NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUN 26 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
RYAN E., No. 19-55131
Plaintiff-Appellant, D.C. No. 2:18-cv-03646-MWF-AS v.
ENTERTAINMENT INDUSTRY FLEX MEMORANDUM* PLAN,
Defendant-Appellee,
and
ANTHEM BLUE CROSS LIFE AND HEALTH INSURANCE COMPANY,
Defendant.
Appeal from the United States District Court for the Central District of California Michael W. Fitzgerald, District Judge, Presiding
Argued and Submitted May 7, 2020 Pasadena, California
Before: MURGUIA and CHRISTEN, Circuit Judges, and HELLERSTEIN,** District Judge.
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Alvin K. Hellerstein, United States District Judge for the Southern District of New York, sitting by designation. Plaintiff-Appellant Ryan E. appeals from the decision of the district court,
following a bench trial, upholding the denial of medical benefits to his minor son,
Corbyn, by Defendant-Appellee Entertainment Industry Flex Plan (the “Plan”), a
plan subject to the Employee Retirement Insurance Security Act of 1974
(“ERISA”). We have jurisdiction pursuant to 28 U.S.C. § 1291. Familiarity with
the facts and procedural history of this case is assumed. For the reasons that
follow, we remand for further development of the record.
After Corbyn was diagnosed with a rare health condition known as Pediatric
Autoimmune Neuropsychiatric Syndrome (“PANS”), his treating physician, after
other attempted treatments failed, requested treatment with Intravenous
Immunoglobin (“IVIG”). The Plan reviewed the claim, determined that IVIG was
not “medically necessary,” as that term is defined in the Plan’s operative
documents, and denied coverage.
The Plan documents confer “sole and absolute discretion” to administer the
Plan on a Board of Trustees, authorize the Board to delegate this discretion to other
fiduciaries, and, acting on this authority, provide for the transfer of discretion from
the Board to a claims administrator, Anthem Blue Cross Life and Health Insurance
Company (“Anthem”). The letters communicating the denial of Corbyn’s claim,
and rejecting the appeals therefrom, all indicate that Corbyn’s request for IVIG
treatment was reviewed by Anthem UM Services, Inc. (“Anthem UM”) and that
2 Anthem UM provides “utilization review services on behalf of” Anthem.1 The
letters denying Corbyn’s request for coverage and later denying Corbyn’s first
appeal were written on Anthem UM letterhead; the letter denying Corbyn’s second
appeal was written on Anthem letterhead. These letters, taken together, suggest
that the review of Corbyn’s claim for coverage was undertaken by employees of
both Anthem and Anthem UM, along with a number of other outside medical
consultants. See, e.g., Excerpts of Record (“ER”) 688 (noting that Anthem UM’s
“Medical Reviewer” made the decision to deny coverage), 709 (“The reviewers
included a consultant outside Anthem”), 881 (“The reviewers included . . . an
Anthem Medical Director who is board certified in Family Medicine . . .”).
Following the denial of his second appeal, Ryan E. filed suit in federal court,
seeking to overturn the Plan’s decision. Ryan E. argued, inter alia, that the district
court should review the denial de novo because (1) although the Plan documents
may have conferred discretion on the Plan’s Board of Trustees and Anthem, no
such discretion was given to Anthem UM; and (2) it was Anthem UM that made
the actual decision to deny Corbyn coverage. The district court rejected this
argument, reviewed the denial deferentially, and upheld the coverage denial.
1 Public filings indicate that Anthem and Anthem UM are both subsidiaries of the same parent, Anthem, Inc. See Anthem, Inc., Annual Report (Form 10-K) for Fiscal Year Ended Dec. 31, 2019, Ex. 21, https://www.sec.gov/Archives/edgar/data/1156039/000115603920000003/exhibit2 1-20191231for1.htm.
3 We review de novo a district court’s choice and application of the standard
of review to decisions made by ERISA fiduciaries. See Pannebecker v. Liberty
Life Assur. Co. of Bos., 542 F.3d 1213, 1217 (9th Cir. 2008). By default, “review
of denial of ERISA benefits is de novo,” but when the plan “expressly and
unambiguously gives the administrator discretion to determine eligibility … we
review the administrator’s decision for abuse of discretion.” Salomaa v. Honda
Long Term Disability Plan, 642 F.3d 666, 673 (9th Cir. 2011) (citing, inter alia,
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). When, as here,
the plan clearly bestows discretion on a fiduciary, but an entity other than the
identified fiduciary makes the coverage decision, the question becomes whether
the deciding entity was properly vested with discretion. See Shane v. Albertson’s
Inc., 504 F.3d 1166, 1170 (9th Cir. 2007). If discretion was properly delegated to
the deciding entity pursuant to the plan provisions, deferential review is owed. See
Madden v. ITT Long Term Disability Plan for Salaried Employees, 914 F.2d 1279,
1283-84 (9th Cir. 1990). But if, on the other hand, the entity “was not properly
vested with such discretion, its decision . . . would not be subject to the deferential
standard of review of abuse of discretion.” Shane, 504 F.3d at 1170.
In the case before us, the district court upheld the denial of coverage using
an abuse of discretion standard. But in so doing, the court’s opinion leaves us
unsure of whether it found that (1) Anthem, the company with fiduciary
4 responsibility delegated under the Plan, made the decision to deny coverage with
assistance from Anthem UM; or (2) Anthem UM, acting as Anthem’s agent, made
the decision on Anthem’s behalf. The following four excerpts of the district court
illustrate the basis of our confusion:
1. “The appeal denial was made by . . . Anthem’s Medical Director.” See ER at 13.
2. “The [Plan] . . . invests Anthem with discretionary authority to determine eligibility for benefits and Anthem has properly exercised this discretion with the help of its affiliate, Anthem UM.” Id. at 19.
3. “The denial determination was made by Anthem UM’s medical reviewer.” Id. at 11.
4. “Plaintiff disputes the propriety of having Anthem UM act as Anthem’s agent and make certain decisions on behalf of Anthem.” Id. at 18.
Without clarification, the standard of review to be properly applied by the
district court is unclear. If Anthem, the authorized delegee of fiduciary discretion,
made the ultimate coverage decision, with possible help from Anthem UM, a
deferential standard might be appropriate. If Anthem UM made the decision, the
standard of review might be de novo. Anthem UM could be considered the agent
of Anthem, and there is a question of whether the delegee of fiduciary
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUN 26 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
RYAN E., No. 19-55131
Plaintiff-Appellant, D.C. No. 2:18-cv-03646-MWF-AS v.
ENTERTAINMENT INDUSTRY FLEX MEMORANDUM* PLAN,
Defendant-Appellee,
and
ANTHEM BLUE CROSS LIFE AND HEALTH INSURANCE COMPANY,
Defendant.
Appeal from the United States District Court for the Central District of California Michael W. Fitzgerald, District Judge, Presiding
Argued and Submitted May 7, 2020 Pasadena, California
Before: MURGUIA and CHRISTEN, Circuit Judges, and HELLERSTEIN,** District Judge.
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Alvin K. Hellerstein, United States District Judge for the Southern District of New York, sitting by designation. Plaintiff-Appellant Ryan E. appeals from the decision of the district court,
following a bench trial, upholding the denial of medical benefits to his minor son,
Corbyn, by Defendant-Appellee Entertainment Industry Flex Plan (the “Plan”), a
plan subject to the Employee Retirement Insurance Security Act of 1974
(“ERISA”). We have jurisdiction pursuant to 28 U.S.C. § 1291. Familiarity with
the facts and procedural history of this case is assumed. For the reasons that
follow, we remand for further development of the record.
After Corbyn was diagnosed with a rare health condition known as Pediatric
Autoimmune Neuropsychiatric Syndrome (“PANS”), his treating physician, after
other attempted treatments failed, requested treatment with Intravenous
Immunoglobin (“IVIG”). The Plan reviewed the claim, determined that IVIG was
not “medically necessary,” as that term is defined in the Plan’s operative
documents, and denied coverage.
The Plan documents confer “sole and absolute discretion” to administer the
Plan on a Board of Trustees, authorize the Board to delegate this discretion to other
fiduciaries, and, acting on this authority, provide for the transfer of discretion from
the Board to a claims administrator, Anthem Blue Cross Life and Health Insurance
Company (“Anthem”). The letters communicating the denial of Corbyn’s claim,
and rejecting the appeals therefrom, all indicate that Corbyn’s request for IVIG
treatment was reviewed by Anthem UM Services, Inc. (“Anthem UM”) and that
2 Anthem UM provides “utilization review services on behalf of” Anthem.1 The
letters denying Corbyn’s request for coverage and later denying Corbyn’s first
appeal were written on Anthem UM letterhead; the letter denying Corbyn’s second
appeal was written on Anthem letterhead. These letters, taken together, suggest
that the review of Corbyn’s claim for coverage was undertaken by employees of
both Anthem and Anthem UM, along with a number of other outside medical
consultants. See, e.g., Excerpts of Record (“ER”) 688 (noting that Anthem UM’s
“Medical Reviewer” made the decision to deny coverage), 709 (“The reviewers
included a consultant outside Anthem”), 881 (“The reviewers included . . . an
Anthem Medical Director who is board certified in Family Medicine . . .”).
Following the denial of his second appeal, Ryan E. filed suit in federal court,
seeking to overturn the Plan’s decision. Ryan E. argued, inter alia, that the district
court should review the denial de novo because (1) although the Plan documents
may have conferred discretion on the Plan’s Board of Trustees and Anthem, no
such discretion was given to Anthem UM; and (2) it was Anthem UM that made
the actual decision to deny Corbyn coverage. The district court rejected this
argument, reviewed the denial deferentially, and upheld the coverage denial.
1 Public filings indicate that Anthem and Anthem UM are both subsidiaries of the same parent, Anthem, Inc. See Anthem, Inc., Annual Report (Form 10-K) for Fiscal Year Ended Dec. 31, 2019, Ex. 21, https://www.sec.gov/Archives/edgar/data/1156039/000115603920000003/exhibit2 1-20191231for1.htm.
3 We review de novo a district court’s choice and application of the standard
of review to decisions made by ERISA fiduciaries. See Pannebecker v. Liberty
Life Assur. Co. of Bos., 542 F.3d 1213, 1217 (9th Cir. 2008). By default, “review
of denial of ERISA benefits is de novo,” but when the plan “expressly and
unambiguously gives the administrator discretion to determine eligibility … we
review the administrator’s decision for abuse of discretion.” Salomaa v. Honda
Long Term Disability Plan, 642 F.3d 666, 673 (9th Cir. 2011) (citing, inter alia,
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). When, as here,
the plan clearly bestows discretion on a fiduciary, but an entity other than the
identified fiduciary makes the coverage decision, the question becomes whether
the deciding entity was properly vested with discretion. See Shane v. Albertson’s
Inc., 504 F.3d 1166, 1170 (9th Cir. 2007). If discretion was properly delegated to
the deciding entity pursuant to the plan provisions, deferential review is owed. See
Madden v. ITT Long Term Disability Plan for Salaried Employees, 914 F.2d 1279,
1283-84 (9th Cir. 1990). But if, on the other hand, the entity “was not properly
vested with such discretion, its decision . . . would not be subject to the deferential
standard of review of abuse of discretion.” Shane, 504 F.3d at 1170.
In the case before us, the district court upheld the denial of coverage using
an abuse of discretion standard. But in so doing, the court’s opinion leaves us
unsure of whether it found that (1) Anthem, the company with fiduciary
4 responsibility delegated under the Plan, made the decision to deny coverage with
assistance from Anthem UM; or (2) Anthem UM, acting as Anthem’s agent, made
the decision on Anthem’s behalf. The following four excerpts of the district court
illustrate the basis of our confusion:
1. “The appeal denial was made by . . . Anthem’s Medical Director.” See ER at 13.
2. “The [Plan] . . . invests Anthem with discretionary authority to determine eligibility for benefits and Anthem has properly exercised this discretion with the help of its affiliate, Anthem UM.” Id. at 19.
3. “The denial determination was made by Anthem UM’s medical reviewer.” Id. at 11.
4. “Plaintiff disputes the propriety of having Anthem UM act as Anthem’s agent and make certain decisions on behalf of Anthem.” Id. at 18.
Without clarification, the standard of review to be properly applied by the
district court is unclear. If Anthem, the authorized delegee of fiduciary discretion,
made the ultimate coverage decision, with possible help from Anthem UM, a
deferential standard might be appropriate. If Anthem UM made the decision, the
standard of review might be de novo. Anthem UM could be considered the agent
of Anthem, and there is a question of whether the delegee of fiduciary
responsibility can sub-delegate to another, even to an agent, without contractual
authorization and still be entitled to deference. While we have previously held in
other narrowly defined circumstances that common law agency principles may
apply in the ERISA context, see, e.g., Salyers v. Metro. Life Ins. Co., 871 F.3d 934,
5 940-41 (9th Cir. 2017) (noting that the Supreme Court has “left open the
opportunity for federal courts to apply agency law in the ERISA context as a
matter of federal common law,” and using agency principles to attribute
knowledge concerning plan administration from an agent-employer to a principal-
insurer), we are not aware of any case in which we have considered the
applicability or effect of agency principles on the standard of review applicable to
delegations of discretionary decision-making authority by an ERISA fiduciary to
an agent.
Accordingly, we remand for further proceedings. On remand, the district
court is instructed to clarify the record with respect to (1) the nature of the
relationship between Anthem and Anthem UM; (2) the roles of the various agents
and employees of each company in making the coverage determination; and (3) the
expectation of the parties, if any, when delegating administrative responsibilities to
Anthem, as to whether Anthem would act on its own or through an agent or
affiliate.
VACATED and REMANDED.