In the world of ERISA litigation, the stakes are often high for families trying to secure essential health benefits, particularly for residential mental health care. The most contested issue in this realm is whether a treatment is “medically necessary” under the plan’s terms. The Ninth Circuit’s recent unpublished decision in Dan C. v. Directors Guild of America – Producer Health Plan, __ F. App’x __, 2025 WL 1419920 (9th Cir. May 16, 2025) (before Circuit Judges Owens, Bennett, and H.A.Thomas) offers important insights into how courts interpret plan language and fiduciary responsibilities under ERISA.

The case arose when Dan C., the father of a nine-year-old boy (“R.C.”), challenged the Plan’s denial of coverage for his son’s residential mental health treatment. The Plan determined the treatment was not “medically necessary,” citing a lack of clinical criteria such as danger to self or others and severe impairment in daily functioning. Dan C. filed suit under two provisions of ERISA: Section 1132(a)(1)(B) to recover plan benefits, and Section 1132(a)(3) for breach of fiduciary duty. The district court ruled in favor of the plaintiff on both claims, and the Plan appealed.

The Ninth Circuit affirmed the district court’s (Fernando Aenlle-Rocha) decision to award benefits, agreeing that de novo review was appropriate. Though the Plan conferred discretion on its Board of Trustees, the court emphasized that this authority was not unambiguously delegated to the Benefits Committee, which had rendered the final decision. It reached this decision because the board “did not unambiguously ‘delegat[e] its discretionary authority’ to the Board’s Benefits Committee, which made the final decision at issue here.” The court stated that although “the Plan delegates the task of ‘determining claims appeals’ to the Committee and provides that the Committee ‘will have discretion to deny or grant the appeal in whole or part,’ this language falls short of the unambiguous delegation contemplated by our precedent.” This was because “[n]one of the Plan’s provisions expressly ‘grant [the Committee] any power to construe the terms of the plan[.]’”As the court explained, “[m]erely using the word ‘determine’ in the policy does not ensure that the denial of benefits will be reviewed for abuse of discretion” (citing Newcomb v. Standard Ins. Co., 187 F.3d 1004, 1006). In the absence of express language granting the Committee authority to construe plan terms or determine eligibility, the Ninth Circuit upheld the district court’s application of a de novo standard.

The court also rejected the Plan’s argument that the district court had misapplied the “medically necessary” standard by relying on “clinical criteria” instead of the Plan’s four-part definition. The Ninth Circuit clarified that the district court simply mirrored the Plan’s own reasoning. The Plan denied benefits on the grounds that R.C. did not meet the clinical criteria for residential treatment—namely, that he was not a danger to himself or others and did not have serious functional impairments. The Ninth Circuit noted that these criteria implicated the Plan’s medical necessity standard, particularly whether the treatment was consistent with generally accepted medical practice and whether it was the most cost-efficient form of care.

Perhaps most compelling was the court’s endorsement of the district court’s factual findings. The record showed that R.C. repeatedly exhibited violent and disturbing behavior: threats to kill peers and staff, detailed fantasies of violence, and serious behavioral problems such as urinating in inappropriate places and pulling out his own hair. According to the Ninth Circuit, these findings “supported the conclusion that R.C. did pose a danger to himself and others and did experience serious problems with functioning that could not have been managed without residential treatment.”

Even if the more deferential abuse of discretion standard applied, the court found that the Plan’s review process fell short of ERISA’s requirement for a “full and fair review.” The Plan failed to clearly inform the plaintiff that it required evidence of attempts at lower levels of care, such as an intensive outpatient program (IOP) or partial hospitalization program (PHP), before approving residential treatment. Instead, its denial letters generically referenced “outpatient services,” which the plaintiff reasonably understood to include therapy that R.C. had already undergone without success. As the court explained, this “inadequate notice deprived Plaintiff of the opportunity to ‘answer[] in time’ the Plan’s questions about lower levels of care, to engage in ‘meaningful dialogue’ on the issue of medical necessity, and to receive a ‘full and fair’ review of the denial of his claim” Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 679–80).

However, the Ninth Circuit reversed the district court’s judgment on the breach of fiduciary duty claim under ERISA Section 1132(a)(3). The court held that because the plaintiff had already obtained adequate relief under Section 1132(a)(1)(B)—namely, the reinstatement of benefits—no separate equitable relief was available under Section 1132(a)(3). Citing its own precedent in Castillo v. Metropolitan Life Ins. Co., 970 F.3d 1224, 1229 (9th Cir. 2020), the court reiterated that Section 1132(a)(3) is a “catchall” provision and does not apply when relief is available under another ERISA section.

In conclusion, Dan C. is a significant case for ERISA practitioners, particularly in mental health benefits litigation. It underscores the importance of clear plan language delegating discretionary authority, the necessity for consistent and comprehensive communication with claimants, and the courts’ willingness to scrutinize administrative processes that fall short. While the plaintiff did not prevail on the fiduciary duty claim, the Ninth Circuit’s affirmation of his right to benefits based on both procedural and substantive grounds is a strong reminder that ERISA protections, when enforced properly, can make a profound difference for families in crisis.