By: HUB's EB Compliance Team
With the increased focused on Mental Health Parity and Addiction Equity Act (“MHPAEA”) compliance and increasing Department of Labor investigation activity, employers should also pay increasing attention to court cases in this space. While they have always been important, a Northern California District Court case from earlier this year sheds some light on what is, and is not, a permissible exclusion.
Background
The dispute here is pretty simple. The plan in question excluded Applied Behavioral Analysis (“ABA”) and other Intensive Behavioral Therapies (“IBTs”) to treat autism spectrum disorders. The plan covered other treatments for autism, but not those.
The MHPAEA allows plans to exclude all treatment for mental health and substance use disorder services. It also allows plans to exclude all treatment for a particular condition. For example, a plan could exclude all treatment for autism. However, if a plan chooses to cover a condition, can it exclude particular types of treatment for that condition?
The Court in this case said no. Once a plan chooses to cover treatments for a mental health or substance use disorder condition, it cannot exclude isolated treatments for that condition that only apply to mental health and substance use disorder benefits.
What this Doesn't Mean
While the Court did not get into this analysis, this does not necessarily mean a plan has to cover any treatment that someone might offer for a condition. General exclusions, like exclusions for educational, experimental, and investigative services, can still apply. These are allowed because they apply to both medical/surgical benefits and mental health/substance use disorder benefits. However, in applying these general exclusions, the plan must use similar standards, and apply them consistently, for both medical/surgical benefits and mental health/substance use disorder benefits, as HUB has discussed in greater detail here.
What it (Probably) Does Mean
On the other hand, what this case likely does mean is that exclusions for individual treatments, like the ones in this case, are not permissible. The issue is that these exclusions target only mental health/substance use disorder benefits. As a result, they violate MHPAEA's rules requiring that treatment limitations be applied consistently across a plan's benefits.
Since this case was decided at the district court level (the lowest federal court), subsequent appeals or other courts may disagree. Therefore, this one court's decision is not necessarily settled law for the entire country. Having said that, the court's decision is a straightforward application of the statutory language. Therefore, while it is possible another court could reach a different result, that seems unlikely. Additionally, this type of interpretation is likely consistent with the Department of Labor's own views on the matter. Taking these facts together, employers that maintain these or similar exclusions are strongly encouraged to revisit those exclusions with their legal counsel.
As a final note, the plan in this case changed its design to cover ABA and other IBTs starting in 2020. While the Court does not say why the plan change occurred, it is possible that the plan sponsor likely expected (and may ultimately have agreed with) the Court's interpretation of the statute. Certainly, making the change avoided the possibility of future lawsuits over this same issue.
Takeaways
For employers (particularly those who are self-funded, including level-funded) who have exclusions of particular types of therapy, the Court's ruling is a warning. This Court, at least, did not think that such an exclusion was permissible under MHPAEA. Given the increased focused on MHPAEA compliance by the U.S. Department of Labor as well, employers should consider removing those exclusions and discuss with counsel. In doing so, employers should weigh the cost of covering these services against the potential for lawsuits and DOL enforcement actions.
If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.
NOTICE OF DISCLAIMER
Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only, and is not intended to constitute legal or tax advice as to an organization's or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization's specific situation in light of your or your organization's particular needs.