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9th Circuit Mental Health Parity Case Still in Play

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California Insurance Commissioner Dave Jones says health insurers in California must cover medically necessary residential care for serious mental illnesses, such as anorexia nervosa, even if the policies exclude coverage for all types of residential care.

An exclusion for all types of residential care may appear to provide parity between mental and medical care, “but the exclusion in fact creates disparity, because residential care is often the only way to treat certain mental illnesses, whereas other options are available for the treatment of other types of illnesses,” Adam Cole, a counsel for Jones, writes in a “friend of the court brief” submitted to the 9th U.S. Circuit Court of Appeals.

Jones submitted the brief to the court because California officials, lawyers for a patients, and lawyers for employers and insurers are waging a fierce battle over a ruling a 3-judge panel at the 9th Circuit handed down in August in Harlick vs. Blue Shield of California (Number 10-15595).

The plaintiff in the case, Jeanene Harlick, was 37 when the ruling was released and has been dealing with anorexia for years. She spent 10 months in a non-licensed residential facility starting in April 2006.

She was enrolled in an employer-sponsored group health plan when she entered the residential facility.

The federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) applies to a health plan at an employer with more than 50 workers that offers both mental health and medical benefits. The MHPAEA requires affected plans to provide comparable mental health and medical health benefits, with plan design features, such as co-payment levels and limitations on the number of treatments covered, be substantially the same for mental health care and medical care.

California’s parity act, the California Mental Health Parity Act of 1999, requires plans to provide equal coverage for medical health and severe mental health conditions such as schizophrenia, bipolar disorder, depression, panic attacks, obsessive-compulsive disorder, autism, anorexia nervosa, bulimia nervosa, and serious emotional problems in children.

California Blue Shield says it should not have to cover the stay in the residential facility because Harlick’s policy excluded coverage for residential care for all types of illnesses, and because the facility was not licensed.

State officials and Harlick’s lawyers have argued that state law requires health insurers to cover all medically necessary care for insureds suffered from specified serious mental illnesses, including anorexia, and that the residential care was medical necessary.

The 3-judge panel sided with Harlick.

Jones is asking the 9th Circuit to defend the August ruling and block California Blue Shield’s efforts to overturn the ruling, or else to have all judges on the court review the ruling “en banc” and uphold it.

The California Association of Health Plans (CAHP), Sacramento, Calif., and many other insurance and employer groups have filed briefs opposing the ruling.

CAHP has argued that the 9th Circuit panel misinterpreted the California law, and that the state has long permitted non-monetary exclusions on coverage. State law requires plans to offer coverage for severe mental illness “at ‘parity’ with coverage for physical illnesses, not to require greater coverage,” the association says.

The ruling would seem to require a plan to provide residential care for anorexia in situations when the plan could exclude coverage for similar care for someone suffering from a traumatic brain injury, CAHP says.

Upholding the ruling could force California health plans to cover non-approved procedures and drugs, CAHP says.


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