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K.M. v. Blueshield

United States District Court, W.D. Washington, Seattle

January 24, 2014

K.M. et al., Plaintiffs,
v.
REGENCE BLUESHIELD, et al., Defendants.

ORDER

RICHARD A. JONES, District Judge.

I. INTRODUCTION

This matter comes before the court on plaintiffs' motion for preliminary injunction and motion for class certification.[1] Dkt. ## 17, 20. Defendants Regence BlueShield and Cambria Health Solutions, Inc., f/k/a The Regence Group oppose the motions. Dkt. ## 23, 26.

As a preliminary matter, defendants move to strike new evidence and argument submitted for the first time with plaintiffs' reply. Dkt. # 32. With respect to argument, plaintiffs' arguments in reply respond directly to defendants' arguments in opposition, and are therefore appropriate. With respect to evidence, plaintiffs argue that the evidence is consistent with plaintiffs' arguments in their opening brief and responsive to defendants' brief. Dkt. # 46 at 2 (citing El Pollo Loco, Inc. v. Hashim, 316 F.3d 1032, 1040 (9th Cir. 2003)). Courts in this District have denied motions to strike evidence submitted with a parties' reply when it is evidence submitted in response to arguments raised in a party's opposition. See e.g., Reming v. Holland Am. Line Inc., Case No. C11-1609RSL, 2013 WL 5963119, *3 (W.D. Wash. Nov. 7, 2013); Lexington Ins. Co. v. Swanson, Case No. C05-1614MJP, 2007 WL 1585099, *5 (W.D. Wash. May 23, 2007). The evidence submitted in reply responds to defendants' arguments and evidence in opposition. Accordingly, it is properly before the court. Nevertheless, plaintiffs indicate that since the motions before the court are preliminary and non-dispositive, plaintiffs do not object to a decision by the court to not rely upon the additional evidence submitted to ensure an expedited decision. Dkt. # 46 at 1. Because the evidence submitted by plaintiffs in reply is superfluous and plaintiffs do not object to a decision by the court to not rely upon the evidence, the court has not considered the evidence submitted in reply.[2]

Having considered the memoranda, evidence, oral argument, and the record herein, the court GRANTS plaintiffs' motions.

II. BACKGROUND

Plaintiffs B.S. and K.M. filed suit on July 11, 2013, [3] alleging that Defendants have failed to comply with Washington's Mental Health Parity Act ("Parity Act") and the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 ("Federal Parity Act").[4] Dkt. # 1 at ¶¶ 10-14.[5] B.S., K.M., and DRW contend that the health care plans underwritten by Defendants do not provide coverage for K.M and B.S.'s medically necessary neurodevelopmental therapy, thus violating the mandates of the Parity Act and the Federal Parity Act. Dkt. # 13 (FAC) ¶¶ 11-18.

The Employee Retirement Income Security Act ("ERISA") governs the health care plans at issue, and thus plaintiffs bring their claims under its provisions. See 29 U.S.C. § 1002(1). Plaintiffs' amended complaint sets forth three claims for relief: (1) breach of fiduciary duties pursuant to ERISA § 404(A)(1), 29 U.S.C. § 1104(A); (2) recovery of benefits, clarification of rights under terms of the plan, and clarification of rights to future benefits under the plan pursuant to ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B); and (3) to enjoin acts and practices in violation of the terms of the plans, to obtain other equitable relief, and to enforce the terms of the plans pursuant to ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3). Dkt. # 13 (FAC) ¶¶ 36-49.

B.S. is a nine year-old[6] who is enrolled in a Regence-insured health plan through his father's employment. Dkt. # 6 (E.S. Decl.) ¶ 2, Ex. A. Several medical professionals confirmed B.S.'s diagnosis of autism, a condition listed in the Diagnostic and Statistical Manual ("DSM") published by the American Psychiatric Association that qualifies as a "mental health condition, " and recommended speech and language therapy for treatment. Dkt. # 6-2 at 5-7 (Ex. B to E.S. Decl., April 17, 2012, Araujo Eval.); # 6-4 at 2-4 (Ex. D to E.S. Decl., July 25, 2012, Long Eval.); # 6-5 at 2 (Ex. E to E.S. Decl., Aug. 7, 2012, Wagner Letter); see also Dkt. # 6-3 at 2-3 (Ex. C to E.S. Decl., Oct. 22, 2012, Gray Eval.). B.S.'s parents submitted claims to Regence for coverage of his speech and occupational therapies, but Regence denied coverage because B.S. was "over the age of six and did not meet the age limit set by [his] contract for this benefit." Dkt. # 6-6 at 3 (Ex. F to E.S. Decl.).

B.S.'s plan contains the following relevant provisions:

We cover Mental Health Services for treatment of Mental Health Conditions.
* * *
Mental Health Conditions means Mental Disorders in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders published by the American Psychiatric Association except as otherwise excluded under this Contract. Mental Disorders that accompany an excluded diagnosis are covered.
Mental Health Services means Medically Necessary outpatient services, Residential Care, partial hospital program or inpatient services provided by a licensed facility or licensed individuals with the exception of Skilled Nursing Facility services (unless the services are provided by a licensed behavioral health provider for a covered diagnosis), home health services and court ordered treatment (unless the treatment is determined by Us to be Medically Necessary).
* * *
We cover inpatient and outpatient neurodevelopmental therapy services. To be covered, such services must be to restore and improve function for a Member age six and under with a neurodevelopmental delay. For the purposes of this provision, neurodevelopmental delay means a delay in normal developmental that is not related to any documented Illness or Injury. Covered Services include only physical therapy, occupational therapy and speech therapy and maintenance services, if significant deterioration of the Member's condition would result without the service.
* * *
Medically Necessary or Medical Necessity means health care services or supplies that a Physician or other health care Provider, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing or treating an Illness, Injury, disease or its symptoms, and that are:
• in accordance with generally accepted standards of medical practice;
• clinically appropriate, in terms of type, frequency, extent, site and duration, and considered effective for the patient's Illness, Injury or disease; and
• not primarily for the convenience of the patient, Physician or other health care Provider, and not more costly than an alternative service or sequence of services or supply at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient's Illness, Injury or disease.

Dkt. # 6-1 at 18-19, 67 (Ex. A to E.S. Decl., Policy at 11-12, 60).

B.S. and DRW seek a preliminary injunction prohibiting defendants from denying coverage for neurodevelopmental therapy to treat mental health conditions based on the age exclusion in defendants' plans. B.S. and DRW also seek class certification for a prospective neurodevelopmental subclass related to Regence's age exclusion for neurodevelopmental therapy to treat mental health conditions.

III. ANALYSIS

A. Parity Act

"Prior to 2005, no Washington state law mandated that insurance providers include coverage for mental health services in their health benefit plans." J.T. v. Regence BlueShield, 291 F.R.D. 601, 606 (W.D. Wash. 2013) (citing S.B. Rep., S.H.B. 1154 (Wash. 2005)). "The legislature addressed this lack of coverage in the Parity Act, finding that the costs of leaving mental disorders untreated or undertreated are significant, ' and that it is not cost-effective to treat persons with mental disorders differently than persons with medical and surgical disorders.'" Id. (quoting S.H.B. 1154, 59th Leg., 2005 Reg. Sess. (Wash. 2005)); Dkt. # 9-4 at 3-4. "The Parity Act's objective was to achieve coverage for mental health services under the same terms and conditions as medical and surgical services.'" Id. The Parity Act defines "mental health services" as "medically necessary outpatient and inpatient services provided to treat mental disorders covered by the diagnostic categories listed in the most current version of the diagnostic and statistical manual of mental disorders." RCW 48.44.341(1). The Act sets forth a five-year, threephase implementation process. See RCW 48.44.341(2)(a)-(c).

The first phase of the Act, applicable to health benefit plans "delivered, issued for delivery, or renewed on or after January 1, 2006, " required that "[a]ll health service contracts providing health benefit plans that provide coverage for medical and surgical services shall provide... [m]ental health services." RCW 48.44.341(2)(a)(i). Additionally, the copayment for such services could be no greater than the copayment for medical or surgical services, and the plans were required to cover prescription drugs to treat mental health disorders to the same extent and under the same terms and conditions as other covered prescription drugs. RCW 48.44.341(2)(a)(i)-(ii).

Phase two, applicable to health plans delivered, issued, or renewed on or after January 1, 2008, incorporated the mandates of phase one and added the requirement that any health benefit plan that imposed a maximum out-of-pocket limit or stop loss must impose a single limit or stop loss for medical, surgical, and mental health services. RCW 48.44.341(2)(b)(i).

The final phase, applicable to plans delivered, issued, or renewed on or after July 1, 2010, incorporates the mandates of the previous two phases and adds the condition that any deductible requirement include mental health, medical, and surgical services. Additionally, this phase adds the provision that "[t]reatment limitations or any other financial requirements on coverage for mental health services are only allowed if the same limitations or requirements are imposed on coverage for medical and surgical services." RCW 48.44.341(2)(c)(i).

B. Article III Standing[7]

Just like any other plaintiff, a plaintiff bringing an ERISA claim must have standing pursuant to Article III of the United States Constitution. Paulsen et al. v. CNF, Inc., et al., 559 F.3d 1061, 1072 (9th Cir. 2009). To have standing under Article III, a plaintiff must demonstrate that (1) he has suffered an actual or threatened injury in fact; (2) the injury is causally connected to the conduct complained of; and (3) it is likely, and not merely speculative, that his injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). The requisite injury-in-fact pursuant to Article III must be actual or threatened, and not merely speculative. See id.

1. B.S.

First, B.S. suffered the requisite injury in fact. On September 24, 2012, Regence denied coverage of the occupational and speech therapy to treat his autism pursuant to the neurodevelopmental therapy age exclusion. Dkt. # 6-6 at 3 (Ex. F to E.S. Decl.). The medical professional evaluations before Regence indicated that the recommended neurodevelopmental therapies were to treat his autism. See Dkt. # 6-2 at 5-7 (Ex. B to E.S. Decl., April 17, 2012, Araujo Eval.) (confirming diagnosis of autistic spectrum and identifying speech and language therapy for treatment); # 6-4 at 2-4 (Ex. D to E.S. Decl., July 25, 2012, Long Eval.) (identifying autism spectrum as diagnosis and speech and language therapy for treatment); # 6-5 at 2 (Ex. E to E.S. Decl., Aug. 7, 2012, Wagner Letter) (identifying autism spectrum disorder and noting that B.S. is planned for speech therapy); see also Dkt. # 6-3 at 2-3 (Ex. C to E.S. Decl., Oct. 22, 2012, Gray Eval.) (noting reason for referral as autism spectrum diagnosis, and referring reader to prior evaluations recommending speech and occupational therapy).[8] Accordingly, the court finds that B.S. suffered an actual and particularized injury when Regence denied coverage due to its neurodevelopmental therapy age exclusion. Additionally, given Regence's continued and sustained position across several cases in denying neurodevelopmental therapy to children age seven and older based on the age exclusion, the court finds that it is likely that the injury will be ongoing without court intervention.

Second, B.S.'s denial of coverage for neurodevelopmental therapy to treat autism is causally connected to Regence's standard practice to exclude such coverage based on an insured's age. See Dkt. # 6-6 at 2-3 (Ex. F to E.S. Decl., Sept. 24, 2012, denial letter) (identifying code 299.00[9] (infantile autism), and identifying age exclusion as reason for denial).

Finally, B.S.'s injury will be redressed by injunctive relief because Regence would be prohibited from applying its age exclusion to B.S.'s neurodevelopmental therapies. Defendants have argued that the neurodevelopmental therapies are not "medically necessary."[10] Dkt. # 26 at 19-20.[11] The court believes that the same evidence cited above ...


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