Decision of ERISA Benefits Plan Director Upheld

You Can’t Always get What You Want from an ERISA Plan

Conflicts about applicability of ERISA plans must be resolved by federal courts. In Alexandra H. v. Oxford Health Insurance, Inc., No. 18-11105, D.C. Docket No. 1:11-cv-23948-FAM United States Court of Appeals for the Eleventh Circuit (March 8, 2019) the Eleventh Circuit resolved a dispute over care for Anorexia.

Alexandra H. struggled with anorexia and undertook several types of treatment for it. After she underwent a few weeks of “partial hospitalization” at a specialized treatment facility in Miami, Oxford Health Insurance, the administrator of her ERISA benefits plan, decided that this level of care was no longer medically necessary and denied coverage for that level of treatment. Three administrative reviewers upheld that decision. So eventually did the district court, which granted summary judgment to Oxford. We affirm.


Alexandra teaches elementary school in Brooklyn and is in her late thirties. Since middle school, she has suffered from anorexia. She has been hospitalized frequently and has tried many different types of treatments.

On December 14, 2010, she entered a “partial hospitalization” program at Oliver-Pyatt, a Miami treatment center that specializes in eating disorders. The center treated her for anorexia, obsessive compulsive disorder, and major depressive disorder. She had 12 hours of therapy each weekday, spending evenings and weekends on her own in a boarding facility.

After reviewing her symptoms, Oxford agreed to provide insurance coverage for a few days of partial hospitalization. The insurance company’s medical director, a psychiatrist, extended benefits twice after examining her treatment file and speaking with her treating physicians. On January 4, 2011, however, the medical director found that Alexandra had improved and recommended she transition to a lower level of care, concluding that partial hospitalization was no longer “medically necessary” under the employee benefits plan. Oxford denied additional benefits for partial hospitalization at that point.

Alexandra challenged the decision, first proceeding through two levels of internal appeal. Both of the reviewers, psychiatrists not previously familiar with her case, upheld Oxford’s medical-necessity determination. Alexandra sought an external appeal under New York law through the State of New York. The State’s assigned independent reviewer, also a psychiatrist, agreed that partial hospitalization was not medically necessary.

In 2011, Alexandra filed this ERISA action in the United States District Court for the Southern District of Florida. The court determined that the benefits plan’s terms precluded her from challenging medical necessity after the external reviewer’s decision. This court disagreed and remanded the case to permit the parties to determine whether “partial hospitalization” remained a medical necessity at the time Oxford denied coverage. On remand, both sides moved for summary judgment. The district court granted Oxford’s motion.


The plan defines “medically necessary” treatments as those that (among other things) are offered at “[t]he most appropriate supply or level of services which can safely be provided.” A level of care remains medically necessary, according to the plan’s level-of-care guidelines, if the patient “continues to present with symptoms and/or history that demonstrate a significant likelihood of deterioration in functioning/relapse if transitioned to a less intensive level” and if she “cannot effectively move toward recovery and be safely treated in a lower level of care.”

The court noted that Alexandra has not met her burden of showing that partial hospitalization was still the most appropriate level of care on January 4, 2011. (Glazer v. Reliance Standard Life Ins. Co., 524 F.3d 1241, 1246-47 (11th Cir. 2008)). The plan’s definition of medical necessity focuses on the stability of improvement: Was the patient’s progress substantial enough that a step down in treatment was unlikely to cause a setback?

For the medical director and the reviewers who upheld her decision, the benefits denial turned on two factors: the marked improvement in Alexandra’s precipitating symptoms and the absence of dangerous symptoms. For example, it was noted that there was no serious risk of harm to self or “psychosis” and “the patient could safely be treated at a lower level of care and that psychiatric disturbances had improved and she did not exhibit severe symptoms. The medical director concluded her “condition could be safely and effectively managed at a lower level-of-care”. Because this evidence shows that Alexandra could safely transition to less intensive care, it was fair to conclude that partial hospitalization was no longer “most appropriate.”

Confirming this conclusion is a look back, a comparative assessment of her treatment status at the start of her partial hospitalization, in the middle of it, and at the end of it. When Alexandra arrived at Oliver-Pyatt on December 14, she was unable to gain weight, she was binging and restricting food, she was depressed, and she reported passive suicidal ideation without intent or plan. A week later, on December 20, she had gained a pound but was eating just fifty to seventy-five percent of her meal plan.

By the time Oxford denied benefits on January 4, Alexandra had turned a corner. She had gained three pounds. According to her treating physician, she still engaged in unusual eating rituals but, in the preceding week, had finished all of her meal plan—even though the treatment team had increased the amount of food and she had doubled her caloric intake over the last two weeks. She did not want medication but otherwise complied with treatment. She had been able to care for herself over the weekend, though she reported some depressive episodes. For the first time, no suicidal ideation was noted.

When Oxford denied benefits, Alexandra had no symptoms indicating “a significant likelihood of deterioration . . . if transitioned to a less intensive level of care.” She instead had improved on each front.

Setting aside the fact that the treatment records from the week preceding Oxford’s decision seem to indicate she was completing all of her meals, the point isn’t whether Alexandra was a picture of health. Neither is it whether she was ready to stop treatment altogether. It is whether she had improved so little that she continued to need the same kind of care as she had received for three weeks or instead could handle a step down in treatment. In that same letter, to that point, her doctors acknowledge her “marked progress,” noting that she was exploring better responses to her disorder’s psychological triggers and was more accepting of her nutritional needs and the difference between weight gain and real recovery.

Alexandra notes last of all that she had tried outpatient treatment before and it always failed. In support, she relies on her doctors’ letter, which emphasizes that a history of premature treatment step-downs contributed to the chronic nature of her illness. While Oxford’s guidelines treat a patient’s history as relevant to the medical-necessity determination, an unsuccessful history is not dispositive or for that matter very probative.

The fact that past step-downs were premature proves nothing about this one, particularly given the doctors’ acknowledgement that Alexandra had “greater conviction about her need to recover” this time and that the care she received was strategically different from her prior treatments.

Alexandra’s earlier defeats did not establish her destiny for this medical transition or any other.


ERISA decisions must be upheld if they are reasonably based in fact. That she was better meant she still needed treatment but not at the level of in-patient hospitalization. Even if out patient failed in the past the provider is not required to allow Alexandra to stay in a high priced hotel/hospital when out patient care was available and reasonable.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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Passover is one of the many holidays Jewish people celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the Passover Seder for Americans: An All English - Easy to Perform - Passover Seder by [Zalma, Thea, Zalma, Barry]mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being?

All Jewish fathers are required to teach their children, at least once a year at the Passover holiday, about the exodus from slavery in Egypt. For American Jews who have difficulty understanding Hebrew and complicated books describing the Exodus, my wife and I wrote this book to use for our own Seder where each member of the family reads part of the book.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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