United States District Court, D. Massachusetts
MEMORANDUM AND ORDER
DOUGLAS P. WOODLOCK, District Judge.
Plaintiff Mark Hatfield ("Hatfield") brought this action against Defendants Blue Cross and Blue Shield of Massachusetts, Inc., and Lahey Clinic Hospital, Inc., under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). He challenges on both procedural and substantive grounds Blue Cross's denial of health insurance benefits for residential substance abuse and mental health treatment from April 9, 2010 through March 29, 2011. Before me are the parties' cross-motions for summary judgment.
A. Factual Background
1. Plan Coverage
During the relevant time period, Hatfield was insured under a health benefits plan (the "Plan") provided by the Lahey Clinic Foundation, Inc. ("Lahey") to its employees and their families. Hatfield's mother, Kathaleen Hatfield, was a Lahey employee. The terms of the agreement between Lahey and Blue Cross are set forth in an Administrative Services Account Agreement (the "Agreement"). Because the Plan was self-insured, Blue Cross was retained to serve only as a third-party claims administrator. The Agreement provides that: "Blue Cross and Blue Shield will administer health care benefits for Covered Members as long as they meet the eligibility requirements described in these Benefit Descriptions and as long as the applicable charges are paid."
The policy under which Hatfield was insured was a self-funded, managed care HMO plan - the Network Blue New England Plan - the terms of which are set forth in a Managed Care Plan Benefit Description (the "Plan Description"). Health care coverage under the plan is limited to "medically necessary" services provided by in-network providers within a specified geographic area, except when emergency or urgent care is needed or an out-of-network provider is otherwise approved. Hatfield's coverage was generally limited to the HMO Blue New England network.
Medically necessary services are those "required services that a health care provider, using prudent clinical judgment, would provide to a patient in order to prevent or to evaluate or to diagnose or to treat an illness, injury, disease, or its symptoms." Among other criteria, medically necessary services must be "[c]linically appropriate, in terms of type, frequency, extent, site, and duration"; "[c]onsistent with the diagnosis and treatment of [the] condition and in accordance with Blue Cross and Blue Shield medical policies and medical technology assessment criteria"; "[e]ssential to improve [the insured's] net health outcome and as beneficial as any established alternatives that are covered by Blue Cross and Blue Shield "; "furnished in the least intensive type of medical care setting that is required by [the] medical condition"; and "[n]ot more costly than an alternative service or sequence of services at least as likely to produce the same therapeutic or diagnostic results...." No benefits are provided for "[a] service or supply that is not considered by Blue Cross and Blue Shield to be medically necessary for [the claimant]."
As with other treatment and services under the plan, mental health treatment must be both medically necessary and furnished by a participating provider. Although the policy provides coverage for alcohol and drug treatment facilities and detoxification facilities, among others, "services that are performed in educational, vocational, or recreational settings; and outward bound-type, ' wilderness, ' camp, ' or ranch' programs, " whether residential or nonresidential, are not covered by the plan. "No benefits are provided for any services furnished along with one of these non-covered programs."
Inpatient services for a mental condition require advance approval by Blue Cross. In addition, intermediate mental health treatments, such as acute residential treatment or intensive outpatient programs, must be provided in "[t]he least intensive type of setting that is required for [the insured's] condition" in order to be considered "medically necessary" by Blue Cross.
Blue Cross conducts a "utilization review" "to evaluate the necessity and appropriateness of [the insured's] health care services" "us[ing] a set of formal techniques that are designed to monitor the use of, or evaluate the clinical necessity, appropriateness, efficacy or efficiency of health care services, procedures, or settings and drugs." In addition to employing its own set of medical necessity criteria and policies, Blue Cross uses InterQual Criteria on Behavioral Health to determine if a level of care is medically necessary.
When a member disagrees with a coverage decision, the plan provides for internal and external review processes through a grievance program. In reviewing a coverage decision, Blue Cross considers the provisions, policies, and procedures of the health plan, "the health provider's input, " and the member's "understanding and expectation of coverage by this health plan."
A decision in response to a member grievance must be in writing and must identify the applicable coverage terms, describe the specific medical and scientific reasons for the denial, and "specify any alternative treatment or health care services and supplies that would be covered." It must also include the applicable clinical guidelines and review criteria and explain how to request an external review.
2. Hatfield's Medical History and In-Patient Treatment
Hatfield, who was 22 years old in 2010, has struggled with substance abuse, bipolar disorder, and severe depression since his teenage years. From age 19, he was periodically homeless. In March 2010, Hatfield was using cocaine "off and on, " smoking four to five grams of marijuana daily, and episodically using ecstasy over the course of multiple days. His previous efforts to achieve sobriety and a stable mental condition had been unsuccessful. These efforts included long-term outpatient treatment, several partial hospitalization or intensive outpatient detoxification programs, one acute residential treatment stay, and two inpatient admissions.
On April 3, 2010, Hatfield was admitted to a psychiatric inpatient facility at Hampstead Hospital in Hampstead, New Hampshire, following a suicide attempt. This was his third suicide attempt and second admission to Hampstead Hospital for dual-diagnosis treatment. According to the psychiatry admission notes at Hampstead, Hatfield lacked "coping strategies, emotion regulations and social skills necessary to function" and required "the structure and safety of an inpatient psychiatric milieu" due to his risk of self-harm. On April 8, Hatfield was no longer experiencing suicidal ideations and was discharged from Hampstead.
Upon his departure from Hampstead, Hatfield was transported to the Burning Tree Recovery Ranch ("Burning Tree") in Kaufman, Texas, by his parents, who had learned of the facility through a family friend. Burning Tree is "a working cattle ranch" that provides a long-term, residential substance abuse program, with stays ranging from eight to fourteen months based on addiction history and response to treatment. Burning Tree maintains a structured daily schedule of activities for residents for seventeen hours a day. It is not part of the New England Blue network or any Blue Cross network.
Hatfield resided at Burning Tree from April 9, 2010 through March 29, 2011. His treatment plan upon admission indicated that he lacked "life skills that promote recovery, " "needs a relapse prevention plan, " and "needs to stabilize mood and mental health issues, " among other problems. When Hatfield left Burning Tree, his discharge summary indicated that he had received chemical dependency education, had participated in a variety of group sessions, had met with a psychiatrist weekly, and had participated in group recreation, yoga, "big book lectures, " and HIV/Hepatitis/STD Education, among other activities.
Hatfield's parents paid out-of-pocket for Hatfield's stay at Burning Tree. The agreement between Hatfield and Burning Tree, which required Hatfield's father to sign as a guarantor, stated that the cost of "treatment tuition" averaged about $8, 000/month. Hatfield and his father were required to establish a medical account with a $3, 000 initial deposit for medical needs and an allowance account for leisure activities. The agreement also provided for a variety of additional expenses, some optional and some mandatory, related to treatment and services, and required Hatfield and his father to acknowledge that they were prepared to commit to the expenses that may be incurred with a lengthy residential stay.
3. Denial of Coverage and Subsequent Appeals
Before the specific claim at issue was submitted, two closely related claims concerning Hatfield's stay at Burning Tree were submitted to Blue Cross and denied. On July 12, 2010, Burning Tree submitted claims to Blue Cross for room and board charges for Hatfield for the period of April 9, 2010 through June 8, 2010. Blue Cross classified Burning Tree as a facility providing acute residential treatment and reviewed the claim for coverage as such. On July 30, 2010, Blue Cross denied the request because the provider was "out of state non covered" and because Hatfield had "received these services either without a referral from [his] primary care physician or plan authorization."
On August 25 and 27, 2010, Blue Cross received a request for coverage of out-of-network individual psychiatric counseling sessions at Burning Tree from Hatfield's mother, accompanied by some medical records from Burning Tree. However, Hatfield's mother subsequently withdrew this request because, at the suggestion of Blue Cross, the family chose instead to seek reimbursement for the entire acute residential treatment admission.
The specific claim at issue in this litigation was submitted on September 28, 2010, when Hatfield's parents requested retroactive coverage for the out-of-network behavioral health residential treatment dating back to Hatfield's admission at Burning Tree on April 9, 2010. Hatfield's father indicated on the out-of-network request form that Burning Tree was a "dual diagnosis facility" that could handle Hatfield's needs, and that Burning Tree was similar to a facility in Connecticut where Blue Cross had previously provided full coverage for Hatfield's treatment. He enclosed with the request form a copy of the July 30, 2010 claim summary denying coverage for room and board at Burning Tree.
A licensed social worker, Mark Tucker, assigned the InterQual criteria for chemical dependency and dual diagnosis to Hatfield's claim. After conducting a preliminary review using the criteria, Tucker referred the claim to a physician reviewer, Dr. Cornelia Cremens. On October 28, 2010, Dr. Cremens informed Hatfield that the requested coverage would be denied. She stated that she had reviewed the limited clinical information received from Burning Tree and Hatfield's parents and had applied the InterQual initial review criteria. Although Hatfield's clinical condition met the InterQual criteria for outpatient therapy visits, he did not satisfy the criteria for a substance abuse residential stay based on his potential safety risk and role performance.
a. Internal Review of Denial Decision
On August 17, 2011, Hatfield's father appealed the decision to deny coverage. On September 16, 2011, a grievance program case specialist, John Lovell, notified Hatfield that a board-certified physician in adult psychiatry and chemical dependency, Dr. Karim Munir, had reviewed the claim and upheld the decision to deny coverage. According to the letter, Dr. Munir considered the August 17, 2011 letter, the plan documents, the InterQual criteria on chemical dependency and dual diagnosis inpatient level of care, and the partial medical records provided by Burning Tree. The letter indicated that "[t]he request was denied because it does not meet the medical necessity criteria required for an acute chemical dependency inpatient treatment stay in the area of immediate safety risk." Instead, Hatfield was said to be eligible for intensive outpatient treatment. The letter informed Hatfield that he had exhausted the internal grievance process for this particular request, and that an "independent external review process" was available for further appeal.
On October 21, 2011, Hatfield's parents submitted 250 pages of documentation to Blue Cross in relation to their further appeal of the denial of benefits decision, and asked Blue Cross to reconsider the decision. Along with this documentation, Blue Cross received a letter from Dr. Michael Knight, Hatfield's treating physician at Hampstead, indicating that he agreed with Hatfield's decision to seek residential treatment because "lower levels of care had not been successful, " and one from Dr. Marc Sadowsky, Hatfield's long-time therapist, recommending long-term residential treatment "[g]iven the lack of success of less restrictive treatments."
On November 16, 2011, Lovell notified Hatfield that the decision had been affirmed again because the request did "not meet the medical necessity criteria required for coverage of an inpatient chemical dependency rehabilitation stay in the areas of potential safety risk and relationships." The review was conducted by another new physician, Dr. Brad Reich, who reviewed the information previously available to physician reviewers, as well as the additional ...