Insurer’s exclusion for outdoor mental health programs rejected

This article was initially published in the Chicago Daily Law Bulletin on February 28, 2019.

By Mark D. DeBofsky

Mark D. DeBofsky is a name partner of DeBofsky Sherman Casciari Reynolds P.C. He handles civil and appellate litigation involving employee benefits, disability insurance and other insurance claims and coverage, and Social Security law. He can be reached at [email protected].

One of the hottest current topics in Employee Retirement Income Security Act litigation concerns medical insurance coverage for residential treatment of behavioral health disorders.

A recent Utah federal court ruling, Michael D. and Madeline D. v. Anthem Health Plans of Kentucky Inc., 2019 WL 586673 (D. Utah, Feb. 13, 2019), is a prime example. The lead plaintiff, "Mike," filed suit seeking reimbursement for wilderness therapy and other residential treatment provided to Mike's daughter Maddie, who suffered from multiple mental health disorders.

Despite the court's application of an arbitrary and capricious standard of review, the court overturned Anthem's refusal to cover the wilderness treatment. Despite the plan's assertion that wilderness programs were excluded from coverage, the court found the exclusion ambiguous, observing: "Aspiro is not a summer camp where children learn 'life and coping skills; in an outdoor setting. Rather, Aspiro offers 'short-term, intermediate treatment options for teenagers and young adults,' including an 'intensive outdoor treatment program' that 'is residential in nature providing multidisciplinary treatment solutions that are safe, effective and clinically sophisticated.' These characteristics all point to an 'intensity of service' not available at a typical summer camp."

The court also pointed out that "Aspiro has a large team of registered nurses, medical doctors, licensed clinical social workers and licensed professional counselors. So although Aspiro is not a true residential treatment center, Aspiro provides an intermediate-level of care to treat mental health conditions that could be covered by the plan - treatment just happens to be in an outdoor environment."

Since the burden is on the insurer to prove the applicability of an exclusion, the court found Anthem failed to meet its burden due to the absence in the plan of a definition of what constitutes a wilderness camp.

While the court did not reach a final conclusion as to whether a blanket exclusion of wilderness treatment would violate the federal Mental Health Parity and Addiction Equity Act, 29 U.S.C. Section 1985a, the court nonetheless offered guidance on the issue, which began by explaining: "Congress enacted the MHPAEA to end discrimination in the provision of insurance coverage for mental health and substance use disorders as compared to coverage for medical and surgical conditions in employer-sponsored group health plans." (Citations omitted.)

The court found that Anthem's wilderness camp exclusion was potentially problematic under the parity law. First, while the exclusion was neutral on its face, "in practice, wilderness camp exclusions have only been applied to outdoor behavioral and mental health treatment programs, and thus the effect of the limitation is that it imposes a limit on mental health treatment that does not apply to medical or surgical treatment."

Second, there is no medical or surgical analog to wilderness programs as there is for more traditional residential treatment facilities, which are analogous to skilled nursing facilities.

However, as the court remarked, "Plans should not be able to exclude mental health treatments only because a clear analog does not exist." The court cited two leading cases involving wilderness treatment, Gallagher v. Empire HealthChoice Assurance Inc., 339 F.Supp.3d 248, 258 (S.D. N.Y. 2018), and A.Z. v. Regence Blueshield, 333 F.Supp.3d 1069, 1080-82 (W.D. Wash. 2018), which utilized a disparate-impact approach to conclude that while an exclusion for wilderness therapy is a neutral term, a "categorical denial of 'medically necessary services at outdoor/wilderness behavioral health-care programs' asserted an improper 'process' ... that qualifies as a discriminatory limitation."

Applying the A.Z. framework, the court concluded that a complete exclusion of wilderness camps and programs is too broad, finding: "Anthem is fully within its right to exclude experimental or unsuccessful types of treatments, but excluding mental health treatment merely because it occurs outdoors appears to place a limitation on mental health that does not apply to medical or surgical treatments."

The plaintiff did not fare as well, though, under claims for Maddie's ongoing treatment at a residential treatment facility following her completion of the wilderness program. The court found that since Maddie was no longer in immediate danger of self-injurious behavior because of improvement that had been achieved during her treatment at Aspiro, she failed to meet Anthem's guidelines for residential treatment.

"The fact that Maddie was no longer spiraling and at risk of self-harm," the court concluded, "meant that she no longer qualified for covered residential treatment, no matter how beneficial the treatment was for her recovery."

The court's extensive discussion concerning wilderness treatment will no doubt influence future litigation challenging blanket exclusions of wilderness therapy. The court's findings in relation to the federal mental health parity law are particularly instructive. Overall, this case is a detailed road map on how to litigate coverage disputes in cases involving wilderness therapy treatment.

The court's denial of residential treatment following Maddie's discharge from the wilderness program is problematic, though. Given her extensive history of self-injurious behavior, there was a significant risk of relapse, which should have satisfied Anthem's admissions criteria.

There is an established body of law in the area of disability insurance benefits pertaining to "risk" of disability holding that if an insured would face a substantial risk of severe harm or even death if he or she were to return to work, the disability insurer must continue to pay benefits, even if the insured is stable at present.

Examples of such cases include Lasser v. Reliance Standard Life Insurance Co., 344 F.3d 381 (3d Cir. 2003), which involved an orthopedic surgeon who suffered from a cardiac impairment that placed him at risk of a fatal heart attack if he were to return to performing surgery.

Another example is Colby v. Union Security Insurance Co., 705 F.3d 58 (1st Cir. 2013), which involved a physician who had become addicted to narcotics and was at severe risk of relapse if she returned to work. The court quoted from Kufner v. Jefferson Pilot Financial Insurance Co., 595 F. Supp. 2d 785 (W.D. Mich. 2009), which found it would be improper for an insurer to wait for the plaintiff to experience a relapse before it would pay benefits, characterizing such conduct as playing "benefits Russian roulette." The rationale of those cases should have applied here as well.

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