1. Case Name: Munnelly v. Fordham Univ. Faculty & Admin. Hmo Ins. Plan
2. Type of Treatment Services Denied: Residential Treatment
- Plaintiff: Lisa Kantor & Elizabeth Green Kantor & Kantor, LLP, Jennifer Lynn Hess and Scott Madison Riemer, Riemer & Associates, LLC
- Defendant: Amanda Genovese, Troutman Sanders, LLP
4. Format: Memorandum Opinion and Order on cross-Motions for Summary Judgment
- ERISA Claim? Yes
- Class Action/or Individual Action: Individual
- Defendant: Claims Administrator
- Type of Insurance Plan: Fordham University Local 153’s health benefits plan
- Type of Coverage Denial: Medical Necessity
6. Legal Pointer: The Final Rules specifically require plans to cover residential treatment facilities for mental health to the same degree as skilled nursing facility services for medical treatment.
7. Legal Issues and Causes of Action: Plaintiff brought this action under ERISA, challenging Defendant’s denial of mental health benefits for residential treatment services provided for his 17-year-old son, C.M. Plaintiff voluntarily dismissed his claims against the Fordham University Faculty and Administration HMO Insurance Plan and UnitedHealthcare Insurance Company of New York. Plaintiff’s only remaining claims are against Empire HealthChoice Assurance, Inc., the claims administrator for Plaintiff’s group health plan. Plaintiff moved for summary judgment, arguing that Empire’s denial of C.M.’s claim for mental health benefits was erroneous, because it was based solely on the Plan’s residential treatment services exclusion without consideration of applicable federal and New York Law. Empire cross-moved for summary judgment arguing that it did not abuse its discretion in denying Plaintiff’s claims for mental health benefits because 1) the Plan expressly excluded coverage for residential treatment services, 2) Plaintiff did not comply with the Plan’s pre-certification requirement, 3) the Plan expressly excluded treatment for out-of-network inpatient mental health care treatment, 4) the Plan complied with the Parity Act, and 5) Plaintiff’s attempts to invoke the New York Parity Law failed.
Ruling: Plaintiff’s motion for summary judgment was granted to the extent that the Court found that the Plan’s provision excluding coverage for residential treatment services violated the Parity Act. Defendant’s motion for summary judgment was granted as to the Complaint’s Second Claim of Relief, but was otherwise denied. The Court reserved decision as to the appropriate remedy for Defendant’s statutory violation, pending additional briefing.
8. Narrative Case Description: In about April 2014, C.M. received mental health care treatment at Telos Residential Retreat, LLC, a residential treatment facility. A claim was submitted to the Plan for these residential treatment services. On July 18, 2014, Empire issued a letter denying the claim, stating that residential treatment was not a covered service. On July 15, 2014, C.M was admitted to Logan Rover Academy, LLC, a residential treatment facility in Utah. Plaintiff submitted pharmacy and non-pharmacy provider claims to Empire related to the treatment at Logan River for dates of service commencing July 16, 2014 and continuing through December 2014. Empire paid $1,604.40 of the $5,260.32 charges for the services provided during the first two weeks of treatment at Logan River. In a December 22, 2014 statement to Plaintiff regarding services C.M. received at Logan River on November 2014, Empire denied the claim, stating that this service was not payable for the diagnosis stated on the claim. In a January 15, 2015 statement to Plaintiff regarding C.M.’s August 2014 treatment at Logan Rover, Empire denied the claim, stating that it was not a covered service. In a January 26, 2015 statement regarding treatment at Logan Rover in September 2014, Empire again denied benefits, stating it was not a covered service under the policy. In another January 30, 2015 statement, Empire denied benefits for C.M.’s treatment at Logan River in October 2014, stating that the service was not payable for the diagnosis stated on the claim.
In about October 2014, C.M.’s mother submitted an appeal concerning Empire’s denial of benefits for services rendered to C.M. at Logan River between July and September 2014, stating that she believed that the services C.M received at Logan River should be covered as a result of the Health Care Parity Act of 2008. In an October 28, 2014 letter, Empire addressed the appeal, stating that it was still processing claims for treatment provided at Logan River Academy between July 16, 2014 and September 30, 2014 and that the claims for services rendered at other residential treatment centers between January 19, 2014 and July 15, 2014 were upheld as being denied. C.M.’s mother again appealed. Empire again denied the request for benefits.
Plaintiff argued that Empire’s denial of benefits for C.M.’s mental health care at Logan River Academy was erroneous because it was based solely on Empire’s exclusion of coverage for residential treatment services. Empire responded that its denial of benefits at Logan River Academy was consistent with the Plan’s exclusion of coverage for 1) residential treatment services, 2) services where a member does not comply with the Plan’s pre-certification requirements, and 3) out-of-network, in-patient mental health care. Specifically, Empire argued that the Interim Final Rules authorized group health plans to exclude coverage for mental health residential treatment services.
The Court found that the plan’s provision excluding coverage for residential treatment services violated the Parity Act. Empire’s argument that the Interim Final Rules permitted exclusion of residential treatment fell short, as the Court stated that although public comments on the rule specifically sought to exclude residential treatment, the rule expressly declined to address the issue. The Court stated that the decision to set aside the “scope of services” issue did not constitute an endorsement of treatment-setting limitations and that the Interim Final Rules made it clear that separate limitations on the scope of treatment and treatment setting applied only to mental health benefits were impermissible.
9. Additional Comments: Empire asserted two alternative bases to justify its denial of benefits: 1) Plaintiff’s failure to comply with the Plan’s pre-certification requirement and 2) the Plan’s coverage exclusion for out-of-network in-patient mental health care. The Court concluded that Empire did not waive its arguments concerning Plaintiff’s failure to comply with the pre-certification requirement and Plaintiff’s failure to comply with this provision would not justify wholesale denial of his claim for residential treatment service. The Plan and its rider merely imposed a financial penalty or violation of the of pre-certification requirement, not a blanket denial of benefits. The Court further concluded that Empire did not give Plaintiff notice of its out-of-network coverage argument prior to litigation.
This case later settled.
11. Practical Implications and Lessons Learned: Despite arguments that exclusions for residential treatment facilities pre-date the Final Rules, Courts have continued to hold that such blanket exclusions are not proper. The Final Rules specifically require plans to cover residential treatment facilities for mental health to the same degree as skilled nursing facility services for medical treatment. As such, plan participants are able to successfully challenge these exclusions, just as the Plaintiff did in this case.
12. All Legal Theories Presented in Case: Breach of ERISA and Parity Act
13. Successful Legal Theories in Case: Parity Act violation