Angela Midthun-Hensen and Tony Hensen, as representatives of their minor daughter, K.H., and on behalf of all others similarly situated v. Group Health Cooperative of South Central Wisconsin, Inc.
Filing
31
OPINION AND ORDER granting in part and denying in part 23 Motion to Stay Summary Judgment Briefing Schedule and for Leave to Conduct Discovery. Signed by Magistrate Judge Stephen L. Crocker on 5/6/2022. (kwf)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
ANGELA MIDTHUN-HENSEN and TONY HENSEN,
as representatives of their minor Daughter, K.H., and
on behalf of all others similarly situated,
v.
Plaintiffs,
OPINION AND
ORDER
21-cv-608-slc
GROUP HEALTH COOPERATIVE OF SOUTH
CENTRAL WISCONSIN, INC.,
Defendant.
In this putative class action for monetary and equitable relief, plaintiffs Angela MidthunHensen and Tony Hensen, as representatives of their minor daughter, K.H., allege that from
2017-2019, their health insurance provider, Group Health Cooperative of South Central
Wisconsin, Inc. (“GHC”), unreasonably and unlawfully denied coverage for speech and
occupational therapy as treatment for K.H.’s Autism Spectrum Disorder (“ASD”). Plaintiffs
assert three causes of action: (1) to recover benefits due under GHC’s health plan, pursuant to
29 U.S.C. § 1001 et. seq., the Employee Retirement Income Security Act of 1974 (“ERISA”), as
enforced through 29 U.S.C. § 1132(a)(1)(B); (2) GHC violated the Mental Health Parity and
Addiction Equity Act of 2008 (“Parity Act”)1 by failing to provide the sought-after treatment;
and (3) GHC violated Wis. Stat. § 632.895, which mandates health insurers to provide certain
coverage to treat ASD.
In the parties’ Rule 26(f) report, GHC asserted that no discovery was necessary until the
court resolved some threshold questions, namely, (1) whether GHC had reasonably determined
that its plan did not provide the therapy requested by plaintiffs because the treatments were not
1
an ERISA amendment codified at 29 U.S.C. § 1185a(a).
evidence-based and were instead experimental and investigational, and (2) whether broader
coverage was mandated by either the Federal Parity Act or Wisconsin’s healthcare mandate.
Dkt. 11. At the preliminary pretrial conference, the court set an early date by which GHC
would file a front-end motion for summary judgment and stayed discovery “unless the court
grants a Rule 56(d) motion.” Dkt. 12. GHC has now filed its contemplated motion, dkt. 13,
and plaintiffs have filed their Rule 56(d) motion. Dkt. 23. Having considered both sides’
submissions, I am denying plaintiffs’ motion for discovery.
The general rule is that evidence beyond the administrative record is not permitted when
the court reviews a claims administrator’s denial of benefits under the “arbitrary and capricious”
standard. Plaintiffs have failed to show that they qualify for an exception to this rule. As for
their Parity Act claim, plaintiffs have failed to allege sufficient facts in their complaint from
which it can be plausibly inferred that GHC denied their claims based on a treatment limitation
that is separate from or more restrictive than those it applies to analogous medical treatment.
However, as explained at the end of this order, I am giving plaintiffs an opportunity to amend
their complaint before they respond to GHC’s summary judgment motion if they wish to
attempt to cure the deficiencies in their Parity Act claim.
The following facts are drawn from the administrative record, attached to GHC’s motion,
and they do not appear to be in dispute. I am setting them forth as background for purposes
of deciding plaintiffs’ Rule 56(d) motion. They do not reflect findings of fact by the court.
2
FACTUAL BACKGROUND
GHC is a non-profit, health maintenance organization that offers health insurance and
oversees the administration of benefits provided under those health insurance plans. Plaintiff
Angela Midthun-Hensen enrolled herself, her husband (plaintiff Tony Hensen) and their
daughter (K.H.) in an employer-sponsored health plan issued and overseen by GHC. K.H. has
been diagnosed with Autism Spectrum Disorder (“ASD”). This case concerns GHC’s denial of
coverage, from 2017-2019, for two kinds of treatments that the Midthun-Hensens sought for
K.H.’s ASD: (1) speech therapy and (2) occupational therapy.
GHC provides its members with a Plan Member Certificate that explains the terms,
benefits, limitations and conditions of the group health plan. Article III of the Member
Certificate for plaintiffs’ plan specifies that GHC had “the discretionary authority to determine
eligibility for Benefits and to construe the terms of [the] Certificate” and that any such
determination or construction would be final and binding on the parties unless arbitrary and
capricious.
The Member Certificates for the years at issue provided that all services that were not
“medically necessary” were excluded by the plan. To be “medically necessary,” a treatment had
to be deemed, among other things, to be “appropriate under the standards of acceptable medical
practice” to treat the member’s illness, disease or injury. The plan further provided that GHC,
through its Medical Director, was authorized to make the determination whether a treatment
was medically necessary and eligible for coverage under the plan, using criteria developed by
recognized sources.
3
The Member Certificates provided that GHC’s plan also excluded services that were
“Experimental, Investigational, or Unproven.” Those terms were defined, in part, as follows:
[A] health service, treatment, or supply used for an illness or injury which,
at the time it is used, meets one or more of the following criteria:
...
b. is not a commonly accepted medical practice in the
American medical community;
...
h. lacks recognition and endorsement of nationally
accepted medical panels;
i. does not have the positive endorsement of supporting
medical literature published in an established, peer reviewed
scientific journal;
...
m. reliable evidence shows that the consensus of opinion
among experts regarding the treatment, procedure, device, drug or
medicine is that further studies or clinical treatments are necessary
to determine its . . . efficacy or efficacy as compared with standard
means of treatment or diagnosis. “Reliable evidence” shall include
anything determined as such by GHC-SCW, within the exercise of
its discretion, and may include published reports and articles in the
medical and scientific literature generally considered to be
authoritative by the national medical professional community, the
written protocol(s) used by the treatment facility or the protocol(s)
of another facility studying substantially the same treatment,
procedure, device, drug or medicine; or the written informed
consent used by the treatment facility or by another facility
studying substantially the same treatment, procedure, device, drug
or medicine . . .
All coverage otherwise provided by the plan–whether that coverage provided mental
health benefits or medical/surgical benefits–was subject to exclusion if GHC determined that it
was not “medically necessary” or that it was “experimental, investigational or unproven.”
GHC’s plan provided some coverage for both “intensive level” and “non-intensive level”
treatment for ASD, as required by Wisconsin’s autism mandate, Wis. Stat. § 632.895(12m).
4
The Member Certificates described the coverage for “intensive-level services” for the treatment
of ASD, in part, as follows:
Intensive-Level Services means evidence-based behavioral Autism Spectrum
therapy (efficacious treatment) that is directly based on, and related to, a
Member’s therapeutic goals and skills as prescribed by a treating physician and
provided by an Autism Qualified Provider, and when the prescribed therapy is for
the treatment of Autism Spectrum Disorder, where the majority of treatment is
provided in the Member’s home where a parent or legal guardian is present and
engaged in the therapy session(s) and meets the following requirements:
***
b.
***
d.
e.
Provides evidence-based intensive therapy, treatment, and services
in an environment most conducive to achieving the goals of the
Member’s treatment plan;
Commences after the Member is two years of age and before the
Member is nine years of age; and
Intensive-Level Services are provided for no more than four years
regardless of the payer.
The Member Certificates described the coverage for non intensive-level services for the
treatment of ASD, in part, as follows:
Non Intensive-Level Services means evidence-based behavioral therapy that
occurs after the completion of treatment with Intensive-Level services and that
is designed to sustain and maximize gains made during Intensive-Level Services
or, for the Member who has not and will not receive Intensive-Level Services,
evidence-based therapy that will improve the Member’s condition as prescribed
by an Autism Qualified Provider when the prescribed therapy meets the following
requirements:
***
b.
Provides evidence-based behavioral therapy, treatment, and
services in an environment most conducive to achieving the goals
of the Member’s treatment plan;
***
5
The Member Certificates provided some coverage for outpatient rehabilitation therapies.
However, they excluded outpatient rehabilitation therapies, including physical therapy, speech
therapy, occupational therapy, and hearing treatments, when diagnosed for and used for the
treatment of chronic brain injuries, including development delay, intellectual disability, and
cerebral palsy. Sensory integration therapy (a type of occupational therapy used to treat autism)
was not covered by the plan generally.
In addition, GHC specifically excluded “sensory
integration therapy” from coverage under its exclusions for ASD Services.
From 2017-2019, plaintiffs submitted seven requests for either speech or occupational
therapy coverage for K.H.. K.H. turned 10 on March 9, 2018. GHC denied those requests on
the ground that neither occupational therapy nor speech therapy for children over age 10 were
evidence-based treatments for ASD, and therefore, were not covered by the plan. Plaintiffs
appealed, supporting their requests with letters from K.H.’s providers attesting to the medical
necessity of the treatments and with various medical literature that they argued showed the
efficacy of the treatments in treating autism. However, GHC continued to adhere to its position
that the treatments sought were not evidence-based and were excluded under the plan’s
exclusion for experimental and investigational treatment.
In rejecting plaintiffs’ claims, GHC relied on CM.MED.121 (“Policy 121"), which reflects
GHC’s “guidelines used to determine eligibility for and coverage of” ASD services for GHC
members. Under a section titled “Concomitant evidence-based therapies,” Policy 121 stated:
“Speech and language evaluations and therapy is not an evidence-based treatment for the core
deficits of autism spectrum disorders for children ages 10 and above per (National Standards
Project, National Autism Center (2015)) and is not a covered benefit.” Dkt. 15-6, at 2.
6
Similarly, under the same section, Policy 121 stated: “Occupational therapy, including sensory
integration therapy is not an evidence-based treatment for the core deficits of autism spectrum
disorders (Social-communication deficits and repetitive/stereotyped behaviors) ((National
Standards Project, National Autism Center (2015)) and is not a covered benefit.” Id. at 3.
Since October 2020, however, GHC has approved claims, including those submitted by
plaintiffs, for speech therapy for children 10 and older and for sensory integration occupational
therapy, including pre-service requests submitted by plaintiffs on August 30, 2021. According
to GHC, this policy change was the result of a 2020 report (“the EBP Report”) issued by the
National Clearinghouse on Autism Evidence and Practice Review Team, which reviewed
available studies into the effectiveness of various treatments for ASD and identified which
treatments were evidence-based practices. Based on new studies, the National Clearinghouse
concluded that both sensory integration occupational therapy and certain speech and language
treatments were evidence-based practices for the treatment of autism. GHC says that the 2020
EBP Report’s determinations caused it to amend Policy 121.
Plaintiffs filed this suit on September 27, 2021, seeking to represent the following class:
All participants, beneficiaries, subscribers and dependents enrolled in the GHC
Large Group HMO Plans, Large Group POS Plans, and Large Group PPO Plans
administered by GHC that contain an exclusion of coverage for applied behavioral
analysis, speech therapy for children age 10 or older and/or occupational therapy
whose requests for coverage for these services were denied by GHC based on
Policy 121.
Complaint, dkt. 1, ¶57.
7
OPINION
GHC has moved for summary judgment on all claims. GHC argues that plaintiff’s first
claim, for recovery of benefits, must be denied because GHC reasonably determined that
plaintiff’s requests for speech and occupational therapy to treat K.H.’s ASD were not “evidence
based” at the time. As for the plaintiffs’ claim that GHC’s denials violated the Federal Parity
Act, GHC argues plaintiffs cannot state a viable cause of action because they have failed to
identify any plan treatment limitations that do not apply equally to medical and to mental
health services.2 Finally, says GHC, plaintiffs’ complaint for declaratory relief must be denied
because GHC now is providing coverage.
Summary judgment is proper “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; Anderson v. Liberty Lobby, Inc., 477 U.S. 242 248 (1986); Celotex Corp. v. Catrett, 477 U.S.
317, 324 (1986). “Material facts” are those under the applicable substantive law that “might
affect the outcome of the suit.” Anderson, 477 U.S. at 248. A dispute over “material fact” is
“genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Id. In deciding a motion for summary judgment, the court views the facts in the light
most favorable to the non-moving parties. Crull v. Sunderman, 384 F.3d 453, 460 (7th Cir.
2004).
2
GHC also contends that Count III, which alleges a violation of Wisconsin’s autism mandate,
Wis. Stat. § 632.895(12m), must be dismissed because GHC’s health plan covers exactly what is
prescribed by Wisconsin law, and in any case there is no private right of action under the statute.
Although plaintiffs have not conceded this point, they do not address this state law claim in their Rule
56(d) motion or supporting materials.
8
In response to GHC’s motion for summary judgment, plaintiffs have moved pursuant to
Fed. R. Civ. P. 56(d) for an order allowing them to take discovery from GHC before they
respond to GHC’s motion.
Rule 56(d) provides that, after a party moves for summary
judgment:
If a nonmovant shows by affidavit or declaration that, for specified
reasons, it cannot present facts essential to justify its opposition,
the court may:
(1) defer considering the motion or deny it;
(2) allow time to obtain affidavits or declarations or
to take discovery; or
(3) issue any other appropriate order.
A party seeking relief under Rule 56(d) cannot merely express a “a fond hope that more fishing
might net some good evidence.” Smith v. OSF HealthCare Sys., 933 F.3d 859, 864–65 (7th Cir.
2019). See also Davis v. G.N. Mortgage Corp., 396 F.3d 869, 885 (7th Cir. 2005) (affirming denial
of 56(d) motion when plaintiffs’ request was “based on nothing more than mere speculation”).
Rather, a party must establish, by affidavit or declaration, “specific reasons” why it cannot
respond to the motion unless discovery is extended. Id. “In addition, a court need not delay
decision on a summary judgment motion to allow time for discovery on an obviously meritless
claim or defense.” Id. (citing Arnold v. Villarreal, 853 F.3d 384, 389 (7th Cir. 2017)).
Plaintiffs ask for discovery on both their improper denial of benefits claim and their
Parity Act claim, which I will address separately:
9
I. Count 1: Improper Denial of Coverage and Benefits
Citing to 29 U.S.C. § 1132(a)(1)(B), plaintiffs claim that GHC improperly denied them
coverage and benefits. Compl., dkt. 1, at 18. As an initial matter, plaintiffs appear to agree with
GHC’s assertion that a claim brought under § 1132(a)(1)(B) is not a claim for breach of a
fiduciary duty, as plaintiffs have styled it in their complaint. Rather, § 1132(a)(1)(B) allows an
ERISA plan participant to bring a civil action “to recover benefits due to him under the terms
of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future
benefits under the terms of the plan[.]” Plaintiffs also do not dispute GHC’s contention that,
under the plan’s terms, GHC had “the discretionary authority to determine eligibility for
Benefits and to construe the terms of [the] Certificate.” Finally, plaintiffs do not dispute that,
where a plan administrator has such discretionary authority, the court reviews the decision under
the arbitrary and capricious standard. See Williams v. Aetna Life Ins. Co., 509 F.3d 317, 321 (7th
Cir. 2007) (“[B]ecause the Plan's administrator does have discretionary authority, the court
reviews Williams's denial of benefits under the arbitrary and capricious standard.”); Hackett v.
Xerox Corp. Long–Term Disab. Income, 315 F.3d 771, 773 (7th Cir. 2003) (“Where the plan does
grant discretionary authority to the administrator, the court reviews the decision under the
arbitrary and capricious standard.”).
The dispute between plaintiffs and GHC is over what evidence the court may consider
when it reviews the claims administrator’s decision under this standard. GHC argues that the
court is limited to reviewing the administrative record. Plaintiffs disagree, arguing that in order
to defend against summary judgment on the wrongful-denial-of-benefits claim, they need to take
discovery from GHC’s decision-makers to “understand the reasoning process behind the coverage
10
decisions to determine if GHC acted in an arbitrary and capricious manner.” Pls. Br. in Supp.,
dkt. 24, at 20.
Discovery generally is not allowed in ERISA cases in which the administrator’s decision
is reviewed under the deferential “arbitrary and capricious” standard. “Although parties may
conduct discovery and present new evidence in ERISA cases on de novo review, evidence outside
of the administrative record is not allowed ‘where the question is whether a decision is . . .
arbitrary and capricious.’” Schilling v. Epic Life Ins. Co., No. 13-CV-438-WMC, 2015 WL
856575, at *15 (W.D. Wis. Feb. 27, 2015) (quoting Perlman v. Swiss Bank Corp. Comprehensive
Disability Prot. Plan, 195 F.3d 975, 982 (7th Cir. 1999)).
Like most rules, however, this one has exceptions. If a plaintiff makes a prima facie
showing of bias or conflict of interest by the decisionmaker, then courts sometimes allow
discovery. Semien v. Life Ins. Co. of NA., 436 F.3d 805, 813 (7th Cir. 2006). To qualify for this
exception, the plaintiff must: (1) show a specific conflict or instance of misconduct; and (2)
make a prima facie showing that there is good cause to believe that limited discovery will reveal
a procedural defect. Gebert v. Thrivent Fin. for Lutherans Grp. Disability Income Ins. Plan, No.
13-C-170, 2013 WL 6858531, at *2 (E.D. Wis. Dec. 30, 2013) (quoting Warner v. Unum Life
Ins. Co. of America, 2013 WL 3874060, *3 (N.D. Ill. July 26, 2013)). Moreover, “[e]ven where
a structural conflict exists, the conflict is significant only when there is some ‘likelihood that the
conflict of interest influenced the decision.’” Dennison v. Mony Life Ret. Income Sec. Plan for Emps.,
No. 10-CV-338-BBC, 2011 WL 13130850, at *4 (W.D. Wis. Apr. 28, 2011) (quoting Marrs
v. Motorola, Inc., 577 F.3d 783, 789 (7th Cir. 2009)). “The ultimate question . . . is whether this
11
is a ‘run-of-the-mill’ ERISA case or whether the Plaintiff can point to something that raises
suspicions.” Gebert, 2013 WL 6858531, at *2.
In their Rule 56(d) brief, plaintiffs do not even acknowledge this burden, much less
attempt to meet it. As evidence of procedural irregularity, they point only to conclusory
allegations in their complaint alleging that GHC saves money when it denies its members’
benefits claims. Complaint, dkt. 1, ¶¶ 44-47. But as GHC points out, this type of conflict of
interest exists in all cases in which the entity that makes the coverage decision also pays for the
benefits, and is insufficient on its own to open the door to discovery. See Dennison v. MONY Life
Ret. Income Sec. Plan for Emps., 710 F.3d 741, 746 (7th Cir. 2013) (observing that “[t]here is a
latent conflict of interest any time someone is asking for money from a company (from anyone,
in fact),” but this would not be enough to subject benefits review officers to discovery);
Weddington v. Aetna Life Ins. Co., No. 15 C 1268, 2015 WL 6407764, at *3 (N.D. Ill. Oct. 21,
2015) (“We read Dennison as saying that a claimant . . . cannot obtain discovery merely by
pointing to a structural conflict, as that approach would open the door too broadly.”)
Apart from their generic conflict-of-interest claim, plaintiffs argue primarily that they
need discovery in order to determine whether GHC actually reviewed all the providers’ reports
and medical literature that plaintiffs submitted in support of their claim that the sought-after
treatment was not experimental and investigational, and, if so, why GHC rejected it. As stated
in plaintiffs’ counsel’s affidavit: “To determine whether GHC was simply going through the
motions to substantiate a denial of coverage it had already determined to make, K.H. must
identify and depose the decision-makers in the case to determine if they really exercised
discretion or ignored the information set forth by K.H.” Aff. of Paul Kinne, dkt. 25, ¶ 10.
12
However, the mere fact that plaintiffs adduced substantial evidence in support of their claim is
not enough to make a prima facie showing of a procedural defect. As the Gebert court observed,
if it were enough to cite medical evidence supportive of a benefits claim, then
every case would justify opening the doors to discovery. Instead, unless something
about the merits of the claim jumps off the page, the mere fact that the plaintiff's
own physicians supported her claim is not enough to raise the specter of
impropriety.
Id., 2013 WL 6858531, at *3.
Moreover, plaintiffs’ argument that they are entitled to know why GHC ultimately was
not persuaded by their evidence misunderstands a claims administrator’s obligations under
ERISA. As the Seventh Circuit explained in Gallo v. Amoco Corp., 102 F.3d 918 (7th Cir. 1996),
[a]ll [the claims administrator] has to give the applicant is the reason for the
denial of benefits; he does not have to explain to him why it is a good reason. To
require that would turn plan administrators not just into arbitrators, for
arbitrators are not usually required to justify their decisions, but into judges, who
are.
Id., at 923. If GHC were to have failed to plainly articulate its grounds for its decision or were
to have offered shifting or incomplete explanations, then plaintiffs can use that to argue that
GHC’s decision was arbitrary and capricious. See id. (“An administrator who fails to articulate
his grounds runs the risk that a court will find that he has no grounds[.]”). But plaintiffs cannot
use any such failures or position shifts as a basis to obtain discovery about the “mindset” of the
decision-makers.
In a strained attempt to call GHC’s good faith into question, plaintiffs point to facts that
seem to have nothing to do with this case. First, they argue that it is “odd” that GHC purported
to consider whether the speech and occupational therapy treatments sought by plaintiffs were
“evidence-based” because, under the policy’s coverage terms, “intensive-level therapy” is not
13
covered after age 9, whether it is evidence-based or not. Reply Br., dkt. 30, at 2. Plaintiffs
surmise from this purported “oddity” that GHC must have been trying to “cover up” something.
This argument is both confusing and unconvincing. Nothing in the administrative record
suggests that anyone, even the plaintiffs, thought the speech or occupational therapy plaintiffs
were seeking would be covered as an “intensive level” service.3 To be covered, such services had
to meet various criteria, including that they were provided (a) primarily in the home, (b) with
a parent present and engaged in the sessions, and (c) averaged at least 20 hours a week. See dkt.
15-2, Art. V, § C(1). The supporting documents submitted with plaintiffs’ claims indicate that
they were seeking occupational therapy 1-2 times a week, and speech and language therapy one
time per week for 60-minute sessions, far short of the 20 hours/week average for intensive-level
services. See, e.g,, dkt. 17-1, at 22; dkt. 17-3, at 9-10.
What is more, according to the Occupational Therapy Evaluation conducted by CI
Pediatric Centers, by July 28, 2017, K.H. already had “received five years of intensive behavioral
services through Wisconsin Early Autism Project, which were recently discontinued due to
insurance.” Dkt. 17-1, at 13. GHC’s policy provided that coverage for such services was
available for only 48 months. See Dkt. 15-2, Art. V, § C(1).4
Assuming the accuracy of the
historical facts provided in the OT evaluation–and plaintiffs have cited no evidence to suggest
otherwise–this means that the only autism-related services for which K.H. could have been
eligible at the time of the contested denials in this case were non-intensive or “concomitant”
3
Notably, Policy 121 identified speech and occupational therapy as a “concomitant” therapy to
intensive or non-intensive level behavioral services.
4
I do not understand plaintiffs to be challenging this cutoff, which is consistent with Wisconsin’s
autism mandate. Wis. Adm. Code § Ins. 3.36(4)(b)(“Insurers and self-insured health plans shall provide
up to forty-eight months of intensive-level services [for treatment of ASD].”).
14
services. Indeed, plaintiffs themselves appear to have recognized as much: a letter from their
personal representative in support of their March 2019 appeal referred only to the plan’s
coverage for “non-intensive services.” 3/5/19 Letter from Heather Morris, dkt. 17-5, at 7.
Perhaps I am missing something, but it appears that the terms of the “intensive level services”
provision are irrelevant to this case.
Similarly misplaced is plaintiffs’ argument that discovery is necessary because the facts
of this case “unfolded at the same time courts in other parts of the country were ordering
insurers to cover [Applied Behavioral Analysis] therapy.” As an initial matter, it is not at all clear
that the speech and occupational therapy treatment K.H. was seeking was the same as or
equivalent to Applied Behavioral Analysis therapy. Moreover, the sole case plaintiffs cite,
McHenry v. PacificSource Health Plans, 679 F. Supp. 2d 1226, 1239 (D. Or. 2010), does not
advance their position. The coverage sought in McHenry was for a child with autism under the
age of 10 (he began ABA therapy when he was two), for which there was a wealth of studies and
medical literature supporting the effectiveness of ABA therapy to treat autism. Id. at 1238.
Nothing in McHenry addresses speech or occupational therapy, much less their effectiveness in
treating children with ASD over age 9. Accordingly, the McHenry decision does not support an
inference of malfeasance by GHC (if this is what plaintiffs are attempting to suggest) such that
plaintiffs should be allowed to take discovery from GHC’s decision-makers.
Finally, plaintiffs assert that discovery is necessary to find out whether GHC considered
whether there was medical evidence to support approving the requested therapy as a “nonintensive-level service” rather than an intensive level service. Aff. of Paul Kinne, dkt. 25, ¶ 13.
Again, there is no evidence that anyone thought plaintiffs were seeking “intensive level” service,
15
but in any case, GHC’s alleged failure to consider whether the therapies might be covered under
a different treatment category or coverage provision does not show that GHC was biased or
otherwise raise the “specter of impropriety.” Plaintiffs’ argument might help them show that
GHC acted unreasonably, but they can make that argument without deposing the decisionmakers.
In sum, plaintiffs have failed to make a prima facie showing of a conflict of interest or
other impropriety on GHC’s part that would warrant granting an exception to the general rule
that limits review in this case to the evidence in the administrative record. Accordingly, their
motion for discovery with respect to the first count of the complaint is denied.
II. Count II: Federal Parity Act Claim
In Count II, plaintiffs allege that GHC’s coverage denials violated the Paul Wellstone and
Pete Dominici Mental Health Parity and Addiction Equity Act of 2008 (the “Parity Act,”), an
ERISA amendment codified at 29 U.S.C. § 1185a. The parties appear to agree that the Parity
Act is enforceable through a cause of action under 29 U.S.C. § 1132(a)(3). See Christine S. v.
Blue Cross Blue Shield of New Mexico, 428 F. Supp. 3d 1209, 1219-20 (D. Utah 2019) (plaintiffs
could enforce their Parity Act rights only through § 502(a)(3) or ERISA, not § 502(a)(1)(B));
Joseph F. v. Sinclair Servs. Co., 158 F. Supp. 3d 1239, 1259 n.118 (D. Utah 2016) (finding Parity
Act enforceable through a cause of action under 29 U.S.C. § 1132(a)(3)); accord Varity Corp. v.
Howe, 516 U.S. 489, 512 (1996) (describing Section 502(a)(3) as a “catchall...[that] offer[s]
appropriate equitable relief for injuries caused by violations that § 502 does not elsewhere
16
adequately remedy.”). In its motion for summary judgment, however, GHC argues that this
claim must be dismissed because plaintiffs have failed to plausibly allege a Parity Act violation.
The Parity Act was “designed to end discrimination in the provision of [insurance]
coverage for mental health and substance use disorders as compared to medical and surgical
conditions . . .” Coal. for Parity, Inc. v. Sebelius, 709 F.Supp.2d 10, 13 (D.D.C.2010). Under the
statute, ERISA plans that choose to offer mental health coverage must ensure that:
the treatment limitations applicable to ... 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 ...
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(a)(3)(A)(ii). “Put simply, the Parity Act prohibits the imposition of more
stringent treatment limitations for mental health treatment than for medical treatment.” Bushell
v. UnitedHealth Grp. Inc., No. 17-CV-2021 (JPO), 2018 WL 1578167, at *4 (S.D.N.Y. Mar. 27,
2018).
The Parity Act defines “treatment limitations” 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.” Id. Regulations promulgated by the Departments of Labor, Health and Human
Services, and Treasury clarify that treatment limitations should be scrutinized with respect to
certain classifications of treatment: (1) inpatient, in-network; (2) inpatient, out-of-network; (3)
outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and (6) prescription
drugs. 29 C.F.R. § 2590.712(c)(2)(ii). If a plan provides medical benefits within a certain
classification, it cannot impose more stringent limitations on a mental health benefit within the
same classification.
17
Additionally, the Parity Act regulations explain that the Act applies to “nonquantitative”
treatment limitations (NQTLs), which are limitations that are not expressed numerically, but
“otherwise limit the scope or duration of benefits for treatment.” 29 C.F.R. § 2590.712(a).
Examples of NQTLs include limitations on geographic location, facility type, drug formulary
design, provider network admission, step therapies, and other similar medical management
program design elements. 29 C.F.R. § 2590.712(c)(4)(ii). With respect to NQTLs, the
implementing regulations mandate that “any processes, strategies, evidentiary standards, or other
factors used in applying the nonquantitative treatment limitation to mental health . . . benefits
in the classification are comparable to, and are applied no more stringently than, the processes,
strategies, evidentiary standards, or other facts used in applying the limitation with respect to
medical/surgical benefits in the same classification.” 29 C.F.R. § 2590.712(c)(4)(i). In other
words, “[p]lans need not apply the same limitations to all benefits; rather, ‘the processes,
strategies, evidentiary standards, and other factors plans use[ ] to impose those limitations [have]
to be comparable for all benefits.’” Alice F. v. Health Care Serv. Corp., 367 F. Supp. 3d 817, 827–28
(N.D. Ill. 2019) (emphasis in original) (internal quotation and citation omitted).
As district courts in this circuit and elsewhere have observed, “‘there is no clear law on
how to state a claim for a Parity Act violation,’ and as a result, ‘district courts have continued
to apply their own pleading standards.’” Smith v. Golden Rule Ins. Co., 526 F. Supp. 3d 374, 386
(S.D. Ind. 2021) (quoting Michael W. v. United Behav. Health, 420 F. Supp. 3d 1207, 1234 (D.
Utah 2019)); see also Rula A.-S. v. Aurora Health Care, No. 20-cv-1816-JPS, 2021 WL 3116143,
at *3 (E.D. Wis. July 22, 2021) (observing same). Although these various pleading standards
differ somewhat, courts generally agree that a plaintiff bringing a Federal Parity Act claim is not
18
restricted to showing that the plan expressly discriminates against mental health or substance
abuse treatment (i.e. a facial claim), but may also challenge a coverage provision “as applied,”
that is, by showing that a facially neutral coverage term is applied disparately in practice. Smith,
526 F. Supp. 3d at 389 (“ Mr. Smith need not identify a treatment limitation expressly outlined
in the Policy that applies to mental health or substance abuse treatment but not to medical or
surgical treatment; it is enough for him to allege that the facially neutral medical necessity
requirement is applied disparately in practice.”); Rula A.-S., 2021 WL 3116143, at *4 (agreeing
with Smith); Michael W., 420 F. Supp. 3d at 1238 (“Plaintiffs have plausibly pleaded that, for
outdoor behavior treatment programs, which in practice are only available to those seeking
mental health/substance abuse care, Defendants' policy of excluding outdoor behavior therapy
from coverage is because of more restrictive criteria that is not applied to analogous
medical/surgical care.”). In the end,
[t]he ultimate question in any Parity Act case is whether the plaintiff has
plausibly alleged that his health insurance plan applies a separate or more
restrictive treatment limitation to mental health and substance abuse services
versus medical and surgical services, and the different standards merely provide
a framework for considering that question as it relates to the different types of
Parity violations, including facially disparate treatment, categorical exclusions,
and as-applied challenges.
Smith, 526 F. Supp. 3d at 388–89.
In arguing for summary dismissal of plaintiffs’ Parity Act claim, GHC argues that
plaintiffs’ complaint does not allege either a facial or as-applied Federal Parity Act violation. As
GHC points out, the complaint contains only one paragraph, ¶ 49, that resembles the elements
of a Parity Act claim. There, plaintiffs allege that restricting coverage of speech therapy to
children under age 10 was a treatment limitation on mental health benefits, and that GHC’s
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plan placed no similar treatment limitation on medical/surgical benefits. Complaint, dkt. 1, ¶
49. But GHC says this claim is “flawed” because it misstates the actual treatment limitation that
GHC applied in denying plaintiffs’ requests for speech therapy.5 According to GHC, its plan did
not have a “treatment limitation” defined by age; rather, “it restricted coverage to those
treatments with sufficient evidentiary support, and, in this instance, evidentiary support only
existed for a certain age range [under 10].” Id.
In their Rule 56(d) motion, plaintiffs offer no response to GHC’s characterization of the
treatment limitation it applied to deny plaintiffs’ request for speech therapy for K.H.
Nevertheless, plaintiffs continue to insist that the plan “applies a separate age-based treatment
limitation where the therapy is sought to treat autism.” Br. in Supp. of Rule 56(d) Mot., dkt.
24, at 10. Based on their record citations, it appears that plaintiffs are relying, once again, on
the plan’s coverage for “intensive-level services” to treat autism, and its provision that such
services are available only between the ages of 2 and 9. As explained in the preceding section,
however, nothing in the administrative record suggests that the requested speech therapy and
occupational therapy constituted an “intensive-level service” or would otherwise have been
covered under this provision but for K.H.’s age. Once again, it is puzzling why plaintiffs are
focused on a plan provision that has no relevance to this case.
5
GHC also presents evidence that it does restrict coverage for medical benefits when outside
guidance recommends such benefits only for certain ages. For example, it says, the Plan’s coverage for
“evidence-based” preventative services was set based on the United States Preventive Services Task Force’s
recommendations concerning the ages for which such services should be provided. Plaintiffs argue that
screenings and therapy are not necessarily comparable or in the same “classification,” and that they need
discovery to “probe these issues” to respond to the summary judgment motion. In light of my conclusion
that plaintiffs have yet to plead a plausible claim under the Parity Act, I do not address plaintiffs’ request
for discovery on this topic, nor have I considered it in deciding this motion.
20
Moreover, even if I assume that plaintiffs could state a plausible Parity Act claim based
on the age limitation in the “intensive-level services” provision (and show that they have
standing to assert such a claim), plaintiffs have failed to make a convincing argument why they
need discovery. In the supporting affidavit, counsel states merely that “K.H. must conduct
discovery to determine if the age restrictions are more restrictive for ASD [than for
medical/surgical limitations for which GHC does use age limits], and she must gather facts to
ensure that the restrictions are being compared across common classifications.” Aff. of Paul
Kinne, dkt. 25, ¶ 7. However, given that plaintiffs appear to be asserting a facial challenge based
on the explicit terms of the plan (the age restriction for intensive-level services), plaintiffs should
be able to discern the information they seek from the plan documents. At the very least,
plaintiffs should be able to mesh the plan documents with the numerous district court cases
addressing the elements of a Parity Act claim to articulate a theory of relief under the Parity Act
that raises their right to relief “above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007). The current complaint fails to do so: it contains but a single bare-bones
allegation about speech therapy that plaintiffs apparently no longer are pursuing,.
Perhaps recognizing the flaws in their age restriction theory, plaintiffs raise an entirely
new theory based on the plan’s exclusion for sensory integration therapy. Plaintiffs assert:
The plan includes a treatment limitation for autism, including but
not limited to exclusion for sensory integration therapy. To
determine the classification into which the limitation is placed, and
to determine if the limitations are applied only to mental health or
if the restriction is more restrictive than restrictions applied to
medical/surgical benefits, K.H. must be able to determine facts to
establish comparable classifications (if it can be done at all). K.H.
must also be able to determine if the limitations on ASD coverage
separately applied only to mental health. K.H. must also be able
21
to seek information to establish the scope of restrictions for
medical/surgical benefits so she can compare them.
Aff. of Kinne, dkt. 25, ¶ 6.
In their supporting brief, plaintiffs note that courts have found Parity Act violations where a
plan has a blanket exclusion that applies exclusively to mental health conditions. See, e.g., Doe
v. United Behav. Health, 523 F. Supp. 3d 1119, 1128 (N.D. Cal. 2021) (plan’s exclusion for
“Intensive Behavioral Therapies such as Applied Behavior Analysis for Autism Spectrum
Disorders” violated Parity Act because, “[o]n its face, the . . . exclusion creates a separate
treatment limitation applicable only to services for a mental health condition (Autism).”); A.F.
ex rel. Legaard v. Providence Health Plan, 35 F. Supp. 3d 1298, 1303 (D. Or. 2014) (finding facial
Parity Act violation where, in spite of offering coverage for autism, insurer denied ABA treatment
based on plan’s Developmental Disability Exclusion, which applied “specifically and exclusively
to mental health conditions”).
But in these (and other) “categorical exclusion” cases, the exclusions at issue applied “on
their face” only to mental health conditions, with no corresponding limitation on treatment for
medical conditions.
Bushell v. UnitedHealth Grp. Inc., No. 17-CV-2021 (JPO), 2018 WL
1578167, at *5 (S.D.N.Y. Mar. 27, 2018) (insurer categorically excluded nutritional counseling
for all eating disorders yet offered nutritional counseling for some medical conditions, like
diabetes); V. v. Health Care Serv. Corp., No. 15 C 09174, 2016 WL 4765709, at *6 (N.D. Ill.
Sept. 13, 2016) (group health plan categorically excluded expenses for residential treatment
centers for mental illness but covered expenses for comparable treatment settings for physical
illness); Craft v. Health Care Serv. Corp., 84 F. Supp. 3d 748, 749 (N.D. Ill. 2015) (same).
22
In the instant case, while GHC’s plan specifically excludes sensory integration therapy
from its coverage for ASD, GHC’s plan also excludes coverage for sensory integration therapy in
general. So the cases involving separate treatment limitations for mental health services do not
advance plaintiffs’ position.
What is more, GHC does not even appear to have relied on the plan’s categorical
exclusion for sensory integration therapy when it denied coverage to plaintiffs. Rather, GHC
denied coverage based on its determination that occupational therapy for the treatment of ASD
was not evidence-based and that it was not covered under the plan’s exclusion for experimental
and investigational treatments. It is not clear, therefore, whether plaintiffs would even have
standing to assert a Parity Act violation based on the categorical exclusion for sensory integration
therapy.
In any case, all of this discussion is academic: plaintiffs’ complaint says nothing about the
sensory integration therapy exclusion. I will not permit plaintiffs to take discovery on a claim
they have not pled.
Finally, plaintiffs say they need discovery to “learn whether a claim for coverage, coupled
with reams of research and pleas from K.H.’s own health care providers, was treated in the same
manner as requests for treatment coverage for medical/surgical treatments.” Dkt. 24, at 12. But
plaintiffs have cited no authority to suggest that the Parity Act, which demands parity among
“treatment limitations,” applies to the administrative appeals process. Therefore, this request is
denied.
In sum, because plaintiffs’ complaint fails to state a plausible claim for relief under the
Parity Act, they are not entitled to discovery on that claim. However, I will allow plaintiffs an
23
opportunity to amend their complaint solely with respect to their Parity Act claim. If, after a
diligent review of the case law and the plan documents, plaintiffs choose to take this path, then
they must file their amended complaint not later than May 27, 2022. If plaintiffs do not file
an amended complaint, then their Parity Act claim will be dismissed, and plaintiffs must respond
to the pending motion for summary judgment on the denial-of-benefits claim not later than June
6, 2022. If plaintiffs do file an amended complaint, then GHC will have until June 23, 2022
in which to either (a) file an updated motion for summary judgment, or (b) withdraw the motion
for summary judgment, without prejudice to refiling it after the parties have had an opportunity
to take discovery on the Parity Act claim. The court will set additional deadlines as necessary,
depending on which course this proceeding takes.
ORDER
IT IS ORDERED that:
1.
Plaintiffs’ motion pursuant to Fed. R. Civ. P. 56(d) to defer consideration of the
pending motion for summary judgment and permit them to take discovery, dkt.
23, is GRANTED in part and DENIED in part, as stated below.
2.
Plaintiffs have until May 27, 2022 in which to file an amended complaint with
respect to their claim brought pursuant to the Federal Parity Act.
3.
If plaintiffs do not file an amended complaint by May 27, 2022, then their Parity
Act claim will be dismissed, and plaintiffs must respond to the pending motion
for summary judgment on the denial-of-benefits claim not later than June 6,
2022.
4.
If plaintiffs do file an amended complaint, then GHC has until June 23, 2022 in
which to either (a) file an updated motion for summary judgment, or (b)
withdraw the motion for summary judgment, without prejudice to refiling it after
the parties have had an opportunity to take discovery on the Parity Act claim.
24
5.
If GHC chooses option (a), above, then the court will set 21/10 response/reply
deadlines for the summary judgment motion. If GHC chooses option (b), then
the court will set a telephonic status conference to revisit the schedule in this case,
including the deadline for Rule 23 motions.
Entered this 6th day of May, 2022.
BY THE COURT:
/s/
_______________________
STEPHEN L. CROCKER
Magistrate Judge
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