K. v. Anthem Blue Cross and Blue Shield

Background

Gary K. brought claims under the Employee Retirement Income Security Act of 1974 (ERISA) individually and for his minor son, T.K., who was a beneficiary of the Assurant Health & Welfare Benefit Plan. Anthem was the plan’s third-party claims administrator, and the Assurant Inc. Benefit Plans Committee was the plan administrator.

Beginning September 28, 2022, T.K. received treatment at Triumph Youth Services, a residential treatment facility in Utah for adolescents experiencing mental-health, behavioral-health, and substance-abuse issues. Anthem denied payment for the treatment in letters that cited two reasons: the treatment was not medically necessary, and Triumph was not accredited under the plan. Anthem later upheld the denial on the accreditation basis and subsequently upheld it on the medical-necessity basis.

The amended complaint asserted three types of claims: a claim for benefits under ERISA, a claim under the Mental Health Parity and Addiction Equity Act, and a claim for statutory penalties based on the alleged failure to provide requested plan documents. The defendants moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to state a legally plausible claim.

Benefits Claim

The defendants argued that the plan did not cover T.K.’s treatment during the period when Triumph was unaccredited. Gary K. argued that the plan language defining a residential treatment provider was ambiguous, particularly because it introduced a list of requirements with the phrase “which includes” and did not clearly connect the listed items with “and” or “or.”

The court agreed that the language was unclear. It compared the definition with other plan definitions that more clearly specified whether one or all listed requirements had to be met. Because the plan did not clearly state whether accreditation was required, and because the defendants had not argued that the plan gave the administrator discretionary authority requiring a different standard of review, the court resolved the alleged ambiguity in Gary K.’s favor at this stage. The court denied the motion to dismiss the benefits claim concerning the denial of coverage.

Mental Health Parity and Addiction Equity Act Claim

The defendants also argued that the amended complaint did not allege that the plan imposed a more restrictive treatment limitation on mental-health benefits than on comparable medical or surgical benefits.

The court held that Gary K. plausibly alleged a disparity in accreditation requirements. The plan required residential treatment facilities to be accredited by one of several organizations, while the plan’s provision for skilled nursing facilities included an alternative under which Anthem could determine that a facility met reasonable standards. The court concluded that this alleged difference was enough to support the claim at the motion-to-dismiss stage.

The court also found the medical-necessity allegations sufficient. Gary K. alleged that Anthem required acute symptoms for residential mental-health treatment, even though comparable skilled-nursing or inpatient-rehabilitation treatment could be covered for less severe symptoms. The court concluded that the alleged requirement to show acute symptoms only for inpatient mental-health treatment was enough to state a Mental Health Parity and Addiction Equity Act claim. The court denied the motion to dismiss that claim.

Statutory Penalties and Requested Documents

Gary K. alleged that he received the requested materials except for an administrative service agreement and medical-necessity criteria. ERISA requires a plan administrator, upon a participant’s or beneficiary’s written request, to provide certain plan-related documents. The court concluded that Gary K. adequately alleged that the administrative service agreement qualified as a plan document subject to disclosure.

The court reached a different conclusion about the medical-necessity criteria. It held that Gary K. had not adequately alleged that those criteria were plan documents covered by the disclosure requirement. The court also noted that failure to provide such information does not create civil penalties under ERISA on the theory asserted here. The court therefore granted the motion as to the statutory-penalty claim based on the medical-necessity criteria.

Disposition

Judge Andrew L. Carter, Jr. concluded: “Defendants’ motion is GRANTED as to Plaintiff’s statutory penalty claim for the ‘medical necessity criteria’ and otherwise DENIED.” The clerk was directed to terminate the pending motion, and the case was to be referred to Magistrate Judge Ona T. Wang for general pretrial matters in a separate order.