MHPAEA is an amendment to the ERISA statute and requires private and public-sector employers with at least 50 employees to provide mental health and substance use disorder benefits at the same level as medical and surgical benefits. The Parity Act is enforceable under 29 U.S.C. § 1132(a)(3). MHPAEA violations may be “facial” (meaning apparent on the face of the plan documents), “as applied” (meaning a facially neutral plan term is applied disparately in practice), or they may allege an improper “internal process” that results in the exclusion or reduction of some mental health or substance use disorder treatment.
“As applied” and “internal process” violations present unique challenges for plaintiffs, who generally need discovery to know what processes the defendant health plan or insurer used to determine the availability of analogous medical/surgical benefits. In recent years, defendants have succeeded in persuading courts to dismiss MHPAEA complaints due to lack of specificity regarding analogous medical/surgical benefits. However, as one court observed, “unless [a plaintiff] had suffered the misfortune of having her admission to a skilled nursing facility for medical reasons approved and her admission to a residential treatment facility denied,” she would not “have had personal experience with both standards.” Melissa P. v. Aetna Life Ins. Co. Grp. Ben. Plan, No. 2:18-cv-00216-RJS-EJF, 2018 U.S. Dist. LEXIS 216775, at *9 (D. Utah Dec. 26, 2018).
The tide may be changing. In E.W., the Tenth Circuit ruled that the plaintiff, a young woman challenging the denial of residential treatment for mental illness, had stated a plausible claim for violation of MHPAEA where she alleged that the defendant health insurer utilized acute criteria to evaluate her claim but subacute criteria to evaluate comparable medical/surgical benefits. The court rejected the defendant’s argument that the plaintiff’s allegations were “conclusory,” observing that the plaintiff had supported her allegations with facts to the extent she was able. The court emphasized that the plaintiff allegedly asked the defendant insurer to provide the medical necessity criteria for skilled nursing facilities prior to filing suit, but it refused.
E.W. is notable in that it sets forth a four-part test regarding the elements a plaintiff must plead to state a claim for MHPAEA violations. Under that test, a plaintiff must:
- plausibly allege that the relevant group health plan is subject to MHPAEA;
- identify a specific treatment limitation on mental health or substance-use disorder benefits covered by the plan;
- 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
- 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.
The Ninth Circuit in Ryan S. similarly declined to require specific details regarding the defendant’s internal processes at the pleadings stage. The plaintiff, on behalf of himself and a putative class, alleged that UnitedHealthcare applied a more stringent review process to benefit claims for outpatient, out-of-network mental health and substance use disorder treatment than to otherwise comparable medical/surgical treatment. In support, the plaintiff cited a 2018 report by the California Department of Managed Healthcare that came to the same conclusion.
The Ninth Circuit first apologized for the lack of “clear guidance” regarding MHPAEA pleading standards. It labeled the Ryan S. case an “internal process” case and discussed the pleading standards for such cases. The court of appeals disputed that a plaintiff needs to allege a “categorical” practice or the uniform denial of benefits to state a claim under MHPAEA. Nor must a plaintiff specify the different process that applies to the analogous category of medical/surgical benefits, since a plaintiff would not know those processes unless they happened to receive the treatment.
The Ninth Circuit concluded:
Overall, . . . a plaintiff bringing an internal process case [must] plausibly allege the existence of a procedure used in assessing [mental health and substance use disorder] benefit claims that is more restrictive than those used in assessing some other claims under the same classification . . . Simply alleging the denial of a plaintiff’s claims for behavioral health benefits is unlikely by itself to support a plausible inference that a defendant employed policies in violation of the Parity Act.
Ryan S., 98 F.4th at 973.
Under the forgoing standard, the Ninth Circuit determined that Ryan S. had met his burden. The court emphasized the inclusion in the complaint of the state agency findings that UnitedHealth used an algorithmic process to trigger additional levels of review of mental health and substance use disorder claims as compared to other claims. The court rejected UnitedHealth’s argument that the forgoing findings lacked a sufficient “nexus” to Ryan S.’s case, observing that the investigation upon which the report was based occurred concurrently with when Ryan S.’ claims were denied and, thus, were plausibly related to his case. The court concluded, “A pleading standard under which such a comprehensive investigation is insufficient would make it inordinately difficult for a plaintiff to challenge an internal process[.] The plausibility pleading standard is not that unreachable.” Id. at 974.
It remains to be seen what the effect of the E.W. and Ryan S. decisions will be. Presumably, more MHPAEA cases will survive the pleadings stage. Plaintiffs would be well-advised, prior to filing suit, to request the criteria used to evaluate comparable medical/surgical benefits, like the plaintiff in E.W. did. Few plaintiffs will have the benefit of a comprehensive, time-concurrent investigative report by a neutral state agency, like the plaintiff in Ryan S. Instead, plaintiffs in MHPAEA cases might consider conducting an early Fed. R. Civ. P. 30(b)(6) deposition to gain insight into the defendant’s internal processes and help to narrow discovery requests.