Pacific Shores Hospital v. United Behavioral Health

An employee of Wells Fargo, whom we will call Jane Jones, was covered under the Wells Fargo & Company Health Plan (the “Plan”), governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). United Behavioral Health (“UBH”) is a third-party claims administrator of the Plan. Jones was admitted to Pacific Shores Hospital (“PSH”) for acute inpatient treatment for severe anorexia nervosa. UBH refused to pay for more than three weeks of inpatient hospital treatment. UBH based its refusal in substantial part on mischaracterizations of Jones’s medical history and condition. PSH continued to provide inpatient treatment to Jones after UBH refused to pay. Jones assigned to PSH her rights to payment under the Plan.

PSH sued the Plan and UBH, seeking payment for the additional days of inpatient treatment. We conclude that UBH abused its discretion in refusing to pay for these days of treatment.

I. Background

The Plan is self-insured by Wells Fargo, which is both the sponsor and administrator of the Plan. Wells Fargo contracts with third-party administrators to review claims made under the Plan. The third-party administrator responsible for reviewing mental health and…