.g., DGA_FG at 000802 (Dr. Jenkins’ assessment report, dated March 11, 2020: “It is strongly recommended that following his stay at Outback, [J.G.] go on to a 21 longer-term residential therapeutic program, such as a therapeutic boarding school or 22 boarding school with collaborative supports, that can continue addressing each of [the diagnosed] issues in depth.”); id. at 820 (NP Kunz’s psychiatric medication 23 evaluation, dated May 14, 2020: “I highly recommend [Catalyst’s] program for the 24 individual, family, group, and recreational therapy. … Catalyst will also allow him to work on his emotional regulation, coping skills, cognitive and behavioral issues, and 25 solution focused motives as well as other treatment approaches.”); id. at 000829 (letter 26 by Heather Lin, M.D., dated July 20, 2020: “Given the lack of sustainable improvement with outpatient treatment modalities and deterioration in [J.G.’s] 27 behavior, a higher level of care was recommended for [J.G.] and referral to 28 1 continued residential treatment was medically necessary, or (b) J.G. satisfied the 2 requirements for discharge from residential care. 3 Once a patient has been admitted to residential care under the MCG Guidelines, 4 continued residential care is “generally needed” until one of the following two 5 situation applies: 6 o Residential care is no longer necessary due to adequate patient stabilization or improvement as indicated by ALL of the 7 following: 8 Risk status acceptable as indicated by ALL of the following: 9 Danger to self or others manageable…. 10 Patient and supports understand follow-up treatment and crisis plan. 11 Provider and supports are sufficiently available at lower 12 level of care. 13 Patient, as appropriate, can participate as needed in monitoring at available lower level of care. 14 Functional status acceptable as indicated by 1 or more of the 15 following: No essential function is significantly impaired. 16 An essential function is impaired, but impairment is 17 manageable at available lower level of care. 18 Medical needs absent or manageable at available lower level of care as indicated by ALL of the following: 19 Adverse medication effects absent or manageable 20 Medical comorbidity absent or manageable … 21 Medical complications absent or manageable 22 Treatment goals for level of care met. 23 / / / 24 educational consultant/ placement specialist Randi Klein was provided to the family to 25 help guide them towards the appropriate residential treatment facilities”); id. at 26 000831 (letter by Randi Klein, MS, LMFT, LPCC, dated July 7, 2020: “I recommended that J.G. attend Outback Therapeutic Expeditions. After this program, 27 the treatment team, including myself, recommended that [J.G.] attend[] a residential 28 treatment facility … called Catalyst Residential Treatment Center in Utah.”). 1 o fRoellsoidweinntgia: l care is no longer necessary due to 1 or more of the 2 Higher level of care is indicated (eg, patient condition has 3 deteriorated or more intensive supervision is necessary to address clinical needs). 4 Lack of improvement indicates need for long-term custodial 5 facility. 6 Patient or guardian refuses treatment. 7 DGA_FG 000072–73 (emphasis in original, footnotes and references omitted). 8 Anthem’s denial letter, dated June 4, 2020, and Dr. Naimark’s notes offered the 9 following rationale in support of the denial decision: 10 The plan clinical criteria considers ongoing residential treatment medically necessary for those who are a danger to themselves or 11 others…. This service can also be medically necessary for those who 12 have a mental health condition that is causing serious problems with functioning. … In addition, the person must be willing to stay and 13 participate, and is expected to either improve with this care, or to keep 14 from getting worse. The information we have does not show your condition is likely to further improve with this care or get worse 15 without it. For this reason, the request is denied as not medically 16 necessary. 17 DGA_FG 000016; ANTHEM_FREDG000821. 18 Dr. Naimark did not state continued residential care was no longer necessary 19 due to adequate patient stabilization or improvement, or discuss how J.G. met the 20 factors for discharge on this basis.11 See ANTHEM_FREDG 000817–22. To the 21 22 11 Defendant contends “the Plan’s decision, based on informed medical reviews, was correct because J.G. posed no harm to himself or others justifying 24/7 residential 23 treatment care.” Dkt. 86 at 1. That, however, is not the standard for discharge from 24 residential treatment under the MCG Guidelines. DGA_FG 000072–73. Although Defendant’s stated justification could potentially support denial of care under the 25 Admission Guidelines of the MCG Guidelines, see id. at 000072, Defendant provides 26 no evidence or legal authority to establish that residential treatment is no longer medically necessary under the MCG Guidelines and an admitted patient should be 27 discharged once the patient’s clinical status has improved to the point that the patient 28 1 contrary, Dr. Naimark noted J.G.’s chart indicated he had a very chronic diagnosis of 2 oppositional defiant disorder and would not be expected to improve with a short-term 3 intervention, and that the treatment “[was] expected to be a long term placement of 4 180 days.” Id. at 000822. This should have resulted in a determination that discharge 5 based on adequate patient stabilization or improvement was not warranted, and 6 continued residential treatment was medically necessary, because J.G.’s medical needs 7 were not manageable at an available lower level of care.12 See DGA_FG 000073.13 8 Dr. Fisher’s assessment on the level one appeal, ANTHEM_FREDG000815– 9 16, likewise, does not support discharge under the MCG Guidelines, as Dr. Fisher 10 agreed with and relied on Dr. Naimark’s analysis without discussing how this analysis 11 was consistent with the MCG Guidelines for discharging a patient due to adequate 12 patient stabilization or improvement. Accordingly, the court finds neither Dr. 13
14 would no longer qualify for admission. Defendant, thus, fails to establish J.G.’s 15 continued residential care was no longer medically necessary on this basis. 16 12 In particular, neither Dr. Naimark nor Dr. Fisher found, or identified any evidence to support a finding, that J.G.’s medical comorbidity and substance-related disorder 17 became absent or manageable as of June 2, 2020, as would be required to justify 18 discharge under the MCG Guidelines. See DGA_FG 000073. While Defendant notes Dr. Fisher stated in her report that J.G. “was not using substances while in the 19 program,” Dkt. 92 at 7 (citing ANTHEM_FREDG000815), the fact that J.G. did not 20 use illegal narcotics and other substances while in residential treatment is insufficient to establish that his “[s]ubstance-related disorder [was] absent or manageable,” when 21 coverage for continued residential treatment was denied. 22 13 Although Dr. Naimark’s analysis could potentially have supported discharge on the grounds that a “[h]igher level of care [was] indicated” or “[l]ack of improvement 23 indicate[d] need for long-term custodial facility,” see DGA_FG 000073, neither 24 Anthem nor DGA offered this as a basis for the denial of coverage. To the extent Defendant may argue continued residential treatment was denied on this basis, such 25 denial would constitute a violation of the Plan’s obligations to: “(1) provide adequate 26 notice in writing to [Plaintiff], setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and (2) afford a 27 reasonable opportunity to [Plaintiff] for a full and fair review … of the decision 28 denying the claim.” 29 U.S.C. § 1133; Dan C., 2025 WL 1554927, at *2. 1 Naimark nor Dr. Fisher’s reports are sufficient to establish lack of medical necessity 2 or justify Anthem and the Plan’s denial of coverage for continued residential care. 3 Defendant additionally argues its denial decision was appropriate because Dr. 4 Kimball determined independently that “the Plan’s medical necessity standard for 5 continued residential care coverage had not been met and that J.G.’s treatment could 6 have been managed at a lower level of care.” Dkt. 86 at 14. Dr. Kimball, however, 7 did not evaluate J.G.’s continued treatment under the MCG Guidelines and relied 8 instead on CALOCUS and CASII—neither of which were included in the 9 administrative record. While the parties have submitted a copy of the CALOCUS 10 manual for the court’s review, Dkt. 69-2, they have not provided the court with the 11 CASII guidelines. Dr. Kimball’s expert opinions, thus, lack adequate foundation and 12 are inadmissible. See Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592 13 (1993). 14 Even if the court were to consider Dr. Kimball’s opinion based on the 15 CALOCUS guidelines alone, Dr. Kimball’s assessment would not constitute a valid 16 basis to deny continued residential treatment as of June 2, 2020, since CALOCUS 17 specifies that patient reviews should not be conducted more often than “every three 18 months for extended care services such as residential treatment facilities.” Dkt. 69-2 19 at 30. As it is undisputed that J.G.’s admittance to residential treatment on or around 20 May 14, 2020 was medically necessary, it was improper for Dr. Kimball to apply 21 CALOCUS to determine whether continued residential care was medically necessary 22 less than three weeks later. 23 Furthermore, Dr. Kimball’s reports clearly indicate his assessments were of 24 J.G.’s conditions as of the date of the reports—after J.G. had received months of 25 residential treatment. See DGA_FG 000853 (discussing J.G.’s treatment notes from 26 Catalyst up to and including October 16, 2020, before concluding: “The notes indicate 27 that the patient is at some risk of harm, moderate functional impairment, significant 28 comorbidity, moderately stressful environment, limited support in the environment, 1 moderate response to treatment, and incompletely engaged”) (emphasis added); id. at 2 001213 (discussing treatment notes up to and including May 25, 2021, before 3 concluding the same).14 Accordingly, these assessments do not support his conclusion 4 that continued residential treatment was not medically necessary as of June 2, 2020, 5 when coverage for continued residential treatment was denied. If anything, Dr. 6 Kimball’s assessments demonstrate J.G.’s residential treatment at Catalyst was 7 successful and resulted in sufficient patient stabilization and improvement to allow 8 him to be treated at a lower level of care by the time of his discharge. 9 Defendant argues Plaintiff’s medical necessity letters have no probative value 10 regarding whether the Plan’s standard for medical necessity was met, because they fail 11 14 Since CALOCUS requires an evaluator to “select the highest score or rating in 12 which at least one of the criteria is met,” Dkt. 69-2, Dr. Kimball’s evaluations would 13 only be consistent with his own discussion of J.G.’s “complicated psychiatric history” 14 if they were of J.G.’s status at the date of the reports, rather than when coverage for continued residential treatment was denied. For example, dimension V of CALOCUS 15 concerns “Resiliency and Treatment History.” Id. at 17–18. Dr. Kimball noted J.G. 16 had “a history of significant outpatient treatment with minimal results,” DGA_FG 000861, 001212, which is consistent with a finding of poor resiliency and/or response 17 to treatment (rating 4, which includes: “b- Previous treatment has not achieved 18 complete remission of symptoms or optimal control of symptoms even with intensive and/or repeated exposure to treatment” and “c- Attempts to maintain whatever gains 19 that were attained in intensive treatment have limited success, even for limited time 20 periods or in structured settings”). Dr. Kimball, however, found J.G. had a “moderate response to treatment” (rating 3, which includes: “b- Previous experience in treatment 21 at low level of intensity has not been successful in relief of symptoms or optimal 22 control of symptoms” and “c- Recovery has been maintained for moderate periods of time, but only with strong professional or peer supports or in structured settings”). 23 DGA_FG 000861, 001212. 24 Evaluating J.G.’s conduct and mental health history based on his “complicated psychiatric history” alone, without considering the post-denial treatment notes from 25 Catalyst, would result in a CALOCUS level of care recommendation of level five: 26 medically monitored residence-based services—which is the level of care Plaintiff requested. See Dkt. 69-2 at 8–38. This assessment is also consistent with Anthem’s 27 initial determination that J.G.’s admission to residential treatment was medically 28 necessary. 1 to address whether J.G.’s treatment at Catalyst was the most appropriate and cost- 2 efficient treatment, service, or supply that could be safely provided, at the most cost- 3 efficient and medically appropriate site and level of service. Dkt. 86 at 15–17. 4 According to Defendant, “[a]lthough many of the clinicians asserted that J.G.’s 5 parents had exhausted all treatment options, none of the treating clinicians considered 6 the option of [intensive outpatient program (‘IOP’)] or [partial hospitalization program 7 (‘PHP’)] care, even on a trial basis, prior to beginning at Outback/Catalyst, or 8 following the initial approved stay at Catalyst.” Id. at 16 (emphasis omitted). 9 Defendant does not offer any argument or explanation why Plaintiff would need 10 to establish IOP or PHP care were not more cost-effective, given that Anthem, itself, 11 found J.G.’s admission to residential treatment at Catalyst was medically necessary 12 under the Plan without any discussion of IOP or PHP care. See DGA_FG 000009. 13 Defendant, likewise, does not identify any medical guidelines that state that a patient 14 that has been admitted to residential treatment should be removed from such treatment 15 after less than three weeks of care and required to participate in IOP or PHP care to 16 receive continued residential treatment. To the contrary, the MCG Guidelines 17 establish that such removal is improper unless the patient satisfies the Discharge 18 Guidelines, and CALOCUS precludes reevaluation before the patient has received 19 three months of care. Defendant’s argument, thus, fails. 20 Accordingly, the court concludes Defendant violated the terms of the Plan by 21 determining J.G.’s continued residential treatment was not medically necessary and 22 denying J.G. coverage for continued residential care. Plaintiff, thus, is entitled to 23 benefits. 24 B. Full and Fair Opportunity for Review 25 The Plan also failed to conform to the claims procedure required by statute and 26 regulation. Under federal law, an ERISA plan must: 27 (1) provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth 28 1 be understood by the participant, and (2) afford a reasonable opportunity to any participant whose claim for 2 benefits has been denied for a full and fair review by the appropriate 3 named fiduciary of the decision denying the claim. 4 29 U.S.C. § 1133. 5 ERISA requires “a meaningful dialogue between ERISA plan administrators 6 and their beneficiaries.” Booton v. Lockheed Med. Benefit Plan, 110 F.3d 1461, 1463 7 (9th Cir. 1997) (citing 29 C.F.R. 2560.503-1(g)(1) (former subd. (f))). “If benefits are 8 denied in whole or in part, the reason for the denial must be stated in reasonably clear 9 language, with specific reference to the plan provisions that form the basis for the 10 denial; if the plan administrators believe that more information is needed to make a 11 reasoned decision, they must ask for it.” Id. 12 “A plan administrator abuses its discretion if it renders a decision without any 13 explanation, construes provisions of the plan in a way that conflicts with the plain 14 language of the plan, or fails to develop facts necessary to its determination.” 15 Anderson v. Suburban Teamsters of N. Ill. Pension Fund Bd. of Trs., 588 F.3d 641, 16 649 (9th Cir. 2009). “The general rule … is that a court will not allow an ERISA plan 17 administrator to assert a reason for denial of benefits that it had not given during the 18 administrative process.” Harlick v. Blue Shield of Cal., 686 F.3d 699, 719–20 (9th 19 Cir. 2012). “The remedy for an improper denial of benefits due to a procedurally 20 deficient review of a claim is the same as the remedy for an improper denial of 21 benefits due to a substantively incorrect medical necessity determination.” Dan C., 22 2025 WL 1554927, at *2 n. 2 (citing Salomaa v. Honda Long Term Disability Plan, 23 642 F.3d 666, 680–81 (9th Cir. 2011)). 24 In Dan C., 2025 WL 1554927, at *2, the Ninth Circuit affirmed the lower 25 court’s ruling, in an unrelated action against Anthem and the Plan involving similar 26 facts, that the Plan deprived the plaintiff of a full and fair review due to a 27 “fundamental failure to explain to [the Dan C. plaintiff] that the Plan’s operative 28 definition of medical necessity required attempting lower levels of care—namely, an 1 intensive outpatient program [IOP] or partial hospitalization program [PHP]—before 2 residential treatment.” Although “the Plan’s medical reviewers noted internally that 3 IOP or PHP services would be more appropriate for [the minor] than residential 4 treatment,” subsequent letters from the Plan to the Dan C. plaintiff indicated only that 5 “residential treatment was not medically necessary because [the minor] did not pose a 6 danger to himself or others and did not experience serious problems with daily 7 functioning—and therefore could be treated with ‘outpatient services’ instead.” Id. at 8 *3. Because IOP or PHP were not mentioned to the plaintiff in writing until after the 9 minor’s discharge from the residential treatment facility, the Ninth Circuit held 10 Anthem and the Plan’s “inadequate notice deprived Plaintiff of the opportunity to 11 ‘answer[] in time’ the Plan’s questions about lower levels of care, to engage in 12 ‘meaningful dialogue’ on the issue of medical necessity, and to receive a ‘full and 13 fair’ review of the denial of his claim.” Id. (citing Salomaa, 642 F.3d at 679–80). 14 The denial letter here was nearly identical to the letter in Dan C., and stated: 15 “There may be other treatment options to help you, such as outpatient services,” 16 DGA_FG 000016, without explaining: (1) why J.G.’s prior “significant” outpatient 17 treatments, including at Outback, were insufficient; (2) what program or types of 18 outpatient programs Anthem and the Plan believed J.G. should attempt prior to 19 continued residential treatment;15 (3) why Anthem believed J.G. needed to interrupt 20 his residential treatment to attempt IOP or PHP services before he could receive 21 continued care; (4) why such interruption was medically necessary or appropriate 22 considering Anthem had approved his admission to residential treatment already; (5) 23 how J.G. was logistically or practically supposed to attempt IOP or PHP services to 24
25 15 Here, as in Dan C., 2025 WL 1554927, at *3, neither Anthem nor the Plan 26 mentioned IOP or PHP to Plaintiff in writing until four months after J.G. was discharged from Catalyst on June 4, 2021. See DGA_FG 001217 (letter denying 27 Plaintiff’s second-level appeal, dated October 7, 2021, stating for the first time that 28 “the most cost effective and efficient modality for the treatment is [PHP].” 1 obtain continued residential treatment, given that he was undergoing the previously 2 approved residential treatment when continued coverage was denied; and/or (6) what 3 evidence and analysis led Dr. Naimark and Anthem to conclude “[r]esidential care 4 [was] no longer necessary due to adequate patient stabilization or improvement” under 5 the MCG Guidelines, such that J.G. could be discharged to a lower level of care. 6 Here, as in Dan C., 2025 WL 1554927, at *2, Defendant’s inadequate notice 7 deprived Plaintiff of the opportunity to “answer[] in time” the Plan’s questions about 8 lower levels of care, engage in “meaningful dialogue” on the issue of medical 9 necessity, and receive a “full and fair” review of the denial of his claim. Defendant’s 10 subsequent letters to Plaintiff were similarly deficient and failed to provide Plaintiff a 11 “full and fair” review. See DGA_FG 000847–52, 000865–72, 001216–23.16 12 The court, therefore, finds Plaintiff’s benefits were improperly denied due to a 13 procedurally deficient review of his claim and that Plaintiff is entitled to benefits on 14 this additional basis. 15 III. Breach of Fiduciary Duty 16 “ERISA also provides a claim for breach of fiduciary duty.” Castillo v. Metro. 17 Life Ins. Co., 970 F.3d 1224, 1228 (9th Cir. 2020). “Just as trust law imposes duties 18 on trustees, ERISA imposes duties on plan fiduciaries.” Id. “A fiduciary, for 19 instance, must ‘discharge his duties with respect to a plan solely in the interest of the 20 participants and beneficiaries and ... with the care, skill, prudence, and diligence ... of 21 a prudent man.” Id. (brackets omitted) (quoting 29 U.S.C. § 1104(a)(1)). “An 22 individual bringing a claim under § 1132(a)(3) may seek ‘appropriate equitable relief,’ 23 which refers to ‘those categories of relief’ that, traditionally speaking … were 24
25 16 Notably, the Plan failed to offer any explanation for why MRI reviewed the appeals 26 under CALOCUS and CASII, rather than the MCG Guidelines, see DGA_FG 000865–67, 001216–18, which further deprived Plaintiff of the opportunity to engage 27 in “meaningful dialogue” on the issue of medical necessity and receive a “full and 28 fair” review of his appeals. 1 typically available in equity.” Id. at 1229 (cleaned up) (quoting CIGNA Corp. v. 2 Amara, 563 U.S. 421, 439 (2011)). 3 “Because § 1132(a)(3) acts as a safety net, offering appropriate equitable relief 4 for injuries caused by violations that [ERISA] § 502 does not elsewhere adequately 5 remedy, relief is not available under § 1132(a)(3) where Congress elsewhere provided 6 adequate relief for a beneficiary’s injury.” Id. (cleaned up). “Thus, a claimant may 7 not bring a claim for denial of benefits under § 1132(a)(3) when a claim under 8 § 1132(a)(1)(B) will afford adequate relief.” Id. “Claims under § 1132(a)(1)(B) and 9 § 1132(a)(3), however, may proceed simultaneously so long as there is no double 10 recovery.” Id. (quotation marks and citation omitted). 11 In the First Amended Complaint, Plaintiff seeks equitable relief including an 12 order “enjoining the Plan from using level of care guidelines that fall below 13 reasonable standards in the medical community, either as written or as applied, or 14 both,” in addition to his request to recover the full amount of benefits that were 15 denied. Dkt. 13 ¶ 56. Plaintiff’s Opening Trial Brief requests the court “fashion 16 appropriate relief so that neither Plaintiff nor other DGA plan participants are 17 subjected to such claims handling mis-administration.” Dkt. 87 at 22. Defendant 18 responds that any request for relief on behalf of a non-party is improper because 19 Plaintiff did not bring a class action and has not alleged any basis for third-party 20 standing. Dkt. 92 at 15. 21 Plaintiff did not demonstrate at trial that either he or J.G. are likely to have 22 future claims denied based on the level of care guidelines applied here, or that any 23 form of equitable relief is warranted for non-party Plan participants or beneficiaries. 24 The court, therefore, holds Plaintiff is not entitled to any relief beyond recovery of the 25 benefits due, prejudgment interest, and reasonable attorney’s fees and costs, and that 26 “[equitable] relief is not available [to Plaintiff] under § 1132(a)(3).” See Castillo, 970 27 F.3d at 1229; see also Dan C., 2025 WL 1554927, at *3. 28 / / / 1 CONCLUSION 2 Plaintiff's request to overturn Defendant’s denial of benefits is GRANTED, and 3 | judgment is entered in Plaintiffs favor on his § 1132(a)(1)(B) claim. Plaintiffs 4 | request for additional equitable relief under § 1132(a)(3) is DENIED. Plaintiff may 5 | bring a motion for attorney’s fees and costs as permitted under ERISA, 29 U.S.C. 6 | § 1132(a)(1)(B), (g)(1). Plaintiff shall file a proposed judgment and e-mail a Word 7 | format version directly to the court’s chambers email address within five (5) business 8 | days of the filing of this Order. 9 10 IT IS SO ORDERED. 11 12 | Dated: July 7, 2025 13 FERNANDO L. AENLLE-ROCHA United States District Judge 14 15S 16 17 18 19 20 21 22 23 24 25 26 27 28 94