R. v. Blue Cross Blue Shield of IllinoisR. v. Blue Cross Blue Shield of Illinois
MEMORANDUM DECISION AND ORDER
Plaintiffs L.R. and M.R. sue Blue Cross Blue Shield of Illinois and the Mayer
I.
L.R. was a participant in the Plan and M.R. was a beneficiary. See Dkt. No. 42 at 11 ¶ 2; Dkt. No. 47 at 4 ¶ 5. Blue Cross served as the claims administrator for the Plan during the period of M.R.‘s treatment at issue in this case. See Dkt. No. 42 at 11 ¶ 1; Dkt. No. 47 at 3 ¶ 3.
The Plan provides benefits “for all of the Covered Services described” in the Plan documents that are used “for the diagnosis and/or treatment of a Mental Illness and/or Substance Use Disorder.” AR 454. “Inpatient benefits for these Covered Services [are] also . . . provided for the diagnosis and/or treatment of Inpatient Mental illness or Substance Use Disorder in a Residential Treatment Center.” Id. The Plan defines a “Residential Treatment Center” as providing, among other services, “24 hour onsite nursing . . . for patients.” AR 398.
In 2019 and 2020, M.R. received inpatient treatment for anxiety, depression, and obsessive-compulsive disorder at Mountain Valley Treatment Center and Waypoint Academy. See AR 799; AR 945. Mountain Valley is located in New Hampshire, and Waypoint is located in Utah. It is undisputed that Mountain Valley and Waypoint did not provide 24-hour onsite nursing in connection with the inpatient mental health treatment they provided to M.R. See AR 9575; Dkt. No. 47 at 2; Dkt. No. 67 at 7.
Blue Cross denied coverage for M.R.‘s treatment at Mountain Valley and Waypoint in a series of “explanation of benefits” statements. See, e.g., AR 1393. M.R.‘s parents appealed the denials for both facilities. See 9571-92. Blue Cross denied both appeals in 2021, stating that Mountain Valley and Waypoint “did not meet the criteria to fall under the residential treatment center definition.” AR 3724; see also AR 1479.
The Plaintiffs then filed this lawsuit. The court heard oral argument on the parties’ summary judgment and Daubert motions on November 8, 2024.
II.
When, as here, all parties have “moved for summary judgment” on a claim for payment of improperly denied benefits, “summary judgment is merely a vehicle for deciding the case; the factual determination of eligibility for benefits is decided solely on the administrative record, and the non-moving party is not entitled to the usual inferences in its favor.” LaAsmar v. Phelps Dodge Corp. Life, Accidental Death & Dismemberment & Dependent Life Ins. Plan, 605 F.3d 789, 796 (10th Cir. 2010) (cleaned up). The court reviews a denial of benefits “under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989).
The Defendants have not identified any provisions of the Plan that give Blue Cross such authority, and they agree that de novo review of the Plaintiffs’ denial-of-benefits claim is appropriate. See Dkt.
Plaintiffs’ Parity Act claim, by contrast, does not turn on a “factual determination [based] solely on the administrative record.” LaAsmar, 605 F.3d at 796 (cleaned up). In resolving the parties’ motions for summary judgment on this claim, the court accordingly applies the ordinary summary judgment standard under
III.
The court first addresses the Plaintiffs’ claim for payment of improperly denied benefits under
The Plaintiffs argue that the Defendants “failed to provide coverage for M.R.‘s treatment in violation of the express terms of the Plan.” Dkt. No. 47 at 29. But M.R. received inpatient mental health treatment at Mountain Valley and Waypoint. And the Plan‘s coverage provision for mental health treatment specifies that “[i]npatient benefits for [its] Covered Services will also be provided for the diagnosis and/or treatment of Inpatient Mental illness . . . in a Residential Treatment Center.” AR 454. Because the Plan defines a “Residential Treatment Center” as providing 24-hour onsite nursing, and because Mountain Valley and Waypoint did not provide that service to their patients, it follows that the Plan did not cover the inpatient mental health treatment that M.R. received.1
In addition, the Plaintiffs argue that the court should reverse Blue Cross‘s denials of benefits because Blue Cross did not provide “a full and fair review” of its initial denials.
IV.
The Plaintiffs further argue that the Plan‘s 24-hour onsite nursing requirement violates the Parity Act. That Act requires that “treatment limitations applicable to . . . mental health or substance use disorder benefits” be “no more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits covered by the plan.”
A.
To state a claim under this Act, the Plaintiffs must “(1) plausibly allege that the relevant group health plan is subject to MHPAEA; (2) identify a specific treatment limitation on mental health or substance-use disorder benefits covered by the plan; (3) identify medical or surgical care covered by the plan that is analogous to the mental health or substance-use disorder care for which the plaintiffs seek benefits; and (4) plausibly allege a disparity between the treatment limitation on mental health or substance-use disorder benefits as compared to the limitations that defendants would apply to the medical or surgical analog.” E.W. v. Health Net Life Ins. Co., 86 F.4th 1265, 1283 (10th Cir. 2023) (cleaned up). “Disparate treatment limitations that violate the Parity Act can be either facial (as written in the language or the processes of the plan) or as-applied (in operation via application of the plan).” Brian J., 667 F. Supp. 3d at 1135 (cleaned up).
While a facial Parity Act challenges “focuses on the terms of a plan,” such a challenge is not limited to the four corners of a plan. E.W., 86 F.4th at 1284 (emphasis added). As with all legal language, the terms of a plan cannot be interpreted “in a vacuum.” United States v. Tate, 999 F.3d 374, 378 (6th Cir. 2021) (cleaned up). The court must consider the meaning of a plan‘s terms in context to determine whether the Plan imposes a more stringent treatment limitation on mental health care than on analogous medical or surgical care. Cf. Church of Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520, 533 (1993) (determining whether “[a] law lacks facial neutrality” under the Free Exercise Clause of the First Amendment based on the law‘s “meaning” as “discernible from the language or context“).
If a plan imposes the same treatment limitation on mental health benefits that it imposes on analogous medical and surgical benefits, that limitation is not a facial violation of the Parity Act, even if the plan uses different language to apply that limitation to the different types of benefits.2 For example, if a plan “expressly” applies a limitation to “mental health treatment” while requiring providers of
“By contrast, as-applied challenges focus on treatment limitations that a plan applies in operation.” E.W., 86 F.4th at 1284 (cleaned up). Such challenges depend on whether a claims administrator like Blue Cross “differentially applies a facially neutral plan term.” Id. (cleaned up).
B.
The Plaintiffs argue that the Plan‘s requirement that residential treatment centers offer 24-hour onsite nursing violates the Parity Act for three primary reasons: (1) because the Plan expressly applies the 24-hour nursing requirement to residential treatment centers but not to facilities that provide analogous medical and surgical treatment; (2) because the requirement exceeds the relevant state and federal licensing requirements for residential treatment centers, but not for facilities that provide analogous medical and surgical treatment; and (3) because the requirement exceeds generally accepted standards of care for residential treatment centers, but not for facilities that provide analogous medical and surgical treatment.
The Plaintiffs characterize their first argument as a facial challenge. They point out that the Plan does not expressly require providers such as skilled nursing facilities and inpatient rehabilitation facilities to offer 24-hour onsite nursing, even though they offer inpatient medical or surgical care that is analogous to the mental health care offered in residential treatment centers.3 Compare AR 398 (definition of
But as discussed, there is no facial violation of the Parity Act when a Plan uses different language to apply the same limitation to mental health care, on the one hand, and analogous medical or surgical care, on the other hand. While the Plan does not expressly require skilled nursing facilities to offer 24-hour onsite nursing, it does require that such facilities be “duly licensed by the appropriate governmental authority.” AR 399. And the Plan appears to treat inpatient rehabilitation as care that will be provided in skilled nursing facilities: although neither the Plan‘s definitions nor its coverage provisions separately address inpatient rehabilitation, the Plan defines a skilled nursing facility as “an institution or a distinct part of an institution which is primarily engaged in providing comprehensive skilled services and rehabilitative Inpatient care.” Id. And in Utah and New Hampshire, the states where Mountain Valley and Waypoint are located, facilities providing these inpatient medical or surgical services must offer 24-hour nursing to be licensed.4 It follows that the Plan‘s terms, when interpreted in context, impose the same treatment limitation on care in a residential treatment center and analogous medical and surgical care. That limitation thus survives facial challenge under the Parity Act.
Second, the Plaintiffs argue that the Plan‘s 24-hour onsite nursing requirement violates the Parity Act because it imposes a requirement on residential treatment centers that exceeds the licensure requirements they must satisfy, but does not require facilities providing analogous medical or surgical care to exceed their licensure requirements. It is not clear whether the Plaintiffs understand this argument to be a facial or an as-applied challenge. But it fails either way. As discussed, there is no facial violation because the Plan imposes the same 24-hour nursing requirement on residential treatment centers that it imposes on facilities providing analogous medical or surgical care. And to the extent the Plan imposes “extra licensure” requirements only on residential treatment centers, that does not form the basis for an as-applied challenge, which turns on whether a claims administrator—like Blue Cross—applies a facially neutral treatment limitation more strictly to mental health care than to analogous medical or surgical care. The Plaintiffs have identified no evidence
What is more, the regulations implementing the Parity Act that govern the events at issue in this case “make clear that a plan does not violate the Parity Act by expressly requiring certain requirements for mental health treatment when those same requirements are mandated by state licensing for analogous medical services.” J.W., 2022 WL 2905657, at *6. That is, so long as the same requirement is imposed “consistently” across the board, a plan does not violate the Parity Act even if the requirement exceeds the licensure requirements for “certain mental health providers” and thus has “a disparate impact” on them. Final Rules Under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, 78 Fed. Reg. at 68273.
Third, the Plaintiffs argue that the 24-hour nursing requirement violates the Parity Act because it exceeds the generally accepted standards of care for residential treatment centers, but not for analogous facilities that provide medical or surgical care. Like the Plaintiffs’ argument regarding licensure requirements, however, this argument is not cognizable under the Parity Act. The Plaintiffs appear to characterize the argument as an as-applied Parity Act challenge because even if the 24-hour nursing requirement is “facially neutral,” its “application” has the “effect” (they argue) of disproportionately burdening residential treatment centers. Dkt. No. 67 at 15. But as discussed, an as-applied Parity Act challenge turns on whether a claims administrator differentially applies a facially neutral treatment limitation; such a challenge does not turn on whether the administrator‘s neutral application of a neutral limitation has a disparate impact on the availability of mental health care. As a result, if (1) a plan imposes a 24-hour nursing requirement for both care in a residential treatment center and analogous medical or surgical care, and (2) the claims administrator neutrally applies that requirement, whether the requirement exceeds generally accepted standards of care for mental health treatment is “irrelevant” under the Parity Act. J.S. v. Blue Cross Blue Shield of Ill., 2024 WL 4308925, at *5 (D. Utah Sept. 26, 2024); see also M.P. v. BlueCross BlueShield of Ill., 2023 WL 8481410, at *4 n.6 (D. Utah Dec. 7, 2023) (noting that the Plaintiffs there “ha[d] not established that the Parity Act permits any analysis of the purportedly different generally accepted standards of care” for residential treatment centers).
To be sure, one judge of this court has reached a contrary conclusion in reliance on the regulations implementing the Parity Act. See S.B. v. BlueCross BlueShield of Tex., 2024 WL 1912224, at *6 (D. Utah May 1, 2024). At the time of the events at issue here, those regulations required that “any processes, strategies, evidentiary standards, or other factors used in applying [a] nonquantitative treatment limitation“—such as a 24-hour nursing requirement—“to mental health or substance use disorder benefits” be “comparable to, and applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to [analogous] medical/surgical benefits.” Final Rules Under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, 78 Fed. Reg. at 68272. That judge reasoned that because generally accepted standards of care were “processes” allegedly used to “create” the 24-hour nursing requirement, those processes were used to apply this requirement “more stringently” to mental health care than to surgical or medical care. S.B., 2024 WL 1912224, at *6. But this interpretation of the regulations is not persuasive. The regulations
In all events, the court need not decide whether a drastic departure from generally accepted standards of care might in some circumstances support a Parity Act claim, because there is no such departure in this case. To the contrary, there is no genuine dispute of fact that the 24-hour onsite nursing requirement comports with generally accepted standards of care for residential treatment centers.
The parties agree that one accurate description of these standards is the American Academy of Child and Adolescent Psychiatry‘s (“AACAP“) Principles of Care for Treatment of Children and Adolescents with Mental Illnesses in Residential Treatment Centers. See Dkt. No. 42 at 14; Dkt. No. 47 at 21 n.14. As relevant here, the AACAP principles require that residential treatment centers be staffed as follows:
A registered nurse with at least one year experience in mental health services or a mental health worker (a person with bachelor‘s degree in psychology, sociology, social work, counseling, nursing education, rehabilitation counseling and at least one year of experience in mental health services) should provide 24 hour developmentally sensitive child supervision, leisure and supportive care. A person with a high school diploma and five years’ experience in mental health services may also be a supervisor but on no more than one shift per day.
Dkt. No. 41-29 at 3.
The AACAP principles thus expressly recognize that offering the 24-hour care and supervision of a nurse is one way a residential treatment center may comply with generally accepted standards of care. Of course, 24-hour onsite nursing is not the only way to comply. A residential treatment center may instead offer the 24-hour care and supervision of a mental health worker with a bachelor‘s degree. See id. And at least one shift of supervision each day may be handled by “[a] person with a high school diploma and five years’ experience in mental health services.” Id. 24-hour onsite nursing may thus fall at the high end of the range of generally accepted practices—but it certainly does not exceed that range. To the contrary, the AACAP principles make clear that 24-hour onsite nursing is one of a very small number of options for staffing residential treatment centers that complies with generally accepted standards of care for those facilities. It follows that “a 24-hour nursing requirement is at least consistent with such generally accepted practices,” M.P., 2023 WL 8481410, at *4, and that any Parity Act claim based on an alleged departure from generally accepted standards of care necessarily fails.5
C.
Ultimately, the Plaintiffs’ real gripe appears to be that the Plan‘s 24-hour
At the threshold, it is unlikely that such a disparate-impact theory can support a cognizable Parity Act claim. As discussed, courts have recognized two types of Parity Act claims: facial and as-applied. Those claims turn on whether a plan imposes the same (or at least sufficiently comparable) treatment limitations on surgical or medical treatment that it imposes on analogous mental health care, or whether such facially neutral treatment limitations are neutrally applied in practice. Parity Act claims do not turn on whether the neutral application of neutral treatment limitations has a disparate impact on the availability of mental health benefits. Indeed, the regulations implementing the Parity Act that govern the events at issue in this case make clear that “[d]isparate results alone” are insufficient to support a Parity Act claim. Final Rules Under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, 78 Fed. Reg. at 68245, 68246. If the same limitation is neutrally applied to both mental health care and analogous surgical or medical care, there is no Parity Act violation, even if the limitation “ha[s] a disparate impact on certain mental health providers.” Id. at 68273. Indeed, finding a Parity Act violation where an administrator neutrally applies the same limitation to mental health care and analogous surgical or medical care would turn on its head—and likely contradict—the Act‘s prohibition of “separate treatment limitations that are applicable only with respect to mental health or substance use disorder benefits.”
In this case, the evidence in the record does not support the conclusion that the Plan‘s 24-hour nursing requirement has an extreme disparate impact on the availability of mental health care or that the requirement‘s application to residential treatment centers is arbitrary and wholly unjustified.
The Plaintiffs contend, based on their expert‘s report and testimony, that it is “uncommon” for residential treatment centers to provide 24-hour onsite nursing and that “there would be so few coverage options” meeting the Plan‘s requirements that the availability of inpatient mental health “treatment would be limited.” Dkt. No. 67 at 21. The Plaintiffs also assert that the 24-hour nursing requirement “artificially inflate[s] the cost of care” for such treatment. Dkt. No. 47 at 26. But the Plaintiffs point to no empirical evidence in the record that supports the proposition that offering 24-hour nursing is more expensive than, for example, complying with the AACAP principles by offering the 24-hour care and supervision of a mental health worker with a bachelor‘s degree. And the evidence in the record regarding the number of residential treatment centers that offer 24-hour onsite nursing is thin. The Plaintiffs’ proffered expert, Dr. Jeffrey Kovnick,7 testified that of the 24 residential treatment centers that responded to his survey request, five programs—more than 20% of the total—reported that they offered 24-hour onsite nursing. Dkt. No. 41-34 at 25 (92:16-20). The evidence thus does not support a conclusion that the Plan‘s 24-hour onsite nursing requirement imposes prohibitive costs on residential treatment centers or that it has an extreme effect on the availability of inpatient mental health treatment under the Plan.
In addition, the Plan‘s 24-hour onsite nursing requirement cannot simply be presumed arbitrary. To be sure, a former judge of this court speculated that the only possible reasons for imposing such a requirement on residential treatment centers would be to “increase the cost of RTC
What is more, the Defendants persuasively argue that the requirement is justified for reasons other than limiting coverage. Their proffered expert, Dr. David Rosenberg, opined that patients in residential treatment centers often “have significant behavioral problems” or “mental illnesses,” and “that the availability of on-site nursing 24/7 supports improved outcomes” because “aside from a medical doctor, no one is in a better position or has the medical training of a nurse” to handle the “serious adverse events” that “can occur unexpectedly anytime” in such facilities. Dkt. No. 41-30 at 9-10.
The Plaintiffs do not dispute Dr. Rosenberg‘s opinion in this respect—that 24-hour onsite nursing makes residential treatment centers “safer and more effective“—but instead suggest that any safety benefits derived from 24-hour onsite nursing are outweighed by the costs of providing that service. See Dkt. No. 72 at 7. (Though, to reiterate, the Plaintiffs identify no empirical evidence whatsoever to support the proposition that 24-hour nursing costs more than other methods of complying with the AACAP principles.)
In addition, the AACAP principles note that unlike for skilled nursing facilities, there are no federal regulations governing staffing in residential treatment centers and that accreditor oversight is relatively undeveloped for those facilities. See Dkt. No. 41-29 at 2. Given this relative lack of oversight, it is surely not arbitrary or unreasonable for a group health plan to choose to exceed licensing and accreditation requirements for residential treatment centers in order to ensure adequate safety, quality control, and professionalism in those programs. It certainly is not the court‘s job to determine the ideal balance, in the context of residential treatment center staffing, between the labor costs of nursing, on the one hand, and the safety and professionalism that nurses provide, on the other. But because the Plaintiffs have not disputed that the superior education, experience, and professionalism of nurses benefit the patients of residential treatment centers, the court cannot say that the balance struck by the Plan is arbitrary and wholly unjustified.
* * *
For the foregoing reasons, the court GRANTS the Defendants’ motion for summary judgment and DENIES the Plaintiffs’ motion for summary judgment. The court DENIES the parties’ Daubert motions as moot.8
IT IS SO ORDERED.
Dated this 22nd day of August, 2025.
BY THE COURT:
Howard C. Nielson, Jr.
United States District Judge
Notes
Further, the Plaintiffs do not point to any provisions of the Plan that contemplate coverage for inpatient mental health treatment at facilities other than hospitals or residential treatment centers, and the court has been unable to locate any such provision. The court accordingly concludes that the Plan does not cover such treatment at other facilities, because it would constitute “[s]ervices or supplies that are not specifically mentioned” in the Plan. AR 480.
The court is not inclined to accept the Plaintiffs’ contention that the care offered in an inpatient hospice facility is also analogous to care in a residential treatment center, however. For one thing, the regulatory preamble does not so much as mention inpatient hospice care, let alone treat it as an analog to care in a residential treatment facility. For another, the end-of-life, palliative care offered by inpatient hospice facilities differs in kind from care in a residential treatment facility, which is intended to improve or cure symptoms. See AR 388 (defining “Hospice Care Program Service” as “a centrally administered program designed to provide for the physical, psychological and spiritual care for dying persons and their families,” with a “goal of . . . allow[ing] the dying process to proceed with a minimum of patient discomfort while maintaining dignity and a quality of life“).
Regardless, by incorporating state licensing requirements, the Plan imposes the same requirements for 24/7 nursing presence on inpatient hospice facilities that it imposes on residential treatment centers, skilled nursing facilities, and inpatient rehabilitation facilities. See AR 387 (requiring that hospice care providers be “duly licensed“);
Assuming inpatient rehabilitation care at a hospital is also covered under the Plan—although the Plan is not explicit on that point—the Plan defines a “Hospital” as “a duly licensed institution . . . which provides services under the care of a Physician including the regular provision of bedside nursing by registered nurses.” AR 388. And under Utah and New Hampshire law, hospitals are required to provide 24-hour nursing. See note 1, supra.
What is more, the validity of the new regulations—including their new “material differences in access” standard—is the subject of pending litigation. See Complaint at 35 ¶¶ 94-95, ERISA Indus. Comm. v. Department of Health & Hum. Servs., No. 1:25-cv-136 (D.D.C. Jan. 17, 2025) (noting that “in every iteration of the” Parity Act “since 1996,” “Congress has consistently imposed disparate-treatment liability,” and that “courts typically do not read disparate-treatment liability as encompassing disparate-impact liability“). In response to that litigation, the Government announced that it “will not enforce those portions of the” new regulations “that are new in relation to the” old regulations “prior to a final decision in the litigation, plus an additional 18 months.” Statement Regarding Enforcement of the Final Rule on Requirements Related to the Mental Health Parity and Addiction Equity Act, Department of Labor (May 15, 2025), https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/mental-health-parity/statement-regarding-enforcement-of-the-final-rule-on-requirements-related-to-mhpaea. And that litigation currently is “be[ing] held in abeyance” while the agencies “reconsider” the new regulations. Id.
For all of these reasons, the court evaluates the Plaintiffs’ Parity Act claim under the regulations as they existed at the time the claims administrator denied benefits.