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Kurt W. v. United Healthcare Insurance Co.

United States District Court, D. Utah

December 12, 2019

KURT W., SANDRA W., and E. W., Plaintiffs,
v.
UNITED HEALTHCARE INSURANCE COMPANY, et al., Defendants.

          MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

          CLARK WADDOUPS UNITED STATES DISTRICT JUDGE

         Before the court is Defendants United Healthcare Insurance Company, Laboratory Corporation of America Holdings, and the Laboratory Corporation of America Holdings Medical Benefit Plan's motion to dismiss (ECF No. 8), which seeks to dismiss, or in the alternative stay, Plaintiffs' action. The motion has been fully briefed, and Defendants did not request a hearing on the same. (ECF No. 14). For the reasons stated herein, Defendants' motion is GRANTED IN PART AND DENIED IN PART.

         BACKGROUND

         Plaintiff E. W. is the child of Plaintiffs Kurt W. and Sandra W. (Compl., ECF No. 2 at ¶ 1). At all times relevant to this action, Kurt W. was a participant in the Laboratory Corporation of America Holdings Medical Benefit Plan (the “Plan”), a self-funded employee welfare benefits plan administrated by defendant Laboratory Corporation of America Holdings (“LabCorp”) and for which defendant United Healthcare Insurance Company (“United”) was the third-party claims administrator. Id. at ¶¶ 2-5. At all times relevant to this action, E. W. was a beneficiary of the Plan. Id. at ¶ 5.

         E. W. is diagnosed with autism spectrum disorder, adjustment disorder, anxiety, and depression. Id. at ¶ 22. As E. W. grew into adolescence, he became increasingly isolated to the point that he stopped attending activities and school and failed to respond to therapeutic interventions. Id. at ¶¶11-25. E. W.'s psychiatrist and educational consultant recommended that he enroll in a residential treatment facility but that he first attend an outdoor behavioral health program to ease the transition into the facility. Id. at ¶25. On January 22, 2017, E. W. was admitted into Aspiro Academy, an outdoor behavioral health program. Id. at ¶¶ 6, 25, 26. Thereafter, on March 30, 2017, E. W. was admitted into Daniels Academy, a residential treatment facility for mental-health. Id. at ¶¶ 6, 25, 37.

         By a letter dated June 1, 2017, United denied payment of E. W.'s treatment at Aspiro on the basis that Plaintiffs had failed to provide requested information. Id. at ¶ 27. Plaintiffs appealed the denial and requested copies of Plan documents. Id. at ¶¶ 28-29. United upheld the denial by a January 18, 2018 letter which stated that the treatment “did not meet the Optum Level of Care Guideline required to be followed in the member's behavioral health plan benefits” and that E. W. “was stable from a medical standpoint, ” as he was “not suicidal, homicidal, manic, aggressive, or psychotic, ” was “stable on his medicine, ” and “did not require 24-hour nursing care.” Id. at ¶ 30. The letter also stated that “[w]ilderness therapy is not a covered service under [E. W.'s] plan.” Id. United did not provide the Plan documents that Plaintiffs requested. Plaintiffs again appealed this decision and renewed their request for Plan documents. Id. at ¶¶ 32-35. United upheld the denial of E. W.'s treatment at Aspiro “based on Optum Level of Care Guidelines for Residential Treatment of Mental Health Disorders and the Optum Common Criteria and Clinical Best Practices for All Levels of Care Guidelines” and because E. W. was cooperative and “did not want to harm himself [or] others.” Id. at ¶ 36.

         By a letter dated April 21, 2017, United also denied payment of E. W.'s treatment at Daniels Academy from April 13, 2017 forward on the basis that E. W. “made progress and that his condition no longer meets Guidelines for further coverage of treatment in this setting” and that E. W. “does not need to be in a 24-hour care setting.” Id. at ¶ 38. Plaintiffs appealed this denial and provided statements of E. W.'s providers recommending that he remain in the level of treatment he was receiving. Id. at ¶¶ 39-43. Plaintiffs also renewed their request for a copy of the Plan documents. Id. at ¶¶ 41, 44. By letter dated March 30, 2018, United upheld the denial on the basis that E. W.'s “condition no longer met Guidelines for further coverage of treatment in this setting” and because he “did not require 24 (twenty-four) hour nursing care.” Id. at ¶ 45. Plaintiffs again appealed this denial, and again requested Plan documents. Id. at ¶¶ 47-51. United upheld the denial by a letter dated June 8, 2018 on grounds already provided in the prior March 30, 2018 letter. Id. at ¶ 45. Defendants never provided the Plan documents. Id. at ¶ 83.

         Plaintiffs filed this action on April 3, 2019, alleging that Defendants violated ERISA and the Mental Health Parity Act (“the Parity Act”) by denying coverage for E. W.'s treatment. Plaintiffs seek an order requiring Defendants to pay for the cost of E. W.'s treatment, and statutory penalties, and varied equitable releif. Kurt W. and Sandra W. have incurred expenses in excess of $170, 000.00 for E. W.'s treatment. Id. at ¶ 55.

         DISCUSSION

         Defendants' motion to dismiss asks the court to: 1) dismiss, or in the alternative stay, Plaintiff's action because E. W. is a member of a plaintiff class in a pending class action premised on the same facts and claims; 2) dismiss Plaintiffs' claim under the Party Act; and 3) dismiss Kurt W. and Sandra W.'s claims for lack of standing. Each of these requests will be discussed in turn.

         I. Plaintiffs' participation in the Wit class action does not require this action to be dismissed or stayed.

         Defendants first argue that Plaintiffs' action should be dismissed, or in the alternative stayed, because E. W. is a member of the plaintiff class in a class action lawsuit pending in the Northern District of California, Wit v. United Behavioral Health, and “‘members of [a] plaintiff class in class action cannot bring separate individual action premised on same grounds as pending class action.'” Cimino v. Perrill, 153 F.3d 726 (10th Cir. 1998) (citing Rivarde by Rivarde v. State of Missouri, 930 F.2d 641, 643-45 (8th Cir.1991)). Even if the court accepts that this principle is “well-established in this Circuit, ” it does not find that it governs here, as Plaintiffs' action is not premised on the “same grounds” as Wit.

         Here, Plaintiffs allege that Defendants breached their fiduciary duty to E. W. in violation of ERISA by denying E. W.'s care at Aspiro Academy and Daniels Academy; violated the Parity Act by requiring E. W. to satisfy acute care medical necessity criteria in order to obtain coverage for residential treatment at Aspiro Academy and Daniels Academy; violated the Parity Act by applying processes, strategies, and etc. to limit coverage for mental health treatment more stringently than coverage than medical/surgical treatment; and violated ERISA by failing to produce to them copies of Plan documents. (See Compl., ECF No. 2 at ¶¶ 59, 65-67, 69-71).

         The Wit class action, on the other hand, only involves claims of “alleged wrongful denial of coverage for one type of provider of substance abuse and mental health treatment” and “does not reference or contain any causes of action under the Parity Act” or “involve any denials of coverage for outdoor behavioral health programs.” See Michael W. v. ...


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