1. Case Name: A.D. v. T-Mobile USA, Inc. Employee Benefit Plan
2. Type of Treatment Services Denied: Applied Behavior Analysis therapy for Autism Spectrum Disorder (“ASD” or “Autism”)
Plaintiff: Charles Donnellan, Eleanor Hamburger, Richard E Spoonemore, Sirianni Youtz, Spoonemoore, & Hamberger
Defendant: Katie Denise Fairchild, Ryan P McBride, Barbara J Duffy, Lane Powell, PC
4. Format: Memorandum Opinion and Order issued by the United States District Court for the Western District of Washington
ERISA Claim?: Yes
Class Action/or Individual Action: Class Action
Defendant: Health Plan
Type of Insurance Plan: Plan was purchased through a state exchange set up by the ERISA
Type of Coverage Denial: Although not part of this opinion, medically necessary ABA therapy to treat ASD
6. Legal Pointer: This case focuses on the adequacy of a preliminary Settlement Agreement between the parties; however, the Court needed more information to determine whether or not the proposed settlement fund was fair, reasonable and adequate.
7. Legal Issues and Causes of Action: Plaintiff argued breach of fiduciary duties, recovery of benefits, clarification of rights under terms of the plan, and clarification of rights to future benefits.
Ruling: Plaintiff’s unopposed Motion to Certify the Class was granted. The Court denied Plaintiff’s unopposed Motion for Preliminary Approval of the Settlement Agreement.
8. Narrative Case Description: In February 2015, Plaintiff A.D. by and through his parents and guardians, E.D. and H.D., filed suit alleging that T-Mobile USA, Inc. Employee Benefit Plan, T-Mobile USA, Inc., and United Healthcare Services, Inc. failed to comply with the Parity Act. Plaintiff contended that T-Mobile adopted a uniform policy excluding any coverage for ABA therapy to treat ASD, including any coverage that may be medically necessary. Plaintiff alleged that he was denied coverage for ABA therapy to treat his ASD, and when Plaintiff appealed, T-Mobile denied his appeals with the justification that ABA therapy was excluded from the Plan.
The parties agreed to resolve, on a class-wide basis, the criteria for coverage on a prospective basis. The proposed Settlement Agreement provided prospective relief following a “best practice” model for delivery of ABA therapy, as well as a settlement fund of $676,935.00 to address claims for reimbursement for any members who paid for ABA services out-of-pocket. Any attorneys’ fees, costs, claims administration costs, and an incentive award would also be drawn from this settlement fund.
Plaintiff proposed that the Court certify the class action that “all individuals who have been, are, or will be participants or beneficiaries under the T-Mobile USA, Inc. Employee Benefit Plan who have received, require, or are expected to require Applied Behavior Analysis (ABA) therapy for the treatment of autism and/or autism spectrum disorder.” The Court first considered whether the class Plaintiff hoped to certify satisfied the four prerequisites. The Court then turned to whether the class satisfied one of the three sets of the interests of all class members.
Under the Parity Act and pursuant to the parties’ preliminary Settlement Agreement, T-Mobile must treat all class members alike with regard to ABA therapy coverage for ASD. Variations on how participants or beneficiaries with ASD obtain coverage for ABA therapy would risk creating incompatible standards of conduct. Plaintiff and T-Mobile conceded that at least 547 unique individuals were participants or beneficiaries to the Plan during the class period, which could likely lead to hundreds of lawsuits. The Court agreed that if some class members opted out and successfully obtained different coverage from T-Mobile through litigation, it could substantially impair the interests of other class members. As such, the Court found that the class should be certified.
Under the terms of the Settlement Agreement, T-Mobile would provide prospective coverage of medically necessary ABA therapy to treat Autism. In doing so, T-Mobile agreed to eliminate the following exclusions: age exclusion, treatment limitations, habilitative exclusion, clinic-based exclusion, academic or educational exclusion, experimental/investigation exclusion, and any other exclusions that categorically deny ABA therapy to class members. The agreement also provided for a $676,935.00 fund for the class from which payment would be made for class members’ claims for uncovered ABA, attorneys’ fees, litigation costs, an incentive award to the Named Plaintiff, and the cost of claims administration/notice. Any funds that remained in the settlement fund after all payments are made would revert back to T-Mobile. Class members would be eligible for payment from the settlement fund upon submission of a claim form that verified the Autism diagnosis, the date of diagnosis, the dates of treatments, the providers of treatments, the unreimbursed charges or debt incurred for the treatment, and verification that the treatment was medically necessary to treat the class member’s Autism. Class members were also required to provide documentation to support their claim for reimbursements. An independent claims processor would then review the claims, confirm coverage with T-Mobile, ensure that there are no duplicate claims, and provide an opportunity for class members to cure any problems with a deficient claim.
The Court concluded that the Settlement Agreement’s “Class Released Claims” were phrased too broadly and appeared to preclude class members from bringing any claims that the Named Plaintiff could bring, even if those claims were beyond the scope of the pertinent factual basis. The Court recommended that the parties limit this provision to only those released claims related to T-Mobile’s denials of coverage for ABA therapy.
The Court further opined that Plaintiff failed to provide any information that would allow the Court to conclude that $676,935.00 was adequate and sufficient to pay the hundreds of class members. Plaintiff also failed to provide the Court with any calculations or any way to determine whether this settlement fund was fair, reasonable and adequate. As such, the Court had no way of knowing how much each claim cost, the approximate number of claims per claimant, or even the number of claimants, aside from it being in the hundreds.
While Courts are generally weary of settlement agreements that permit unrewarded fees to revert back to defendants rather than be added to the class fund, in this case, the parties agreed that any funds left over after all payments were made would revert to T-Mobile. The Court was satisfied that this provision was not the product of collusion because any unrewarded attorneys’ fees would remain in the fund to pay for class members’ claims.
The Settlement Agreement allowed Plaintiff’s counsel to collect up to thirty-five percent of the fund for attorney’s fees. The Court required counsel to provide detailed billing records when it filed its motion for attorney’s fees and costs. Accordingly, the Court reserved its ruling on attorney’s fees.
The Settlement Agreement also provided for an incentive award of up to $10,000 for A.D.’s parents. The Court concluded that Plaintiff’s request was steep considering Plaintiff’s admission that the proceedings in this matter were abbreviated as compared to prior, similar litigations. The Court again required counsel to provide detailed records of the named plaintiff’s role in the matter when it filed its motion for attorney’s fees and costs. As such, the Court reserved its ruling on the incentive award.
Because Plaintiff had not provided any information that would allow the Court to conclude that $676,935.00 was adequate and sufficient to pay the hundreds of class members, the Court reserves in making a final opinion.
9. Additional Comments: N/A
11. Practical Implications and Lessons Learned: ABA treatment may not be excluded and, had more documentation and calculations been performed, the proposed Settlement Agreement may have been approved by the Court.
12. All Legal Theories Presented in Case: Breach of fiduciary duties, violation of Parity Act, ERISA violation
13. Successful Legal Theories in Case: All claims presented by Plaintiffs.