Lisa Mirsky v. Horizon Blue Cross Blue Shield , 586 F. App'x 893 ( 2014 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 13-4121
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LISA MIRSKY
v.
HORIZON BLUE CROSS AND BLUE SHIELD OF NEW JERSEY,
Appellant
__________________________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 2-11-cv-02038)
District Judge: Honorable Dennis M. Cavanaugh
__________________________
Submitted Under Third Circuit L.A.R. 34.1(a)
July 11, 2014
Before: SMITH, VANASKIE, and SLOVITER, Circuit Judges
(Filed: September 26, 2014)
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OPINION
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VANASKIE, Circuit Judge.
Horizon Blue Cross Blue Shield of New Jersey (“Horizon”) appeals the District
Court’s grant of summary judgment in favor of Lisa Mirsky, a member of an employee
benefit plan (“the Plan”) administered by Horizon and governed by the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1101, et seq. Horizon
denied Mirsky’s claim for inpatient medical treatment. After considering the record,
including the unanimous consensus of Mirsky’s treating physicians that continuing
inpatient treatment was medically necessary, the District Court concluded that Horizon’s
coverage denial had been arbitrary and capricious. We will affirm the decision in
Mirsky’s favor, effectively awarding her benefits, but remand for the District Court to
determine in the first instance the amount of benefits to which Mirsky is entitled under
the terms of the Plan.
I.
We write primarily for the parties, who are familiar with the facts and procedural
history of this case. Accordingly, we will provide only a brief synopsis of the relevant
factual background.
After being diagnosed with bulimia and post-traumatic stress disorder, Mirsky
became unable to function in her workplace, contemplated suicide, and subsequently was
admitted to the Castlewood Treatment Center on June 7, 2010. Horizon authorized
Mirsky’s initial treatment at Castlewood as covered by the terms of the Plan and
designated Magellan Health Services to administer her continued inpatient treatment.
Although Magellan approved reimbursement for Mirsky’s care at Castlewood
through July 6, 2010, it denied coverage for inpatient treatment following that date,
claiming that such care was no longer medically necessary. Magellan reached this
conclusion despite the consensus of Mirsky’s treating therapists and physicians, who, in
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the District Court’s words, “unanimously agreed that she was not mentally fit to return to
the community as an outpatient.” App. 12.
Castlewood, acting on Mirsky’s behalf, filed an internal appeal of the denial of
coverage with Magellan on July 8, 2010. Magellan upheld its denial the following day
and Castlewood requested a Second Level Appeal on July 12. The next day, an Appeal
Subcommittee, consisting of physicians employed by Horizon, affirmed the denial.
Mirsky then pursued an external appeal with Permedion, an Independent Utilization
Review Organization (IURO) assigned by the New Jersey Department of Banking and
Insurance. Mirsky submitted correspondence to Permedion that had not been presented
to Horizon during the internal appeals process. Permedion completed its review on
August 24, 2010 and upheld Magellan’s denial of coverage for Mirsky’s continuing
inpatient treatment.
Mirsky remained in inpatient treatment at Castlewood through December 2010, at
a cost of approximately $30,000 per month. She brought this action to recover the
benefits due to her under the Plan for her continued inpatient treatment.
II.
The District Court had jurisdiction under 28 U.S.C. § 1331, and we have
jurisdiction under 28 U.S.C. § 1291. Before turning to the merits of the appeal, we must
determine the proper scope of the record for our review. Horizon contends that the
District Court erred by considering documents that Permedion reviewed during the
external appeal of Mirsky’s benefit denial, but which Horizon had not had the
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opportunity to consider during its internal review. Horizon argues the scope of the record
should be limited to the information Horizon reviewed during Mirsky’s internal second
level appeal. The District Court reasoned that it must “‘look to the record as a whole,’”
and review all “‘evidence that was before the administrator when he made the decision
being reviewed.’” App. 10 (quoting Mitchell v. Eastman Kodak Co., 113 F.3d 433, 440
(3d Cir. 1997) (abrogated on other grounds)). Although Permedion’s review was
conducted by an external body, the District Court concluded that the external review was
“part of Horizon’s clearly articulated review process,” and evidence introduced during
that appeal was therefore part of the record. Id.We agree with the District Court that the record encompasses these documents,
which include letters from Mirsky’s treating physicians and therapists at Castlewood that
are highly relevant to assessing whether the final decision to deny coverage for continued
inpatient treatment was supported by substantial evidence. After denying Mirsky
coverage under the Plan, Horizon was required by regulation to “[p]rovide for a review
that takes into account all comments, documents, records, and other information
submitted by the claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.” 29 C.F.R.
§ 2560.503-1(h)(2)(iv). The Plan provided for two internal appeals and one external
review, during which Mirsky was permitted to supplement the record with information
that had not been before Horizon at the time of the initial coverage denial. Because the
external review was the last appeal conducted prior to the filing of this action,
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information considered during that review was properly before the District Court and can
be considered in this appeal.1
III.
Turning to the merits of Horizon’s appeal, we exercise de novo review of the
District Court’s grant of summary judgment and “employ the same legal standards
applied by the District Court in the first instance.” Courson v. Bert Bell NFL Player Ret.
Plan, 214 F.3d 136, 142 (3d Cir. 2000). “We may affirm the order when the moving
party is entitled to judgment as a matter of law, with the facts viewed in the light most
favorable to the non-moving party.” Kossler v. Crisanti, 564 F.3d 181, 186 (3d Cir.
2009). Because the terms of the Plan granted “discretionary authority to the
administrator or fiduciary to determine eligibility for benefits or to interpret the terms of
the plan,” the District Court reviewed the denial of coverage under an arbitrary and
capricious standard. Estate of Schwing v. The Lilly Health Plan, 562 F.3d 522, 525 (3d
Cir. 2009). “An administrator’s decision is arbitrary and capricious if it is without
reason, unsupported by substantial evidence or erroneous as a matter of law.” Miller v.
Am. Airlines, Inc., 632 F.3d 837, 845 (3d Cir. 2011) (quotations and citations omitted).
This standard is “highly deferential.” Courson, 214 F.3d at 142.
1
As we conclude that the District Court properly considered the supplemental
evidence presented to Permedion during the external review, we do not agree with
Horizon’s contention that the District Court instead should have remanded the claim to
Horizon to consider this supplemental information in the first instance.
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Mirsky’s entitlement to coverage for the duration of her treatment at Castlewood
was governed by the “Criteria for Continued Stay” set forth in the Plan. In this regard,
the Plan provides:
Criteria A, B, C, and either D or E must be met to satisfy the
criteria for continued stay.
A. Despite reasonable therapeutic efforts, clinical evidence
indicates at least one of the following:
• the persistence of problems that caused the admission to a
degree that continued to meet the admission criteria (both
severity of need and intensity of service needs), or
• the emergence of additional problems that meet the
admission criteria (both severity of need and intensity of
service needs), or
• that disposition planning, progressive increases in hospital
privileges and/or attempts at therapeutic re-entry into the
community have resulted in, or would result in exacerbation
of the psychiatric illness to the degree that would necessitate
continued hospitalization, or
• a severe reaction to medication or need for further
monitoring and adjustment of dosage in an inpatient setting,
documented in daily progress notes by a physician.
B. the current treatment plan includes documentation of
diagnosis (DSM-IV axes 1-v), individualized goals of
treatment, treatment modalities needed and provided on a 24-
hour basis, discharge planning, and intensive family
therapeutic involvement occurring several times per week
(unless there is an identified valid reason why such a plan is
not clinically appropriate or feasible). This plan receives
regular review and revision that includes ongoing plans for
timely access to treatment resources that will meet the
patient’s post-hospitalization needs.
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C. the current or revised treatment plan can be reasonably
expected to bring about significant improvement in the
problems meeting criterion IIIA. This evolving clinical status
is documented by daily progress notes, one of which
evidences a daily examination by the psychiatrist.
D. the patient's weight remains <85% of IBW [Ideal Body
Weight] and he/she fails to achieve a reasonable and expected
weight gain despite provision of adequate caloric intake.
E. there is a continued inability to adhere to a meal plan and
maintain control over urges to binge/purge such that
continued supervision during and after meals and/or in
bathrooms is required. In order to satisfy this criterion, there
must be evidence that the patient is unable to participate in
ambulatory or residential treatment.
App. 512.
The District Court thoroughly analyzed the “Criteria for Continued Stay” that
bound Horizon and found that Mirsky should not have been denied coverage, as she had
satisfied Criteria A through C, along with Criterion E, thereby establishing that continued
treatment was medically necessary under the terms of the Plan. After our own
comprehensive review of the record, we agree with the District Court’s conclusion that
the denial of continued inpatient treatment was not supported by “substantial evidence.”
The District Court found that Mirsky had satisfied Criterion A, which required,
inter alia, the patient to display “the persistence of problems that caused the admission to
a degree that continued to meet the admission criteria . . . ,” or “a . . . need for further
monitoring and adjustment of [medication] dosages in an inpatient setting.” Id. We
agree with the District Court that Horizon did not present any evidence to rebut the
opinions of Mirsky’s treating physicians that continued inpatient care was necessary.
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Mirsky’s treating physicians urged that her lifelong struggle with bulimia and her history
of relapses following periods of inpatient treatment indicated that “if she is discharged
now, she is likely to relapse quickly . . . ,” and that “if she is discharged now to standard
outpatient care, she will relapse almost immediately and will require further inpatient
treatment within the next 6 to 12 months, if not sooner.” App. 221, 219. Although
Horizon argued to the District Court that Mirsky had made progress as of July 6, 2010 by
“‘completing her meal plan, not purging, and even self portioning out food,’” App. 12,
the District Court properly reasoned that Criterion A does not demand that coverage for
inpatient care must cease as soon as a patient demonstrates some progress. Rather,
Criterion A allows for continued coverage where patients demonstrate a “need for further
monitoring.” App. 512. There is no dispute that Mirsky’s healthcare providers
reasonably believed that she required additional monitoring and that the severe symptoms
that justified her admission, as well as Horizon’s decision to cover her healthcare costs,
were persisting. Horizon did not present the District Court with “substantial evidence”
undermining the conclusions of her healthcare providers.
The District Court also found that Criterion B of the Plan, which requires a patient
to be engaged in a treatment plan which contains several specified components and
receives “regular review and revision that includes ongoing plans for timely access to
treatment resources that will meet the patient's post-hospitalization needs,” had been
indisputably satisfied. App. 512. We agree that the correspondence of Mirsky’s treating
physicians demonstrates that a viable treatment plan was in place, which included goals
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for transitioning Mirsky into outpatient care. Castlewood Staff Psychiatrist Anna Jurec
wrote that Castlewood intended to transition Mirsky out of inpatient care and into partial
hospitalization “as soon as she is capable of autonomously maintain [sic] adequate
nutrition without binging and purging, and anxiety and trauma are stabilized enough for
client to manage without 24 hour structure.” App. 268. Horizon has not directed us to
anything in the record which would support the conclusion that Mirsky’s treatment plan
at the time of the coverage denial failed to satisfy Criterion B.
Criterion C requires that “[t]he current or revised treatment plan can be reasonably
expected to bring about significant improvement in the problems” identified by Criterion
A, and that the patient’s clinical status is “documented by daily progress notes, one of
which evidences a daily examination by the psychiatrist.” App. 512. Horizon does not
allege that Mirsky’s treatment at Castlewood was unlikely to help improve her eating
disorder, but instead argues that Mirsky had already achieved the maximum benefits of
inpatient treatment—a claim unsupported by any of her treating physicians and belied by
her history of relapses. Horizon likewise does not argue that Castlewood failed to
maintain the appropriate records documenting Mirsky’s “evolving clinical status.” Id.The terms of the Plan only required Mirsky to meet either Criterion D or E in
order to demonstrate that continued care was medically necessary. Although the District
Court concluded Mirsky did not meet Criterion D, it found that at the time of the denial,
Criterion E was satisfied. Criterion E requires a showing that “[t]here is a continued
inability to adhere to a meal plan and maintain control over urges to binge/purge such
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that continued supervision during and after meals and/or in bathrooms is required,” as
well as “evidence that the patient is unable to participate in ambulatory or residential
treatment.” Id. Horizon contended that this requirement was not met, as Mirsky had not
binged or purged in the inpatient setting since June 11, 2010. The District Court found
this argument unconvincing, given that Mirsky’s ability to binge and purge was restricted
in the inpatient setting, where she was monitored around the clock and “‘refrigerators,
cabinets, and bathrooms were locked.’” App. 15.
We agree with the District Court. As discussed supra, the consensus of Mirsky’s
treating physicians was that her lifelong struggle with bulimia and her history of relapses
following inpatient treatment indicated that she was not yet ready to transition into
outpatient treatment at the time of the coverage denial. Evidence that Mirsky was not
binging or purging under the restrictive conditions of inpatient care does not provide
substantial support for the proposition—contradicted by all of her treating physicians—
that Mirsky would not binge or purge once released from inpatient treatment. Therefore,
Criterion E was satisfied, as Horizon has not presented substantial evidence that Mirsky
would have been able to transition out of inpatient treatment at the time of the coverage
denial.
Because Mirsky satisfied all of the requisite Criteria for demonstrating that
continued inpatient treatment was medically necessary, Horizon’s denial of coverage was
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arbitrary and capricious. Therefore, we will affirm the District Court’s grant of summary
judgment in favor of Mirsky on her ERISA claim.2
IV.
Horizon next contends that the District Court erred by awarding Mirsky
compensatory damages for the total cost of her inpatient care at Castlewood through
December 2010. Contrary to Horizon’s argument, the District Court did not award
compensatory damages to Mirsky. Instead, its order simply granted summary judgment
in favor of Mirsky on her claim for benefits for her continued inpatient care after Horizon
discontinued coverage. The District Court, however, made no determination as to the
dollar value of the benefits due Mirsky. Accordingly, we will remand the matter to the
District Court to determine the amount of benefits due to Mirsky under the Plan.3
2
Horizon’s argument that Mirsky lacks standing to bring an ERISA claim because
her father paid for her continued inpatient care after Horizon’s denial of coverage is
specious. Mirsky was the Plan member who received treatment for her serious condition
and sought coverage for that treatment. How Mirsky paid for her care at Castlewood
after Horizon’s wrongful denial of coverage is irrelevant. It is to Mirsky that Horizon has
an obligation to pay benefits under the Plan, and Horizon cannot evade its obligation
because Mirsky’s father paid the bills that should have been paid by Horizon.
3
On appeal, Horizon argues for the first time that Mirsky has not demonstrated
that inpatient treatment remained medically necessary through December 2010. This
argument was not raised before the District Court and should be treated as waived on
remand.
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V.
For the foregoing reasons, we will affirm the District Court’s grant of summary
judgment in favor of Mirsky, but remand for the District Court to determine the amount
of benefits payable to Mirsky under the Plan.
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