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Salley v. E.I. Dupont de Nemours & Co.

United States Court of Appeals for the Fifth Circuit
966 F.2d 1011 (5th Cir. 1992)


Facts

Danielle Salley (plaintiff) was the daughter of Jack Salley (plaintiff). Jack was retired from E.I. Dupont de Nemours & Company (Dupont) (defendant). The plaintiffs received medical benefits under Dupont’s Hospital Medical-Surgical Coverage Policy (the Policy), which Dupont had established pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq. The Policy only covered expenses deemed medically necessary. Preferred Health Care (Preferred) managed Dupont’s cases, but Dupont retained discretionary authority to determine eligibility for benefits. Due to emotional disabilities, Danielle was admitted to the hospital under the care of Dr. Gordon Blundell, a psychiatrist. After showing improvement, Danielle was released. However, Danielle quickly relapsed and was again admitted to the hospital. After her release, Danielle again relapsed and was admitted to the hospital for a third time. The Policy covered the first two hospitalizations and initially covered the third. Dr. Blundell was concerned about Danielle’s repeated admissions and determined that, although Danielle had dramatically improved and become stable, Danielle should not be released until a suitable treatment plan was identified. Dr. Blundell discussed his opinion with Dr. Satwant Ahluwalia, a Preferred psychiatrist. Dr. Ahluwalia ultimately determined that continued in-patient hospitalization was not medically necessary. Dupont terminated Danielle’s benefits. Dr. Ahluwalia never examined Danielle or reviewed Danielle’s medical records from the second and third hospitalizations. The plaintiffs sued Dupont to recover benefits from the date that Dupont terminated Danielle’s benefits to the date that Danielle was discharged. The district court found that Dupont had abused its discretion by terminating Danielle’s benefits. Dupont appealed.

Rule of Law

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Issue

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Holding and Reasoning (Williams, J.)

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