1. Case Name: Craft v. Health Care Serv. Corp, United States District Court for the Northern District of Illinois, Eastern Division, March 25, 2015

2. Lawyers:

  • Plaintiff (FOR JANE DOE): D. Brian Hufford, Jason S. Cowart, Zuckerman Spaeder LLP
    • Caroline Elizabeth Reynolds, Zuckerman Spaeder LLP
    • George Freeman Galland, Jr. Miner Barnhill & Galland, P.C.
  • Plaintiff (FOR ELIZABETH CRAFT):
    • D. Brian Hufford, Jason S. Cowart; Zuckerman Spaeder LLP
    • Caroline Elizabeth Reynolds, Zuckerman Spaeder LLP
    • George Freeman Galland, Jr., Miner Barnhill & Galland, P.C.
    • Meiram Bendat, Psych-Appeal, Inc.
  • Defendant: Helen E. Witt, Brian Patrick Kavanaugh, Devon McKechan Largio, Kirkland & Ellis, LLP

3. Format: Published opinion and order on Health Care Service Corporation’s (HCSC) Motion to Dismiss. Court denies HCSC’s motion.

4. Outline: Before the Court is defendant HCSC’s motion to dismiss. Plaintiff’s 16-year old daughter had been hospitalized 9 times for acute inpatient care to treat her mental illness (PTSD, recurrent severe major depressive disorder and anorexia nervosa). Physicians had recommended she be transferred to a long-term residential treatment center. Plaintiff called to obtain preauthorization, Defendant denied based on the residential treatment center (RTC) exclusion in the plan. Plaintiffs claim this exclusion violates ERISA, which requires Parity. Defendant moved to dismiss on the ground that the statute did not apply to “treatment settings” during the time period at issue.

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

5. Relation to Parity Implementation: This case examines whether an RTC exclusion violates the term treatment limitations under Parity. Here, the question focused on whether the RTC exclusion violates the Interim Final Rules and Final Rules issued by the Departments.

6. Legal Issue: The issue is whether the Plaintiff’s case can withstand a motion to dismiss based on a proposed ERISA violation. The Court must consider whether the Interim and Final Rules are consistent with MHPAEA and whether invalidating the RTC exclusion would violate due process.

7. Ruling: The Court denied the Defendant’s motion to dismiss.

8.Causes of Action: The Plaintiff alleges violations of ERISA requiring parity between mental health and medical/surgical benefits.

9. Court and Jurisdiction: Federal; U.S. District Court for the Northern District of Illinois

10. Treatment at Issue:

  • Diagnosis:  Craft (daughter) diagnosed with post-traumatic stress disorder, recurrent severe major depressive disorder, and anorexia nervosa
  • Mental Health/Substance Use/Eating Disorder/Other: Mental health and eating disorder
  • Service: Long-term residential treatment
  • Level of Care: Inpatient

11. Type of Insurance Involved: “Trustwave Plan,” employee plan for Trustwave Holdings, Inc. employees. Defendant administered and insures the plan

12. Case Description: Plaintiff sought preauthorization for her daughter’s treatment at a long-term residential treatment center. This preauthorization was denied based on the plan’s exclusion of RTCs. There is no corresponding exclusion for treatment of medical and surgical conditions at similar residential facilities.

Parity requires that treatment limitations applicable to mental-health benefits are no more restrictive than that of MH/SU, and that there are no separate treatment limitations applicable only with respect to mental health benefits.

Defendant argued that the federal Parity Act does not apply to nonquantitative treatment limitations, contrary to both the Interim and Final Rules, based on noscitur a sociis (questionable words and phrases in a statute may be ascertained by reference to the meaning of words and phrases associated with it) and ejusdem generis (where general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words). Defendant uses these concepts to argue that the phrase “other similar limits” only applies to numerical limitations. The Court did not agree with this argument.

In the alternative, Defendant argues that if the federal Parity law does cover nonquantitative treatment limitations, it does not apply to treatment settings. This is based on the Departments declining to address the scope of services in the interim final rules. The Court again returned to the fact that the RTC exclusion had no similar basis for medical surgical benefits (i.e., if an elderly person broke their hip and needed nursing care in an RTC this would not necessarily be excluded).

Finally, the Court addressed whether invalidating the RTC exclusion would violate due process. The Court held that the due process defense needed additional factual and legal development. Here, there was no evidentiary record to operate from, and it was unclear whether Defendant could establish the element of unfair surprise necessary to support a due process defense.

13. Additional Comments: None

14. Website: https://scholar.google.com/scholar_case?case=340047407069043771&hl=en&as_sdt=6&as_vis=1&oi=scholarr

15. Analysis and Lessons Learned: The Court demonstrates an unwillingness to dismiss the case based on the lack of an evidentiary record.

16. All Legal Theories Presented in Case: Violations of ERISA; Defendant argues unclear statutory interpretation and a violation of due process

17. Successful Legal Theories in Case: None

18. Relevant State Laws: None

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