1. Case Name: S. v. Microsoft Corporation Welfare Plan and Microsoft Corporation
2. Type of Treatment Services Denied: Psychiatric treatment in residential treatment center for major depressive disorder
- Plaintiff: Richard E Spoonemore & Eleanor Hamburger, Sirianni Youtz Spoonemore Hamburger
- Defendant: Geoffrey M Sigler, Heather L Richardson & Richard Joseph Doren, Gibson, Dunn & Crutcher; Richard J. Birmingham & Rebecca J. Francis, Davis Wright Tremaine
4. Format: This summary is compiled from information found in the Complaint, Defendants’ Motion to Dismiss and the docket. The case was filed in the United States District Court for the Western District of Washington
- ERISA Claim? Yes.
- Class Action/or Individual Action: Class Action
- Defendant: Health Plan and plan administrator
- Type of Insurance Plan: Microsoft Corporation Welfare Plan under ERISA
- Type of Coverage Denial: Treatment in residential treatment centers (except for treatment of eating disorders)
6. Legal Pointer: None.
7. Legal Issues and Causes of Action: Plaintiff seeks to end Microsoft’s discriminatory practice of excluding all coverage from the Plan for psychiatric treatment in residential treatment centers (except for treatment of eating disorders). Plaintiff seeks remedies for Microsoft’s breach of fiduciary duty under ERISA and its failure to properly administer the terms of the Plan. Plaintiff further seeks to recover the benefits that have been wrongly denied and a Court Order declaring Microsoft’s exclusion of coverage for psychiatric residential treatment void and unenforceable. Lastly, Plaintiff seeks an injunction to prevent any future or ongoing efforts by Microsoft to use and enforce any blanket exclusions of psychiatric residential treatment.
Ruling: The Court granted Defendants’ Motion to Dismiss.
8. Narrative Case Description: On and after October 3, 2009, S.S. was diagnosed with major depressive disorder and required treatment from a residential treatment center. S.S. had to pay for treatment received from the residential treatment center. S.S. completed the internal appeal process and exhausted her administrative remedies.
Defendants’ filed a Motion to Dismiss. Defendants state that the Plan generally covered both inpatient and outpatient mental health treatment for a wide range of mental health conditions, but it contained a narrow exclusion of coverage for services by residential treatment centers (unless the treatment was for substance abuse or an eating disorder, in which case residential treatment is covered). Defendants’ argue that Plaintiff’s Complaint should be dismissed because the residential treatment exclusion that is challenged is valid and permitted under the Parity Act. Defendants state that there is no issue with a plan generally providing coverage for inpatient and outpatient mental health treatment and containing a narrow exclusion for a particular treatment setting (e.g., residential treatment centers). Defendant further argues that Plaintiff’s reliance on a new set of federal parity rules is improper as these new rules were issued after her treatment and do not apply to the Plan at issue.
Plaintiff argues that the Plan’s denial of coverage of her residential treatment services violates the Federal Parity Act. She argues that because the Plan covers services for intermediate facilities such as skilled nursing facilities, including coverage of room and board, it is obligated to cover room and board for those receiving mental health services at residential treatment centers. Plaintiff further argues that the Final Rules implementing the Federal Parity Act clarify the intent for coverage of residential treatment services such as room and board under the former IFRs.
The Court disagreed with Plaintiff, stating that in 2010, when the IFRs were initially published in the Federal Register, the Agencies declined to provide guidance with respect to treatment settings and scope of services. As such, the Court stated that these IFRs do not provide guidance with respect to types of treatment centers within the scope of coverage, and leave open the possibility that coverage plans may exclude certain types of facilities, particularly where there is no analog for medical/surgical benefits. The Court rejected Plaintiff’s argument that the Final Rules, having an effective date of January 13, 2014 and applying to coverage plans after July 1, 2014, merely clarify the IFRs and explain what the Federal Parity Act was intended to cover all along. Rather, the Court agreed with Defendants, who argued that these Final Rules introduce limitations not previously required of coverage plans, and that even if these Final Rules are clarifications, they cannot be applied retroactively.
The Court further concluded that Plaintiff failed to demonstrate that she is entitled to a declaration of future rights or injunctive relief, particularly given that based on changes to the Plan that were made in response to the Final Rules, as of July 1, 2014, the Plan no longer contained the exclusion that she challenged in this case. A such, the Court dismissed all of Plaintiff’s claims.
9. Additional Comments: Plaintiff appealed but later voluntarily dismissed the appeal.
11. Practical Implications and Lessons Learned: None.
12. All Legal Theories Presented in Case: Breach of fiduciary duties under ERISA, violation of Parity Act
13. Successful Legal Theories in Case: None.