35 F. Supp. 3d 1298
D. Or.2014Background
- Plaintiffs A.F. and A.P., insured dependents under Providence Health Plan group policies in Oregon, were denied coverage for physician-prescribed Applied Behavior Analysis (ABA) therapy based on Providence’s blanket "Developmental Disability Exclusion" (excluding services “related to developmental disabilities, developmental delays, or learning disabilities”).
- Providence applied the exclusion to deny both reimbursement and preauthorization for ABA across insured group plans issued after 2007; plans also affirmatively list autism as a covered mental health condition.
- Plaintiffs sued as a certified class under ERISA § 1132(a)(3), claiming the exclusion violates (1) Oregon Mental Health Parity Act (Or. Rev. Stat. § 743A.168), (2) Oregon mandatory coverage for minors with pervasive developmental disorders (Or. Rev. Stat. § 743A.190), and (3) the Federal Mental Health Parity and Addiction Equity Act (29 U.S.C. § 1185a).
- After class certification, Providence voluntarily implemented coverage consistent with an upcoming Oregon statute (SB 365) but the court found controversies not moot because the exclusion still affects coverage beyond that statute’s scope.
- Court treated cross-motions as for partial summary judgment and, reviewing statutory issues de novo, held Providence’s Developmental Disability Exclusion violates both Oregon law and the Federal Parity Act and is therefore prohibited under ERISA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Providence’s exclusion violates Oregon Mental Health Parity Act (Or. Rev. Stat. § 743A.168) | § 743A.168 requires mental health conditions be covered at parity with medical conditions; excluding medically necessary ABA for autism undermines parity | Parity statute does not mandate coverage of particular services; if ABA is not covered for medical conditions, parity doesn't require it for mental health | Held for Plaintiffs: exclusion violates § 743A.168 because Providence cannot claim to cover autism while excluding medically necessary services related to it without defeating parity |
| Whether Developmental Disability Exclusion violates Oregon law requiring coverage for minors with pervasive developmental disorders (Or. Rev. Stat. § 743A.190) | § 743A.190 requires coverage of medically necessary services for children with pervasive developmental disorders that are otherwise covered; a blanket exclusion conflicts with that mandate | ABA is not a "medical service" or is not "otherwise covered," so the statute does not compel coverage | Held for Plaintiffs: on its face the exclusion conflicts with § 743A.190 and cannot be used to deny services otherwise covered for non-disabled plan members |
| Whether the Developmental Disability Exclusion violates the Federal Parity Act (29 U.S.C. § 1185a) | The exclusion is a nonquantitative "treatment limitation" that applies only to mental health conditions and thus is barred by the Federal Parity Act | The Act addresses quantitative limits (visits, days, etc.) and does not prohibit a categorical exclusion; parity does not mandate coverage of specific benefits | Held for Plaintiffs: exclusion is a nonquantitative treatment limitation (medical-management style exclusion) applicable only to mental health and is prohibited under the Federal Parity Act |
| Whether ERISA § 1132(a)(3) permits enforcement of these state and federal parity rules against the plan | State insurance laws regulating coverage are incorporated into ERISA plans via the savings clause and become enforceable "terms of the plan" under ERISA; the Federal Parity Act is part of ERISA | ERISA preempts state law and Plaintiffs cannot obtain ERISA relief for state-law violations | Held for Plaintiffs: ERISA § 1132(a)(3) provides equitable relief for violations of ERISA provisions (including the Federal Parity Act) and for violations of state insurance laws saved by § 1144(b)(2)(A) that form part of plan terms |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (legal questions of ERISA statutory interpretation reviewed de novo)
- UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358 (state laws mandating insurance contract terms are saved from ERISA preemption)
- Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724 (ERISA savings clause and state regulation of insurance discussed)
- Harlick v. Blue Shield of Cal., 686 F.3d 699 (ERISA § 1132(a)(3) can enforce state insurance requirements incorporated into plans)
- McHenry v. PacificSource Health Plans, 679 F. Supp. 2d 1226 (persuasive district-court discussion that parity legislation affects exclusions for pervasive developmental disorders)