A.F. et al v. Providence Health Plan
Filing
91
Opinion and Order - Plaintiffs' motion for partial summary judgment (Dkt. 59 ) is GRANTED, and Defendant's cross motion (Dkt. 67 ) is DENIED. Signed on 8/8/2014 by Judge Michael H. Simon. (mja)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
A.F., by and through his parents and
guardians, Brenna Legaard and Scott
Fournier; and A.P., by and through his
parents and guardians, Lucia Alonso and
Luis Partida, and on behalf of similarly
situated individuals,
Case No. 3:13-cv-00776-SI
OPINION AND ORDER
Plaintiffs,
v.
PROVIDENCE HEALTH PLAN,
Defendant.
Keith S. Dubanevich, Joshua L. Ross, and Nadine A. Gartner, STOLL STOLL BERNE
LOKTING & SHLACHTER, P.C., 209 S.W. Oak Street, Suite 500, Portland, OR 97204; Megan
E. Glor, MEGAN E. GLOR, ATTORNEYS AT LAW P.C., 621 S.W. Morrison Street,
Suite 900, Portland, OR 97205. Of Attorneys for Plaintiffs.
William F. Gary, Arden J. Olson, and Aaron Landau, HARRANG LONG GARY RUDNICK,
P.C., 360 East 10th Avenue, Suite 300, Eugene, OR 97401; Aaron T. Bals, HARRANG LONG
GARY RUDNICK, P.C., 1001 S.W. Fifth Avenue, Suite 1650, Portland, OR 97204. Of
Attorneys for Defendant.
Michael H. Simon, District Judge.
Autism Spectrum Disorder is a pervasive developmental disorder that begins to appear
during early childhood and is characterized by impairments in communication and social skills,
PAGE 1 – OPINION AND ORDER
severely restricted interests, and repetitive behavior. Applied Behavior Analysis (“ABA”) is an
early intensive behavioral interaction health service that helps people with autism to perform
social, motor, verbal, behavior, and reasoning functions that they would not otherwise be able to
do. Plaintiffs A.F. and A.P. (collectively “Plaintiffs”) are both covered as dependentbeneficiaries under group health insurance plans issued by Defendant Providence Health Plan
(“Providence”). A.F. and A.P. were denied coverage of ABA therapy by Providence—both
initially and on appeal—based on Providence’s “Developmental Disability Exclusion.”
Plaintiffs bring this class action lawsuit, alleging that Providence’s denial of ABA
therapy on the basis of its Developmental Disability Exclusion violates the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq.; the Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act (“Federal Parity Act”), 29 U.S.C.
§ 1185a; and two Oregon state laws, Or. Rev. Stat. §§ 743A.168 and 743A.190. Plaintiffs moved
for class certification, which the Court granted. The parties have agreed that the Court should
treat their pending motions as cross motions for partial summary judgment. For the reasons that
follow, the court grants partial summary judgment for Plaintiffs and denies Defendant’s cross
motion. Providence’s Developmental Disability Exclusion violates both the Federal Parity Act
and Oregon law and is therefore prohibited under ERISA.
STANDARDS
A. De Novo Review
Judicial review of an ERISA-governed insurance policy that grants the insurer discretion
to determine a claimant’s eligibility for benefits is ordinarily reviewed for “abuse of discretion.”
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). When a court reviews
questions of statutory interpretation, however, it owes no deference to the insurer’s decision and
reviews legal questions de novo. Long v. Flying Tiger Line, Inc. Fixed Pension Plan for Pilots,
PAGE 2 – OPINION AND ORDER
994 F.2d 692, 694 (9th Cir. 1993). The issues presented in the pending motions are questions of
statutory interpretation.
B. Motion for Summary Judgment
A party is entitled to summary judgment if the “movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). The moving party has the burden of establishing the absence of a genuine
dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The court must view
the evidence in the light most favorable to the non-movant and draw all reasonable inferences in
the non-movant’s favor. Clicks Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257 (9th
Cir. 2001). Although “[c]redibility determinations, the weighing of the evidence, and the
drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling
on a motion for summary judgment,” the “mere existence of a scintilla of evidence in support of
the plaintiff’s position [is] insufficient . . . .” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252,
255 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for
the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation and quotation marks omitted).
Where parties file cross-motions for summary judgment, the court “evaluate[s] each
motion separately, giving the non-moving party in each instance the benefit of all reasonable
inferences.” A.C.L.U. of Nev. v. City of Las Vegas, 466 F.3d 784, 790-91 (9th Cir. 2006); see
also Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 674 (9th Cir. 2010) (“Cross-motions for
summary judgment are evaluated separately under [the] same standard.”). In evaluating the
motions, “the court must consider each party’s evidence, regardless under which motion the
evidence is offered.” Las Vegas Sands, LLC v. Nehme, 632 F.3d 526, 532 (9th Cir. 2011).
“Where the non-moving party bears the burden of proof at trial, the moving party need only
PAGE 3 – OPINION AND ORDER
prove that there is an absence of evidence to support the non-moving party’s case.” In re Oracle
Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010). Thereafter, the non-moving party bears the
burden of designating “specific facts demonstrating the existence of genuine issues for trial.” Id.
“This burden is not a light one.” Id. The Supreme Court has directed that in such a situation, the
non-moving party must do more than raise a “metaphysical doubt” as to the material facts at
issue. Matsushita, 475 U.S. at 586.
BACKGROUND
Plaintiffs A.F. and A.P. are both insured as dependent-beneficiaries under group health
plans in Oregon provided by Providence. A.F. and A.P. have both been diagnosed with Autism
Spectrum Disorder and prescribed ABA therapy by their treating physicians. ABA therapy is an
intensive behavior therapy that, among other things, measures and evaluates observable
behaviors. Evidence shows that ABA therapy may help autistic children with cognitive function,
language skills, and adaptive behavior. Evidence also suggests that the benefits of ABA are
significantly greater with early intervention for young autistic children. Before January 2014,
Providence denied all requests for coverage of ABA therapy.
In 2012, Providence denied a request by A.F.’s parents for reimbursement for the
expenses of ABA therapy. A.F.’s parents appealed the initial denial, which Providence also
denied. When A.F.’s parents appealed a second time, Providence denied the second appeal and
provided this explanation:
Under the language of the Oregon Group Member Handbook for
Open Option Plans, services “related to developmental disabilities,
developmental delays or learning disabilities” are specifically
excluded from coverage under this plan. (See Group Member
Handbook, at 43). There is no question that autism spectrum
disorder is a “developmental disability” or involves
“developmental delay,” and PHP [Providence Health Plan] here
has so interpreted it, in this case as it has in other cases seeking
ABA services for autism spectrum disorder. Because ABA
PAGE 4 – OPINION AND ORDER
services are related to autism spectrum disorder, they are therefore
not benefits covered under the plan.
Declatation of Joshua L. Ross (“Ross Decl.”) Ex. C at 9., Dkt. 41-3.
Also in 2012, Providence denied the request by A.P.’s physician for authorization of
ABA therapy to treat A.P.’s autism. A.P.’s parents appealed Providence’s denial, and Providence
denied the appeal. Providence provided the following explanation, which is almost identical to
the explanation provided to A.F., to A.P.’s parents:
Under the language of the Oregon Group Member Handbook for
Open Option Plans, mental health services “related to
developmental disabilities, developmental delays or learning
disabilities” are specifically excluded from coverage under this
plan. (See Group Member Handbook, at 41). There is no question
that autism spectrum disorder is a “developmental disability” or
involves “developmental delay,” and Providence as the plan
administrator here has so interpreted it, in this case as it has in
other cases seeking ABA services for autism spectrum disorder.
Because ABA services are mental health services related to autism
spectrum disorder, they are therefore not benefits covered under
the plan.
Ross Decl. Ex. D at 8., Dkt. 41-4.
Thus, in both cases, Providence denied coverage of ABA therapy because it is a service
“related to developmental disabilities, developmental delays or learning disabilities.” Id. This
exclusion (hereinafter, “the Developmental Disability Exclusion”) is included in all of the group
plan insurance contracts issued by Providence after 2007. The Developmental Disability
Exclusion is listed in the member handbook given to all members that describes the governing
terms of the insurance plans.
Providence issues two types of plans: “self-insured” group plans and “insured” group
plans. Under a “self-insured” plan, the employer carries the risk of coverage. Under an “insured”
plan, Providence carries the risk of coverage. Both the “self-insured” and “insured” plans are
subject to Oregon law and ERISA. Plaintiffs and all class members are members of “insured”
PAGE 5 – OPINION AND ORDER
group plans. Providence is both the administrator of these plans and a fiduciary to all plan
members. As such, Providence is obligated to apply exclusions consistently and uniformly.
Providence uses diagnosis codes and current procedural terminology (“CPT”) codes to
process members’ claims. The diagnosis codes for Autism Spectrum Disorder all start with 299.
There is no CPT code for ABA therapy.
Although Providence’s group plans differ in terms of the specific benefits provided to
group members, all of the group plan contracts issued after January 1, 2007 contain several
identical provisions, including: (1) coverage for “Mental Health Services;” (2) a definition of
“Mental Health Services” that includes coverage of autism; and (3) exclusion of coverage for
“services related to developmental disabilities, developmental delays, or learning disabilities”
(the Developmental Disability Exclusion). Before 2014, Providence denied coverage of ABA
therapy under the Developmental Disability Exclusion for all group members under all group
plans, regardless of whether the member seeks reimbursement for payments for ABA therapy or
pre-authorization of coverage.
Plaintiffs previously moved to certify the class. The Court granted class certification and
defined the class to include the following persons:
All individuals: (a) who are, or will be up to the date of class
certification, beneficiaries of an ERISA health benefit plan (i) that
is subject to Oregon law, (ii) that contains an Exclusion for
services related to developmental disabilities, developmental
delays, or learning disabilities, (iii) and that has been or will be
issued for delivery, or renewed, on or after January 1, 2007 up to
the date of class certification, in the state of Oregon, by Providence
Health Plan or any affiliate of Providence Health Plan, its
predecessors or successors and all subsidiaries or parent entities;
(b) who either have been or will be diagnosed, up to the date of
class certification, with any diagnosis code beginning with 299
contained in either the Diagnostic and Statistical Manual of Mental
Disorders (DSM-IV-TR, Fourth Edition) or the International
Classification of Diseases, Ninth Edition (ICD-9); and (c) who are
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not (i) a parent, subsidiary, affiliate, or control person of
Defendant, (ii) an officer, director, agent, servant or employee of
Defendant, (iii) the immediate family member of any such person,
or (iv) a class member who has previously released a claim for
benefits under a settlement agreement.
A.F. ex rel. Legaard v. Providence Health Plan, ---F.R.D.---, 2013 WL 6796095, at *4 (D. Or.
Dec. 24, 2013).
After the Court granted class certification, but before the current motions were fully
briefed, Providence changed its policy regarding covering ABA therapy for children with autism.
Oregon Senate Bill 365 was passed by the Oregon Legislature in 2013, but is not effective until
January 1, 2015. That law requires that insurance companies in Oregon provide coverage for
ABA therapy for children eight years of age and younger for up to 25 hours per week. In
response to the passage of Oregon Senate Bill 365, Providence decided voluntarily to implement
the coverage sooner than required. The parties agree that because the issue in this case is whether
the Developmental Disability Exclusion is lawful and because plan members often seek coverage
for ABA therapy for more than 25 hours per week and for children over age eight, Providence’s
decision to implement Oregon Senate Bill 365 early does not render moot the issues raised in this
lawsuit.
DISCUSSION
A. ERISA Civil Enforcement
Plaintiffs argue that Providence’s denial of coverage of ABA under the Developmental
Disability Exclusion is unlawful in three ways: (1) by violating the Oregon Mental Health Parity
Act, Or. Rev. Stat. § 743A.168; (2) by violating the Oregon Mandatory Coverage for Minors
with Pervasive Developmental Disorders Act, Or. Rev. Stat. § 743A.190; and (3) by violating the
Federal Parity Act, 29 U.S.C. § 1185a. Plaintiffs bring each of these claims under the ERISA
civil enforcement provision, 29 U.S.C. § 1132(a)(3), which provides a cause of action for
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violations of ERISA itself and, under certain circumstances, violations of state law regulating
insurance.
Plan participants and beneficiaries of group policies may bring actions under ERISA’s
civil enforcement provision to challenge violations of ERISA and the terms of ERISA plans. The
ERISA civil enforcement provision provides:
A civil action may be brought . . . by a participant, beneficiary, or
fiduciary (A) to enjoin any act or practice which violates any
provision of this subchapter or the terms of the plan, or (B) to
obtain other appropriate equitable relief (i) to redress such
violations or (ii) to enforce any provisions of this subchapter or the
terms of the plan.
29 U.S.C. § 1132(a)(3). Because the Federal Parity act is enacted as part of ERISA, it is
enforceable through a cause of actions under § 1132(a)(3) as a violation of a “provision of this
subchapter.” See id. Or. Rev. Stat. §§ 743A.168 and 743A.190, on the other hand, are, for the
reasons discussed below, enforceable through a cause of action under § 1132(a)(3) as “terms of
the plan.” Id.
It is a general principle of insurance law that all insurance plans include all applicable
requirements and restrictions imposed by state law. 2 Couch on Insurance § 19:1 (3d ed. 2011).
State law regulating insurance thus “enter[s] into and form[s] a part of all contracts of insurance
to which [it is] applicable.” Id. When an insurance policy provision is “in conflict with, or
repugnant to, statutory provisions which are applicable to the contract,” the inconsistent
insurance policy provisions are invalid “since contracts cannot change existing statutory laws.”
Id. at § 19:3. Moreover, when such a conflict exists, “the statutory requirements supersede the
conflicting policy provisions and become part of the insurance policy itself.” Id.
The Supreme Court has repeatedly held that state law regulating insurance applies to
ERISA insurance plans, despite the fact that other state laws are preempted by ERISA. See
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UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 376 (1999) (“We have repeatedly held that
state laws mandating insurance contract terms are saved from preemption under
§ 1144(b)(2)(A).”); Metro. Life Ins. Co. v. Mass., 471 U.S. 724, 733 (1985) (discussing the
ERISA insurance savings clause, which states that nothing in ERISA “shall be construed to
exempt or relieve any person from any law of any State which regulates insurance”) (quoting 29
U.S.C. § 1144(b)(2)(a)) (quotation marks omitted). Section 1144(b)(2)(A), which has come to be
known as the “savings clause,” states: “Except as provided in subparagraph (B), nothing in this
subchapter shall be construed to exempt or relieve any person from any law of any State which
regulates insurance, banking, or securities.” 29 U.S.C. § 1144(b)(2)(A). Therefore, the general
rule of insurance law—that insurance contracts are subject to and incorporate relevant state law
regulating insurance—applies with equal force to ERISA insurance plans.1 To the extent that
Oregon insurance regulations are in conflict with the provisions of Providence’s plans, those
regulations will “become part of the insurance policy itself.” See Couch on Insurance § 19:3.
Thus, because the ERISA civil enforcement provision allows courts to enjoin or provide
other appropriate equitable relief when a practice violates any “terms of the plan,” and because
state law regulating insurance, when in conflict with terms of an insurance plan, “supersede the
conflicting policy provisions and become part of the plan itself,” see Couch on Insurance § 19:3,
ERISA provides courts with the power to enjoin violations of state law regulating insurance that
1
Oregon’s insurance coverage mandates are also incorporated into Providence’s
insurance policy as a matter of express contract: “The laws of the State of Oregon govern the
interpretation of this Group Contract and the administration of benefits to members, except as
provided in section 14.11 [addressing non-transferability of benefits].” Decl. Brenna Legaad
Ex. 1, at 77, Dkt. 62.
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have become part of the terms of the plan. See, e.g., Harlick v. Blue Shield of Cal., 686 F.3d 699,
721 (9th Cir. 2012) cert denied 133 S. Ct. 1492 (U.S. 2013).2
B. Plaintiffs’ ERISA Claims for Violation of Or. Rev. Stat. §§ 743A.168 and 743A.190
1. Oregon Statutory Interpretation
Plaintiffs argue that Providence’s Developmental Disability Exclusion violates two
Oregon laws: Or. Rev. Stat. § 743A.168 and § 743A.190. The Court interprets these statutes
applying Oregon statutory interpretation principles. Powell’s Books, Inc. v. Kroger, 622 F.3d
1202, 1209 (9th Cir. 2010) (a federal court interpreting Oregon law should “interpret the law as
would the [Oregon] Supreme Court” (alteration in original)). Under Oregon law, the “first step”
of statutory interpretation is an examination of the text and context of the statute in order “to
discern the intent of the legislature. Portland Gen. Elec. Co. v. Bureau of Labor & Indus., 317
Or. 606, 610 (1993), superseded by statute, Or. Rev. Stat. § 174.020; see State v. Gaines, 346 Or.
160, 171 (2009) (explaining that Or. Rev. Stat. § 174.020 did not alter the Portland General
Electric holding regarding the first step of statutory interpretation). “[A]fter examining the text
and context,” the court will “consult” the legislative history, “even if the court does not perceive
an ambiguity in the statute’s text, where that legislative history appears useful to the court’s
analysis.” Gaines, 346 Or. at 172. The “evaluative weight” given to the legislative history is for
the court to determine. Id. At “the third[] and final step[] of the interpretive methodology,” if
“the legislature’s intent remains unclear after examining text, context, and legislative history, the
2
Providence cites Haviland v. Metropolitan Life Insurance Co., 876 F. Supp. 2d 946
(E.D. Mich. 2012), aff’d, 730 F.3d 563 (6th Cir. 2013), cert denied, 134 S. Ct. 1790 (2014), for
the proposition that ERISA preempts state law and then argues that Plaintiffs are not entitled to
ERISA relief for violations of state law. The Haviland case, however, addressed a state
consumer protection law, which is a state law that did not regulate the insurance industry and
thus was not “saved” by ERISA § 1144(b)(2)(A). The Haviland case, therefore, does not assist
Providence in the pending lawsuit.
PAGE 10 – OPINION AND ORDER
court may resort to general maxims of statutory construction to aid in resolving the remaining
uncertainty.” Id.
2. Oregon Mental Health Parity Act
The Oregon Mental Health Parity Act, Or. Rev. Stat. § 743A.168, requires parity among
the services and treatment covered for medical conditions and the services and treatment covered
for mental health and chemical dependency related conditions. The statute states in relevant part:
A group health insurance policy providing coverage for hospital or
medical expenses shall provide coverage for expenses arising from
treatment for chemical dependency, including alcoholism, and for
mental or nervous conditions at the same level as, and subject to
limitations no more restrictive than, those imposed on coverage or
reimbursement of expenses arising from treatment for other
medical conditions.
Or. Rev. Stat. § 743A.168. After the enactment of the Oregon Mental Health Parity Act, several
Oregon Administrative Rules were issued to help interpret the statute. “Validly promulgated
administrative rules have the force of law.” Haskins v. Emp’t Dep’t, 156 Or. App. 285, 288
(1998) (en banc). “Administrative rules and regulations are to be regarded as legislative
enactments having the same effect as if enacted by the legislature as part of the original statute.”
Bronson v. Moonen, 270 Or. 469, 476 (1974).
One particularly relevant administrative rule interpreting § 743A.168 is Oregon
Administrative Rule 836-053-1405(1), which provides:
A group health insurance policy issued or renewed in this state
shall provide coverage or reimbursement for medically necessary
treatment of mental or nervous conditions . . . at the same level as,
and subject to limitations no more restrictive than those imposed
on coverage or reimbursement for medically necessary treatment
for other medical conditions.
Or. Admin. R. 836-053-1405(1) (emphasis added). Additionally, Oregon Administrative Rule
836-053-1404 defines “mental and nervous conditions” as “all disorders listed in the ‘Diagnostic
PAGE 11 – OPINION AND ORDER
and Statistical Manual of Mental Disorders, DSM-IV-TR, Fourth Edition’ except for [certain
diagnostic codes not relevant here].” Or. Admin. R. 836-053-1404(1)(a)(A). Autism is a disorder
listed in the Diagnostic Statistical Manual of Mental Disorders and the diagnostic code for
autism, 299, is not listed among the exceptions. Thus, autism is a “mental and nervous
condition” under the Oregon Mental Health Parity Act. See id.
Plaintiffs argue that the legislative intent of § 743A.168 was to prohibit such exclusions
like the Developmental Disability Exclusion from excluding medically necessary ABA from
coverage. Plaintiffs also argue that the statute and related administrative rules state that group
health insurance policies “shall” provide coverage of medically necessary services for mental
health conditions as other medical conditions and that the ordinary usage of the term “shall”
creates a mandatory duty. See Friends of the Columbia Gorge, Inc. v. Columbia River Gorge
Comm’n, 346 Or. 415, 426-27 (2009). In other words, Plaintiffs contend that Or. Rev. Stat.
§ 743A.168 “mandates” coverage of ABA therapy.
Providence responds that the phrases “at the same level” and “subject to limitations no
more restrictive than” indicate that § 743A.168 is not a coverage mandate for particular services,
but rather requires that any service that the group plan covers for mental health conditions is
covered at the same level as that same service would be covered for other medical conditions.
Providence argues that if ABA is not a service covered for medical conditions, then Providence
is free not to provide ABA for mental health conditions.
Looking to the text and context of the statute, Providence’s focus on the word “services”
is misplaced. The text of the statute requires coverage of treatment for mental health
“conditions” at the same level as coverage for medical “conditions.” Therefore, although the
Oregon Mental Health Parity Act might not mandate coverage of a particular service, it does
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mandate that Providence cover mental health conditions no more restrictively than it covers
medical conditions. By stating that it covers autism (a developmental disability), but excluding
coverage for all services “related to a developmental disability,” Providence is not covering
treatment for mental health conditions in parity with treatment for medical conditions.
Providence cannot identify any medical condition covered by its plan where there was an
exclusion that could, on its face, deny coverage for all services “related to” the treatment for that
condition. Moreover, Providence cannot provide any examples of a medical condition where an
exclusion was used to deny coverage of the primary and widely-respected medically necessary
treatment for that medical condition. Because of the broad-based Developmental Disability
Exclusion, Providence covers mental health conditions at a different level than medical
conditions in violation of the parity obligations.
The Court also notes that if Providence’s argument were accepted and insurance
companies could cover a mental health condition but exclude coverage for medically necessary
services “related to” that condition, the Oregon Mental Health Parity Act would have little to no
meaning. For example, Providence could state that it covers depression, but refuse to cover
psychotherapy or antidepressant medications, provided that it did not cover psychotherapy or
antidepressant medications when those treatments were medically necessary to treat medical
conditions. This interpretation is inconsistent with the context of the statute and its purpose to
ensure that mental health conditions be covered in parity with medical conditions. Particularly
considering that, because of the nature of mental health conditions, in many instances treatment
that is medically necessary for mental health diagnoses would never be medically necessary for
medical diagnoses. Insurers could thus use a broad exclusion, like the Developmental Disability
Exclusion, to get around the parity requirement.
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Plaintiffs and Defendant each provided the Court with selections from the legislative
history for this statute. The Court has considered this legislative history, but does not find it
particularly useful or illuminating in interpreting § 743A.168. Therefore, in accordance with
State v. Gaines, the Court accords the cited legislative history relatively little evaluative weight.
See Gaines, 346 Or. at 171. Finally, because the meaning and legislative intent of the Oregon
Mental Health Parity Act are clear after examining the text and context of the statute, the Court
does not need to apply general maxims of statutory interpretation.3 Id. at 172.
The Court also takes into consideration the fact that other federal courts in this district
and state courts across the country have interpreted similar mental health parity acts to require
insurance companies to cover ABA therapy under similar circumstances. The persuasive
reasoning in these opinions provides further support for the Court’s conclusion that § 743A.168
requires insurance companies to cover medically necessary services for covered mental health
conditions.
In McHenry v. PacificSource Health Plans, 679 F. Supp. 2d 1226 (D. Or. 2010), U.S.
Magistrate Judge Stewart analyzed, albeit in dicta, an exclusion of benefits for pervasive
developmental disorders (“PDDs”), similar to the Developmental Disability Exclusion, and noted
that the then-recently enacted Oregon Mental Health Parity Act resulted in the insurance
company abandoning the exclusion. Judge Stewart wrote:
3
The Court finds the statute’s meaning to be clear after considering the text and context
of the law. The Court notes, however, that if it were to proceed to step three of the Gaines
analysis and consider maxims of statutory interpretation, the maxim that statutes should be
interpreted to avoid an absurd result would be persuasive on this point. See Griffin v, Oceanic
Contractors, Inc., 458 U.S. 564, 575 (1982). The Court would interpret § 743A.168 to avoid the
absurd result that insurance companies could decide not to cover medically necessary services
for covered mental health conditions (thus obliterating parity) and still be in technical
compliance with the Mental Health Parity Act.
PAGE 14 – OPINION AND ORDER
The status of this [PPD] exclusion was brought into question by
legislation effective shortly after [the plaintiff’s] diagnosis. In
August 2005, the State of Oregon enacted the Mental Health Parity
Act (“Parity Act”), which went into effect on January 1, 2007. See
Or. Laws 2005, c. 705, § 1, codified at ORS 743.556 (renumbered
ORS 743A.168). The Parity Act mandated that “[a] group health
insurance policy providing coverage for hospital or medical
expenses” must “provide coverage for expenses arising from
treatment for . . . mental or nervous conditions at the same level as,
and subject to limitations no more restrictive than, those imposed
on coverage or reimbursement of expenses arising from treatment
for other medical conditions.” Id. This language required
PacificSource to abandon its prior exclusion for PDDs in the 2006
Plan.
Id. at 1233 (footnote omitted). Judge Stewart, although only in dicta, indicated that a PPD would
be invalid under the Oregon Mental Health Parity Act.
Similarly, a state appellate court in New Jersey addressed the New Jersey mental health
parity act and an exclusion that barred from coverage occupational, speech, and physical therapy.
The court wrote:
[A]n exclusion from coverage for claims based upon occupational,
speech, and physical therapy offered to developmentally disabled
children would render meaningless the specific inclusion of PDD
and autism within those biologically-based mental illnesses subject
to the parity statute. . . . To read the governing statute as offering
parity, but not affording coverage for medically necessary
treatment of the very conditions that are the enumerated subjects of
the parity provisions would be unreasonable.
Markiewicz v. State Health Benefits Comm’n, 915 A.2d 553 (N.J. App. Div. 2007); see also
Micheletti v. State Health Benefits Comm’n, 913 A.2d 842, 849 (N.J. App. Div. 2007) (“If the
[plan administrator] is correct in its reading, the statute would appear to promise much, but it
really grants little or nothing for an autistic child. We cannot infer such a cruel intent by the
Legislature.”).
Thus, looking to the text and context of § 743A.168 as well as the persuasive case law,
the Court finds that Providence cannot simultaneously purport to cover autism and yet deny
PAGE 15 – OPINION AND ORDER
coverage for medically necessary ABA therapy through its Developmental Disability Exclusion
consistent with the Oregon Mental Health Parity Act. Because of the Developmental Disability
Exclusion, which provides a blanket exclusion for an entire family of mental health diagnoses,
Providence is not providing equal coverage of mental health and medical conditions. The Court
thus holds that the Developmental Disability Exclusion violates Or. Rev. Stat. §743A.168.
3. Oregon Mandatory Coverage for Minors with Pervasive Developmental
Disorders Act
In 2007, the Oregon Legislature passed House Bill 2918, which requires health benefit
plans to cover treatment of pervasive developmental disorders for children. The bill, codified as
Or. Rev. Stat. § 743A.190, provides:
(1) A health benefit plan, as defined in ORS 743.730, must cover
for a child enrolled in the plan who is under 18 years of age
and who has been diagnosed with a pervasive developmental
disorder all medical services, including rehabilitation services,
that are medically necessary and are otherwise covered under
the plan.
(2) The coverage required under subsection (1) of this section,
including rehabilitation services, may be made subject to other
provisions of the health benefit plan that apply to covered
services, including but not limited to:
(a) Deductibles, copayments or coinsurance;
(b) Prior authorization or utilization review requirements;
or
(c) Treatment limitations regarding the number of visits or
the duration of treatment.
Or. Rev. Stat. § 743A.190(1) and (2). “Pervasive developmental disorder,” defined in subsection
(3) of the statute, includes “autism spectrum disorder.” Or. Rev. Stat. § 743A.190(3)(b). In
addition, subsection (3) defines “medically necessary” as “in accordance with the definition of
medical necessity that is specified in the policy, certificate or contract for the health benefit plan
PAGE 16 – OPINION AND ORDER
and that applies uniformly to all covered services under the health benefit plan,” and
“rehabilitation services” as “physical therapy, occupational therapy or speech therapy services to
restore or improve function.” Or. Rev. Stat. § 743A.190(3)(a), (c).
Plaintiffs argue that Or. Rev. Stat. § 743A.190 mandates coverage of all medically
necessary medical services, including ABA therapy, for children with development disorders
under the age of 18. Providence responds that ABA therapy does not fit within the definition of
“medical services,” that ABA therapy is not “otherwise covered” by Providence’s plan, and
therefore, that § 743A.190 does not mandate coverage of ABA therapy.
Plaintiffs, however, seek injunctive and declaratory relief, asking the Court to enjoin
Providence from denying coverage based on its Developmental Disability Exclusion and to issue
a declaration stating that Providence’s Developmental Disability Exclusion violates applicable
law. Thus, the issue before the Court is not whether Or. Rev. Stat. § 743A.190 mandates
coverage of ABA therapy in the abstract, but rather, whether Providence can lawfully use the
Developmental Disability Exclusion to deny coverage of ABA therapy—or stated another way,
whether the Developmental Disability Exclusion violates Or. Rev. Stat. § 743A.190. Thus,
specifically determining whether ABA therapy is a “medical service” that is “otherwise covered”
by Providence is unnecessary.4
4
If the Court were to interpret “medical services,” it would find, and does find in the
alternative, that ABA therapy is a medical service. Looking to the text and the context, the
statute provides that a health benefit plan must cover “all medical services, including
rehabilitation services, that are medically necessary and otherwise covered.” Or. Rev. Stat.
§ 743A.190(1). “Rehabilitation services” is defined as “physical therapy, occupational therapy or
speech therapy services to restore or improve function,” but “medical services” is not explicitly
defined in the statute. Or. Rev. Stat. § 743A.190(3). Plaintiffs argue that ABA therapy, like
“physical therapy, occupational therapy or speech therapy,” is a therapy service meant to “restore
or improve function,” and that therefore, ABA fits within the “plain, natural, and ordinary”
definition of medical services if these other types of rehabilitation services fit within the
definition of medical services. ABA is a widely accepted therapy that is “firmly supported by
PAGE 17 – OPINION AND ORDER
To determine whether the Developmental Disability Exclusion violates Or. Rev. Stat.
§ 743A.190, the Court first looks to the text and context of the statute and then consults the
legislative history to the extent that it is useful. See Gaines, 346 Or. at 171-72. The plain text of
the statute, cited above, provides that a health plan must cover all medically necessary medical
services for children with a pervasive developmental disorder that are otherwise covered.
Providence contends that the common sense meaning of “otherwise covered” is that the medical
services must be “otherwise covered” for plan members who do not have a developmental
disorder. See Or. Rev. Stat. § 743A.190(1). Plaintiffs argue that the plain and ordinary meaning
of “otherwise covered” is that the service would be subject to the plan’s other coverage
limitations, such as limitations on the number of visits and any “outside of network” physician
restrictions. The Court assumes without deciding that Providence’s interpretation is correct. The
result is the same.
Providence’s Developmental Disability Exclusion excludes from coverage services
“related to developmental disabilities, developmental delays or learning disabilities.” Ross Decl.
Ex. D at 8., Dkt. 41-4. Although Providence does not appear to enforce the Developmental
Disability Exclusion in all circumstances, on its face, the exclusion exempts from coverage all
services related to a plan member’s pervasive developmental disability. There are several
decades of research and application and is a well-established treatment modality of autism and
other [pervasive developmental disorders].” McHenry, 679 F. Supp. 2d at 1237. Based on the
text and context of the statute—including the statutory definition of “rehabilitation services”—
the Court agrees that ABA therapy fits within the ordinary definition of medical services. Accord
Hummel v. Ohio Dep’t of Job & Family Servs., 844 N.E.2d 360, 366 (Ct. App. Ohio 2005)
(interpreting “medical service” to include ABA therapy under the ordinary definition); K.G. ex
rel. Garrido v. Dudek, 839 F. Supp. 2d 1254, 1276-77 (S.D. Fl. 2011) (holding that ABA therapy
is a medical service that must be covered under Medicaid), affirmed in relevant part Garrido v.
Dudek, 731 F.3d 1152 (11th Cir. 2002); Chisholm ex rel. CC, MC v. Kliebert, 2013 WL
3807990, at *22 (E.D. La. July 18, 2013) (holding that ABA therapy when recommended by a
physician or psychologist constitutes “medical assistance”)
PAGE 18 – OPINION AND ORDER
services that would be considered “related to” a developmental disorder—for example speech
therapy, physical therapy, and psychotherapy—that are covered by Providence for other plan
members.
In other words, if a plan member requested coverage for speech therapy related to his or
her developmental disability, Providence could deny coverage under the exclusion, but still
provide coverage for speech therapy for a different plan member who does not have a
developmental disability. Regardless of whether or not Providence chooses always to enforce its
Developmental Disability Exclusion, the exclusion on its face directly violates Or. Rev. Stat.
§ 743A.190. As such, even accepting Providence’s interpretation of “otherwise covered,” the
Developmental Disability Exclusion conflicts with the statute.
Although the plain text of the statute is clear, the legislative history further supports the
conclusion that the Developmental Disability Exclusion violates Or. Rev. Stat. § 743A.190. Both
parties cited extensive legislative history to support their arguments.5 For example, in a speech
cited by Providence, Representative Sara Gelser explained the purpose of the proposed
legislation. She stated:
5
Plaintiffs cite to the testimony of several advocates and legislators discussing how the
bill would provide coverage for ABA therapy. Of particular relevance, is the testimony of
Representative Mitch Greenlick in support of the House Bill 2918. Representative Greenlick
discussed the United States Surgeon General’s statement describing a study of ABA therapy that
demonstrated “the efficacy of [ABA] in reducing inappropriate behavior and in increasing
communication, learning, and appropriate social behavior.” Or. H.R. H. Health Care Subcomm.
On Health Care Access, Rep. Mitch Greenlick, H.B. 2918, Mar. 14, 2007, Gartner Decl. Ex. H.
This testimony in support of the bill, regarding the importance of ABA therapy, indicates that the
legislators believed that ABA therapy would be included in the definition of “medical services.”
Providence points out that all of this testimony cited by Plaintiffs took place in March of 2007, in
support of a previous (and more expansive) version of the bill. The original bill stated: “All
health benefit plans, as defined in ORS 743.730, shall provide coverage for treatment of a
pervasive developmental disorder that is prescribed by the beneficiary’s physician in accordance
with a treatment plan.” H.B. 2918 § 2(1), 74th Leg. Assemb., Reg. Sess. (Or. 2007) (as
introduced). This legislative history regarding an earlier version of the bill is less probative.
PAGE 19 – OPINION AND ORDER
[C]hildren with autism or pervasive developmental delay, learning
disabilities, mental retardation are routinely denied services that
are available to other members of their family under the same
health insurance plan because they are people with learning
disabilities, developmental disabilities and developmental delays. .
. . And so what this amendment does, basically, is it just creates
some equity within an insurance plan that says if speech therapy is
covered for Betty in a family, it should also be covered for Ben,
even if he has autism, at the same level of coverage that it’s offered
to Betty.
H. Comm. on Health Care, Testimony of Rep. Sara Gelser, H.B. 2918, April 25, 2007, Olson
Decl. Ex 1 at 4, Dkt. 70-1. Representative Gelser’s testimony supports, rather than diminishes,
the conclusion that the Developmental Disability Exclusion, which could, on its face, in some
instances deny a person with a developmental disability a service that is otherwise provided by
Providence to plan members without a developmental disability, is in conflict with Or. Rev. Stat.
§ 743A.190.
The House Staff Member Summary of the bill also interpreted the statute consistently
with the Court’s interpretation. It specified that the bill ensures “that health benefit plans may not
deny benefits to an individual who is covered under the plan due to the diagnosis of pervasive
developmental disorder.” Staff Measure Summary, H.B. 2918 A, 74th Leg. Assemb., Reg. Sess.
(Or. 2007), Olson Decl. Ex 3., Dkt. 70-3. Moreover, after the bill passed the Oregon House of
Representatives and the Oregon Senate, Representative Peter Buckley—a member of the Joint
Ways and Means Committee—testified as follows:
We are asking for nothing more or less than what is available to a
child without the diagnosis of pervasive developmental disorder or
autism. . . . We have compromised down with the insurance
companies to only require the same medically necessary benefits
for developmentally disordered children that non-developmentally
disordered children are offered under the exact same polices.
PAGE 20 – OPINION AND ORDER
Joint Comm. On Ways and Means, Transp. & Econ. Dev. Subcomm., Testimony of Rep.
Buckley, H.B. 2918, 74th Leg. Assemb. Reg. Sess. (Or. 2007), June 16, 2007, Olson Decl. Ex 5
at 7-8, Dkt. 70-5. Representative Buckley further provided this useful example:
Two children live on the same street. The evaluations for both
children indicate the same need for physical therapy. One child
experienced a stroke at four months so has access to covered
benefits because it was the result of an illness or injury. The other
child, same age, whose disability occurred prior to birth, is given a
label of developmental disability and is therefore denied access to
the family’s covered health benefits.
Id. at 11-12. Representative Buckley concluded by saying that this bill would prevent insurers
from covering this first child’s physical therapy and not covering the second child’s physical
therapy. This testimony supports the proposition that the statute prohibits an insurer from
refusing to cover a service for a developmentally disabled child that is otherwise covered for
other plan members.
The text, context, and legislative history thus make it clear that an insurer cannot provide
coverage for a service for one child and deny coverage for the same service for another child
solely because the second child suffers from a developmental disability. The Developmental
Disability Exclusion, however, would allow just that. It permits Providence to deny coverage for
services as “related to a developmental disability” that otherwise would be covered for other plan
members who do not have developmental disabilities. Whether or not Providence chooses
consistently to enforce the Developmental Disability Exclusion does not matter. On its face, the
Developmental Disability Exclusion violates Or. Rev. Stat. § 743A.190.
C. Plaintiffs’ ERISA Claim for Violation of the Federal Parity Act
Plaintiffs argue that Providence’s Developmental Disability Exclusion is also unlawful
under the Federal Parity Act, 29 U.S.C. § 1185a(a)(3)(A)(ii). This law requires that for group
health plans, financial requirements and treatment limitations to mental health benefits must be
PAGE 21 – OPINION AND ORDER
no more restrictive than the predominant requirements or limitations applied to substantially all
medical and surgical benefits.6 Providence argues that the Federal Parity Act, like the Oregon
Mental Health Parity Act, does not mandate, or require, coverage of any specific service or
treatment, but merely states that if a certain service or treatment is covered, it must be covered
equally for medical and mental health conditions.
The Court uses federal principles of statutory interpretation to interpret this federal law.
Under these principles, “[s]tatutory interpretation begins with the language of the statute.” UMG
Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1026 (9th Cir. 2013) (citation
and quotation marks omitted). When terms within a statute are not defined, those terms must be
“accorded their plain and ordinary meaning, which can be deduced through reference sources
such as general usage dictionaries.” Id. When determining the meaning of a statute, however,
courts “look not only to the particular statutory language, but to the design of the statute as a
whole.” Crandon v. United States, 494 U.S. 152, 158 (1990). Nonetheless, “statutory
construction must begin with the language employed by Congress and the assumption that the
ordinary meaning of that language accurately expresses the legislative purpose.” Park ‘N Fly,
Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 194 (1985).
The Court thus begins its analysis by looking to the text of the Federal Parity Act. In
pertinent part, it provides:
In the case of a group health plan (or health insurance coverage
offered in connection with such a plan) that provides both medical
and surgical benefits and mental health or substance use disorder
benefits, such plan or coverage shall ensure that—
6
As discussed above, plan participants and beneficiaries of group policies may bring
actions under ERISA’s civil enforcement provision to challenge Federal Parity Act violations.
ERISA provides individual participants and beneficiaries with a basis to challenge a plan for
“any act or practice” that violates ERISA provisions, including the Federal Parity Act, which was
enacted within ERISA.
PAGE 22 – OPINION AND ORDER
(i) the financial requirements applicable to such mental health or
substance use disorder benefits are no more restrictive than the
predominant financial requirements applied to substantially all
medical and surgical benefits covered by the plan (or coverage),
and there are no separate cost sharing requirements that are
applicable only with respect to mental health or substance use
disorder benefits; and
(ii) the treatment limitations applicable to such mental health or
substance use disorder benefits are no more restrictive than the
predominant treatment limitations applied to substantially all
medical and surgical benefits covered by the plan (or coverage)
and there are no separate treatment limitations that are applicable
only with respect to mental health or substance use disorder
benefits.
29 U.S.C. § 1185a(3)(A)(i)-(ii) (emphasis added). The law defines “treatment limitation” as
follows: “The term ‘treatment limitation’ includes limits on the frequency of treatment, number
of visits, days of coverage, or other similar limits on the scope or duration of treatment.” 29
U.S.C. § 1185a(3)(B)(iii).
The U.S. Department of Health and Human Services has issued regulations interpreting
the Federal Parity Act. In these regulations, the agency explains that the term “treatment
limitations” includes both quantitative and nonquantitative limitations:
Treatment limitations include limits on benefits based on the
frequency of treatment, number of visits, days of coverage, days in
a waiting period, or other similar limits on the scope or duration of
treatment. Treatment limitations include both quantitative
treatment limitations, which are expressed numerically (such as 50
outpatient visits per year), and nonquantitative treatment
limitations, which otherwise limit the scope or duration of benefits
for treatment under a plan or coverage. (See paragraph (c)(4)(ii) of
this section for an illustrative list of nonquantitative treatment
limitations.) A permanent exclusion of all benefits for a particular
condition or disorder, however, is not a treatment limitation for
purposes of this definition.
45 C.F.R. § 146.136(a); 29 C.F.R. § 2590.712(a). Included in the regulations is an illustrative list
of nonquantitative treatment limitations which include, of particular relevance, “[m]edical
PAGE 23 – OPINION AND ORDER
management standards limiting or excluding benefits based on medical necessity or medical
appropriateness, or based on whether the treatment is experimental or investigative.” Id.
Plaintiffs argue that the Federal Parity Act prohibits Providence from denying ABA
therapy under the Developmental Disability Exclusion because it is a “treatment limitation” that
is applicable only to mental health disorders. Providence responds primarily with two arguments
for the proposition that the Federal Parity Act does not preclude Providence from using the
Developmental Disability Exclusion. First, Providence contends that the Developmental
Disability Exclusion is not a “treatment limitation.” Providence argues that the Federal Parity
Act deals with treatment limitations that are “limits on benefits based on the frequency of
treatment, number of visits, days of coverage, days in a waiting period,” or other similar limits
comparable to those listed. Providence argues that under the principal of ejusdem generis, which
means that general words should be interpreted consistently with the specific words they follow,
“treatment limitations” is limited to similar quantitative limits like “frequency of treatment,
number of visits, days of coverage, days in a waiting period.” The Developmental Disability
Exclusion is not a numerical or quantitative limitation like those listed in the statute, and
therefore, Providence argues, it is not a “treatment limitation.” This argument is unpersuasive.
The statute itself and the related regulations explicitly note that the Federal Parity Act
applies to both quantitative and nonquantitative limitations. See 45 C.F.R. § 146.136(a); 29
C.F.R. § 2590.712(a); see also Interim Final Rules Under the Paul Wellstone and Pete Domenici
Mental Health Policy and Addiction Equity Act of 2008, 75 Fed. Reg. 5410-01, 5413 (Feb. 2,
2010) (“The statute describes the term as including limits on the frequency of treatment, number
of visits, days of coverage, or other similar limits on the scope or duration of treatment, but it is
not limited to such types of limits.” (emphasis added)). Moreover, the principal of ejusdem
PAGE 24 – OPINION AND ORDER
generis normally only comes into play when a general word follows a list of specific words.
“The ejusdem generis canon applies when a drafter has tacked on a catchall phrase at the end of
an enumeration of specifics.” Antonin Scalia & Bryan A. Garner, Reading Law: The
Interpretation of Legal Texts 199 (2012). In this instance, the statute provides examples of what
treatment limitations might be after the term is used. The term “treatment limitations” does not
appear as a general term at the end of a list of specifics.
The plain and ordinary meaning of “treatment limitation” includes and encompasses the
Developmental Disability Exemption. It is a limitation on the treatment of plan members with
developmental disabilities. The regulations bolster this interpretation, because they include
“[m]edical management standards limiting or excluding benefits based on medical necessity or
medical appropriateness, or based on whether the treatment is experimental or investigative,” 29
C.F.R. § 2590.712, as an illustration of what a nonquantitative treatment limitation might be.
Providence itself has used an “experimental” exemption and a “medical necessity” exemption in
addition to the Developmental Disability Exemption when denying coverage for ABA therapy in
the past. Thus, the Developmental Disability Exemption, like an experimental or medical
necessity exemption, is a “treatment limitation” within the meaning of the Federal Parity Act.
Providence’s second argument is that the Federal Parity Act does not require an insurance
plan to cover any particular benefits or conditions, but instead merely requires that if Providence
were to choose to cover a particular benefit, then they must cover it with equal restrictions as
medical benefits. Plaintiffs respond that although the Federal Parity Act does not require
coverage of any particular condition, it does require that any limitation on services of an already
covered condition be equally applied to mental health and medical conditions. In other words,
Providence would be free under the Federal Parity Act not to cover autism. But after Providence
PAGE 25 – OPINION AND ORDER
chooses to cover autism, any limitation on services for autism must be applied with parity.
Because Providence does cover autism, it cannot use the Developmental Disability Exclusion to
deny coverage of ABA therapy because it is a “separate treatment limitation” that applies only to
mental health disorders.
The Developmental Disability Exclusion applies specifically and exclusively to mental
health conditions. The Federal Parity Act requires that a plan have “no separate treatment
limitations that are applicable only with respect to mental health or substance use disorder
benefits.” 29 U.S.C. § 1185a(a)(3)(A)(ii). Providence’s Developmental Disability Exclusion
limits coverage of services “related to developmental disabilities, developmental delays or
learning disabilities.” Ross Decl. Ex. D at 8, Dkt. 41-4. Thus, Providence’s exclusion is overtly
applicable only to mental health conditions—specifically developmental disabilities—and does
not apply to medical or surgical conditions. The plain text of the Federal Parity Act prohibits
“separate treatment limitations that are applicable only with respect to mental health or substance
use disorder benefits.” 29 U.S.C. § 1185a(a)(3)(A)(ii). Thus, under the plain text of the statute,
Providence’s Developmental Disability Exclusion is prohibited.
CONCLUSION
Plaintiffs’ motion for partial summary judgment (Dkt. 59) is GRANTED, and
Defendant’s cross motion (Dkt. 67) is DENIED.
IT IS SO ORDERED.
DATED this 8th day of August, 2014.
/s/ Michael H. Simon
Michael H. Simon
United States District Judge
PAGE 26 – OPINION AND ORDER
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