Tenth Circuit Addresses Standards for Full and Fair Review of Health Claims

On May 15, 2023, the U.S. Court of Appeals for the Tenth Circuit issued a decision in D.K. v. United Behavioral Health, No. 21-4088, holding that pursuant to the "full and fair review" requirement of ERISA § 503 and its implementing health claims regulations, administrators must "engage" in a "meaningful dialogue" with participants and respond to the opinions of treating healthcare providers in their denial letters. In D.K., the Tenth Circuit affirmed summary judgment in favor of a participant who sought coverage of long-term mental health residential care, finding that United Behavioral Health (United) arbitrarily and capriciously denied the participant's claims with "conclusory responses" and without proper consideration of the medical record and opinions of the participant's treating providers. 

One issue in the case was whether a provision in the 2016 update to the U.S. Department of Labor's (DOL's) claims regulation, which expressly required disability claim administrators to explain any disagreement with the views presented by treating healthcare providers when making benefit determinations, applies to medical claim determinations. United argued that the new regulations, 29 C.F.R. § 2560.503-1(g)(1)(vii)(A)(i) and § 2560.503-1(j)(6)(i)(A), established a stricter standard for disability claims that did not apply to medical claims. The plaintiffs disagreed, as did DOL, which argued as amicus curiae that "any variation in the wording of the regulations with respect to disability and health plans does not change the materially similar full and fair review standards required by the regulations." The ERISA Industry committee (ERIC) filed an amicus brief disagreeing with DOL's position – ERIC argued that interpreting the 2016 amendment to the claims regulation as applying not only to disability claims, as stated in the amendment, but also to health plan claims violated the Administrative Procedures Act (APA) and is not entitled to deference. The Tenth Circuit stopped short of addressing the impact of the amended regulatory language on health claims head on, but determined that even if the regulations "set[] different baseline requirements" for medical and disability claims, "[t]he regulations do not relieve United of its responsibility to engage with medical opinions in health benefit claims." 

According to the court, claim reviewers' 

duties under ERISA require them to address medical opinions, particularly those which may contradict their findings. This is the core of meaningful dialogue: if benefits are denied and the claimant provides potential counterevidence from medical opinions, the review must respond to the opinions. . . . In refusing to address the treating physician opinions presented to it . . . United acted arbitrarily and capriciously.

The court refused to credit assertions that United's claims reviewers had considered the opinions of treating healthcare providers, because that information was not shared with the participant in the denial letter, which the court said must be "comprehensive" in order to form a "meaningful dialogue" for a full and fair review. 

Finally, the Tenth Circuit concluded that the district court did not abuse its discretion in declining to remand, given "the administrator's clear and repeated procedural errors in denying this claim."  According to the court, "it would be contrary to ERISA fiduciary principles to mandate a remand and provide an additional 'bite at the apple.'" United appears poised to seek another opportunity to address the court of appeals and has until June 13, 2023, to request rehearing. 

Court Rejects Denial-of-Benefits and MHPAEA Claims in Autism Case

In Midthun-Hensen v. Group Health Cooperative of South Central Wisconsin, No. 21-cv-608 (W.D. Wisc. May 8, 2023), the U.S. District Court for the Western District of Wisconsin held that Group Health Cooperative of South Central Wisconsin (GHC) did not unreasonably or unlawfully deny coverage for speech and occupational therapy as treatment for a minor's autism spectrum disorder (ASD) and that GHC's denials did not violate the Mental Health Parity and Addiction Equity Act (MHPAEA). In reaching its decision, the court focused on whether the treatment at issue was "evidence based" and whether GHC used a "comparable" or "more stringent" process when limiting access to speech or occupational therapy as compared to pediatric chiropractic care.

The relevant plan terms provided some coverage for both "intensive level" and "non-intensive level" treatment of ASD; under either level, the treatment had to be "evidence based." In a written policy, GHC described the treatments for ASD that it had determined were supported by sufficient evidence, as well as the treatments that lacked such evidence. The policy relied on a report issued by the National Autism Center (NAC) that analyzed reliable peer-reviewed studies on treatments for individuals with ASD and categorized the treatments as "established" (i.e., supported by enough evidence to determine that it was effective), "emerging" (i.e., additional studies were needed before the treatment could be deemed effective), or "unestablished" (i.e., having little or no evidence permitting a firm conclusion about effectiveness). During the period at issue, 2017-2019, GHC's policy adopted the NAC's determination that speech therapy was an evidence-based treatment for children aged 3-9, but not for children 10 and older. The policy also adopted the NAC's determination that there was insufficient evidence for the effectiveness of sensory integration occupational therapy in treating ASD. 

Before the minor (K.H.) turned 10, GHC had authorized coverage for certain ASD treatments for her, including speech therapy. As K.H. was turning 10, however, GHC advised her parents that speech therapy would no longer be covered because it was not an evidence-based treatment for ASD for children over the age of 10. And in denying a pre-service request for sensory integration occupational therapy, GHC cited its policy and stated that occupational therapy was not an evidence-based treatment for autism. 

At summary judgment, the parties agreed that only evidence-based, non-investigational treatments were covered under the plan and that the plan gave GHC discretionary authority to determine coverage. The first question, then, was whether GHC acted arbitrarily and capriciously when it denied K.H.'s claims for benefits. 

The court concluded that GHC's policy and the NAC standards incorporated into the policy "provide[d] rational support for GHC's conclusions that the sought-after treatments were not covered under the plan because they were not 'evidence based' treatments for ASD." On the other hand, the court rejected the plaintiffs' "conclusory assertions" and held that none of their evidence provided "strong support" that the denied therapies were evidence-based. And even if the physicians from whom GHC sought external review had failed to fully and fairly review plaintiffs' claims, they did "not show that GHC failed to fully and fairly review plaintiffs' claim." Instead, GHC "could reasonably expect" that the external reviewers would be "aware of the current state of the clinical research and the extent to which the [requested] treatments . . . were generally accepted as effective by the medical community at large."  

In addition, the court held that GHC did not "appl[y] a more stringent test for evaluating the medical support for ASD treatments, a mental health condition, than chiropractic treatments, a medical condition," and therefore did not violate MHPAEA. GHC did not dispute that outpatient chiropractic treatment was in the same classification as outpatient speech or occupational therapy for treatment of ASD, nor did GHC dispute that outpatient chiropractic treatment was a comparable medical/surgical analog for MHPAEA purposes. But the court held that

to the extent there was a disparity in coverage for the ASD treatments sought for K.H. and pediatric chiropractic treatment, it arose not from GHC applying a more restrictive strategy or process to mental health benefits, but from a difference in the status of the acceptance of those treatments by the medical community at large.

The court also held that GHC did not violate Wisconsin's autism mandate, requiring insurers to cover evidence-based services for ASD, for the same reasons it rejected the plaintiffs' denial of benefits claims. 

403(b) Plan Determination Program Opens June 1

Beginning June 1, 2023, the Internal Revenue Service (IRS) is expanding its determination letter program to include certain 403(b) plans. Plan sponsors that maintain an individually designed 403(b) plan will be permitted to submit a determination letter application for an initial plan determination based on the EIN of the plan sponsor: 

• EIN ends in 1, 2, or 3: submit beginning June 1, 2023.
• EIN ends in 4, 5, 6, or 7: submit beginning June 1, 2024.
• EIN ends in 8, 9, or 0: submit beginning June 1, 2025.

Plan sponsors may also submit an application for terminating 403(b) plans beginning June 1, 2023. The IRS may announce other circumstances that would allow 403(b) sponsors to a submit determination application in the future. See Revenue Procedure 2022-40 for more information. Form 5300, Application for Determination for Employee Benefit Plan, and Form 5310, Application for Determination Upon Termination, will be updated in Pay.gov to reflect the addition of 403(b) plans. 

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