Federal law governing mental health benefits is giving rise to a new wave of lawsuits against self-insured ERISA welfare benefit plans. Plan sponsors should carefully consider their current scope of coverage to avoid litigation risk and ensure fair benefits for participants.
ERISA and other governing federal laws historically have not required that plan sponsors or insurers provide any particular coverage or level of benefits. Thus, plans and insurers could pick and choose what type of benefits and coverage to offer.
Even with the passage of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (the “Parity Act”), plans and insurers were not required to offer any mental health benefits. However, the 2008 Parity Act requires group health plans and health insurance issuers that offer mental health benefits to do so in a manner that meets the parity rules. At a high level, the parity rules mandate that the financial requirements (such as co-pays and deductibles) and non-quantitative treatment limitations (such as visit limits) applicable to mental health or substance use disorder benefits are no more restrictive than the predominant requirements or limitations applied to substantially all medical/surgical benefits.
Treatment for Autism Spectrum Disorders (“ASD”) has become a much-discussed and frequently-litigated topic in the wake of passage of the Parity Act and the advent of market reforms triggered with adoption of the ACA. While the ACA mandates that most health plans provide coverage for autism spectrum screenings for 18- to 24-month-old children, it does not otherwise mandate a particular coverage of autism treatment.
Reports indicate that at least thirty-four states require insurance carriers that sell policies on their insurance markets to cover behavioral health treatments that include autism treatments such as applied behavioral analysis (or “ABA”). For example, the state of Washington’s insurance statute mandates coverage of all “medically necessary outpatient and inpatient services provided to treat mental disorders” covered by the Diagnostic and Statistical Manual of Mental Disorders (“DSM”), unless such service is expressly carved out of the law. Wash. Rev. Code § 48.41.220.
In recent years, advocacy groups have brought claims challenging various insurers’ limits or exclusions of neurodevelopmental and behavioral therapies, including ABA. Several of these claims have been successful, although most often such successes have been achieved by application of state statutes which are preempted with respect to ERISA-covered plans.
Given the significant number of ASD diagnoses and (no doubt) the relatively high cost of ASD treatment (including for the provision of ABA), plan participants have sought ways to secure coverage under ERISA-covered plans that are not subject to state insurance laws (typically self-insured plans). The resulting lawsuits present novel legal theories, including substantive reliance on the terms of the Parity Act. More specifically, plaintiff have alleged violations of ERISA’s fiduciary obligation by failing to comply with plan documents which, on their face, purport to comply with the Parity Act and/or challenge “de facto” (rather than express) coverage limitations in violation of the Parity Act. Since the Parity Act regulations expressly provide that a “permanent exclusion of all benefits for a particular condition or disorder” is not an impermissible treatment limitation, ERISA plan sponsors can avoid suit by reducing the scope of both medical and mental health benefits but this legal solution raises concerns regarding employee satisfaction with the offered benefits package. A thoughtful assessment of ABA, ASD and Parity Act coverage and compliance — and balancing of litigation risk and human resources concerns — should be undertaken prior to benefit claims and lawsuits.
Challenges to coverage of ABA for treatment of ASD may just be the tip of the iceberg for these new Parity Act claims. Other recently filed lawsuits include claims for mental health and substance-abuse related health benefits – such as nutritional counseling or for residential treatment for mental health or substance use disorders – in violation of the ERISA and Parity Act.