Oral Argument Previews: 10th Circuit Court of Appeals for October 27

The Byron White Courthouse. Two stone bighorn sheep in front of a white building with pillars.
The 10th Circuit returns for oral arguments in four cases, including denied of health care benefits, hidden fees on mortgage payments and more. / Law Week File

On Oct. 27, the 10th Circuit Court of Appeals returns for oral arguments in four cases which include questions about denial of health care benefits under the Employee Retirement Income Security Act, hidden fees on mortgage payments and more.


Oral arguments are scheduled for 9 a.m. at the Byron White Courthouse in Denver with Judges Joel Carson, Carlos Lucero and Veronica Rossman presiding.

Matchett v. BSI Financial Services

The 10th Circuit will review the decision by a judge in the U.S. District Court for the District of Utah which granted a motion to dismiss a class action lawsuit brought by a woman alleging she was charged hidden fees while paying her mortgage.

According to the order of Judge Dale Kimball, Radonna Matchett filed a class action suit against BSI Financial Services, the mortgage servicer for a 2008 mortgage loan she took out. Matchett alleged BSI impermissibly charged her a convenience fee for paying her mortgage over the phone after she was unable to do so online due to a purported error on the company’s website. When Matchett made her monthly payment six times between 2017 and 2018, BSI collected a $20 convenience fee for payment service. According to the court’s records, Matchett’s account statement included a disclosure that “[a] fee may apply” for the pay-by-phone service, which was one of five ways she could’ve made the monthly payment.

Matchett argued her loan document’s did not expressly authorize BSI to collect the phone call convenience fee. But BSI countered that a paragraph of the deed of trust stated that in “the absence of express authority in this Security Instrument to charge a specific fee to Borrower shall not be construed as a prohibition on the charging of such fee.” The deed of trust also had provisions for excess charges, BSI argued.

Collecting the fee, Matchett argued, violated the Utah Consumer Sales Practices Act, breached her loan documents and led to BSI being unjustly enriched. She asked the federal court to grant statutory damages, actual and punitive damages and declaratory and injunctive relief for her and a class of others in similar situations.

The Utah district court granted BSI’s motion to dismiss the complaints and, with one exception, dismissed them with prejudice. The federal district court agreed to dismiss Matchett’s individual claims under the Utah CSPA with prejudice and proposed class actions claims under the Utah CSPA without prejudice. The court also dismissed her cause of action for unjust enrichment, her breach of contract claim and her request for declaratory judgment and unjust enrichment with prejudice.

In March, Matchett asked the 10th Circuit Court of Appeals to review the district court’s order and argued the lower court contravened her factual allegations, misapplied a previous ruling by the 10th Circuit in Bernieke v. CitiMortgage and incorrectly interpreted the deed of trust terms “so BSI can add any charge (authorized or not) to a serviced mortgage.”

Matchett asked the 10th Circuit to review the lower court’s order and reverse and remand it.

K., et al. v. United Behavioral Health, et al.

The 10th Circuit will review a decision by a judge in the U.S. District Court for the District of Utah which found an insurer incorrectly denied medical coverage.

The appeal arose after a father was denied a coverage request for his daughter by UnitedHealthcare and its affiliate United Behavioral Health under a health insurance plan governed by the Employee Retirement Income Security Act.

According to an order by Judge Dale Kimball, the daughter of the plaintiff in the case experienced a long-term mental health crisis which resulted in multiple suicide attempts, in-patient hospitalizations and regular behavioral health care visits. After his daughter wasn’t getting better, medical staff recommended long-term residential care. A care advocate with a UnitedHealthcare subsidiary advised the parents to submit a coverage request for two long-term care facilities recommended by a consultant. UnitedHealthcare approved a 90-day stay at one of the facilities and stated it would review the case after the 90-day period to decide if extended treatment would be necessary.

Near the end of the 90-day period, UnitedHealthcare issued an adverse benefit decision denying extended treatment at the facility. Requesting further information on the denial, the parents were pointed towards a provision of the health care plan which was retroactively removed from the plan which stated “Alternative treatment facilities accessed or Out-of-Network is excluded.” The parents issued two appeals of the initial denial and UnitedHealthcare eventually agreed the denial was an error and re-reviewed the claims.

UnitedHealthcare conducted a medical necessity review and once again denied coverage, finding it was not medically necessary. The parents filed another appeal but were once again denied coverage. An external review upheld the coverage denial.

In 2017, the parents filed a federal lawsuit against UnitedHealthcare and its affiliates claiming the denial of coverage was in violation of ERISA.

In 2021, Kimball ruled on the case under a deferential standard of review which asked only if the denial of benefits was arbitrary and capricious.

The parents argued under ERISA, the denial was arbitrary and capricious because the treatment was medically necessary under terms of the insurance plan, that UnitedHealthcare disregarded the opinions of their daughter’s treating physicians and that UnitedHealthcare didn’t explain how they applied the terms of the insurance plan to their daughter’s history and conditions. Kimball also reviewed a fourth consideration about the implications of UnitedHealthcare’s inconsistent denial reasoning.

The district court agreed the coverage denials were arbitrary and found UnitedHealthcare’s shifting denial rationale was arbitrary and capricious. Kimball ordered UnitedHealthcare to retroactively reinstate the benefits and pay for treatment, about $88,000.

UnitedHealthcare appealed the ruling in December 2021 and asked the 10th Circuit to overturn the district court’s ruling and benefits reinstatement.

UnitedHealthcare argued that while Kimball correctly applied a deferential standard of review, he executed a de novo standard of review. UnitedHealthcare further argued the denial of coverage wasn’t arbitrary and capricious since three board certified psychiatrists reviewed the request and all found treatment wasn’t medically necessary and while there were some inconsistencies between the rationale of the reviewers, the final conclusion was the same. UnitedHealthcare also argued that even if the 10th Circuit agrees the denial of benefits was arbitrary and capricious, the case should’ve been remanded back to UnitedHealthcare to re-review the decision.

At oral arguments Oct. 27, the 10th Circuit will also hear from amicus curiae Secretary of the U.S. Department of Labor Martin Walsh who filed a brief in support of the parents and urged the 10th Circuit to uphold the district court’s decision and find courts can consider inconsistent denial letters when considering if a denial is arbitrary and capricious under ERISA.

Other Cases

The 10th Circuit will also hear an appeal from a decision by the Bureau of Alcohol, Tobacco and Firearms, Firestorm Pyrotechnics v. Richardson, et al, and one from Utah’s federal court, In re Overstock Securities, et al.

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