In a recent unpublished case from the U.S. Court of Appeals for the Fifth Circuit, the New Orleans-based court, which hears appeals from federal courts in Louisiana, Mississippi, and Texas, affirmed Blue Cross and Blue Shield of Texas’s decision to cover only a portion of a young woman’s inpatient hospitalization bill after multiple suicide attempts. The plaintiff, referred to in the decision as Michael P., is the young woman’s father, and at the time of the young woman’s hospitalization, he was employed Energy Transfer Partners. In connection with this job, Michael P. and his daughter were beneficiaries of a self-funded group health plan governed by the Employee Retirement Income Security Act of 1974 (ERISA).  He appealed twice through the internal plan appeal process, and after neither appeal was successful, he filed suit in the United States District Court for the Western District of Louisiana.

Under the plan, Blue Cross and Blue Shield of Texas is the claims administrator and has discretionary authority to determine eligibility for benefits. Blue Cross obtained an independent physician review and referred to outside guidelines for inpatient care. Blue Cross obtained medical records, which it says show the insured was stabilized, was not an imminent threat to herself or others, and was not expressing suicidal thoughts after two weeks in treatment. Blue Cross stated in its denials that two weeks was an appropriate amount of acute inpatient treatment according to established guidelines of medical necessity. Because it found all of the time in care after the first two weeks to be unnecessary acute treatment, the plan would not cover them. Applying Fifth Circuit precedent, the court affirmed the finding of the district court that Blue Cross did not abuse its discretion. Because there was some evidence to support Blue Cross’s decision, the decision was reasonable, even if on the low end of reasonableness.

The interesting thing in this case is the concurring decision of Judge Andrew Oldham, one of President Trump’s recent appointments to the Fifth Circuit. Judge Oldham is a former law clerk for Supreme Court Justice Samuel Alito and worked in the Texas Solicitor General’s Office. Judge Oldham found that the court was correct in its application of Fifth Circuit precedent, and thus he was bound to join the decision. However, he questioned whether the Fifth Circuit has been too deferential to ERISA plan members.

The concurring decision is an interesting piece of writing, because it expresses the views of a new judge, perhaps with little prior exposure to ERISA. Perhaps his fresh take is just what the court needs to eventually re-evaluate its view that decisions of ERISA administrators should be given great deference. As many have been saying for years, ERISA was meant to benefit beneficiaries of employer-provided benefit plans by providing them a cause of action in federal court to challenge benefit decisions.

Judge Oldham questioned the court’s interpretation of the term “substantial evidence,” which he says is almost always interpreted differently elsewhere in the law. Under Fifth Circuit precedent, even if a plaintiff challenging a benefit denial produces “substantial evidence” in favor of his position, he will not prevail unless he can show the ERISA administrator’s decision is not justified by “substantial evidence.” Judge Oldham argues that the Fifth Circuit has strayed from the Supreme Court’s instructions, and that law, logic, and history cannot square the legislative purposes of ERISA with the Fifth Circuit’s deferential review of benefit determinations (at least those in which the plan gives discretionary authority to the claim administrator). Even worse, ERISA has been found to preempt certain state law remedies, arguable making the situation worse for plan beneficiaries than if Congress had never passed ERISA.

Judge Oldham recognized that the “rule of orderliness,” in which three-judge panels of the Fifth Circuit are bound by previous decisions of three-judge panels, dictated that he must vote to affirm the district court’s decision. The only way such precedent can be changed is by an en banc decision of the entire Fifth Circuit or by a US Supreme Court decision overruling a Fifth Circuit precedent. Perhaps Judge Oldham’s reasoning could help a future plaintiff to seek review from the en banc Fifth Circuit or the Supreme Court with the aim of changing the standard of review in ERISA cases to be more beneficial to plan participants, the people ERISA was meant to protect in the first place.

The case is Michael P. v Blue Cross Blue Shield of Texas, No. 20-30361,__F.App’x__,2021 WL 4314316 (5^th Cir. Sept 22, 2021).