1. Case Name: Markiewicz v. State Health Benefits Com’n, Superior Court of New Jersey, Appellate Division, January 17, 2007. 390 N.J. Super. 289, 915 A.2d 553
2. Type of Treatment Services Denied: Petitioner’s son, T., suffers from pervasive developmental disorder (PDD). T. had been receiving occupational, speech and physical therapy.
- Counsel for Plaintiff: Susan W. Saidel, New Jersey Protection & Advocacy, Inc.
- Counsel for Defendant: Stuart Rabner, Attorney General, Michael J. Haas, Jeff Ignatowitz, Deputy Attorney General
4. Format: Published opinion reversing and remanding to the State Health Benefits Commission.
- Type of Coverage Denial: Administrative denial (Defense concedes that services are medically necessary)
- Defendant: Insurer
- ERISA Claim? No.
- Class Action/or Individual Action: Individual action.
- Type of Insurance Plan: State funded, privately administered health benefits program for public employees
- Causes of Action: Plaintiff challenges Defense’s exclusion arguing that it is contrary to the New Jersey Parity Law.
6. Legal Pointer: Layperson’s explanation of the legal action and the federal and state laws involved.
7. Legal Issues and Causes of Action: Plaintiff argues that the exclusion of the therapy is contrary to the Legislature’s intent, that the exclusion is ambiguous, and that the exclusion results in a denial of equal protection for the Plaintiff.
- Ruling: The Court reverses the administrative law judge’s decision to uphold the denial of benefits and remands to the SBHC.
8. Narrative Case Description: Plaintiff’s son suffers from PDD. This condition, which is related to autism, has resulted in gross delays in T.’s development of motor skills, and other neurological and muscular problems. Occupational, speech and physical therapy are the recognized treatment for PDD.
Defendant had paid 22 months of claims until denying coverage based on an exclusion set forth in the Member Handbook. According to the Defendant’s benefits administrator, prior to 2001 the treatment for PDD was covered by Defendant. However, when Defendant saw that claims were “running at a certain level” they were flagged to determine whether they fell within the developmental treatment exclusion and, if so, were denied.
The ALJ upheld the denial of benefits because the occupational and physical therapy was being provided in order to “promote development beyond any level of function previously demonstrated.”
At issue before the Court is whether the Legislature intended to bar the only effective treatment for PDD when it passed the parity legislation. In so considering, the Court applies the following four factor test: “1) whether the agency’s decision offends the State or Federal constitution, 2) whether the agency’s action violates express or implied legislative policies, 3) whether the record contains substantial evidence to support the findings on which the agency based its action, and 4) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors.”
In examining the intent of the Legislature, the Court finds that the intent of the Parity Act is to “provide coverage for biologically based mental illness under the same terms and conditions as provided for any other sickness under the contract.” Additionally, the NJ State Department of Banking and Insurance, Division of Insurance, adopted a proposed regulation that specifically bars a carrier from excluding medically necessary services or supplies for the treatment of covered persons with mental illness. An exclusion for physical, speech and occupational therapy that is non-restorative is specifically listed as inapplicable. Ultimately, the Court finds that “the Legislature could not have intended that the principal treatments for developmental disabilities be excluded from coverage simply because those treatments differ in their essential nature.”
The Defendant argues that its contractual exclusion of services that promote development beyond the patient’s previous level of functioning actually complies with the Parity Act because the same standard is applied to physical and surgical benefits. However, the Court finds this argument unpersuasive as that reading of the Parity Act would circumvent the intent of the legislature. 9. Additional Comments: The Court ultimately states that the Defendant’s decision to enforce the exclusion came about after a rise in the number of claims for children with PDD. The Court states, “an administrative agency may not exercise its delegated authority to alter the terms of a statute or frustrate the policy underlying an enactment.”
11. Practical Implications and Lessons Learned: A categorical exclusion of benefits without a determination of medical necessity is once again found to violate parity.
12. All Legal Theories Presented in Case: Violation of NJ Parity Act
13. Successful Legal Theories in Case: Violation of NJ Parity Act