2019 and Earlier Parity Case Highlights

Violation Category: In-patient treatment at a residential treatment facility was denied due to plan exclusion.

Short Description: Plaintiff’s daughter was admitted to a hospital on the verge of heart failure due to an eating disorder. After being discharged, she was later readmitted three times. Treating providers recommended additional residential treatment due to “severe medical risk.” 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.

Appeal/Disposition: Defendant’s motion to dismiss was denied.

Violation Category: There are four named Plaintiffs: Beye, Byram, Drazin and Sedlak. Three of the Plaintiffs’ policies cover treatment for biological based mental illness (BBMI) at parity with other illnesses, as required by the New Jersey Mental Health Parity Law. Three policies also contain limitations for non-BBMIs (Byram, Beye and Drazin). Plaintiffs Beye and Drazin received coverage for the eating disorders as non-BBMIs but exhausted coverage. Plaintiffs Byram and Sedlak’s claims were denied as not medically necessary.

Short Description: The Court first considers whether to abstain from considering Plaintiffs claims pursuant to the holding of Burford v. Sun Oil Co. Relying upon the holding in DeVito v. Aetna, the Court decides that abstention is not appropriate in this case. The Court then considers whether to dismiss the claims of Plaintiff Byram, Beye and Sedlak for failure to appeal their adverse IURO decisions to the appellate division but find that beneficiaries of ERISA plans are not required to appeal an adverse IURO ruling before filing suit. Likewise, non-ERISA plaintiffs are required to appeal adverse IURO rulings before filing suit. Next, the Court considers whether to dismiss all claims brought by Plaintiffs Byram and Sedlak whose claims were deemed not medically necessary. The Court states that the Plaintiffs must demonstrate a connection between the claims and the Defendant’s improper treatment of eating disorders, but that dismissal at this stage is not appropriate. The Court then considers whether ERISA preempts the common law and state claims. The Court holds that based on the language, the ERISA plaintiffs may pursue their contractual claim to benefits but that the Parity Law claims are dismissed and preempted. The Court then moves on to the Plaintiffs Parity Law Claims. The Plaintiffs argue for an implied private cause of action. The Court disagrees and grants Defendant’s motion to dismiss these claims. In so deciding, the Court considers the test for whether a statute provides an implied cause of action, “whether: 1) the Plaintiff is a member of the class for whose special benefit the statute was enacted, 2) there is any evidence that the Legislature intended to create a private right of action under the statute, and 3) it is consistent with the underlying purposes of the legislative scheme to infer the existence of such a remedy.”

Appeal/Disposition: The Defendants motion to dismiss is denied in part and granted in part.

Violation Category: Plaintiffs DeVito and Meiskin have daughters who suffer from eating disorders. Plaintiff Meiskin’s daughter’s coverage was cut off when it exceeded the contractual limitations for coverage of non-biologically based mental illness

Short Description: Defendants argue that Plaintiffs state law claims are preempted under ERISA § 502(a) and §514(a). The Court notes that Plaintiffs appear to allege a private right of action under the NJ Parity Act. In finding that the claims are, in fact, preempted by ERISA, the Court states that the savings clause does not preclude preemption and that because Plaintiffs could have brought their claim under ERISA and there is no other independent legal duty implicated by the Defendants actions that the claims are properly preempted.

Appeal/Disposition: The Defendant’s motion to dismiss was granted as to the Parity Law claim and the punitive damages claim but otherwise denied.

Violation Category: Care rendered at a residential treatment facility was not covered under the terms of plaintiff’s plan.

Short Description: Plaintiff suffers from anorexia nervosa and needed care at an in-network facility. Plaintiff had been receiving intensive outpatient treatment, however her doctors determined that this care was not sufficient. When she arrived at a residential treatment facility she was at 65% of her ideal body weight. Less than a month later, she had to have a feeding tube inserted because her caloric level needed to gain weight was so high. In examining the case, the Court first considers whether the treatment received at Castlewood is covered under the plan. The Plaintiff argues that the treatment is covered because 1) the plan covers residential care, and 2) that her care at Castlewood was care received at a Skilled Nursing Facility (SNF). The Court rejects both arguments due to the clear language of the plan language stating that residential care is not covered and that Castlewood cannot qualify as a SNF. The Court then considers the impact of the California Mental Health Parity Act. In holding that the care must be covered, the Court states that the Mental Health Parity Act requires a plan provide all medically necessary treatment for severe mental illnesses. Further, the Court finds that here, Harlick’s care was medically necessary.

Appeal/Disposition: Appellate court reversed the judgment of the district court.

Violation Category: Claims for occupational and physical therapy were denied. Initially, the payer had paid claims for 22 months. Claims were then denied based on a plan exclusion of educational or developmental services or supplies.

Short Description: Plaintiff’s son suffers from pervasive developmental disorder (PDD) that has caused gross delays in his development of motor skills and other neurological and muscular problems. His condition also results in son’s low muscle tone and weakness with hypermobile joints that render him unable to do activities such as holding a pen or throwing a ball. He also has problems swallowing as he is unaware of where his tongue is in his mouth. He also has visual and auditory processing problems, severe problems with his balance, and is hypersensitive to touch. His treating providers recommended physical and occupational therapy, which is standard treatment for a child with PDD. At issue before the Court is whether the Legislature intended to bar the only effective treatment for PDD when it passed the parity legislation. In examining the intent of the Legislature, the Court finds that the intent of the Parity Act is to “provide coverage for biologically based mental illness under the same terms and conditions as provided for any other sickness under the contract.” Ultimately, the Court finds that “the Legislature could not have intended that the principal treatments for developmental disabilities be excluded from coverage simply because those treatments differ in their essential nature.”

Appeal/Disposition: Exclusion was found to be invalid under MHPAEA

Violation Category: Plaintiff’s daughter was hospitalized for 15 days and required additional residential treatment. Plaintiff requested pre-authorization, which was denied, and continued appealing the decision. Plan administrators continued to deny the claim based on the fact that residential treatment for anorexia nervosa was not covered by the plan. Plaintiff appealed through both the Plan and to OPM – OPM upheld the Plan’s denial.

Short Description: Plaintiff argued the Plan was acting in violation of FEHBA, and state and federal parity laws. Defendant OPM argued that the Court lacked jurisdiction over the claimed violation of CA Mental Health Parity Law. The Court agrees with this argument in that there is no explicit waiver by Congress allowing OPM to be sued for violations of this Act. Defendant also argued that the Court lacked jurisdiction over the claimed violation of MHPAEA due to sovereign immunity. MHPAEA did not amend FEHBA, meaning that those plans are under no requirement to comply with MHPAEA requirements. Even though OPM voluntarily decided to require plans to follow MHPAEA, the action of an agency does not create an effective waiver. Further, Congress did not consent to allow the government to be sued for violations of MHPAEA.

Appeal/Disposition: The Plaintiff’s motion for summary judgment was denied. The Defendant’s motion for summary judgment was granted.

Violation Category: The two Plaintiffs suffer from bulimia and anorexia nervosa. They sought residential treatment for their eating disorders, but their health plans did not provide coverage for this treatment.

Short Description: Plaintiffs were both enrolled in health plans that cover mental illness, but exclude residential treatment. For both Plaintiffs, residential treatment was deemed medically necessary and residential treatment is widely seen as one of the most effective treatments for eating disorders. The Plaintiffs argue for a broad reading of the Parity Act’s “medically necessary treatment” language that includes residential treatment for anorexia and bulimia because there is no treatment analog for physical illnesses. By not adopting this reading, the Plaintiffs argue that the trial court failed to take into account the legislature’s goal of achieving parity. The Court declines to hold that parity mandates identical coverage for mental and physical illness.

Appeal/Disposition: The Court reverses the judgment of the trial court and finds that the language and background of the Parity Act require coverage for residential treatment of anorexia and bulimia.

Violation Category: Plaintiff’s 16-year old daughter had been hospitalized 9 times for acute inpatient care to treat her mental illness (PTSD, recurrent severe major depressive disorder and anorexia nervosa). Physicians had recommended she be transferred to a long-term residential treatment center. Plaintiff called to obtain preauthorization, Defendant denied based on the residential treatment center (RTC) exclusion in the plan. Plaintiffs claim this exclusion violates ERISA, which requires Parity. Defendant moved to dismiss on the ground that the statute did not apply to “treatment settings” during the time period at issue.

Short Description: Defendant argued that the federal Parity Act does not apply to nonquantitative treatment limitations, contrary to both the Interim and Final Rules, based on noscitur a sociis (questionable words and phrases in a statute may be ascertained by reference to the meaning of words and phrases associated with it) and ejusdem generis (where general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words). Defendant uses these concepts to argue that the phrase “other similar limits” only applies to numerical limitations. The Court did not agree with this argument. In the alternative, Defendant argues that if the federal Parity law does cover nonquantitative treatment limitations, it does not apply to treatment settings. This is based on the Departments declining to address the scope of services in the interim final rules. The Court again returned to the fact that the RTC exclusion had no similar basis for medical surgical benefits (i.e., if an elderly person broke their hip and needed nursing care in an RTC this would not necessarily be excluded).

Appeal/Disposition: Court denies the plan administrator’s motion to dismiss.