Mental Health Parity Act: A Litigation Update

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The Federal Mental Health Parity and Addiction Equity Act (the “Federal Parity Act”), like many similar state parity laws, mandates that financial requirements (e.g., copayments, coinsurance, or deductibles) and treatment limitations (e.g., limitations on the frequency of treatment, number of out-patient visits, or amount of days covered for in-patient stays) applicable to mental health benefits generally can be no more restrictive than the requirements and limitations applied to medical benefits. These parity laws, which are enforceable under ERISA, have been at issue in an increasing number of cases. Three district courts, all of which are located within the Ninth Circuit, have released rulings over the past few weeks.

In A.F. v. Providence Health Plan, No. 13-cv-776, 2014 U.S. Dist. LEXIS 109507 (D. Or. Aug. 8, 2014), a federal district court in Oregon granted plaintiffs’ partial motion for summary judgment, finding that Providence’s “Developmental Disability Exclusion” (which excludes coverage for services “related to developmental disabilities, developmental delays, or learning disabilities”) violated both the Federal Parity Act and the Oregon Mental Health Parity Act. Plaintiffs alleged that, under the Developmental Disability Exclusion, Providence routinely denied coverage for applied behavior analysis therapy for participants and beneficiaries diagnosed with autism spectrum disorders. Because the Developmental Disability Exclusion applied to services related to developmental disabilities (which are considered mental health conditions), yet did not apply to services related to medical or surgical conditions, the court found that the exclusion is prohibited by the plain text of both statutes.

Similarly, in R.H. v. Premera Blue Cross, No. 13-cv-0097, 2014 U.S. Dist. LEXIS 108503 (W.D. Wash. Aug. 6, 2014), plaintiffs commenced a class action lawsuit alleging that Premera, in violation of Washington’s Mental Health Parity Act, imposed treatment limitations on applied behavior analysis and neurodevelopmental therapy that were not in parity with the coverage provided for services related to medical conditions. The court granted plaintiffs’ unopposed motion for preliminary approval of class settlement, finding that the proposed agreement was fair, reasonable, and adequate. Pursuant to the class settlement, Premera promised to remove the challenged treatment limitations and also to provide a $3.5 million settlement fund to reimburse participants for services that were not covered during the class period.

In Daniel F. v. Blue Shield of California, No. 09-cv-2037, 2014 U.S. Dist. LEXIS 111643 (N.D. Cal. Aug. 11, 2014), a federal district court in the Northern District of California denied plaintiffs’ motion for class certification in a suit claiming that Blue Shield of California’s group and individual health insurance plans exclude coverage of residential treatment services for severe mental health conditions in violation of California’s Mental Health Parity Act. In denying certification, the court found that the proposed class definition “is a moving target,” in that plaintiffs provided differing definitions in their moving brief, reply brief, and at oral argument. The court concluded that none of the proposed definitions satisfied Rule 23’s implied requirement of ascertainability, particularly because ascertaining class membership would necessitate individualized inquiries into whether putative class members participated in plans governed by ERISA and whether their respective mental health conditions (and treatment therefore) are covered under the California Parity Act.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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