Ninth Circuit Affirms Denial of Coverage for Residential Treatment, Finding Plan Administrator’s Reliance on InterQual Criteria to be Reasonable

In K.K.; I. B. v. Premera Blue Cross, et al., No. 23-35480, 2025 WL 415721 (9th Cir. Feb. 6, 2025), Plaintiffs, K.K. and her daughter I.B., sought recovery of benefits after Premera Blue Cross, the administrator of the Columbia Banking System, Inc. Benefits Plan, denied coverage for I.B.’s stay at the Eva Carlston Academy, a psychiatric residential treatment center. The denial was based on Premera’s determination that the stay was not medically necessary according to the Plan’s terms. The district court granted summary judgment in favor of Defendants and Plaintiffs appealed. The Ninth Circuit affirmed the district court’s decision, emphasizing several key legal principles and the application of the “abuse of discretion” standard of review.

First, the court underscored the standard of review applicable to decisions made by fiduciaries in ERISA cases, referencing the precedent set by Abatie v. Alta Health & Life Ins. Co. The court reiterated that when a plan confers discretionary authority on the administrator, as it did here, the appropriate standard is “abuse of discretion.” This standard limits judicial intervention to scenarios where the administrator’s decision is unreasonable or conflicts with the plain language of the plan.

In this case, the Plan defined medical necessity through standards that must align with generally accepted medical practices, as articulated in credible scientific evidence and peer-reviewed literature. Premera adopted the InterQual criteria to assess medical necessity, which are comprehensive guidelines developed by independent clinicians and medical experts. The court found Premera’s interpretation and application of these criteria reasonable, thereby not constituting an abuse of discretion.

The court further evaluated Premera’s application of the InterQual criteria to I.B.’s case. Under these criteria, admission to a psychiatric residential treatment center requires evidence of severe functional impairment, inadequate support systems, and persistent symptoms that cannot be managed safely within the community. Premera concluded that I.B. did not meet these criteria, a decision supported by contemporaneous medical evaluations from her doctors which suggested improvement in I.B.’s condition during her stay at a previous facility.

Plaintiffs challenged this conclusion, arguing that Premera failed to address letters of medical necessity from I.B.’s treating physicians and did not engage in a meaningful dialogue as required by ERISA’s procedural rules. However, the court noted that ERISA does not mandate special weight to be given to a claimant’s treating physicians’ opinions, especially when they are not based on direct evaluations contemporaneous with the treatment decision. Additionally, the alleged procedural shortcomings did not rise to the level of “wholesale and flagrant” violations that would necessitate a de novo review, as outlined in Abatie.

Ultimately, the court found that Premera’s denial was consistently grounded in the assessment that I.B.’s symptoms did not meet the InterQual criteria for residential treatment. The supposed vagueness in Premera’s explanation did not critically impair Plaintiffs’ ability to present their case, nor did it suggest that additional evidence would alter the outcome. Consequently, the court concluded that there was no abuse of discretion in the denial of benefits, affirming the district court’s judgment.

This decision highlights the complexities involved in ERISA litigation, particularly concerning the deference given to plan administrators under the abuse of discretion standard. It reiterates the importance of understanding both the substantive criteria for benefit determinations and the procedural requirements imposed on plan administrators. For attorneys navigating similar disputes, this case underscores the necessity of aligning arguments with both the plan’s express terms and the substantive medical criteria it incorporates, while also considering the procedural safeguards ERISA provides to claimants.