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Doe v. Harvard Pilgrim Health Care, Inc.

United States Court of Appeals, First Circuit

September 6, 2018

JANE DOE, Plaintiff, Appellant,
v.
HARVARD PILGRIM HEALTH CARE, INC.; HARVARD PILGRIM PPO PLAN MASSACHUSETTS, GROUP POLICY NUMBER 0588660000, Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Denise J. Casper, U.S. District Judge]

          Mala M. Rafik, with whom Sarah E. Burns and Rosenfeld & Rafik, P.C. were on brief, for appellant.

          Peter S. Sessions, Lisa S. Kantor, and Kantor & Kantor LLP, on brief for National Alliance on Mental Illness, amicus curiae.

          Jonathan M. Feigenbaum on brief for United Policyholders and Health Law Advocates, Inc., amici curiae.

          Christine Zaleski, with whom Steven L. Schreckinger and Anderson & Kreiger LLP were on brief, for appellees.

          Before Thompson, Selya, and Kayatta, Circuit Judges.

          KAYATTA, CIRCUIT JUDGE

         Jane Doe's insurer, Harvard Pilgrim Health Care ("HPHC"), deemed part of the time Doe spent at a mental health residential treatment facility not medically necessary under the health care benefits plan established by the employer of Doe's parent. HPHC therefore denied coverage for that portion of the treatment. After several unsuccessful administrative appeals, Doe sued HPHC in federal court under the Employee Retirement Income Security Act ("ERISA"). 29 U.S.C. §§ 1001-1461. On de novo review, the district court agreed with HPHC's determination that continued residential treatment was not medically necessary for Doe. We conclude that the administrative record upon which the district court based its finding should have been supplemented. We therefore reverse in part, vacate in part, and remand for further proceedings.

         I.

         A.

         The following facts are undisputed. On January 17, 2013, Doe was admitted to the Austen Riggs Center ("Riggs") in Stockbridge, Massachusetts for residential mental health treatment. She was experiencing psychosis, suicidal ideation, depression, and anxiety. At the time, Doe was insured under her father's employer-provided HPHC plan (the "Plan"). HPHC contracted with another insurance company, United Behavioral Health ("UBH"), to manage mental health services. In order for services to be eligible for coverage under the Plan, they must be, among other things, "medically necessary," a standard defined in the Plan with a degree of detail that is not relevant to what we ultimately decide on this appeal.

         HPHC approved coverage for an initial residential stay at Riggs. But on February 5, 2013, HPHC, acting through UBH, informed Doe by letter that it would not cover additional time spent at Riggs because further residential treatment was not medically necessary. As UBH explained in the letter, it based this denial on the assessment of UBH's Associate Medical Director, Dr. James Feussner. The letter informed Doe that she had the right to appeal the denial of benefits to UBH/HPHC, on a standard or expedited basis, and that she might also be eligible for an external appeal.

         Doe requested an expedited appeal. Pursuant to the Plan, HPHC continued to cover Doe's residential treatment through the completion of the internal appeal process. On February 12, 2013, HPHC denied Doe's appeal and upheld the determination that further residential treatment was not medically necessary. In the February 12 letter, HPHC explained that it based its "final decision on [Doe's] appeal" on an assessment by independent psychiatrist Dr. Michael Bennett. The letter also advised Doe that she might be eligible for an external review through the Massachusetts Department of Public Health's Office of Patient Protection ("OPP") and might also be able to pursue legal action. Despite the fact that residential treatment services would not be covered beginning on February 13, Doe remained at Riggs. On her daughter's behalf, Doe's mother filed a request for an expedited external appeal with the OPP. As part of that request, Doe's mother signed two authorizations allowing the release of all relevant medical or treatment records and all relevant psychotherapy notes for review in the appeal. The reviewer engaged by the OPP to conduct the review wrote Doe on March 12, 2013, upholding the denial of continued residential treatment based on the assessment of a board-certified psychiatrist. At her parents' expense, Doe stayed at Riggs until mid-June. On June 18, 2013, Doe was discharged and admitted to a higher level of care -- an inpatient facility -- for several days. On June 24, 2013, she was re-admitted to Riggs, where she remained until August 7, 2013. HPHC paid for Doe's inpatient stay in June 2013, as well as her entire second admission to Riggs from June 24, 2013 to August 7, 2013, so coverage for these stays is not at issue in this appeal.

         B.

         At some point after HPHC denied Doe's expedited appeal, Doe retained counsel. In February 2014, Doe's attorney wrote to HPHC expressing a desire to resolve the dispute "amicably rather than through litigation." She enclosed with the letter Doe's complete medical records from Riggs spanning both admissions (January 17, 2013 to August 7, 2013, [1] minus the brief period spent in inpatient treatment in June 2013), as well as a narrative report from Doe's treating psychologist, Dr. Sharon Krikorian.

         Giving a preview of her position in litigation should it come to that, Doe's attorney also asserted that because neither UBH, HPHC, nor the external reviewer had reviewed the complete medical records, their reviews were incomplete and did not comply with ERISA. In short, counsel took the position that the record of how Doe's actual treatment played out after HPHC's denial of coverage was relevant to determining whether her stay at Riggs between February 13 and her first discharge was medically necessary. Counsel requested that HPHC reverse its February 12 decision and reimburse Doe for the uncovered portion of her stay. HPHC denied this request on July 23, 2014, asserting that it had reviewed Doe's February 19 "letter, the accompanying documents and the underlying case" but that it agreed with its previous decisions and upheld its denial "for the reasons previously stated."

         Doe eventually sued HPHC and the Plan in March 2015 challenging the denial of coverage and seeking reimbursement for the cost of her uncovered residential treatment from February 13, 2013 through June 18, 2013. Before the newly filed lawsuit moved forward, in-house counsel for HPHC contacted Doe's attorney and asserted for the first time that Doe had failed to exhaust her administrative remedies. At this point, HPHC's exhaustion argument appeared to be directed at claims that were submitted to HPHC after it concluded its initial internal appeal on February 12, 2013 and thus were never, in HPHC's view, "actually formally appealed." HPHC offered to waive the expired deadline and conduct a formal appeal of these claims.

         With Doe's attorney contesting the failure-to-exhaust contention, the two sides then proceeded to do what good lawyers do. They continued to explore the possible settlement of the underlying dispute. Unsuccessful, they nevertheless did agree to the parameters for a renewed review of Doe's claim for benefits by HPHC (to which we will refer as the post-filing review), including a specification of which documents HPHC would consider and the time frame in which it would conduct the review. In preparation for the post-filing review, HPHC provided Doe with all of the denial letters associated with Doe's claims and the clinical rationale relied upon in reaching those decisions. In response, Doe provided HPHC with Doe's complete medical records from both admissions at Riggs (spanning January 17, 2013 to August 7, 2013), a narrative report prepared by Dr. Krikorian, and a report ...


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