Enter to open, tab to navigate, enter to select
Health Plan Exclusion Involving Autism Violated MHPAEA
Practical Law Legal Update w-030-0295 (Approx. 5 pages)
Health Plan Exclusion Involving Autism Violated MHPAEA
by Practical Law Employee Benefits & Executive Compensation
| Published on 09 Mar 2021 • USA (National/Federal) |
In a coverage dispute over autism treatment, the District Court for the Northern District of California held that a health plan's autism-related exclusion for Applied Behavioral Analysis (ABA) therapy violated the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). The court also concluded that the plan's third-party administrator (TPA) was an ERISA fiduciary regarding its denial of benefits under the plan's exclusion.
In a benefits coverage dispute involving treatment for autism, a California district court held that a health plan's autism-related exclusion for Applied Behavioral Analysis (ABA) therapy violated the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) (Doe v. United Behavioral Health, (N.D. Cal. Mar. 5, 2021)). The court also concluded that the plan's TPA was an ERISA fiduciary regarding its denial of benefits under the plan's exclusion.
Plan Excluded Treatments Relating to Autism
The plaintiff-participant brought this action on behalf of her minor child, a covered beneficiary under a self-funded health plan sponsored by the participant's employer who was diagnosed with autism. Although the plan covered autism and Autism Spectrum Disorder (ASD), it contained an exclusion for Applied Behavioral Analysis (ABA) and Intensive Behavioral Therapies (IBT), which are common treatments for children with autism. After the beneficiary received ABA treatment, the participant sought coverage for the treatment. The plan's claims administrator denied coverage, however, citing the exclusion for ABA and IBT treatments.
The participant sued the claims administrator, asserting ERISA fiduciary breach claims based on alleged violations of MHPAEA (see ERISA Litigation Toolkit and Practice Notes, ERISA Fiduciary Duties: Overview and Mental Health Parity: Overview). The parties filed cross-motions for partial summary judgment.
MHPAEA-Related Claims Involve Fiduciary Status and Exclusion's Validity
The district court granted partial summary judgment for the participant, concluding that:
- The claims adminstrator was a functional fiduciary under ERISA (see Claims Administrator Was a Functional Fiduciary Under ERISA).
- The plan's exclusion violated MHPAEA (see Plan Exclusion Violated MHPAEA).
Claims Administrator Was a Functional Fiduciary Under ERISA
The court first addressed whether the claims administrator was an ERISA fiduciary. Because the claims administrator was not a named fiduciary under the governing plan documents, the court focused on whether it was a functional fiduciary (see Practice Note, ERISA Fiduciary Duties: Overview: Functional or Inadvertent Fiduciary).
The claims administrator argued that it was not a functional fiduciary for ERISA purposes because it did not exercise discretion in applying the plan's exclusion (which the employer/plan sponsor had adopted). In rejecting this argument, the court noted that benefit determinations generally are considered fiduciary acts under ERISA. According to the court, the claims administrator's focus on its application of the plan exclusion was too narrow. Because the claims administrator had authority to make the benefit determination, and exercised that authority, the court concluded that it was a functional fiduciary regarding the benefits claim.
The fact that the claims administrator did not have discretion to rewrite the plan did not change the court's conclusion. As the court observed, ERISA "explicitly requires a fiduciary to apply a plan's terms, but only if those terms do not violate ERISA." Accordingly, the court reasoned that the plan terms did not relieve the claims administrator of its other fiduciary duties.
Plan Exclusion Violated MHPAEA
On the merits, the court concluded that the plan exclusion violated MHPAEA by:
- Imposing a separate treatment limit that applied only to a mental health condition (that is, autism).
- Excluding coverage for a primary treatment for autism when there was no comparable exclusion for medical/surgical benefits.
In reaching this conclusion, the court rejected several arguments advanced by the claims administrator.
First, the claims administrator argued that MHPAEA's parity rules did not require the plan to provide specific benefits for autism treatments (29 U.S.C. § 1185a(b)(1)). According to the court, the provision cited by the claims administrator would have allowed the plan not to cover autism. But once the plan chose to cover autism, the court reasoned, that coverage had to meet the parity requirements.
Second, the claims administrator urged the court to apply the doctrine of ejusdem generis to find that, because the exclusion did not limit "the frequency of treatment, number of visits, days of coverage, [or] days in a waiting period," the exclusion was not a treatment limitation within the meaning of implementing regulations (29 C.F.R. 2590.712(a)). The court disagreed, concluding that "zero treatment" was nonetheless a quantitative treatment limitation.
The court also rejected the claims administrator's argument that regulatory language providing that "[a] permanent exclusion of all benefits for a particular condition or disorder…is not a treatment limitation for purposes of this definition" meant that the exclusion was not a treatment limitation (29 C.F.R. 2590.712(a)). The court reasoned that this permanent exclusion language:
- Meant that the plan could have excluded all coverage for autism and related treatments without violating MHPAEA.
- Did not allow the plan to exclude coverage for treatments of a covered condition without meeting the parity requirements.
Finally, the court rejected the claims administrator's argument that MHPAEA's prohibition on plans imposing more restrictive treatment limits for mental health conditions than for medical/surgical conditions applied only to quantitative treatment limitations.
Practical Impact
In recent years, mental health parity compliance has emerged as one of the more challenging aspects of health plan administration. As this decision illustrates, the MHPAEA rules have become a common topic of litigation—including as to whether health plan exclusions for mental health/substance use disorder benefits are comparable to those for medical/surgical benefits. MHPAEA issues also have been addressed in recent legislation (the Consolidated Appropriations Act, 2021 (CAA-21)), under which health plans can now be asked to provide the administrative agencies "comparative analyses" demonstrating parity between MH/SUD and medical/surgical benefits. For more information, see Practice Note, Mental Health Parity Requirements Under the CAA-21. Plans also can expect MHPAEA compliance to be addressed by the administrative agencies in the enforcement context.
The ERISA fiduciary holding in this case underscores that MHPAEA compliance is a concern not only for plan sponsors (as a matter of plan design) but for TPAs and other service providers as well in administering plan provisions concerning mental health parity.