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Todd R. v. Premera Blue Cross Blue Shield of Alaska

United States District Court, W.D. Washington, Seattle

April 30, 2019

TODD R., et al., Plaintiffs,
v.
PREMERA BLUE CROSS BLUE SHIELD OF ALASKA, Defendant.

          ORDER ON DEFENDANT'S MOTION FOR RECONSIDERATION AND PLAINTIFFS' MOTIONS FOR ATTORNEY'S FEES, PREJUDGMENT INTEREST, AND ENTRY OF JUDGMENT

          JAMES L. ROBART, UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the court are three motions: (1) Defendant Premera Blue Cross Shield of Alaska's (“Premera”) motion for reconsideration (MFR (Dkt. # 52)); (2) Plaintiffs Todd R., Suzanne R., and Lillian R.'s (collectively, “Plaintiffs”) motion for attorney's fees (MFF (Dkt. # 56)); and (3) Plaintiffs' motion for entry of judgment and an award of prejudgment interest (MFJ (Dkt. # 61)). The court has considered the motions, the parties' submissions in support of and opposition to the motions, the relevant portions of the record, and the applicable law. Being fully advised, [1] the court DENIES Premera's motion for reconsideration, GRANTS Plaintiffs' motion for attorney's fees, and GRANTS in part and DENIES in part Plaintiffs' motion for entry of judgment and an award of prejudgment interest.

         II. BACKGROUND

         In this action, Plaintiffs sought review of Premera's denial of benefits under a group health benefits plan (“the Plan”), which is governed by the Employment Retirement Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461. (See Compl. (Dkt. # 2) ¶¶ 2, 9, at 7-8.) Specifically, Plaintiffs asked the court to review Premera's decision declining to pay for a portion of Lillian R.'s treatment at Elevations Residential Treatment Center (“Elevations”)[2] as not medically necessary. (See generally id.) On September 14, 2018, the parties placed the issue before the court in cross motions for summary judgment. (See Plf. MSJ (Dkt. # 37); Def. MSJ (Dkt. # 33).)

         On January 15, 2019, the court issued an order scheduling a January 23, 2019, hearing on the parties' motions. (1/15/19 Order (Dkt. # 48) at 1.) The court directed the parties “to come prepared to discuss” certain issues “that the parties did not fully brief.” (Id.) Specifically, the court directed the parties to address whether “Lillian R's treatment at Elevations . . . from May 1, 2014, until her discharge on June 21, 2015, [was] medically necessary based on the sixth provision of . . . [Premera's] Medical Policy, [3]which provides that residential care admission is appropriate for an adolescent where the ‘[p]atient has currently stabilized during [an] inpatient treatment stay for severe symptoms or behavior and requires a structured setting with continued around-the-clock behavioral care.'” (Id. at 3 (quoting AR at 007137 (first and second alterations and footnote added; third and fourth alterations in original).) The court also directed that, “[i]n assessing the applicability of this provision, ” the parties should note that Dr. Shubu Ghosh refers to “residential care” as “inpatient” and Premera repeatedly describes Lillian R.'s “residential care” at Elevations as “inpatient” throughout its briefing. (Id.) The court further directed the parties “to consider whether . . . Dr. Laura B. Brockbank's February 2014 evaluation of Lillian R. supports the conclusion that Lillian R.'s continued treatment at Elevations was medically necessary based on the sixth provision of Premera's Medical Policy.” (Id. at 3-4.)

         At the January 23, 2019, hearing, Premera's counsel admitted that the terms “inpatient” and “residential” are used interchangeably “in the medical community and in the standard of care, ” and that Lillian R.'s treatment at Elevations “is inpatient, not outpatient” because “[s]he is not going home at night . . . .” (1/23/19 Trans. of Hr. (Dkt. # 51) (sealed) at 10:11-18.) However, Premera's counsel also argued that the term “inpatient, ” as it is used in the sixth provision of Premera's Medical Policy, is equivalent to hospitalization. (See Id. at 11:7-10 (“So there is a medical necessity policy that deals with inpatient hospitalization for . . . mental health treatment for adolescents. It is different than the residential treatment policy that we are talking about today.”).) Premera's counsel suggested that the court could go “online” to see the distinction between “inpatient” and “residential” care as those terms are used in additional portions of the Medical Policy that are not contained in the record. (See Id. at 11:16-21.) Premera's counsel, however, never asked the court for permission to supplement the administrative record or submit additional evidence into the record. (See generally id.)

         On January 30, 2019, the court issued its written findings of fact and conclusions of law under Federal Rule of Civil Procedure 52(a) based on a de novo review of the record. (See generally 1/30/19 Order.) The court determined that Lillian R.'s treatment at Elevations from May 1, 2014, to June 21, 2015, was “medically necessary” and, therefore, covered under the Plan. (Id. at 25-38.) Under the Medical Policy's sixth provision, an adolescent's treatment in residential care is medically necessary if the “[p]atient has currently stabilized during [an] inpatient treatment stay for severe symptoms or behavior and requires a structured setting with continued around-the-clock behavioral care.” (AR at 007137.) The court determined that Lillian R.'s treatment at Elevations fell within this criterion and therefore was covered under the Plan. (1/30/19 Order at 25-38.)

         On February 13, 2019, Premera moved for reconsideration of the court's ruling. (See generally MFR.) Premera argues that the Medical Policy's sixth prong does not apply to Lillian R.'s treatment at Elevations because the phrase “inpatient treatment stay” in the sixth prong refers solely to hospitalizations, and Lillian R. was never hospitalized prior to her admission to Elevations. (See Id. at 5 (stating that “[t]he sixth prong of the Medical Policy applies to circumstances in which the patient is first hospitalizaed and then transferred to a residential treatment center to stabilize”); see also MFR Reply (Dkt. # 68) at 1 (stating that Premera interprets “the sixth prong of the Medical Policy as applying only after hospitalization for acute symptoms”).) Premera argues that the court should reconsider its ruling in light of “new facts” Premera submits with its motion. Specifically, Premera submits additional portions of the Medical Policy, which describe various “Behavioral Health Levels of Care.” (See, e.g., 2/13/18 Payton Decl. (Dkt. ## 53 (redacted), 55 (sealed)) ¶ 2, Ex. 4; 3/8/18 Payton Decl. (Dkt. ## 69 (redacted), 71 (sealed) ¶ 2, Ex. 6).) The highest level of care described in the document is “inpatient care” and the second highest level is “residential care.”[4] (See 2/13/18 Payton Decl. ¶ 2, Ex. 4 at 1; 3/8/18 Payton Decl. ¶ 2, Ex. 6 at 1.) Plaintiffs oppose Premera's motion. (MFR Resp.)

         In addition to Premera's motion for reconsideration, Plaintiffs filed two motions. First, Plaintiffs ask the court for an award of attorney's fees in the amount of $50, 437.50. (See generally MFF.) Premera does not challenge the reasonableness of this figure; rather, Premera argues that any award of fees is improper because there is no evidence that Premera “acted with culpability or bad faith.” (MFF Resp. (Dkt. # 59) at 2.) Second, Plaintiffs ask the court for entry of judgment in the amount of $123, 849.00, which represents the amount that they paid for Lillian R.'s treatment at Elevations from May 1, 2014, to June 21, 2015. (MFJ at 2.) They also seek an award of prejudgment interest. (Id. at 3-4.) Premera does not oppose Plaintiffs' request for judgment in the amount of $123, 849.00 (MFJ Resp. (Dkt. # 75) at 1), but does oppose Plaintiffs' request for prejudgment interest, and if awarded, argues that the interest rate Plaintiffs' seek is excessive (see Id. at 2-6).

         The court will address each motion in turn.

         III. ANALYSIS

         A. Premera's Motion for Reconsideration

         The court first lays out the applicable standards of review. Motions for reconsideration “are disfavored.” Local Rules W.D. Wash. LCR 7(h)(1). Ordinarily, the court will deny such motions in the absence of a showing of (1) “manifest error in the prior ruling, ” or (2) “new facts or legal authority which could not have been brought to [the court's] attention earlier with reasonable diligence.” Id. In addition, the parties agree that de novo is the proper standard of review for the court's underlying consideration of Premera's denial of benefits and its review of the administrative record. (See 1/30/19 Order at 3 (citing Def. MSJ at 10; Plf. MSJ at 14; Plf. MSJ Resp. (Dkt. # 43) at 2).) When a district court “reviews a plan administrator's decision under the de novo standard of review, the burden is placed on the claimant.” Muniz v. Amec Constr. Mgmt., Inc., 623 F.3d 1290, 1294 (9th Cir. 2010). “Under a de novo review, the rules ordinarily associated with the interpretation of insurance policies apply.” Leight v. Union Sec. Ins. Co., 189 F.Supp.3d 1039, 1047 (D. Or. 2016) (citing Lang v. Long-Term Disability Plan of Sponsor Applied Remote Tech., Inc., 125 F.3d 794, 799 (9th Cir. 1997)). “Accordingly, [the court] may construe the Plan in accordance with the rules normally applied to insurance policies.” Lang, 125 F.3d at 799. This means that the court construes ambiguities in the Plan against Premera and adopts reasonable interpretations advanced by Plaintiffs. See id.

         Premera argues that the court should reconsider its earlier ruling granting benefits under the Plan to Plaintiffs “based on evidence that Premera is submitting at this time- the entire Medical Policy.” (MFR at 2.) Premera, however, never establishes that “the entire Medical Policy” constitutes “new facts . . . which could not have been brought to [the court's] attention earlier with reasonable diligence.” Local Rules W.D. Wash. LCR 7(h)(1). Indeed, the portions of the Medical Policy that Premera now submits are not “new” evidence. Premera had these additional portions of the Medical Policy in its possession all along. Instead, Premera argues that the court should consider these additional portions because “Premera had no reason to foresee this Court's application and interpretation of the sixth prong.” (MFR Reply at 1; see also Id. at 4 (“Premera had no reasons to address this issue before now . . . .”).) Premera's counsel mischaracterizes the record.[5] As detailed above, more than a week prior to the hearing on the parties' briefs, the court notified the parties that it was considering whether “Lillian R.'s treatment at Elevations . . . from May 1, 2014, until her discharge on June 21, 2015, [was] medically necessary based on the sixth provision of . . . [Premera's] Medical Policy, ” and the court directed the parties to come to the hearing prepared to discuss this issue. (1/15/19 Order at 1, 3.) Indeed, the court issued its January 15, 2019, order specifically to notify the parties, provide them with an opportunity to supplement the record with additional argument or evidence related to the Medical Policy's sixth provision, and avoid the type of motion Premera now brings.

         Yet, at no time during the January 23, 2019, hearing or following the court's January 15, 2019, notice did Premera ask to supplement the administrative record to include the additional portions of the Medical Policy that Premera now contends are critical to the court's analysis of the Medical Policy's sixth prong. At most during the hearing, Premera's counsel suggested that the court could go “online” to review additional portions of the Medical Policy because “different carriers” had published the entire Medical Policy online. (1/23/19 Trans. of Hr. at 11:16-21.) Of course, neither material contained on Premera's website nor on another insurance company's website would be a proper subject for judicial notice, and if the court had independently searched for, reviewed, and relied upon such material, it would have likely committed reversible error. See Monkton, Ins. Servs., Ltd. v. Ritter, 768 F.3d 429, 431 n.1 (5th Cir. 2014) (noting that a party's website, which the district court had reviewed, did not appear to be a proper subject for judicial notice and declining to consider such material on appeal); Gaza v. LTD Fin. Servs., L.P., No. 8:14-CV-1012-T-30JSS, 2015 WL 5009741, at *2 (M.D. Fla. Aug. 24, 2015) (“Courts have long recognized that private, non-governmental websites are not the proper subject of judicial notice.”) (citing Lodge v. Kondaur Capital Corp., 750 F.3d 1263, 1274 (11th Cir. 2014)); Nassar v. Nassar, No. 3:14-CV-1501-J-34MCR, 2017 WL 26859, at *5 (M.D. Fla. Jan. 3, 2017), aff'd, 708 Fed.Appx. 615 (11th Cir. 2017) (“In general, non-governmental websites are not proper subjects of judicial notice.”). Because the court notified Premera that it was considering whether the sixth provision of the Medical Policy provided coverage to Plaintiffs, Premera had an opportunity to ask the court to supplement the record with the additional material that Premera now deems relevant to that determination. Because Premera failed to do so, it cannot now argue that the additional provisions of the Medical Policy represent “new facts . . . which could not have been brought to [the court's] attention earlier with reasonable diligence.” See W.D. Wash. Local Rule LCR 7(h)(1).

         However, even if the court were to consider the materials that Premera now submits, it would not reconsider its decision. Premera argues that “[t]he whole Medical Policy conclusively establishes that the word ‘inpatient' in the sixth prong is referring to inpatient hospitalization.” (MFR Reply at 2.) The court disagrees. First, contrary to Premera's statement, the definition of “inpatient care” that Premera now provides from the Medical Policy expressly includes units “whether they are located in general hospitals or freestanding behavioral health facilities.” (3/8/19 Payton Decl. ¶ 2, Ex. 6 at 2.[6]) Thus, even under the additional provisions of the Medical Policy that Premera now submits, “inpatient care” expressly refers to a broader category of care than solely “inpatient hospitalization.”

         Second, although the Medical Policy discusses “discrete categories” of care- including “inpatient” and “residential care, ” it also expressly recognizes that the “level of care might be represented by a continuum rather than discrete categories.” (Id.) Indeed, the categories themselves are not strictly defined but rather tend to blend into one another. For example, “inpatient care” is described as “generally” locked and staffed by round-the-clock nurses with attending physicians “typically” rounding at least 5 days a week; whereas at residential care doctors “typically round less often, and nurses are generally on site for fewer hours each day than at an inpatient unit.” (Id.) Thus, there is overlap between the types of care that “generally” or “typically” constitute “inpatient” and “residential” care. (See id.) This creates ambiguity in how the terms “inpatient” and “residential” are defined and should be applied, and the court must construe that ambiguity against Premera. See Lang, 125 F.3d at 799. Thus, even considering the additional portions of the Medical Policy that Premera submits with its motion, the court does not conclude that the term “inpatient” as it is used in the Medical Policy's sixth prong refers solely to hospitalization.

         More importantly, the Plan itself does not define “inpatient” as being limited to hospital admissions, and Premera never addresses this language in its motion for reconsideration. (See generally MFR.) As the court explained in detail in its January 30, 2019, order, the Plan expressly defines the term “inpatient” as “[s]omeone who is admitted to a healthcare facility for an overnight stay.” (1/30/10 Order at 29 (citing AR at 011722).) The definition contains no express limitation to an overnight stay in a hospital. Further, the Plan defines “hospital” as only one type of healthcare facility that meets four specific criteria. (See Id. (citing AR at 011722).) The definition goes onto state that “[a] facility is not considered a hospital if it operates mainly . . . [a]s a residential treatment center.” (Id. (citing AR at 011722).) Reading these provisions together, the term “inpatient” necessarily includes more than just a person who is admitted to a hospital; the term must apply persons who are admitted to other types of healthcare facilities. Premera never challenges the court's determination that Elevations is a “healthcare facility.” (See 1/30/19 Order at 30; see ...


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