United States District Court, D. Maine
DECISION AND ORDER ON CROSS-MOTIONS FOR JUDGMENT ON THE ADMINISTRATIVE RECORD
D. BROCK HORNBY UNITED STATES DISTRICT JUDGE
On this judicial review of an insurance carrier’s decision to deny benefits under a group employee health plan, the issues are, first, the standard of review and, second, whether the denial of benefits should be sustained. Both parties have moved for judgment on the administrative record. I conclude that review is de novo and that the insurance carrier erred in denying benefits.
The plaintiff Adele E. is a resident of Maine who was attending college in Colorado. R. at 375. Through her father, she was a covered beneficiary under a group employee health plan (“Plan”). R. at 1551. Anthem Blue Cross and Blue Shield (“Anthem”) insured benefits under the Plan through a Certificate of Coverage (“Certificate”). R. at 1551-1659. The parties have stipulated that the Certificate of Coverage is the authoritative Plan document and that Anthem is the Administrator for the Plan. See Stipulation of the Parties in Resp. to the Procedural Order dated March 22, 2016 at 1 (ECF No. 39).
At the time of Adele E.’s claim for Plan benefits, she had a history of severe mental illnesses, including bulimia nervosa and obsessive compulsive disorder. R. at 377-416. On May 29, 2012, she was admitted to RainRock Treatment Center (“RainRock”) in Eugene, Oregon, to address these issues. R. at 377. Initially, Anthem determined that she met the criteria for Residential Treatment Center (“RTC”) level of care under the Plan and Certificate, and approved her claim for residential treatment benefits for twenty days, May 29, 2012 to June 17, 2012. R. at 227-228. On June 18, 2012, Anthem denied her claim for further benefits because “[t]he information your provider gave us does not show that [residential treatment] is medically necessary.” R. at 4-7. She nevertheless remained at RainRock until October 29, 2012, when she was discharged after having made “tremendous progress [with] her [eating disorder] management [and was] hopeful regarding full recovery.” R. at 373, 418-419. After her discharge, she appealed Anthem’s denial of benefits. R. at 260-685, 1086-1550. At two appeal levels, Anthem upheld the denial. R. at 686-688, 1025-1027. Adele E. then filed this federal lawsuit challenging the benefits denial.
This is a claim under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C.A. §§ 1001-1461 (2009 & Supp. 2015). Federal courts have subject-matter jurisdiction over ERISA claims. Id. § 1132(a)(1)(B), (e); 28 U.S.C.A. § 1331 (2006 & Supp. 2015).
Standard of Review
In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), the Supreme Court held that judicial review of benefits denial is de novo, “unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Id. at 115 (referring to review under 29 U.S.C.A. § 1132(a)(1)(B)). If the plan does grant discretionary authority, then according to the Supreme Court and the First Circuit “the claims administrator’s decision will be upheld unless it is arbitrary, capricious, or an abuse of discretion.” Stephanie C. v. Blue Cross Blue Shield of Mass. HMO Blue, Inc., 813 F.3d 420, 427 (1st Cir. 2016); Firestone, 489 U.S. at 115.
Here, Anthem’s Certificate of Coverage explicitly gives the administrator discretionary authority to determine eligibility for benefits:
We, or anyone acting on our behalf, have complete discretion to determine the administration of your Benefits. Our determination shall be final and conclusive and may include, without limitation, determination of whether the services, care, treatment, or supplies are Medically Necessary . . . .
R. at 1622 (emphasis added). That language seems to place it within Firestone’s and Stephanie C.’s deferential review category. But section 4303(11) of Maine’s Insurance Code states that
[a] policy, contract, certificate or agreement offered . . . in this State by a carrier to . . . reimburse any of the costs of health care services may not contain a provision purporting to reserve sole or absolute discretion to the carrier to interpret the terms of the contract or to provide standards of interpretation or review that are inconsistent with the laws of this State.
24-A M.R.S.A. § 4303(11)(A) (2015) (emphasis added). Thus, if Anthem’s provision means what it says about complete discretion that is final and conclusive, then the provision does not belong in the Certificate; instead, it is invalid under Maine law,  and as a result, Firestone makes judicial review de novo. On the other hand, the discretionary provision in the Certificate goes on to say: “However, you may utilize all applicable Complaint and Appeal procedures, as outlined later in this section, ” R. at 1622, and at another point the Certificate refers to a beneficiary’s right to an “external review” by the Maine Bureau of Insurance under another Maine statute, R. at 1576; see 24-A M.R.S.A. § 4312 (2015). So does the Anthem Certificate contain a provision that grants Anthem “sole or absolute discretion” such that the clause is invalid in Maine? The beneficiary Adele E. says yes, Pl.’s Mot. for J. on the Admin. R. at 13-15 (ECF No. 33) (“Pl.’s Mot.”), and that judicial review is therefore de novo. Anthem says no-that the availability of independent external review by the Bureau of Insurance means that Anthem does not have in its Certificate a clause that gives it “sole or absolute” discretion, Def.’s Mot. for J. on the Admin. R. at 3-6 (ECF No. 32) (“Def.’s Mot.”)-and that Anthem’s adverse decision therefore should receive deference under Firestone. Id. at 6.
In 2000, Maine enacted the independent external review statute on which Anthem relies-section 4312, enacted as part of “An Act to Establish a Patient’s Bill of Rights.” P.L. 1999, ch. 742, § 19. The 2000 legislation gave an enrollee “the right to an independent external review” of an “adverse health care treatment decision” and established procedures for how to request such a review. 24-A M.R.S.A. § 4312. The statute also instructed that external review was to be conducted under Maine Bureau of Insurance oversight. Id. § 4312(4). According to the statute, the external review decision is binding on the carrier, but not on the enrollee. Id. § 4312(6). Moreover, the statute requires the carrier to “notify an enrollee of the enrollee’s right to request an external review in large type and easy-to-read language in a conspicuous location.” Id. § 4312(3). The Maine Bureau of Insurance adopted rules to carry out the requirements of section 4312. See 02-031 C.M.R. ch. 850 (2002). Among other things, the rules directed that “[n]otice of external review rights must be provided to the enrollee as required by 24-A M.R.S.A. § 4312(3).” Id. § 8(G)(1)(c)(v) (now codified at 02-031 C.M.R. ch. 850, § 8(G)(1)(c)(vii) (2015)).
Then in 2003, Maine added its prohibition on discretionary clauses, three years after it had enacted the provision for independent external review. The language of the 2003 statute is as follows:
11. Absolute discretion clauses. The use and enforcement of an absolute discretion clause is governed by this subsection.
A. A policy, contract, certificate or agreement offered, delivered, issued or renewed for delivery in this State by a carrier to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services may not contain a provision purporting to reserve sole or absolute discretion to the carrier to interpret the terms of the contract or to provide standards of interpretation or review that are inconsistent with the laws of this State.
B. A carrier may not enforce a provision in a policy, contract, certificate or agreement that was offered, delivered or issued for delivery in this State and has been continued or renewed by a group policy holder or individual enrollee in this State that purports to reserve sole or absolute discretion to the carrier to interpret the terms of the contract or to provide standards of interpretation or review that are inconsistent with the laws of this State.
24-A M.R.S.A. § 4303(11). Maine enacted section 4303(11) in response to national model legislation. In 2001, the National Association of Insurance Commissioners (“NAIC”) drafted a Model Act entitled the “Prohibition on the Use of Discretionary Clauses” to clarify to “states that they possess[ed] the authority to prohibit [discretionary] clauses in insurance contracts.” NAIC, 2001 Proc. 4th Quart. Vol. I, 214. In 2002, the NAIC adopted the Model Act. NAIC, 2002 Proc. 1st Quart. Vol. I, 7. The legislative history of section 4303(11) in Maine is full of references to the NAIC Model Act and demonstrates that the Maine Legislature was concerned that “these [discretionary] clauses put consumers at [a] disadvantage when seeking to overturn [the] denial of benefits.” Office of Policy and Legal Analysis to the Joint Standing Committee on Insurance and Financial Services, L.D. 316 (121st Legis. 2002) (summary of proponents and opponents of the bill). Both proponents and opponents of the bill’s enactment presented detailed testimony to the Legislature. Opponents of the bill highlighted that
the intent of [the] Model Act would be to make all benefit denials subject to de novo review by a federal court. While the Model Act cannot determine the standard of review for federal courts, the absence of ‘discretion’ would mean that the initial Firestone standard of de novo review would always be applied and any reasonable findings or conclusions of the plan administrator would be ignored.
Summary from the Health Insurance Association of America against L.D. 316 (121st Legis. 2002) (detailing intent and consequences of NAIC’s Model Act) (emphasis added). There was no reason for that concern about de novo judicial review if in fact section 4312 had the effect that Anthem urges here. Yet nowhere in the debate is there any suggestion that 2003’s new prohibition on discretionary clauses was unnecessary or redundant because claimants already had the ability to seek de novo review by the external review procedures codified in section 4312.
There is nothing in section 4312’s external review procedure to suggest that it is mandatory,  but Anthem contends that a beneficiary like Adele E. who chooses not to use it forfeits her right to any de novo review, even in court. According to Anthem: “If Plaintiff wished to have binding de novo review, she should have made a request pursuant to 24-A M.R.S.A. § 4312. Having not done so, Anthem’s decision must be afforded the discretionary authority provided under the Plan documents.” Def.’s Mot. at 6. That conclusion is directly contrary to section 4312’s language that it “may not be construed to remove or limit any legal rights or remedies of an enrollee . . . .” 24-A M.R.S.A. § 4312(9). Moreover, it renders Maine’s prohibition on discretionary clauses in section 4303(11) superfluous: under Anthem’s reading of section 4312, no discretion clause in Maine can ever fall within the definition of a “sole or absolute” discretion clause, no matter how flagrant the language.
Finally, Anthem makes an argument from the syntax of the following language in section 4303(11): a Plan or Certificate of Coverage “may not contain a provision purporting to reserve sole or absolute discretion to the carrier to interpret the terms of the contract or to provide standards of interpretation or review that are inconsistent with the laws of this State.” Anthem argues that the final phrase-“that are inconsistent with the laws of this State”-modifies both the immediately preceding antecedent phrase-“to provide standards of interpretation or review”-and the more distant antecedent phrase-“to reserve sole or absolute discretion to the carrier to interpret the terms of the contract.” Def.’s Mot. at 5-6; Def.’s Reply at 2-6. In other words, according to Anthem, section 4303(11) prohibits sole or absolute discretionary clauses only if they are otherwise inconsistent with other Maine laws. My reading of the statute does not lead me to the same conclusion. First, there is a serious grammatical problem with Anthem’s reading. The clause “that are inconsistent with the laws of this State” has to have a plural antecedent noun or nominal phrase for its plural verb. “[S]tandards of interpretation or review” meets that requirement, but “a provision purporting to reserve sole or absolute discretion” does not.Grammatically, therefore, Anthem’s reading is incorrect. Second, the Supreme Court has recently instructed us that the “rule of the last antecedent” provides that “a limiting clause or phrase . . . should ordinarily be read as modifying only the noun or phrase that it immediately follows.” Lockhart v. United States, 136 S.Ct. 958, 962 (2016) (internal quotation marks omitted)); see also Gonda v. The Permanente Med. Grp., Inc., 10 F.Supp. 3d 1091, 1093 (N.D. Cal. 2014) (interpreting similar language in California); Novak v. Life Ins. Co. of N. Am., 956 F.Supp.2d 900, 905-06 (N.D. Ill. 2013) (interpreting similar language in Illinois). That principle of statutory construction likewise is contrary to the reading Anthem urges here.
In summary, the Maine Legislature first provided a right of independent external review to enrollees as part of “An Act to Establish a Patient’s Bill of Rights” in 2000. Evidently that was not enough and, three years later, following a national trend and the NAIC Model Act, Maine adopted legislation that prohibited outright any sole or absolute discretion provision in a policy, contract, or certificate of coverage. Anthem’s Certificate of Coverage in this case has just such a provision: it gives Anthem “complete discretion to determine the administration of your Benefits. Our determination shall be final and conclusive and may include, without limitation, determination of whether the services, care, treatment, or supplies are Medically Necessary . . . .” R. at 1622 (emphasis added). As a result, I excise the discretion clause from Anthem’s Certificate as Maine law requires and, under Firestone, I review Adele E.’s benefits-denial claim de novo.
Adele E. has the burden of proving by a preponderance of the evidence that residential treatment for her eating disorder was within the Plan’s coverage. See Gent v. CUNA Mut. Ins. Soc’y, 611 F.3d 79, 83 (1st Cir. 2010). I must “‘independently weigh the facts and opinions in the administrative record to determine whether the claimant has met [her] burden . . . .’” Gross v. Sun Life Assurance Co. of Can., 734 F.3d 1, 17 (1st Cir. 2013) (quoting Scibelli v. Prudential Ins. Co. of Am., 666 F.3d 32, 40 (1st Cir. 2012)). In doing so, I accord the administrator’s opinions and conclusions no deference or presumption of correctness. Id. “In other words, [I] stand in the shoes of the administrator to determine whether the administrative decision was correct.” Richards v. Hewlett-Packard Corp., 592 F.3d 232, 239 (1st Cir. 2010) (internal quotation marks omitted).
Under the terms of the Certificate (and thus the Plan), Anthem pays for health care services that are “medically necessary.” R. at 1602. The Certificate defines ...