Wit v. United Behav. Health

Wit v. United Behav. Health

Opinion

MEMORANDUM²

Defendants appeal the district court's judgment in an ERISA class action against United Behavioral Health (UBH) for breach of fiduciary duties and wrongful denial of benefits pursuant to 29 U.S.C. § 1132(a)(1)(B) and (a)(3)(A). "We review the district court's conclusions of law de novo and its findings of fact for clear error." Democratic Nat'l Comm. v. Hobbs, 948 F.3d 989, 998 (9th Cir. 2020) (en banc). We have jurisdiction pursuant to 28 U.S.C. § 1291, and we reverse. Because the parties are familiar with the facts, we do not recite them here.

1. UBH argues that plaintiffs lacked Article III standing to bring their claims because: (1) plaintiffs did not suffer concrete injuries; and (2) plaintiffs did not show proof of benefits [*6]  denied, they cannot show any damages traceable to UBH's Guidelines. We disagree.

To determine whether a statutory violation caused a concrete injury, we ask: "(1) whether the statutory provisions at issue were established to protect [the plaintiff's] concrete interests (as opposed to purely procedural rights), and if so, (2) whether the specific procedural violations alleged in this case actually harm, or present a material risk of harm to, such interests." Patel v. Facebook, Inc., 932 F.3d 1264, 1270-71 (9th Cir. 2019) (quoting Robins v. Spokeo, Inc., 867 F.3d 1108, 1113 (9th Cir. 2017)).

Plaintiffs alleged that UBH developed Guidelines for use in administering claims, and that the Guidelines were not coextensive with the benefits afforded to them by the terms of their respective Plans. Plaintiffs argue they have standing to bring their claims because they were denied their rights to Guidelines that were developed for their benefit and to a fair adjudication of their claims. As to plaintiffs' fiduciary duty claim, plaintiffs alleged that they suffered injury because UBH failed to develop Guidelines that were consistent with generally accepted standards of care (GASC) in violation of its duty to administer the class members' health benefit plans "solely in the interest of the participants and beneficiaries," [*7]  29 U.S.C. § 1104(a)(1), "with . . . care, skill, prudence, and diligence," 29 U.S.C. § 1104(a)(1)(B), and "in accordance with the documents and instruments governing the plan," 29 U.S.C. § 1104(a)(1)(D). Plaintiffs further argue that ERISA allows members to clarify their rights to future benefits under their Plans' terms allowing beneficiaries to enforce their rights.

ERISA's core function is to "protect contractually defined benefits," US Airways, Inc. v. McCutchen, 569 U.S. 88, 100, 133 S. Ct. 1537, 185 L. Ed. 2d 654 (2013) (quoting Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 148, 105 S. Ct. 3085, 87 L. Ed. 2d 96 (1985)), and UBH's alleged fiduciary violation presents a material risk of harm to plaintiffs' interest in the interpretation of those contractual benefits, see Ziegler v. Connecticut Gen. Life Ins. Co., 916 F.2d 548, 551 (9th Cir. 1990) ("Congress intended to make fiduciaries culpable for certain ERISA violations even in the absence of actual injury to a plan or participant."). Plaintiffs' alleged harm includes the risk that their claims will be administered under a set of Guidelines that narrows the scope of their benefits, and also includes the present harm of not knowing the scope of the coverage their Plans provide. The latter implicates plaintiffs' ability to make informed decisions about the need to purchase alternative coverage and the ability to know whether they are paying for unnecessary coverage. Plaintiffs sufficiently alleged a concrete injury.

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