[00:00:00] Speaker 03:
Good morning, your honor.

[00:00:00] Speaker 03:
May it please the court, your honor, as I should say.

[00:00:03] Speaker 03:
May it please the court.

[00:00:04] Speaker 03:
Brian King is my name.

[00:00:05] Speaker 03:
I'm representing the appellants in this case.

[00:00:08] Speaker 03:
This case deals with a significantly and seriously disturbed young man, ER.

[00:00:15] Speaker 03:
He was treated at a residential treatment center, Intercept Residential Treatment Center, back in 2020 and 2021.

[00:00:23] Speaker 03:
His insurance carrier at the time was Blue Shield of California.

[00:00:27] Speaker 03:
He submitted his claims, hoping that they would be paid, expecting they would be paid, and they were denied.

[00:00:33] Speaker 03:
And the basis for the denial was that the reviewing physicians at Blue Shield said, we just don't think that it's medically necessary.

[00:00:42] Speaker 03:
Under the guidelines that we have are medical necessity guidelines.

[00:00:46] Speaker 03:
And the medical necessity guidelines that they had were referred to as MCG, Milliman Care Guidelines.

[00:00:52] Speaker 03:
they required that this young man be either a danger to himself, that there be a danger to others, or that there be a moderately severe psychiatric, behavioral, or other comorbid condition that causes serious dysfunction in daily living.

[00:01:10] Speaker 03:
This was a young man that from 2017 to 2020 when he was admitted to intercept

[00:01:14] Speaker 03:
had a series of really significant problems.

[00:01:19] Speaker 03:
You know, we're pretty familiar with the record.

[00:01:23] Speaker 04:
I mean, I read quite a bit about this case.

[00:01:28] Speaker 04:
And so if I'm not mistaken, and you can correct me if I'm wrong, but the district court

[00:01:38] Speaker 04:
toss the case out on a 12b6, is that right?

[00:01:41] Speaker 04:
No, it was on motion summary judgment.

[00:01:44] Speaker 04:
I'm confusing that with another case.

[00:01:47] Speaker 04:
But the district court decided that abusive discretion review was appropriate here.

[00:01:51] Speaker 03:
That's correct, Rob.

[00:01:53] Speaker 04:
And he makes note of that in his order.

[00:01:59] Speaker 04:
in a footnote, I think it is.

[00:02:01] Speaker 04:
And he says that no party, that the parties did not dispute that abuse of discretion review applies.

[00:02:10] Speaker 04:
Is that correct?

[00:02:11] Speaker 03:
Well, we argued, Your Honor, that it should not apply because of the California state prohibition on discretionary authority clauses, but the court in its decision said

[00:02:22] Speaker 03:
I don't find that applicable for this particular type of policy.

[00:02:26] Speaker 03:
An abusive discretion standard is appropriate.

[00:02:29] Speaker 04:
Did you argue, did you have any discussion with the district courts about Abbatee?

[00:02:35] Speaker 03:
Well, we certainly rely on Abbatee and cite to Abbatee in our pleadings, both at the district court and at this level.

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We certainly believe that when you have a procedural irregularity that calls into question the integrity

[00:02:51] Speaker 03:
of the claim procedure process.

[00:02:54] Speaker 03:
that it should be.

[00:02:56] Speaker 04:
So you only see a procedural problem here, not a substantive conflict?

[00:03:02] Speaker 04:
Well, certainly.

[00:03:03] Speaker 04:
Appearance from the record.

[00:03:04] Speaker 04:
Wasn't or isn't Blue Shield both the administrator and the funder of the plan?

[00:03:12] Speaker 03:
Yes, there's a conflict of interest, and it's an inherent conflict of interest.

[00:03:16] Speaker 03:
The Supreme Court in the Glenn case, Glenn versus MetLife, about 20 years ago, made it very clear that

[00:03:23] Speaker 03:
district courts and this court can take into account the inherent conflict of interest that exists.

[00:03:28] Speaker 03:
There is an inherent conflict of interest here.

[00:03:30] Speaker 03:
Now, the district court didn't do that, correct?

[00:03:32] Speaker 03:
Didn't reference it at all, one way or another.

[00:03:33] Speaker 03:
Did you suggest that he might do that?

[00:03:35] Speaker 03:
I don't recall, Your Honor, whether that's in the pleadings that we specifically pointed out and referenced it.

[00:03:40] Speaker 03:
It's something that is inherent, and the Supreme Court in Glens said that.

[00:03:46] Speaker 04:
That's do you think that do you think the district court has a Suiz Bonte obligation to consider the inherent conflict or the apparent conflict that's on the record?

[00:03:55] Speaker 03:
I mean, it's obvious.

[00:03:57] Speaker 03:
It is obvious and it's inherent.

[00:03:59] Speaker 03:
And I can't tell you, Your Honor, that I'm aware off the top of my head with what the Ninth Circuit has done with that.

[00:04:04] Speaker 03:
So the answer to your question is I think that's something that should temper an abuse of discretion standard of review.

[00:04:12] Speaker 03:
We think that a deferential standard of review is satisfied easily in terms of the claims that we're making in this case, just because there are so many ways in which the district court ignored undisputed facts in the medical records for why this treatment was medically necessary, why this child satisfied the criteria for the MCG guidelines.

[00:04:35] Speaker 03:
That's the thrust of our argument.

[00:04:37] Speaker 04:
Part of your argument does seem to suggest that the

[00:04:43] Speaker 04:
that the administrator

[00:04:46] Speaker 04:
needs to get particular deference to your experts.

[00:04:51] Speaker 04:
That's not quite the rule.

[00:04:54] Speaker 03:
No.

[00:04:55] Speaker 03:
I agree with you, Your Honor, that Black and Decker versus Nord makes clear that a treating physician rule that exists for Social Security doesn't apply in risk of cases.

[00:05:03] Speaker 03:
But it also says this, Your Honor, and this is an important statement that I think is something that the Court did not focus on.

[00:05:11] Speaker 03:
Black and Decker, and Black and Decker the Supreme Court said, plan administrators, of course,

[00:05:15] Speaker 03:
may not arbitrarily refuse to credit a claimant's reliable evidence, including the opinions of a treating physician.

[00:05:23] Speaker 03:
That's our contention, is that over and over again

[00:05:25] Speaker 03:
There were several statements from treating physicians that were undisputed.

[00:05:29] Speaker 03:
They were in the medical records, and Blue Shield never bothered to dispute them in the pre-litigation appeal process.

[00:05:35] Speaker 03:
And that was an abuse of discretion, Your Honor.

[00:05:38] Speaker 03:
That's right.

[00:05:39] Speaker 04:
You said there were other procedural irregularities.

[00:05:43] Speaker 04:
The one that gave me some pause

[00:05:47] Speaker 04:
was that I think one of the criteria under is it the Magellan criteria or something like that.

[00:05:55] Speaker 04:
One of them talks about when they evaluate whether permanent residency is needed is to look at various factors and one of the factors was whether there had been attempts at a lower level care.

[00:06:08] Speaker 04:
Yes, that's right.

[00:06:09] Speaker 04:
And there doesn't seem to be any acknowledgement that he did go to a

[00:06:13] Speaker 04:
He did go to a part-time residential care, and they kicked him out because he didn't want to go, and he would not cooperate, and he stopped going.

[00:06:26] Speaker 04:
And they said, well, we can't do anything for you.

[00:06:27] Speaker 03:
That's right.

[00:06:28] Speaker 03:
There was partial hospitalization.

[00:06:30] Speaker 03:
A PHP program is called partial hospital programs.

[00:06:33] Speaker 03:
That's a lower level of care than residential treatment.

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There was intensive outpatient treatment.

[00:06:38] Speaker 03:
That's a lower level of care than residential treatment.

[00:06:42] Speaker 03:
And he also, of course, as you are aware, came directly into the intercept program from an acute hospitalization, an inpatient acute care setting.

[00:06:52] Speaker 03:
And that's something that the treating physicians felt was necessary to scale him down and help him become more assimilated and have

[00:07:03] Speaker 03:
kind of treatment that he was getting to address his problems provided to him over a longer period of time so that he would more likely do well once he was discharged from the residential treatment center.

[00:07:14] Speaker 03:
None of that was, those were talked about in the letters of medical necessity that the family submitted, but they were not addressed in detail or certainly not in a way that was fairly disclosed in the denial letters by Blue Shield.

[00:07:28] Speaker 03:
That's our position, your honor, that's right.

[00:07:31] Speaker 03:
There are, of course, this court has indicated also that there must be a full and fair review involving a meaningful dialogue that considers completely and fairly information presented in the appeal letters by families.

[00:07:48] Speaker 03:
In this particular appeal letter, as the record shows, the family went to great lengths not just to present letters of medical necessity, but to recount for Blue Shield what this child's medical history was like from 2017

[00:08:00] Speaker 03:
to 2020 when the precipitating event here was that he basically threatened with physical injury his therapist.

[00:08:09] Speaker 03:
And his therapist was so concerned that they called and had him admitted to an inpatient hospitalization.

[00:08:15] Speaker 03:
Now, following that, he went into intercept.

[00:08:18] Speaker 03:
But the point that the family tried to emphasize in their appeal letters is the degree to which, as you say, Your Honor, there had been really intensive efforts to try and treat this young man.

[00:08:29] Speaker 03:
at lower levels of care that were unsuccessful.

[00:08:32] Speaker 04:
And the administrators didn't seem like they really acknowledged or dealt with that.

[00:08:38] Speaker 03:
That's the concern.

[00:08:39] Speaker 04:
And that's the failure to engage in a meeting and dialogue?

[00:08:43] Speaker 03:
Yes.

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And we rely on the 10th Circuit and the 5th Circuit for decisions in this area that we cited in the pleadings.

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And there are other circuits as well that have addressed this to a significant extent.

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But the point is not that you have to have every jot and tittle

[00:08:56] Speaker 03:
of the points that are raised in an appeal address in order for that response to an appeal to be valid.

[00:09:02] Speaker 03:
The point is you have to have a meaningful recognition in response to an appeal that all the materials have been considered, a reference to some of the specific information in the medical records that justifies a continued denial, a reference to why the letters of medical necessity are invalid or too remote in time.

[00:09:20] Speaker 03:
They say now in litigation, well, they were too remote in time.

[00:09:24] Speaker 03:
Number one, not true.

[00:09:25] Speaker 03:
But more pointedly as to this meaningful dialogue issue, they never raised that in the pre-litigation appeal process.

[00:09:31] Speaker 03:
And that pre-litigation appeal process is critically important.

[00:09:35] Speaker 03:
We recognize, I recognize, an abusive discretion standard review means when I come into litigation, I've got to, you know, I have an uphill battle facing me.

[00:09:46] Speaker 03:
The critically important thing from the perspective of the federal judiciary is you've got to have a pre-litigation appeal process that has integrity, that is a full and fair review in the sense that there's a meaningful dialogue carried out.

[00:09:59] Speaker 03:
And to the extent that an insurance company like Blue Shield wants to play hide the ball or stonewall or change the rules in the ninth inning, you're going to have problems with

[00:10:10] Speaker 03:
Claimants like my client feeling that they've had a full and fair review and we're going to see more cases in litigation at the District Court and Circuit Court level it shouldn't be there if you had a more meaningful exchange a more fair exchange of information People would maybe sometimes go away very disappointed But at least that have an understanding of why the claim was denied and feel that they had given given a fair shot I mean, I think there's a lot to be said for that but

[00:10:39] Speaker 04:
When you talk about abusive discretion review, it's pretty deferential.

[00:10:44] Speaker 04:
And before Abbate, at least when I was a district judge, the burden was on the plaintiff to show a conflict under Atwood, if I'm not mistaken.

[00:10:54] Speaker 04:
That was a Ninth Circuit case.

[00:10:56] Speaker 04:
And that case was set aside by Abbate.

[00:11:00] Speaker 04:
And under Abbate, I thought we had made it pretty clear that you needed

[00:11:07] Speaker 04:
The district court had an obligation to factor into its abusive discretion standard of review any conflict that was apparent from the record of what the parties brought to their attention.

[00:11:19] Speaker 04:
In fact, under a body, there could even be additional discovery taken to ferret out the conflict.

[00:11:25] Speaker 04:
I think that's right, Your Honor.

[00:11:28] Speaker 04:
And it's not de novo versus abusive discretion.

[00:11:32] Speaker 04:
It can be abusive discretion that's tempered on a scale.

[00:11:36] Speaker 03:
Right.

[00:11:37] Speaker 03:
And the Glenn case from the Supreme Court made that pretty clear too.

[00:11:41] Speaker 03:
And I'll reserve my time.

[00:11:42] Speaker 03:
Thank you.

[00:11:56] Speaker 00:
Thank you, Your Honors, and may it please the Court, Cattleball, on behalf of Blue Shield.

[00:12:00] Speaker 00:
I'd like to start with the standard of review, and particularly getting to abusive discretion, which, as Your Honors noted, is a deferential standard.

[00:12:09] Speaker 00:
In the district court, the parties didn't argue that abusive discretion should be tempered.

[00:12:14] Speaker 00:
The district court was right in footnote two of its decision that the parties hadn't raised that.

[00:12:18] Speaker 00:
Plaintiffs didn't raise it in their opening brief.

[00:12:20] Speaker 00:
They didn't raise it in their reply brief.

[00:12:22] Speaker 00:
And so this is the first time on

[00:12:23] Speaker 00:
I'm hearing my friend argue that this is that the tempering should take place in the abuse of discretion or review.

[00:12:30] Speaker 00:
And we pointed out in our answering brief that there wasn't that the district court hadn't reached this, that it hadn't been raised below

[00:12:37] Speaker 00:
and that it didn't apply.

[00:12:38] Speaker 00:
And I think it is plaintiff's burden to bring up that there's a conflict of interest to allow us the chance to respond and to show that we have safeguards.

[00:12:45] Speaker 04:
Well, let me ask you, do you think there's, from the record, do you think it's just obvious that there's a, you don't think it's obvious that there's a conflict?

[00:12:50] Speaker 00:
Well, so we have a plan that is fully insured with Blue Shield having discretion, but there's nothing else in the record and we would have been able to get into.

[00:13:01] Speaker 00:
Who funds the plan?

[00:13:02] Speaker 00:
It is a fully insured plan funded from contributions from the members.

[00:13:07] Speaker 00:
Right.

[00:13:07] Speaker 00:
Correct.

[00:13:08] Speaker 00:
But that's not... Isn't that a conflict?

[00:13:10] Speaker 00:
That's not the end of the analysis, though.

[00:13:13] Speaker 04:
Well, they were asking for, you know, it turns out, $250,000.

[00:13:15] Speaker 04:
That's a lot of money to pay out.

[00:13:18] Speaker 00:
Well, Your Honor, to be very clear, we did not make a decision based on how much money is... No, I know.

[00:13:22] Speaker 04:
But, I mean, you know, there is concern.

[00:13:25] Speaker 04:
I mean, these residential programs are expensive.

[00:13:30] Speaker 00:
Well, I understand.

[00:13:31] Speaker 04:
Who wants to pay for a residential program?

[00:13:33] Speaker 00:
If it's medically necessary, we absolutely will pay for it.

[00:13:36] Speaker 00:
We will follow the terms of the plan.

[00:13:38] Speaker 00:
And the plan says that services have to be medically necessary, as determined by Blue Shield.

[00:13:44] Speaker 00:
That's the standard.

[00:13:45] Speaker 00:
There's no dispute that we rely on the MCP guidelines.

[00:13:47] Speaker 01:
Has there been any suggestion that the second doctor, the independent doctor, was actually not independent?

[00:13:53] Speaker 00:
No.

[00:13:54] Speaker 01:
Who chose?

[00:13:55] Speaker 00:
That doctor to look at this advanced medical reviews is an independent company that blue shield contracts with

[00:14:01] Speaker 00:
But there's been no challenge to his or her independence.

[00:14:07] Speaker 00:
So that's not also an argument that's been raised in this court, that the AMR physician is somehow biased or is not truly independent.

[00:14:17] Speaker 00:
The regulations require an independent physician at the appeal stage, and we did that.

[00:14:23] Speaker 00:
And if plaintiffs were going to argue that he was somehow biased or lacked independence, they should have raised that, and then we could have addressed it.

[00:14:31] Speaker 00:
in the district court, same with tempering the standard of review.

[00:14:36] Speaker 00:
But even if there were some tempering of the standard of review, some skepticism, the abusive discretion standard is still whether it was... Could I ask you a question?

[00:14:46] Speaker 02:
Because I'm frankly a little bit confused.

[00:14:49] Speaker 02:
There's been some mention here of a tempered abusive discretion standard.

[00:14:55] Speaker 02:
I understand what abusive discretion is.

[00:14:57] Speaker 02:
I understand what de novo is, right?

[00:14:59] Speaker 02:
Clear error?

[00:15:00] Speaker 02:
De novo.

[00:15:02] Speaker 02:
Tell me, you know, what are we talking about with a tempered abuse of discretion standard?

[00:15:10] Speaker 00:
I do think that it is somewhat of a difficult concept, Your Honor.

[00:15:13] Speaker 00:
And I think in the Saloma case, Judge Kleinfeld talked about how this is somewhat of a different weighing.

[00:15:21] Speaker 00:
It's a little bit different because we're not, it's still abuse of discretion.

[00:15:25] Speaker 00:
I think it just means that you take it into account.

[00:15:28] Speaker 00:
that is a factor to consider, and that's how in Abbate and in subsequent cases.

[00:15:31] Speaker 02:
What is a factor you consider?

[00:15:33] Speaker 00:
If there's a conflict of interest, the conflict of interest would be taken into account.

[00:15:37] Speaker 02:
I see.

[00:15:37] Speaker 02:
So the administrator and the funder is the same person, Blue Shield.

[00:15:42] Speaker 02:
So the tempered abuse of discretion is that you take into consideration that there is a conflict of interest, and then what do you do with that?

[00:15:55] Speaker 00:
you continue to apply the normal abuse of discretion standards and ask whether the decision was... So you recite that you've taken into consideration, then you forget it?

[00:16:05] Speaker 00:
Well, Your Honor, again, this is not an argument that was raised in the district court, and so we didn't have the opportunity... An argument that has me baffled.

[00:16:15] Speaker 00:
If I...

[00:16:17] Speaker 00:
So I think under this standard, if my friend were arguing that this skepticism should apply within the abusive discretion standard, I think that would be one other thing that this court would put into the mix to determine whether there was an abuse of discretion.

[00:16:35] Speaker 00:
Because abuse of discretion is a holistic review.

[00:16:38] Speaker 02:
As I understand it, if there's one single persuasive opinion,

[00:16:45] Speaker 02:
that is properly in evidence, then the tri-refact can follow that opinion.

[00:16:53] Speaker 00:
I agree.

[00:16:57] Speaker 00:
We don't.

[00:16:58] Speaker 02:
So how do I temper that rule?

[00:17:01] Speaker 00:
In this case, I don't think it matters because we have three physicians looking at the medical records as a whole, taking into account all of the documentation, reviewing them as a whole.

[00:17:14] Speaker 00:
There's been some suggestion in the reply brief that there's been a credibility determination.

[00:17:17] Speaker 00:
There's not been a credibility determination.

[00:17:21] Speaker 00:
Reading through the records, they talk about ER's diagnosis, his symptoms, his treatment history going back to 2011.

[00:17:27] Speaker 00:
They don't question the credibility, they recognize

[00:17:31] Speaker 00:
that there were prior threats made.

[00:17:33] Speaker 00:
They recognize the parents' concern.

[00:17:35] Speaker 00:
They don't minimize those symptoms.

[00:17:37] Speaker 00:
They just take them into account against the MCG guidelines, which there's no dispute apply.

[00:17:43] Speaker 00:
Those guidelines are a high bar.

[00:17:46] Speaker 04:
How do they deal with the fact that he was in

[00:17:49] Speaker 04:
the partial hospital facilities or whatever they're called.

[00:17:53] Speaker 00:
The partial hospitalization program that your honor referenced, it was in 2018.

[00:17:58] Speaker 00:
He went for three days.

[00:18:00] Speaker 00:
I believe it was a Wednesday, Thursday, Friday.

[00:18:02] Speaker 00:
The following Monday, he didn't get out of the car.

[00:18:04] Speaker 00:
That was the end of it.

[00:18:05] Speaker 04:
They kicked him out.

[00:18:06] Speaker 04:
They said no more.

[00:18:07] Speaker 00:
I read the record to be more that they

[00:18:12] Speaker 00:
you know, they weren't going to try to force him out of the car.

[00:18:14] Speaker 00:
It wasn't that he was expelled.

[00:18:16] Speaker 00:
It was that he didn't want to get out of the car.

[00:18:19] Speaker 00:
That was the last they tried.

[00:18:21] Speaker 00:
That does not show that in 2020, nearly two years later, that it was an abuse of discretion to determine that

[00:18:31] Speaker 00:
Residential treatment, which is a very severe intense form of treatment is one step short of admission to a full-fledged mental hospital If you're looking at the continuum of care that that level of treatment was not medically necessary It comes with real cost to take a child away from their family

[00:18:46] Speaker 00:
Send them nearly a thousand miles from home for 15 months.

[00:18:50] Speaker 00:
That is a big deal.

[00:18:51] Speaker 00:
And the guidelines recognize that we're only going to do that in extreme circumstances where we're looking at persistent thoughts of suicide or homicide or serious harm.

[00:19:01] Speaker 00:
Not just harm, but serious harm.

[00:19:04] Speaker 00:
That we're dealing with severe or serious disturbances in daily living, which Dr. Javed, the AMR physician, Dr. Chan all said wasn't

[00:19:14] Speaker 00:
present based on the totality of the circumstances.

[00:19:20] Speaker 00:
saying that he tried three days of a partial hospitalization in 2018 doesn't show that there's an abuse of discretion.

[00:19:26] Speaker 00:
And as my friend agreed this morning, there's no need to go through every jot and tittle in every medical record.

[00:19:32] Speaker 00:
I don't think there's any way to read the letters from Dr. Javed and Dr. Chan or the AMR physician report and conclude that they are boilerplate or that they're not dealing with ER's actual symptoms, his treatment, his diagnosis.

[00:19:50] Speaker 00:
It was a full review, just focused on his behaviors and his

[00:19:54] Speaker 00:
the assessments of his treating providers and what his treatment providers, particularly at Intercept, were saying that he wasn't being documented for hallucinations.

[00:20:04] Speaker 00:
That's something that Intercept would have noted in its records had he shown that.

[00:20:08] Speaker 00:
They would have noted if he had had suicidal or homicidal ideations.

[00:20:12] Speaker 00:
But on February 13th, they said he was a minimal risk.

[00:20:15] Speaker 00:
On March 31st, they said that he had not evidenced any risk of harm since his arrival.

[00:20:21] Speaker 00:
When he was discharged in January of 2020, the discharging provider said that there was no evidence that he was at risk of imminent harm to himself or others.

[00:20:32] Speaker 00:
And he did not go straight into Intercept after that.

[00:20:35] Speaker 00:
There was basically a month that's mid-January to mid-February.

[00:20:39] Speaker 00:
It was not a pipeline based on the records that we've seen.

[00:20:45] Speaker 00:
There's a month there.

[00:20:47] Speaker 00:
And so the fact that we didn't specifically call out the partial hospitalization in 2018, it's still too remote in time to show an abuse of discretion.

[00:20:59] Speaker 00:
Doesn't mean that it's irrelevant, but it's still too remote in time.

[00:21:03] Speaker 00:
It doesn't show that this decision was illogical, implausible, or without support from inferences that can be drawn from the record, which is the standard for abuse of discretion.

[00:21:14] Speaker 00:
The same goes for the serious dysfunction.

[00:21:17] Speaker 00:
The record showed that ER had generally appropriate interactions with his peers and with staff, that he was not socially withdrawn, that he was eating, sleeping, taking care of himself.

[00:21:29] Speaker 00:
He was doing well in school with accommodations, that at his admission he had insight, he understood the need for treatment, that he was showing remorse.

[00:21:39] Speaker 00:
And so that's why Dr. Javed, Dr. Chan, the AMR physician, all said that

[00:21:43] Speaker 00:
that he didn't have either serious dysfunction or they phrased it differently in the AMR report that there was no significant functional impairment.

[00:21:55] Speaker 00:
On the procedural requirements that have been talked about at length in the brief, the plain text of the regulations show that we complied fully with the procedures.

[00:22:07] Speaker 00:
Looking at the text and the structure of those regulations, subsections G and J are about the content of the letters.

[00:22:13] Speaker 00:
Subsection H is about the internal process.

[00:22:18] Speaker 00:
The internal process does require a full and fair review.

[00:22:21] Speaker 00:
That's in the statute.

[00:22:23] Speaker 00:
It requires taking into account all of the documents.

[00:22:27] Speaker 00:
But that is a duty of analysis.

[00:22:29] Speaker 00:
It is not a duty of explanation.

[00:22:31] Speaker 00:
It does not mean that all of that has to show that it has to be in the report.

[00:22:36] Speaker 00:
And it is plaintiff's burden to show that there's been an abuse of discretion.

[00:22:41] Speaker 04:
What does the regs mean when they talk about dialogue?

[00:22:44] Speaker 00:
I'm sorry, I missed the first part of that.

[00:22:45] Speaker 04:
What do the regulations mean when they talk about dialogue?

[00:22:50] Speaker 00:
So the phrase meaningful dialogue is not, I don't believe it's in the regulations themselves, it comes from this court's decision.

[00:22:57] Speaker 04:
Or our court's decision.

[00:23:00] Speaker 00:
Correct.

[00:23:01] Speaker 00:
That is a shorthand for the regulatory requirements.

[00:23:04] Speaker 00:
So in the letter, the requirements for the letters in subsections G and J, you have to set forth the specific reason.

[00:23:11] Speaker 00:
Here, the specific reason was that it was not medically necessary.

[00:23:15] Speaker 00:
That is the level of generality that this Court and others have talked about when it comes to the specific reason.

[00:23:20] Speaker 00:
There has to be a description of other documents needed in the initial letter.

[00:23:23] Speaker 00:
We did that here.

[00:23:24] Speaker 00:
We provided a list of other documents that if plaintiffs wanted to provide them, they could do so, take that into account.

[00:23:31] Speaker 00:
There's an explanation of the clinical judgment for a medical necessity determination or an offer to provide that explanation.

[00:23:41] Speaker 00:
It's these kinds of things that form a meaningful dialogue.

[00:23:44] Speaker 00:
And I think meaningful dialogue is a shorthand for what those requirements say.

[00:23:50] Speaker 00:
But in Black and Decker versus Nord, the Supreme Court, I believe on page 831 of that opinion, said that the scope of judicial innovation is narrowed.

[00:24:01] Speaker 00:
where we have a regulation.

[00:24:03] Speaker 00:
It is the Department of Labor that sets these requirements.

[00:24:06] Speaker 00:
It determines what is and is not going to be required.

[00:24:10] Speaker 00:
And so the meaningful dialogue shorthand, I don't believe is a way to create new requirements.

[00:24:18] Speaker 00:
It is just simply looking back at the regs, which don't require explaining why there's a particular disagreement with a treatment provider.

[00:24:26] Speaker 00:
That's what Nord held, both in the substantive manner and in the procedural

[00:24:30] Speaker 00:
manner, and the 10th Circuit just doesn't grapple with nor in footnote four says that there's not even a procedural version of the treating physician rule.

[00:24:42] Speaker 00:
The regs don't require explaining the underlying process.

[00:24:45] Speaker 00:
That's what the First Circuit talked about in the Stephanie C case, cited in our brief.

[00:24:50] Speaker 00:
It doesn't require responding to every piece of evidence, as we've talked about here.

[00:24:53] Speaker 00:
As the court noted in Collier, as the 10th Circuit noted in David P and in EW,

[00:24:59] Speaker 00:
So this process, it was full, it was fair, and it was consistent.

[00:25:06] Speaker 00:
There's not been a bait and switch here.

[00:25:08] Speaker 00:
There's not been any sandbagging.

[00:25:10] Speaker 00:
We've been talking about the same plan provisions, the same MCG guidelines, the same medical records that plaintiffs submitted, and then the AMR report which was provided, Dr. Gervais' notes were provided.

[00:25:21] Speaker 00:
Plaintiffs understood that we were applying the MCG guidelines.

[00:25:25] Speaker 00:
They responded in a letter.

[00:25:28] Speaker 00:
But the letter itself, it doesn't say that plaintiffs

[00:25:31] Speaker 00:
that ER meets the MCG guidelines, that letter attacks the MCG guidelines.

[00:25:37] Speaker 00:
And the physicians or the treatment providers that wrote their letters, they're fairly cursory and they don't grapple with the MCG guidelines even though... Let me just ask, your time is running out and I just have one last question for you.

[00:25:53] Speaker 04:
How do you read a body?

[00:25:54] Speaker 04:
Does it impose any kind of obligation on the district court to make an assessment about the conflict of interest?

[00:26:02] Speaker 00:
I don't read a body that way.

[00:26:04] Speaker 00:
And again, I was looking back through my friend's argument to try to see if I brought a copy of a body with me.

[00:26:10] Speaker 00:
I didn't.

[00:26:11] Speaker 00:
And if this court has questions about that, I'm happy to submit additional briefing on it.

[00:26:19] Speaker 00:
But I think the most basic point is that this was not raised in the district court.

[00:26:23] Speaker 00:
It was not raised in the opening brief.

[00:26:25] Speaker 00:
It was not raised in the reply brief.

[00:26:26] Speaker 00:
Well, the district court seemed to be sensitive to it.

[00:26:29] Speaker 00:
I think the district court noted that this is an argument that is sometimes made.

[00:26:33] Speaker 04:
I think I read it a little bit differently.

[00:26:37] Speaker 00:
So it says, neither party contends that Blue Shield acted in a dual role because the parties did not raise the question of a potential conflict.

[00:26:45] Speaker 00:
Why do you think he did that?

[00:26:47] Speaker 00:
Because I think it is an argument that is often made, and it's an argument that we are able to respond to and to show that there are safeguards in place.

[00:26:55] Speaker 00:
And so to the extent that there's going to be any skepticism in the abusive discretion standard, that we would be able to respond to that.

[00:27:02] Speaker 00:
I see that my time has expired unless there are any further questions the court should affirm.

[00:27:07] Speaker 01:
Thank you, counsel.

[00:27:08] Speaker 01:
Rebuttal?

[00:27:12] Speaker 03:
Thank you.

[00:27:13] Speaker 03:
Let me address, Judge Pez, your question about a body and specifically what the court said in footnote two, because the court said

[00:27:21] Speaker 03:
there is a built-in conflict of interest if the same entity that makes the eligibility decision also pays the benefits undisputed that that's what you have before you and then the court says because the parties did not raise the question of potential conflict the abuse of discretion standard applies well even in the context of this conflict of interest the abuse of discretion standard applies we don't dispute that so we have no problems with what the court stated here in the sense that

[00:27:49] Speaker 03:
We don't dispute that it's an abuse of discretion standard of review.

[00:27:52] Speaker 03:
But it is an inherent conflict that this court can and should take into account in the same way that the district court recognized it had the ability to take into account.

[00:28:01] Speaker 02:
So if there is a conflict of interest, then should the district court abandon the abuse of discretion standard and go to a de novo standard?

[00:28:12] Speaker 03:
No.

[00:28:12] Speaker 03:
No.

[00:28:13] Speaker 03:
I think the case law is very clear about that.

[00:28:16] Speaker 03:
My friend and I agree that this is a

[00:28:19] Speaker 03:
a tempered spectrum.

[00:28:20] Speaker 03:
It's sort of a sliding scale.

[00:28:23] Speaker 03:
You shake your head, Your Honor.

[00:28:24] Speaker 03:
I get it.

[00:28:25] Speaker 03:
I don't know how to help you other than this, other than this is something that should be taken into account by the district courts and all its courts when there is this inherent conflict of interest.

[00:28:34] Speaker 03:
And again, MetLife versus Glenn, the Supreme Court discussed that.

[00:28:37] Speaker 03:
I didn't cite that in my materials.

[00:28:39] Speaker 03:
I don't think my colleague did either.

[00:28:41] Speaker 02:
Does it mean if you're tempered, one single opinion is not enough, you need two or maybe three or do two and a half is not enough?

[00:28:49] Speaker 03:
Your Honor, you are more familiar than I am with the phrase, fact-sensitive inquiry.

[00:28:55] Speaker 03:
And I think that's what you're dealing with here.

[00:28:56] Speaker 03:
This is a very fact-sensitive inquiry.

[00:28:59] Speaker 03:
And I think what's a significant conflict in case A may not be a significant conflict in case B, given the facts of cases A and B. So to the extent that this is the same entity that's evaluating whether to pay the claim,

[00:29:16] Speaker 03:
is also the entity that's deciding the appeal.

[00:29:19] Speaker 03:
That is a conflict of interest that's inherent and that this court can take into account.

[00:29:24] Speaker 03:
And the district court recognized that as well.

[00:29:27] Speaker 03:
I also want to talk about this meaningful dialogue issue.

[00:29:31] Speaker 03:
The Booton case, I think, was the most eloquent statement from the Ninth Circuit back in the 1990s

[00:29:37] Speaker 03:
this need for there to be a fair consideration of information that's presented by claimants, by insurance companies about whether claims should be paid or denied.

[00:29:49] Speaker 03:
And in that case, the Ninth Circuit said, look, you didn't fairly consider the information that the family submitted.

[00:29:55] Speaker 03:
That's exactly what we have here.

[00:29:56] Speaker 03:
We simply don't have enough information to give us assurance and should not give the

[00:30:01] Speaker 03:
Ninth Circuit assurance that Blue Shield really took into account these letters of medical necessity, the details of the medical records, the information from the parents that was detailed in their lengthy appeal letter.

[00:30:14] Speaker 03:
We just don't have consideration of those things and the details of those things by Blue Shield in a way that should give you comfort that the denial should be maintained.

[00:30:23] Speaker 03:
Unless you have other questions, I think I'm out of time.

[00:30:26] Speaker 02:
And you say there's no consideration because they don't mention it?

[00:30:31] Speaker 03:
Yes, they don't make any attempt to come to grips with that information.

[00:30:36] Speaker 03:
They don't make any attempt.

[00:30:37] Speaker 02:
Come to grips is different from mentioning.

[00:30:39] Speaker 03:
That's right, Your Honor.

[00:30:40] Speaker 03:
That's a fair point.

[00:30:41] Speaker 03:
They don't mention the letters of medical necessity, and they don't mention any specific references to information in the medical records.

[00:30:48] Speaker 03:
They talk very generally and very conclusory.

[00:30:51] Speaker 03:
They're referring to the medical records, but they're not specific.

[00:30:55] Speaker 01:
Thank you.

[00:30:58] Speaker 01:
We thank counsel for their argument the matter of our versus California physician service is submitted for decision