- Filing. Published in U.S. District Court for the District of Massachusetts on March 30, 2020 (Case no. 1:18-cv-12278-ADB).
- Background. Plaintiffs’ daughter suffers from depression, anxiety, and obsessive-compulsive disorder, suicidal ideation – among other issues. After being hospitalized and transferred to a residential treatment center in Utah for adolescent girls, Defendants denied payment for the RTC care after 16 days based on lack of medical necessity. Plaintiffs were enrolled in a fully insured plan and paid over $185,000 in treatment for the daughter. The adverse benefit determination was upheld during appeal based on the medical necessity denial and because the RTC provider was not a “covered type of provider”. Regarding the latter, the “Defendants determined that (the RTC) was ‘an intermediate residential facility with subacute treatment, which is not a covered type of provider on your health plan.’” Using InterQual criteria, the Defendants asserted that coverage was rightfully denied “because (1) the treatment was not medically necessary; (2) (the RTC) would be excluded as an educational, vocational, or recreational setting; and (3) (the RTC) is not a covered provider.” Plaintiffs filed several ERISA claims, both as individuals and as representatives of a putative class of similarly situated individuals, covering a 1132(a)(1)(B) action to recover benefits based on a breach of fiduciary duty; 1120(a)(3) Parity Act violation claim seeking equitable relief; and 1132(g)(1) claim seeking attorney fees. Defendants filed a 12(b)(6) motion to dismiss all three claims.
- Holding. The Court denied the motion to dismiss all three claims based on the observation that the Plaintiffs have “effectively pled that the Defendants provide coverage for subacute medical and surgical treatment, but deny coverage for comparable mental health treatments, and that (the daughter’s) claim was denied because she was seeking subacute mental health treatment.” Judge Allison Burroughs added “The Plaintiffs are therefore entitled to discovery regarding whether the Defendants covered analogous medical and surgical treatment.”
- Analysis. Judge Allison Burroughs noted:
In 2003, the Massachusetts Commissioner of Insurance and the Commissioner of Mental Health issued Bulletin 2003-11, which advises insurers that intermediate mental health services must cover “acute residential treatment, partial hospitalization, day treatment and crisis stabilization licensed or approved by the Department of Public Health or the Department of Mental Health… In 2009, the Commissioner additionally advised that insurers do not need to cover “[t]uition-based programs that offer educational, vocational, recreational or personal development activities, such as a therapeutic school.”
The Court noted that the first two counts of the legal action need to proceed to see if the denial of care could be based on the educational exclusion. It also noted that they could not dismiss the third count until the case moved forward. In terms of addressing whether both health plan defendants were potentially liable, the judge noted that would be determined based on the facts of the case.