Wit v. United Behavioral Health

• Docket Number: 20-17363,21-15193,20-17364,21-15194
• Decision Date: 22 August 2023
• Parties: DAVID WIT; NATASHA WIT; BRIAN MUIR; BRANDT PFEIFER, on behalf of the Estate of his deceased wife, Lauralee Pfeifer; LORI FLANZRAICH, on behalf of her daughter Casey Flanzraich; CECILIA HOLDNAK, on behalf of herself, her daughter Emily Holdnak; GARY ALEXANDER, on his own behalf and on behalf of his beneficiary son, Jordan Alexander; CORINNA KLEIN; DAVID HAFFNER, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. UNITED BEHAVIORAL HEALTH, Defendant-Appellant. LINDA TILLITT; MARY JONES, Intervenor-Plaintiffs- Appellees, GARY ALEXANDER, on his own behalf and on behalf of his beneficiary son, Jordan Alexander; CORINNA KLEIN; DAVID HAFFNER, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, MICHAEL DRISCOLL, Intervenor-Plaintiff- Appellee, v. UNITED BEHAVIORAL HEALTH, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

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DAVID WIT; NATASHA WIT; BRIAN MUIR; BRANDT PFEIFER, on behalf of the Estate of his deceased wife, Lauralee Pfeifer; LORI FLANZRAICH, on behalf of her daughter Casey Flanzraich; CECILIA HOLDNAK, on behalf of herself, her daughter Emily Holdnak; GARY ALEXANDER, on his own behalf and on behalf of his beneficiary son, Jordan Alexander; CORINNA KLEIN; DAVID HAFFNER, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees,

LINDA TILLITT; MARY JONES, Intervenor-Plaintiffs- Appellees,
v.
UNITED BEHAVIORAL HEALTH, Defendant-Appellant.

GARY ALEXANDER, on his own behalf and on behalf of his beneficiary son, Jordan Alexander; CORINNA KLEIN; DAVID HAFFNER, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees,

MICHAEL DRISCOLL, Intervenor-Plaintiff- Appellee,
v.
UNITED BEHAVIORAL HEALTH, Defendant-Appellant.

Nos. 20-17363, 21-15193, 20-17364, 21-15194

United States Court of Appeals, Ninth Circuit

August 22, 2023

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Argued and Submitted August 11, 2021 San Francisco, California

Appeal from the United States District Court for the Northern District of California Joseph C. Spero, Magistrate Judge, Presiding D.C. Nos. 3:14-cv-02346-JCS, 3:14-cv-05337-JCS

Miguel A. Estrada (argued), Geoffrey M. Sigler, Lucas C. Townsend, and Matthew S. Rozen, Gibson Dunn & Crutcher LLP, Washington, D.C.; Jennifer S. Romano and Andrew Holmer, Crowell & Moring LLP, Los Angeles, California; April N. Ross, Crowell & Moring LLP, Washington, D.C.; Nathaniel P. Bualat, Crowell & Moring LLP, San Francisco, California; for Defendant-Appellant.

Caroline E. Reynolds (argued), David A. Reiser, and Andrew N. Goldfarb, Zuckerman Spaeder LLP, Washington, D.C.; D. Brian Hufford and Jason S. Cowart, Zuckerman Spaeder LLP, New York, New York; Adam Abelson, Zuckerman Spaeder LLP, Baltimore, Maryland; Meiram Bendat, Meiram Bendat, Santa Barbara, California; John R. Stokes and Peter K. Stris, Stris & Maher LLP, Los Angeles, California; Colleen R. Smith, Stris & Maher LLP, Washington, D.C.; for Plaintiffs-Appellees.

Mark D. DeBofsky, DeBofsky Sherman Casciari Reynolds PC, Chicago, Illinois, for Amici Curiae National Association for Behavioral Healthcare, American Hospital Association, American Association for Treatment of Opioid Dependence, American Psychological Association, California Hospital Association, Federation of American Hospitals, National Association of Addiction Treatment Providers, National Council for Mental Wellbeing, and REDC Consortium

Jack R. Bierig, Alison L. Andersen, Neil Lloyd, and Wendy Qiu, Arentfox Schiff LLP, Chicago, Illinois, for Amici Curiae American Psychiatric Association, American Medical Association, California Medical Association, and American Psychiatric Association California District Branches.

Abigail K. Coursolle and Elizabeth Edwards, National Health Law Program, Los Angeles, California; Kevin Costello, Center for Health Law &Policy Innovation, Harvard Law School, Cambridge, Massachusetts; for Amici Curiae National Health Law Program et. al..

Aaron M. Panner and Eric J. Maier, Kellogg Hansen Todd Figel &Frederick PLLC, Washington, D.C.; for Amici Curiae American Psychiatric Association, American Medical Association, California Medical Association, and California State Association of Psychiatrists.

Joshua B. Simon, Warren Haskel, and Richard Diggs, McDermott Will &Emery LLP, New York, New York; Michael B. Kimberly and Sarah P. Hogarth, McDermott Will &Emery LLP, Washington, D.C.; for Amicus Curiae America's Health Insurance Plans.

Daryl Joseffer and Jennifer B. Dickey, United States Chamber Litigation Center Inc., Washington, D.C.; Andrew J. Pincus, Archis A. Parasharami, and Daniel E. Jones, Mayer Brown LLP, Washington, D.C.; Avi M. Kupfer, Mayer Brown LLP, Chicago, Illinois; for Amicus Curiae The Chamber of Commerce of the United States of America.

Joanna S. McCallum, Manatt Phelps &Phillips LLP, Los Angeles, California; Joseph E. Laska and Nathaniel A. Cohen, Manatt Phelps &Phillips LLP, San Francisco, California; for Amicus Curiae Association for Behavior Health and Wellness.

Elena Goldstein, Acting Solicitor of Labor; G. William Scott, Associate Solicitor for Plan Benefit Security; Jeffrey Hahn, Counsel for Litigation, Melissa Moore and Stephen Silverman, Senior Attorneys; United States Department of Labor, Office of the Solicitor, Plan Benefits Security Division, Washington, D.C.; for Amicus Curiae Secretary of Labor.

Alyssa C. George and Sejal Singh, Trial Attorneys; Jeffrey Hahn, Counsel for Appellate and Special Litigation, Wayne R. Berry, Acting Associate Solicitor for Plan Benefits Security; Seema Nanda, Solicitor of Labor; United States Department of Labor, Office of the Solicitor, Plan Benefits Security Division, Washington, D.C.; for Amicus Curiae Secretary of Labor.

Martine N. D'Agostino and Ari Dybnis, Deputy Attorneys General; Karli Eisenberg, Supervising Deputy Attorney General; Renu R. George, Senior Assistant Attorney General; Rob Bonta, California Attorney General; Oakland, California; for Amicus Curiae The State of California.

Julia Harvey, Special Assistant Attorney General; Sarah W. Rice, and Michael Field, Assistant Attorneys General; Peter F. Neronha, Rhode Island Attorney General; Rhode Island Attorney General's Office, Providence, Rhode Island; Maria R. Lenz, Assistant Attorney General, Rhode Island Supreme Court, Office of Disciplinary Counsel, Warwick, Rhode Island; Thomas Ryan, Assistant Attorney General; Clare Kindall, Solicitor General; William Tong, Connecticut Attorney General; Connecticut Attorney General's Office, Hartford, Connecticut; Sarah A. Hunger, Attorney, Attorney General's Office, Chicago, Illinois; Kwame Raoul, Illinois Attorney General; Illinois Attorney General's Office, Chicago, Illinois; Aaron M. Frey, Maine Attorney General, Augusta, Maine; Ellen F. Rosenblum, Oregon Attorney General, Salem, Oregon; Charity R. Clark, Vermont Attorney General, Montpelier, Vermont; Robert W. Ferguson, Washington Attorney General, Olympia, Washington; Anthony G. Brown, Maryland Attorney General, Baltimore, Maryland; Dana Nessel, Michigan Attorney General, Lansing, Michigan; Aaron D. Ford, Nevada Attorney General, Carson City, Nevada; Matthew J. Platkin, New Jersey Attorney General, Trenton, New Jersey; Letitia James, New York Attorney General, New York, New York; for Amici Curiae Rhode Island, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Jersey, New York, Oregon, Vermont, Washington, and the District of Columbia.

Before: Morgan Christen and Danielle J. Forrest, Circuit Judges, and Michael M. Anello, ^[*] District Judge.

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SUMMARY ^[**]

Employee Retirement Income Security Act

The panel filed (1) an order vacating a prior opinion, replacing it with a new opinion, granting a petition for panel rehearing, and denying as moot a petition for rehearing en banc; and (2) an opinion affirming in part and reversing in part the district court's judgment, after a bench trial, finding United Behavioral Health ("UBH") liable under ERISA for breach of fiduciary duties and wrongful denial of benefits, and awarding declaratory and injunctive relief, to three classes of plaintiffs who were beneficiaries of ERISA-governed health benefit plans for which UBH was the claims administrator.

The panel held that plaintiffs had Article III standing to bring their claims. Plaintiffs sufficiently alleged a concrete injury as to their fiduciary duty claim because UBH's alleged violation presented a material risk of harm to plaintiffs' interest in their contractual benefits. Plaintiffs

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also alleged a concrete injury as to the denial of benefits claim. Further, plaintiffs alleged a particularized injury as to both claims because UBH's Level of Care Guidelines and Coverage Determination Guidelines for making medical necessity or coverage determinations materially affected each plaintiff. And plaintiffs' alleged injuries were "fairly traceable" to UBH's conduct.

The panel held that the district court did not err in certifying the three classes to pursue the fiduciary duty claim, but the panel reversed the district court's certification of the denial of benefits classes. The panel held that, by certifying the denial of benefits classes without limiting the classes to those with claims that UBH denied under a specific Guidelines provision or provisions challenged in this litigation that applied to the claimant's own request for benefits, the certification order improperly enlarged or modified plaintiffs' substantive rights in violation of the Rules Enabling Act.

The panel held that, on the merits, the district court erred to the extent it determined that the ERISA plans required the Guidelines to be coextensive with generally accepted standards of care. The panel therefore reversed the judgment on plaintiffs' denial of benefits claim. To the extent the judgment on plaintiffs' breach of fiduciary duty claim was based on the district court's erroneous interpretation of the ERISA plans, it was also reversed.

The panel remanded for the district court to answer the threshold question of whether the fiduciary duty claim was subject to the plans' administrative exhaustion requirement and, if so, whether the requirement was satisfied by unnamed class members or should otherwise be excused.

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ORDER

The opinion filed on January 26, 2023, is vacated, and replaced with the concurrently filed opinion. The pending petition for panel rehearing [128] is GRANTED. Because we grant the petition for panel rehearing, the petition for rehearing en banc is DENIED as moot. The amicus curiae motions [133, 134, &140], and motion for leave to file a reply in support of the petition for rehearing [147] are also DENIED as moot. Subsequent petitions for rehearing or rehearing en banc, if any, are permissible.

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OPINION

ANELLO, District Judge

United Behavioral Health...