By Pension and Benefits Editorial Staff
An HMO insurer did not violate the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) or the California Mental Health Parity Act (California Parity Act) in denying coverage for an insured’s out-of-state residential treatment of anorexia nervosa, the U.S. Court of Appeals for the Ninth Circuit held. The exclusion on which the denial was based—that for out-of-state treatment—applied equally to mental and physical illnesses.
A mother whose family was covered under an employer-sponsored health maintenance organization (HMO) plan in California sent her daughter to a facility in Colorado for the residential treatment of anorexia nervosa, even though she knew that the plan excluded coverage for out-of-state treatment. When the insurer denied coverage, the mother appealed, explaining that unlike the in-state facility that was covered by the plan, the Colorado facility used the “Maudsley” method of treatment, was locked and alarmed, and had a full-time psychiatrist and medical staff. After her appeal was rejected, she filed suit against the insurer, asserting that its denial of coverage violated both the MHPAEA and the California Parity Act. The district court ruled in favor of the insurer, and the mother appealed.
Plan provisions. The plan, which was governed by ERISA, excluded coverage for mental health services rendered outside the service area, except for emergencies or urgently needed services. The plan similarly excluded coverage for physical health services rendered outside the service area (except for emergencies or urgently needed services).
MHPAEA. Under the MHPAEA, “benefits and treatment limitations for mental health problems shall be ‘no more restrictive’ than those for medical and surgical problems.” In this case, the mother failed to show that the plan’s requirement that her daughter receive treatment at a residential treatment facility in California was a more restrictive limitation on treatment than the plan’s limitations on treatment for medical and surgical issues. Indeed, she did not even contend that the plan’s geographic limitation applied unequally to physical and mental health issues. Thus, the insurer did not violate the MHPAEA, the appellate panel concluded.
California Parity Act. The California Parity Act has a similar purpose as that of the federal statute. However, instead of generally requiring parity of benefits between mental health and medical or surgical health, the state statute requires health care service plans to “provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses … under the same terms and conditions applied to other medical conditions[.]” The term “severe mental illnesses” is defined to include anorexia nervosa.
The mother did not dispute that the HMO plan barred out-of-state treatment for both physical and mental coverage. Rather, she asserted that her daughter’s treatment was medically necessary
According to the court, the mother essentially was arguing that the California Parity Act guarantees a substantive right to medically necessary treatment of the listed mental illnesses, without any relationship to parity with physical illnesses. That position was not supported by the language and purpose of the statute, the court said.
Contrary to the mother’s contention, the Ninth Circuit’s decision in Harlick v. Blue Shield of Cal., 686 F.3d 699 (9th Cir. 2012), did not mandate coverage for her daughter’s treatment solely on the basis that it was medically necessary. In Harlick, an insurer had denied coverage for an insured’s residential treatment of anorexia nervosa solely on the ground that residential treatment was not included in the health plan, rather than on the ground that it was not medically necessary. The panel had concluded that the California Parity Act required the insurer to pay for the residential treatment, “subject to the same financial terms and conditions it imposes on coverage for physical illnesses.” Pursuant to Harlick, therefore, the insurer here was required to provide coverage for medically necessary treatment on the same terms and conditions as the coverage it provided for physical illnesses.
The crucial distinction between Harlick and this case was that the plan in Harlick excluded coverage for any residential treatment, whereas the plan here barred coverage only for out-of-state residential treatment. The parties did not dispute that the at-issue plan offered coverage for in-state residential treatment. As such, the exclusion for out-of-state care was not a denial of a medically necessary treatment; it was a condition of the HMO plan that applied equally to mental and physical illnesses. In fact, the mother was given options for residential treatment in California, but she rejected them.
California’s appellate court also has construed the state’s Parity Act as requiring health plans to cover residential treatment for eating disorders, but acknowledged that “medically necessary” coverage “is coverage that is nonetheless limited by the policy limits.”
Accordingly, the Ninth Circuit concluded that the HMO plan complied with Harlick by providing coverage for residential treatment of anorexia nervosa. There was no dispute that the plan’s exclusion for out-of-state treatment applied to any type of treatment, whether for mental health or medical conditions. Because the mother failed to present any evidence showing that the plan’s coverage of mental illness was less generous than that of physical illnesses, or that the out-of-state exclusion applied only to mental health conditions and not physical ones, the California Parity Act was not implicated.
SOURCE: Stone v. UnitedHealthcare Insurance Co., (CA-9), No. 19-16227, November 9, 2020.
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