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Angiulo: First Circuit Reviews Denial of Mental Health Benefits

Monday, February 22, 2016


Health insurance policies typically provide coverage for both physical and mental illness.  Exactly what kinds of treatments are covered varies by policy and the explanations can be confusing.  Consumer expectations may not match what the insurance company is obligated to cover. Dissatisfied policy holders can often find themselves on frustrating telephone calls leading to denial letters in the mail as they attempt to secure coverage. What some people might not realize is that a health insurer's coverage decisions are based on a contract.

Like any other contract, if either party fails to keep up their end of the bargain they will be in breach. If, for example, you do not pay your premium you are in breach and the insurance company may not provide benefits.  In addition, a breach of contract is a civil cause of action.  This is the principle underlying a consumer's ability to sue if they believe an insurer did not provide coverage that they should have.  A recent case from the Federal First Circuit Court of Appeals discusses the legal standards that apply to these types of cases.  

In the case of Stephanie C. v. Blue Cross Blue Shield of Massachusetts HMO Blue, Inc. a mother sought mental health treatment for her child. The intensity of the treatment she looked for was in response to the depth of the issues she saw her child dealing with. In the opinion, the child was known only by initials, M.G., and had behavioral issues from a young age. In adolescence the issues escalated into physical agression towards his parents and refusal to take court ordered medication. 

In an effort to get M.G. the care she thought he needed, Stephanie C. sent him to a facility in Utah specializing in treatment for and education of patients with mental illness. After some period of time in this new facility, M.G. received diagnoses of Asperger's Syndrome, anxiety disorder, and attention deficit and hyperactivity disorder. These, in turn, led to recommendations for additional long-term settings to provide therapy.  The mother followed these recommendations and enrolled M.G. in a residential program in Utah. 

One of the disputes between the defendant insurance company and the plaintiff consumer was whether bills for residential services were covered by the policy.  The contract terms said only the least intensive types of treatment would receive coverage.  During their evaluation of M.G's claim, the insurance company hired a psychatrist to review M.G.'s records and bills.  That psychiatrist applied a national standard for her profession. When she did, she formed an opinion that M.G.'s condition did not justify a finding that residential psychiatric treatment, like the program attended in Utah, was the least intensive option. The insurance company, armed with that opinion, denied M.G.'s request for coverage of that treatment

What is a person to do if they think they have been shorted by their health insurance company?  The first, obvious, thing you can do is give up.  For those that refuse such an option, there is an internal review process likely offered by their insurance company. If the desired relief is not achieved, a lawsuit is then filed.      

This action arises out of a federal statute designed to clearly outline the procedure for these cases.  The term “clearly” is relative as this area of law deals with Employee Retirement Income Security Act of 1974, known as ERISA in legal circles.  It is notoriously complex.

When people choose to go down this road they will face a judge.  That judge is responsible for deciding whether or not the insurance company's coverage denial was appropriate based on the facts of the case and the applicable law.    

The case of Stephanie C. is about what standard of review a trial judge uses.  If a contract is written with particular language, then the trial judge only reviews an insurance company's decision.  That review is limited to whether, or not, the decision was arbitrary, capricious, or an abuse of discretion.  Roughly translated, this means a decision will be upheld so long as it is rationally based on evidence.  The other standard of review is called De Novo and, based on the Appeals Court opinion, should have been used in Stephanie C.'s case.  

After reviewing the contract that governed this policy the Federal Appeals Court decided no language reserved discretionary authority to the insurance company.  A De Novo review, therefore, should have been done.  This means the trial judge should have reviewed the case and formed her own opinion rather than placing a value judgment on the insurance company decision.  The Appeals Court returned the matter to the original court for a new trial using the appropriate standard.

Some people might not see this decision as a victory.  At the least, it is an example of why a person should continue to fight in the face of defeat.  Sometimes it will move you incrementally closer to what you need.  For people or parents of children struggling with mental illness this can be equal to a win.    

Leonardo Angiulo is an Attorney in the city of Worcester handling legal matters across the Commonwealth. He can be reached by email [email protected] and found on the web at www.angiulolaw.com


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