1. Case: DONALD WEDEKIND, et al. V. UNITED BEHAVIORAL HEALTH and United Health Care Insurance Company, Civil No. 1:07-CV-0026TS (D. Utah decided Jan. 24, 2008),
- Counsel for Plaintiffs:
- Bradley R. Sidle, James L. Harris, Brian S. King; Brian S. King
- Colin P. King, Edward B. Havas; Dewsnup King & Olsen
- Counsel for Defendants:
- August A. Imholtz, III, Michael J. Prame, Thomas F. Fitzgerald; Groom Law Group
- John E. Hansen; Scalley Reading Bates Hansen & Rasmussen
3. Format: Published Memorandum Decision and Order Granting in Part Defendant’s Motion to Dismiss.
- Type of Treatment Services Denied: Plaintiff’s claim for residential treatment for eating disorder was denied.
- ERISA Claim? Yes.
- Class Action or Individual Action? Individual Action
- Defendant: Employer group health plan. United Behavioral Health and United Healthcare Insurance Company (United).
- Type of Insurance Plan: Not specified as to whether employer was large or small.
- Type of Coverage Denial: Administrative denial. United denied coverage for such services based on an exclusion in the benefit plan for residential treatment services
- Causes of Action: Plaintiffs asserted their claims under ERISA and Nebraska state parity law for mental illness.
5. Legal Pointer: ERISA, the Employee Retirement Income Security Act, is an important law for parity enforcement because ERISA is a federal law that generally governs some types of health insurance plans, while state law generally governs other types of health insurance plans. Certain aspects of plans can be regulated either by state or federal law. If ERISA does govern a health plan, then in some instances, ERISA may override (preempt) state law. In other instances, such as state statute that requires coverage of mental health benefits, the state law may apply to regulate that plan.
6. Legal Issues & Causes of Action: ERISA preemption. Plaintiffs brought suit against United for denial of claims for residential treatment, and seek payment under the Nebraska state parity law for mental illness stating that policy excluding residential treatment violates Nebraska state law. Plaintiffs also seek declaratory and injunctive relief against United to stop United from denying future claims based on residential treatment services exclusion in policy. United moved to dismiss complaint for failure to state a claim.
- Federal & State Laws: ERISA, 29 U.S.C. Chapter 18; Nebraska state parity law for mental illness; NEB.REV.STAT. § 44–791, § 44–793(1), § 44–793(2), § 71–423.
- Ruling: United’s Motion to dismiss denied; United’s Motion to dismiss Jane Wedekind for lack of standing granted. The district court found that Nebraska state law was not preempted by ERISA; that the Nebraska state parity law for mental illness requires coverage for treatment at residential treatment facilities; and, that the policy may allow for coverage for treatment at the center where Plaintiffs’ daughter was treated.
7. Narrative Case Description: Plaintiffs brought suit against United for denial of claims for residential treatment, and seek payment under the Nebraska state parity law for mental illness. Plaintiffs also seek injunction against United to stop United from denying future claims based on residential treatment services exclusion in policy. Plaintiffs included Donald and Jane Wedekind, and their daughter.
The daughter was admitted to a Nebraska hospital in 2003 because she was very close to heart failure due to an eating disorder. At the hospital the daughter was diagnosed with major depression. After being discharged, the daughter was readmitted to the hospital three times. Doctors strongly recommended residential treatment, and the daughter was enrolled at an eating disorder treatment center in Utah and treated there for eight months. United told plaintiffs that the policy did not cover inpatient treatment at residential treatment facilities, and denied payment because of this exclusion in the policy.
The Plaintiffs assert that United’s policy excluding residential treatment services violates Nebraska parity law. The Plaintiffs brought their claims under ERISA and Nebraska state law.
United filed a motion to dismiss these claims stating that the Nebraska parity law is preempted by (overridden by) ERISA, that Nebraska law does not require coverage of the services the daughter received, and that the policy does not require coverage for the treatment the daughter received, among other reasons. United also filed a motion to dismiss Jane Wedekind as a plaintiff arguing that Jane Wedekind lacks standing.
The district court found that Nebraska state law was not preempted by ERISA because it is a state statute that mandates certain benefit terms and thereby regulates insurance. As such, the court determined that the Nebraska state parity law for mental illness requires coverage for treatment at residential treatment facilities, and that the policy may allow for coverage for treatment at the center where the daughter was treated. The court found that Jane Wedekind does not have standing.
8. Additional Comments: None
10. Practical Implications and Lessons Learned: ERISA law and ERISA preemption is a complex and important component of parity cases because ERISA may or may not preempt state laws that also govern insurance plans. While ERISA preemption is a broad concept, certain types of state laws that “regulate insurance” are not preempted by ERISA (or are “saved” from ERISA preemption). As this case supports, courts generally find that state statutes requiring certain benefit terms, such as mental health parity laws, are not preempted by ERISA, and may serve as a basis for a lawsuit.
11. All Legal Theories Presented in Case: State parity law requirements, ERISA preemption, State laws regulating insurance saved from ERISA preemption.
12. Successful Legal Theories in Case: State parity law requirements, state laws regulating insurance saved from ERISA preemption.