Insurance companies often attempt to provide different levels of benefits for the treatment of physical injuries and mental health issues in the same policy. Mental health parity describes the equal treatment of mental health conditions and non-mental health conditions in insurance plans. When a plan or policy has parity, it means that if a covered person is provided unlimited doctor visits for a chronic condition like diabetes then that person must offer unlimited visits for a mental health condition, such as depression or schizophrenia. Under federal law, health insurance plans must have parity in benefits.
The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, 29 U.S.C. § 1185a, requires that if a plan provides for “both [(a)] medical and surgical benefits and [(b)] mental health or substance use disorder benefits,” then the plan must not impose greater restrictions on the latter category of care. In particular, it states:
In the case of a group health plan (or health insurance coverage offered in connection with such a plan) that provides both medical and surgical benefits and mental health or substance use disorder benefits, such plan or coverage shall ensure that–
(i) the financial requirements applicable to such mental health or substance use disorder benefits are no more restrictive than the predominant financial requirements applied to substantially all medical and surgical benefits covered by the plan (or coverage), and there are no separate cost sharing requirements that are applicable only with respect to mental health or substance use disorder benefits; and
(ii) the treatment limitations applicable to such mental health or substance use disorder benefits are no more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits covered by the plan (or coverage) and there are no separate treatment limitations that are applicable only with respect to mental health or substance use disorder benefits.
Even though the law is relatively clear as to what types of coverage limitations an insurance company can include in its policies, many insurers still attempt to include improper limitations that are applicable solely to mental health and/or substance abuse benefits. In a recent case, Danny P. v. Catholic Health Initiatives, No. 16-35609 (Ninth Cir. June 6, 2018), the Ninth Circuit Court of Appeals addressed a dispute involving such a self-funded group health benefit plan (“Plan”) governed by the Employee Retirement Income Security Act (“ERISA”).
In Danny P., Nicole B. and Danny P. (“Insureds”) were covered under the Plan provided by Catholic Health Initiatives and Catholic Health Initiatives Medical Plan – Blue Cross Blue Shield. The Plan provided “for coverage of ‘Mental Health Services,’ which included coverage for services related to ‘the diagnosis and/or treatment of an Illness Affecting Mental Health.’” Under the Plan, Nicole B. and Danny P. were entitled to “[b]ed, board, and general nursing care” in addition to “[a]ncillary services” in a skilled nursing facility, defined as “an institution or distinct part of an institution which is primarily engaged in providing comprehensive skilled services and rehabilitative Inpatient care.” The Plan also provided for coverage in “Residential Treatment Facilities,” licensed facilities that address mental health issues.
Nicole B. was admitted to an in-patient residential treatment program for approximately 11 months. The insureds filed a claim seeking to have the Plan cover the costs of Nicole B.’s room and board. The Plan denied the claim for the cost of this in-patient residential mental health treatment facility.
The Insureds pursued their administrative remedies. Again, their claim was denied. Insureds brought suit in federal court. “[T]he parties filed cross-motions for summary judgment and the district court granted summary judgment in favor of the Plan[.]” The district court determined that the Plan’s actions did not violate the Parity Act. The Insureds appealed to the Ninth Circuit and it reversed.
The Ninth Circuit began its analysis with the Parity Act itself noting that “it directs that benefits and treatment limitations for mental health problems shall be ‘no more restrictive’ than those for medical and surgical problems.”
The court concluded that the Parity Act did not allow the Plan to provide room and board reimbursements “at licensed skilled nursing facilities for medical and surgical patients, but  not provide room and board reimbursement at residential treatment facilities for mental health patients.” The Ninth Circuit did not conclude its analysis with a reading of the plain language of the Plan and Parity Act though. It next looked to various government agencies’ interpretations of the Parity Act. No agency had directly addressed the issue before the Court, but “[the agencies] did indicate that mental and medical/surgical benefits must be congruent, and that limiting the former while not placing a similar limitation on the latter would be improper.” As the court noted, the regulations state that:
Although the interim final regulations did not define the scope of the six classifications of benefits, they directed that plans and issuers assign mental health and substance use disorder benefits and medical/surgical benefits to these classifications in a consistent manner. This general rule also applies to intermediate services provided under the plan or coverage. Plans and issuers must assign covered intermediate mental health and substance use disorder benefits to the existing six benefit classifications in the same way that they assign comparable intermediate medical/surgical benefits to these classifications. For example, if a plan or issuer classifies care in skilled nursing facilities or rehabilitation hospitals as inpatient benefits, then the plan or issuer must likewise treat any covered care in residential treatment facilities for mental health or substance user disorders as an inpatient benefit.
Finding no authority contrary to its interpretation, and finding some indirect support for it, the Ninth Circuit reversed the district court’s ruling. The Plan was required to provide the benefits the insureds sought.
Insurance companies often attempt to provide inferior benefits for the treatment of mental health conditions than for the treatment of regular physical injuries. The lack of a physical sign of the condition often drives the insurance companies to fail to appreciate just how serious a mental health condition can be. Insureds are well served by the ruling in Danny P. It is a clear signal to insurance companies that the courts will honor both the letter and the spirit of the Parity Act. Insurance companies cannot attempt to draft their plans or administer their claims in such a manner as to provide for unequal treatment between mental health problems and issues of a non-mental health variety.