Cromwell v. Kaiser Foundation Health Plan

Background

Ashley Cromwell sued Kaiser Foundation Health Plan under the Employee Retirement Income Security Act (ERISA) over health benefits for her daughter, who has autism. Covenant Care California, LLC sponsors the employee health benefits plan. Kaiser administers and adjudicates claims and funds benefits under the plan. The plan documents gave Kaiser discretionary authority to determine whether members were entitled to benefits.

Before June 1, 2018, Cromwell paid $20 per visit for her daughter’s autism-related speech therapy without being subject to the plan deductible. Beginning June 1, 2018, she had to pay the full cost of speech therapy until reaching the plan’s $2,000 deductible, after which she would pay $20 per visit. Kaiser informed her that the change placed physical, occupational, and speech therapy under the plan’s standard rehabilitative and habilitative benefits rather than its mental-health benefits. Kaiser stated that these services were covered for members with or without autism on the same terms.

Cromwell challenged the change, arguing that speech therapy was a critical part of autism treatment and that the deductible made treatment for autism more expensive than treatment for physical conditions. She relied on the California Mental Health Parity Act, including the provision addressing behavioral-health treatment for autism. The California Department of Managed Health Care told her that its investigation did not find that the plan treated mental-health benefits unfavorably compared with medical and surgical benefits and did not find that state law barred applying the deductible to the speech-therapy services.

Motions and standard of review

Kaiser moved for summary judgment under Federal Rule of Civil Procedure 56. Summary judgment is appropriate when there is no genuine dispute over a material fact and the moving party is entitled to judgment as a matter of law. Cromwell moved for judgment under Rule 52, which can allow a court to make findings and legal conclusions after a trial based on the administrative record.

The parties agreed that the court should review Kaiser’s benefits decision for abuse of discretion. Under that standard, the decision would stand if reasonable and supported by the record. Because Kaiser both administered the plan and funded benefits, the court applied some skepticism when reviewing the decision. The court stated that the record did not show a history of biased claims administration.

ERISA and state-law theories

Kaiser argued that Cromwell’s remaining claim was an ERISA claim based only on alleged violations of California law. The court rejected Cromwell’s argument that a state law preserved from ERISA preemption automatically becomes an ERISA claim. The court also considered Cromwell’s argument that the plan incorporated California law through its governing-law provision. The court found that provision potentially ambiguous but did not resolve its meaning because it could address the merits whether the claim was based on ERISA or state law.

Parity Act analysis

The court concluded that Kaiser had not violated the California Mental Health Parity Act. The court reasoned that Kaiser covered medically necessary autism treatment, including speech therapy, and applied the same financial terms to speech therapy regardless of whether the underlying condition was autism or another medical condition. All people requiring speech therapy had to satisfy the $2,000 deductible before the $20 copay applied.

The court rejected Cromwell’s argument that facially equal coverage could violate the law because speech therapy was more central to autism treatment than to some physical conditions. It found that Cromwell had not provided evidence supporting that comparison and noted that speech therapy, physical therapy, or occupational therapy could also be core treatment for various physical conditions. The court also found no persuasive statutory language, legislative history, agency interpretation, or case authority supporting Cromwell’s proposed approach. It distinguished a case in which a plan excluded therapy for autism while covering the same therapy for certain physical conditions, explaining that Kaiser’s plan did not exclude autism-related speech therapy and formally treated the therapy equally regardless of diagnosis.

Disposition

The court granted Kaiser’s motion for summary judgment. It held that, whether Cromwell’s claim was based on ERISA or state law, there was no genuine dispute of material fact that Kaiser did not violate the Parity Act. Because Kaiser’s motion was granted, the court denied Cromwell’s Rule 52 motion. The order disposed of Docket Nos. 42 and 49, directed the clerk to enter judgment, and closed the file.