In a mental health parity dispute that resulted in benefits litigation under ERISA, the US Court of Appeals for the Ninth Circuit held that a group health plan could not permit coverage for inpatient room and board costs at a skilled nursing facility (in the medical/surgical context) while denying inpatient room and board costs at an inpatient residential treatment facility (for mental health) (Danny P. v. Catholic Health Initiatives, (9th Cir. June 6, 2018)).

The dependent in this case was covered by an employer's self-funded group health plan. Although the plan provided some coverage for treatment of mental health conditions at residential treatment facilities, it did not cover costs for room and board. For treatment of medical or surgical issues at skilled nursing facilities, however, the plan covered room and board and ancillary services. The dependent was admitted to a residential treatment program, where she received treatment for nearly a year, and sought to have the plan cover this treatment and related room and board costs. The plan denied room and board coverage.

After exhausting the plan's administrative claims procedures, the dependent's guardians sued the plan under ERISA for wrongful denial of benefits (see Practice Notes, ERISA Litigation: Exhaustion of Plan Claims Procedures and ERISA Litigation: Causes of Action Under ERISA Section 502, and ERISA Litigation Toolkit). The dependent and her guardians sued the plan for violations of ERISA and the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) (29 U.S.C. § 1185a; see Practice Notes, Mental Health Parity: Overview and Mental Health Parity: NQTLs and Other Issues). The district court granted summary judgment in the plan's favor, concluding that the plan's exclusion for room and board charges did not violate the MHPAEA, as interpreted in interim final regulations (IFRs) (, at *6 (W.D. Wash. June 30, 2016)).

On appeal, the Ninth Circuit held that the MHPAEA prevented the plan from:

The Ninth Circuit acknowledged that the IFRs did not definitively address the scope of services issue (that is, regarding residential treatment facilities versus skilled nursing facilities) for the period of the dependent's residential treatment facility stay. In the court's view, however, the IFRs strongly indicated that a plan could not allow room and board costs for an inpatient stay at a skilled nursing facility while denying them for an inpatient stay at a residential treatment facility (see 75 Fed. Reg. 5410, 5413 (Feb. 2, 2010)). The court added that final regulations addressing mental health parity – though they did not apply retroactively to reach this case – expressly stated that coverage at residential treatment facilities must be like the coverage at skilled nursing facilities. As a result, the Ninth Circuit concluded that the plan should not have denied coverage because the dependent's stay was at a residential treatment facility.

This decision is one of the latest in a burgeoning body of cases involving mental health parity claims – some successful and others not. (For an example of the latter, see A.H. v. Microsoft Corp. Welfare Plan, (W.D. Wash. June 5, 2018) (rejecting a covered dependent's claim that a plan's wilderness program exclusion violated the MHPAEA).) As the Ninth Circuit observes, final regulations addressing mental health parity make intermediate services such as residential or intensive outpatient treatment subject to the MHPAEA (see Practice Note, Mental Health Parity: NQTLs and Other Issues: Scope of Services (Continuum of Care: Residential Treatment Centers).

Mental health parity compliance also continues to be an administrative compliance priority. In April, the Department of Labor (DOL) made available a collection of guidance addressing the MHPAEA (see Legal Update, DOL Mental Health Parity Guidance Includes Proposed FAQs and Updated Self-Compliance Tool). Last week, the DOL also issued a disclosure guide for consumers involving mental health and substance use disorder benefits.