Ninth Circuit Affirms Judgment for ERISA Plaintiff in Dispute Over Residential Mental Health Treatment

In Dan C. v. Directors Guild of America – Producer Health Plan, No. 24-3203, 2025 WL 1419920 (9th Cir. May 16, 2025), the Ninth Circuit Court of Appeals reviewed the district court’s decision regarding the denial of ERISA benefits for residential mental health treatment for Plaintiff’s son, R.C. Defendant Directors Guild of America – Producer Health Plan (“Plan”) denied mental health treatment for the then-nine-year-old child as being not “medically necessary” under the terms of the Plan. The district court ruled in favor of Plaintiff Dan C., finding that the Plan’s denial of benefits was incorrect and entered judgment on both recovery of benefits and breach of fiduciary duty claims under ERISA sections 502(a)(1)(B) and 502(a)(3).

The court affirmed the district court’s judgment on the recovery of benefits but reversed the decision regarding the breach of fiduciary duty. The court held that the district court correctly applied a de novo standard of review because the Plan did not unambiguously delegate discretionary authority to its Benefits Committee. “Though the Plan delegates the task of ‘determining claims appeals’ to the Committee and provides that the Committee ‘will have discretion to deny or grant the appeal in whole or part,’ this language falls short of the unambiguous delegation contemplated by our precedent.” Additionally, the court found no error in the district court’s focus on the Plan’s rationale for denial based on clinical criteria rather than the Plan’s full definition of “medically necessary.”

Even if an abuse of discretion standard had been applied, the court agreed with the district court that the Plan failed to provide a full and fair review, as required by ERISA. The Plan’s communication did not adequately inform Plaintiff of the need to attempt lower levels of care, such as intensive outpatient programs, before residential treatment, depriving Plaintiff of a meaningful opportunity to respond.

Regarding the breach of fiduciary duty claim, the court determined that the relief provided under section 502(a)(1)(B) was sufficient, rendering additional relief under section 502(a)(3) unnecessary. As a result, the case was remanded for the district court to amend the judgment to award relief solely under section 502(a)(1)(B). The decision was thus reversed in part, affirmed in part, and remanded, with costs on appeal to be borne by the Defendant.