333 F. Supp. 3d 1069
W.D. Wash.2018Background
- Plaintiff A.Z., a 16-year-old with diagnosed depression, attended Evoke, an Oregon-licensed outdoor/wilderness residential mental-health program, on medical recommendation and incurred nearly $50,000 in costs.
- A.Z.'s family sought reimbursement under the Juno Therapeutics, Inc. Health Benefit Plan (insured/ administered by Regence and Cambria); Regence denied preauthorization and later appeals, citing plan exclusions and stating wilderness programs are not covered "in the absence of illness."
- The Plan defines covered "Mental Health Services" to include "Residential Care" provided by a state-licensed facility for the level of care sought; Evoke is licensed as an "outdoor youth program" under Oregon law and billed using a code associated with residential/outdoor behavioral programs.
- A.Z. sued under ERISA seeking recovery of benefits, declaratory relief, and equitable relief on a putative class basis, alleging (1) wrongful denial of benefits, (2) breach of fiduciary duty, (3) violations of the Mental Health Parity and Addiction Equity Act (Parity Act), and (4) violations of the ACA provider non-discrimination provision.
- Defendants moved to dismiss, arguing (a) the Plan does not cover Evoke's program, (b) the Plan's "Counseling in the Absence of Illness" exclusion (which lists "wilderness programs" as an example) bars coverage, (c) Parity Act and ACA claims were inadequately pleaded, and (d) the fiduciary-duty claim failed for lack of alleged plan losses.
- The district court evaluated the Plan text, attached administrative documents, and relevant precedent and permitted consideration of certain external materials (e.g., Evoke website) on the motion to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Plan covers treatment at Evoke as "Residential Care" mental-health services | Evoke is a licensed outdoor residential program that provides medically necessary therapy for a DSM-listed condition; thus treatment is plausibly covered under the Plan definitions | The Plan's terms and ordinary meaning of "facility" do not encompass wilderness programs; Evoke's billing code and license do not show coverage | Court: Denied dismissal — allegations plausibly show Evoke is a licensed facility providing Residential Care and thus coverage is plausibly alleged |
| Whether the "Counseling in the Absence of Illness" exclusion forecloses coverage | A.Z. alleges she attended Evoke to treat diagnosed depression; exclusion applies only to services rendered in absence of illness so it may not apply here | Exclusion expressly lists "wilderness programs" as non-covered examples; thus denial is proper as a plain-text exclusion | Court: Denied dismissal — exclusion, as pleaded, may not apply because plaintiff alleged illness and medically necessary treatment; ambiguity resolved for plaintiff at pleading stage |
| Whether defendants' denial violates the Parity Act (non-quantitative treatment limitations and facility-type restrictions) | Regence has a categorical practice of excluding wilderness programs for mental-health treatment while covering analogous medical/surgical intermediate settings, amounting to a nonquantitative, disparate limitation | Denial reflects allowable plan criteria/processes (not a blanket exclusion); plaintiff failed to identify the relevant limitation or processes to compare to medical benefits | Court: Denied dismissal — plaintiff adequately alleged both a facial "categorical" exclusion in practice and an "as-applied" disparate application; factual/process evidence lies largely within defendant's control and discovery is appropriate |
| Whether the ACA provider non-discrimination provision creates a private right of action and whether fiduciary-duty claim pleads plan losses | A.Z. asserts the exclusion discriminates against a state-licensed provider and seeks equitable relief; fiduciary claim seeks plan losses | Defendants: Section 300gg-5(a) does not create an individual private cause of action; fiduciary-duty claim fails for lack of pleaded losses to the Plan under §1132(a)(2) | Court: ACA discrimination claim dismissed with prejudice (no private right); fiduciary breach claim dismissed with prejudice for failure to allege plan losses |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plaintiff must plead factual matter showing plausible entitlement to relief)
- Danny P. v. Catholic Health Initiatives, 891 F.3d 1155 (9th Cir.) (Parity Act requires case-by-case analysis; prohibits disparate restrictions on mental-health treatment)
- Blankenship v. Liberty Life Assurance Co., 486 F.3d 620 (9th Cir.) (ambiguities in ERISA plan language construed in beneficiary's favor)
- Harlick v. Blue Shield of California, 686 F.3d 699 (9th Cir.) (limitations on plan administrators raising new reasons for denial not raised during admin process)
- Horvath v. Keystone Health Plan East, 333 F.3d 450 (3d Cir.) (ERISA beneficiary may seek declaratory relief as to future benefits without showing a likelihood of future harm)