P. v. Blue Cross of California DBA as Anthem Blue Cross

Background

Andrew P. participated through his employment in the Anthem Platinum PPO 15/250/10% Plan, an employee-benefit plan governed by the Employee Retirement Income Security Act of 1974 (ERISA) and administered by Blue Cross of California. L.P., Andrew P.’s child, was a beneficiary. L.P. received mental-health treatment at Open Sky Wilderness Therapy from February 7, 2022, through April 27, 2022.

The plan covered medically necessary mental-health and substance-use-disorder treatment. It covered inpatient behavioral-health services at specified facilities, including residential treatment centers, and required covered facilities to be licensed, accredited, registered, or approved. The plan excluded wilderness and outdoor programs, subject to an exception required by state law for medically necessary mental-health or substance-use-disorder treatment.

Plaintiffs did not seek preauthorization for the treatment. After they requested a review of the services, Blue Cross denied benefits under the wilderness exclusion. Blue Cross later denied plaintiffs’ appeal because it concluded that Open Sky did not meet the plan’s definition of a residential treatment center and was not properly accredited.

Plaintiffs asserted two claims: an ERISA claim seeking benefits under 29 U.S.C. § 1132(a)(1)(B), and an equitable claim under the Mental Health Parity and Addiction Equity Act, referred to in the opinion as the Parity Act, under 29 U.S.C. § 1132(a)(3). Blue Cross moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which addresses whether a complaint states a legally sufficient claim.

ERISA Benefits Claim

The court held that plaintiffs failed to state a claim for benefits under ERISA. Although plaintiffs correctly argued that the plan did not limit mental-health coverage only to residential treatment centers, the court concluded that inpatient benefits, including residential accommodations, were covered only when provided in certain listed facilities. The plan also required those facilities to be accredited.

The complaint did not allege that Open Sky was accredited. The court rejected plaintiffs’ argument that Open Sky’s licensing alone was enough, reasoning that the plan’s capitalized term “Facility” incorporated additional requirements, including accreditation. The court therefore concluded that plaintiffs had not shown that the plan owed the disputed benefits under its terms.

Parity Act Claim

The court also held that plaintiffs failed to state a Parity Act claim. The Parity Act requires mental-health and substance-use-disorder treatment limitations in an ERISA plan to be no more restrictive than the predominant treatment limitations applied to substantially all covered medical and surgical benefits.

Plaintiffs argued that the plan facially violated the Parity Act because it did not exclude medically necessary medical or surgical care based on geographic location in the same way that it allegedly excluded L.P.’s treatment. The court acknowledged that geographic location, facility type, and provider specialty can be non-quantitative treatment limitations relevant to a Parity Act claim. But it found that plaintiffs did not identify those restrictions with enough specificity and did not dispute that the wilderness exclusion, accreditation requirement, and residential-coverage limitations applied equally to medical and behavioral-health conditions.

The court further found that plaintiffs did not adequately plead an as-applied violation. The complaint alleged only, on information and belief, that the plan violated the Parity Act “in application or effect.” The court concluded that this was a conclusory legal statement, unsupported by specific facts showing a disparity between mental-health benefits and medical or surgical benefits.

Leave to Amend and Disposition

Blue Cross asked the court to dismiss the complaint with prejudice. The court concluded that amendment of the ERISA claim would be futile under its interpretation of the plan’s evidence of coverage. In the discussion, the court stated that the ERISA claim was dismissed with prejudice; in the order, it stated that the ERISA claim was dismissed without leave to amend.

For the Parity Act claim, the court found that the factors governing dismissal with prejudice did not support barring amendment. Plaintiffs had not yet had an opportunity to prepare a complaint using information they requested from Blue Cross for a parity analysis. The court therefore dismissed the Parity Act claim without prejudice in its discussion and ordered that it be dismissed with leave to amend.

The court granted the motion to dismiss. Plaintiffs must file an amended complaint within 30 days after receiving the requested information from Blue Cross and must notify the court when they receive it. Any amendment must be limited to correcting the deficiencies identified in the order; plaintiffs may not add new claims or parties without the court’s permission.