The 5th Circuit Court of Appeals issued an opinion on January 31, 2019, in a case that is governed by the ERISA. The opinion is styled, Karen A. Rittinger v. Healthy Alliance Life Insurance Company.
Here, the beneficiary of a health plan governed by ERISA brought action against the plan administrator challenging the denial of coverage for her bariatric surgery and the follow-up surgery required after she developed complications. This Court ruled in favor of the plan administrator, ruling the administrator did not abuse its discretion when it treated e-mail from the plan beneficiary’s husband as a first-level appeal, and the administrator did not abuse its discretion in denying health plan beneficiary’s second level appeal.
Where an ERISA plan administrator has discretion, the court reviews the administrator’s denial of benefits deferentially for abuse of discretion.
An ERISA plan administrator abuses its discretion where the decision is not based on evidence, even if disputable, that clearly supports the basis for its denial and if the decision is supported by substantial evidence and is not arbitrary or capricious, it must prevail.
The “substantial evidence” required to support an ERISA plan fiduciary’s decision is more than a scintilla, less than a preponderance, and is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
ERISA plan administrator did not abuse its discretion in denying health plan beneficiary’s second-level appeal of administrator’s denial of coverage for her bariatric surgery and the follow-up surgery required after she developed complications, on ground that the initial surgery was for weight loss and acid reflux and so did not fall within the exception to the plan’s exclusion for coverage for bariatric surgery, which applied where there was excessive nausea/vomiting; pre-surgery clinic intake report noted that beneficiary’s chief complaint were morbid obesity and abdominal pain and also noted no vomiting and no nausea, her pre-authorization documentation requested treatment for morbid obesity but did not indicate any excessive nausea or vomiting, and administrator did not have to credit beneficiary’s post-surgery letter from physician stating she had severe persistent gastro-esophageal reflux with nausea and vomiting.
An abuse of discretion review under ERISA is the functional equivalent of arbitrary and capricious review. An ERISA plan administrator’s decision is arbitrary if it is made without a rational connection between the known facts and the decision. The abuse of discretion review of an ERISA plan administrator’s decision falls somewhere on a continuum of reasonableness, even if on the low end.
A federal district court, when reviewing the decision of an administrator of ERISA governed health plan to deny coverage for plan beneficiary’s bariatric surgery required after she developed complications, was only supposed to review for abuse of discretion, which addressed whether the administrator had more than a scintilla of evidence to support its decision, but the district court was not supposed to weigh and balance the evidence. Thus, a district court cannot substitute its own judgment for the judgment of the plan administrator’s.