Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 1 of 18
`
`Robert J. McKennon (SBN 123176) rm@mckennonlawgroup.com
`
`Andrea Soliz (SBN 243302) as@mckennonlawgroup.com
`MCKENNON LAW GROUP PC
`20321 SW Birch Street, Suite 200
`Newport Beach, California 92660
`Phone: 949-387-9595 | Fax: 949-385-5165
`
`
`Attorneys for Plaintiffs Zachary Wallace,
`Clayton Wallace and Liza Wallace
`
`
`
`
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA – SAN FRANCISCO DIVISION
`
`
`
`ZACHARY WALLACE; CLAYTON
`WALLACE; and LIZA WALLACE,
`
`vs.
`
`Plaintiffs,
`
`AETNA LIFE INSURANCE
`COMPANY; SHI INTERNATIONAL
`CORP.; and DOES 1 through 10,
`inclusive,
`
`Defendant.
`
`
`
`
`
`
`
`Case No.:
`
`Action Filed:
`
`Trial Date:
`
`
`COMPLAINT FOR RECOVERY OF
`ERISA PLAN BENEFITS;
`ENFORCEMENT AND
`CLARIFICATION OF RIGHTS;
`PREJUDGMENT INTEREST; AND
`ATTORNEYS’ FEES
`
`
`
`[Filed Concurrently With:
`- Civil Cover Sheet;
`- Certification of Interested Entities or
`Persons; and
`- Summons]
`
`
`
`-0-
`
`Case No.:
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 2 of 18
`
`
`
`INTRODUCTION
`
`1.
`
`In this lawsuit, Plaintiffs Zachary Wallace (“Zachary”), Clayton
`
`Wallace and Liza Wallace (collectively, “Plaintiffs”) seek to recover payment for
`
`health insurance benefits that were wrongfully denied by Defendant Aetna Life
`
`Insurance Company (“Aetna”). Plaintiffs Clayton Wallace and Liza Wallace are the
`
`parents of Zachary. The disputed health insurance claims relate to medically
`
`necessary substance-abuse treatment received by Zachary from December 2018
`
`through May 2020. Aetna issued and administered the health benefit plan, Contract
`
`No. MSA-308616 (the “Plan”), and Defendant SHI International Corp. (“SHI”)
`
`funded the Plan. SHI is the employer of Plaintiff Clayton Wallace, and all three
`
`Plaintiffs are insured under the Plan. The Plan is governed by the Employee
`
`Retirement Income Security Act of 1974 (“ERISA”). After being presented with
`
`valid health insurance claims for Zachary’s medical treatment, Aetna improperly
`
`refused to pay the claims to the fullest extent permitted under the Plan, instead
`
`choosing to arbitrarily reduce payment for certain claims and denying other claims
`
`altogether. Further compounding its bad faith, Aetna failed to afford Plaintiffs a full
`
`and fair review of their claims as required by ERISA because it failed to provide
`
`Plaintiffs with written notice of the adverse benefit determination for the vast
`
`majority of the claim denials. As discussed herein, throughout the entire
`
`administrative process, Aetna engaged in an arbitrary and biased handling of
`
`Plaintiffs’ claims. As a result of Aetna’s improper claims-handling practices,
`
`Plaintiffs were left with nearly $200,000 in unpaid medical bills for medical services
`
`that should have been covered under the Plan.
`
`JURISDICTION AND VENUE
`
`2.
`
`Plaintiffs bring this action to recover benefits and to enforce and clarify
`
`their rights under Section 502(a)(1)(B) of ERISA, 29 U.S.C. Section 1132(a)(1)(B).
`
`This Court has subject-matter jurisdiction over Plaintiffs’ claims pursuant to ERISA
`
`
`
`1
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 3 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`
`Section 502(e) and (f), 29 U.S.C. Section 1132(e) and (f), and 28 U.S.C. Section
`
`1331.
`
`3.
`
`Venue lies in the Northern District of California, San Francisco
`
`Division pursuant to ERISA Section 502(e)(2), 29 U.S.C. Section 1132(e)(2),
`
`because some of the Plaintiffs reside in this district, some of the alleged breaches
`
`occurred in this district and the ERISA-governed plan at issue was administered in
`
`part in this district.
`
`PARTIES
`
`4.
`
`Plaintiffs were, at all times relevant to this action, residents of Windsor,
`
`California. Further, at all times relevant to this action, Plaintiffs were participants
`
`and beneficiaries, as defined by Section 3(7) of ERISA, 29 U.S.C. Section 1002(7),
`
`in the employee welfare benefit plan established by SHI, which is at issue in this
`
`13
`
`action.
`
`5.
`
`Aetna, at all times relevant, administered health insurance benefits to
`
`SHI employees and their eligible dependents, including Plaintiffs, by issuing the
`
`Plan to SHI. Aetna is, and at all times relevant was, an ERISA claims fiduciary of
`
`the Plan. Aetna administered the Plan’s benefits and determined whether benefits
`
`would be awarded or denied under the Plan.
`
`6.
`
`SHI employed Plaintiff Clayton Wallace, through which the Plan’s
`
`benefits became available to Plaintiffs as it did to all employees and their
`
`dependents eligible under the employer-sponsored Plan. SHI is, and at all times
`
`relevant was, an ERISA plan fiduciary. SHI administered and funded the benefits
`
`under the Plan as offered to its employees and their eligible dependents. SHI also
`
`acted as Aetna’s agent concerning its employees’ enrollment in the Plan and the
`
`collection of premiums for such benefits as that provided by the Plan.
`
`7.
`
`Defendants Does 1 through 10, inclusive, are sued by fictitious names
`
`because their true name and capacities, whether individual, corporate, associate or
`
`otherwise, and/or their responsibility and culpability for the acts alleged herein, are
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`2
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 4 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`
`unknown to Plaintiffs at this time. Plaintiffs are informed and believe, and on that
`
`basis allege, that each Defendant sued herein as “Doe” is responsible in some
`
`manner for the acts and events referred to herein. When the true name, capacity,
`
`responsibility and culpability of each Doe Defendant are ascertained, Plaintiffs will
`
`seek leave of this Court to amend the complaint, as appropriate.
`
`8.
`
`Plaintiffs are informed and believe, and on that basis allege, that, at all
`
`times mentioned herein, each of the fictitiously named defendants was the agent,
`
`representative, co-conspirator, successor-in-interest, assignee or employee of each
`
`remaining defendant, and in doing the things alleged herein was acting within the
`
`10
`
`course and scope of such agency, representation, conspiracy, assignment or
`
`11
`
`employment.
`
`GENERAL ALLEGATIONS
`
`9.
`
`As part of Plaintiff Clayton Wallace’s employment with SHI, he
`
`obtained health insurance coverage under the Plan for himself and his dependents,
`
`including his wife, Plaintiff Liza Wallace and his son, Zachary. According to the
`
`Plan, substance-abuse-related treatment is a covered health item. The Plan provides:
`
`Eligible health services include the treatment of substance abuse provided by
`a hospital, psychiatric hospital, residential treatment facility, physician or
`behavioral health provider as follows:
`
`
`• Inpatient room and board at the semi-private room rate, and other
`services and supplies that are provided during your stay in a
`hospital, psychiatric hospital or residential treatment facility . . .
`• Outpatient treatment received while not confined as an inpatient
`in a hospital, psychiatric hospital or residential treatment facility,
`including:
`o Office visits to a physician or behavioral health provider
`such as a psychiatrist, psychologist, social worker,
`advance practice registered nurse, or licensed professional
`counselor . . .
`o Individual, group and family therapies for the treatment of
`substance abuse
`o Other outpatient substance abuse treatment such as:
`▪ Outpatient detoxification
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`3
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 5 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`
`
`▪ Partial hospitalization treatment provided in a
`facility or program for the treatment of substance
`abuse provided under the direction of a physician
`▪ Intensive outpatient program provided in a facility
`or program for the treatment of substance abuse
`provided under the direction of a physician
`▪ Ambulatory detoxification which are outpatient
`services that monitor withdrawal from alcohol and
`other substance abuse, including the administration
`of medications
`
`The Plan defines “Substance Abuse” in relevant part as follows:
`
`This is a physical or psychological dependency, or both, on a controlled
`substance or alcohol agent. These are defined in the Diagnostic and Statistical
`Manual of Mental Disorders (DSM) published by the American Psychiatric
`Association.
`
`The Plan defines “Medically necessary/medical necessity” as follows:
`
`Health care services that we determine a provider exercising prudent clinical
`judgment, would provide to a patient for the purpose of preventing,
`evaluating, diagnosing or treating an illness, injury, disease or its symptoms,
`and that we determine are:
`• In accordance with generally accepted standards of medical practice.
`• Clinically appropriate in terms of type, frequency, extent, site and
`duration, and considered effective for the patient’s illness, injury or
`disease.
`• Not primarily for the convenience of the patient, physician, or other
`health care provider.
`• Not more costly than an alternative service or sequence of services
`at least as likely to produce equivalent therapeutic or diagnostic
`results as to the diagnosis or treatment of that patient’s illness,
`injury or disease.
`
`
`
`Pursuant to the Plan, out-of-network substance-related disorders treatment is
`
`covered at 60% of the recognized charge per admission for inpatient treatment and
`
`60% of the recognized charge per visit for outpatient treatment, both with no
`
`deductible applied.
`
`10. Zachary has an extensive history of substance-abuse treatment dating
`
`back to December 2018. On December 12, 2018, Zachary entered his first inpatient
`
`
`
`4
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 6 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`treatment facility at Cirque Lodge in Sundance, Utah. He had suffered a heroin
`
`overdose the previous month and, with the encouragement of his family, had
`
`decided to seek professional help for his substance abuse problem. However, after
`
`only six weeks he was asked to leave the facility due to non-compliance and
`
`aggressive behavior with peers and staff. He was discharged from Cirque Lodge on
`
`January 27, 2019 and was then escorted directly to his second treatment facility,
`
`Caron Pennsylvania Treatment Center (“Caron Pennsylvania”). He began inpatient
`
`substance-abuse treatment at Caron Pennsylvania on January 28, 2019. After only
`
`two weeks at this facility, he was asked to transfer to another facility because he
`
`had, again, become verbally abusive to staff members and non-compliant with
`
`facility rules. He was discharged from Caron Pennsylvania on February 11, 2019
`
`and was then admitted to Boca Detox where he remained until February 17, 2019.
`
`On February 18, 2019, he transferred to Caron of Florida Treatment Center (“Caron
`
`Florida”) for further inpatient substance-abuse treatment. He remained at Caron
`
`Florida for over four months until June 25, 2019, when he was discharged to a
`
`halfway house. Unfortunately, he was unable to continuously maintain his sobriety,
`
`and he spent the next several months moving around to different halfway houses and
`
`detoxification centers in Florida.
`
`11. This lasted until January 29, 2020, when Zachary suffered a life-
`
`threatening overdose at Legacy Healing Detox Center. He was immediately rushed
`
`to the emergency room at Broward Health Imperial Point Hospital after being
`
`administered two doses of Narcan (a prescription medication used to treat narcotic
`
`overdose in an emergency situation) inside the detox facility. He was admitted with
`
`acute hypoxemic respiratory failure secondary to heroin overdose. Zachary
`
`remained in the Intensive Care Unit, on life-support, for one week while he slowly
`
`recovered from his overdose. On February 4, 2020, Zachary was discharged from
`
`Broward Health Imperial Point Hospital. Two days later he entered another
`
`detoxification facility, Immersion Residential, prior to enrolling in his last inpatient
`
`
`
`5
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 7 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`residential substance-abuse treatment center, Voyage Recovery, where he finally
`
`became sober. He was admitted to Voyage Recovery on February 10, 2020 and was
`
`discharged on May 11, 2020.
`
`12. As summarized above, between December 2018 and May 2020,
`
`Zachary was treated at several different inpatient substance-abuse treatment centers
`
`and continued to undergo medically necessary substance-abuse treatment during this
`
`time. The medical records related to his treatment at these facilities reveal that he
`
`was diagnosed with the following: Opioid Use Disorder; Sedative Use Disorder;
`
`Sedative, Hypnotic and Anxiolytic Use Disorder; and Other Unspecified Trauma
`
`and Stressor-Related Disorder. During his time in treatment, Zachary was evaluated
`
`by various psychologists, nurse case managers and behavioral health therapists, all
`
`of whom confirmed Zachary’s serious substance abuse and mental-health-related
`
`diagnoses and reiterated the need for further residential substance-abuse treatment.
`
`13. For instance, a Nursing Assessment conducted on January 28, 2019 at
`
`Caron Pennsylvania confirmed that Zachary presented for severe opioid use disorder
`
`and severe sedative use disorder. This included daily heroin and fentanyl use. The
`
`assessment reflected that Zachary met eleven out of eleven of the diagnostic criteria
`
`for severe opioid use disorder including, but not limited to, (1) opioids often taken in
`
`larger amounts or over a longer period of time than was intended; (2) a great deal of
`
`time is spent in activities necessary to obtain opioid, use opioid or recover from its
`
`effects; (3) recurrent opioid use resulting in a failure to fulfill major role obligations
`
`at work, school or home; (4) continued opioid use despite having persistent or
`
`recurrent social or interpersonal problems caused or exacerbated by the effects of
`
`opioid; and (5) recurrent opioid use in situations in which it is physically hazardous.
`
`This assessment was confirmed by the treatment center’s Senior Director of
`
`Psychological Services, Dr. Michele Pole, PhD, who officially diagnosed Zachary
`
`with “Severe Opioid Use Disorder, Severe Sedative Use Disorder and Other
`
`Unspecified Trauma and Stressor Related Disorder.” In addition, behavioral health
`
`
`
`6
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 8 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`therapist Bethany Koch agreed that the American Psychological Association’s
`
`Diagnostic and Statistical Manual (“DSM-V”) criteria had been met for Substance
`
`Use Disorder, Opioid Use Disorder and Sedative, Hypnotic and Anxiolytic Use
`
`Disorder.
`
`14. Upon Zachary’s discharge from Caron Pennsylvania on February 11,
`
`2019, his medical team reiterated his clinical diagnoses of Severe Opioid Use
`
`Disorder and Other Specified Trauma and Stressor Related Disorder and indicated
`
`that he was being discharged against medical advice. His medical team noted that
`
`during his stay, there were multiple concerns about Zachary being under the
`
`influence and that he had behavioral issues including using inappropriate language
`
`with staff members and patients, damaging property and having non-substance
`
`contraband in his possession. Due to his verbal aggression toward staff and peers,
`
`he was placed on a 72-hour discharge notice. Because he violated the terms of the
`
`discharge notice, he was asked to transfer to another facility, but instead he left
`
`treatment against medical advice. Lastly, the medical team noted that Zachary was
`
`at a high risk of relapse due to his drug of choice (heroin).
`
`15. After leaving Caron Pennsylvania on February 11, 2019, and with the
`
`encouragement of his family, Zachary agreed to continue his treatment as
`
`recommended by his medical team at Caron Pennsylvania. He entered Boca Detox
`
`facility on February 12, 2019 and remained there until February 17, 2019. On
`
`February 18, 2019, Zachary was transferred directly from Boca Detox to Caron
`
`Florida, where he received inpatient residential substance-abuse treatment for the
`
`next four months. Upon admission, this facility performed its own assessment of
`
`him and determined that he met the criteria for Severe Opioid Use Disorder, Severe
`
`Alcohol Use Disorder, Moderate Cocaine Use Disorder, Severe Cannabis Use
`
`Disorder, Generalized Anxiety Disorder and Major Depressive Disorder. Zachary’s
`
`medical team at this facility concluded that he required “day/night treatment with
`
`community living” level of care. This level of care was a residential inpatient
`
`
`
`7
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 9 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`
`service necessary for patients who had failed to make progress at less intense levels
`
`of care; had stable medical or psychiatric problems that required close monitoring;
`
`and had impairment of social, familial, or occupational functioning requiring
`
`separation from the environment.
`
`16. At the time of admission to Caron Florida, Zachary’s medical team
`
`noted his substance abuse issues, anger issues, family strain and trauma. The
`
`admission report noted Zachary’s ongoing struggles with remaining sober and his
`
`repeated failed attempts at treatment as discussed above. In addition, his medical
`
`team reported that Zachary had been involved in a domestic violence incident the
`
`previous June in which an ex-girlfriend had accused him of choking her while he
`
`was under the influence. Zachary was arrested and spent a night in jail before the
`
`ex-girlfriend recanted her story and the charges were dropped. The report also
`
`explained that Zachary had experienced tremors, diarrhea, blackouts, itchy skin,
`
`excessive sweating, memory lapse, anxiety and depression while under the
`
`influence. The medical team also reiterated that Zachary remained at a high risk for
`
`16
`
`relapse.
`
`17. After approximately four months of residential inpatient treatment,
`
`Zachary was discharged from Caron Florida on June 25, 2019. Upon discharge, his
`
`medical team noted that Zachary had made steady progress in his recovery, he was
`
`in the contemplative stage of change and it was recommended that he continue with
`
`intensive outpatient level of care to serve his need for ongoing support that would
`
`assist in continuing his recovery.
`
`18. Unfortunately, as noted above, Zachary was unable to continuously
`
`maintain his sobriety, and he spent the next seven months moving around to
`
`different halfway houses and detoxification centers in Florida. During this time his
`
`family struggled to stay in touch with him, support him and get him the help he
`
`needed. Sadly, this pattern continued until Zachary suffered his January 29, 2020
`
`life-threatening overdose. Following his overdose, Zachary received further
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`8
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 10 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`
`inpatient residential substance-abuse treatment at Voyage Recovery, where he
`
`remained for three months. Thankfully, Zachary’s treatment at Voyage Recovery
`
`was successful and he was finally able to remain sober.
`
`19. As clearly evidenced by Zachary’s current sobriety and the information
`
`contained in his medical records, all his substance-abuse treatment was medically
`
`necessary, was an eligible health service under the Plan and should have been fully
`
`covered. However, Aetna wrongly and in contravention of the Plan terms failed to
`
`pay many of Zachary’s valid health benefit claims. As a result, Plaintiffs Clayton
`
`Wallace and Liza Wallace were forced to pay nearly $200,000 in medical expenses
`
`related to Zachary’s care that should have been covered under the Plan and paid by
`
`Defendants. Because of Plaintiffs Clayton Wallace and Liza Wallace’s out-of-
`
`pocket payments, there are no outstanding medical costs owed to providers related
`
`13
`
`to Zachary’s treatment.
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`20. From December 2018 through May 2020, the only coverage
`
`determination letter that Plaintiffs received from Aetna relating to Zachary’s
`
`treatment was a letter dated April 18, 2019, in which Aetna denied coverage for
`
`residential substance-abuse treatment for the period of January 28, 2019 through
`
`February 9, 2019. The basis of the denial was that:
`
`Coverage for the requested services has been denied because we have not
`
`been able to obtain any requested clinical information from the provider to
`
`determine whether or not the services are considered medically necessary
`
`under the terms of the plan.
`
`Aside from this letter, Aetna did not provide Plaintiffs with any other denial letters
`
`relating to Zachary’s ongoing treatment. Thus, the only claims subject to Aetna’s
`
`April 18, 2019 written denial letter were those related to Caron Pennsylvania, where
`
`Zachary received inpatient residential treatment from January 28, 2019 through
`
`
`
`9
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 11 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`
`February 11, 2019. All other claims related to Zachary’s substance-abuse treatment,
`
`including claims related to his stays at Cirque Lodge, Caron Florida, Boca Detox,
`
`Legacy Healing Detox Center, Immersion Residential and Voyage Recovery, were
`
`not covered by the written denial letter.
`
`21. On May 11, 2020, Plaintiffs’ prior authorized representative, the Van
`
`Law Firm, sent a letter to Aetna, appealing the denial of Zachary’s medical benefit
`
`claims from December 2018 forward. Plaintiffs explained that Zachary had
`
`continued to undergo medically necessary substance-abuse treatment throughout this
`
`time and requested that Aetna cover all related costs in compliance with the Plan.
`
`Plaintiffs also informed Aetna that, because the Caron residential treatment facilities
`
`were out-of-network, all treatment should have been covered at least at the 60% rate
`
`or higher with no deductible applied. Plaintiffs further explained that, because no
`
`formal denial letters had been received for any services other than those in the 13-
`
`day period of January 28, 2019 through February 9, 2019, the 180-day window to
`
`appeal all other claims had not expired (and in fact had not yet started) and,
`
`accordingly, Aetna should proceed with its review of those claims. Lastly, Plaintiffs
`
`requested a detailed breakdown of what claims were covered, what claims were not
`
`covered, at what rates the covered claims were paid and any reasoning for denying
`
`19
`
`the claims.
`
`22. On May 21, 2020, Aetna sent the Van Law Firm a letter in response to
`
`the May 11, 2020 appeal request. Aetna’s letter incorrectly claimed that the appeal
`
`was related to services rendered on January 28, 2019 through June 24, 2019 by
`
`Caron Renaissance. However, as discussed above, Plaintiffs’ appeal letter clearly
`
`stated that it related to all claims concerning Zachary’s substance abuse treatment
`
`for the period of December 2018 onward. Plaintiffs’ appeal letter also explained
`
`that no adverse benefit determination had been received other than the April 18,
`
`2019 denial letter covering the period January 28, 2019 through February 9, 2019
`
`and that, therefore, the appeal of all other claims was timely. Despite these
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`10
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 12 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`statements, Aetna’s May 21, 2020 letter claimed (incorrectly) that the appeal was
`
`untimely because it had not been received within 180 days from the date of the
`
`original notice of an adverse benefit decision and that, therefore, Aetna would not be
`
`conducting a review of the appeal.
`
`23. On July 19, 2020, Plaintiffs, through their former authorized
`
`representative, the Van Law Firm, responded to Aetna’s May 21, 2020 letter.
`
`Plaintiffs again reminded Aetna that no adverse benefit determination had ever been
`
`received for Zachary’s health benefit claims (as discussed above) and, thus, the 180-
`
`day appeal clock had not started and the appeal was timely. Plaintiffs again
`
`requested that Aetna consider their appeal. In addition, because Aetna had wrongly
`
`labeled their appeal as pertaining to claims in 2019 only, Plaintiffs submitted
`
`another appeal letter dated July 19, 2020 specifically addressing claims incurred
`
`beginning January 2020. Plaintiffs’ second appeal letter reiterated the arguments
`
`made in the first appeal letter regarding the medical necessity of Zachary’s
`
`substance-abuse treatment and requested that Aetna cover the unpaid medical costs
`
`to the fullest extent permitted under the Plan.
`
`24. By letter dated July 30, 2020, Aetna repeated its inaccurate assertion
`
`that Plaintiffs’ appeal of claims pertaining to services incurred through June 24,
`
`2019 was untimely. Aetna’s letter stated that the appeal process had been exhausted
`
`with respect to these claims and that it would not respond to any further requests for
`
`review. Aetna’s letter also failed to address any of Zachary’s 2020 claims even
`
`though it was aware that Plaintiffs were disputing those claims as well. Aetna’s
`
`refusal to hear Plaintiffs’ appeal regarding these claims was highly improper
`
`because it knew, or should have known, that no adverse benefit determination
`
`notices were ever sent to Plaintiffs (other than the April 18, 2019 denial letter), that
`
`Plaintiffs’ appeal was timely and that, as a result of Aetna’s refusal to hear the
`
`appeal, Plaintiffs were given no opportunity to respond to Aetna’s claims denials at
`
`the administrative level.
`
`
`
`11
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 13 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`25. Subsequently, throughout August of 2020, Aetna sent Plaintiffs a series
`
`of letters relating to Zachary’s substance-abuse treatment received between January
`
`22 and June 9, 2020. The letters indicated that they were in response to Plaintiffs’
`
`appeal of certain claim determinations for services provided between those dates. It
`
`is unclear whether the August 2020 letters were sent in response to Plaintiffs’
`
`second appeal letter. The letters informed Plaintiffs that Aetna was upholding its
`
`prior benefit determinations. Although these letters purported to address Zachary’s
`
`appeal of health insurance claims for the period January 22 to June 9, 2020, these
`
`letters failed to provide Plaintiffs with a reasonable opportunity for a full and fair
`
`review of Zachary’s claims because Plaintiffs had never received the original
`
`adverse benefit determination in the first place and, thus, they were unable to
`
`properly address the basis for the claim denials. In addition, many of the August
`
`2020 letters were vague and cursory and failed to provide the specific reasons for
`
`the adverse benefit determination.
`
`26. As a result of Aetna’s improper and entirely inadequate claims-
`
`handling process, Plaintiffs were forced to retain current counsel to pursue their
`
`wrongly denied health benefits. By letters dated October 29, 2020, December 2,
`
`2020, January 5, 2021, January 19, 2021 and February 10, 2021, Plaintiffs’ counsel
`
`requested a copy of all documents relevant to Zachary’s disputed health insurance
`
`claims from Aetna pursuant to Section 503 of ERISA, 29 U.S.C. Section 1133, and
`
`applicable Department of Labor Regulations, including 29 C.F.R. Section 2560.503-
`
`1(h)(2)(iii). Despite Plaintiffs’ repeated requests for documents, Aetna failed to
`
`provide the necessary documentation to Plaintiffs. Instead, Aetna repeatedly
`
`referred Plaintiffs’ counsel’s letters to the Rawlings Company (which handles
`
`Aetna’s subrogation claims), even after Plaintiffs informed Aetna that their request
`
`for documents did not relate to a subrogation matter and should be handled directly
`
`by Aetna. To date, Plaintiffs have received no substantive response from Aetna to
`
`their request for claim documents.
`
`
`
`12
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 14 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`
`
`27. As evidenced by the aforementioned conduct, throughout the entire
`
`administrative phase, Aetna engaged in an arbitrary and capricious handling of
`
`Plaintiffs’ file, in violation of its obligations under ERISA. Plaintiffs are now and at
`
`all times relevant were entitled to payment of health insurance benefits under the
`
`Plan for Zachary’s medically necessary substance abuse treatment.
`
`28. Under California Insurance Code Section 10110.6 (which applies to
`
`health plans) and because of Aetna’s blatant violation of ERISA’s full and fair
`
`review regulations by failing to “set[] forth the specific reasons for [a] denial,
`
`written in a manner calculated to be understood by the participant,” pursuant to 29
`
`U.S.C. Section 1133(1), with respect to Plaintiffs’ claims and Aetna’s denials of the
`
`claims, a de novo standard of review applies. See Khani v. Regence BlueShield,
`
`2011 U.S. Dist. LEXIS 106850 21-22 (W.D. Wash. 2011) (“Under ERISA, plan
`
`administrators must follow certain practices when processing and deciding plan
`
`participants’ claims. According to ERISA’s procedural requirements, claims
`
`procedures must ‘contain administrative processes and safeguards to ensure and to
`
`verify that benefit claim determinations are made in accordance with governing plan
`
`documents.’ 29 C.F.R. § 2560.503-1(b)(5). In addition, an administrator must
`
`provide a plan participant with adequate notice of the reasons for denial ‘setting
`
`forth the specific reasons for such denial, written in a manner calculated to be
`
`understood by the participant,’ 29 U.S.C. § 1133(1), and must provide a ‘full and
`
`fair review’ of the participant's claim, id. § 1133(2).”). In Abatie v. Alta Health &
`
`Life Ins. Co., 458F. 3d 955, 971 (9th Cir. 2006), the Ninth Circuit specifically held
`
`that “[w]hen an administrator engages in wholesale and flagrant violations of the
`
`procedural requirements of ERISA, and thus acts in utter disregard of the underlying
`
`purpose of the plan as well, we review de novo the administrator’s decision to deny
`
`26
`
`benefits.”
`
`29. Plaintiffs exhausted their administrative remedies under the Plan and
`
`have the right to bring a legal action for benefits under ERISA Section 502(a), based
`
`27
`
`28
`
`
`
`
`13
`
`

`

`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 15 of 18
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`
`on the fact that Aetna failed to follow claims-handling procedures consistent with
`
`the requirements of ERISA. Specifically, as detailed above, Aetna failed to provide
`
`Plaintiffs with written notice stating the specific reasons for the denial of the claims
`
`and failed to afford Plaintiffs a reasonable opportunity for a full and fair review of
`
`those claims. See 29 C.F.R. Section 2560.503-1(l)(1).
`
`FIRST CLAIM FOR RELIEF
`
`To Recover Benefits, Attorneys’ Fees and Pre-Judgment Interest
`
`under ERISA Plan – 29 U.S.C. Sections 1132(a)(1)(B), (g)(1)
`
`(Plaintiffs against Defendants and Does 1 through 10)
`
`30. Plaintiffs incorporate each and every paragraph alleged above as
`
`though fully set forth herein.
`
`31. ERISA Section 502(a)(1)