throbber
Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 1 of 18
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`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
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`
`
`
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA – SAN FRANCISCO DIVISION
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`
`
`ZACHARY WALLACE; CLAYTON
`WALLACE; and LIZA WALLACE,
`
`vs.
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`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]
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`-0-
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`Case No.:
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`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 2 of 18
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`
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`INTRODUCTION
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`1.
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`In this lawsuit, Plaintiffs Zachary Wallace (“Zachary”), Clayton
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`Wallace and Liza Wallace (collectively, “Plaintiffs”) seek to recover payment for
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`health insurance benefits that were wrongfully denied by Defendant Aetna Life
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`Insurance Company (“Aetna”). Plaintiffs Clayton Wallace and Liza Wallace are the
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`parents of Zachary. The disputed health insurance claims relate to medically
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`necessary substance-abuse treatment received by Zachary from December 2018
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`through May 2020. Aetna issued and administered the health benefit plan, Contract
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`No. MSA-308616 (the “Plan”), and Defendant SHI International Corp. (“SHI”)
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`funded the Plan. SHI is the employer of Plaintiff Clayton Wallace, and all three
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`Plaintiffs are insured under the Plan. The Plan is governed by the Employee
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`Retirement Income Security Act of 1974 (“ERISA”). After being presented with
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`valid health insurance claims for Zachary’s medical treatment, Aetna improperly
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`refused to pay the claims to the fullest extent permitted under the Plan, instead
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`choosing to arbitrarily reduce payment for certain claims and denying other claims
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`altogether. Further compounding its bad faith, Aetna failed to afford Plaintiffs a full
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`and fair review of their claims as required by ERISA because it failed to provide
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`Plaintiffs with written notice of the adverse benefit determination for the vast
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`majority of the claim denials. As discussed herein, throughout the entire
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`administrative process, Aetna engaged in an arbitrary and biased handling of
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`Plaintiffs’ claims. As a result of Aetna’s improper claims-handling practices,
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`Plaintiffs were left with nearly $200,000 in unpaid medical bills for medical services
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`that should have been covered under the Plan.
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`JURISDICTION AND VENUE
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`2.
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`Plaintiffs bring this action to recover benefits and to enforce and clarify
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`their rights under Section 502(a)(1)(B) of ERISA, 29 U.S.C. Section 1132(a)(1)(B).
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`This Court has subject-matter jurisdiction over Plaintiffs’ claims pursuant to ERISA
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`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 3 of 18
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`Section 502(e) and (f), 29 U.S.C. Section 1132(e) and (f), and 28 U.S.C. Section
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`1331.
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`3.
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`Venue lies in the Northern District of California, San Francisco
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`Division pursuant to ERISA Section 502(e)(2), 29 U.S.C. Section 1132(e)(2),
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`because some of the Plaintiffs reside in this district, some of the alleged breaches
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`occurred in this district and the ERISA-governed plan at issue was administered in
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`part in this district.
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`PARTIES
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`4.
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`Plaintiffs were, at all times relevant to this action, residents of Windsor,
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`California. Further, at all times relevant to this action, Plaintiffs were participants
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`and beneficiaries, as defined by Section 3(7) of ERISA, 29 U.S.C. Section 1002(7),
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`in the employee welfare benefit plan established by SHI, which is at issue in this
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`13
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`action.
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`5.
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`Aetna, at all times relevant, administered health insurance benefits to
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`SHI employees and their eligible dependents, including Plaintiffs, by issuing the
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`Plan to SHI. Aetna is, and at all times relevant was, an ERISA claims fiduciary of
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`the Plan. Aetna administered the Plan’s benefits and determined whether benefits
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`would be awarded or denied under the Plan.
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`6.
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`SHI employed Plaintiff Clayton Wallace, through which the Plan’s
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`benefits became available to Plaintiffs as it did to all employees and their
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`dependents eligible under the employer-sponsored Plan. SHI is, and at all times
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`relevant was, an ERISA plan fiduciary. SHI administered and funded the benefits
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`under the Plan as offered to its employees and their eligible dependents. SHI also
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`acted as Aetna’s agent concerning its employees’ enrollment in the Plan and the
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`collection of premiums for such benefits as that provided by the Plan.
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`7.
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`Defendants Does 1 through 10, inclusive, are sued by fictitious names
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`because their true name and capacities, whether individual, corporate, associate or
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`otherwise, and/or their responsibility and culpability for the acts alleged herein, are
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`unknown to Plaintiffs at this time. Plaintiffs are informed and believe, and on that
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`basis allege, that each Defendant sued herein as “Doe” is responsible in some
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`manner for the acts and events referred to herein. When the true name, capacity,
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`responsibility and culpability of each Doe Defendant are ascertained, Plaintiffs will
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`seek leave of this Court to amend the complaint, as appropriate.
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`8.
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`Plaintiffs are informed and believe, and on that basis allege, that, at all
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`times mentioned herein, each of the fictitiously named defendants was the agent,
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`representative, co-conspirator, successor-in-interest, assignee or employee of each
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`remaining defendant, and in doing the things alleged herein was acting within the
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`course and scope of such agency, representation, conspiracy, assignment or
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`employment.
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`GENERAL ALLEGATIONS
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`9.
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`As part of Plaintiff Clayton Wallace’s employment with SHI, he
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`obtained health insurance coverage under the Plan for himself and his dependents,
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`including his wife, Plaintiff Liza Wallace and his son, Zachary. According to the
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`Plan, substance-abuse-related treatment is a covered health item. The Plan provides:
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`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:
`
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`• 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
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`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 5 of 18
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`▪ 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
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`The Plan defines “Substance Abuse” in relevant part as follows:
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`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.
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`The Plan defines “Medically necessary/medical necessity” as follows:
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`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.
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`Pursuant to the Plan, out-of-network substance-related disorders treatment is
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`covered at 60% of the recognized charge per admission for inpatient treatment and
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`60% of the recognized charge per visit for outpatient treatment, both with no
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`deductible applied.
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`10. Zachary has an extensive history of substance-abuse treatment dating
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`back to December 2018. On December 12, 2018, Zachary entered his first inpatient
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`treatment facility at Cirque Lodge in Sundance, Utah. He had suffered a heroin
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`overdose the previous month and, with the encouragement of his family, had
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`decided to seek professional help for his substance abuse problem. However, after
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`only six weeks he was asked to leave the facility due to non-compliance and
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`aggressive behavior with peers and staff. He was discharged from Cirque Lodge on
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`January 27, 2019 and was then escorted directly to his second treatment facility,
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`Caron Pennsylvania Treatment Center (“Caron Pennsylvania”). He began inpatient
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`substance-abuse treatment at Caron Pennsylvania on January 28, 2019. After only
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`two weeks at this facility, he was asked to transfer to another facility because he
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`had, again, become verbally abusive to staff members and non-compliant with
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`facility rules. He was discharged from Caron Pennsylvania on February 11, 2019
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`and was then admitted to Boca Detox where he remained until February 17, 2019.
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`On February 18, 2019, he transferred to Caron of Florida Treatment Center (“Caron
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`Florida”) for further inpatient substance-abuse treatment. He remained at Caron
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`Florida for over four months until June 25, 2019, when he was discharged to a
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`halfway house. Unfortunately, he was unable to continuously maintain his sobriety,
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`and he spent the next several months moving around to different halfway houses and
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`detoxification centers in Florida.
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`11. This lasted until January 29, 2020, when Zachary suffered a life-
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`threatening overdose at Legacy Healing Detox Center. He was immediately rushed
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`to the emergency room at Broward Health Imperial Point Hospital after being
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`administered two doses of Narcan (a prescription medication used to treat narcotic
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`overdose in an emergency situation) inside the detox facility. He was admitted with
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`acute hypoxemic respiratory failure secondary to heroin overdose. Zachary
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`remained in the Intensive Care Unit, on life-support, for one week while he slowly
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`recovered from his overdose. On February 4, 2020, Zachary was discharged from
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`Broward Health Imperial Point Hospital. Two days later he entered another
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`detoxification facility, Immersion Residential, prior to enrolling in his last inpatient
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`residential substance-abuse treatment center, Voyage Recovery, where he finally
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`became sober. He was admitted to Voyage Recovery on February 10, 2020 and was
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`discharged on May 11, 2020.
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`12. As summarized above, between December 2018 and May 2020,
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`Zachary was treated at several different inpatient substance-abuse treatment centers
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`and continued to undergo medically necessary substance-abuse treatment during this
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`time. The medical records related to his treatment at these facilities reveal that he
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`was diagnosed with the following: Opioid Use Disorder; Sedative Use Disorder;
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`Sedative, Hypnotic and Anxiolytic Use Disorder; and Other Unspecified Trauma
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`and Stressor-Related Disorder. During his time in treatment, Zachary was evaluated
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`by various psychologists, nurse case managers and behavioral health therapists, all
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`of whom confirmed Zachary’s serious substance abuse and mental-health-related
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`diagnoses and reiterated the need for further residential substance-abuse treatment.
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`13. For instance, a Nursing Assessment conducted on January 28, 2019 at
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`Caron Pennsylvania confirmed that Zachary presented for severe opioid use disorder
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`and severe sedative use disorder. This included daily heroin and fentanyl use. The
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`assessment reflected that Zachary met eleven out of eleven of the diagnostic criteria
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`for severe opioid use disorder including, but not limited to, (1) opioids often taken in
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`larger amounts or over a longer period of time than was intended; (2) a great deal of
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`time is spent in activities necessary to obtain opioid, use opioid or recover from its
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`effects; (3) recurrent opioid use resulting in a failure to fulfill major role obligations
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`at work, school or home; (4) continued opioid use despite having persistent or
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`recurrent social or interpersonal problems caused or exacerbated by the effects of
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`opioid; and (5) recurrent opioid use in situations in which it is physically hazardous.
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`This assessment was confirmed by the treatment center’s Senior Director of
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`Psychological Services, Dr. Michele Pole, PhD, who officially diagnosed Zachary
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`with “Severe Opioid Use Disorder, Severe Sedative Use Disorder and Other
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`Unspecified Trauma and Stressor Related Disorder.” In addition, behavioral health
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`therapist Bethany Koch agreed that the American Psychological Association’s
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`Diagnostic and Statistical Manual (“DSM-V”) criteria had been met for Substance
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`Use Disorder, Opioid Use Disorder and Sedative, Hypnotic and Anxiolytic Use
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`Disorder.
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`14. Upon Zachary’s discharge from Caron Pennsylvania on February 11,
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`2019, his medical team reiterated his clinical diagnoses of Severe Opioid Use
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`Disorder and Other Specified Trauma and Stressor Related Disorder and indicated
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`that he was being discharged against medical advice. His medical team noted that
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`during his stay, there were multiple concerns about Zachary being under the
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`influence and that he had behavioral issues including using inappropriate language
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`with staff members and patients, damaging property and having non-substance
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`contraband in his possession. Due to his verbal aggression toward staff and peers,
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`he was placed on a 72-hour discharge notice. Because he violated the terms of the
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`discharge notice, he was asked to transfer to another facility, but instead he left
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`treatment against medical advice. Lastly, the medical team noted that Zachary was
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`at a high risk of relapse due to his drug of choice (heroin).
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`15. After leaving Caron Pennsylvania on February 11, 2019, and with the
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`encouragement of his family, Zachary agreed to continue his treatment as
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`recommended by his medical team at Caron Pennsylvania. He entered Boca Detox
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`facility on February 12, 2019 and remained there until February 17, 2019. On
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`February 18, 2019, Zachary was transferred directly from Boca Detox to Caron
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`Florida, where he received inpatient residential substance-abuse treatment for the
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`next four months. Upon admission, this facility performed its own assessment of
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`him and determined that he met the criteria for Severe Opioid Use Disorder, Severe
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`Alcohol Use Disorder, Moderate Cocaine Use Disorder, Severe Cannabis Use
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`Disorder, Generalized Anxiety Disorder and Major Depressive Disorder. Zachary’s
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`medical team at this facility concluded that he required “day/night treatment with
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`community living” level of care. This level of care was a residential inpatient
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`service necessary for patients who had failed to make progress at less intense levels
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`of care; had stable medical or psychiatric problems that required close monitoring;
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`and had impairment of social, familial, or occupational functioning requiring
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`separation from the environment.
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`16. At the time of admission to Caron Florida, Zachary’s medical team
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`noted his substance abuse issues, anger issues, family strain and trauma. The
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`admission report noted Zachary’s ongoing struggles with remaining sober and his
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`repeated failed attempts at treatment as discussed above. In addition, his medical
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`team reported that Zachary had been involved in a domestic violence incident the
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`previous June in which an ex-girlfriend had accused him of choking her while he
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`was under the influence. Zachary was arrested and spent a night in jail before the
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`ex-girlfriend recanted her story and the charges were dropped. The report also
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`explained that Zachary had experienced tremors, diarrhea, blackouts, itchy skin,
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`excessive sweating, memory lapse, anxiety and depression while under the
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`influence. The medical team also reiterated that Zachary remained at a high risk for
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`relapse.
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`17. After approximately four months of residential inpatient treatment,
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`Zachary was discharged from Caron Florida on June 25, 2019. Upon discharge, his
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`medical team noted that Zachary had made steady progress in his recovery, he was
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`in the contemplative stage of change and it was recommended that he continue with
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`intensive outpatient level of care to serve his need for ongoing support that would
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`assist in continuing his recovery.
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`18. Unfortunately, as noted above, Zachary was unable to continuously
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`maintain his sobriety, and he spent the next seven months moving around to
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`different halfway houses and detoxification centers in Florida. During this time his
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`family struggled to stay in touch with him, support him and get him the help he
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`needed. Sadly, this pattern continued until Zachary suffered his January 29, 2020
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`life-threatening overdose. Following his overdose, Zachary received further
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`inpatient residential substance-abuse treatment at Voyage Recovery, where he
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`remained for three months. Thankfully, Zachary’s treatment at Voyage Recovery
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`was successful and he was finally able to remain sober.
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`19. As clearly evidenced by Zachary’s current sobriety and the information
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`contained in his medical records, all his substance-abuse treatment was medically
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`necessary, was an eligible health service under the Plan and should have been fully
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`covered. However, Aetna wrongly and in contravention of the Plan terms failed to
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`pay many of Zachary’s valid health benefit claims. As a result, Plaintiffs Clayton
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`Wallace and Liza Wallace were forced to pay nearly $200,000 in medical expenses
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`related to Zachary’s care that should have been covered under the Plan and paid by
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`Defendants. Because of Plaintiffs Clayton Wallace and Liza Wallace’s out-of-
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`pocket payments, there are no outstanding medical costs owed to providers related
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`to Zachary’s treatment.
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`20. From December 2018 through May 2020, the only coverage
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`determination letter that Plaintiffs received from Aetna relating to Zachary’s
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`treatment was a letter dated April 18, 2019, in which Aetna denied coverage for
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`residential substance-abuse treatment for the period of January 28, 2019 through
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`February 9, 2019. The basis of the denial was that:
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`Coverage for the requested services has been denied because we have not
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`been able to obtain any requested clinical information from the provider to
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`determine whether or not the services are considered medically necessary
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`under the terms of the plan.
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`Aside from this letter, Aetna did not provide Plaintiffs with any other denial letters
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`relating to Zachary’s ongoing treatment. Thus, the only claims subject to Aetna’s
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`April 18, 2019 written denial letter were those related to Caron Pennsylvania, where
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`Zachary received inpatient residential treatment from January 28, 2019 through
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`9
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`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 11 of 18
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`February 11, 2019. All other claims related to Zachary’s substance-abuse treatment,
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`including claims related to his stays at Cirque Lodge, Caron Florida, Boca Detox,
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`Legacy Healing Detox Center, Immersion Residential and Voyage Recovery, were
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`not covered by the written denial letter.
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`21. On May 11, 2020, Plaintiffs’ prior authorized representative, the Van
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`Law Firm, sent a letter to Aetna, appealing the denial of Zachary’s medical benefit
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`claims from December 2018 forward. Plaintiffs explained that Zachary had
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`continued to undergo medically necessary substance-abuse treatment throughout this
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`time and requested that Aetna cover all related costs in compliance with the Plan.
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`Plaintiffs also informed Aetna that, because the Caron residential treatment facilities
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`were out-of-network, all treatment should have been covered at least at the 60% rate
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`or higher with no deductible applied. Plaintiffs further explained that, because no
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`formal denial letters had been received for any services other than those in the 13-
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`day period of January 28, 2019 through February 9, 2019, the 180-day window to
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`appeal all other claims had not expired (and in fact had not yet started) and,
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`accordingly, Aetna should proceed with its review of those claims. Lastly, Plaintiffs
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`requested a detailed breakdown of what claims were covered, what claims were not
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`covered, at what rates the covered claims were paid and any reasoning for denying
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`19
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`the claims.
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`22. On May 21, 2020, Aetna sent the Van Law Firm a letter in response to
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`the May 11, 2020 appeal request. Aetna’s letter incorrectly claimed that the appeal
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`was related to services rendered on January 28, 2019 through June 24, 2019 by
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`Caron Renaissance. However, as discussed above, Plaintiffs’ appeal letter clearly
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`stated that it related to all claims concerning Zachary’s substance abuse treatment
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`for the period of December 2018 onward. Plaintiffs’ appeal letter also explained
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`that no adverse benefit determination had been received other than the April 18,
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`2019 denial letter covering the period January 28, 2019 through February 9, 2019
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`and that, therefore, the appeal of all other claims was timely. Despite these
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`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 12 of 18
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`statements, Aetna’s May 21, 2020 letter claimed (incorrectly) that the appeal was
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`untimely because it had not been received within 180 days from the date of the
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`original notice of an adverse benefit decision and that, therefore, Aetna would not be
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`conducting a review of the appeal.
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`23. On July 19, 2020, Plaintiffs, through their former authorized
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`representative, the Van Law Firm, responded to Aetna’s May 21, 2020 letter.
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`Plaintiffs again reminded Aetna that no adverse benefit determination had ever been
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`received for Zachary’s health benefit claims (as discussed above) and, thus, the 180-
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`day appeal clock had not started and the appeal was timely. Plaintiffs again
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`requested that Aetna consider their appeal. In addition, because Aetna had wrongly
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`labeled their appeal as pertaining to claims in 2019 only, Plaintiffs submitted
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`another appeal letter dated July 19, 2020 specifically addressing claims incurred
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`beginning January 2020. Plaintiffs’ second appeal letter reiterated the arguments
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`made in the first appeal letter regarding the medical necessity of Zachary’s
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`substance-abuse treatment and requested that Aetna cover the unpaid medical costs
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`to the fullest extent permitted under the Plan.
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`24. By letter dated July 30, 2020, Aetna repeated its inaccurate assertion
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`that Plaintiffs’ appeal of claims pertaining to services incurred through June 24,
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`2019 was untimely. Aetna’s letter stated that the appeal process had been exhausted
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`with respect to these claims and that it would not respond to any further requests for
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`review. Aetna’s letter also failed to address any of Zachary’s 2020 claims even
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`though it was aware that Plaintiffs were disputing those claims as well. Aetna’s
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`refusal to hear Plaintiffs’ appeal regarding these claims was highly improper
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`because it knew, or should have known, that no adverse benefit determination
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`notices were ever sent to Plaintiffs (other than the April 18, 2019 denial letter), that
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`Plaintiffs’ appeal was timely and that, as a result of Aetna’s refusal to hear the
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`appeal, Plaintiffs were given no opportunity to respond to Aetna’s claims denials at
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`the administrative level.
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`Case 3:21-cv-03864 Document 1 Filed 05/21/21 Page 13 of 18
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`25. Subsequently, throughout August of 2020, Aetna sent Plaintiffs a series
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`of letters relating to Zachary’s substance-abuse treatment received between January
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`22 and June 9, 2020. The letters indicated that they were in response to Plaintiffs’
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`appeal of certain claim determinations for services provided between those dates. It
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`is unclear whether the August 2020 letters were sent in response to Plaintiffs’
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`second appeal letter. The letters informed Plaintiffs that Aetna was upholding its
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`prior benefit determinations. Although these letters purported to address Zachary’s
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`appeal of health insurance claims for the period January 22 to June 9, 2020, these
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`letters failed to provide Plaintiffs with a reasonable opportunity for a full and fair
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`review of Zachary’s claims because Plaintiffs had never received the original
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`adverse benefit determination in the first place and, thus, they were unable to
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`properly address the basis for the claim denials. In addition, many of the August
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`2020 letters were vague and cursory and failed to provide the specific reasons for
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`the adverse benefit determination.
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`26. As a result of Aetna’s improper and entirely inadequate claims-
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`handling process, Plaintiffs were forced to retain current counsel to pursue their
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`wrongly denied health benefits. By letters dated October 29, 2020, December 2,
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`2020, January 5, 2021, January 19, 2021 and February 10, 2021, Plaintiffs’ counsel
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`requested a copy of all documents relevant to Zachary’s disputed health insurance
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`claims from Aetna pursuant to Section 503 of ERISA, 29 U.S.C. Section 1133, and
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`applicable Department of Labor Regulations, including 29 C.F.R. Section 2560.503-
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`1(h)(2)(iii). Despite Plaintiffs’ repeated requests for documents, Aetna failed to
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`provide the necessary documentation to Plaintiffs. Instead, Aetna repeatedly
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`referred Plaintiffs’ counsel’s letters to the Rawlings Company (which handles
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`Aetna’s subrogation claims), even after Plaintiffs informed Aetna that their request
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`for documents did not relate to a subrogation matter and should be handled directly
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`by Aetna. To date, Plaintiffs have received no substantive response from Aetna to
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`their request for claim documents.
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`

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

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

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