Another Court Scrutinizes Plan Exclusion for Wilderness Programs

Another court has allowed mental health parity claims to proceed against an insurer that denied coverage for behavioral health care services provided in an outdoor residential treatment setting. An employee’s 16-year-old daughter (who had been diagnosed with depression) filed a class action lawsuit against the insurer on behalf of the plan, claiming that the plan’s “blanket exclusion” of coverage for wilderness therapy programs violated the federal mental health parity requirements. The insurer asked the court to dismiss the case, arguing that the treatment was properly denied under the plan’s “Counseling in the Absence of Illness” exclusion, which listed wilderness programs as an example of a noncovered service.

Denying the insurer’s request, the court explained that a mental health parity claim can be based on either “facial” or “as applied” violations. The plan did not violate the parity requirements “on its face” because its terms were neutral. But the court concluded the lawsuit adequately alleged that, in practice, the insurer categorically denied coverage for wilderness behavioral health care programs. The lawsuit alleged that the insurer had a practice of excluding wilderness therapy (for example, by disparate application of the “Counseling in the Absence of Illness” exclusion), while covering medical and surgical services provided in analogous intermediate settings such as skilled nursing facilities and rehabilitation hospitals. Citing the recent decision in Vorpahl (see our Checkpoint article), the court held that, at this stage of the proceedings, it was enough to allege a categorical mental health exclusion without specifying the processes and factors used by the insurer to apply that exclusion.

EBIA Comment: As courts continue allowing these residential treatment claims to proceed to trial, the cases become increasingly costly for insurers to defend. It will be interesting to see the outcome, especially considering the DOL’s recent statement that it is establishing dedicated mental health parity enforcement teams to conduct investigations of behavioral health organizations and insurance companies (see our Checkpoint article). For more information, see EBIA’s Group Health Plan Mandates manual at Sections IX.A (“What Is Mental Health Parity and Who Must Comply?”) and IX.E (“Mental Health Parity: Nonquantitative Treatment Limitations”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.C (“Federally Mandated Benefits”).

Contributing Editors: EBIA Staff.