A.F. ex rel. Legaard v. Providence Health Plan

35 F.Supp.3d 1298

A.F., by and through his parents and guardians, Brenna LEGAARD and Scott Fournier; and A.P., by and through his parents and guardians, Lucia Alonso and Luis Partida, and on behalf of similarly situated individuals, Plaintiffs

v.PROVIDENCE HEALTH PLAN, Defendant.

Case No. 3:13–cv–00776–SI.

United States District Court, D. Oregon.

Signed Aug. 8, 2014.

Keith S. Dubanevich, Joshua L. Ross, and Nadine A. Gartner, Stoll Stoll Berne Lokting & Shlachter, P.C., Portland, OR; Megan E. Glor, Megan E. Glor, Attorneys at Law P.C., Portland, OR, for Plaintiffs.

William F. Gary, Arden J. Olson, and Aaron Landau, Harrang Long Gary Rudnick, P.C., Eugene, OR; Aaron T. Bals, Harrang Long Gary Rudnick, P.C., Portland, OR, for Defendant.

OPINION AND ORDER

MICHAEL H. SIMON, District Judge.

Autism Spectrum Disorder is a pervasive developmental disorder that begins to appear during early childhood and is characterized by impairments in communication and social skills, severely restricted interests, and repetitive behavior. Applied Behavior Analysis (“ABA”) is an early intensive behavioral interaction health service that helps people with autism to perform social, motor, verbal, behavior, and reasoning functions that they would not otherwise be able to do. Plaintiffs A.F. and A.P. (collectively “Plaintiffs”) are both covered as dependent-beneficiaries under group health insurance plans issued by Defendant Providence Health Plan (“Providence”). A.F. and A.P. were denied coverage of ABA therapy by Providence—both initially and on appeal—based on Providence's “Developmental Disability Exclusion.”

Plaintiffs bring this class action lawsuit, alleging that Providence's denial of ABA therapy on the basis of its Developmental Disability Exclusion violates the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq.; the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (“Federal Parity Act”), 29 U.S.C. § 1185a ; and two Oregon state laws, Or.Rev.Stat. §§ 743A.168 and 743A.190. Plaintiffs moved for class certification, which the Court granted. The parties have agreed that the Court should treat their pending motions as cross motions for partial summary judgment. For the reasons that follow, the court grants partial summary judgment for Plaintiffs and denies Defendant's cross motion. Providence's Developmental Disability Exclusion violates both the Federal Parity Act and Oregon law and is therefore prohibited under ERISA.

STANDARDS

A. De Novo Review

Judicial review of an ERISA-governed insurance policy that grants the insurer discretion to determine a claimant's eligibility for benefits is ordinarily reviewed for “abuse of discretion.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). When a court reviews questions of statutory interpretation, however, it owes no deference to the insurer's decision and reviews legal questions de novo. Long v. Flying Tiger Line, Inc. Fixed Pension Plan for Pilots, 994 F.2d 692, 694 (9th Cir.1993). The issues presented in the pending motions are questions of statutory interpretation.

B. Motion for Summary Judgment

A party is entitled to summary judgment if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the burden of establishing the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The court must view the evidence in the light most favorable to the non-movant and draw all reasonable inferences in the non-movant's favor. Clicks Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257 (9th Cir.2001). Although “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge ... ruling on a motion for summary judgment,” the “mere existence of a scintilla of evidence in support of the plaintiff's position [is] insuf ficient....” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citation and quotation marks omitted).

Where parties file cross-motions for summary judgment, the court “evaluate[s] each motion separately, giving the non-moving party in each instance the benefit of all reasonable inferences.” A.C.L.U. of Nev. v. City of Las Vegas, 466 F.3d 784, 790–91 (9th Cir.2006) ; see also Pintos v. Pac. Creditors Ass'n, 605 F.3d 665, 674 (9th Cir.2010) (“Cross-motions for summary judgment are evaluated separately under [the] same standard.”). In evaluating the motions, “the court must consider each party's evidence, regardless under which motion the evidence is offered.” Las Vegas Sands, LLC v. Nehme, 632 F.3d 526, 532 (9th Cir.2011). “Where the non-moving party bears the burden of proof at trial, the moving party need only prove that there is an absence of evidence to support the non-moving party's case.” In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir.2010). Thereafter, the non-moving party bears the burden of designating “specific facts demonstrating the existence of genuine issues for trial.” Id. “This burden is not a light one.” Id. The Supreme Court has directed that in such a situation, the non-moving party must do more than raise a “metaphysical doubt” as to the material facts at issue. Matsushita, 475 U.S. at 586, 106 S.Ct. 1348.

BACKGROUND

Plaintiffs A.F. and A.P. are both insured as dependent-beneficiaries under group health plans in Oregon provided by Providence. A.F. and A.P. have both been diagnosed with Autism Spectrum Disorder and prescribed ABA therapy by their treating physicians. ABA therapy is an intensive behavior therapy that, among other things, measures and evaluates observable behaviors. Evidence shows that ABA therapy may help autistic children with cognitive function, language skills, and adaptive behavior. Evidence also suggests that the benefits of ABA are significantly greater with early intervention for young autistic children. Before January 2014, Providence denied all requests for coverage of ABA therapy.

In 2012, Providence denied a request by A.F.'s parents for reimbursement for the expenses of ABA therapy. A.F.'s parents appealed the initial denial, which Providence also denied. When A.F.'s parents appealed a second time, Providence denied the second appeal and provided this explanation:

Under the language of the Oregon Group Member Handbook for Open Option Plans, services “related to developmental disabilities, developmental delays or learning disabilities” are specifically excluded from coverage under this plan. (See Group Member Handbook, at 43). There is no question that autism spectrum disorder is a “developmental disability” or involves “developmental delay,” and PHP [Providence Health Plan] here has so interpreted it, in this case as it has in other cases seeking ABA services for autism spectrum disorder. Because ABA services are related to autism spectrum disorder, they are therefore not benefits covered under the plan.

Declaration of Joshua L. Ross (“Ross Decl.”) Ex. C at 9., Dkt. 41–3.

Also in 2012, Providence denied the request by A.P.'s physician for authorization of ABA therapy to treat A.P.'s autism.

A.P.'s parents appealed Providence's denial, and Providence denied the appeal. Providence provided the following explanation, which is almost identical to the explanation provided to A.F., to A.P.'s parents:

Under the language of the Oregon Group Member Handbook for Open Option Plans, mental health services “related to developmental disabilities, developmental delays or learning disabilities” are specifically excluded from coverage under this plan. (See Group Member Handbook, at 41). There is no question that autism spectrum disorder is a “developmental disability” or involves “developmental delay,” and Providence as the plan administrator here has so interpreted it, in this case as it has in other cases seeking ABA services for autism spectrum disorder. Because ABA services are mental health services related to autism spectrum disorder, they are therefore not benefits covered under the plan.

Ross Decl. Ex. D at 8., Dkt. 41–4.

Thus, in both cases, Providence denied coverage of ABA therapy because it is a service “related to developmental disabilities, developmental delays or learning disabilities.” Id. This exclusion (hereinafter, “the Developmental Disability Exclusion”) is included in all of the group plan insurance contracts issued by Providence after 2007. The Developmental Disability Exclusion is listed in the member handbook given to all members that describes the governing terms of the insurance plans.

Providence issues two types of plans: “self-insured” group plans and “insured” group plans. Under a “self-insured” plan, the employer carries the risk of coverage. Under an “insured” plan, Providence carries the risk of coverage. Both the “self-insured” and “insured” plans are subject to Oregon law and ERISA. Plaintiffs and all class members are members of “insured” group plans. Providence is both the administrator of these plans and a fiduciary to all plan members. As such, Providence is obligated to apply exclusions consistently and uniformly.

Providence uses diagnosis codes and current procedural terminology (“CPT”) codes to process members' claims. The diagnosis codes for Autism Spectrum Disorder all start with 299. There is no CPT code for ABA therapy.

Although Providence's group plans differ in terms of the specific benefits provided to group members, all of the group plan contracts issued after January 1, 2007 contain several identical provisions, including: (1)...