W. v. Health Care Service Corporation
Filing
18
MEMORANDUM Opinion and Order Signed by the Honorable Georgia N Alexakis on 1/27/25.(ca, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
BRIAN W., individually and on behalf
of N.W., a minor
Plaintiff,
No. 24 CV 2168
v.
Judge Georgia N. Alexakis
HEALTH CARE SERVICE
CORPORATION, d/b/a BLUE CROSS
AND BLUE SHIELD OF TEXAS,
Defendant.
MEMORANDUM OPINION AND ORDER
N.W., a minor, received inpatient treatment for mental health and behavioral
issues at Intermountain Children’s Home (“Intermountain”), a Montana-based
facility that provides such treatment to adolescents. N.W.’s father, Brian, had an
employment-based health insurance plan with Health Care Service Corporation, also
known as Blue Cross and Blue Shield of Texas (“Blue Cross”). Blue Cross denied
N.W.’s claims for payment of medical expenses related to his inpatient treatment.
Brian sued Blue Cross on behalf of himself and his son, claiming the denial violated
Blue Cross’s obligations under the Employee Retirement Income Security Act of 1974
(“ERISA”) and the Mental Health Parity and Addiction Equity Act of 2008 (“the
Parity Act”). Blue Cross now moves to dismiss W’s complaint for failure to state a
claim. [10]. For the reasons elaborated below, that motion is denied.
I.
Legal Standards
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6),
a plaintiff must allege facts sufficient “to raise a right to relief above the speculative
level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A court must accept
the complaint’s factual allegations as true and draw all reasonable inferences in the
plaintiff's favor (as the Court does in the section that follows), but a court need not
accept legal conclusions or “threadbare recitals” supported by “conclusory
statements.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
II.
Background
N.W. was admitted to inpatient treatment at Intermountain on May 2, 2022,
after escalating unsafe behaviors. [1] ¶ 9. Intermountain requested preauthorization
for the treatment, which was denied without a written justification. Id. ¶ 10. Blue
Cross later informed Brian that no payment could be made because “your precertification request was not approved,” but that “[w]e have asked your health care
provider for more information.” Id. ¶ 11. It added: “We will complete your claim when
this information is received.” Id. The medical expenses related to N.W.’s inpatient
treatment exceeded $290,000. Id. ¶ 27.
Brian appealed the denial in April 2023, noting that Intermountain had
provided the information requested by Blue Cross and invoking ERISA requirements
for a full and fair review by appropriately qualified reviewers and for any denials to
reference the specific plan provision under which a claim is denied. Id. ¶¶ 12–13.
Brian specifically informed Blue Cross of his belief that the denial violated the Parity
2
Act. Id. ¶¶ 15–17. Brian also asked that Blue Cross perform a parity compliance
analysis on its plan, for physical copies of the result of that analysis, and for all
documents related to the plan or N.W.’s treatment. Id. ¶¶ 22–23.
In a May 24, 2023 letter, Blue Cross upheld the denial of payment of N.W.’s
claims because “the facility [Intermountain] does not meet the Residential Treatment
Center (RTC) criteria.” Id. ¶ 24. Blue Cross continued: “RTC requires the presence of
24-hour nursing and M.D. access.” Id. Despite Brian’s requests, the letter did not
indicate which provision of the plan controlled this outcome, i.e., which provision of
the plan required that a residential treatment center have 24-hour access to a nurse
and doctor. Id. Nor did Blue Cross provide the analysis or other plan documents Brian
had requested relating to the denial. Id. ¶ 25.
Brian sued, claiming that Blue Cross failed to provide coverage for N.W.’s
treatment in violation of the plan’s terms and that Blue Cross did not meet its
obligations under ERISA to provide a “full and fair review” of the claim denial, see 29
U.S.C. § 1133(2), or its fiduciary duties, see id. § 1104 (“Count I”). [1] ¶¶ 28–35. Brian
also alleges that Blue Cross’s plan imposed more onerous requirements on residential
treatment centers, which provide mental healthcare, than analogous medical or
surgical facilities, in violation of the Parity Act (“Count II”). Id. ¶ 4.
III.
Analysis
A.
Count I – Denial of Benefits
Coverage of N.W.’s Treatment
Brian argues that, under the language of the plan, Blue Cross must cover
N.W.’s treatment. The Court applies general principles of contract law to interpret
3
insurance policies under ERISA and construes any ambiguities in favor of the
insured. See Cheney v. Standard Ins. Co., 831 F.3d 445, 450 (7th Cir. 2016). Brian
presents two theories for why the plan covers N.W.’s treatment at Intermountain,
and the Court address both.
First, Brian argues that Intermountain’s requirement that residential
treatment centers have 24-hour onsite nursing care violates the Parity Act, and thus
cannot bar coverage under the plan. (Brian concedes that Intermountain does not in
fact have such care. [1] ¶ 26.) But as discussed later in this opinion, for purposes of
Count II, Brian has plausibly alleged that the 24-hour nursing requirement for
residential treatment centers violates the Parity Act. See also R.T. and J.T. v. Blue
Cross Blue Shield of Illinois et al., No. 23 C 16953, Dkt. 41 at 2 (N.D. Ill. April 16,
2024) (similar plan term plausibly violated Parity Act). In addition, Blue Cross
(appropriately) does not argue that a plan provision that would be unlawful under
the Parity Act could be used to deny coverage. See REI Transp., Inc. v. C.H. Robinson
Worldwide, Inc., 519 F.3d 693, 699 (7th Cir. 2008) (“If a provision of a contract violates
a statute … that provision is void.”). Brian has thus plausibly alleged that Blue Cross
should have covered N.W.’s treatment.
In its reply, Blue Cross argues that Intermountain cannot be a residential
treatment center, even without the 24-hour nursing requirement, because Brian, in
his appeal, submitted Intermountain’s youth care facility license rather than a
residential treatment center license. [15] at 3. But Blue Cross provides no support for
the proposition it intimates: that a facility cannot hold both licenses simultaneously.
4
So the Court has no reason to conclude that the presence of a youth care facility
license necessarily demonstrates the absence of a residential treatment center
license.
Accepting the complaint’s well-pleaded facts as true and making reasonable
inferences in Brian’s favor, Intermountain is thus a “licensed and accredited
provider” of “sub-acute inpatient treatment to adolescents with mental health,
behavioral, and/or substance abuse problems.” [1] ¶¶ 4, 15. In addition, the reason
Blue Cross gave for determining that Intermountain “does not meet the Residential
Treatment Center (RTC) criteria” of the plan was because those criteria “require[]
the presence of 24-hour nursing and M.D. access.” Id. ¶ 24. Blue Cross did not at the
time of the denial mention any deficiency in licensure, which is also a criterion under
the plan. [9-1] at 96.1 Brian has thus adequately alleged that Intermountain is a
licensed residential treatment center under Montana law. If Blue Cross has evidence
demonstrating that Intermountain is not, that is a factual question that can be
disputed at summary judgment.
Brian makes a second argument as well: Even were Intermountain not a
residential treatment center under the plan, N.W.’s mental health treatment there
should have been covered as an “Eligible Expense” in the “Medical-Surgical Expense”
category. [13] at 15. More specifically: The plan states that Medical-Surgical
1 Because the complaint references the plan Blue Cross has attached as an exhibit, and the
plan is central to the claims, the Court may consider it at summary judgment. Esco v. City of
Chicago, 107 F.4th 673, 678 (7th Cir. 2024). The Court also notes that Brian does not dispute
the validity of the document and cites to it in his response. See, e.g., [13] at 6–10. When citing
to the plan, the Court cites to the blue ECF numbers at the top of the exhibit.
5
Expenses “shall include Services of Physicians and Professional Other Providers.” [91] at 50. A “Professional Other Provider” is defined to include (among other things)
“a person or practitioner” who is a Doctor in Psychology, Licensed Clinical Social
Worker, or Licensed Professional Counselor. [9-1] at 92–93. In other words, a
“Professional Other Provider” includes practitioners who might provide treatment for
mental and behavioral health issues like N.W.’s. This is a reasonable inference to
draw in Brian’s favor in light of the allegation in the complaint stating that W.’s
“unsafe behaviors,” which prompted his admission to Intermountain, “included
verbal and physical aggression, lack of social awareness, age-inappropriate tantrums,
biting, head-banging, issues related to autism spectrum disorder, ADHD, and
suspected diagnoses of disruptive mood dysregulation disorder and bipolar disorder.”
[1] ¶ 9.
Next, the plan defines “Mental Health Care” to include both “the diagnosis or
treatment of a mental disease, disorder, or condition” listed in certain reference
documents or “the diagnosis or treatment of any symptom, condition, disease or
disorder by a … Behavioral Health Practitioner or Professional Other Provider” when
the expense is for: (a) individual, group, family, or conjoint psychotherapy; (b)
counseling; (c) psychoanalysis; (d) psychological testing and assessment; (e) the
administration or monitoring of psychotropic drugs, or (f) “[h]ospital visits or
consultations in a facility listed in subsection 5.” [9-1] at 91. Subsection 5 reads as
follows: “Any of the services listed … above, performed in or by a Hospital, Facility
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Other Provider, or other licensed facility or unit providing such care” qualify as
Mental Healthcare. Id. (emphasis added).
The term “other licensed facility … providing such care” is not defined under
the plan. And the complaint does not specifically allege which mental health services
N.W. received at Intermountain. But given the allegation regarding N.W.’s mental
health needs and the fact that Brian sought assistance for those needs at
Intermountain, see [1] ¶ 1, and after drawing all reasonable inferences in Brian’s
favor, the Court concludes that he has adequately alleged that, under the plan,
Intermountain is a “licensed facility” that provides “Mental Health Care” and that
Brian received such care “in” Intermountain by “Professional Other Providers.” Cf.
A.H. by & through G.H. v. Microsoft Corp. Welfare Plan, No. C17-1889-JCC, 2018 WL
2684387, at *3 (W.D. Wash. June 5, 2018) (concluding that plaintiff had plausibly
alleged that a treatment provider met “the Plan’s generic definition of an ‘eligible
provider’ because it is a state-licensed provider that rendered care to Plaintiff within
the scope of its license while Plaintiff attended the program”). Put more succinctly:
Brian has adequately alleged that he was wrongfully denied coverage under the
plan.2
In an attempt to counter the Court’s position, Blue Cross argues that none of
these treatments at Intermountain are Eligible Expenses because the plan requires
2 Blue Cross argues that Intermountain “does not qualify as a[n] ‘other licensed facility,’ as
that term is used in the Plan” because “‘[o]ther licensed [facilities]’ must fall under one of the
Eligible Expense categories allowed under the Plan.” [15] at 4–5 (citing [9-1] at 84, 94). But
the plan does not actually say this, and for the reasons already explained, Brian has alleged
that Intermountain provides Medical-Surgical Expenses that would qualify as an Eligible
Expense.
7
inpatient mental health care to be provided at a certain type of facility listed in the
plan—like a residential treatment center—and Intermountain is not such a facility.
[9] at 6 (citing [9-1] at 56, 88). The Court has separately addressed in this opinion
why the complaint plausibly alleges Intermountain’s status as a residential
treatment center. But setting that analysis aside, the plan itself is at the very least
ambiguous on the purported requirement Blue Cross asserts. Here is the provision
Blue Cross relies on:
Medically Necessary services for Mental Health Care in a
Psychiatric Day Treatment Facility (partial hospitalization program), a
Crisis Stabilization Unit or Facility, a Residential Treatment Center for
Children and Adolescents, or a Residential Treatment Center in lieu of
hospitalization will be considered Inpatient Hospital Expense. The
Inpatient Hospital Expense benefit percentages for this Plan, and any
Deductible as shown on your Schedule of Coverage, will apply.
The Medical-Surgical Expense benefit percentages for this Plan,
and any Deductible as shown on your Schedule of Coverage, will apply.
[9-1] at 56 (emphasis added).
Nothing about this provision requires that inpatient mental health care be
provided at one of these types of facilities. Rather, the provision simply tells
beneficiaries that treatment provided at such a facility would be considered a
particular type of expense (“Inpatient Hospital Expense”) for the purpose of billing.
In addition, the provision’s reference to Medical-Surgical Expenses indicates, for the
reasons already discussed, that at least some Mental Health Care falls into that
category.
Blue Cross also points to the Schedule of Coverage, which under the heading
“Mental Health Care (Including Serious Mental Illness)” includes under the category
8
“Inpatient Services” the following: “Hospital Services (facility)” and “Behavior Health
Practitioner services.” [15] at 5; [9-1] at 11. According to Blue Cross, this construction
excludes “other licensed facility[ies]” from providing inpatient care. [15] at 5. For two
reasons, the Court is not persuaded by Blue Cross’s reliance on the “Schedule of
Coverage.”
First, the top of the Schedule of Coverage states: “The following information
summarizes the benefits available under the Managed Health Care Benefits section
of your coverage.” [9-1] at 9. It is not obvious why a summary would override or cabin
the definitions provided elsewhere in the plan. Indeed, the schedule’s own prefatory
language urges plan participants to “carefully read [the] Benefit Booklet” so they “are
aware of plan requirements, provisions and limitations and exclusions.” Id.
Second, the schedule also summarizes coverage for “Medical/Surgical
Expenses,” a category which, as discussed above, can be defined to include the
services of someone like a Doctor in Psychology, Licensed Clinical Social Worker, or
Licensed Professional Counselor. [9-1] at 10. According to the schedule,
“Medical/Surgical Expenses” includes “inpatient visits.” Id. That latter term is not
defined in the plan, but in moving to dismiss the complaint, Blue Cross gives no
indication why the term would not apply to inpatient “Mental Health Care” services
that would also qualify as “Medical-Surgical Expenses.” In other words, even if the
Schedule of Coverage overrode definitions elsewhere in the plan, it is not obvious at
this phase—and construing any ambiguities in favor of the insured, Cheney, 831 F.3d
at 450—why it excludes coverage of N.W.’s treatment at Intermountain.
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Finally, Blue Cross argues that none of this matters because Intermountain
billed its services as residential treatment facility services, thus triggering the plan’s
24-hour onsite nursing requirement. [15] at 2. But even if the Court assumed that
Blue Cross need not cover Intermountain services billed as residential treatment
center services—a live issue, under the Court’s analysis—this argument still goes
nowhere. Blue Cross supports its billing-based argument with a single statement
from Intermountain for services provided from May 2, 2022, through May 14, 2022.
[15-1] at 3. The bill totals $7,800—a little less than 3% of the $290,000 in medical
expenses alleged in the complaint—so hardly settles the matter of how Blue Cross
was billed for the other 97% of N.W.’s. expenses. Id.; [1] ¶ 27. And, yet again, Blue
Cross does not explain why the Court is permitted to consider this sort of extrinsic
evidence at this phase. See Esco, 107 F.4th at 678.
For all of these reasons, Brian has stated a claim that at least some of N.W.’s
treatment should have been covered by Blue Cross under the terms of the plan.
Procedural Adequacy of the Claim Appeal
ERISA requires “adequate notice in writing to any participant or beneficiary
whose claim for benefits under the plan has been denied, setting forth the specific
reasons for such denial, written in a manner calculated to be understood by the
participant.” 29 U.S.C. § 1133(1). Brian alleges a number of procedural inadequacies:
the initial preauthorization was denied without any justification in writing; a later
written explanation did not explain why the denial had happened; and Blue Cross
upheld the denial of payment on appeal with a brief statement that “RTC requires
the presence of 24-hour nursing and M.D. access,” but did not address the Parity Act
10
concerns Brian raised, did not state the provisions applied to the denial, and did not
include the documents he had requested. [1] ¶¶ 10–25.
In its motion to dismiss, Blue Cross did not dispute that the review procedures
as alleged were inadequate, instead arguing that because the plan did not cover
Intermountain’s services, any procedural inadequacies were irrelevant to Brian’s
claim. [9] at 6. Blue Cross’s reply, however, raises a new argument: that the
procedures alleged were, in fact, sufficient under ERISA. [15] at 7–9. In particular,
Blue Cross argues that because it provided the “specific reason” for the denial of the
appeal—that Intermountain lacked 24-hour onsite nursing care—it had met its
obligations and Brian did not properly allege a procedural violation. [15] at 7–9.
But, again, this is a new argument, and one that Blue Cross easily could have
made in its initial motion given the substance of the complaint. Because Blue Cross
did not, Brian was not able to respond to the arguments in the reply. The Seventh
Circuit has instructed that “[t]he district court is entitled to find that an argument
raised for the first time in a reply brief is forfeited.” Narducci v. Moore, 572 F.3d 313,
324 (7th Cir. 2009). The Court does so here. Brian has thus stated a claim that Blue
Cross’s review of his claim denial was procedurally inadequate under ERISA.
B.
Parity Act Violation (Count II)
The Parity Act requires that when a group health plan provides coverage for
medical and surgical benefits as well as mental health and substance abuse benefits,
the plan must ensure treatment limitations on mental health benefits that are “no
11
more restrictive than the predominant treatment limitations applied to substantially
all medical and surgical benefits covered by the plan.” 29 U.S.C. § 1185a(3)(A)(ii).3
Brian alleges three facial violations of the Parity Act: (1) the plan imposes
unequal requirements for licensure between residential treatment centers, like
Intermountain, and analogous medical or surgical care facilities; (2) the plan imposes
unequal requirements regarding accreditation as between the two types of entities;
and (3) the plan imposes a 24-hour onsite nursing requirement on residential
treatment centers but not on analogous treatment facilities for medical or surgical
issues. [1] ¶¶ 44–47. Brian further alleges that by imposing the 24-hour onsite
nursing requirement, Blue Cross violates the generally accepted standard of care for
mental health treatment and its own fiduciary duty to cover services for insured
individuals in the most effective and least costly manner that can adequately address
the insured’s treatment needs, thus contributing to a Parity Act violation. Id. ¶¶ 47–
54.
Although the Seventh Circuit has not yet addressed the issue, many courts
assessing Parity Act violations have adopted the following test: Plaintiffs must show
that (1) the relevant group health plan is subject to the Parity Act; (2) the plan
provides both medical/surgical benefits and mental health or substance use disorder
benefits; (3) the plan includes a treatment limitation for mental health or substance
use disorder benefits that is more restrictive than medical/surgical benefits; and (4)
3 The Parity Act distinguishes between “quantitative” and “nonquantitative” limitations, 29
C.F.R. § 2590.712(a), but the parties agree that the 24-hour onsite nursing requirement is a
nonquantitative limitation. [9] at 7; [13] at 6.
12
the mental health or substance use disorder benefit being limited is in the same
classification as the medical/surgical benefit to which it is being compared. See A.H.,
No. C17-1889-JCC, 2018 WL 2684387, at *6; W. v. Health Net Life Ins. Co., 86 F.4th
1265, 1282 (10th Cir. 2023) (collecting cases applying A.H. elements); see also Alice
F. v. Health Care Serv. Corp., 367 F. Supp. 3d 817, 828 (N.D. Ill. 2019) (citing A.H.).
Blue Cross does not dispute that the plan is subject to the Parity Act and offers
both medical and mental health benefits, thereby satisfying the first two prongs of
this test. The parties agree that Skilled Nursing Facilities (“SNFs”), used for medical
and surgical benefits, are an appropriate analogue for residential treatment centers,
thereby satisfying the fourth prong. [9] to at 7; [13] at 6; see also V. v. Health Care
Serv. Corp., No. 15 C 09174, 2016 WL 4765709, at *6 (N.D. Ill. Sept. 13, 2016)
(“What’s more, the regulations also confirmed that skilled nursing facilities are the
medical/surgical ‘scope of services’ analogue for residential mental health treatment
centers.”). So the only issue is the third prong: whether the 24-hour onsite nursing
requirement that the plan imposes on residential treatment centers is more
restrictive than requirements imposed on analogous SNFs.
Blue Cross concedes that, on its face, the plan does not impose a 24-hour
nursing requirement on SNFs. [9] at 8. Blue Cross maintains, however, that the plan
effectively imposes a similar requirement because “[t]he Plan also requires that SNFs
are licensed under state law or are Medicare eligible, which both impose a 24-hour
nursing requirement,” so the end result is the same. Id. But the relevant federal
regulations implementing the Parity Act state that “[a] plan or issuer may not impose
13
any … treatment limitation that is applicable only with respect to mental health or
substance use disorder benefits and not to any medical/surgical benefits in the same
benefit classification.” 29 C.F.R. § 2590.712(c)(2)(i) (emphasis added). See also 29
C.F.R. § 2590.712(c)(4)(i) (barring “a plan” from “impos[ing] a … limitation with
respect to mental health or substance use disorder benefits in any classification
unless, under the terms of the plan (or health insurance coverage), as written and in
operation, any ... factors used in designing and applying the … limitation to mental
health or substance use disorder benefits in the classification are comparable to, and
are applied no more stringently than, the … factors used in designing and applying
the limitation with
respect
to medical/surgical
benefits in
the
classification”)
(emphases added). Even if all Medicare-eligible SNFs were required by federal
regulation to have 24-hour onsite nursing,4 that is a requirement imposed by federal
regulators, not by “a plan or issuer.” Id. Indeed, reading the plan this way would seem
to leave it to susceptible to a potential Parity Act violation any time a government
entity altered (e.g., reduced) the regulatory requirements on a SNF.
Blue Cross also has cited to Montana and Illinois laws regulating SNFs to
support its position, but Montana’s law at least cannot be read as mandating 24-hour
4 For its assertion that all SNFs have 24-hour nursing care, Blue Cross cites to 42 U.S.C. §
1395i-3(b)(4)(C)(i), which states: “Except as provided in clause (ii), a skilled nursing facility
must provide 24-hour licensed nursing service which is sufficient to meet nursing needs of
its residents” with the nursing needs provided by residents’ written plan of care, id. § 1395i3(b)(2) (emphasis added). But clause (ii) allows the United States Department of Health and
Human Services to waive the requirement if, among other things, the SNF is in a rural area
with an insufficient supply of skilled nursing services and no patients that require the roundthe-clock services of a registered professional nurse. Id. § 1395i-3(b)(4)(C)(ii). As a general
matter, therefore, it is not clear that federal law universally imposes a 24-hour onsite nursing
care requirement.
14
onsite nursing at “substantially all” SNFs, as required under the Parity Act’s
regulations. The Montana code merely defines “skilled nursing care” as “provision of
nursing care services, health-related services, and social services under the
supervision of a licensed registered nurse on a 24-hour basis” and does not indicate
whether the supervision must be onsite or who must provide the care. Mont. Code
Ann. § 50-5-101(51) (emphasis added). These ambiguities create a factual question—
whether “substantially all” SNFs are required by state law (in Montana, or
elsewhere) to have 24-hour onsite nursing—that the Court cannot resolve when
addressing a motion to dismiss.
Blue Cross also makes clear in its motion that it considers the plan’s 24-hour
onsite nursing requirement to be “in addition to” other requirements, such as licenses
that might be required by state or federal law. [9] at 5 (emphasis in original). Brian
is therefore correct that on its face the policy imposes a separate and distinct
requirement on residential treatment centers—24-hour onsite nursing care—that it
does not impose on SNFs.
Blue Cross also invokes the general standard of care as a defense against
Count II. [9] at 11. But the standard of care is generally a factual question appropriate
for summary judgment or trial, not a motion to dismiss, and Blue Cross has not
offered a reason why that should not be the case in this context. See, e.g., Horn v. St.
Peter's Hosp., 406 P.3d 932, 936–37 (Mont. 2017) (“Montana law has long required
the presentation of expert testimony to establish the standard of care in a medical
negligence case.”); Thompson v. Gordon, 241 Ill. 2d 428, 445 (2011) (“[I]n professional
15
negligence cases, the plaintiff bears the burden to establish the standard of care
through expert witness testimony.”). Nothing in the complaint indicates that a 24hour nursing requirement is the general standard for residential treatment centers.
Blue Cross relies on another exhibit for this point: the guidelines from the American
Academy of Child & Adolescent Psychiatry (“the Academy”). [9-3]. Blue Cross asserts
that the Academy “sets the generally accepted standards for RTCs for minors.” [9] at
11. But Blue Cross again does not explain why the Court can consider this extrinsic
evidence, which is not referenced in the complaint, at this phase of litigation. Blue
Cross cites to N.C. v. Premera Blue Cross, No. 2:21-cv-01257-JHC, 2023 WL 2741874
(W.D. Wash. Mar. 31, 2023), for the proposition that the Court can “consult[] AACAP
Principles to define generally accepted standards for RTCs.” [9] at 11. And N.C.
involved a cross-motion for summary judgment, not a motion to dismiss. Even if the
Court were to ignore the general standards of care entirely, as Blue Cross invites it
to do in its reply, see [15] at 14 (“this Court need not address what the generally
accepted standards are to dismiss Plaintiff’s [Parity Act] count”), dismissal of the
complaint would still not be warranted where a facial disparity in the plan persists.
The cases Blue Cross cite for the proposition that the 24-hour onsite nursing
requirement does not violate the Parity Act do not avail them in this case. See [9] at
9. For example, in C.B. v. Blue Cross & Blue Shield of Illinois, No. 23-CV-01206, 2024
WL 1003687 (N.D. Ill. Jan. 9, 2024), the plaintiffs conceded that the requirement was
part of the generally accepted standard of care for residential treatment centers and
SNFs. Id. at *2. Here, Brian argues—and the Court agrees—that Blue Cross cannot
16
unilaterally establish the standard of care at the motion to dismiss phase. [13] at 24–
26. As discussed above, establishing the standard of care would require extrinsic
evidence that would not be appropriate for a motion under Rule 12(b)(6).
Other district-court cases upon which Blue Cross relies can similarly be
distinguished. See R.J. v. BlueCross Blueshield of Texas, No. 23-CV-00177-PAB-STV,
2024 WL 1257524, at *5 (D. Colo. Mar. 25, 2024) (“Although plaintiffs argue that their
ERISA claim includes an assertion that the 24-hour onsite nursing requirement
violates the Parity Act and cannot be used to deny coverage, the complaint contains
no such allegations in relation to plaintiffs’ ERISA claim.”); M.P. v. BlueCross
BlueShield of Illinois, No. 2:23-CV-216-TC, 2023 WL 8481410 (D. Utah Dec. 7, 2023)
(“Plaintiffs here do not dispute that under the Plan the analogous intermediate levels
of care at skilled nursing facilities or inpatient rehabilitation hospitals also include
24-hour nursing requirements.”); J.W. v. Bluecross Blueshield of Texas, No. 1:21-CV21, 2022 WL 2905657, at *6 (D. Utah July 22, 2022) (involving a “wilderness program”
that was not licensed as a residential treatment center and finding no Parity Act
violation “as this provision is applied to Utah facilities.”).
Because Brian has plausibly alleged that the plan’s 24-hour onsite nursing
requirement violates the Parity Act, the Court need not address his other theories of
a Parity Act violation as alleged in Count II.
IV.
Conclusion
For the reasons set forth above, Blue Cross’s motion to dismiss [10] is denied.
17
___________________________
Georgia N. Alexakis
United States District Judge
Date: 1/27/25
18
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