Gallagher v. Empire Healthchoice Assurance, Inc.
Gallagher v. Empire Healthchoice Assurance, Inc.
Opinion of the Court
Plaintiff William Gallagher brings this action against Empire HealthChoice Assurance, Inc. ("Empire") under Section 502 of the Employee Retirement Income Security Act of 1974 ("ERISA"),
Empire has moved to dismiss and to strike Plaintiff's jury demand. (Def. Mot. (Dkt. No. 20) at 1)
BACKGROUND
I. RELEVANT PLAN PROVISIONS
Plaintiff is an employee of Mount Sinai Health System - a New York City-based *251hospital and health care company - and receives health insurance benefits through an employer-sponsored health insurance plan (the "Plan"). (Cmplt. (Dkt. No. 5) ¶¶ 2-3, 7) The Plan is administered by Empire - a not-for-profit managed care subsidiary of Anthem, Inc. that administers employer-funded health insurance plans. (Id. ¶¶ 7-8) Under the Plan, Mount Sinai is responsible for benefit payments, and Empire "provides administrative claims payment services only[.]" (Cmplt., Ex. A (Health Plan) (Dkt. No. 5-1) at 3) As claims administrator, Empire has discretionary authority to interpret and apply the Plan's terms in reviewing claims and determining benefit entitlement. (Cmplt. (Dkt. No. 5) ¶ 8) Under ERISA,
Under the Plan, Empire is directed to authorize benefits for Covered Services as long as the service sought is "Medically Necessary." (Cmplt., Ex. A (Health Plan) (Dkt. No. 5-1) at 85) The Plan provides that Empire will determine whether a Covered Service is "Medically Necessary" based on
Your medical records;
[Empire's] medical policies and clinical guidelines;
Medical opinions of a professional society; peer review committee or other groups of Physicians;
Reports in peer-reviewed medical literature;
Reports and guidelines published by nationally-recognized health care organizations that include supporting scientific data;
Professional standards of safety and effectiveness, which are generally-recognized in the United States for diagnosis, care, or treatment;
The opinion of Health Care Professionals in the generally-recognized health specialty involved;
The opinion of attending Providers, which have credence but do not overrule contrary opinions.
(Id. )
The Plan further provides that "Services will be deemed Medically Necessary only if":
They are clinically appropriate in terms of type, frequency, extent, site, and duration, and considered effective for Your illness, injury, or disease;
They are required for the direct care and treatment or management of that condition;
Your condition would be adversely affected if the services were not provided;
They are provided in accordance with generally accepted standards of medical practice;
They are not primarily for convenience of You, Your family, or Your Provider;
They are not more costly than an alternative service or sequence of services, that is at least as likely to produce equivalent therapeutic or diagnostic results;
When setting or place of service is part of the review, services that can be safely provided to You in a lower cost setting will not be Medically Necessary if they are performed in a higher cost setting....
(Id. at 85-86)
The Plan's Covered Services include mental health and substance abuse treatments. (Id. at 47) The "Behavioral Healthcare" section of the Plan states that, "[i]n addition to the services listed in Your Benefits At A Glance section, the following mental health care service is covered":
• Electroconvulsive therapy for treatment of mental or behavioral disorders, if precertified by Behavioral Healthcare Management.
*252• Care from psychiatrists, psychologists or licensed clinical social workers, providing psychiatric or psychological services within the scope of their practice, including the diagnosis and treatment of mental and behavioral disorders. Social workers must be licensed by the New York State Education Department or a comparable organization in another state, and have three years of post-degree supervised experience in psychotherapy and an additional three years of post-licensure supervised experience in psychotherapy.
• Treatment in a New York State Health Department-designated Comprehensive Care Center for Eating Disorders pursuant to Article 27-J of the New York State Public Health Law.
• We Cover inpatient mental health care services relating to the diagnosis and treatment of mental, nervous and emotional disorders received at Facilities that provide residential treatment, including room and board charges.
(Id. )
The Your Benefits At A Glance section states that the Plan covers mental health care - and alcohol or substance abuse treatment - on both an outpatient and an inpatient basis. (Id. at 26) The Plan does not specifically mention wilderness therapy. (Cmplt. (Dkt. No. 5) ¶ 10)
Empire makes the initial determination as to a claim for benefits under the Plan, and also is responsible for addressing "Level 1 Appeals." (Id., Ex. A (Health Plan) (Dkt. No. 5-1) at 75-76) "If the outcome of the mandatory first level appeal is adverse to [a Plan participant or beneficiary]," the Plan states that the Plan participant or beneficiary "may be eligible for an independent External Review pursuant to federal law."
With respect to a Plan participant and beneficiary's rights to challenge an adverse benefits determination under ERISA, the Plan states that "[u]nder ERISA, you have the right to have your Plan Administrator review and reconsider your claim. If we deny a claim, wholly or partly, you may appeal our decision [to the Plan Administrator]." (Id. at 81; see also
Here, Plaintiff does not contend that Empire is the Plan Administrator. (See Pltf. Opp. (Dkt. No. 23) at 23). Indeed, the Plan states that Empire is the claims administrator, and refers to the Plan Administrator as a separate party. (See, e.g., Cmplt., Ex. A (Health Plan) (Dkt. No. 5-1) at 3 ("Empire ... provides administrative claims payment services only....");
II. PLAINTIFF'S BENEFITS CLAIM FOR J.G.'S WILDERNESS THERAPY
J.G. has a history of mental health issues, including depression, low self-esteem, suicidal ideation, panic disorder, and drug use. (Id. ¶ 11) In May 2016, after J.G.'s therapist determined that she required intensive, in-patient treatment, J.G.'s parents had her admitted to Evoke Therapy - a mental health service provider in Bend, Oregon that offers wilderness therapy. (Id. ) Plaintiff sought coverage for the wilderness therapy under the Plan, but Empire denied Plaintiff's claim in a May 9, 2016 letter. (Id. ¶ 12) Empire's letter denying coverage states that "[t]he requested service(s) are excluded from the member's contract." (Id. )
Plaintiff appealed the denial of benefits, but Empire rejected the appeal in an August 23, 2016 letter. (Id. ¶ 13) By explanation, Empire states that the only services available for mental health treatment are those listed in the four bullet points in the "Behavioral Healthcare" section of the Plan. (Id. ) The letter does not address the coverage for outpatient and inpatient skilled nursing and rehabilitation care listed in the Your Benefits At A Glance section of the Plan. (Id. )
On November 23, 2016, Plaintiff filed the instant action against Empire, on behalf of himself and other similarly-situated individuals who are covered under health insurance plans that (1) are administered, underwritten, or insured by Empire; and (2) purport to cover mental health treatment, and whose claims for wilderness therapy coverage have been denied. (Id. ¶ 17) Plaintiff asserts that Empire's blanket exclusion of wilderness therapy violates the Parity Act, because it is a treatment limitation applicable only to mental health benefits. (Id. ¶ 16) The Complaint asserts a claim for enforcement of the Plan under
Empire has moved to dismiss and to strike the Complaint's jury demand. (Def. Mot. (Dkt. No. 20) at 1) Empire contends that - as a claims administrator without complete discretion to resolve benefits claims - it is not a proper defendant for purposes of a cause of action brought under Section 1132(a)(1)(B). (Def. Br. (Dkt. No. 21) at 5) Empire further contends that the Complaint does not plead sufficient facts to make out a violation of the Parity Act. (Id. )
DISCUSSION
I. MOTION TO DISMISS STANDARD
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal,
"In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint." DiFolco v. MSNBC Cable L.L.C.,
II. WHETHER EMPIRE IS A PROPER DEFENDANT FOR PURPOSES OF PLAINTIFF'S CLAIM UNDER SECTION 1132(a)(1)(B)
Empire contends that Plaintiff's claim under Section 1132(a)(1)(B) must be dismissed because - as a claims administrator without complete discretion over benefits claims - it cannot be sued under this provision of ERISA. (Def. Br. (Dkt. No. 21) at 10-11) Plaintiff argues, however, that pursuant to New York State Psychiatric Ass'n, Inc. v. UnitedHealth Grp.,
Prior to the Second Circuit's decision in New York State Psychiatric Ass'n, "the longstanding rule in the Second Circuit was that only a plan administrator or [trustee] could be held liable under [ Section 1132(a)(1)(B) ]." Easter v. Cayuga Med. Ctr. at Ithaca Prepaid Health Plan,
Although the court in New York State Psychiatric Ass'n declined to decide "whether a claims administrator that exercises less than total control over the benefits denial process is an appropriate defendant under [ Section 1132(a)(1)(B) ],"
*255Here, as in Easter, Empire is a claims administrator that does not have "total control" over the determination of benefit claims. While Empire makes an initial determination as to a benefit claim and resolves the first appeal concerning a denial of benefits (see Cmplt, Ex. A (Health Plan) (Dkt. No. 5-1) at 75), the Plan states that Plan participants and beneficiaries "have the right to have [their] Plan Administrator review and reconsider [their] claim" if Empire denies the claim "wholly or partly." (Id. at 81) Accordingly, the Plan makes clear that Empire does not make "final and binding decisions as to appeals," which is required for a claims administrator such as Empire to have "total control over claims for benefits." New York State Psychiatric Ass'n,
Because "there is no governing precedent for holding a claims administrator with less than total control responsible," Plaintiff's Section 1132(a)(1)(B) claim against Empire must be dismissed.
III. PLAINTIFF HAS PLAUSIBLY PLED A VIOLATION OF THE PARITY ACT
A. Statutory and Regulatory Framework
"Congress enacted the [Parity Act] 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." Am. Psychiatric Ass'n v. Anthem Health Plans, Inc.,
To achieve its statutory objective, the Parity Act "requires group health plans and health insurance issuers to ensure that the financial requirements (deductibles, copays, etc.) and treatment limitations applied to mental health benefits be no more restrictive than the predominant financial requirements and treatment limitations applied to substantially all medical and surgical benefits covered by the plan or insurance." New York State Psychiatric Ass'n,
*256Under the Parity Act, "treatment limitation" " 'includes limits on the frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment.' " C.M. v. Fletcher Allen Health Care, Inc., No. 5:12 Civ. 108,
"The regulations promulgated pursuant to the Parity Act expand on this definition by breaking it down into two categories: quantitative treatment limitations and nonquantitative treatment limitations." Bushell,
With respect to non-quantitative limitations, the Department of Labor's regulations mandate that "any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to mental health ... benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other facts used in applying the limitation with respect to medical/surgical benefits in the same classification."
B. Analysis
Plaintiff contends that Empire's denial of benefits for J.G.'s wilderness therapy violates the Parity Act. (Pltf. Opp. (Dkt. No. 23) at 6) To state a Parity Act violation, a plaintiff must allege that
(1) the insurance plan is of the type covered by the Parity Act; (2) the insurance plan provides both medical benefits and mental-health benefits; (3) the plan has a treatment limitation - either quantitative or nonquantitative - for one of those benefits that is more restrictive for mental-health treatment than it is for medical treatment; and (4) the mental-health treatment is in the same classification as the medical treatment to which it is being compared.
Bushell,
Here, Empire contends that Plaintiff has not pled facts that plausibly make out the third element, because the Complaint does not "identify Plan provisions that create a disparity between medical/surgical treatment and mental health/substance abuse treatment." (Def. Br. (Dkt. No. 21) at 9) Empire also contends that, "to the extent [Plaintiff] argues that there is a lack of parity because the Plan covers intermediate medical/surgical treatment in an outdoor 'wilderness' setting but does not [ ] cover mental health in this setting, there is simply no support for th[at] proposition in the Plan." (Def. Reply (Dkt. No. 22) at 5-6)
In Vorpahl v. Harvard Pilgrim Health Ins. Co., No. 17 Civ. 10844 (DJC),
The Vorpahl court denied the motion to dismiss, holding that it was "sufficient to allege, as Plaintiffs ha[d], 'that a mental-health treatment is categorically excluded while a corresponding medical treatment is not' to state a Parity Act claim."
In A.Z. by & through E.Z. v. Regence Blueshield, No. C17-1292 TSZ,
In A.H. by & through G.H. v. Microsoft Corp. Welfare Plan, No. C17-1889-JCC,
This Court rejects A.H. and finds the reasoning in Vorpahl and A.Z. persuasive. At least at the motion to dismiss stage, the relevant comparison is not whether benefits for wilderness therapy are available for medical/surgical patients, but rather whether the Plan has chosen to provide benefits for skilled nursing facilities and rehabilitation centers for medical/surgical patients, but chosen to deny benefits to those with mental health conditions who seek coverage for a residential treatment center offering wilderness therapy. To impose a higher pleading standard would likely undermine the statutory purpose of the Parity Act. See Bushell,
Here, Plaintiff has alleged that Empire's "blanket exclusion for services rendered at wilderness treatment centers is a separate treatment limitation applicable only to mental health benefits" (Cmplt. (Dkt. No. 5) ¶ 16), and Plaintiff has identified skilled nursing and rehabilitation facilities as the relevant analogue in the medical/surgical context.
IV. MOTION TO STRIKE JURY DEMAND
Empire has moved to strike Plaintiff's jury demand, arguing that there is no right to a jury trial in an action to recover benefits under an ERISA plan. (Def. Br. (Dkt. No. 21) at 5) "The Second Circuit has repeatedly held that 'cases involving ERISA benefits are inherently equitable in nature ... and that no right to a jury trial attaches to such claims,' " Chau v. Hartford Life Ins. Co.,
CONCLUSION
For the reasons stated above, Empire's motion to dismiss is granted as to Count 1, but denied as to Count 2. Empire's motion to strike the Complaint's jury demand is granted. The Clerk of the Court is directed to terminate the motion. (Dkt. No. 20)
SO ORDERED.
The page numbers of documents referenced in this Order correspond to the page numbers designated by this District's Electronic Case Filing system.
The Plan does not disclose who conducts the External Review, what procedures are involved in that review, or what federal law entitles certain Plan participants to seek an External Review.
Plaintiff contends that there is an "an issue of fact not amenable to a conclusive determination at this stage" regarding Empire's control over the appeal process, because "independent review of [Empire's] adverse decisions [requires] Empire's consent...." (Pltf. Opp. (Dkt. No. 23) at 23-24) This assertion directly contradicts the terms of the Plan, however, which explicitly inform Plan participants and beneficiaries that they may appeal Empire's adverse benefit determination to the Plan Administrator. (See Cmplt, Ex. A (Health Plan) (Dkt. No. 5-1) at 81)
Welp v. Cigna Health and Life Insurance Company, No. 17 Civ. 80237 (DMM),
Empire argues that this Court should disregard Plaintiff's assertion that "the relevant analogue in the medical/surgical context is treatment at rehabilitation hospitals or skilled nursing facilities," because that allegation is "not contained in the Complaint." (Def. Reply. (Dkt. No. 22) at 5) But the Complaint alleges that the Parity Act violation here is the same as that alleged in Joseph & Gail F. v. Sinclair Servs. Co.,
Reference
- Full Case Name
- William GALLAGHER, on behalf of himself and all others similarly situated v. EMPIRE HEALTHCHOICE ASSURANCE, INC., d/b/a Empire BlueCross BlueShield
- Cited By
- 25 cases
- Status
- Published