August 23, 2019

Tenth Circuit: Denial of Benefits under ERISA Was Reasonable, Made in Good Faith, and Supported by Substantial Evidence

The Tenth Circuit Court of Appeals issued its opinion in Eugene S. v. Horizon Blue Cross Blue Shield of New Jersey on Tuesday, November 15, 2011.

The Tenth Circuit affirmed the district court’s decision. Petitioner sought coverage for his son’s residential treatment costs from his employer’s ERISA benefits insurer. Respondent’s delegated third-party plan administrator, Magellan, originally denied the claim and explained that Petitioner’s son qualified for intensive outpatient treatment, but not for residential treatment. Magellan affirmed its initial denial of residential treatment benefits through several appeals by both Petitioner and the residential treatment center. Having exhausted his administrative appeals, Petitioner filed this action challenging Respondent’s denial of benefits under ERISA. On appeal, Petitioner alleges 1) that the district court erred by denying his motion to strike and allowing the VSA into evidence, 2) that the district court erred in reviewing Respondent’s denials of benefits under an arbitrary and capricious, rather than a de novo, standard, and 3)  that Respondent improperly denied him benefits under the terms of his ERISA benefits plan.

The Court disagreed with all of Petitioner’s contentions. The Court refused to overturn the district court’s ruling because that court permissibly exercised its discretion and Respondent’s failure to disclose was harmless or justified. The Court also found that, to the extent it must independently assess the deference to which Magellan is entitled, Magellan was entitled to deferential review and that review should be under an arbitrary and capricious standard. And, under this standard, the administrator’s decision was reasonable, made in good faith, and supported by substantial evidence.

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