Coverage of Wilderness Treatment Program at Issue in Mental Health Parity Dispute

Practical Law Legal Update w-015-9445 (Approx. 5 pages)

Coverage of Wilderness Treatment Program at Issue in Mental Health Parity Dispute

by Practical Law Employee Benefits & Executive Compensation

Background

The three children in this class action litigation, who were covered dependents under an employer-sponsored insured health plan, each suffered from mental health issues and received treatment at a state-licensed outdoor youth treatment program that was authorized to provide mental health services. The plan's insurer denied coverage for the children's treatment and, on appeal, cited a plan exclusion for health resorts, recreational programs, camps, wilderness programs, outdoor skills programs, relaxation or lifestyle programs, and services provided in conjunction with (or as part of) those programs.

The children's parents, on behalf of a putative class, sued the insurer for benefits and fiduciary breach under ERISA, asserting that the coverage denials violated the MHPAEA and the ACA (29 U.S.C. § 1185a; 42 U.S.C. § 300gg-5; see Practice Notes, Mental Health Parity: Overview, Mental Health Parity: NQTLs and Other Issues, and Affordable Care Act (ACA) Overview). The insurer moved to dismiss.

Outcome

The district court denied the insurer's motion to dismiss as to the MHPAEA claim, but granted the motion to dismiss the ACA claim. The court concluded that:

The plan's exclusion unambiguously applied to services provided at the outdoor youth treatment program.
The complaint sufficiently alleged that the exclusion violated the MHPAEA.
The exclusion did not violate the ACA.

Mental Health Parity Claim Survived Dismissal

Regarding the MHPAEA claim, the court framed the issue as whether the plan's exclusion for wilderness program treatment applied equally to medical/surgical benefits and MH/SUD benefits. The parties disagreed regarding how the parity analysis should be structured. The insurer argued that the plan's exclusion applied both to medical/surgical benefits and MH/SUD benefits provided at a wilderness program "type" of facility. For example, the insurer asserted that the exclusion would apply to treatment at a diabetes camp. The insurer argued that because the plan's wilderness program exclusion was categorical (that is, wilderness programs for MH/SUD and medical/surgical treatment would both be excluded), the participants had failed to raise a viable MHPAEA claim.

In contrast, the participants asserted that because the plan covers medical/surgical benefits provided at other inpatient treatment settings (for example, rehabilitation hospitals and skilled nursing facilities), its wilderness treatment exclusion – which the participants characterized as an equivalent type of treatment setting – violated the MHPAEA. In support of this position, the participants cited a case concluding that a plan violated the MHPAEA by:

Covering skilled nursing facilities, which did not include coverage of MH/SUDs.
Not covering residential treatment facilities that treated only MH/SUD benefits.

(Joseph F. v. Sinclair Servs. Co., 158 F. Supp. 1239 (D. Utah 2016); see also Legal Update, In Mental Health Parity Dispute, Plan Must Cover Room and Board at Residential Treatment Facility.)

Ruling in the participants' favor for motion to dismiss purposes, the court concluded that it appeared to be sufficient for stating a MHPAEA claim to allege, as the participants did, that a mental health treatment is categorically excluded though a corresponding medical treatment is not.

ACA Claim Dismissed

In another claim, the participants alleged that the wilderness treatment exclusion violated an ACA provision prohibiting health insurers from discriminating, with regard to participation under the plan or coverage, against any health care provider acting within the scope of its license or certification under applicable state law (42 U.S.C. § 300gg-5; see Article, Nondiscrimination in Health Care Providers Under the ACA).

In dismissing this claim, the district court concluded that:

The ACA provision does not prevent insurers from applying plan exclusions.
There is no private right of action under the provision.

Practical Impact

This case addresses the parties' arguments at an early stage procedurally, and without the benefit of full discovery. However, it aptly reflects the challenges, complexity, and uncertainty of litigating mental health parity disputes. One of those challenges, for example, is determining the scope of benefit types that are compared for parity purposes. For example, whereas the insurer in this case favors a more limited parity analysis that compares medical/surgical and MH/SUD coverage in the wilderness program setting, the participants would compare medical/surgical and MH/SUD benefits using a broader set of inpatient treatment settings (including skilled nursing facilities, which the plan covered on the medical side). As the court notes, mental health parity claims represent a growing body of case law, and this area was the subject of recent DOL guidance (see Legal Update, DOL Mental Health Parity Guidance Includes Proposed FAQs and Updated Self-Compliance Tool).

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