By Jessica Grillo, J.D., Legal Advisor for The Kennedy Forum
In early 2014, Kevin Munnelly’s 17-year-old son, C.M., received mental health care at Telos Residential Retreat and Logan Rover Academy, two residential treatment facilities. Health insurance claims for C.M.’s treatments were submitted to Empire HealthChoice Assurance, Inc. (“Empire”), the claims administrator for the group health plan. Empire issued several denial letters, stating that residential treatment was not a covered service, and that the service was not payable for the diagnosis stated on the claim.
In July 2016, a lawsuit was filed challenging the denial of the mental health benefits for C.M.’s residential treatment services. Plaintiff Kevin Munnelly argued that Empire’s denial of benefits was erroneous because it was based solely on Empire’s exclusion of coverage for residential treatment services, which applied across the board whether a provider was in-network or out-of-network. Specifically, the exclusion precluded plan members from obtaining benefits for 24-hour supervision and mental health care in a non-hospital setting. Munnelly further argued that because residential treatment services are only provided used in the treatment of mental health conditions – and there was no corresponding limitation on analogous treatment for medical/surgical conditions – the plan was in violation of the Mental Health Parity and Addiction Equity Act of 2008 (also known as the Federal Parity Law), which requires insurers to cover illnesses of the brain, such as depression and addiction, no more restrictively than how they cover illnesses of the body, such as diabetes and cancer. Empire responded that its denial of benefits was consistent with the plan’s exclusion of coverage for 1) residential treatment services; 2) services in which a member does not comply with the plan’s pre-certification requirements; and 3) out-of-network, in-patient mental health care. Specifically, Empire argued that the Interim Final Rules authorized group health plans to exclude coverage for mental health residential treatment services.
In March 2018, the Court found that the plan’s provision excluding coverage for residential treatment services violated the Federal Parity Law. Empire’s argument that the Interim Final Rules permitted exclusion of residential treatment fell short, as the Court stated that although public comments on the rule specifically sought to exclude residential treatment, the rule expressly declined to address the issue. The Court stated that the decision to set aside the “scope of services” issue did not constitute an endorsement of treatment-setting limitations and that the Interim Final Rules made it clear that separate limitations on the scope of treatment and treatment setting applied only to mental health benefits were impermissible.
The Court additionally concluded that while Empire had not waived its precertification defense by failing to raise the issue after the first denial letter, Plaintiff’s failure to obtain precertification did not justify a complete denial of the claim. The Court also opined that Empire’s denial letters failed to include the out-of-network care exclusion as a reason for denying coverage, but allowed Empire to raise the policy’s exclusion of out-of-network providers as a defense.
Key Takeaway from This Case
Despite arguments that exclusions for residential treatment facilities pre-date the Final Rules of the Federal Parity Law, Courts have continued to hold that such blanket exclusions are not permissible. The Final Rules specifically require plans to cover residential treatment facilities for mental health to the same degree as skilled nursing facility services for medical treatment. As such, plan participants are able to successfully challenge these exclusions, just as the Plaintiff did in this case.
To read the full decision, click here.
The Kennedy Forum Legal Taskforce seeks to create positive case law in ERISA, and Federal and State Parity and Disability cases nationwide. The group is comprised of expert litigators in the field who are committed to fighting for equality and justice for those who have been wrongfully denied coverage for mental health and addiction treatment services.
Parity Resources from The Kennedy Forum
Parity Registry is a website where consumers can learn to file an appeal with their health plan after being denied coverage for mental health or addiction treatment; send a complaint directly to state enforcement officials; access step-by-step appeals guidance; find a comprehensive listing of state and federal regulators who can help with an appeal; and review FAQs and other information to help advance an appeal. The data shared will help to shape public policy and influence future legislation.
Parity Track is a website where policymakers, journalists, consumers, and others can track legislative, regulatory, and legal parity activities in all 50 states and at the Federal level to monitor implementation and best practices.
