In a recent opinion, E.W. v. Health Net Life Insurance Co., the US Court of Appeals for the Tenth Circuit clarified the elements that plaintiffs must plead to state claims under the Mental Health Parity and Addiction Equity Act (MHPAEA).
A link to the opinion is here.
MHPAEA’s Existing Legal Landscape
By way of background, MHPAEA prohibits insurers from enacting limitations on mental health and substance-use benefits that are more restrictive than those applied to comparable medical and surgical benefits. In recent years, district courts have wrangled with the pleading standard for MHPAEA claims, particularly in cases related to services provided at residential treatment centers. Until the Tenth Circuit’s opinion, however, no court had clearly defined the elements necessary to plead a MHPAEA claim.
The Underlying Claim at Issue
In this case, the first plaintiff, E.W., was a participant in an employer-sponsored health insurance plan governed by the Employee Retirement Income Security Act of 1974 (ERISA). The second plaintiff, I.W., was E.W.’s daughter and a plan beneficiary who received treatment for mental health challenges and an eating disorder at Uinta Academy, an adolescent residential treatment center.
The plan covered only treatments that were “medically necessary,” as defined by the plan documents. And although the plan initially covered the daughter’s treatment, the plan determined that subsequent services did not qualify as “medically necessary,” discontinuing coverage for subsequent claims. Specifically, the plan determined that the daughter failed to meet the acute-care criteria for treatment to be considered “medically necessary.”
The plaintiffs sued the plan, alleging that it had violated MHPAEA by imposing criteria for its definition of “medically necessary” that were more stringent for mental health treatment benefits than those applied to comparable medical or surgical benefits. Specifically, the plaintiffs claimed that the plan required the daughter to satisfy acute-care criteria, even though she was receiving treatment at a sub-acute facility, whereas patients receiving treatment for medical or surgical conditions at a sub-acute facility would not be required to satisfy acute-care criteria.
The US District Court for the District of Utah granted the plan’s motion to dismiss the MHPAEA claim. In a short opinion, the district court dismissed the plaintiffs’ MHPAEA claim as “conclusory.”
The Tenth Circuit’s Opinion
On appeal, the Tenth Circuit reversed the district court’s dismissal of the MHPAEA claim. Initially, the Tenth Circuit set forth its view of the proper four-part test that should govern the pleading standard for MHPAEA claims. Under this test, plaintiffs must:
- plausibly allege that MHPAEA applies to their group health plan,
- identify a specific limitation on benefits for mental health or substance-use treatments under the plan,
- identify medical care covered by the plan that is analogous to the mental health or substance-use treatment for which the plaintiff seeks care, and
- plausibly allege a discrepancy between the restrictions for mental health or substance-use treatment as compared to the limitations that defendants would apply to the medical or surgical analog.
Applying this test, the Tenth Circuit concluded that the plaintiffs had plausibly stated a MHPAEA claim. In particular, the Tenth Circuit observed, requiring beneficiaries to satisfy acute-care criteria for mental health or substance-use benefits, while not requiring the same of those seeking medical or surgical benefits, would constitute a discrepancy between treatment limitations on benefits for mental health or substance-use and for analogous medical or surgical benefits. Accordingly, the Tenth Circuit remanded the case back to the district court for further proceedings.
Looking Ahead: Monitoring Regulatory and Judicial Developments
The Tenth Circuit’s opinion offers guidance for plaintiffs looking to MHPAEA claims as a tool for plan beneficiaries to recover mental health benefits. However, as the Tenth Circuit recognized, “district courts within and outside this Circuit have adopted different tests.” So, although the Tenth Circuit’s opinion will bind district courts within its borders, plaintiffs outside the Tenth Circuit should also review the tests applied within their geographic region to stand the best chance of surviving a motion to dismiss. Of course, the Tenth Circuit’s opinion is the first court of appeals decision in a burgeoning area of case law. Therefore, practitioners should continue to monitor developments to see how the Tenth Circuit’s opinion is received.
The Tenth Circuit’s opinion also comes on the heels of the release of a new rule in July 2023 by the US Departments of Labor, Treasury, and Health and Human Services to ensure that group health plans comply with MHPAEA. This underscores the importance of monitoring both judicial and regulatory developments in this area.
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