In a coverage dispute involving a wilderness therapy program, a Utah district court found that a group health plan's blanket exclusion for wilderness therapy programs violated the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) (Jonathan Z. v. Oxford Health Plans, (D. Utah July 7, 2022)).

The plaintiff in this case, a covered dependent in his father's group health plan, received treatment for anxiety, depression, cannabis use disorder, and other conditions at residential treatment facilities that provided wilderness therapy (see Practice Note, Mental Health Parity: Health Plan Exclusions for Wilderness Therapy). A few years later, the dependent also received treatment at a transitional living program for young adults.

The plan provided coverage for care at residential treatment facilities if the treatment was medically necessary, preauthorization was obtained for treatment at out-of-network facilities, and filing deadlines were met regarding claims. The plan authorized the claims administrator to implement guidelines for determining whether treatment was medically necessary. Under guidelines adopted by the claims administrator, medical necessity determinations involved evaluating (among other factors) why certain symptoms or conditions could not be addressed in a less intensive setting.

After the claims administrator denied coverage for almost all of the dependent's claims, the dependent sued the administrator in federal district court for benefits under ERISA and for violations of MHPAEA (see ERISA Litigation Toolkit and Practice Notes, ERISA Litigation: Causes of Action and Remedies Under ERISA Section 502 for Benefit and Fiduciary Breach Claims: Claims for Benefits Under Plan Terms (ERISA Section 502(a)(1)(B)) and Mental Health Parity: Overview).

Regarding the dependent's ERISA benefit denial claim, the district court first addressed the applicable standard of review for reviewing the claims administrator's denials (see Practice Note, ERISA Litigation: Standard of Review: Two Applicable Standards of Review in Benefits Disputes). The district court concluded that the nondeferential (de novo) standard of review applied because the claims administrator violated requirements under the DOL's claims regulations by changing its rationales for denying coverage for the dependent's wilderness therapy treatment. Whereas the administrator initially cited the dependent's failure to timely file and obtain preauthorization as reasons for denying the claims, it later applied a plan exclusion for experimental treatment in denying coverage for the wilderness therapy treatment.

Even reviewing the claims de novo, however, the district court concluded that the dependent was ineligible for plan benefits. The court reasoned that the dependent's evidence regarding medical necessity failed to show that:

As a result, the court ruled for the administrator regarding the dependent's ERISA challenge to the administrator's denial of benefits.

The court also addressed whether the plan's blanket exclusion for wilderness therapy violated MHPAEA (see Mental Health Parity (MHPAEA) Toolkit). Accepting the dependent's argument, the court concluded that—for parity analysis purposes—skilled nursing facilities were the medical/surgical analog to residential treatment centers for MH/SUD conditions. Next, the court noted that there was no evidence that the administrator would deny benefits in a skilled nursing facility (on the medical/surgical side) merely because the care occurred in a wilderness setting. According to the court, this tended to support the dependent's argument that the administrator had created a wilderness treatment exclusion that applied only to behavioral health programs—in violation of MHPAEA.

The court also rejected the administrator's argument that the plan could not provide wilderness therapy coverage because the coverage failed the plan's medical necessity requirement. The court reasoned that the administrator had not shown that all wilderness therapy programs would fail the medical necessity requirement. As a result, the court concluded that the administrator needed to conduct an individualized assessment of a given wilderness therapy facility to determine whether it was medically necessary under the plan. Because the administrator had failed to do so, it could not rely on the plan's medical necessity exclusion.

For these reasons, the court concluded that the plan's blanket wilderness therapy exclusion was a facial violation of MHPAEA (see Practice Note, Mental Health Parity: Health Plan Exclusions for Wilderness Therapy: Type One: Facial Violations of MHPAEA (Categorical Exclusions)).

The dependent also argued that the claims administrator violated MHPAEA by:

(See Practice Note, Mental Health Parity: Nonquantitative Treatment Limitations (NQTLs): As-Applied Claims Under MHPAEA.)

In other words, the dependent asserted that by requiring him to present a danger to himself or others (that is, suicidal or homicidal ideation), the administrator required an elevated severity of symptoms that it did not require for analogous medical/surgical benefits.

Agreeing with this argument, the court observed that the plan's skilled nursing facility guidelines (on the medical/surgical side) required participants to present with no acute care needs to receive coverage. This meant that the administrator denied coverage to medical/surgical participants who displayed acute hospital care needs. By contrast, the court emphasized, the administrator had denied mental health care for a participant because he failed to present acute care needs. (The administrator's letter denying wilderness therapy coverage noted that the participant was not "thinking about hurting [himself] or others.")

As a result, the court held that the plan's requirements for receiving MH/SUD benefits were applied more stringently, in violation of MHPAEA.

In sum, the court found two MHPAEA violations—but not an ERISA benefits denial violation. Specifically, the court entered fact findings that:

However, because the parties did not specify the appropriate equitable remedies for the MHPAEA violations, the court permitted supplemental briefing on this issue.

This case reflects some of the more common litigation exposure points in the MHPAEA context—including the risk of both facial and as-applied violations of the parity requirements. Fortunately for the defendant-administrators in this litigation, however, the plaintiff-dependent apparently did not work through what the resulting remedies should be for the plan's parity violations. That question will remain to be answered in the next phase of this litigation.