1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 COMMUNITY HOSPITAL OF THE Case No. 19-cv-00328-BLF

MONTEREY PENINSULA,

8 ORDER DENYING PLAINTIFF’S Plaintiff,

MOTION FOR PARTIAL SUMMARY

9 v. JUDGMENT AND GRANTING 10 DEFENDANT’S MOTION FOR

AETNA LIFE INSURANCE COMPANY, PARTIAL SUMMARY JUDGMENT

11 Defendant. [Re: ECF 51; 55] 12

13 This case arises from partially unpaid bills for medical services provided by Plaintiff 14 Community Hospital of the Monterey Peninsula (“CHOMP” or the “Hospital”) to one of Defendant 15 Aetna Life Insurance Company’s (“Aetna”) health plan members. 16 Before the Court is the parties’ cross motions for summary judgment. On June 5, 2020, 17 CHOMP filed its Motion for Partial Summary Judgment. Pl.’s Mot. for Partial Summ. J. (“Pl. 18 MSJ”), ECF 51. On June 15, 2020, Aetna field its opposition to CHOMP’s Motion for Summary 19 Judgment and its own Cross Motion for Partial Summary Judgment. Def.’s Opp. to Pl. MSJ and 20 Def.’s Mot. for Partial Summ. J. (“Def. MSJ”), ECF 55-1. On June 25, 2020, CHOMP filed its 21 opposition to Aetna’s Motion for Partial Summary Judgment and reply in support of its own Motion 22 for Partial Summary Judgment. Pl.’s Opp. to Def. MSJ and Pl.’s Reply ISO Pl.’s MSJ (“Pl. Reply”), 23 ECF 58. On July 2, 2020, Aetna filed the final reply brief in support of its Motion for Partial 24 Summary Judgment. Reply in ISO Def.’s Motion for Partial Summary Judgment (“Def. Reply”), 25 ECF 65. The Administrative Record (“AR”) is filed under seal at ECF 54-6 and ECF 54-7. The 26 Court heard oral arguments on July 9, 2020 (the “Hearing”). 27 For the reasons stated below, the Court DENIES CHOMP’s Motion for Partial Summary 1 Judgment at ECF 51 and GRANTS Aetna’s Motion for Partial Summary Judgment at ECF 55. 2 I. BACKGROUND 3 Plaintiff CHOMP’s remaining claim in this case arises from the partially unpaid bills 4 associated with Patient P.R.’s stay at CHOMP from January 1, 2016 to January 23, 2016.1 5 A. The Relationship between the Parties 6 CHOMP is a full-service hospital in Monterey, California. Pl. MSJ at 3. Prior to January 7 2016, CHOMP and Aetna had no contractual relationship governing reimbursement for healthcare 8 services, and CHOMP was considered “out-of-network” for Aetna’s members. Id. 9 Before January 2016, a dispute arose between CHOMP and Aetna regarding payment for 10 health care services. As a result, the parties entered into a confidential settlement (“Settlement 11 Agreement”) on January 5, 2016. AR at 964-70. Around the same time, the parties negotiated a 12 Hospital Services Agreement (“HSA”) effective February 1, 2016. Id. at 971-1017. Pursuant to the 13 Settlement Agreement, claims with dates of service from September 25, 2015 to February 1, 2016, 14 would be processed according to the terms of the HSA and the applicable plan. Id. at 966, ¶ 3(b); 15 Id. at 971. Patient P.R.’s claim for benefits falls within this time period. Pl. MSJ at 3-4; Def. MSJ 16 at 3. CHOMP has an assignment of benefits from P.R. Pl. MSJ at 13; Def. MSJ at 13. 17 B. Patient P.R. 18 P.R. is a 63-year-old woman with a history of end-stage chronic obstructive pulmonary 19 disease (“COPD”) during the relevant time period. AR at 191. Shortly prior to the hospital stay at 20 issue in this case, P.R. was hospitalized from December 7, 2015 to December 28, 2015. Id. On 21 January 1, 2016, P.R. presented to CHOMP’s emergency department due to a worsening shortness 22 of breath and was admitted to the hospital. Id. CHOMP admitted P.R., placed her in the telemetry 23 unit and referred her to discharge planning and requested a social worker on the same day. Id. at 24 192, 262, 264. From January 3, 2016 to January 5, 2016, P.R.’s doctors treated her shortness of 25 breath and other symptoms, predicted that she would be hospitalized for “the next couple of days,” 26

27 1 CHOMP’s claims arising from service provided to another Aetna patient (Patient F.F.) have settled. 1 and considered discharging her with “home hospice.” Id. at 220-22. On January 6, 2016, P.R.’s 2 doctor noted that her “main problem seems to be that she does not comply with her medical program 3 when she leaves the hospital, i.e., she does not take her medication, she refused oxygen.” Id. at 224. 4 On January 7, 2016, P.R.’s treating physician, Dr. Jefferey Barnum, issued an order 5 discharging P.R. to her residence with home health care to assist with her needs. AR at 253. But 6 discharge was placed on hold because P.R. was “very sedated or sleepy and unsafe to send home.” 7 Id. at 482. In addition, the home health care agency subsequently reported that it would not provide 8 care to P.R. because “her home environment was unsafe for her condition.” Id. at 482. According 9 to the report, P.R. “live[d] in a shack behind a home that [wa]s not insulated and d[id] not have 10 heat.” Id. at 483. CHOMP then began to locate a skilled nursing facility placement for P.R. Id. 11 CHOMP’s discharge planners contacted three facilities on that day. Id. at 483. Two facilities 12 declined the referral on the same day, and the third one rejected the referral the next day. Id. at 483; 13 484. 14 On January 8, 2016, P.R.’s doctor reported that P.R. appeared to be “pretty much at her 15 baseline, which is marginal” and “unable to care for herself.” AR at 225. The discharge planner 16 contacted another skilled nursing facility and was rejected. Id. at 484. On January 9, 2016, P.R. 17 was transferred from her monitored bed in the telemetry unit to non-monitored bed in a medical 18 surgical unit. Id. at 252, 599. P.R.’s doctor reported that “she await[ed] placement, which [wa]s 19 difficult due to her insurance.” Id. at 226. “She [wa]s at baseline and can probably be discharged 20 whenever suitable arrangements have been made.” Id. 21 From January 10, 2016 to January 18, 2016, P.R.’s doctors repeatedly reported that while 22 she was an end-stage COPD patient with oxygen and steroid dependency, she was “breathing 23 comfortably” while at rest, did not have “pain” or “discomfort.” was “breathing at her baseline,” 24 and was “stable.” AR at 227-39. The doctors also reported that P.R. had “extremely poor social 25 support” and “fail[ed] to thrive in the outpatient setting” and thus, CHOMP would “continue to work 26 with discharge planning on locating appropriate placement for her.” Id. 27 During this time, CHOMP’s discharge planners reported receiving a call from Aetna on 1 with. AR at 486. On January 15, 2016, the discharge planner reported that three of the six skilled 2 nursing facilities either did not have beds or declined. Id. at 487. On January 18, 2016, one of the 3 three remaining skilled nursing facilities was found to not be in contract with Aetna. Id. at 488. The 4 discharge planner also reported that a call to Aetna was made and a message was left. Id. The note 5 also stated that the discharge planner “[m]ust call again on non-holiday to ask for help with 6 placement with Aetna contracted facilities.” Id. 7 On January 19, 2016, Aetna notified CHOMP that it was not authorizing services as of 8 January 15, 2016 because the services provided to P.R. could have been completed at a “less 9 intensive level of care or setting.” AR at 943. Aetna had previously approved services from January 10 1, 2016 to January 14, 2016. Id. at 896-936. On the same day, P.R.’s doctor reported that P.R. did 11 not have any pain or discomfort and “really remained at baseline.” Id. at 240. The doctor alerted 12 discharge planning and social work that the patient “will have to discharge from the hospital 13 tomorrow.” Id. The discharge planner noted that P.R. “really has no skilled needs” and “[w]ill need 14 a taxi ride home.” Id. at 489. However, the discharge planner later learned that P.R. has been served 15 with an eviction notice and her living environment was unsuitable for her condition. Id. at 493. 16 P.R.’s landlord was scheduled to leave the state, leaving P.R. with access to her “shack” but not the 17 kitchen, phone, or bathroom in the main house. AR at 500. CHOMP then started to look for a 18 residential care facility that could accept P.R. Id. Her doctor’s report reflected that P.R. was 19 “medically stable for discharge” and social worker found a residential care facility for P.R. on the 20 same day. Id. at 501. On January 22, 2016, CHOMP completed the necessary paperwork to send 21 P.R. to the residential care facility. Id. at 502. On January 23, 2016, P.R. was discharged. Id. at 22 246, 502. 23 C. The Dispute and Appeal 24 On March 3, 2016, pursuant to an assignment of plan benefits from P.R., CHOMP billed 25 Aetna $254,745.00 for the services provided to P.R. from January 1, 2016 through January 23, 2016. 26 See Exhibit G to Declaration of Angela Cadena (“Cadena Decl.”), ECF 50-11. In February and 27 March of 2016, Aetna made partial payments in the amount of $129,857.08, and denied the balance. 1 Cadena Decl. Following the June 28, 2016 appeal, on August 10, 2016, Aetna made a further 2 payment in the amount of $40,072.64 but continued to deny the balance due for dates of service 3 from January 15, 2016 through January 23, 2016. See Exhibit J to Cadena Decl. 4 On September 8, 2016, CHOMP sent “first level appeal request” to Aetna, regarding the 5 denial decision made on services provided to P.R. from January 15, 2016 to January 23, 2016. AR 6 at 167-69. On November 3, 2016, Aetna responded by requesting additional documents. Id. at 850. 7 CHOMP resubmitted its appeal on November 18 and December 15, 2016. Pl. MSJ at 13-14. On 8 December 31, 2016, Aetna again responded and stated that the appeals were untimely because the 9 notification of payment dispute was not submitted within 180 days after the initial claim decision. 10 AR at 952. On June 22, 2017, Aetna notified CHOMP that the 180-day denial was averted “due to 11 a retrospective update to [CHOMP’s] exception to timely filing” allowing CHOMP 365 days to 12 appeal retrospective to February 1, 2016. Id. at 950. On June 23, 2017, Aetna’s medical director 13 reviewed the case and Aetna sent a final appeal resolution letter to CHOMP, upholding the previous 14 denial decision because P.R. “no longer met acute inpatient criteria.” Id. at 956-61. 15 D. Patient P.R.’s Plan 16 P.R. was covered under CVS Caremark Health Savings Plan (the “Plan”), governed by 17 Employee Retirement Income Security Act of 1974 (“ERISA”). See AR at 1-141. The Plan is self- 18 insured and sponsored by CVS Pharmacy, Inc. and its participating affiliates (collectively, “CVS”). 19 AR at 111. The Plan Administrator is the Senior Vice President and Chief Human Resources Officer 20 of CVS Pharmacy, Inc. Id. at 112. The Plan Administrator has delegated to Aetna, a health care 21 insurance company, the discretionary authority to determine all claims under the Plan and to perform 22 a full and fair review of each claim denial which has been appealed by a claimant or his or her 23 authorized representative. See AR at 112. 24 P.R.’s health plan covers inpatient hospital care, including discharge planning services, 25 skilled nursing care, home health care, hospice care, and emergency and urgent care of an emergency 26 condition. AR at 46, 54-56. The Plan’s terms and definitions relevant to this dispute are as follows:

27 What the Plan Covers that the Plan covers only services and supplies that are necessary to 1 diagnose or treat an illness or injury. If a service or supply is not necessary, it will not be covered, even if it is listed as a covered 2 expense in this book. 3 AR at 39.

4 What the Plan Does Not Cover … 5 The plan does not cover “custodial and protective care,” including:

6 • Any item or service that is primarily for the personal comfort and convenience of you or a third party; 7 • Care provided to create an environment that protects a person against exposure that can make his or her disease or injury 8 worse. 9 AR at 69.

10 Emergency Condition This means a recent and severe medical condition — including (but 11 not limited to) severe pain — that would lead a prudent layperson, possessing an average knowledge of medicine and health, to believe 12 that your condition, sickness or injury is of such a nature that failure to get immediate medical care could result in: 13 • Placing your health in serious jeopardy; • Serious impairment to bodily function; 14 • Serious dysfunction of a body part or organ; or • Serious jeopardy to the health of the fetus (in the case of a 15 pregnant woman). 16 AR at 117.

17 Necessary/Medically Necessary Health care services and supplies that a physician, other health care 18 provider or dentist, exercising prudent clinical judgment, would provide to a patient for the purpose of evaluating, diagnosing or 19 treating an illness, injury or disease. The service or supply must be:

20 • Provided in accordance with generally accepted standards of medical or dental practice; 21 • Clinically appropriate, in terms of type, frequency, extent, site and duration; 22 • Considered effective for the patient's illness, injury or disease; • Not primarily for the convenience of the patient, physician, 23 dentist or other health care provider; and • Not more costly than an alternative service or sequence of 24 services that would be at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or 25 treatment of that patient’s illness, injury or disease.

26 For these purposes, “generally accepted standards of medical or dental practice” means standards that are: 27 medical or dental community; or 1 • Otherwise consistent with physician or dental specialty society recommendations and the views of physicians or 2 dentists practicing in relevant clinical areas and any other relevant factors. 3 AR at 121-22. 4

II. STANDARD OF REVIEW

5 ERISA is a federal law that sets minimum standards for most voluntarily established 6 retirement and health plans in private industry, aiming to provide protection for individuals and their 7 beneficiaries covered under these plans. See generally Employment Retirement Income Security 8 Act of 1974, Pub. L. No. 93-406, 88 Stat. 829 (codified as amended at 29 U.S.C. §§ 1001-1461) 9 (2006). ERISA gives plan participants a private right of action to recover benefits. 29 U.S.C. § 10 1132(a)(1)(B). Because ERISA does not specify the standard of review, federal courts have 11 developed a body of common law that supplies the appropriate governing authority. Abatie v. Alta 12 Health & Life Ins. Co., 458 F.3d 955, 962 (9th Cir. 2006). 13 When the terms of an ERISA plan unambiguously grant discretion to the plan, the denial of 14 benefits is reviewed for abuse of discretion. Pac. Shores Hosp. v. United Behavioral Health, 764 15 F.3d 1030, 1039–40 (9th Cir. 2014). CHOMP and Aetna agree that the Plan gives Aetna discretion 16 to determine eligibility for benefits, rendering abuse of discretion review appropriate. Pl. MSJ at 17 17; Def. MSJ at 11. And neither party argues that de novo review would be appropriate under any 18 recognized exception. 19 The parties dispute, however, whether the Court may consider evidence outside of the 20 administrative record or temper its abuse of discretion review with skepticism. Generally, in 21 reviewing a plan administrator’s decision under the abuse of discretion standard, courts are “limited 22 to the record before the plan administrator.” Jebian v. Hewlett-Packard Co. Employee Benefits Org. 23 Income Prot. Plan, 349 F.3d 1098, 1110 (9th Cir. 2003). As the Ninth Circuit held in Abatie, “a 24 district court may review only the administrative record when considering whether the plan 25 administrator abused its discretion, but may admit additional evidence on de novo review.” 458 26 F.3d at 970. There are two exceptions to this general rule. 27 First, if there is evidence of plan administrator’s conflict of interest, the abuse of discretion 1 is “tempered by skepticism.” Abatie, 458 F.3d at 959. The existence of a conflict does not “alter[] 2 the standard of review itself, rather than merely its application.” Montour v. Hartford Life & Acc. 3 Ins. Co., 588 F.3d 623, 631 (9th Cir. 2009). “As Abatie explicitly held, if a conflict of interest 4 exists, ‘abuse of discretion review applies’ and ‘that conflict must be weighed as a factor in 5 determining whether there is an abuse of discretion.’” Id. (quoting Abatie, 458 F.3d at 965). 6 Accordingly, when a court must decide how much weight to give a conflict of interest, courts “may 7 consider evidence beyond that contained in the administrative record that was before the plan 8 administrator, to determine whether a conflict of interest exists that would affect the appropriate 9 level of judicial scrutiny.” Abatie, 458 F.3d at 970. However, once that determination is made, the 10 decision on the merits must rest on the administrative record, and not the extrinsic evidence. Id. 11 Second, “[w]hen a plan administrator has failed to follow a procedural requirement of 12 ERISA, the court may have to consider evidence outside the administrative record.” Abatie, 458 13 F.3d at 972–73. If flagrant enough, procedural noncompliance with ERISA can remove the plan 14 administrator’s decision from abuse of discretion to de novo review. See id. at 971. But when 15 procedural irregularities are smaller, abuse of discretion review applies and “the court may take 16 additional evidence when the irregularities have prevented full development of the administrative 17 record.” Id. Under these circumstances, “the court may, in essence, recreate what the administrative 18 record would have been had the procedure been correct.” Id.; see also Pac. Shores Hosp., 764 F.3d 19 at 1041. In addition, “[w]here there are ‘procedural irregularities’ in the claim review process, the 20 abuse of discretion standard that is applied by the district court will be ‘tempered’ by heightened 21 skepticism.” Hoffman v. Screen Actors Guild Producers Pension Plan, 757 F. App’x 602, 604 (9th 22 Cir. 2019) (quoting Abatie, 458 F.3d at 951, 971). In other words, procedural irregularities during 23 a plan administrator’s review must “be weighed in deciding whether an administrator’s decision 24 was an abuse of discretion.” Abatie, 458 F.3d at 972. 25 A. Conflict of Interest 26 In its briefing, CHOMP argues that “there is substantial evidence of procedural irregularities 27 and potential conflict of interest that warrant skepticism of defendant’s denial decision and that 1 fails, however, to articulate any conflict of interest in this case. Aetna is the claim administrator of 2 P.R.’s Plan and the Plan is self-funded, meaning Aetna does not pay for the benefits. See AR at 3 111. At the Hearing, CHOMP conceded that no conflict of interest has been identified. Thus, the 4 Court’s review under the abuse of discretion standard is not “tempered by skepticism” based on a 5 conflict of interest and the Court may not consider evidence beyond the administrative record 6 regarding conflict of interest. 7 B. Procedural Irregularities 8 Next, CHOMP points to several procedural irregularities, which it argues warrant 9 consideration of extrinsic evidence and tempering of the abuse of discretion standard of review 10 standard with skepticism. “[I]n the context of ERISA procedural violations, discovery outside the 11 administrative record is proper where there have been flagrant violations of ERISA procedure 12 constituting substantive harm to the beneficiary, or where procedural violations have prevented the 13 full development of the administrative record.” DelDebbio v. Walgreens Co., No. C 11-01866 SI, 14 2012 WL 707155, at *2 (N.D. Cal. Mar. 5, 2012) (citing Abatie, 458 F.3d at 974). For example, if 15 a plan administrator “adds, in its final decision, a new reason for denial,” that administrator’s 16 procedural violation is weighed in the abuse of discretion analysis and warrants introduction of 17 extrinsic evidence because the violation “prevented full development of the administrative record.” 18 Abatie, 458 F.3d at 973-74. 19 CHOMP identifies five procedural irregularities in the processing of P.R.’s claim for 20 benefits. The Court addresses each argument in turn. 21 1. Notification of Denial of Authorization for P.R.’s Care Between January 14 and January 19, 2016 22 First, CHOMP argues that Aetna violated two ERISA requirements to notify CHOMP of 23 “denial of a request for authorization of urgent care”: (1) 29 CFR 2560.503-1(f)(2)(i), requiring 24 ERISA plans to notify claimants of any denial of a request for authorization of urgent care within 25 72 hours of the request and (2) 29 CFR 2560.503-1(f)(2)(ii)(B), requiring that once a plan has 26 approved an ongoing course of treatment involving urgent care, the plan must notify the claimant 27 of a decision on a request to extend that course of treatment within 24 hours of the request. Pl. MSJ 1 at 18. CHOMP argues that Aetna violated these requirements by providing ongoing authorizations 2 for P.R.’s care through January 14, 2016, and then failing to communicate the denial of CHOMP’s 3 requests for ongoing care until January 19, at which time Aetna retroactively denied care provided 4 after January 14. Id. Aetna responds that P.R.’s care cannot be considered “urgent” during the time 5 period in question as defined by ERISA. Def. MSJ at 13. 6 The Court agrees with Aetna. Under ERISA, a “claim involving urgent care” is:

7 [A]ny claim for medical care or treatment with respect to which the application of the time periods for making non-urgent care 8 determinations – (A) Could seriously jeopardize the life or health of the 9 claimant or the ability of the claimant to regain maximum function, or, 10 (B) In the opinion of a physician with knowledge of the claimant’s medical condition, would subject the claimant to 11 severe pain that cannot be adequately managed without the care or treatment that is the subject of the claim. 12 29 CFR 2560.503-1(m)(1). 13 While there is no question that P.R. was very ill and at the “end-stage of COPD,” there was 14 nothing “urgent” in her condition or course of treatment during the disputed period (i.e., January 15 15 to January 19, 2016). CHOMP transferred P.R. on the first day of her stay from the emergency 16 department to telemetry and discontinued all emergency orders on her first day of admission. AR 17 at 264. Since January 7, 2016 (seven days before the denial of benefits), CHOMP had determined 18 that P.R. could be discharged to an even lower level of care and was simply searching for a suitable 19 accommodation for her. AR at 253. P.R.’s doctors repeatedly described her condition as “baseline” 20 and reported no pain or discomfort. See AR at 236-240. On January 18, 2016, her doctor noted that 21 “[t]he patient is medically stable for discharge pending arrangements by social services.” AR at 22 239. P.R.’s condition cannot fairly be characterized as “urgent” as defined by the regulation 23 triggering the expedited notification requirement set by ERISA for “urgent care.” 24 Thus, CHOMP has not established that Aetna’s January 19, 2016 denial notification was a 25 procedural violation of 29 CFR 2560.503-1(f)(2)(i)-(ii) 26 2. Delay in the Appeal Process 27 Second, CHOMP argues that Aetna failed to comply with ERISA’s requirements for a full 1 and fair appeal process. ERISA requires that notification of the plan’s determination on appeal must 2 be provided within 60 days of receipt of a request for review in the case of a single level appeal 3 process, and within 30 days of receipt of a request for review in the case of a two level appeal 4 process. 29 CFR 2560.503-1(i)(2)(iii)(A). Separately, the HSA provides that Aetna will respond 5 to CHOMP’s appeals within 45 business days. AR at 971-1017 (“HSA”). CHOMP argues that 6 Aetna failed to meet these requirements because it denied the September 2016 appeal in July 2017 7 – ten months after its submission. 8 Aetna, on the other hand, argues that (1) the ERISA appeal requirements only apply to 9 appeals by participants, not healthcare providers such as CHOMP and (2) Aetna responded to all of 10 CHOMP’s requests. Def. SMJ at 13-14. Specifically, Aetna notes that it replied to the September 11 2016 appeal on November 3, 2016, by requesting additional information. Def. MSJ at 13 (citing 12 AR at 850). When CHOMP resubmitted its appeal on November 18 and December 15, 2016, Aetna 13 responded on December 31, 2016, advising CHOMP that its appeals were untimely according to the 14 HSA. AR at 952; 980, HSA ¶4.1.1 (requiring notification of payment dispute within 180 days). On 15 June 22, 2017, the 180 denial was averted “due to a retrospective update to [CHOMP’s] exception 16 to timely filing” and Aetna allowed CHOMP 365 days to appeal retrospective to February 1, 2016. 17 AR at 950. Aetna then set up a replacement case and had the appeal reviewed by a medical director 18 resulting in the June 23, 2017 Final Appeal Resolution letter. AR at 956-961. CHOMP does not 19 dispute that it received the above-mentioned communications from Aetna. See generally, Pl. Reply. 20 Even if the cited regulation is applicable to CHOMP as a healthcare provider (not plan 21 participant), the delay in responding to CHOMP’s appeal does not rise to a level that would change 22 the standard of review or allow the introduction of extrinsic evidence. While the Court recognizes 23 that the delay in the final determination of appeal was long and must have been frustrating, when a 24 plan administrator shows that it has engaged in an “ongoing, good faith exchange of information 25 between the administrator and the claimant,” courts should give the plan administrator’s decision 26 “broad deference notwithstanding a minor irregularity.” Abatie v. Alta Health & Life Ins. Co., 458 27 F.3d 955, 972 (9th Cir. 2006). Here, Aetna has shown that it was communicating with CHOMP to 1 procedural history of the appeal is not disputed and is properly reflected in the administrative record. 2 Thus, the Court sees no basis to alter the abuse of discretion standard of review by allowing CHOMP 3 to submit extrinsic evidence and supplement the record. 4 3. Delay in Full Payment for P.R.’s Care Between January 7 and January 14, 2016 5 Third, CHOMP asserts that it was a procedural irregularity for Aetna to initially deny full 6 payment for P.R.’s stay from January 7 through January 14, 2016, but later pay the full amount in 7 August 2016 in response to an appeal by CHOMP. Pl. MSJ at 18. CHOMP fails, however, to 8 explain why this is a procedural irregularity – as opposed to evidence of an effective appeal process. 9 Thus, CHOMP has not established that Aetna’s delayed payment was a procedural irregularity. 10 4. Production of Documents 11 Fourth, CHOMP claims that during direct negotiation of P.R.’s claim as required by the 12 HSA prior to bringing a lawsuit, Aetna failed to produce any documents in response to CHOMP’s 13 request “for all documents relied on or relevant to [Aetna]’s adverse benefit determination for P.R” 14 in violation of 29 CFR 2560.503-1(j)(3). Pl. MSJ at 19. As the Court determined in its Order 15 Granting Aetna’s Motion to Dismiss, Aetna is not the plan administrator for P.R.’s Plan and the 16 regulation CHOMP cites applies to the plan administrator (not the claim administrator such as 17 Aetna). See Order Granting Defendant’s Motion to Dismiss at 13-14, ECF 56; see also 29 CFR 18 2560.503-1(j) (“The plan administrator shall provide …”). 19 Thus, CHOMP has not established that Aetna violated 29 CFR 2560.503-1(j)(3). 20 5. Consideration of Unavailability of Lower Level of Care for P.R. 21 Finally, CHOMP argues that it was a procedural irregularity for Aetna not to consider that 22 suitable lower level of care for P.R. was unavailable. Pl. MSJ at 19. At the Hearing, CHOMP 23 asserted that Aetna’s failure to consider the unavailability of lower level of care is the most important 24 procedural irregularity. The parties’ briefing on this issue is unfortunately sparse. For its part, 25 CHOMP fails to identify which ERISA procedure Aetna allegedly violated. See generally, Pl. MSJ; 26 Pl. Reply. Aetna does not to address this alleged procedural irregularity in its briefing at all. See 27 generally, Def. MSJ; Def. Reply. In any event, ERISA requires that in order to conduct a “full and 1 fair review” of an adverse benefit determination, the reviewing body must “take[ ] into account all 2 comments, documents, records, and other information submitted by the claimant relating to the 3 claim, without regard to whether such information was submitted or considered in the initial benefit 4 determination.” 29 C.F.R. § 2560.503-1(h)(iv). Thus, failure to consider the Administrative Record 5 in its entirety, if it occurred, would be a procedural irregularity of the ERISA appeal procedures. 6 Here, to prove this procedural irregularity, CHOMP provides evidence outside of the 7 Administrative Record. Aetna’s medical director, Nancy Bryant, M.D., stated in her deposition that 8 the availability (or unavailability) of lower level of care was not “part of what was reviewed.” Pl. 9 MSJ at 10; Deposition of Nancy Bryant M.D. (“Bryant Dep.”) at 73:8-15 (Exh. C to Leitzinger 10 Decl., ECF 50-13). Specifically, Dr. Bryant testified:

11 Q. Okay. Do you have any understanding of whether at any point during this patient’s admission an appropriate lower level of care was 12 available to the patient?

13 A. No. That wouldn’t be part of what was reviewed. What comes in is medical level of care requested, an NCS is appropriate based on the 14 member’s condition and what’s being done or, no, it’s not.

15 …

16 Q. Okay. So are you saying that you didn’t make any evaluation of any lower levels of care available or not available to this patient? 17 A. No. Not as part of the medical assessing review, no. 18 Bryant Dep. at 73:8-15, 74:15-22. 19 In its briefing, Aetna does not dispute that it did not consider the unavailability of lower level 20 care. Instead, Aetna insists that it denied CHOMP’s claim because it found that the care requested 21 (i.e., hospitalization) was not medically necessary. See Def. MSJ at 16; Def. Reply at 11. In 22 response to the Court’s questions at the Hearing, Aetna pointed the Court to the “case summary” 23 document in the Administrative Record prepared by Aetna’s medical director, which appears to be 24 a summary of the Administrative Record. See AR at 956-59. In this document, Aetna noted that 25 “[d]ue to [P.R.’s] severe COPD and her inability to take care of herself, her attending physician 26 documented the need to provide a safe environment for her prior to discharge.” AR at 957. Aetna 27 further noted that “Plan for discharge to SNF/RCF with calls made with no beds available yet.” Id. 1 The Court finds that Aetna has presented no evidence that contradicts or brings into question 2 Dr. Bryant’s deposition testimony. There is no dispute that the unavailability of a skilled nursing 3 facility was included in the Administrative Record. And the evidence Aetna cited to at the Hearing 4 merely summarizes the discharge notes that undisputedly contained information about CHOMP’s 5 efforts in locating a skilled nursing facility. Thus, the “case summary” is not evidence of a dispute 6 as to whether Aetna considered the unavailability of lower level of care in its denial decision, it only 7 shows that the unavailability was included in the Administrative Record and noted by the medical 8 director. Importantly, the denial letter makes no mention of the unavailability of lower level of care. 9 See AR at 960-961 (“The member no longer met acute inpatient criteria. […]. Her care, treatments, 10 and any further monitoring could have been managed at a lower level of care or in a different 11 setting.”). 12 Accordingly, the Court finds that Aetna failed to consider the unavailability of lower level 13 of care and that failure was a violation of ERISA appeal procedural requirements. CHOMP does 14 not contend that this procedural violation was flagrant enough to change the standard of review to 15 de novo. For smaller procedural irregularities, like this one, abuse of discretion standard of review 16 applies and “the court may take additional evidence when the irregularities have prevented full 17 development of the administrative record.” Abatie, 458 F.3d at 973. Accordingly, the Court 18 supplements the Administrative Record by admitting Dr. Bryant’s deposition testimony regarding 19 Aetna’s failure to consider the unavailability of lower level of care for P.R. See id.; see also Pac. 20 Shores Hosp., 764 F.3d at 1041. 21 C. Level of Skepticism 22 Next, the Court must determine how much weight it should give to the procedural 23 irregularity in Aetna’s review. Hoffman, 757 F. App’x at 604. The Court starts its analysis by 24 noting that the facts in this case do not present a close call as to what was or was not medically 25 necessary to treat P.R. Instead, the dispute arises from the unfortunate effective homelessness of 26 P.R. The facts are undisputed and well documented in the Administrative Record. P.R. was a very 27 ill end-stage COPD patient and unable to care for herself without assistance. See AR at 191. P.R. 1 course of medication. AR at 483. She presented at CHOMP’s emergency room not long after her 2 last stay at the Hospital. AR at at 191. P.R. was admitted to the Hospital until she was stable enough 3 to be discharged. AR at 482. P.R. would have been discharged from CHOMP on January 7, 2016, 4 if her home conditions allowed for her to receive home healthcare. See AR at 253 (patient order 5 report on January 7, 2016: “Discharge Home with Equipment/Care”); see also AR at 483. But sadly, 6 P.R. lived in an uninsulated shack behind a home with no plumbing and no heat. AR 483, 485. 7 P.R.’s home environment was unsafe for her condition and home healthcare would not provide 8 services to P.R. at the “shack” where she lived. AR at 482. P.R.’s home condition got even worse 9 when P.R.’s landlord left the state, leaving P.R. with access to her “shack” but not the kitchen, 10 phone, or bathroom in the main house. AR at 500. From January 8, 2016, until she was discharged 11 on January 23, 2016, CHOMP provided care to P.R. at the Hospital (and billed Aetna for that care) 12 while its discharge planners worked on finding P.R. a suitable lower level of care. See AR at 483- 13 502. 14 Under these undisputed set of facts, CHOMP and Aetna present fundamentally different 15 views as to what Aetna’s obligations as an insurance company are. Aetna’s view is straightforward: 16 based on CHOMP’s records documenting P.R.’s medical condition between January 15 and January 17 23, 2016, the requested level of care (i.e., actuate hospitalization) was not medically necessary 18 according to the terms of P.R.’s Plan. A.R. at 960. Aetna did not consider P.R.’s home condition 19 or the unavailability of lower level of care for P.R. See AR at 960-961. 20 CHOMP sees things differently. In CHOMP’s view, Aetna must consider what was 21 medically necessary in light of what discharge options were available and acceptable in P.R.’s 22 circumstances. Because (1) P.R. was virtually homeless and discharge to those conditions would 23 have caused her condition to get dangerously worse and (2) appropriate lower level of care was 24 unavailable to P.R. on the disputed days, CHOMP contends, Aetna was required to pay for P.R.’s 25 hospital stay until appropriate lower level of care was located. 26 To determine the appropriate level of skepticism, the Court must determine how much 27 weight to give to Aetna’s failure to consider the unavailability of lower level of care. The Court is 1 Hospital. That said, the Court finds that Aetna’s procedural violation was a minor one because 2 under the terms of P.R.’s Plan, Aetna was not required to evaluate the medical necessity of the 3 requested level of service in light of P.R.’s home condition or unavailability of lower level of care. 4 P.R.’s Plan covers “medically necessary” services that are “[c]linically appropriate, in terms 5 of type, frequency, extent, site and duration” and are “[n]ot more costly than an alternative service 6 or sequence of services that would be at least as likely to produce equivalent therapeutic or 7 diagnostic results as to the diagnosis or treatment of that patient’s illness, injury or disease.” AR at 8 121-22. Thus, Aetna was not required to cover a higher level of service (i.e., hospitalization) when 9 lower level of service (i.e., skilled nursing, residential care facility, or home healthcare) would have 10 been sufficient to care for P.R.’s condition. 11 Importantly, the Plan excludes “[a]ny item or service that is primarily for the personal 12 comfort and convenience of [the patient]” or “[c]are provided to create an environment that protects 13 a person against exposure that can make his or her disease or injury worse.” AR at 69. This, sadly, 14 is what P.R.’s situation was. She was virtually homeless, living in an uninsulated shack behind a 15 home with no plumbing and no heat. AR 483, 485. If P.R. had a standard living condition, she 16 would have been discharged on January 7, 2016 with home healthcare assisting her with her 17 medication and other nursing needs. Because a lower level of care was unavailable to her, CHOMP 18 continued her hospitalization until a suitable facility was located. Her insurance Plan, however, 19 does not cover higher level of care for as long as it would take to locate suitable lower level of care, 20 where inadequate housing is the impediment. 21 As Dr. Bryant explained in her deposition testimony, while it is true that hospitalizing P.R. 22 ensured that she took her medication as prescribed, hospitalization was not “medically necessary” 23 under her Plan.

24 Q: … And my question is if the patient needed a lower level of care and that level of care wasn’t available during this admission, would 25 you agree that the patient had no safe option other than remaining in the hospital? 26 A: … So, I mean, technically I suppose that if you put her in a hospital 27 and you kept her there, you can make sure she got on medications. as not part of her covered benefits even with a health plan. 1 Q. What's not part of her covered benefits? 2 A. Maintenance of care that is not considered medically necessary. 3 It’s – I’ll look for it in the claim exclusions. 4 Bryant Dep. at 75:22-77:9. 5 Because consideration of unavailability of lower level of care was not required under P.R.’s 6 Plan, Aetna’s failure to consider that unavailability was ultimately inconsequential to its denial of 7 CHOMP’s claim and therefore, the procedural irregularity was a minor one. Accordingly, the Court 8 tempers its review for abuse of discretion with a mild level of skepticism and will weigh this 9 procedural irregularity in deciding whether an administrator’s decision was an abuse of discretion. 10 See Abatie, 458 F.3d at 972. 11 III. AETNA’S EVIDENTIARY OBJECTIONS 12 Aetna objects to the introduction of declarations of Angela Cadena (ECF 50-11), Cara Allard 13 (ECF 50-9), Mikko C. Helenius, M.D. (ECF 50-7), Elizabeth Leitzinger (ECF 50-13), Jeffrey E. 14 Barnum M.D. (ECF 50-5), Exhibits K and M to the Cadena. Decl., and Exhibits A though C to the 15 Leitzinger declaration “to the extent they are not part of the Administrative Record and unrelated to 16 any alleged conflict of interest or procedural irregularity.” Def. MSJ at 15. When evaluating a plan 17 administrator’s denial of benefits “a court may consider evidence outside of the administrative 18 record only when procedural irregularities prevented full development of the administrative record.” 19 Broyles v. A.U.L. Corp. Long-Term Disability Ins. Plan, No. C-07-5305 MMC, 2009 WL 3817935, 20 at *4 (N.D. Cal. Nov. 12, 2009), aff’d, 408 F. App’x 67 (9th Cir. 2011) (citing Abatie, 458 F.3d at 21 973). 22 First, CHOMP responds that its evidence should be considered because it supports a finding 23 of procedural irregularities. Pl. Reply at 7. The Court has reviewed the additional evidence 24 submitted by CHOMP for the sole purpose of evaluating the alleged procedural irregularities. As 25 explained earlier, the Court has admitted Dr. Bryant’s deposition testimony regarding whether Aetna 26 considered the unavailability of lower level of care for P.R. None of the other alleged procedural 27 irregularities CHOMP notes are of the nature to have prevented “full development of the 1 Administrative Record. 2 Aside from Dr. Bryant’s deposition testimony (which the Court has admitted into the record), 3 the remaining documents either repeat the Administrative Record or attempt to explain the 4 declarants’ views of the Administrative Record. The Administrative Record speaks for itself and 5 CHOMP has not articulated a justification for augmenting the Administrative Record beyond Dr. 6 Bryant’s testimony. 7 Second, CHOMP argues that its proffered extrinsic evidence responds to arguments in favor 8 of Aetna’s denial decision raised for first time in this motion (i.e., the reasonableness of CHOMP’s 9 efforts in finding suitable lower level of care for P.R.). Pl. Reply at 7. CHOMP contends that Aetna 10 has argued for the first time in its Motion for Summary Judgment that P.R.’s care is not covered 11 because CHOMP was complacent in arranging a safe discharge plan for P.R. and CHOMP “has 12 never had an opportunity to provide responsive evidence.” Pl. Reply at 5. Aetna rejects this 13 argument and responds that Aetna’s basis for the denial is the same as it was in the denial letters 14 (i.e., not medically necessary) – and Aetna only challenges CHOMP’s efforts in finding lower level 15 of care for P.R. to counter CHOMP’s arguments that the unavailability of lower level of care 16 supports a finding of abuse of discretion. Def. Reply at 5. 17 The Court agrees with Aetna that the CHOMP’s “complacency” in its search for a lower 18 level of care for P.R. was not one of the reasons provided by Aetna in denying coverage. See AR 19 at 960. In its opening brief, CHOMP noted its diligent efforts in finding P.R. a suitable placement 20 – to which Aetna responded by citing to the Administrative Record that in Aetna’s view, supports 21 the position that CHOMP was not diligent. See e.g., Def. MSJ at 1 (arguing “from January 9 through 22 January 18, a period of ten days, CHOMP’s discharge planner did document a single call to a skilled 23 nursing facility to try to move P.R. to a lower level of care.”); see also id. at 6-9. Aetna’s responsive 24 arguments and reliance on the Administrative Record do not open the door to a deluge of extrinsic 25 evidence in support of CHOMP’s argument that it diligently searched for suitable lower level of 26 care. Put differently, CHOMP is correct – its diligence is not at issue. 27 Importantly, CHOMP’s efforts in locating a suitable lower level of care for P.R. is 1 doctors and CHOMP’s discharge planners. Thus, admission of additional evidence that simply 2 supports or bolsters the record on CHOMP’s diligence is unnecessary. 3 *** 4 Accordingly, Aetna’s objection to CHOMP’s evidence outside the Administrative Record is 5 SUSTAINED, with the exception of Dr. Bryant’s deposition testimony regarding whether Aetna 6 considered the unavailability of lower level of care.2 Because the Court has determined that the 7 abuse of discretion standard with a mild level of skepticism applies to denial of CHOMP’s claim, 8 the Court’s review is limited to the Administrative Record and Dr. Bryant’s deposition testimony. 9 See Jebian, 349 F.3d at 1110. 10 For the same reasons, Aetna’s request for judicial notice of information from CHOMP’s 11 website (Def. MSJ at 17-18), not included in the Administrative Record, is DENIED. 12 IV. DENIAL OF BENEFITS 13 A. Legal Standard 14 “A party is entitled to summary judgment if the ‘movant shows that there is no genuine 15 dispute as to any material fact and the movant is entitled to judgment as a matter of law.’” City of 16 Pomona v. SQM North America Corp., 750 F.3d 1036, 1049 (9th Cir. 2014) (quoting Fed. R. Civ. 17 P. 56(a)). “The moving party initially bears the burden of proving the absence of a genuine issue of 18 material fact.” In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010). 19 “Where the moving party meets that burden, the burden then shifts to the non-moving party 20 to designate specific facts demonstrating the existence of genuine issues for trial.” In re Oracle 21 Corp., 627 F.3d at 387. “[T]he non-moving party must come forth with evidence from which a jury 22 could reasonably render a verdict in the non-moving party’s favor.” Id. “The court must view the 23 evidence in the light most favorable to the nonmovant and draw all reasonable inferences in the 24 nonmovant’s favor.” City of Pomona, 750 F.3d at 1049. “Where the record taken as a whole could 25 not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” 26

27 2 The Court notes that Aetna does not object to introduction of some of the exhibits to the Cadena 1 Id. (internal quotation marks and citation omitted). 2 In Bendixen v. Standard Ins. Co., the Ninth Circuit held that where the abuse of discretion 3 standard applies in an ERISA benefits denial case, “a motion for summary judgment is merely the 4 conduit to bring the legal question before the district court and the usual tests of summary judgment, 5 such as whether a genuine dispute of material fact exists, do not apply.” 185 F.3d 939, 942 (9th Cir. 6 1999). Bendixen, however, “predated Abatie and its requirement that any conflict always be 7 considered, applied an abuse of discretion standard untempered in any way, and did not involve a 8 case where the district court examined evidence outside of the administrative record.” Nolan v. 9 Heald Coll., 551 F.3d 1148, 1154 (9th Cir. 2009) (citing Abatie, 458 F.3d at 969). Thus, post- 10 Abatie, where the district court considers evidence was outside of the administrative record “the 11 protections that summary judgment usually affords the non-moving party” apply and weighing that 12 evidence on summary judgment is improper. Nolan v., 551 F.3d at 1154-55. 13 B. Analysis 14 This case is about a dispute over CHOMP’s bills for P.R.’s stay at the Hospital between 15 January 15 and January 23, 2016. The Court starts its analysis by stating what the parties do not 16 dispute: while P.R. was a very ill end-stage COPD patient and unable to care for herself without 17 assistance, she would have been discharged from CHOMP on January 7, 2016, if her home 18 conditions allowed for her to receive home healthcare. See AR at 253 (patient order report on 19 January 7, 2016: “Discharge Home with Equipment/Care”); see also AR at 483. From January 8, 20 2016, until she was discharged on January 23, 2016, CHOMP provided care to P.R. at the Hospital 21 (and billed Aetna for that care) while its discharge planners worked on finding P.R. a suitable lower 22 level of care. See AR at 483-502. Aetna agreed to pay for P.R.’s care at the Hospital (at the charged 23 rates) until January 14, 2016 – but denied coverage between January 15 and January 23, 2016. 24 The Court has determined that the abuse of discretion standard applies with a mild level of 25 skepticism. “A plan administrator abuses its discretion if it renders a decision without any 26 explanation, construes provisions of the plan in a way that conflicts with the plain language of the 27 plan, or fails to develop facts necessary to its determination.” Pac. Shores Hosp., 764 F.3d at 1042 1 be disturbed if reasonable.’” Stephan v. Unum Life Ins. Co. of Am., 697 F.3d 917, 929 (9th Cir. 2 2012) (quoting Conkright v. Frommert, 559 U.S. 506, 130 (2010)). In the Ninth Circuit, the 3 reasonableness standard requires deference to the plan administrator’s decision unless it is “(1) 4 illogical, (2) implausible, or (3) without support in inferences that may be drawn from the facts of 5 the record.” Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 676 (9th Cir. 2011). 6 Where, as here, no conflict of interest is found, “the plan administrator’s decision can be upheld if 7 it is grounded on any reasonable basis.” Williby v. Aetna Life Ins. Co., 867 F.3d 1129, 1138 (9th 8 Cir. 2017) (citation omitted). “In other words, where there is no risk of bias on the part of the 9 administrator, the existence of a single persuasive medical opinion supporting the administrator’s 10 decision can be sufficient to affirm, so long as the administrator does not construe the language of 11 the plan unreasonably or render its decision without explanation.” Id. 12 The crux of CHOMP’s argument is that because no lower level of care was available to P.R. 13 and she could not be safely discharged to her then-existing living condition, her stay at CHOMP 14 was an “emergency condition” and thus, “medically necessary.” Pl. MSJ at 11-12; 19-23. In 15 CHOMP’s view, in determining whether hospitalization was “medically necessary” for P.R., Aetna 16 was required to consider the unavailability of post-discharge appropriate level of care for P.R. 17 Aetna responds that it did pay for the care it considered medically necessary for P.R.: her 18 emergency admission, her hospital stay until she was stabilized, and even 7 days after P.R. was 19 ready to be discharged. Def. MSJ at 15 (citing AR at 142-43, 147, 153-54). Aetna argues that it 20 reasonably denied coverage for the services provided by from January 15 to January 23, 2016 at the 21 level charged. Id. In Aetna’s view, P.R.’s Plan did not require Aetna to pay for hospitalization, 22 when lower level of care (e.g., skilled nursing or residential care) would have been sufficient for 23 P.R.’s medical condition – regardless of whether that lower level of care was available to P.R. 24 Thus, the question before the Court is whether Aetna reasonably exercised its discretion in 25 denying the claim for services billed by CHOMP (i.e., P.R.’s care at the Hospital, and not a lower 26 level of care) from January 15 through January 23, 2016 as not medically necessary. The Court will 27 apply a mild level of skepticism to this analysis due to Aetna’s procedural violation of not 1 2 1. Medically Necessary 3 CHOMP argues that the care P.R. received was medically necessary under the Plan and 4 federal law. The Court addresses each argument below. 5 a. Under the Plan 6 CHOMP argues that P.R.’s care was covered under the Plan because she was experiencing 7 an “emergency condition.” Pl. MSJ at 11-13. 8 The Plan defines emergency condition as follows:

9 Emergency Condition This means a recent and severe medical condition — including (but 10 not limited to) severe pain — that would lead a prudent layperson, possessing an average knowledge of medicine and health, to believe 11 that your condition, sickness or injury is of such a nature that failure to get immediate medical care could result in: 12 • Placing your health in serious jeopardy; • Serious impairment to bodily function; 13 • Serious dysfunction of a body part or organ; or • Serious jeopardy to the health of the fetus (in the case of a 14 pregnant woman). 15 AR at 117. 16 The Plan covers “medically necessary” services that are “[c]linically appropriate, in terms 17 of type, frequency, extent, site and duration” and are “[n]ot more costly than an alternative service 18 or sequence of services that would be at least as likely to produce equivalent therapeutic or 19 diagnostic results as to the diagnosis or treatment of that patient’s illness, injury or disease.” AR at 20 121-22. The Plan does not cover “[a]ny item or service that is primarily for the personal comfort 21 and convenience of [the patient] or “[c]are provided to create an environment that protects a person 22 against exposure that can make his or her disease or injury worse.” AR at 69. 23 CHOMP argues that P.R. was experiencing an “emergency condition” because if she was 24 discharged from the Hospital “without an appropriate lower level of care or she would have risked 25 an immediate material deterioration of her condition, including possible death.” Pl. MSJ at 21. 26 Aetna responds that it paid for what was “medically necessary” to treat P.R. at the emergency room, 27 seven days of hospital care until P.R. was stabilized and ready to be discharged, and even an 1 at 15. In Aetna’s view, it reasonably denied the charges for January 15 to January 23, 2016 because 2 it was no longer medically necessary for P.R. to be hospitalized and lower level of care was 3 appropriate. Id. 4 In the Court’s view, CHOMP’s argument boils down to this: even though it was the 5 Hospital’s responsibility to identify and arrange for a lower level of care after she no longer needed 6 to be hospitalized, Aetna was required to pay for P.R.’s hospital stay for as long as it took CHOMP 7 to find her a suitable arrangement. This position is not supported by the terms of the Plan and 8 CHOMP does not point to any authority to back up this position. Nothing in the Plan obligates 9 Aetna to continue to pay for acute hospitalization of a patient that CHOMP agrees was no longer 10 needed, until the Hospital fulfills its obligation to find a proper level of post-discharge care that 11 meets the patient’s needs. 12 The Administrative Record shows that P.R. was stable enough to be discharged as early as 13 January 7, 2016. AR at 482. Doctors at CHOMP did not decide that P.R. needed further 14 hospitalization until they learned of her unfortunate home condition. See AR at 483.3 To be clear, 15 the Court recognizes that the Administrative Record undoubtedly shows that P.R. was very ill and 16 unable to care for herself without assistance – a fact that Aetna does not dispute. But the question 17 before the Court is whether Aetna abused its discretion to conclude that acute hospitalization was 18 not medically necessary – and the answer, based on the medical record, is no. 19 Nothing in the Administrative Record shows that P.R.’s condition deteriorated from January 20 7 to January 23, 2016, or that P.R. was not stable enough to be discharged to a lower level of care. 21 See e.g., AR at 225 (January 8, 2016: “The patient appears to be pretty much at her baseline, which 22 is marginal.”); AR at 226 (January 9, 2016: “[S]he is at baseline and can probably be discharged 23 whenever suitable arrangements have been made.”); AR at 228 (January 10, 2016: “The patient is 24 breathing comfortably at this point in time at rest” and “[w]orking with discharge planning on 25 placement.”); AR at 229 (January 11, 2016: “overall, she feels about the same as yesterday with 26

27 3 The Court notes that on January 7, P.R.’s doctors put her discharge “on hold” because she was 1 regards to her respiratory status” and “[w]orking with discharge planning on placement.”); AR at 2 236 (January 15, 2016: “she feels she is about at her baseline at this point” and “work with discharge 3 planning and medical social work on appropriate placement and disposition for the patient.”); AR 4 at 237 (January 16, 2016: “She is breathing at what she feels is about her baseline” and “[s]he is 5 aware of the plan for ongoing care here in the hospital as we try and arrange appropriate placement 6 for her.”); AR at 238 (January 17, 2016: “The patient feels she is breathing overall at baseline, but 7 had some exacerbation of shortness of breath this morning and she is going to receive some 8 respiratory therapy for this” and “[a]nticipate require more time to arrange a safe placement for the 9 patient.”); AR at 239 (January 18, 2016: “The patient is medically stable for discharge pending 10 arrangements by social services.”); AR at 240 (January 19, 2016: “unfortunately the patient is 11 effectively homeless. I have alerted discharge planning and social work that the patient will have to 12 discharge from the hospital tomorrow.”). 13 Based on the Administrative Record, Aetna did not abuse is discretion in concluding that the 14 acute hospital stay was no longer medically necessary for P.R. On January 20, 2016, Aetna’s 15 medical director spoke with P.R.’s treating physician who agreed that, “in this case there is no reason 16 for this patient to have ongoing hospitalization and he does not disagree with the decision.” AR at 17 876. Based on P.R.’s ongoing stability and her doctors’ agreement, it was reasonable for Aetna to 18 deny coverage for P.R.’s stay at the Hospital seven days after she was ready to be discharged. 19 Specifically, Aetna explained:

20 You no longer need to stay in the hospital because (1) your oxygen needs are less or at your normal level; (2) intensive breathing 21 treatments are no longer needed; (3) your breathing rate and breathing at rest are better or at your normal level; (4) blood tests of your lung 22 function are better or back to normal; (5) your heart is able to pump enough blood; (6) your temperature is normal; (7) any infection has 23 been or is being treated; (8) airflow and chest function are better or normal; (9) any pain or nausea is gone or better; and (10) you are able 24 to walk or move normally and your dietary needs are being met. You could receive care in a less intensive setting. 25 AR at 937 (January 19, 2016 Denial Letter). Further, after CHOMP appealed Aetna’s denial of 26 coverage, Aetna affirmed its denial explaining that P.R. “no longer met acute inpatient criteria” 27 because: [she] was ambulating, tolerating diet, tapering steroids, oxygen 1 saturations were 93 percent on room air. She was hemodynamically stable, afebrile with stable vital signs. Her care, treatments, and any 2 further monitoring could have been managed at a lower level of car or in a different setting. 3 AR at 960. Aetna’s findings are consistent with P.R.’s medical records – which CHOMP does not 4 dispute. CHOMP’s inability to find an available skilled nursing facility during P.R.’s stay is not a 5 valid reason to find Aetna abused its discretion. 6 Moreover, CHOMP’s interpretation of the “emergency condition” in the Plan is not 7 reasonable. The Plan describes “emergency condition” as it applies to the patient’s existing status 8 – not to what would happen in the future after the patient is discharged. Nothing in the Plan requires 9 Aetna to look at what was ahead for P.R. or to cover higher level of services as long as lower level 10 of care is unavailable. In fact, the Plan specifically states that it does not cover services that are 11 “more costly than an alternative service or sequence of services that would be at least as likely to 12 produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient’s 13 illness, injury or disease.” AR at 121-22. Moreover, The Plan does not cover “[c]are provided to 14 create an environment that protects a person against exposure that can make his or her disease or 15 injury worse.” AR at 69. 16 CHOMP argues that Aetna abused its discretion in denying coverage for P.R. because it 17 failed to consider there was no alternative lower level of care available. Pl. MSJ at 22-23. Even 18 with the mild level of skepticism the Court applies to its review because of Aetna’s failure to 19 consider the unavailability of lower level of care, there was no abuse of discretion. This is because 20 P.R.’s Plan did not require Aetna to consider P.R.’s effective homelessness. The Plan expressly 21 excludes “[c]are provided to create an environment that protects a person against exposure that can 22 make his or her disease or injury worse.” AR at 69. The Court is mindful that P.R.’s living 23 conditions (an uninsulated shack with no access to heat, water, kitchen, or bathroom) were 24 undoubtedly unsuitable for anyone and certainly for P.R. who is an end-stage COPD patient. P.R.’s 25 hospitalization, however, was not needed due to her medical condition, but because her living 26 circumstances were unfortunately so inadequate that home healthcare was unable to serve her needs. 27 AR at 482. Otherwise, she would have been discharged on January 7, 2019. AR at 483. 1 Accordingly, the unavailability of lower level of care was ultimately irrelevant to Aetna’s decision 2 that hospitalization was not medically necessary between January 15 and January 23, 2016. 3 Thus, the Court concludes that Aetna did not abuse its discretion to deny coverage for P.R.’s 4 stay at CHOMP from January 15, 2016 through January 23, 2016, under the terms of the Plan. 5 b. Under Federal Law 6 CHOMP separately argues that Aetna was mandated to pay for P.R.’s stay at CHOMP under 7 federal law because she was experiencing an “emergency medical condition.” Pl. MSJ at 19-22. If 8 a group health plan provides benefits with respect to services in an emergency department of a 9 hospital, it must also cover “emergency services” for “an emergency medical condition.” 29 C.F.R. 10 § 2590.715-2719A(b)(3)(i). “Emergency medical condition” is defined as “a medical condition 11 manifesting itself by acute symptoms of sufficient severity (including severe pain) so that a prudent 12 layperson, who possesses an average knowledge of health and medicine, could reasonably expect 13 the absence of immediate medical attention to result in [serious health risks].” Id. § 2590.715- 14 2719A(b)(4)(i). “Emergency services” must be provided to “stabilize the patient,” meaning “to 15 provide such medical treatment of the condition as may be necessary to assure, within reasonable 16 medical probability, that no material deterioration of the condition is likely to result from or occur 17 during the transfer of the individual from a facility.” Id. § 2590.715-2719A(b)(4)(iii); 42 U.S.C. 18 1395dd. 19 For the same reasons stated above, the Administrative Record shows that P.R. was not 20 experiencing an “emergency medical condition” between January 15 and January 23, 2016. Her 21 doctors noted repeatedly that she was stable and could be discharged to a lower level of care. 22 CHOMP has not pointed to any authority that would require Aetna, an insurance company, to 23 continue to pay for acute hospital stay for as long as it would take CHOMP to arrange for a suitable 24 lower level of care. While the parties do not discuss this issue in their briefing, the Court notes that 25 a separate body of law, Emergency Medical Treatment and Active Labor Act (“EMTALA”), 26 imposes a duty on hospitals, like CHOMP, to “stabilize” patients who are experiencing an 27 “emergency medical condition” before transferring or discharging. Bryant v. Adventist Health 1 Thus, the Court finds that Aetna did not abuse its discretion in denying coverage as not 2 “medically necessary” under federal law. 3 2. CHOMP’s Diligence in Locating Lower Level of Care 4 In its opening brief CHOMP argued that Aetna abused its discretion in denying coverage for 5 P.R. because it failed to consider there was no alternative lower level of care available. Pl. MSJ at 6 22-23. In response, Aetna challenges CHOMP’s diligence in its search for locating a suitable lower 7 level of care for P.R. after January 7, 2016. Def. SMJ at 15-17. Aetna argues that CHOMP did not 8 even consider residential care facilities (the type of care P.R. was eventually discharged to on 9 January 23, 2016), until Aetna denied the claim. Id. at 16. CHOMP responds by describing in detail 10 its efforts in locating a suitable post-discharge arrangement for P.R. Pl. Reply at 11-14. 11 The Court recognizes that the parties dispute whether CHOMP was diligent in its efforts to 12 find a suitable placement for P.R. (compare Def. MSJ at 15-17 with Pl. Reply at 11-14). Not all 13 disputed facts, however, preclude summary judgment. The requirement is that there be no genuine 14 issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). As to materiality, 15 “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will 16 properly preclude the entry of summary judgment.” Id. 17 Here, the disputed fact is not material because under the abuse of discretion standard 18 tempered with mild skepticism, CHOMP’s diligence (or lack thereof) in locating proper post- 19 discharge placement for P.R. is irrelevant. Aetna denied coverage for P.R.’s acute hospitalization 20 because her doctors (and CHOMP) agreed that she would have been discharged if her home 21 conditions were suitable. See e.g., AR at 876 (January 20, 2016: “Dr Helenius […] states that in 22 this case there is no reason for this patient to have ongoing hospitalization[.]”); AR at 239 (January 23 18, 2016: “The patient is medically stable for discharge pending arrangements by social services.”); 24 AR at 240 (January 19, 2016: “unfortunately the patient is effectively homeless. I have alerted 25 discharge planning and social work that the patient will have to discharge from the hospital 26 tomorrow.”). 27 As the Court explained earlier in this Order, neither the Plan nor the law requires Aetna (an 1 Thus, it was not an abuse of discretion for Aetna to deny the claim for P.R.’s hospitalization seven 2 days after she was ready to be discharged – regardless of CHOMP’s diligence in locating lower 3 level of care for her. 4 3. Doctrine of Contra Proferentem 5 Finally, CHOMP argues that “[b]ecause it is reasonable to understand P.R.’s plan to cover 6 inpatient hospital treatment of an emergency medical condition for a short period of time when a 7 lower level of care is unavailable despite diligence, the doctrine of contra proferentem requires a 8 finding of coverage for P.R.’s services.” Pl. MSJ at 23. Doctrine of “contra proferentem” requires 9 ambiguous plan terms subject to two different interpretations to be resolved in favor of the plan 10 participant. Patterson v. Hughes Aircraft Co., 11 F.3d 948, 950 (9th Cir. 1993). 11 In its briefing, CHOMP fails to identify which term in P.R.’s Plan it contends is ambiguous. 12 At the Hearing, CHOMP identified “Medically Necessary” as the allegedly ambiguous term – which 13 CHOMP asserts should be read to include coverage for an acute care hospital stay while a lower 14 level of care is unavailable. 15 The Plan defines “Medically Necessary” as:

16 Health care services and supplies that a physician, other health care provider or dentist, exercising prudent clinical judgment, would 17 provide to a patient for the purpose of evaluating, diagnosing or treating an illness, injury or disease. The service or supply must be: 18 • Provided in accordance with generally accepted standards of 19 medical or dental practice; • Clinically appropriate, in terms of type, frequency, extent, site 20 and duration; • Considered effective for the patient's illness, injury or disease; 21 • Not primarily for the convenience of the patient, physician, dentist or other health care provider; and 22 • Not more costly than an alternative service or sequence of services that would be at least as likely to produce equivalent 23 therapeutic or diagnostic results as to the diagnosis or treatment of that patient’s illness, injury or disease. 24 25 AR at 121-22. 26 CHOMP’s interpretation of the Plan’s “Medically Necessary” definition is a bridge too far. 27 It is not reasonable to read the definition of “Medically Necessary” as taking into consideration the 1 specifically excludes “[c]are provided to create an environment that protects a person against 2 || exposure that can make his or her disease or injury worse.” AR at 69. In addition, the Plan excludes 3 services that are “more costly than an alternative service or sequence of services that would be at 4 || least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment 5 of that patient’s illness, injury or disease.” See AR at 122. CHOMP has failed to identify any 6 || meaningful “ambiguity” in the Plan’s “Medically Necessary” language, only that it could be read to 7 include coverage for more expensive level of care when less expensive care is unavailable. 8 || CHOMP’s interpretation of the “Medically Necessary” language is not reasonable. 9 Because the “Medically Necessary” language in P.R.’s plan is not ambiguous, doctrine of 10 || contra proferentem does not apply. 11 V. ORDER 12 For the foregoing reasons, the Court DENIES CHOMP’s Motion for Partial Summary 13 || Judgment at ECF 51 and GRANTS Aetna’s Motion for Partial Summary Judgment at ECF 55.

15 IT IS SO ORDERED.

2 17 || Dated: September 11, 2020 kom Lh han én) 18 MN

BETH LABSON FREEMAN

19 United States District Judge 20 21 22 23 24 25 26 27 28