1. Case Name: Harlick v. Blue Shield of Cal., United States Court of Appeals for the Ninth Circuit, June 4, 2012, 686 F.3d 699

2. Lawyers:

  • Counsel for Plaintiff: Lisa S. Kantor, Elizabeth K. Green, Kantor & Kantor
  • Counsel for Defendant: Adam Pines, Joanna Sobol McCallum, Manatt, Phelps & Phillips, LLP

3. Format: Published opinion and order.

4. Outline:

  • Type of treatment Services Denied: Out-of-state, out-of-network residential treatment facility. Plaintiff brings this individual action against Defendant health insurer. Plaintiff is 38-years-old and has struggled with anorexia for more than 20 years. In 2006, she suffered a relapse.
  • ERISA Claim?
  • Class Action or Individual Action: Individual action
  • Defendant: Health insurer
  • Type of Insurance Plan: Employer plan (unclear whether large or small group)
  • Type of Coverage Denial: Administrative denial
  • Causes of Action: Plaintiff brought suit alleging violations of the California Mental Health Parity Act.

5. Legal Pointer: In this case, the Plaintiff had to find a facility out-of-network and out-of-state to address her serious anorexia. The Defendant did not dispute that this treatment was medically necessary, but rather stated that the plan was not required to pay for this type of care under the California Mental Health Parity Act.

6. Legal Issues and Causes of Action: Here, the Plaintiff argues that the Defendant’s failure to cover residential care for anorexia nervosa is a violation of the California Mental Health Parity Act. The district court granted Defendant’s motion for summary judgment and denied Plaintiff’s motion for summary judgment.

  • Ruling: The Court reverses the District Court’s holding.

7. Narrative Case Description: The Plaintiff suffers from anorexia nervosa. Upon entering a residential treatment facility, Plaintiff was at 65% of her ideal body weight. Plaintiff had to go to Castlewood Treatment Center, a residential treatment center in Missouri that specializes in eating disorders. Defendant paid for the first eleven days of the treatment but then refused to pay for the rest of the treatment. Defendant also performed several internal reviews of Plaintiff’s claim. Defendant sent Plaintiff several letters denying the care, but provided different rationales for this denial. At one point, an employee of Defendant sent a letter clarifying inconsistencies in previous letters and stating that the first eleven days of treatment were paid for because of a coding error. Further, the employee stated that the coder used “a procedure code that did not identify the claim as a mental health diagnosis.”

In examining the case, the Court first considers whether the treatment received at Castlewood is covered under the plan. The Plaintiff argues that the treatment is covered because 1) the plan covers residential care, and 2) that her care at Castlewood was care received at a Skilled Nursing Facility (SNF). The Court rejects both arguments due to the clear language of the plan language stating that residential care is not covered and that Castlewood cannot qualify as a SNF.

The Court then considers the impact of the California Mental Health Parity Act. In holding that the care must be covered, the Court states that the Mental Health Parity Act requires a plan provide all medically necessary treatment for severe mental illnesses. Further, the Court finds that here, Harlick’s care was medically necessary.

In coming to this holding, the Court looks at the clear language of the Mental Health Parity statute and finds that plans that are covered within the scope of the Act must cover medically necessary treatment for severe mental illnesses. The Defendant argues that they are not required to provide residential care under the Act, even if this coverage is medically necessary. They propose a three-part test to determine whether care is required: 1) it is a level of care specified in subsection b of the Parity Act, 2) it is a basic health care service, or 3) it is an additional (non-mandated) benefit that the plan has chosen to provide for the treatment of physical conditions. The Court specifically rejects this argument.

Finally, the Court considers the question of medical necessity. Defendant contested whether the care was medically necessary only after filing a supplemental briefing after oral arguments had occurred. The Court found that because Defendant failed to assert during the administrative process that the care was not medically necessary that they had forfeited the ability to argue that claim before the Court.

8. Additional Comments: A dissent was filed in this case questioning the interpretation of the word “Act” in the Parity Act’s implementation regulation. Defendant argued that the Act referred to the Knox-Keene Health Care Service Plan Act of 1975 which would limit coverage to those services specifically required under the Parity Act unless the insurer voluntarily chooses to provide a non-mandated benefit for a physical condition which must then be met with equal coverage for mental health claims.

9. Website: http://www.kantorlaw.net/documents/Harlick_Opinion_11-08-26.pdf

10. Practical Implications and Lessons Learned: The textual interpretation of the statute was critical in this case. The interpretation offered in the dissent would limit the care that must be covered to that specifically referenced in the Parity Act whereas the majority’s interpretation led to all medically necessary care being covered for severe mental illness.

11. All Legal Theories Presented in Case: Violation of California Mental Health Parity

12. Successful Legal Theories in Case: Violation of California Mental Health Parity

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