N.R. v. Raytheon Co.

N.R., by and through his parents and guardians, S.R. and T.R.,individually and on behalf of all others similarly situated, and derivativelyon behalf of the Raytheon Health Benefits Plan v. RAYTHEON COMPANY; RAYTHEON HEALTH BENEFITS PLAN; andWILLIAM M. BULL

CIVIL ACTION NO. 20-10153-RGS

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

June 9, 2020

MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO DISMISS

STEARNS, D.J.

N.R. is the named plaintiff in this putative class action brought against defendants Raytheon Health Benefits Plan (Plan), an employee benefit plan within the meaning of the Employee Retirement Income Security Act (ERISA); Raytheon Company, the Plan Sponsor; and William M. Bull, the Plan Administrator. N.R. brings four claims under ERISA, each of which is predicated upon an allegation that the defendants' exclusion of coverage for non-restorative speech therapy as an autism spectrum disorder (ASD) treatment violates the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA, or Parity Act).

Specifically, N.R. alleges that "the Plan's exclusion of coverage of speech therapy that is 'non-restorative," its exclusion of "non-restorative [Applied Behavior Analysis (]ABA[)] speech therapy" in particular, and its exclusion of "habilitation [sic] services," is specifically "aimed at eliminating coverage of speech therapy and other services for developmental mental health conditions." Compl. ¶ 9 (Dkt # 1). N.R. argues that these "[e]xclusions are a proxy for disability discrimination, and improperly exclude coverage of medically necessary services to enrollees with developmental mental health conditions." Id.

The Complaint sets out the following four claims: breach of fiduciary duties under ERISA §§ 404(a)(1), 502(a)(2), 29 U.S.C. §§ 1104(a), 1132(a)(2) (Count 1); recovery of benefits under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) (Count 2); equitable remedies under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3) (Count 3); and sanctions for alleged violation of ERISA disclosure requirements (Count 4). Defendants move to dismiss all Counts. For the reasons to be explained, Counts 1 and 2 will be dismissed with prejudice; Counts 3 and 4 will be dismissed without prejudice.

BACKGROUND

The facts, drawn from the Complaint and documents incorporated by reference, when viewed in the light most favorable to N.R. as the nonmovingparty, are as follows. Raytheon administers the Plan, an employer-sponsored health insurance plan. T.R., an employee of Raytheon Company, is a plan participant. N.R., who is five years old, is a dependent of T.R. and S.R. In 2017, a physician diagnosed N.R. with ASD and recommended that N.R. "receive speech therapy services to treat his ASD." Compl. ¶ 25. A licensed speech pathologist provided speech therapy to N.R., "to treat N.R.'s identified diagnoses of ASD (F84.0), Mixed receptive-expressive language disorder (F80.2), and phonological disorder (F80.0)." Compl. ¶ 27. N.R. sought coverage for the pathologist's services totaling $1,790.00, but was denied coverage by United Healthcare - the "Claims Administrator" for the Plan. Dkt # 1-3 at 2, 5. United Healthcare explained that "this service is not covered for the diagnosis listed on the claim." Compl. ¶ 32, quoting Dkt # 1-2.

In April of 2019, N.R.'s parents appealed United Healthcare's denial of coverage. They argued that "(1) Speech therapies are medically necessary mental health services and should be covered under United Healthcare's mental disorders benefit," and that "(2) United Healthcare's restriction of covering only 'restorative speech therapy' violates the federal Mental Health Parity and Addiction Equity Act of 2008." Dkt # 1-11 at 3; see 29 U.S.C. § 1185a(a)(3); 42 U.S.C. § 300gg-5; 26 U.S.C. § 9812(a)(3).

United Healthcare rejected the appeal. In so doing, it quoted from the language of N.R.'s benefit plan, explaining that:

[H]abilitative services (defined in Exclusions later in this section) are not covered. For a description of limitations and exclusions related to the treatment of ASD, including a definition of habilitative services, see later in this section. For more information, or if you have any questions, contact UHC.

Autism Spectrum Disorder (ASD) refers to a range of conditions characterized by challenges with social skills, repetitive behaviors, speech and nonverbal communication, as well as by unique strengths and differences. The term "spectrum" reflects the wide variation in challenges and strengths possessed by each person with autism.

Note: To be considered covered services, speech and nonverbal communication services must comply with restorative-only requirements. To be considered restorative, the speech or nonverbal communication function must have been previously intact.

Dkt # 1-3 at 4, quoting Dkt # 1-12 at 37. United Healthcare also quoted language located elsewhere in the Plan:

Short-Term Rehabilitative Therapy (includes physical therapy, speech therapy (restorative only), occupational therapy, pulmonary therapy or cardiac rehabilitation)

. . .

Rehabilitation benefits (outpatient physical, occupational, speech (restorative only), pulmonary rehabilitation and cardiac rehabilitation therapy) may be denied or shortened for a covered person who is not progressing in goal-directed rehabilitation services or if rehabilitation goals have previously been met.

The following mental health (including Autism Spectrum Disorder (ASD) services)/substance-related and addictive disorders services are not covered:

-Habilitative services, which are health care services that help a person keep, learn or improve skills and functioning for daily living, such as non-restorative ABA speech therapy;

-Speech therapy for non-restorative purposes.

Id. at 4-5, quoting Dkt # 1-12 at 52, 58, 64, 80, 83. Finally, United Healthcare forwarded the explanation of its Medical Director, Dr. Samuel Wilmit, who stated:

You are asking for speech therapy. This is for your child. Your child is autistic. Your child does not speak clearly. Your benefit document covers speech therapy if your child lost speech. It is to restore speech that was lost. Your child has not had speech that was lost. Therefore, speech therapy is not covered. The appeal is denied.

Id. at 3. Accordingly, United Healthcare concluded that "[b]ecause the claim(s) for this service(s) was processed according to the above plan provisions, the original determination remains unchanged, and is upheld." Id. at 5. The response did not address N.R.'s parents' Parity Act argument.

When N.R.'s parents lodged a second-level appeal in August of 2019, they provided United Healthcare with additional evidence supporting their contention that speech therapy for N.R. was medically necessary. United Healthcare denied the second-level appeal in September of 2019, without addressing the issue of medical necessity or the ramifications of the ParityAct. Rather, United Healthcare's Medical Director, Dr. Meenakshi LaCorte, iterated what had been said before:

I have reviewed the information that was submitted for this appeal. I have also reviewed your benefits. You have requested speech therapy for your child. This therapy is a benefit under your health plan only if your child's had speech that was lost. Based on your health plan guidelines, your request is denied.

Compl. ¶ 40, quoting Dkt # 1-7 at 3. Following the denial of the appeal, N.R.'s parents

contacted Raytheon and United Healthcare to obtain (a) the list of non-mental health conditions to which the Plan applies the "non- restorative" speech therapy exclusion, and (b) the "medical necessity criteria for both medical/surgical benefits and mental health and substance use disorder benefits, as well as the processes, strategies, evidentiary standards and other factors used to apply" the "non-restorative speech therapy" exclusion, the "non-restorative ABA speech therapy" exclusion and the exclusion of "habilitative services" under the Plan.

Compl. ¶ 48, quoting Dkt # 1-8 at 2 (letter dated October 22, 2019), 29 C.F.R. § 2590.712(d)(3). United Healthcare did not respond to their requests.

DISCUSSION

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Two basic principles guide the court's analysis. "First, the tenet that a court must accept as true all of theallegations contained in a complaint is inapplicable to legal conclusions." Iqbal, 556 U.S. at 678. "Second, only a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 679. A claim is facially plausible if its factual content "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678. "If the factual allegations in the complaint are too meager, vague, or conclusory to remove the possibility of relief from the realm of mere conjecture, the complaint is open to dismissal." S.E.C. v. Tambone, 597 F.3d 436, 442 (1st Cir. 2010).

Generally, in ERISA cases, "where the plan documents grant the claims administrator full discretionary authority, the decision [to deny benefits] is reviewed for abuse of discretion." McDonough v. Aetna Life Ins. Co., 783 F.3d 374, 379 (1st Cir. 2015). Here, N.R. alleges that both Bull and Raytheon Company exercise "discretionary authority or discretionary control with respect to the denial and appeal of denied claims under the Plan." Compl. ¶¶ 62, 63. The discretionary authority of the Plan Administrator or fiduciary is not, however, in question here. N.R. alleges a violation of the MHPAEA, and not a denial of a benefit otherwise covered by the Plan. Consequently, the issue is purely one of law subject to de novo review. See Joseph F. v. Sinclair Servs. Co., 158 F. Supp. 3d 1239, 1258 (D. Utah 2016), citing Foster v. PPGIndus., Inc.,...