Kelly Yox v. Providence Health Plan , 659 F. App'x 941 ( 2016 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS SEP 9 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
KELLY J. YOX, No. 14-35127
Plaintiff-Appellee, D.C. No. 3:12-cv-01348-HZ
v.
MEMORANDUM*
PROVIDENCE HEALTH PLAN,
Defendant-Appellant.
KELLY J. YOX, No. 14-35144
Plaintiff-Appellant, D.C. No. 3:12-cv-01348-HZ
v.
PROVIDENCE HEALTH PLAN,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Oregon
Marco A. Hernandez, District Judge, Presiding
Argued and Submitted July 5, 2016
Portland, Oregon
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: PREGERSON, BEA, and OWENS, Circuit Judges.
Providence Health Plan (Providence) appeals from the district court’s
summary judgment in favor of Kelly Yox. After a seizure-induced fall fractured
her jaw, Yox’s group health plan (the Plan) covered the costs for initial surgeries.
The Plan was funded and administered by Providence under the Employee
Retirement Income Security Act of 1974 (ERISA). Yox sought, but was denied,
preauthorization for additional trauma-related dental services under the Plan. The
district court held that Providence had abused its discretion in denying this
preauthorization request and that Yox’s agreement to have her denial reviewed by
an Independent Review Organization (IRO) did not constitute an agreement to
arbitrate. On cross-appeal, Yox argues that the district court erred in finding that
the scope of her claim was limited to Yox’s initial preauthorization request. We
have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.
1. We review de novo whether a party has waived the right to sue by
agreeing to arbitration under the Federal Arbitration Act (FAA). See Nagrampa v.
MailCoups, Inc., 469 F.3d 1257, 1267 (9th Cir. 2006). We look to state law to
supply the meaning of the term “arbitration” for the purposes of the FAA. See
Portland Gen. Elec. Co. v. U.S. Bank Tr. Nat’l Ass’n, 218 F.3d 1085, 1086, 1091
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(9th Cir. 2000). Because Oregon law provides little guidance regarding whether the
Plan’s IRO constitutes arbitration, see O.R.S. § 36.110(1), the district court was
correct in relying on the Supreme Court’s analysis of a similar independent review
statute. See Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 382–83 (2002). In
Rush, the Court analyzed an Illinois statute that guaranteed patients an independent
and binding medical review of claims denied for not being “medically necessary.”
Id. at 361. The Court stated that the Illinois review process was “significantly
different from common arbitration” and looked “like a practice (having nothing to
do with arbitration) of obtaining another medical opinion.” Id at 382–83. The
Oregon IRO is largely indistinguishable from the one addressed in Rush. Thus, the
district court did not err in finding that the IRO at issue here, like the one analyzed
in Rush, was not an arbitration enforceable under the FAA.
2. “[W]e review a district court’s choice and application of the appropriate
standard for reviewing benefits decisions by an ERISA plan administrator de
novo.” Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623, 629 (9th Cir.
2009) (internal quotation marks omitted). Where, as here, the plan administrator is
granted discretionary authority to determine benefits eligibility and to construe
plan terms, the administrator’s decision is generally reviewed for abuse of
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discretion. Id. at 629–30; see also Abatie v. Alta Health & Life Ins. Co., 458 F.3d
955, 971–72 (9th Cir. 2006) (en banc).
We will customarily uphold an administrator’s decision if it is “grounded on
any reasonable basis.” Montour, 588 F.3d at 629 (internal quotation marks
omitted). This deference is tempered where, as here, the plan administrator has a
structural conflict of interest, being the entity that both funds and administers the
benefits plan. See Abatie, 458 F.3d at 965; Salomaa v. Honda Long Term
Disability Plan, 642 F.3d 666, 675 (9th Cir. 2011). Other case-specific factors
heighten our judicial scrutiny of an administrator’s benefits decision, including
procedural irregularities, the quality and quantity of the medical evidence, and the
administrator’s reliance on a paper review of the claimant’s medical records.
Abatie, 458 F.3d at 972; Montour, 588 F.3d at 630.
The district court did not err in holding that Providence abused its discretion.
First, Providence did not follow important procedural requirements. Providence
failed to adequately notify Yox of her right to bring a civil action under ERISA §
502(a). See 29 C.F.R. § 2560.503-1(g)(1)(iv) and (j)(4). Providence also failed to
consult a professional with “appropriate training and experience in the field of
medicine involved in the medical judgment.” See 29 C.F.R. § 2560.503-
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1(h)(3)(iii). Ignoring these regulations “contravenes the purpose of ERISA” and
weighs in favor of finding an abuse of discretion. Abatie, 458 F.3d at 974.
Second, Providence did not meet its procedural obligations to Yox in
assessing the substance of her claim. Providence continually asserted that Yox’s
treatment was dental rather than medical, but provided no evidentiary basis for its
decision beyond this conclusory statement. Although Yox failed to schedule the in-
person dental review Providence requested, Providence failed to consult with
adequately trained professionals when analyzing Yox’s preauthorization request.
See, e.g., Zavora v. Paul Revere Life Ins. Co., 145 F.3d 1118, 1122–23 (9th Cir.
1998). Moreover, Providence arbitrarily refused to address the clinical evaluation
submitted by Yox’s treating dentist. See Black & Decker Disability Plan v. Nord,
538 U.S. 822, 834 (2003). When Providence did address the evaluation provided
by another dentist, it discounted the dentist’s opinion as “insufficient” without
further explanation. Providence’s conclusory opinion does not satisfy its duty
under ERISA. See Salomaa, 642 F.3d at 680 (“An administrator does not do its
duty under the statute and regulations by saying merely ‘we are not persuaded’ or
‘your evidence is insufficient.’”).
Third, Providence’s structural conflict of interest appears to have played a
5
role in its decision. Providence consistently failed to credit Yox’s reliable
evidence, failed to consult with professionals adequately trained to assess Yox’s
request, and failed to explain the evidentiary basis for its decision. See Abatie 458
F.3d at 968–69. Because of this manifest conflict of interest, we must view
Providence’s decision with heightened skepticism; it is simply not enough for us to
“scan[] the record for medical evidence supporting” Providence’s decision, even if
such evidence exists. Montour, 588 F.3d at 630. The district court did not err in
factoring Providence’s conflict of interest into its abuse of discretion analysis.
The district court correctly found that these procedural, substantive, and
structural issues, although alone not dispositive, together support a finding that
Providence abused its discretion.
3. The district court properly held that the scope of Yox’s claim does not
include the expanded services she requested after starting her internal appeal.
Providence never had a chance for first review of the additional claim, because the
appeals process addresses only the scope of the initial denial. That Providence did
not change its appeals process to include Yox’s expanded claim is not arbitrary,
nor does it conflict with the plain language of the Plan. See Schikore v.
BankAmerica Supplemental Ret. Plan, 269 F.3d 956, 960 (9th Cir. 2001).
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AFFIRMED.
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FILED
Yox v. Providence Health Plans, Nos. 14-35127, 14-35144
SEP 09 2016
BEA, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I agree with the majority that the district court did not err in finding that the
IRO at issue here was not an arbitration enforceable under the FAA. In addition, I
agree that the district court properly held that the scope of Yox’s claim does not
include the expanded services she requested after starting her internal appeal.
Unlike the majority, however, I would hold that the district court erred in holding
that Providence had abused its discretion in denying Yox’s claim.
First, the majority asserts that Providence did not follow various procedural
requirements. According to the majority, Providence failed adequately to notify
Yox of her right to bring a civil action under ERISA § 502(a). Although
Providence’s benefits determination letters did not include a statement of her right
to bring an action under ERISA § 502, I would hold that Providence nonetheless
adequately complied with its procedural obligations. Yox’s Plan documents stated
that the Plan was governed by ERISA, the claim denials stated that Yox had the
right to internal appeal and independent review of her claim, and the Plan
documents stated that she was entitled to file suit in state or federal court
concerning any denied claim for benefits as a beneficiary under an ERISA plan.
The majority also asserts that Providence failed to consult a professional
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with “appropriate training and experience in the field of medicine involved in the
medical judgment.” See 29 C.F.R. § 2560.503-1(h)(3)(iii). However, the issue
underlying Yox’s claim was not the diagnosis of Yox’s dental condition, but rather
whether the evidence Yox submitted indicated that her fall caused her dental
problems. This issue of cause and effect did not require specialized dental
knowledge.
Second, the majority asserts that Providence did not meet its procedural
obligations in assessing the substance of Yox’s claim. The majority asserts that
Providence provided no evidentiary support for its decision beyond the conclusory
statement that Yox’s treatment was dental rather than medical. However, the
internal documentation associated with both the initial denial and the first level
appeal denial noted that the extensive dental problems that Yox experienced were
not caused by the mandibular traumatic fracture, but rather preexisted her fall.
Stating that Yox’s dental condition was not caused by the trauma is not a
conclusory statement, but a factual finding. This finding of no causation is
supported by the record.
Furthermore, the majority asserts that Providence arbitrarily refused to
address the clinical evaluation that was submitted by Yox’s treating dentist. Under
ERISA, however, administrators need not “credit the opinions of treating
2
physicians over other evidence relevant to the claimant’s medical condition.”
Black & Decker Disability Plan, 538 U.S. at 825. Moreover, ERISA imposes no
“discrete burden of explanation when [plan administrators] credit reliable evidence
that conflicts with a treating physician’s evaluation.” Id. at 834. Here,
Providence’s disagreement with Yox’s treating dentist was not arbitrary. Yox’s
medical records indicated widespread tooth decay and various periodontal
conditions existed before her fall. Providence had a rational basis to disagree with
the conclusions of Yox’s treating dentist.
Third, the majority asserts that Providence’s structural conflict of interest
played a role in its decision, basing this conclusion on Providence’s failure to
credit Yox’s reliable evidence, failure to consult with adequately trained
professionals, and failure to explain the evidentiary basis for its decision. For the
reasons explained above, I disagree with each of these bases for the majority’s
conclusion. There is no evidence that Providence’s structural conflict of interest
improperly influenced its decision. Accordingly, there is no reason to give
additional weight to this factor.
I would thus hold that the district court erred in holding that Providence had
abused its discretion in denying Yox’s claim. I therefore respectfully dissent.
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