Ninth Circuit Affirms Cigna’s Denial of ERISA Claims for Mental Health Treatment Due to Provider’s Fee-Forgiving Practice

In Bristol SL Holdings, Inc. v. Cigna Health & Life Insurance Company, No. 23-55019, 2024 WL 2801531 (9th Cir. May 31, 2024), Plaintiff-Appellant Bristol SL Holdings, Inc. brought an ERISA claim for benefits against Defendants-Appellees Cigna Health and Life Insurance Company and Cigna Behavioral Health, Inc. (collectively, “Cigna”) for non-payment of treatment provided to 106 patients of Sure Haven, a now defunct entity for which Bristol is the successor-in-interest. The district court granted summary judgment to Cigna and denied Bristol’s motion for reconsideration. The Ninth Circuit affirmed.

First, the court determined that abuse of discretion review applied to Cigna’s denial of reimbursement based on various plan documents stating that “[t]he Plan Administrator delegates to Cigna discretionary authority to interpret and apply plan terms and to make factual determinations in connection with its review of claims under the plan.” The court rejected Bristol’s argument that the plan documents are insufficient because they are summary plan descriptions (“SPDs”) rather than formal plan documents. Though the court agreed that statements in SPDs do not themselves constitute the terms of the plan for purposes of an ERISA benefit claim, an SPD can still operate as a plan document if it is part of the Plan’s written instrument and so long as it does not add or contradict the terms of existing Plan documents. Here, the plan documents provided by Cigna state that they are part of a Plan and take the place of any documents previously issued which describe benefits. Cigna offered at the district court to produce supplements to its exemplars and other plan documents, but Bristol declined the offer. The court found that the evidence in the record supports Cigna having discretionary authority to interpret plan terms.

Second, the court found that Cigna’s decision under abuse of discretion review was reasonable. It explained the basis for the claim denials in reasonably clear language with specific reference to the plan provisions that form the basis for the denial. Cigna explained its suspicion that Sure Haven was forgiving patient financial contributions or “fee-forgiving” and requested documentation of patient payments. The court also found that Cigna’s denials were based on a permissible interpretation of its plans. Cigna also had a reasonable basis for its initial suspicion that Sure Haven was waiving patient payments and that it failed to provide proof of patient payments. The court also agreed with the district court that Cigna was not conflicted since the vast majority of claims it administered are self-funded by the plan sponsors and not Cigna.