16-3463-cv
Elizabeth W. v. Empire HealthChoice Assurance, Inc.

                           UNITED STATES COURT OF APPEALS
                               FOR THE SECOND CIRCUIT

                                         SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

        At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
3rd day of October, two thousand seventeen.

Present:
            DEBRA ANN LIVINGSTON,
            GERARD E. LYNCH,
            DENNY CHIN,
                  Circuit Judges,
_____________________________________

ELIZABETH W.,

                         Plaintiff-Appellant,

                 v.                                                        16-3463-cv

EMPIRE HEALTHCHOICE ASSURANCE, INC.,
BANK LEUMI USA PLAN 15,

                  Defendants-Appellees.
_____________________________________

For Plaintiff-Appellant:                              PETER S. SESSIONS (Lisa S. Kantor, on the brief),
                                                      Kantor & Kantor LLP, Northridge, CA.

For Defendants-Appellees:                             AMANDA LYN GENOVESE (Robert S. Whitman,
                                                      Seyfarth Shaw LLP, New York, NY, on the brief),
                                                      Troutman Sanders LLP, New York, NY.




                                                        1
       Appeal from a judgment of the United States District Court for the Southern District of

New York (McMahon, C.J.).

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is AFFIRMED.

       Plaintiff-Appellant Elizabeth W. (“W”) appeals from the final judgment of the United

States District Court for the Southern District of New York, entered on September 15, 2016,

granting summary judgment to Defendants-Appellees Empire HealthChoice Assurance, Inc. and

Bank Leumi USA Plan 15 (collectively, “Empire”), on W’s claim to medical benefits pursuant to

a health benefits plan governed by the Employee Retirement Income Security Act of 1974

(“ERISA”), 29 U.S.C. § 1001 et seq.      We assume the parties’ familiarity with the facts and

record of prior proceedings, which we reference only as necessary to explain our decision.

       A. Background

       W was undergoing medical treatment for anorexia nervosa as a beneficiary of an ERISA

plan that is fully insured through a group insurance policy (“Policy”) issued by Empire.     After

unsuccessful outpatient treatment, W was admitted to Oliver Pyatt Center (“Oliver Pyatt”) for a

partial hospitalization program (“PHP”) on May 5, 2014.      Empire initially approved coverage

under the Policy and thereafter continued to approve eight additional pre-certifications submitted

for continued PHP treatment.      After 59 days, however, a doctor employed by Empire’s

third-party utilization manager, Anthem UM, concluded that PHP treatment for W was no longer

medically necessary. Empire thus ceased its coverage of W’s PHP treatment at Oliver Pyatt

beginning on July 3, 2014.      W appealed the denial of coverage through Empire’s review

process, but three additional third-party doctors upheld the denial.   W then brought suit in the




                                                2
district court against Empire for wrongful denial of benefits pursuant to ERISA, 29 U.S.C.

§ 1132.

         B. Standard of Review

         In this ERISA action, we review the district court’s grant of summary judgment based on

the administrative record de novo. Hobson v. Metro. Life Ins. Co., 574 F.3d 75, 82 (2d Cir.

2009).     Summary judgment may be granted if “there is no genuine issue as to any material fact

and the moving party is entitled to judgment as a matter of law.” Id.      If there are no disputed

material facts, “our task is to determine whether the district court correctly applied the law.”

Pagan v. NYNEX Pension Plan, 52 F.3d 438, 441 (2d Cir. 1995) (citation omitted).

          We agree with the district court that Empire’s denial of benefits is properly reviewed

pursuant to the deferential arbitrary and capricious standard of review.   The default standard of

review for a plan administrator’s underlying benefits determination is de novo. Firestone Tire

& Rubber Co. v. Bruch, 489 U.S. 101, 111–12 (1989).      But if “written [ERISA] plan documents

confer upon a plan administrator the discretionary authority to determine eligibility, we will not

disturb the administrator’s ultimate conclusion unless it is ‘arbitrary and capricious.’” Hobson,

574 F.3d at 82 (quoting Pagan, 52 F.3d at 441).     The district court correctly noted that “magic

words such as ‘discretion’ and ‘deference’” are not necessary to confer discretionary authority.

Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 251 (2d Cir. 1999) (citation

omitted).    The plan documents here provide Empire with broad discretionary authority by

reserving to it “all . . . powers necessary or appropriate” including the “power to construe this

Contract, to determine all questions arising under this Contract, and to make and establish (and

thereafter change) rules and regulations and procedures with respect to this Contract.”       J.A.

430–31; see also Krauss v. Oxford Health Plans, Inc., 517 F.3d 614, 622–23 (2d Cir. 2008)



                                                3
(citing power to “adopt reasonable policies, procedures, rules, and interpretations” as language

that clearly confers discretionary authority); Jordan v. Ret. Comm. of Rensselaer Polytechnic

Inst., 46 F.3d 1264, 1269–71 (2d Cir. 1995) (citing “power to construe” and “to determine all

questions” as language that clearly confers discretionary authority); Lidoshore v. Health Fund

917, 994 F. Supp. 229, 232–33 (S.D.N.Y. 1998) (applying arbitrary and capricious standard to

identical language).     W contends that “the only relevant Policy provision in this case is the

definition of medical necessity.” Pl.-Appellant Br. 30. But this Policy provision confirms

Empire’s discretionary authority by defining “medical necessity” as care that is medically

necessary based on “our [Empire’s] criteria, and in our [Empire’s] judgment.”          J.A. 393; see

Krauss, 517 F.3d at 622 (listing ability to make benefits determinations “in our judgment” as an

example of “clear language” conferring discretion).

       C. Empire’s Decision

       Based on the record here, we also agree with the district court’s determination that

summary judgment was appropriate under the arbitrary and capricious standard of review.

Because we agree that this standard applies, Empire’s decision to deny benefits must be upheld

unless Empire acted “without reason, unsupported by substantial evidence or erroneous[ly] as a

matter of law.” Kinstler, 181 F.3d at 249 (citation omitted).      The record does not support such

a conclusion.     Empire had full discretion under the Policy to determine if a treatment was

medically necessary “according to our [Empire’s] criteria, and in our [Empire’s] judgment.”

J.A. 393.     Empire’s criteria for medical necessity included evaluating the “most appropriate . . .

level of service” for W, “consistent with the symptoms or diagnosis and treatment of [W’s]

condition.”     Id.    Four third-party doctors evaluated W’s medical records and provided

explanations that were consistent with application of Empire’s medical necessity criteria:     Each



                                                  4
doctor denied coverage because W’s “symptoms or diagnosis” improved and recommended that

W should be “treated with less intensive outpatient treatment” since PHP was no longer the

“most appropriate . . . level of service.”   J.A. 70, 75, 106–07, 349, 393.

        Empire’s decision to deny further coverage was also supported by substantial evidence.

W presented Empire’s reviewers with multiple pieces of evidence in favor of continuing PHP

treatment.    Although some of the evidence in favor of continued treatment conflicts with

Empire’s ultimate conclusion, “if the administrator has cited ‘substantial evidence’ in support of

its conclusion, the mere fact of conflicting evidence does not render the administrator’s

conclusion arbitrary and capricious.” Roganti v. Metro. Life Ins. Co., 786 F.3d 201, 212 (2d

Cir. 2015) (citation omitted).      Empire’s third-party doctors acknowledged the conflicting

evidence, but also noted significant progress made by W.        (Indeed, after receiving 59 days of

PHP treatment, W admits that “she made consistent progress, . . . [s]he was committed to

improving, and had improved while at Oliver Pyatt, . . . was ‘more open’ and progressing in her

treatment goals[,] … she was attending programming, and her family was participating in her

treatment.”   Pl.-Appellant Br. 35, 37.)     Each of Empire’s third-party doctors also noted W’s

steady weight gain, general compliance with treatment, and adherence to her meal plan.         J.A.

70, 75, 106, 348–49.

        After weighing the conflicting evidence, there was enough “evidence that a reasonable

mind might accept as adequate to support” Empire’s decision to deny coverage for further PHP

treatment. Durakovic v. Bldg. Serv. 32 BJ Pension Fund, 609 F.3d 133, 141 (2d Cir. 2010)

(defining “substantial evidence” as “such evidence that a reasonable mind might accept as

adequate to support the conclusion reached by the administrator and requir[ing] more than a

scintilla but less than a preponderance” (citation omitted)). And though we might not have



                                                   5
arrived at the same conclusion, “we are not free to substitute our own judgment for that of

[Empire’s] as if we were considering the issue of eligibility anew.” Hobson, 574 F.3d at 83–84.

Empire’s third-party doctors did not act arbitrarily in determining that W’s demonstrated

progress after 59 days of treatment indicated that PHP was no longer medically necessary as the

“most appropriate . . . level of service” and that W “[could] be treated with less intensive

outpatient treatment.”   J.A. 70, 75, 106, 348–49, 393.

       D. Conflict of Interest

       Finally, the district court did not err in its assessment of Empire’s conflict of interest.

Empire has an inherent conflict of interest because it is “an administrator [that] both evaluates

and pays benefits claims.” Hobson, 574 F.3d at 82–83 (citation omitted).          Such a conflict

should be considered in determining whether a plan administrator has abused its discretion in

denying benefits, but the significance of the conflict decreases if “the administrator has taken

active steps to reduce potential bias and to promote accuracy, for example, by walling off claims

administrators from those interested in firm finances.” McCauley v. First Unum Life Ins. Co.,

551 F.3d 126, 133 (2d Cir. 2008) (quoting Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 117

(2008)).   The district court correctly concluded that Empire’s claims personnel, including the

third-party doctors at issue, were “walled off” because Empire subcontracts its review process to

an independent company, Anthem UM.

       In addition to Empire’s inherent conflict of interest, W also proffered statistical evidence

regarding cases reviewed by three of the third-party doctors involved in W’s review process,

arguing that this evidence shows the bias of Empire’s third-party doctors and further establishes

Empire’s conflict of interest. The district court did not err, however, in concluding that the

proffered material is “hardly powerful evidence that Empire’s structural conflict worked against



                                                6
[W]” given that there was no indication in the material as to whether the proffered cases bore any

similarity to W’s.   J.A. 881.   Consistent with our precedent, we “decline[] to assign any weight

to a conflict of interest ‘in the absence of any evidence that the conflict actually affected the

administrator’s decision.’” Roganti, 786 F.3d at 218 (citation omitted). As discussed above,

Empire’s decision was based on substantial evidence, and there is no basis in the record before

us to determine that Empire’s conflict of interest tainted its decision.

       E. Conclusion

       We have considered W’s remaining arguments and find them to be without merit.

Accordingly, we AFFIRM the judgment of the district court.

                                                       FOR THE COURT:
                                                       Catherine O’Hagan Wolfe, Clerk




                                                  7
