D.T. v NECA/IBEW Family Medical Care Plan et al

Filing 20

ORDER denying Defendants' 11 Motion to Dismiss signed by Judge Richard A Jones.(TH)

HONORABLE RICHARD A. JONES

1
2
3
4
5
6

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22

D.T. by and through his parents and
guardians, K.T. and W.T., individually, on
behalf of similarly situated individuals,
No. 17-cv-00004-RAJ
and on behalf of the NECA/IBEW Family
Medical Care Plan
ORDER
Plaintiff,
v.
NECA/IBEW FAMILY MEDICAL
CARE PLAN, THE BOARD OF
TRUSTEES OF THE NECA/IBEW
FAMLY MEDICAL CARE PLAN,
SALVATORE J. CHILIA, ROBERT P.
KLEIN, DARRELL L. MCCUBBINS,
GEARY HIGGINS, LAWRENCE J.
MOTER, JR., KEVIN TIGHE, JERRY
SIMS, AND ANY OTHER
INDIVIDUAL MEMBER OF THE
BOARD OF TRUSTEES OF
NECA/IBEW FAMILY MEDICAL
CARE PLAN,

23
24
25

Defendants.
This matter comes before the Court on Defendants NECA/IBEW Family Medical
Care Plan (the “Plan” or “FMCP”), the Board of Trustees of the FMCP, Salvatore J.

ORDER - 1

1

Chilia, Robert P. Klein, Darrell L McCubbins, Geary Higgins, Lawrence J. Moter, Jr.,

2

Kevin Tighe, and Jerry Sims’ (collectively “Defendants”) Motion to Dismiss. Dkt. # 11.

3

Plaintiff opposes the motion. Dkt. # 16. For the reasons that follow, the Court DENIES

4

the motion.

5

I.

6

Plaintiff D.T., a three-year-old dependent on his parent’s NECA/IBEW Family

7
8
9

BACKGROUND

Medical Care Plan (“Plan”), was diagnosed with a developmental mental health
condition. Dkt. # 1 (Complaint) at ¶¶ 1, 22. D.T. sought coverage for either
neurodevelopmental therapies (NDT) or Applied Behavior Analysis (ABA) therapy but
was denied under his Policy’s Development Delay Exclusion. According to Plaintiff, this

10

exclusion is a “uniform policy excluding all coverage for NDT and ABA therapies to
11
12
13
14

treat developmental mental health conditions like ASD, even when medically necessary.”
Id. at ¶ 9. Plaintiff further claims that the Policy covers other benefits associated with
developmental mental health conditions, and therefore the uniform exclusion of coverage
for NDT and ABA therapy is a violation of the Paul Wellstone and Pete Domenici

15

Mental Health Parity and Addiction Equity Act of 2008 (“Federal Parity Act”).

16

Defendants argue that the Policy legitimately excludes coverage for any

17

developmental mental health conditions, and therefore there is no Federal Parity Act

18

violation for its refusal to cover NDT or ABA therapy benefits. Defendants are now

19

before the Court seeking dismissal of Plaintiff’s Complaint under Rule 12(b)(6).

20

II.

LEGAL STANDARD

21

Fed. R. Civ. P. 12(b)(6) permits a court to dismiss a complaint for failure to state a

22

claim. The rule requires the court to assume the truth of the complaint’s factual

23

allegations and credit all reasonable inferences arising from those allegations. Sanders v.

24
25

Brown, 504 F.3d 903, 910 (9th Cir. 2007). A court “need not accept as true conclusory
allegations that are contradicted by documents referred to in the complaint.” Manzarek v.
St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The plaintiff must

ORDER - 2

1

point to factual allegations that “state a claim to relief that is plausible on its face.” Bell

2

Atl. Corp. v. Twombly, 550 U.S. 544, 568 (2007). If the plaintiff succeeds, the complaint

3

avoids dismissal if there is “any set of facts consistent with the allegations in the

4

complaint” that would entitle the plaintiff to relief. Id. at 563; Ashcroft v. Iqbal, 556 U.S.

5

662, 679 (2009).

6
7
8
9

A court typically cannot consider evidence beyond the four corners of the
complaint, although it may rely on a document to which the complaint refers if the
document is central to the party’s claims and its authenticity is not in question. Marder v.
Lopez, 450 F.3d 445, 448 (9th Cir. 2006).
III.

DISCUSSION

10

A. Federal Parity Act
11
12
13
14

The parties agree that the Federal Parity Act allows group plans to invoke blanket
exclusions. See Dkt. ## 11 at 8 (“The Federal Parity Act does not mandate coverage of
mental health benefits.”), 16 at 18 (“Under the Parity Act, a group plan need not offer any
mental health benefits.”). However, once a group plan decides to provide coverage for

15

mental health benefits, then it may not apply “any financial requirement or treatment

16

limitation to mental health or substance use disorder benefits in any classification that is

17

more restrictive than the predominant financial requirement or treatment limitation of that

18

type applied to substantially all medical/surgical benefits in the same classification.” 29

19

C.F.R. § 2590.712(c)(2)(i). “A permanent exclusion of all benefits for a particular

20

condition or disorder, however, is not a treatment limitation[.]” 29 C.F.R. § 2590.712(a).

21

The Policy covers certain “mental health or nervous disorder” benefits. The

22

definition of “mental or nervous disorder” is broadly defined:
A neurosis, psychoneurosis, psychopathy, psychosis or mental

23

or emotional disease or disorder of any kind, regardless of

24

whether such condition, disease or disorder has causes or

25

ORDER - 3

1

origins which are organic, physiological, traumatic or

2

functional.

3

Dkt. # 11-3 at 24 (defining “mental or nervous disorder”). It is unclear whether autism

4

spectrum disorder (ASD) falls within the definition. The Complaint claims that it does.

5

See also Dkt. # 16 at 12 (Plaintiffs reiterate that the definition “encompasses ASD and

6

other developmental conditions.”).

7
8
9

The Policy excludes coverage for benefits related to development delays.
Specifically, in a section titled, “Benefit Plan Conditions, Limitations and Exclusions,”
the Policy states that charges are not payable for the following:
Developmental delays, including charges for development and

10

neuro-educational testing or treatment, hearing therapy,
11

therapy for learning disability, communication delay,

12

perceptual disorders, sensory deficit, developmental disability

13

and related conditions, or for other special therapy not

14

specifically included as a Covered Medical Expense elsewhere

15

in this document, whether or not such disorder is the result of

16

an injury or sickness.

17

Dkt. # 11-3 at 48. Despite the placement of the exclusion in the limitation section of the

18

Policy, Defendants claim that their Developmental Delay Exclusion is not a treatment

19

limitation but rather “a blanket exclusion,” and therefore is not a violation of the Federal

20

Parity Act. Dkt. # 11 at 10.

21

The Policy’s mental health definition is so broad that it may encompass ASD. If

22

this is the case—the Complaint states as much—and if the Policy covers certain benefits

23

for beneficiaries diagnosed with ASD but refuses to cover ABA therapy, then this may be

24
25

ORDER - 4

1

a violation of the Federal Parity Act. 1 See, e.g., A.F. ex rel. Legaard v. Providence

2

Health Plan, 35 F. Supp. 3d 1298 (D. Or. 2014). This is precisely the crux of the

3

Complaint, which claims that Defendants cover “medical/surgical services for enrollees

4

with developmental mental health conditions” but fail to cover NDT and ABA therapy

5

for those same conditions. Dkt. # 1 (Complaint) at ¶ 24. Therefore, at this early stage in

6

litigation and under the standards dictated by Rule 12(b)(6), the Court finds that Plaintiff

7
8
9

met his burden to state a claim for recovery of benefits under ERISA.
B. Breach of Fiduciary Duty
To allege a claim for breach of Fiduciary Duty under ERISA, Plaintiff must show
that “the fiduciary injured the benefit plan or otherwise ‘jeopardize[d] the entire plan or

10

put at risk plan assets.’” Wise v. Verizon Commc’ns, Inc., 600 F.3d 1180, 1189 (9th Cir.
11
12
13
14

2010) (quoting Amalgamated Clothing & Textile Workers Union, AFL-CIO v. Murdock,
861 F.2d 1406, 1414 (9th Cir. 1988)). Plaintiff may show that his “denial of benefits is
part of a larger systemic breach of fiduciary obligations,” Nielsen v. Unum Life Ins. Co.
of Am., 58 F. Supp. 3d 1152, 1165 (W.D. Wash. 2014) (citations omitted), but may not

15

premise this claim on the “mishandling of an individual benefit claim,” Amalgamated

16

Clothing, 861 F.2d at 1414. Defendants attempt to phrase this claim as one for individual

17

benefits. The Court disagrees.

18

Plaintiff bases his breach of fiduciary duty claim on the Plan’s failure to “act in

19

accordance with the documents and instruments governing the Plan[.]” Dkt. # 1

20

(Complaint) at ¶ 31; see also 29 C.F.R. § 1104(a)(1)(D). Specifically, Plaintiff states that

21

the Policy must be interpreted consistently with the Federal Parity Act, and by violating

22

the Federal Parity Act, Defendants breached their fiduciary duties as defined under

23

ERISA. Dkt. # 1 (Complaint) at ¶ 30; see also Dkt. # 11-3 at 35 (describing the law that

24
25

1 The Court is inclined to agree with Defendants that if, on summary judgment, it appears that the only evidence
supporting Plaintiff’s position is that Defendants simply cover preventative screening “to the extent required under
PHS Act section 2713,” see 29 C.F.R. § 2590.712 (e)(3)(ii), then it is unlikely that Plaintiff will ultimately prevail in
this lawsuit.

ORDER - 5

1

governs the Plan). Plaintiff’s Complaint further describes a systematic breach in which

2

the Policy is interpreted in a way that consistently excludes coverage for benefits that

3

must be covered under the Federal Parity Act. Therefore, in light of the relatively low

4

standard governing this motion, the Court finds that Plaintiff sufficiently pled a claim for

5

breach of fiduciary duties.

6

C. Equitable Relief

7
8
9

Plaintiff’s third claim is for injunctive and equitable relief under 29 U.S.C. §
1132(a)(3). Dkt. # 1 (Complaint) at ¶¶ 38-39. Defendants argue that Plaintiff may not
take advantage of ERISA’s “catchall” provision because he already has an adequate
monetary remedy. Dkt. # 11 at 13. This argument is not persuasive in light of Moyle v.

10

Liberty Mut. Ret. Ben. Plan, 823 F.3d 948, 961 (9th Cir. 2016), which recognized that Ҥ
11
12
13
14

1132(a)(1)(B) and § 1132(a)(3) claims can proceed simultaneously if they plead distinct
remedies.” Plaintiff may pursue alternative claims for relief as long as he does not obtain
double recoveries. Id. Accordingly, the Court finds that Plaintiff may simultaneously
plead his second and third causes of action.

15

IV.

16

For the foregoing reasons, the Court DENIES Defendants’ motion to dismiss.

17
18

CONCLUSION

Dkt. # 11.
Dated this 28th day of November, 2017.

19

A

20
21

The Honorable Richard A. Jones
United States District Judge

22
23
24
25

ORDER - 6