1. Case Name: Brazil v. OPM, US District Court for the Northern District of California, March 28, 2014

2. Lawyers:

  • Plaintiff: Elizabeth Katherine Green, Lisa Sue Kantor, Kantor & Kantor, LLP
  • Defendant: Chi Soo Kim, U.S. Attorney’s Office, Sacramento, CA
  • Amicus (For BCBSA):
    • Sandra I. Weishart, Barger & Wolen, LLP
    • Adam P. Feinberg, Miller & Chevalier Chartered

3. Format: Published opinion

4. Outline: Brazil brought an action against OPM on behalf of his daughter whose care at a residential treatment facility for an eating disorder was denied. Both parties filed a motion for summary judgment. OPM argued that the Court lacked subject matter jurisdiction over the Federal Employees Health Benefit Act (based on lack of asserted violations in the Complaint); that the plaintiff’s claims were barred by sovereign immunity; that the California Mental Health Parity Act is preempted; and that the Court lacks jurisdiction to hear violations of the Federal Parity Act due to sovereign immunity. The Court granted Defendant’s motion for summary judgment and denied Plaintiff’s motion for summary judgment.

  • Medical Necessity/Administrative: Administrative
  • Class Action/Individual: Individual

5. Relation to Parity Implementation: This case deals with whether the Federal Employees Health Benefit Programs (FEHBP) Blue Cross and Blue Shield Service Benefit Plan is subject to federal Parity requirements.

6. Legal Issue: The legal issue is whether the FEHBP is subject to both California and Federal Parity laws or if the federal government is protected from suit based on sovereign immunity and a lack of subject matter jurisdiction by the Court.

7. Ruling: The Plaintiff’s motion for summary judgment was denied. The Defendant’s motion for summary judgment was granted.

8. Causes of Action: Plaintiff alleges violations of the Federal Employee Health Benefit Act; violations of California’s Mental Health Parity Act; and violations of MHPAEA. Plaintiff seeks: 1) damages; 2) a declaration that the Plan violates CA’s Mental Health Parity Act; 3) a declaration that the Plan violates MHPAEA; and 4) an order enjoining the Plan and the Defendant from continuing to incorporate into the insurance policies they provide or authorize any blanket exclusion of coverage for medically necessary residential treatment for anorexia nervosa.

9. Court and Jurisdiction: Federal, US District Court for Northern District of CA

10. Treatment at Issue:

  • Diagnosis: Anorexia nervosa
  • Mental Health/Substance Use/Eating Disorder/Other: Eating disorder & mental health
  • Service: In-patient residential care
  • Level of Care: In-patient

11. Type of Insurance Involved: Federal PPO

12. Case Description: Plaintiff’s daughter was hospitalized for 15 days and required additional residential treatment. Plaintiff requested pre-authorization, which was denied, and continued appealing the decision. Plan administrators continued to deny the claim based on the fact that residential treatment for anorexia nervosa was not covered by the plan. Plaintiff appealed through both the Plan and to OPM – OPM upheld the Plan’s denial.

Plaintiff argued the Plan was acting in violation of FEHBA, and state and federal parity laws. Defendant OPM argued:

  1. That the Court lacked subject matter jurisdiction to hear the case based on a failure to adequately claim a violation of FEHBA in the Complaint. The Court disagreed with this argument because, regardless of the mistakes in the Complaint, Plaintiff is challenging the action of a federal agency and a claim under federal law that is not frivolous.
  2. That the Court lacked subject matter jurisdiction to grant Plaintiff’s relief for a violation of FEHBA due to sovereign immunity. There is a waiver of sovereign immunity where the relief requested is for the Plan to pay the amount of the claim; however, the Complaint did not request this relief. The Court denied the request to amend the Complaint to amend the relief sought based on the fact that the Plan excludes the coverage Plaintiff seeks.
  3. That the Court lacked jurisdiction over the claimed violation of CA Mental Health Parity Law. The Court agrees with this argument in that there is no explicit waiver by Congress allowing OPM to be sued for violations of this Act.
  4. That the Court lacked jurisdiction over the claimed violation of MHPAEA due to sovereign immunity. MHPAEA did not amend FEHBA, meaning that those plans are under no requirement to comply with MHPAEA requirements. Even though OPM voluntarily decided to require plans to follow MHPAEA, the action of an agency does not create an effective waiver. Further, Congress did not consent to allow the government to be sued for violations of MHPAEA.

13. Additional Comments: While discussing the violation of FEHBA, the Court does state that it “would grant the request if it was not futile,” suggesting that if the plan document did cover a treatment and that the requested relief was repayment of the denied claim, that the case could have moved forward on its merits.

While the Court found that sovereign immunity barred its consideration of the claimed violation of the CA Mental Health Parity Law, it further found that even if there was jurisdiction that CA Act would be preempted by federal law. MHPAEA contains both an express preemption and is conflict preempted. Conflict preemption occurs where it would be impossible to comply with both state and federal requirements or where the state law stands as an obstacle to achieving Congress’ discernible objections.

14. Website: https://docs.justia.com/cases/federal/district-courts/california/candce/3:2012cv02898/255719/64

15. Analysis and Lessons Learned: When alleging a violation of FEHBA, make sure that the requested relief includes the payment of the denied benefit.

16. All Legal Theories Presented in Case: Violation of FEHBA, violation of CA Parity, violation of MHPAEA

17. Successful Legal Theories in Case: None

18. Relevant State Laws: CA Mental Health Parity Act, Cal. Health & Safety Code § 1374.72; Cal Ins. Code § 10144.5

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