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B.D. v. Blue Cross Blue Shield of Georgia

United States District Court, D. Utah, Northern Division

January 18, 2018

B.D. and S.D., Plaintiffs,
v.
BLUE CROSS BLUE SHIELD OF GEORGIA, and ATLANCO VENTURES, INC. MEDICAL BENEFIT PLAN, Defendants.

          REDACTED MEMORANDUM DECISION AND ORDERGRANTING [39] MOTION FOR SUMMARY JUDGMENT;DENYING [41] MOTION FOR SUMMARY JUDGMENT; andAWARDING BENEFITS

          David Nuffer United States District Judge.

         This administrative appeal of Defendants' Blue Cross Blue Shield of Georgia (“BCBSG”) denial of benefits for Plaintiffs B.D. and S.D. is governed by ERISA.[1] Plaintiffs sued Defendants, after Plaintiff S.D.'s residential treatment for mental health related issues was denied by BCBSG. BCBSG insures Atlanco Ventures, Inc. Medical Benefit Plan (“Plan”). Atlanco Ventures, Inc. was dismissed.[2] Plaintiffs and BCBSG move for summary judgment.[3]Each party opposes the other's motion and replies in support of its motion.[4]

         Plaintiff B.D. is a participant in the Plan and his daughter S.D. is a beneficiary of the Plan. S.D. received mental health care and treatment at Uinta Academy (“Uinta”) in Utah between August 8, 2013, and November 12, 2015. Uinta requested approval for coverage of services provided from August 8, 2013 through July 17, 2014, and BCBSG initially denied coverage, indicating the requested services were not a covered benefit. B.D. administratively appealed. BCBSG upheld its previous decision. B.D. sued.

         The Plan changed year-to-year and there was a separate plan document (“SPD”) for each of the 2013, 2014 and 2015 years. For 2013 and 2014, the Plan did not list residential treatment centers as a covered benefit, “Residential Treatment Centers [are not covered] Unless required to be covered by law.”[5] In 2015, the Plan changed to cover residential treatment centers for mental health services.

         A. Background ......................................................................................................................... 3

         1. The Parity Act ......................................................................................................... 3

         2. The Interim Final Rules. . ........................................................................................ 4

         3. The Final Rules. . ..................................................................................................... 6

         B. Undisputed material facts ................................................................................................... 7

         1. The Plan. . ................................................................................................................ 8

         2. BCBSG's Denial of Benefits for S.D.'s Stay at Uinta .......................................... 10

         C. Summary Judgment Standard ........................................................................................... 13

         D. Discussion ......................................................................................................................... 14

         1. Benefits Incurred Before January 1, 2015. . .......................................................... 14

         a. Standard of Review. . ................................................................................. 14

         b. The Plan did not violate the Parity Act. BCBSG's interpretation of the Plan violated the Parity Act. . .................. 15

         2. Benefits Incurred on or After January 1, 2015. . ................................................... 20

         a. Standard of Review. . ................................................................................. 20

         b. B.D. exhausted administrative remedies. . ................................................. 21

         3. Remand is inappropriate. . ............................................................................................. 23

         4. Prejudgment interest and attorney's fees and costs. . ............................................ 25

         E. Order ................................................................................................................................. 27

         A. BACKGROUND

         1. The Parity Act

         The Mental Health Parity Act of 1996 (“MHPA”) requires group health plans to use the same aggregate lifetime and annual dollar limits for mental health benefits that the plans impose on medical/surgical benefits. In 2008, the Paul Wellstone and Pete Domenici Mental Health and Addiction Equity Act (“Parity Act”) sought to achieve parity by mandating equal treatment limitations placed on mental health and medical/surgical benefits.[6] Under the Parity Act, a plan must ensure that (1) the treatment limitations applicable to mental health benefits are “no more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits covered by the plan; and (2) “there are no separate treatment limitations that are applicable only with respect to [mental health benefits].”[7] The Parity Act defines “treatment limitation” by referring to the scope and duration of treatment. “Specifically, 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.'”[8]

         Congress delegated to the Department of Labor, the Department of Health and Human Services, and the Department of Treasury (“Departments”) to issue “guidance and information” on the Parity Act's requirements.[9] “Congress directed, however, that the Parity Act would apply to all plans beginning on or after October 3, 2009, and Congress did not provide for a delay of the Parity Act even if the Departments had not yet issued the rules.”[10]

         2. The Interim Final Rules.

         The Interim Final Rules (“IFR”) were implemented on an expedited basis without comments in February 2010, just four months after the Parity Act took effect, and remained in effect until the Final Rules were published in 2014.[11] The IFRs required treatment limitation parity between mental health benefits and medical benefits which are applied on a classification-by-classification basis.[12] The IFRs “established six ‘classifications of benefits' for purposes of Parity Act compliance: (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.”[13] “The Departments chose these classifications after observing that many plans already varied treatment limitations ‘based on whether a treatment is provided on an inpatient, outpatient, or emergency basis; whether a provider is a member of the plan's network; or whether the benefit is specifically for a prescription drug.'”[14] “The regulations left it to group health plans to define, for example, ‘inpatient, outpatient, and emergency care, ' but mandated that plans apply those terms ‘uniformly' for both mental health and medical/surgical benefits.”[15]

         Under the IFRs, group health plans were required to “provide the same treatment limitations for mental health and medical/surgical benefits within each classification…”[16] As a result, a group health plan, in each classification, “could not place a treatment limitation on mental health benefits that was more restrictive than the treatment limitation applied to medical/surgical benefits in that same classification.”[17] “And, if a plan provided any benefits for a mental illness, the group health plan had to provide mental health benefits in each classification for which it provided any medical/surgical benefits.”[18] “The six classifications generally applied to both ‘quantitative' and ‘nonquantitative limitations.'”[19] “A quantitative treatment limitation, as defined under the IFRs, is a limitation that is ‘expressed numerically (such as 50 outpatient visits per year) ..... '”[20] “By contrast, a nonquantitative treatment limitation is a limitation that ‘otherwise limits the scope or duration of benefits for treatment …'”[21] (such as preauthorization requirements). The IFRs developed a standard for analyzing nonquantitative treatment limitations:

A group health plan (or health insurance coverage) may not impose a nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in any classification unless, under the terms of the plan (or health insurance coverage) as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical/surgical benefits in the classification.[22]

         In other words, under the IFRs, a plan complied with the Parity Act if, “when applying treatment limitations to all benefits in a group health plan, ” the insurance “company used comparable processes, strategies, evidentiary standards, or other factors.”[23] “The ‘processes, strategies, evidentiary standards, or other factors' could not just be comparable ‘on their face'; rather, the group health plan had to apply them ‘in the same manner.'”[24]

         “Although the Departments provided much needed guidance on ‘nonquantitative treatment limitations' in the IFRs, they left one major issue unaddressed: the extent to which the Parity Act required that the ‘scope of services' that a plan offered for mental health conditions had to be on par with those offered for medical/surgical conditions.”[25] “The term ‘scope of services' ‘generally refers to the types of treatment and treatment settings that are covered by a group health plan or health insurance coverage.'”[26] “Though the Departments acknowledged that ‘not all treatments or treatment settings for mental health … correspond to those for medical/surgical conditions, ' they made clear that the IFRs did not address the scope of services issue and ‘invite[d] comments on whether and to what extent [the Parity Act] addresses the scope of services … provided by a group health plan…'”[27]

         3. The Final Rules.

         The Final Rules were published on November 13, 2013, and the mental health parity provisions of the final regulations applied to group health plans for plan years beginning on or after July 1, 2014.[28] “The Final Rules also addressed the ‘scope of services' issue-that is, the types of treatment or treatment settings that plans offer within each…classification.”[29] The final regulations clarified that “plan or coverage restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services must comply with the nonquantitative treatment limitation parity standard.”[30] Therefore, residential treatment or intensive outpatient treatment-“intermediate” services - “were subject to the Act's parity requirements.”[31]

         The Final Rules “confirmed that skilled nursing facilities are the medical/surgical ‘scope of services' analogue for residential mental health treatment centers:

Plans and issuers must assign covered intermediate mental health …disorder benefits to the existing six benefit classifications in the same way that they assign comparable intermediate medical/surgical benefits to these classifications. For example, if a plan or issuer classifies care in skilled nursing facilities or rehabilitation hospitals as inpatient benefits, then the plan or issuer must likewise treat any covered care in residential treatment facilities for mental health … disorders as an inpatient benefit.”[32]

         “The Final Rules made clear that plan restrictions based on types of treatment or treatment settings-like residential treatment centers-must comply with the nonquantitative treatment limitation parity standard.”[33]

         B. UNDISPUTED MATERIAL FACTS

         The following Undisputed Material Facts are taken from both Plaintiffs' Motion and Defendant's Motion.

         1. The Plan.

         1. The 2013, the 2014 and the 2015 SPDs under the respective “Notices” sections describe the Mental Health Parity and Addiction Act:

The Parity Act provides for parity in the application of aggregate treatment limitations (day or visit limits) on mental health and substance abuse benefits with dollar limits or day/visit limits on medical/surgical benefits. In general, group health plans offering mental health and substance abuse benefits cannot set day/visit limits on mental health or substance abuse benefits that are lower than any such day or visit limits for medical and surgical benefits. A plan that does not impose day or visit limits on medical and surgical benefits may not impose such day or visit limits on mental health and substance abuse benefits offered under the Plan.

         2. The 2013 SPD provides that the Plan covers the following mental health and substance abuse services: “Treatment generally involves inpatient and outpatient services and may also include intensive outpatient/day treatment and possibly residential treatment centers.”

         3. The 2014 SPD provides that the covered services for mental health and substance abuse treatment include:

Inpatient Services in a Hospital or any Facility that we must cover per state law. Inpatient benefits include psychotherapy, psychological testing, convulsive therapy, detoxification, and rehabilitation. Outpatient Services including treatment in an outpatient department of a Hospital and office visits. Day Treatment Services which are services more intensive than outpatient visits but less intensive than an overnight stay in the Hospital.

         4. In the 2013 SPD under the “What's Not Covered” section it lists “Residential Treatment Centers Unless required to be covered by law.”[34]

         5. In the “What's Not Covered Section, ” the 2014 SPD lists “Residential Treatment Centers Unless we must cover them by law.”[35]

         6. The 2013 and the 2014 SPDs provided coverage for skilled nursing facilities.

         7. The 2013 and the 2014 SPDs covered rehabilitation services.

         8. The 2013 and the 2014 SPDs provided coverage for hospice care.

         9. The Plan, effective January 1, 2015, changed so that residential treatment centers providing care for mental health were a covered benefit provided that the treatment was medically necessary. In the section providing what services are covered, the 2015 SPDs states:

Inpatient Services in a Hospital or any Facility that we must cover per state law. Inpatient benefits include psychotherapy, psychological testing, electroconvulsive therapy, and detoxification. Outpatient Services including office and treatment in an outpatient department of a Hospital or outpatient Facility, such as partial hospitalization programs and intensive outpatient programs. Residential Treatment which is specialized 24-hour treatment in a licensed Residential Treatment Center. It offers individualized and intensive treatment and includes: Observation and assessment by a physiatrist weekly or more often, Rehabilitation, therapy, and education.

         10. The 2013, 2014 and 2015 SPDs General Provisions sections provide: “Any [provision] of the Plan which is in conflict with the laws of the state in which the Group Contract is issued, or with federal law, will hereby be automatically amended to conform with the minimum requirements of such laws.”

         11. The 2013, the 2014 and the 2015 SPDs define medical necessity as follows: “BCBSG reserves the right to determine whether a service or supply is Medically Necessary. The fact that a [physician] has prescribed, ordered, recommended or approved a service or supply does not, in itself, make it Medically Necessary.”

         12. The Plan requires that medical providers, on behalf of the plan participants, seek authorization from BCBSG prior to obtaining certain services.

         In summary, the Plan for 2013 and 2014 provided coverage for medical treatment at a skilled nursing facilities, rehabilitation services and hospice care and excluded coverage for mental health services at a residential treatment facility, unless it was required by law. Under the “What's Not Covered” Section of the SPDs, it states “In this section you will find a summary of items that are not covered by your Plan. Excluded items will not be covered even if the service, supply or equipment would otherwise be considered Medically Necessary.”[36] In the list of what is not covered, the 2013 and 2014 SPDs state “Residential Treatment Centers Unless required to be covered by law.”[37] Beginning January 1, 2015, the Plan changed and provided coverage for mental health services at residential treatment centers.

         2. BCBSG's Denial of Benefits for S.D.'s Stay at Uinta.

         1. In the event that a plan participant seeks review of BCBSG's denial of benefits for a claim, the participant can appeal BCBSG's denial as set forth in the Plan.

         2. The 2013, 2014 and 2015 SPDs provide that members can file a Grievance, which is a written complaint regarding the services or benefits received from the Plan. “The complaint may involve your dissatisfaction with our administration or claim practices, disenrollment proceedings, a determination of a diagnosis or level of service or denial of a claim that you think should be paid by us.”

         3. The Plan's appeal process is described under the “Grievance and External Review Procedures” section in the 2013, the 2014 and the 2015 SPDs but there is neither information about any external review procedures nor specifics about the number of appeals allowed.

         4. According to Uinta's Master Treatment Plan, S.D. struggled with depression, anxiety, and behavioral issues before she was admitted for treatment at Uinta.

         5. S.D. was admitted at Uinta on August 8, 2013, when she was 15 years old.

         6. After she was admitted to Uinta, S.D. was diagnosed with: Depressive Disorder NOS, Anxiety Disorder NOS, Reactive Attachment Disorder of Infancy or Early Childhood, Learning Disorder NOS, Problems with Primary Support Group, and Problems Related to the Social Environment Educational Problems.

         7. S.D.'s treatment at Uinta included individual, group and family therapy sessions.

         8. S.D. was discharged from Uinta on November 12, 2015.

         9. In July of 2014, while S.D. was still being treated at Uinta, Uinta requested approval for coverage of services provided from August 8, 2013 through July 17, 2014.

         10. On July 21, 2014, BCBSG denied coverage for the stated services based on the following rationale:

A request for payment for Child/Adolescent Psychiatric Residential Treatment has been received and administratively denied. Our records indicate that the requested service is not covered benefit based on the coverage as described in the [SPD]. Specifically, the Level of Care ...

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