How Denial Of Autism Care Coverage Can Breach ERISA Duty

According to statistics compiled by the Centers for Disease Control and Prevention, about one in 54 children has been diagnosed with autism spectrum disorder, [1] which is considered a developmental disability associated with social, communication and behavioral issues. [2] Although there is no known cure for autism, children with autism may be helped with behavioral treatment such as applied behavioral analysis, or ABA, and early intensive behavioral intervention, or IBT, a subtype of ABA treatment. [3] Unfortunately, for parents of children with autism and the children themselves, health insurers have been resistant to reimbursing the cost of such therapies, deeming such treatments unproven or investigational.

There have been numerous court challenges to coverage denials; and the tide appears to be turning in favor of the patients. For example, take Doe v. United Behavioral Health. [4] The U.S. District Court for the Northern District of California found March 5 that the denial of reimbursement for ABA and IBT treatment violates the Mental Health Parity and Addiction Equity Act. [5] Since UnitedHealth excluded coverage for ABA and IBT treatment altogether, plaintiff Jane Doe, proceeding under a pseudonym and as a representative for her minor son, John Doe, cited the Mental Health Parity Act as the basis for a claim alleging a breach of fiduciary duty under the Employee Retirement Income Security Act [6] to challenge the benefit denial. The court agreed with the plaintiff’s arguments that the exclusion of ABA and IBT therapy violated the Parity Act and granted partial summary judgment in the plaintiff’s favor.

The first issue addressed by the court was whether UnitedHealth was an ERISA fiduciary. UnitedHealth maintained that it was not the plan sponsor and that its enforcement of the plan as written was not a discretionary act that could subject it to fiduciary liability under ERISA. The court quoted from a prior ruling that explained that “[f]iduciary status under ERISA is not an ‘all [1] or-nothing concept,’ and ‘a court must ask whether a person is a fiduciary with respect to the particular activity at issue.'” [7] The court elaborated by explaining that a party who is not named as a fiduciary in the plan documents may still be deemed a functional fiduciary consistent with the ERISA statute’s definition of a fiduciary as one who (1) “exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets” or (2) “has discretionary authority or discretionary responsibility in the administration” of the plan. [8] The court agreed with UnitedHealth that a party who merely performs administrative or material functions is not acting as a fiduciary, [9] but nonetheless pointed out: “A plan’s characterization of a claim administrator’s duties as ‘ministerial’ is not determinative [though and courts may] look past the plan’s characterization to determine what duties the administrator actually performs.”[10] Resolving the question by finding UnitedHealth acted as a fiduciary, the court observed: “A benefit determination under ERISA … is generally a fiduciary act” and is “part and parcel of the ordinary fiduciary responsibilities connected to the administration of a plan.”[11] Hence, the court concluded that since UnitedHealth was “undisputedly was given the authority to make benefits determination[s]” and did so when Doe’s claims were rejected, it was acting as a fiduciary. UnitedHealth next argued that it had no discretion to render benefit decisions contrary to plan terms; however, the court rejected that assertion by pointing out that “in general, plan terms cannot override fiduciary duties.” The court added, “United Health cannot hide behind the plan terms, especially where ERISA imposes specific and independent duties on its fiduciaries to otherwise comply with the provisions of ERISA.”

After deciding the fiduciary issue, the court turned to the main question of whether the policy’s exclusion for the therapies at issue violated the Parity Act. Under that law, treatment limitations for mental health and substance abuse disorders may not be: More restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits covered by the plan … and there are no separate treatment limitations that are applicable only with respect to mental health or substance use disorder benefits. [12] Since the exclusion at issue applied specifically to mental health disorders, the court found: “On its face, the ABA/IBT exclusion creates a separate treatment limitation applicable only to services for a mental health condition (Autism).” The court further determined the exclusion “also contravenes the Parity Act by requiring ‘more restrictive [limitations] than the predominant treatment limitations applied to substantially all medical and surgical benefits.'” [13] The court pointed out the “exclusion carves out and rejects from coverage a core treatment for Autism: ABA therapy.” The court added there were no comparable exclusions for medical/surgical treatment covered under the plan. Critical to the court’s finding was its determination that since treatment for autism was covered under the plan, the plan was required to cover a widely accepted treatment for that condition. Since ABA and IBT therapies have now become the standard of care, the court found the exclusion unlawful. Although UnitedHealth’s final argument was that the Parity Act addresses limitations rather than exclusions, the court rejected UnitedHealth’s position, deeming it a distinction without a difference. The court relied heavily on two prior cases: A.F. v. Providence Health Plan[14] and Craft v. Health Care Service Corp.,[15] both of which addressed similar issues involving the Parity Act.

In A.F., the U.S. District Court for the District of Oregon in 2014 ruled that a policy exclusion of treatments for developmental disabilities constituted a Parity Act violation because it was “overtly applicable only to mental health conditions — specifically developmental disabilities — and does not apply to medical or surgical conditions.” In Craft, the U.S. District Court for the Northern District of Illinois in 2015 similarly found that a health insurance policy’s benefit exclusion applying only to mental health conditions violates the Parity Act’s requirement that it “must not impose treatment limitations on mental-health benefits that are not imposed on medical/surgical benefits.”[16] Based in substantial part on the guidance offered by those two rulings, the court determined the exclusion for autism-related therapies violated the Parity Act.

The implication of this ruling is far-reaching. The federal courts have been seeing a rising number of cases alleging Parity Act violations. Plaintiffs have asserted that more restrictive guidelines are applied to behavioral health treatment than for treatments applicable to medical and surgical benefits such as fail first requirements before certain treatments are approved. For example, before a prescription for a newly developed drug is approved for reimbursement, irrespective of the new treatment’s proven efficacy, insurers have required the patient’s failure on other medications. Likewise, many insurers resist approval of reimbursement for residential behavioral treatment unless and until the patient has failed to improve after receiving intensive outpatient therapy or partial hospitalization. Typically, no such requirements are imposed for medical/surgical benefits, though. Examples include inpatient rehabilitation following major orthopedic surgery, admission to a skilled nursing facility, or hospice care. While insurers remain free to exclude coverage for unproven or investigational/experimental treatments, the Parity Act has proven to be a potent weapon available to claimants who require treatment for mental health conditions or developmental disabilities. As the stigma of mental illness fades away, and as new and more effective medications and other treatment modalities allow children, adolescents and adults to achieve, maintain or return to normal functioning, cases such as Doe will pave the way toward greater acceptance of proven effective treatments for behavioral health disorders.


Mark DeBofsky is a shareholder at DeBofsky Sherman Casciari Reynolds PC. This article was first published by Law360 on April 6, 2021.

[1] “Data and Statistics on Autism Spectrum Disorder” (CDC) – available at https://www.cdc.gov/ncbddd/autism/data.html.

[2] “What is Autism Spectrum Disorder” (CDC) – available at https://www.cdc.gov/ncbddd/autism/facts.html.

[3] “Treatment and Intervention Services for Autism Spectrum Disorder (CDC) – available at https://www.cdc.gov/ncbddd/autism/treatment.html.

[4] 2021 WL 842577 (N.D. Cal. March 5, 2021).

[5] 29 U.S.C. § 1185a. [6] 29 U.S.C. § 1132(a)(3).

[7] In re JDS Uniphase Corp. Erisa Litig., No. C 03- 04743 CW (WWS), 2005 WL 1662131, at *2 (N.D. Cal. July 14, 2005).

[8] Id. (quoting § 1002(21)(A)).

[9] The court quoted from a Department of Labor regulation which states that entities do not act in a fiduciary capacity when they perform “administrative functions for an employee benefit plan [ ] within a framework of policies, interpretations, rules, practices and procedures made by other persons” such as the “application of rules determining eligibility for participation or benefits,” ” [p]rocessing of claims,” and “[c]alculation of benefits.” See 29 C.F.R. § 2509.75-8, D-2.

[10] Citing King v. Blue Cross and Blue Shield of Illinois, 871 F.3d 730, 745-46 (9th Cir. 2017).

[11] Citing Aetna Health Inc. v. Davila, 542 U.S. 200, 218-19 (2004).

[12] 29 U.S.C. § 1185a(a)(3)(A)(ii).

[13] Citing 29 U.S.C. § 1185a(3)(A)(ii); see generally Joseph F. v. Sinclair Servs. Co., 158 F. Supp. 3d 1239, 1261-62 (D. Utah 2016) (explaining that the Parity Act prohibits both “separate” treatment limitations as well as “more restrictive” treatment limitations).

[14] 35 F. Supp. 3d 1298, 1315 (D. Or. 2014).

[15] 84 F. Supp. 3d 748, 754 (N.D. Ill. 2015).

[16] Citing 29 C.F.R. 2590.712(c)(4)(iii), Example 6 (nonquantitative treatment limitation limiting eligibility for mental health benefits violates parity where no comparable requirement applies to medical/surgical benefits). All Content © 2003-2021, Portfolio Media, Inc

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