In Julie L. v. Excellus Health Plan, Inc., 2020 U.S. Dist. LEXIS 47734 (W.D.N.Y. March 19, 2020), a New York district court rejected the plaintiff's claims that a health insurer improperly imposed stricter medical necessity requirements for treatment at residential mental health centers than for stays at inpatient skilled nursing facilities.

The case arose under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (the "Parity Act") (29 U.S. C. § 1185a), which seeks to eliminate disparities in health insurance coverage for mental health as compared to other medical or surgical conditions. The Parity Act requires group health plans to provide the same aggregate benefits for mental healthcare and substance abuse treatment as they do for medical and surgical benefits.

The Parity Act technically amended ERISA, and is enforced by seeking equitable relief through 29 U.S.C. § 1132(a)(3).

In recent years, several claimants have alleged that plans violated the Parity Act by applying more stringent medical necessity criteria when evaluating claims for mental health/substance abuse treatments than they would for medical/surgical treatments. A cluster of recent lawsuits has alleged that plans denied benefits for intermediate level treatment at residential mental health treatment facilities based on criteria that applies to acute-level medical care, and further, that the plans would not apply those same standards when evaluating coverage for subacute treatment in the medical/surgical context.

That was the case in Julie L., where the plaintiff's parents sued a group health plan (the "Plan") on behalf of their minor child, who had a history of mental health problems, after the plan denied coverage for her treatment at two wilderness therapy programs in Idaho. The parents alleged, inter alia, that the Plan covered skilled nursing facilities in the medical context for "subacute" symptoms, but in the mental health context the Plan covered analogous residential treatment facilities only for more serious "acute" symptoms—often involving the serious risk of harm to self or others—in violation of the Parity Act.

The court disagreed that the Plan imposed stricter requirements for residential mental health treatment. In so holding, the court analyzed the specific Plan language and noted that it required all benefits to be "medically necessary," and further, it imposed the same set of medical necessity criteria to both mental health residential treatment programs and skilled nursing facilities. Critical to the coverage determination for both was whether the patient's symptoms could be treated in a less intensive setting.

In addition, the court noted that the Plan imposed neutral requirements for the types of mental health and skilled nursing facilities that would be covered. Residential treatment facilities must be defined under New York's Mental Hygiene Law, while skilled nursing facilities must be accredited by a national accrediting agency or Medicare.

"In light of the above, there is no evidence that the Plan, on its face, imposes more stringent requirements on admission to residential treatment facilities in comparison to [skilled nursing facilities]," the court concluded in granting the Plan's motion for summary judgment.

The Julie L. case demonstrates that Parity Act challenges are usually plan specific, hinging on both specific plan language and how plan administrators have applied coverage grants and exclusions in the mental health and medical surgical contexts.