• Filing. Published in U.S. District Court For the District of Utah on December 15, 2020 (Case no. 2:18-cv-00351-DBB-DAO).
  • Background. Plaintiff attended Daniels Academy, a licensed RTC in Utah. The care was not pre-certified before the parents submitted the claims.  Defendant denied the claims in part because “the plan has a specific exclusion for the requested treatment or service.”  During the level one appeal, the care denial was upheld and it was noted that Plaintiff’s did not meet the precertification requirement as well.  In addition, the level two appeal did not reverse the initial denial.  The Defendant noted in their motion to dismiss no medical necessity review was completed because the claims were administratively denied.
  • Holding. Judge David Barlow denied Defendant’s motion to dismiss because:
    • Aetna’s decision denying Plaintiffs’ benefits based on the educational services exclusion was arbitrary and capricious;
    • Any categorical denial of coverage based on Plaintiffs’ failure to pre-certify, as opposed to a reduction in covered benefits paid, would be arbitrary and capricious.

The Court remanded the case back to the administrator for a review based on medical necessity.  Judge Barlow did not award attorney fees based after reviewing a 5-factor test which included the relative merits of the parties positions.

  • Analysis.  Under arbitrary and capricious review, the Court would have upheld the Defendant’s determination so long as it was made on a reasoned basis and supported by substantial evidence.  Although the plaintiff received educational services, the record also shows that Plaintiff participated in individual therapy, family therapy, process group therapy, recreation therapy, and was seen by a physician.  The Court noted that the health plan made “no findings about the nature of these services, rather it categorically denied coverage based on its view of Daniels Academy as a boarding school.”

Regarding the failure to follow the precertification requirement, Judge Barlow noted that expenses are covered after a precertification benefit reduction is applied according to the terms of the plan.  A categorial denial of all reimbursement based on either the education exclusion or the precertification penalty is arbitrary and capricious.