On May 14, 2020, the Fifth Circuit Court of Appeals – in Katherine P. v. Humana, an ERISA health benefits case where the plan administrator denied benefits — ruled in favor of our plan participant client, Katherine P., sending us back for a bench trial later this year. At trial, the district will get a second chance to review whether Katherine’s partial hospitalization treatment was medically necessary. Humana had previously approved only 12 days out of Katherine’s nearly three month stay.
In coming to this decision, the Court applied the de novo standard of review that was previously modified in Ariana M. v. Humana. When a court applies the de novo standard of review, it does not defer to the decision of the ERISA benefits plan administrator. It considers the issue as though it were doing so with a “blank slate”.
Link to oral argument by Mr. Raval:
In 2012, Katherine was a 21-year-old who was suffering from a severe eating disorder, related physical ailments, and bipolar disorder. When she followed the advice of her doctors and sought a more intensive partial hospitalization treatment protocol for her mental health disorders, Humana initially approved this treatment under her plan, which promises to pay for all medically necessary mental health treatment. After only 12 days, however, and without examining Katherine or speaking with her treating providers, Humana determined that this treatment was no longer medically necessary. It immediately stopped paying for the treatment, leaving Katherine and her family financially responsible for any further treatment. Fortunately, they were able to personally pay for the final two and a half months of treatment.
Katherine filed an appeal with Humana, providing all of her medical records, as well as other evidence showing that her treatment was medically necessary. Humana denied the appeal, forcing Katherine to file this lawsuit in February 2014. The case has taken many twists and turns: it has transferred from one district to another, had two separate rounds of summary judgment briefing, been on hold while part of the claim was remanded back to Humana, and then appealed to the United States Court of Appeals for the Fifth Circuit.
Humana Used Mihalik Criteria to Deny Claim
The central issue in this case is whether Katherine’s ongoing treatment was medically necessary. The Plan defines medically necessary as “health care services that a health care practitioner exercising prudent clinical judgment would provide” that are “[i]n accordance with nationally recognized standards of medical practice,” “clinically appropriate,” “[n]ot primarily for the convenience of the patient” or her providers, and “[n]ot more costly than an alternative” that would be just as effective. “Medically necessary” services must also have a grounding in “standards that are based on credible scientific evidence.”
Rather than rely on Plan language, Humana instead relied on something called the Mihalik Criteria, a set of guidelines created for the insurance industry that it has tried to keep secret from the public. The Criteria provide four factors for determining if partial hospitalization is medically necessary. Per the criteria, partial hospitalization is medically necessary if a patient meets the first two factors (ED.PM.1 and ED.PM.2) and either one of the last two (ED.PM.3 and ED.PM.4). Humana determined that Katherine did not meet two of these criteria. The district court granted Humana summary judgment, concluding that Katherine failed ED.PM.3 and the ED.PM.4.2 sub-criteria.
Fifth Circuit’s Analysis
On appeal, Katherine argued that Humana’s medical record reviewers were biased, unqualified, and used improper criteria in reviewing the claim. The Fifth Circuit did not address those issues. However, it found evidence that there was a genuine dispute about whether Katherine met the ED.PM.4.2 sub-criteria.
The ED.PM.4.2 requires that a patient show that “[t]reatment at a less intense level of care has been unsuccessful in controlling” her eating disorder. The Court found evidence that Katherine met that requirement. For example, in her last appeal to Humana, Katherine provided a declaration describing her history of failed treatment. In it, she listed past failed treatment regimens, including outpatient treatment. Her mother likewise provided a declaration with the same evidence. Furthermore, Katherine’s physicians said she was “unable to follow a weight gain meal plan and to abstain from symptoms of purging and restricting while she was at a lower level of care.” The Court noted that although it would not give her doctors’ opinions “special weight,” it was competent summary judgment evidence.
The Path Forward
The Court found that summary judgment for Humana was inappropriate. it thus remanded the case back to the district court for a bench trial. The district court will have the ability to decide exactly how this trial will proceed. For instance, it could have oral argument, review the administrative record, then make findings of fact and conclusions of law.
Consequences for Future ERISA Denial of Benefits Cases
The decision of the Fifth Court in this case shows a willingness for the Court to conduct an exhaustive and careful de novo review of the facts of these types of claims. It shows an ongoing trend that ERISA plan participants in the Fifth Circuit will have their benefits determination assessed as though it were being presented for the very first time. The court will not defer to the decision of the plan administrator. Instead, the court will consider the evidence with fresh eyes.
In light of this shift from a stricter to a broader, more participant-friendly standard, ERISA plan participants in the Fifth Circuit will be in a more advantageous position when having their denial of benefits claim evaluated in court. This approach better serves the purpose of ERISA, which is to protect the interests of employees. It has already helped Katherine, who will finally have the chance to have her day in court.
Link to Full Opinion: