1. Case Name: Smith v. United States OPM, United States District Court for the Eastern District of Pennsylvania, February 26, 2014
2. Type of Treatment Services Denied: Residential Treatment
- Counsel for Plaintiff: Gregory B. Heller, Young Ricchiuti Caldwell & Heller, LLC
- Counsel for Defendant: Gregory B. David, Margaret L. Hutchinson, Mark J. Sherer, U.S. Attorney’s Office
4. Format: Published Memorandum and Order
- ERISA Claim? No
- Class Action or Individual Action? Individual Action
- Defendant? Plan Administrator
- Type of Insurance Plan? Large Employer Group Insurance
- Type of Coverage Denial? Medical Necessity
6. Legal Pointer: The court found that remand to OPM was appropriate as it will allow OPM to consider in more depth whether IBC’s plan violates MHPAEA, determine whether and how MHPAEA affects his appeal from the denial of benefits, and develop an administrative record.
7. Legal Issues and Causes of Action: Smith brings this action against OPM to challenge its decisions (1) to deny him benefits for a residential addiction treatment program, and (2) to approve federal health insurance plans, including his own, that do not cover non-hospital residential addiction treatment facilities. Count I of the Complaint, challenging the denial of benefits, is brought under 5 C.F.R. § 890.107; count II challenges OPM’s decision to enter into the allegedly unlawful insurance contract, which is alleged to be “final agency action” under 5 U.S.C. § 706. Smith argues that his health insurance plan violates the MHPAEA because it excludes residential treatment facilities. Specifically, Smith contends that the MHPAEA requires coverage for non-hospital addiction treatment at residential facilities because inpatient addiction treatment encompasses two very different care settings: (a) care that is provided in an inpatient hospital setting (such as a general acute care hospital or a specialty hospital), and (b) care that is provided in an inpatient non-hospital setting.
- Ruling: The Court denied Defendant’s Motion to Dismiss and granted, in part, Defendant’s Motion for a Protective Order Staying Discovery.
8. Narrative Case Description: Smith brings this individual suit against OPM as the administrator of his large employer group insurance (FEHBP). Smith suffers from addiction and was admitted to an inpatient non-hospital addiction treatment facility for detoxification. He was then transferred to a residential treatment program; however, this claim was denied based on the plan’s exclusion of residential treatment programs and because the treatment was not through a preferred provider. Smith brings the action against OPM based on their decision to deny him benefits under 5 C.F.R. § 890.107 and based on their decision to enter into the allegedly unlawful insurance contract (alleged to be “final agency action”) under 5 U.S.C. § 706. Smith challenges his health plan’s decision to deny his claim for residential treatment and alleges that the plan violates MHPAEA. Defendant counters this argument by saying that the plan does not violate MHPAEA’s treatment limitation provision. Defendant argues that MHPAEA does not require every health insurance plan to provide mental health benefits. The Court does not find this reasoning persuasive in that MHPAEA does require parity for plans that do provide some mental health benefits.
Defendant also argues that MHPAEA is not violated by an exclusion of residential treatment facilities. The Court finds that the plan offering “some benefits” is not enough to satisfy MHPAEA, but does not find enough evidence to demonstrate that the plan’s exclusion is more restrictive than limitations that apply to medical/surgical benefits.
Another argument offered in support of Defendant’s position is that MHPAEA’s prohibition on treatment limitations is not violated because exclusions are expressly excluded from parity analysis. This argument, the Court finds, is based on an overly broad interpretation of the text.
OPM also argues that Smith cannot bring suit because Congress has not waived sovereign immunity. The Court does not find this argument persuasive as OPM relies upon FEHBA regulations as its evidence – OPM also drafted these regulations.
The Court does grand OPM’s Motion for a Protective Order Staying Discovery. Under the APA, the district court will rely upon the record developed at the administrative level. If the record is incomplete, it is generally remanded to the administrative agency for additional supplementation. The Court finds that it is appropriate to remand in this case.
9. Additional Comments: None
11. Practical Implications and Lessons Learned: The Court again struck down a categorical exclusion based on the language of MHPAEA.
12. All Legal Theories Presented in Case: Violation of MHPAEA
13. Successful Legal Theories in Case: Violation of MHPAEA