## Facts

- Daniel Kunin was covered under his employer’s group health insurance policy issued and administered by Benefit Trust Life Insurance Company.
- The policy was an ERISA-governed employee welfare benefit plan and limited benefits for “mental illness,” but did not define that term.
- Kunin incurred over $50,000 in medical expenses for treatment of his child’s autism and sought reimbursement under the plan.
- After a brief investigation, Benefit Trust paid $10,000 and denied additional benefits, asserting autism was subject to the policy’s “mental illness” limitation.
- Kunin sued; the case proceeded in federal court as an ERISA benefits dispute.
- The district court heard expert testimony, found autism was not a “mental illness” in ordinary or technical usage, held the denial arbitrary and capricious, and ordered full payment.

## Issues

1. Whether the plan administrator acted arbitrarily and capriciously under ERISA by classifying autism as a “mental illness” and applying the $10,000 limitation.
2. Whether the undefined term “mental illness” unambiguously included autism and, if ambiguous, what interpretive rule governs under ERISA federal common law.

## Decision

- The Ninth Circuit affirmed the judgment requiring Benefit Trust to pay the claim in full.
- The court held the denial of full benefits was arbitrary and capricious because Benefit Trust’s cursory investigation did not provide reasonable grounds to classify autism as a mental illness.
- Alternatively, the court held the term “mental illness” was unclear as applied to autism; ambiguity had to be construed in favor of the insured, resulting in coverage without application of the limitation.

## Legal Principles

- Under ERISA deferential review, a benefits denial is arbitrary and capricious when it lacks a reasonable evidentiary basis and rests on an inadequate investigation.
- Undefined plan terms must be interpreted in context; when a term is unclear as applied to a condition, the ambiguity is treated as an interpretive problem rather than resolved by unsupported administrative labeling.
- As a matter of ERISA federal common law, ambiguous terms in insurance policies are construed in favor of the insured (contra proferentem), either as a uniform federal rule or through incorporation of widely shared state insurance rules.

## Conclusion

The Ninth Circuit required full reimbursement for autism treatment because the administrator’s decision to treat autism as a capped “mental illness” was unsupported and therefore arbitrary; in any event, the undefined limitation was ambiguous as applied to autism and had to be construed for coverage under ERISA federal common law.


Kunin v. Benefit Tr. Life Ins. Co., 910 F.2d 534 (9th Cir. 1990)