McKennon Law Group, Author at McKennon Law Group

When and under what circumstances an insurer paying long-term disability benefits may collect retroactive benefits paid to an ERISA plan participant under the Social Security Act has been the source of conflicting opinions over the years. The most recent pronouncement: a long-term disability plan administrators must “specifically identify a particular fund” from which it will be reimbursed in order to seek to recover of alleged overpayment of disability benefits. So held the Southern District of California in its recent plaintiff-friendly decision in Wong v. Aetna Life Insurance Company, 2014 U.S. Dist. LEXIS 135661 (S.D. Cal. 2014). Through its decision in Wong, the district court reaffirmed that simply because an ERISA governed long-term disability plan’s language provides for recovery of an award of back-dated SSDI benefits does not mean that an insurance company may seek reimbursement from an insured’s general assets. Instead, the onus is on the insurer to specifically identify specific funds, separate from a plan participant’s general assets, on which it may place an attachment.

In Wong, the plan a participant was initially granted benefits under her ERISA governed long-term disability plan. However, the plan administrator, Aetna, repeatedly denied and then reinstated her benefits. After the third denial, the plan participant filed an appeal with Aetna, which was subsequently denied. However, while she was still on claim, Aetna had advised her to apply for Social Security benefits, which was eventually approved and the Social Security Administration also agreed to back-date her award for over a year. However, very soon after being approved for the award, Aetna contacted the plan participant and asserted that it was entitled to reimbursement of the retroactive SSDI benefits she received.

Following Aetna’s demand for reimbursement, the plan participant filed an ERISA action seeking benefits owed to her. Aetna in turn filed a counterclaim seeking recovery for the retroactive social security benefits received by the plan participant. First, as to the plan participant’s claim, the court concluded that it was unreasonable and an abuse of discretion for Aetna to terminate the plan participant’s benefits. Second, and more significantly, the court held that Aetna may not retroactively attach the plan participant’s social security benefits because it failed to meet the necessary criteria for seeking overpayment. In reaching its holding, the court explained that there are “at least three criteria” that a plan administrator must satisfy in order to recover the overpayment:

First, there must be a promise by the beneficiary to reimburse the fiduciary for benefits paid under the plan in the event of a recovery from a third party. Second, the reimbursement agreement must specifically identify a particular fund, distinct from the beneficiary’s general assets, from which the fiduciary will be reimbursed. Third, the funds specifically identified by the fiduciary must be within the possession and control of the [beneficiary]. (internal quotations omitted).

Here, as in most plans, the first criteria is satisfied because, as the plan participant did not dispute that she contracted to reimburse overpayment of benefits to Aetna. However, the court held that Aetna did not satisfy second criteria. The court focused on the fact that the Social Security Act provides that “none of the moneys paid or payable or rights existing under this [Social Security] subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process.” As such, although Aetna attempted to do so, the court found that Aetna could not identify the SSDI benefits as themselves a particular fund because they had already been paid. Furthermore, Aetna did not dispute that the long-term disability benefits had already been spent by the plan participant. As such, the court held that Aetna is not permitted to attach the plan participant’s SSDI benefits because it could not identify a fund distinct from her general assets that permits such an attachment.

This decision demonstrates that simply because a plan participant contracted to reimburse an insurer for an overpayment does not mean that the plan has an unfettered ability to seek recovery of overpaid benefits. Indeed, especially in the case of retroactive social security benefits, the insurance company may well be unable to meet its burden of identifying particular fund from which it can properly be reimbursed. Plan participants and beneficiaries can take some solace from this decision.

Insurance Commissioner Dave Jones announced that during the 2014 legislative session that Governor Jerry Brown signed nine bills sponsored by the California Department of Insurance (“CDI”). A bill that adds protections for small businesses that took effect in 2014 and five other consumer protection bills that were implemented January 1, 2015. Here is a list of them (taken from a CDI bulletin):

SB 1273, authored by Senator Ricardo Lara (D-Bell Gardens) – Low Cost Auto Insurance Expansion

The signing of SB 1273 was the single most important action taken this year to reduce the number of uninsured vehicles on our roads. The law enhances the California Low Cost Auto program by allowing more low-income individuals the opportunity to purchase low cost auto insurance, most importantly the estimated 1.4 million newly-licensed undocumented individuals who may apply for licenses starting January 2015.

AB 1804, authored by Assembly Member Henry Perea (D-Fresno) – Back-up contact

Requires insurers to provide consumers the option to designate a third party as a back-up contact and receive notification from their insurance carrier if their policy is in danger of lapsing, expiring, being terminated or canceled due to nonpayment of premium. This new law benefits both insurers and consumers by promoting continual insurance among automobile, homeowners and disability income insurance policyholders, especially seniors and members of the military who move often or are deployed, and may unintentionally have their policies terminated due to nonpayment. This will take effect January 1, 2016.

SB 1446, authored by Senator Mark DeSaulnier (D-Concord) – Small business protections

This small employer health coverage urgency bill is a victory for all California small businesses. The new law provides small employers who need time to transition to Affordable Care Act compliant policies additional time to make the transition. Small employers with non-grandfathered health insurance coverage purchased by December 31, 2013 have the option to renew their existing coverage for one year, rather than be required to move to new coverage by December 2014.

AB 2056, authored by Assembly Member Matthew Dababneh (D-Encino) – Pet insurance

Under AB 2056 pet insurers are required to disclose important information regarding their policies, standardize definitions and provide consumers with a 30-day free look period. As of July 1, 2015, pet insurers will be required to disclose baseline information regarding their policies such as reimbursement benefits, pre-existing condition limitations and a clear explanation of limitations of coverage including coinsurance, waiting periods, deductibles and annual or lifetime policy limits.

AB 2347, authored by Assembly Member Lorena Gonzalez (D-San Diego) – Annuity disclosures

Consumer protection and helping seniors avoid possible financial hardship is paramount to the mission of the Department of Insurance. Seniors now have more protection with the new annuity disclosure requirements provided by AB 2347. The new law requires disclosure language on the front of the policy jacket or on the cover sheet for an immediate annuity that aligns with the disclosure language already required for the more common deferred annuity products. This bill will go into effect July 1, 2015.

AB 2128, authored by Assembly Member Richard Gordon (D-Menlo Park) – Community development investments

Reforms the California Organized Investment Network (COIN) Program to better focus on finding and facilitating insurance industry investments that provide economic and social benefits to California’s underserved communities. The new law requires insurers who write $100 million or more in California premium to provide information to the commissioner, by July 1, 2016, on all of its community development investments, including infrastructure and green investments, as well as streamlining reporting requirements. This bill also clarifies an important element of the law authorizing the insurance commissioner to survey insurers’ supplier diversity efforts, which is part of Commissioner Jones’ Insurance Diversity Initiative.

AB 2734, authored by the Assembly Committee on Insurance – Omnibus provisions

This omnibus bill clarifies and improves various sections of the Insurance Code, the body of law that provides for consumer protections and regulation of insurance companies. Specifically it provides the Locomotive Engineers and Conductors Mutual Protection Association (LECMPA) the authority to offer an accidental death benefit in addition to job protection insurance to their members. Railroad workers will gain an important insurance protection benefitting them and their families.

SB 1142, authored by Senate Insurance Chair Bill Monning (D-Carmel) – Insurance fraud

The law clarifies the annual fraud health and disability assessment to ensure CDI is able to continue its mission in ensuring a healthy and vibrant insurance marketplace by reducing fraud and working with local district attorneys.

AB 1234, authored by Assembly Member Marc Levine (D-San Rafael) – Confidentiality

Maintains the confidentiality of state investigations and examinations that monitor the financial health of insurance companies. The new law protects insurer solvency by precluding the Department of Insurance from being forced to provide sensitive financial data. This bill also clarifies an important element of the law authorizing the insurance commissioner to survey the supplier diversity efforts of insurance companies which is part of Commissioner Jones’ Insurance Diversity Initiative.

Since the Supreme Court’s decision in Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134 (1985), the courts have grappled with the issue of the extent to which equitable remedies are available under the Employee Retirement Income Security Act (“ERISA”). One of the most interesting and beneficial for plan participants is the issue of the equitable remedy of surcharge under ERISA. Recently, the Ninth Circuit withdrew an earlier decision regarding the availability of the equitable remedy of surcharge in ERISA, and issued a new ruling consistent with the holdings of other Circuit courts. The new ruling, Gabriel v. Alaska Electrical Pension Fund, 2014 DJDAR 16590 (9th Cir. 2014), is much more favorable to ERISA claimants and makes clear that surcharge, a form of equitable relief, is available to ERISA claimants under 29 U.S.C. section 1132(a)(3). Further, the Court also set forth the requirements that a claimant must meet to qualify for other forms of equitable relief, including equitable estoppel and reformation.

The specific facts of the Gabriel matter are unimportant, and ultimately the Ninth Circuit ruled that the district court was correct in holding that the plaintiff was not entitled to the payment of the pension funds that he sought because his rights to those funds never vested. The Ninth Circuit also remanded one aspect of the case to the District Court, but virtually instructed the lower court to deny that claim as well. However, the ruling is important because, by making the equitable remedy of surcharge available to ERISA claimants, the Ninth Circuit aligned itself with the Fourth, Fifth, Seventh and Eighth Circuits in expanding the rights of ERISA claimants.

In the ruling, the Ninth Circuit explained that in Cigna Corp. v. Amara, 131 S. Ct. 1866 (2011), the United States Supreme Court made it clear that because ERISA section 1132(a)(3) allows a claimant to seek “appropriate equitable relief,” those remedies traditionally viewed as equitable were available.

Thus, for example, a claim of “appropriate equitable relief” may include “the reformation of the terms of the plan, in order to remedy the false or misleading information” provided by a plan fiduciary. The Ninth Circuit then explained:

A plaintiff may obtain reformation based on mistake in two circumstances: “if there is evidence that a mistake of fact or law affected the terms of [a trust] instrument and if there is evidence of the settlor’s true intent”; or (2) “if both parties [to a contract] were mistaken about the content or effect of the contract” and the contract must be reformed “to capture the terms upon which the parties had a meeting of the minds.” Skinner, 673 F.3d at 1166. Under a fraud theory, a plaintiff may obtain reformation when either (1) “[a trust] was procured by wrongful conduct, such as undue influence, duress, or fraud,” or (2) a “party’s assent [to a contract] was induced by the other party’s misrepresentations as to the terms or effect of the contract” and he “was justified in relying on the other party’s misrepresentations.” Id.

Next, the Ninth Circuit explained that equitable estoppel is another form of equitable relief available to ERISA claimants. Under the remedy of equitable estoppel, a fiduciary is held to what it promised and the claimant is entitled to the benefit consistent with that promise. However, in ERISA cases, enforcing equitable estoppel is not as simple as demonstrating that a promise for certain benefits were made; other conditions apply. For example, “a federal equitable estoppel claim in the ERISA context [cannot] contradict written plan provisions.”

Accordingly, a plaintiff may not bring an equitable estoppel claim that “would result in a payment of benefits that would be inconsistent with the written plan,” or would, as a practical matter, result in an amendment or modification of a plan, because such a result “would contradict the writing and amendment requirements of 29 U.S.C. §§ 1102(a)(1) and (b)(3).”

…

For the same reason, “oral agreements or modifications cannot be used to contradict or supersede the written terms of an ERISA plan.” (Citations omitted.)

In addition, the court explained that in order to meet the traditional equitable estoppel requirements, the ERISA claimant must also demonstrate “(1) extraordinary circumstances; (2) that the provisions of the plan at issue were ambiguous such that reasonable persons could disagree as to their meaning or effect; and (3) that the representations made about the plan were an interpretation of the plan, not an amendment or modification of the plan.” (Internal quotations and citations omitted.)

Finally, with respect to the equitable remedy of surcharge, an equitable remedy in which the claimant is placed in the position he or she would have been in but for the fiduciary’s breach of duty, the Ninth Court reversed its previous, now-withdrawn, decision and noted that Amara allows a claimant to obtain relief by surcharge. The Ninth Circuit explained that in order to prevail on a claim surcharge remedy, after Amara, the claimant is not required to show detrimental reliance, only that the plan or claim fiduciary breached its fiduciary duty owed to the injured claimant. In other words, all that is needed is harm and causation.

While the plaintiff in Gabriel may not ultimately obtain the benefits he was seeking, this was another plaintiff-friendly ruling from the Ninth Circuit.

On Sunday December 14, 2014, CBS’ 60 Minutes program contained a segment entitled “Denied” which highlights that insurers routinely deny, based on lack of medical necessity, treatment for patients with mental illnesses, especially those for long-term in-patient care at mental health facilities. This segment was an indictment of health insurance companies’ actions (especially Anthem Blue Cross) to deny legitimate claims for such care, sometimes with tragic results. According to 60 Minutes, “we found that the vast majority of claims are routine but the insurance industry aggressively reviews the cost of chronic cases. Long-term care is often denied by insurance company doctors who never see the patient. As a result, some seriously ill patients are discharged from hospitals over the objections of psychiatrists who warn that someone may die.”

As we see all too often, insurers rely on their non-independent physician consultants, who are paid handsomely for their opinions, who render decisions favoring the insurers’ attempts to deny legitimate claims. These physician consultants do not see or physically examine the insureds, but rather perform a “peer review” or “paper review” based on a review of medical records and other information. These physicians typically attempt to contact the insured’s treating physicians to ask questions, but in reality use these “attempted” phone calls as a pretext to opinions against the insured’s interest (i.e., that the insured does not need additional mental health care) so that the insurer can deny these claims. This is very often done without giving the treating physician adequate time for a response. This is exactly what the 60 Minutes segment found.

This problem is so prevalent that when McKennon Law Group clients hire us to represent them to handle ERISA or non-ERISA insurance claim correspondence and appeals, we now instruct insurers that if they wish to contact our clients’ treating physicians, any communications between the insurer’s consulting physician and the treating physicians must be in writing, include only those questions that are pertinent to the claim and include a reasonable time to allow the treating physicians to adequately respond to the questions. This allows the treating physicians the time necessary to adequately respond to the questions in writing, with the benefit of allowing them to review the most recent medical records. All too often we have seen a scenario in which an insurer’s consulting physician makes a “cold call” to an insured’s treating physician without an appointment to speak to him or her in the midst of a busy practice schedule. This creates several problems. First, the treating physician may not be able to immediately take the call because he or she is treating patients. As a result, the insurer’s physician notes that the treating physician did not take his call and an implication is raised that the insured’s physician does not support the claim. Second, even if the treating physician is able to take the call, he or she may not be prepared to thoroughly discuss the claim or the restrictions and limitations without a review of his or her records. If pressed for answers regarding the date of last examination or clinical findings, the treating physician may, understandably, not be able to give complete or accurate answers. Of course, this does not stop the physician consultants and insurance companies from arguing that the treating physicians do not support the insured’s claim. Communication in writing alleviates these problems.

The real problem is that (as the CBS segment notes) doctors hired by the insurance companies are paid for each medical review they complete, and in many cases, the so-called independent physician consultants conduct hundreds of reviews per year for these insurers. They are thus economically motivated to render opinions that allow insurers to deny legitimate health insurance claims because they want repeat business.

California Insurance Commissioner Dave Jones commented on the 60 Minutes segment, stating that:

60 Minutes featured a story last night about Anthem Blue Cross’ denial of coverage for patients needing mental health treatment. “I am very pleased to see that 60 Minutes has brought national attention to our disputes with Anthem Blue Cross over their denial of coverage for mental health treatment,” said California Insurance Commissioner Dave Jones. “Medically necessary mental health treatment, including residential mental health treatment, is required to be covered under mental health parity laws.”

(Calif. Dept of Insurance, “Insurance Commissioner responds to 60 Minutes story about insurer denials of coverage for mental health treatment,” December 15, 2014)

State and federal mental health parity laws are in place to prevent health insurers from denying coverage for mental health care. California Insurance Code section 10144.5 requires health insurance policies to cover diagnosis and medically necessary treatment of severe mental illnesses for patients of all ages.

One issue not mentioned in the 60 Minutes segment is that insureds typically have a review or appeal process available to them. In order to navigate this complex area of the law, it is advisable that they seek out the advice of experienced attorneys in this area of the law when they are faced with insurance claim denials.

When a covered property is damaged, the insured may face a quintessential Catch-22—the insured cannot afford to proceed with costly repairs or replacement without insurance money, but until the repairs or replacements are finished, the insured cannot recover under the replacement cost provision of the liability policy. A recent court decision held a policyholder must actually repair or replace the damage in order to claim replacement cost value, but may recover a “conditional judgment” for replacement cost benefits and satisfy the condition after trial. Stephens & Stephens XII, LLC v. Fireman’s Fund Insurance Co., 2014 Cal. App. LEXIS 1073, 2014 WL 6679263 (Cal. App. 1st Dist. Nov. 24, 2014) (“Stephens”). Stephens fashions a pragmatic approach whereby insurers can condition payment on actual replacement, while policyholders preserve their rights to benefits after proving coverage.

The case involved a vacant, industrial warehouse owned by Stephens & Stephens XII, LLC (“Stephens XII”), which was covered under a commercial property insurance policy issued by Fireman’s Fund Insurance Co. (“Fireman’s Fund”). The insurance policy initially covered liability, and subsequently, Stephens XII added property damage coverage. The updated policy covered loss from property damage, including rent, and provided two different measures for reimbursement of covered damages: Stephens XII either could recover the replacement cost, or full cost of repairing the damage, so long as the repairs were actually made promptly or as soon as reasonably possible, or the actual cash value, or depreciated value of the damaged property.

Three days after the property damage coverage became effective, Stephens XII discovered large scale vandalism and theft by burglars who stripped all the electrical and conductive materials on the covered property, causing an estimated $1 million in repairs. Stephens XII filed a claim, but Fireman’s Fund delayed resolution of the claim, asserting that given the extensive scope of the vandalism, the damage must have occurred before the policy effective date. Stephens brought suit against Fireman’s Fund for breach of contract and breach of the implied covenant of good faith and fair dealing. Five years later, and one month before the trial, Fireman’s Fund denied coverage. As of the trial date, Stephens XII had yet to repair the damage. Regardless, in a special verdict, the jury awarded Stephens XII the “Replacement Cost,” plus over $2 million in lost “Business Income” for breach of contract, but denied damages for repair and lost profits and awarded $436,896 in “lost rents” as bad faith damages and awarding no damages for loss of rental value.

The trial court granted a judgment notwithstanding the verdict (“JNOV”), holding the terms of policy did not require Fireman’s Fund to pay replacement cost until the property damage was actually repaired or replaced, and such repairs had not been made. Replacement cost insurance, which typically places the insured in a better position than before the loss, creates a moral hazard that the insured will intentionally destroy property and recover under the policy. Therefore, replacement coverage typically requires as a condition to recovery that the insured actually repair or replace the damaged property before the insurer will pay the replacement cost. Generally, policies provide that the actual repair or replacement must occur as soon as possible.

The court noted that often, a policyholder with replacement cost coverage could claim an immediate payment based on the actual cash value to use as seed money to start the repairs. Here, claims discussions were in vain, with Stephens XII taking no steps to make repairs, and Fireman’s Fund never accepting coverage. Stephens XII did not ever seek the actual cost value to use as “seed money” to begin repairs and instead sought the replacement cost value with making any repairs, and sought its lost income. Because Stephens XII did not seek actual cost value and did not repair the damage, the trial court ruled that neither award was warranted. Next, the court rejected the jury award for lost business income. The policy contained a provision under which Fireman’s Fund agreed to pay for “actual loss of Business Income and Rental Value” sustained “due to the necessary suspension of operations during the period of restoration.” The court explained Stephens XII did not sustain losses because potential income lost from a failed property sale did not constitute “business income,” and Stephens XII did not suffer business losses as it did not conduct business at the property, as required by the policy.

On appeal, the Court of Appeal reversed, holding that Stephens XII was entitled to a conditional judgment awarding the replacement value, so long as the repairs were actually made. The court first confirmed that the trial court properly interpreted the contract as stating Stephens XII could claim either replacement cost, only if it actually repaired the damage, or actual cost value, which it did not claim. Further, there was no dispute that Stephens XII did not actually repair the damage, and therefore it was not entitled to replacement cost under the policy. The only issue to resolve was whether Stephens XII was excused from repairs based on Fireman’s Fund’s actions.

Stephens XII successfully argued its failure to repair was prevented by Fireman’s Fund’s failure to accept coverage. The court upheld the jury finding that there was significant evidence of Fireman’s Fund’s refusal to cover the loss which made it difficult for Stephens XII to repair the property. The court held that an insurer’s failure to pay a claim excused the procedural requirements (i.e., time restrictions), but not the insured’s underlying obligations (to repair the building) under the policy. However, the insured was entitled to a conditional judgment for replacement costs conditioned on the insured’s completion of repairs promptly after judgment. The Court of Appeal explained:

If coverage is ultimately resolved in favor of the insured, the insured should remain eligible to receive replacement cost, but only so long as the insured complies with other applicable policy terms, such as a repair requirement. In other words, a coverage dispute should not give the insured a benefit under the policy it never had in the absence of the dispute—such as the right to receive the replacement cost without actually repairing the damage.

The court rejected Stephens XII’s arguments that Fireman’s Fund waived, and was estopped from asserting, its right to demand compliance with the repair provision because it failed to communicate this demand in its correspondence. The court noted that California courts adhere to the general rule that waiver requires an insurer intentionally relinquish its right to deny coverage, and a failure to raise one basis for a denial in a denial letter may not reflect an intention to waive that reason. Here, Stephens XII did not provide sufficient evidence that Fireman’s Fund intended to waive the repair requirement.

Finally, the court upheld the jury’s verdict of $436,896 in “lost rents.”

Stephens identified a problematic issue in recovering replacement cost under a property damage policy and fashioned a rarely used judicial remedy by permitting a conditional judgment of award of replacement/repair costs. This solution seems appropriate and allows an insured to establish its right to coverage under a policy where the insurer denied coverage by requiring insurers to pay the replacement value once repairs are made.

The Federal Mental Health Parity and Addiction Equity Act (“MH Parity Act”) requires, at a minimum, that the financial requirements and treatment limitations for mental health benefits set by group health plans and health insurance carriers be no more restrictive than those provided for non-mental health medical benefits. The MH Parity Act was originally signed into law by President Bill Clinton in 1996 and amended the Employee Retirement Income Security Act (ERISA) and Public Health Service Act and Internal Revenue Code in 2008. Now, the MH Parity Act is at issue in an increasing number of cases and has been addressed several times by the federal courts in the Ninth Circuit Court of Appeals.

Daniel F. v. Blue Shield of California, U.S. Dist. LEXIS 111643 (N.D. Cal. Aug. 11, 2014) began with two parents seeking coverage for residential treatment of their minor son’s mental health condition under their Blue Shield health insurance plan, governed by ERISA. Blue Shield denied the claim, stating its policy excluded coverage of residential treatment services for severe mental health conditions. Plaintiffs brought suit alleging violation of the insurance contract and a claim for declaratory and injunctive relief, but the court granted summary judgment for Blue Shield. During the appeal of this case, the Ninth Circuit issued Harlick v. Blue Shield of California, 686 F.3d 699 (9th Cir. 2012) holding the MH Parity Act requires health plans to provide coverage for all medically necessary treatment for severe mental illness, subject to the same financial terms as imposed on coverage for physical illnesses. Plaintiffs sought to maintain a class action against Blue Shield on behalf of participants covered under Blue Shield health insurance plans, governed by ERISA, whose claims for residential treatment of mental health claims were denied. However, the court explained class certification would require individualized discovery and proof, inquiries into medical necessity and whether individual mental health conditions and treatment were covered under the California Parity Act and additional difficulties with determining damages. Ultimately, the court held Plaintiffs failed to articulate a definition of an ascertainable class, and denied the motion for class certification.

Brazil v. OPM, 2014 U.S. Dist. LEXIS 44856 (N.D. Cal. Mar. 28, 2014) involved a plaintiff who received medically necessary mental health treatment at a residential facility, but her federal health insurance plan excluded coverage for residential treatment. The Plaintiff exhausted all administrative remedies and brought suit against the Office of Personnel Management (“OPM”) in federal court. The court held the plaintiff cannot recover under the MH Parity Act because the OPM has sovereign immunity, and Congress did not consent to be sued under the MH Parity Act. Brazil demonstrates the MH Parity Act did not apply to federal insurance plans.

A.F. v. Providence Health Plan, 2014 U.S. Dist. LEXIS 109507 (D. Or. Aug. 8, 2014) involved plaintiffs who sought an order enjoining the insurer, Providence Health Plan, from excluding applied behavior analysis therapy for participants diagnosed with autism spectrum disorders. The court granted the plaintiffs’ partial motion for summary judgment holding Providence’s “Developmental Disability Exclusion,” which excluded coverage for services relating to “developmental disabilities, developmental delays or learning disabilities” but not medical or surgical conditions, constituted a violation of the MH Parity Act and the Oregon Mental Health Parity Act.

R.H. v. Premera Blue Cross, 2014 U.S. Dist. LEXIS 108503 (W.D. Wash. Aug. 6, 2014) involved a class action suit in which plaintiffs alleged Premera Blue Cross, imposed treatment limitations on applied behavior analysis and neurodevelopmental therapy when similar limitations were not applied to medical benefits in violation of Washington’s Mental Health Parity Act. Premera agreed to a settlement in which it would remove the limitations and establish a $3.5 million settlement fund to reimburse plaintiffs who were denied services under the limitation. The court approved the unopposed class settlement as fair, reasonable, and adequate.

The trend of cases reveal practical considerations some insureds may encounter in bringing suit against their health insurance company if benefits are small, and additional difficulties establishing a class action suit. However, these decisions reflect the Ninth Circuit Court’s interpretation of the MH Parity Act, its willingness to hold health insurance carriers responsible for violations and ensure that insureds who have health insurance coverage have a viable claims for violations of the MH Parity Act.

Ruling Limits Insurance Company’s Ability to Collect SSDI Overpayments

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