Consumer Watchdog v. Department of Managed Health Care
225 Cal. App. 4th 862
| Cal. Ct. App. | 2014Background
- Applied Behavior Analysis (ABA) is an established, intensive therapy for autism that is often delivered by paraprofessionals supervised by certified behavior analysts (BACB), and can be medically necessary and provided as a basic health care/home health service under California law.
- Knox–Keene Act (Health & Saf. Code) requires plans regulated by the Department of Managed Health Care (DMHC) to provide basic health services and generally contemplates use of licensed providers where state law requires licensure.
- DMHC issued a March 2009 memorandum requiring mental health services to be provided only by state-licensed or -certified providers and directing coverage/grievance routing procedures; Consumer Watchdog sued seeking writs and declaratory/injunctive relief challenging DMHC’s practice of upholding plan denials when ABA was provided by BACB‑certified but unlicensed therapists.
- Trial court invalidated the March 2009 memo under the Administrative Procedure Act but denied broader relief compelling DMHC to order coverage whenever BACB‑certified (but unlicensed) therapists provided ABA.
- Legislature enacted Health & Safety Code §1374.73 (the ABA statute), effective July 1, 2012, requiring many plans to cover ABA when prescribed by a licensed physician/psychologist and provided or supervised by a “qualified autism service provider,” which expressly includes BACB-certified persons; some plans (Medi‑Cal, Healthy Families, PERS) are exempted from the coverage mandate.
- On appeal the court held that the ABA statute effectively authorizes (and thus functions as) legislative recognition/licensure of BACB‑certified providers for ABA, limiting DMHC’s ability to sustain plan denials on the ground that such providers lack a state license.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the appeal is moot after enactment of the ABA statute | Consumer Watchdog: not moot because some plans remain exempt and relief sought is prospective | DMHC: largely moot because the statute provides the relief requested | Mostly moot; statute supplies prospective relief for covered plans, but not for exempt plans |
| Whether DMHC must direct plans to cover ABA provided/supervised by BACB‑certified therapists (prospectively) | Consumer Watchdog: DMHC has duty to enforce MHPA/Knox‑Keene to require coverage when medically necessary and provided or supervised by certified providers | DMHC: Knox‑Keene licensure scheme prevents requiring coverage when provider is not state‑licensed; DMHC has discretion | DMHC may not uphold denials that rest solely on the provider’s lack of state licensure; ABA statute’s recognition of BACB certification means DMHC cannot sustain such denials, including for plans exempt from ABA statute |
| Whether DMHC’s March 2009 memo was valid under the Administrative Procedure Act | Consumer Watchdog: memo unlawfully imposed licensing requirement and improper grievance routing | DMHC: memo within its duty to ensure quality and protect enrollees | Trial court correctly invalidated the memo under APA; appellate court affirmed that invalidation |
| Whether DMHC must send all mixed coverage/medical‑necessity ABA grievances to Independent Medical Review (IMR) | Consumer Watchdog: DMHC should return to pre‑memo practice of routing mixed issues to IMR | DMHC: has statutory discretion to determine whether a grievance is for IMR or standard grievance | DMHC has statutory discretion under Health & Saf. Code §1374.30(d) and need not route all such grievances to IMR |
Key Cases Cited
- Arce v. Kaiser Foundation Health Plan, Inc., 181 Cal.App.4th 471 (Cal. Ct. App.) (context on autism prevalence and ABA acceptance)
- California Consumer Health Care Council, Inc. v. Department of Managed Health Care, 161 Cal.App.4th 684 (Cal. Ct. App.) (DMHC grievance duties)
- Prince v. Sutter Health Central, 161 Cal.App.4th 971 (Cal. Ct. App.) (broad construction of "license" under Bus. & Prof. Code § 23.7)
- Marine Forests Society v. California Coastal Com., 36 Cal.4th 1 (Cal.) (injunctive relief governed by law at time of appellate decision)
- City of Watsonville v. State Dept. of Health Services, 133 Cal.App.4th 875 (Cal. Ct. App.) (same principle on injunctions and current law)
- Bowland v. Municipal Court, 18 Cal.3d 479 (Cal.) (scope and public interest in licensing and practice definitions)
- Hageseth v. Superior Court, 150 Cal.App.4th 1399 (Cal. Ct. App.) (purpose of §2052 to protect public via licensure)
- People v. McCall, 214 Cal.App.4th 1006 (Cal. Ct. App.) (distinguishing unlicensed practice issues and scope of regulated conduct)