Meredith Solomon v. Medical Mutual of Ohio

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 11a0005n.06
No. 09-4152 FILED
Jan 04, 2011
UNITED STATES COURT OF APPEALS LEONARD GREEN, Clerk
FOR THE SIXTH CIRCUIT
MEREDITH SOLOMON, )
)
Plaintiff-Appellant, )
) ON APPEAL FROM THE UNITED
v. ) STATES DISTRICT COURT FOR THE
) NORTHERN DISTRICT OF OHIO
MEDICAL MUTUAL OF OHIO, )
)
Defendant-Appellee. )
Before: MERRITT, GIBBONS, and COOK, Circuit Judges.
COOK, Circuit Judge. In an action brought pursuant to the Employee Retirement Income
Security Act (ERISA), Meredith Solomon sought reimbursement from Medical Mutual of Ohio
(MMO) for charges she incurred for treatment of her cocaine addiction. The district court upheld
MMO’s benefits determination and granted summary judgment to MMO. Solomon now appeals,
arguing that the district court erred by applying arbitrary and capricious rather than de novo review,
accepting MMO’s interpretation of the insurance plan (the Plan), and rejecting her equitable-estoppel
argument. We affirm.
I.
In January 2007, following significant weight loss, multiple overdoses, and a family
intervention, Solomon decided to seek treatment for her cocaine addiction. Medical insurance
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coverage instructions printed on an MMO-issued identification card led Solomon to peruse the First
Health Network (First Health) website, which listed the Hanley Center (Hanley) as an in-network
treatment facility. It turned out that, unbeknownst to Solomon, the outdated website failed to show
that MMO had removed Hanley from its provider network at the end of the previous year. Solomon
checked into Hanley and, despite being warned that the Plan would not cover her treatment there,
stayed nearly two months. After checking out, Solomon participated in Hanley’s outpatient therapy.
In all, she incurred charges in excess of $40,000.
The Plan limits coverage to services deemed “Medically Necessary,” defined in part as “the
most appropriate . . . level of service which can be safely provided” to diagnose or treat the
member’s condition, and distinguishes between multiple such “level[s] of service.” Relevant here
is the distinction between “inpatient” care and “residential” care. A facility offering inpatient drug
abuse treatment “mainly provides detoxification and/or rehabilitation treatment.” By contrast, a
facility offering residential treatment “provid[es] an individual treatment plan for the chemical,
psychological and social needs of each of its residents,” and its “[r]esidents do not require care in
an acute or more intensive medical setting.” Plan eligibility for inpatient care coverage requires that
a member meet both of the following requirements:
• establish medical necessity by showing “that [her] medical symptoms or [c]ondition
require [sic] that the services cannot be safely or adequately provided to [her] as an
[o]utpatient,” and
• obtain MMO’s pre-approval for inpatient admission for drug abuse treatment.
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The plan excludes all coverage for residential care: “[R]esidential care rendered by a Residential
Treatment Facility is not covered.”
Within days of Solomon’s admission to Hanley, MMO informed her that the Plan did not
cover her treatment. Solomon contends that her mental and physical condition at that time prevented
her from disputing the coverage decision. Months later, after checking out of the facility and while
still participating in outpatient care, Solomon submitted an insurance claim to MMO. MMO’s initial
Explanation of Benefits denied Solomon’s claim because her “benefit plan [did] not provide
coverage for this service.” Following Solomon’s internal appeal, MMO’s review prompted a
redetermination that she “[did] not meet medical necessity criteria for inpatient rehabilitation
services” because, among other reasons, she was psychiatrically and medically stable and did not
exhibit severe risk factors. Finding that Solomon’s treatment could thus have been handled “in a less
restrictive level of care,” MMO affirmed its determination to deny her claim.
Following this internal determination, Solomon triggered her right to review by an
independent doctor. According to Dr. Edward M. Lukawski of Lumetra, an Independent Review
Organization, Solomon’s condition necessitated an “acute level of care” for her first two days of
treatment but only “residential treatment” for the remainder of her stay. After receiving Dr.
Lukawski’s assessment, MMO paid Hanley for the two medically necessary days of Solomon’s stay
at the out-of-network rate and denied the remainder of her claim because Plan benefits excluded
coverage of “inpatient admission for residential treatment for . . . substance abuse.”
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Solomon objected to the use of the out-of-network rate for the allowed days because the
outdated website misled her. Upon further consideration, MMO agreed to pay for the first two days
of Solomon’s stay at the in-network rate because of First Health’s error. MMO refused, however,
to pay an in-network rate for any reimbursable expenses incurred after First Health updated its
website.
Having exhausted the appeals process, Solomon sought relief in state court. MMO removed
the case to federal court on preemption grounds and Solomon amended her complaint to allege a
wrongful denial of benefits under ERISA. When Solomon later failed to file a requested
supplemental brief supporting her motion for summary judgment, the district court interpreted
Solomon’s silence as conceding MMO’s supplemental arguments, found that MMO’s reasons for
resolving Solomon’s claims satisfied arbitrary and capricious review, dismissed Solomon’s claim
with prejudice, and granted summary judgment to MMO. Solomon then moved to file her
supplemental brief instanter and vacate the grant of summary judgment. In denying both motions,
the district court clarified that even if it had considered the arguments in Solomon’s supplemental
brief, it still would have found in favor of MMO because the Plan excluded coverage for the
residential treatment Hanley provided, and the Plan required pre-approval of any inpatient care.
Solomon now appeals.
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II.
Solomon first challenges the standard of review the district court employed in reviewing
MMO’s resolution of her claims. Courts review the decision of a plan administrator de novo
“‘unless the benefit plan gives the administrator or fiduciary discretionary authority to determine
eligibility for benefits or to construe the terms of the plan,’” in which case arbitrary and capricious
review applies. Haus v. Bechtel Jacobs Co., 491 F.3d 557, 561 (6th Cir. 2007) (quoting Firestone
Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). “[D]iscretion is the exception, not the rule
and . . . the arbitrary and capricious standard does not apply unless there is a clear grant of discretion
to determine benefits or interpret the plan.” Wulf v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th
Cir. 1994). This court reviews de novo the standard of review applied by the district court. Shelby
Cnty. Health Care Corp. v. Majestic Star Casino, 581 F.3d 355, 364 (6th Cir. 2009).
Because the MMO Plan includes a clear grant of discretion in Section 7.6, titled “Retention
of Discretion,” the court here rightly reviewed using the arbitrary and capricious standard. That
section reads as follows: “Medical Mutual shall have the exclusive right to interpret the terms of the
Certificate, Schedule of benefits, riders and Amendments. The decision about whether to pay any
claim, in whole or in part, is within the sole discretion of Medical Mutual and such decisions shall
be final and conclusive.” To the extent that Solomon attempts to argue that this language does not
does qualify as a clear grant of discretion, we consider the argument forfeited because Solomon
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offered it for the first time in her reply brief. See Bridgeport Music, Inc. v. WB Music Corp., 520
F.3d 588, 595 n.4 (6th Cir. 2008).
“[E]ven when the plan documents confer discretionary authority on the plan administrator,
when the benefits decision is made by a body other than the one authorized by the procedures set
forth in a benefits plan, federal courts review the benefits decision de novo.” Shelby Cnty., 581 F.3d
at 365 (internal quotation marks and citation omitted). Relying on Sanford v. Harvard Industries,
Inc., 262 F.3d 590 (6th Cir. 2001), and Wintermute v. Guardian, 524 F. Supp. 2d 954 (S.D. Ohio
2007), Solomon argues that despite any clear grant of discretion, the district court still should have
applied de novo review because MMO did not act as the final decisionmaker with respect to her
claim. But Solomon misconstrues these cases. In both, the courts settled on de novo review as the
appropriate standard not simply because an outside entity acted as the final decisionmaker, but
because the defendant-administrators violated plan procedures in making the benefits determination.
See Sanford, 262 F.3d at 596–97 (applying de novo review where defendant-administrator violated
plan appeal procedures); Wintermute, 524 F. Supp. 2d at 959–60 (applying de novo review where
an “unauthorized body without discretionary authority” rendered decision).
Unlike the defendants in Sanford and Wintermute, MMO followed Plan procedures in
assessing Solomon’s claim. After Solomon exhausted the internal appeal process, she specifically
requested external review of her claim—as permitted under the terms of the Plan. MMO accordingly
submitted her information to an Independent Review Organization and received Dr. Lukawski’s
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opinion as to medical necessity. Moreover, Dr. Lukawski did not “make a policy interpretation
decision,” as Solomon mistakenly contends. Although Dr. Lukawski’s report quoted portions of the
Plan, he opined only on the medical necessity of different types of care; he did not recommend a
coverage decision. This requested, external-review opinion on medical necessity—which was
almost entirely consistent with MMO’s internal-review coverage determination—then triggered
MMO to notify Solomon of its determination that the Plan entitled her to coverage for the period of
acute detoxification as shown on the Hanley billing submitted with the claim. MMO, not “a body
other than the one authorized by the procedures set forth in [the] benefits plan,”
determined—according to Plan procedures—the coverage applicable to Solomon’s claim. See
Shelby Cnty., 581 F.3d at 365 (internal quotation marks and citation omitted). Because the Plan
grants MMO discretion to construe its terms, and MMO, in doing so, followed Plan procedures, the
district court properly reviewed under the arbitrary and capricious standard.
III.
Solomon next challenges MMO’s interpretation of the Plan. Under arbitrary and capricious
review, we uphold an administrator’s decision “when it is possible to offer a reasoned explanation,
based on the evidence[,] for a particular outcome.” Cox v. Standard Ins. Co., 585 F.3d 295, 299 (6th
Cir. 2009). A court “must accept a plan administrator’s rational interpretation of a plan even in the
face of an equally rational interpretation offered by the participants.” Morgan v. SKF USA, Inc., 385
F.3d 989, 992 (6th Cir. 2004). While deferential, arbitrary and capricious review does not compel
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courts to merely rubber stamp the administrator’s decision. Balmert v. Reliance Standard Life Ins.
Co., 601 F.3d 497, 501 (6th Cir. 2010). When an administrator both evaluates and pays claims, a
conflict of interest exists that must be weighed in determining whether the administrator met the
arbitrary and capricious standard. Calvert v. Firstar Fin., Inc., 409 F.3d 286, 292–93 (6th Cir.
2005).
MMO maintains that Hanley qualifies as a “Residential Treatment Facility” and that, other
than during the initial detoxification portion of her stay that constituted acute care, Solomon received
residential care. Accepting that Hanley may meet the definition of Residential Treatment Facility,
Solomon argues that it also qualifies as a “Drug Abuse Treatment Facility” at which she received
inpatient care. We turn to the Plan language. The chief difference between a Residential Treatment
Facility offering residential treatment and a Drug Abuse Treatment Facility offering inpatient care
is that a Drug Abuse Treatment Facility “mainly provides detoxification and/or rehabilitation
treatment for Drug Abuse,” while a Residential Treatment Facility treats “[r]esidents [who] do not
require care in an acute or more intensive medical setting” and “provid[es] an individual treatment
plan for the chemical, psychological and social needs of each of its residents,” (emphasis added).
As the district court found, while “the Plan is certainly not a model of clarity, and the use of two
terms—‘residential’ and ‘inpatient’—in the Plan could generate confusion,” Solomon v. Med. Mut.
of Ohio, No. 1:09 CV 3, 2009 WL 3086483, at *5 (N.D. Ohio Sept. 23, 2009) (decision on motion
to vacate judgment), MMO offered a rational interpretation of the Plan to label Hanley a Residential
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Treatment Facility offering non-covered residential treatment, see Morgan, 385 F.3d at 992. As the
bills Solomon submitted to MMO demonstrate, other than during the initial portion of her stay,
Hanley did not “mainly provide[]” detoxification and rehabilitation treatment (as required to meet
the definition of a Drug Abuse Treatment Facility offering inpatient care); it offered a significant
amount of individual and group therapy, primary care, and nutritional counseling (fitting the
description of a Residential Treatment Facility offering residential rather than more acute care).
Even if we accept Solomon’s position that her stay at Hanley constitutes inpatient care, the
Plan’s provision that “[a]ll Covered Services must be Medically Necessary unless otherwise
specified,” would still foreclose coverage because Dr. Lukawski opined that treatment after
Solomon’s first two days of stay did not qualify as medically necessary acute care. The balance of
her stay qualified as medically necessary—but Plan-excluded—residential care. Buttressed by Dr.
Lukawski’s independent review, MMO’s decision to deny this aspect of Solomon’s claim could not
be called arbitrary and capricious.1
IV.
Finally, Solomon presses the view that MMO should have covered her outpatient treatment
at the in-network rate rather than the out-of-network rate. It was not her fault, she contends, that the
1
Because Solomon’s claim fails for these reasons, we need not address whether MMO could
also deny Solomon coverage for failing to obtain written pre-certification at Hanley, as the Plan
requires for inpatient drug abuse treatment.
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website listing Hanley as in-network was out-of-date. We read this as a federal-law estoppel claim
because ERISA preempts all state laws that relate to any employee benefit plan. Helfman v. GE Grp.
Life Assurance Co., 573 F.3d 383, 389–90 (6th Cir. 2009).
This court reviews de novo whether Solomon establishes the elements of an estoppel claim.
See Smiljanich v. GM Corp., 302 F. App’x 443, 447–48 (6th Cir. 2008). “In order to establish an
estoppel claim: (1) there must be conduct or language that amounts to a representation of material
fact; (2) the party to be estopped must be aware of the true facts; (3) the party to be estopped must
have the intent that the representation be acted on or the party seeking estoppel must reasonably
believe that the party to be estopped so intends; (4) the party asserting the estoppel must be unaware
of the true facts; and (5) the party seeking estoppel must reasonably or justifiably rely on the
representation to his detriment.” Riverview Health Inst. LLC v. Med. Mut. of Ohio, 601 F.3d 505,
521 (6th Cir.), cert. denied, 131 S. Ct. 220 (2010). In addition, the “[p]rinciples of estoppel . . .
cannot be applied to vary the terms of unambiguous plan documents; estoppel can only be invoked
in the context of ambiguous plan provisions.” Id. (second alteration in original) (internal quotation
marks and citation omitted).
Solomon points to no provision qualifying for estoppel treatment. Though this Court has
permitted application of estoppel absent qualifying ambiguity, it has done so only “where the
plaintiff can demonstrate the traditional elements of estoppel, including that the defendant engaged
in intended deception or such gross negligence as to amount to constructive fraud.” Bloemker v.
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Laborers’ Local 265 Pension Fund, 605 F.3d 436, 444 (6th Cir. 2010). Solomon’s case lacks such
intended deception or constructive fraud by MMO. The inaccurate information appeared on the
website of third-party First Health, not on MMO’s; Solomon does not allege that MMO knew of
First Health’s error; and she fails to present facts or cite legal authority that either supports a finding
that MMO owed a duty to ensure the accuracy of First Health’s website or that otherwise justifies
holding MMO responsible for First Health’s mistake. The district court thus did not err in rejecting
Solomon’s estoppel argument and affirming MMO’s benefits determination.2
V.
For the above reasons, we AFFIRM the judgment of the district court.
2
Solomon additionally requests remand to the district court for a determination as to her
entitlement to attorney’s fees under 29 U.S.C. § 1132(g)(1), without any argument to justify such a
remand or explain why the district court might find such an award appropriate, particularly in view
of the disposition here. As such, we bypass this request as forfeited. See United States v. Hurley,
278 F. App’x 574, 577 (6th Cir. 2008).
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MERRITT, Circuit Judge, concurring. Due to the technical nature of the facts and law
presented in this ERISA appeal, I write separately in hopes of providing added clarification. Under
ERISA case law, a court must defer to the claims decision of a health insurer when the insurance
policy gives the insurer authority to determine if the insured is eligible for benefits. Metro. Life Ins.
Co. v. Glenn, 554 U.S. 105, 111 (2008). This is so notwithstanding the insurer’s inherent conflict
of interest: the insurer saves money if it denies the claim. Id. at 112–16. This case asks whether
an insurer’s decision to deny a claim loses the benefit of deferential review when that decision was
supported by the recommendation of a neutral arbitrator during an external administrative appeal
permitted by the policy. We hold that it does not. A contrary holding would afford less deference
to the conflicted decisions of insurers when a neutral arbitrator reaches the same conclusion. Such
a result would be absurd—and certainly is not mandated by ERISA or its interpreting case law. The
meaning of this reasoning for this case is that we may only overturn Medical Mutual’s denial of
Solomon’s claim if Medical Mutual acted arbitrarily and capriciously. It did not, so we affirm.
Solomon submitted a claim to Medical Mutual for approximately $40,000 for the two months
she stayed at the Hanley Center for drug-addiction treatment. Medical Mutual denied her claim in
its entirety. It explained that her treatment was not “medically necessary,” as required by her policy.
Solomon then filed an external appeal, which, under state law, was submitted to a randomly selected,
neutral arbitrator—a so-called “independent review organization.” See Ohio Rev. Code Ann. §
3923.67(A), (D); id. § 3901.80(C) (providing for random selection). Solomon’s policy expressly
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provided for this external appeal process. The neutral reviewer, Dr. Edward Lukawski, concluded
that only the first two days of Solomon’s stay at Hanley were medically necessary as inpatient care,
the only kind of drug treatment covered by Hanley’s policy. Relying upon Dr. Lukawski’s
conclusion, Medical Mutual denied Solomon’s claim for all but her first two days.
Solomon’s primary argument on appeal to this Court is that we should not review Medical
Mutual’s denial of the bulk of her claim under the deferential arbitrary-and-capricious standard
because it was effectively Dr. Lukawski, and not Medical Mutual, who made the decision, and
deference to external reviewers is not appropriate. She cites two cases, Sanford v. Harvard
Industries, Inc, 262 F.3d 590 (6th Cir. 2001), and Wintermute v. Guardian, 524 F. Supp. 2d 954
(S.D. Ohio 2007), which the majority opinion properly distinguishes as holding that deference is
improper when the decisionmaker was completely unauthorized by the policy—not that deference
is improper when an external reviewer plays any role in forming the claims decision. Aside from
her lack of authority, Solomon’s argument is unpersuasive because the fact that a neutral expert came
to the same conclusion as the insurer should make us more likely, not less likely, to defer to the
insurer’s determination. Thus, we review the denial under the arbitrary-and-capricious standard.
Under this standard, Solomon’s case quickly falls apart. Nowhere in her briefs does Solomon
argue that her stay at Hanley was medically necessary as inpatient care. The only drug treatment that
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her policy covers is medically necessary inpatient care. Accordingly, Medical Mutual’s decision to
deny all but the first two days of her claim for this reason was not arbitrary and capricious.3
Finally, Solomon appeals a collateral claim regarding the rate at which Medical Mutual
reimbursed her for her outpatient treatment. As with Solomon’s primary claim, I agree with the
majority opinion’s reasoning and disposition of that issue.
3
Medical Mutual also gives two independent reasons why it believes its decision to deny
Solomon’s claim was not arbitrary and capricious: (1) Solomon did not obtain preapproval, as
required by her policy, before seeking treatment at Hanley; and (2) Hanley provided “residential
treatment,” which Solomon’s policy never covers, rather than “inpatient treatment,” which her policy
covers only when medically necessary. Although the majority opinion agrees with Medical Mutual’s
second argument, we need not agree with either argument to affirm, because Solomon’s lack of
medical necessity alone is dispositive.
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