A self-insured health plan denied coverage for a minor child’s residential mental health treatment, finding that the treatment was not medically necessary. The child’s family sued the plan, plan administrator, and claims administrator for (among other things) violating the Mental Health Parity and Addiction Equity Act (MHPAEA). The court held that the administrators violated the parity rules by using more stringent criteria to determine medical necessity for mental health benefits than for medical/surgical benefits of the same classification and directed the parties to submit further arguments as to the appropriate remedy (see our Checkpoint article).
The court considered the family’s requested relief: (1) an injunction preventing the administrators from using the more stringent criteria to evaluate claims for residential mental health treatment while using only plan language to evaluate comparable medical/surgical claims; (2) reevaluation of their claims based solely on plan language; and either (3) a “surcharge” of $217,086 to compensate for losses due to the parity violation or (4) “disgorgement or restitution” of $211,757 for out-of-pocket payment of medical expenses. The court denied the family’s requests, concluding that an injunction was inappropriate because the family did not prove it faced a continued or repeated threat of injury, and reevaluation would be futile because the child’s treatment would not be considered medically necessary even under the lesser standard of the plan’s language. Based on its finding that residential treatment was not medically necessary even without the application of the additional criteria, the court denied the requests for surcharge, disgorgement, and restitution because no harm or loss had been proven. The court awarded attorney’s fees and costs, in addition to amounts previously awarded as statutory penalties for the administrators’ delay in providing requested plan documents.
EBIA Comment: MHPAEA litigation by plan participants does not always result in a big payout, especially where, as here, the claim resolution would have been the same even if the parity rules had been followed. Nevertheless, careful adherence to the rules is a must for plan sponsors wishing to avoid costly, time-consuming litigation and potential agency enforcement. For more information, see EBIA’s Group Health Plan Mandates manual at Sections IX.E (“Mental Health Parity: Nonquantitative Treatment Limitations”), IX.G (“Disclosure of Criteria for Medical Necessity Determinations, Claims Denials, and Other Document Requests”), and IX.J (“Mental Health Parity: Enforcement”).
Contributing Editors: EBIA Staff.