Health Insurer Accused of Parity Act Violations After Denial of Coverage

Evergreen Health and the Select Plus Plan they provide are facing suit over claims they violated a portion of the Employment Retirement Income Security Act of 1974 (ERISA) when they denied coverage to an insurance claim submitted by plaintiffs Kim and John B., on behalf of their daughter, M.B. Kim, John and their daughter M.B. are covered by the Select Plus Plan (the Plan) through John’s employer, Evergreen Health and filed an insurance claim after their daughter received mental health wilderness therapy. The claim was denied by the defendants, who cited the exclusion code “EXCLU Not a Covered Benefit.”

As a beneficiary of the plan, M.B. received treatment for two and a half months at Outback Therapeutic Expeditions, a licensed residential treatment facility in Utah. The plan the family submitted the insurance claim to is an employee benefit plan governed by ERISA. Their denial of coverage to the plaintiffs is a decision that the plaintiffs said is unfair, as it “seems to apply a stricter standard for receiving mental health care than for receiving analogous medical care, in violation of the Mental Health Parity and Additions Equity Act of 2008.” (MHPAEA)

The plaintiffs appealed the initial denial of coverage using a Level One Member Appeal on October 13, 2020. They asserted that under the MHPAEA, Outback qualifies as an intermediate behavioral health facility, meaning they are required to administer certain benefits. Despite this, on December 16, 2020, the plan sent a letter to the plaintiffs upholding the denial, maintaining their original position that the wilderness therapy is a plan benefit exclusion.

The second denial prompted a suit by the plaintiffs, where they argued that the administrators of the plan are required by ERISA to provide a “full and fair review” of denied claims. By failing to do this, Kim and John believe that the defendants have violated their fiduciary duties. They also explain that the fiduciary duties have been violated because the administrators of the plan have implemented policies and practices that exclude required coverage, and since they have failed “to discharge all plan duties solely in the interest of the participants and beneficiaries of the plan for the exclusive purpose of providing them benefits.”

In addition to these violations, the plaintiffs are also citing a violation of the Parity Act since the plan is supposed to provide mental health benefits yet applies stricter limitations to those benefits than other medical and surgical benefits with the same coverage classification. When claims are received by the Select Payment Plan for medical and surgical conditions, coverage is granted. This decision process is something that the plaintiffs believe represents a disparity because “the Plan denied coverage for mental health benefits when the analogous levels of medical or surgical benefits would have been paid.”

The plaintiffs are seeking coverage for the total amount of their initial claims, as well as appropriate equitable relief and attorney fees and costs.The plaintiffs are represented by G. Eric Nielson and Associates.