N.R. v. Raytheon Co.

24 F.4th 740

N.R., BY AND THROUGH his parents and guardians, S.R. and T.R., individually and on behalf of all others similarly situated, and derivatively on behalf of the Raytheon Health Benefits Plan, Plaintiff, Appellant,

v.RAYTHEON COMPANY ; Raytheon Health Benefits Plan; William M. Bull, Defendants, Appellees.

No. 20-1639

United States Court of Appeals, First Circuit.

January 31, 2022

Eleanor Hamburger, with whom Richard E. Spoonemore, Sirianni Youtz Spoonemore Hamburger Pllc, Stephen Churchill, and Fair Work P.C. were on brief, for appellant.

James F. Kavanaugh, Jr., with whom Catherine M. DiVita, Johanna L. Matloff, and Conn Kavanaugh Rosenthal Peisch & Ford LLP were on brief, for appellees.

Michael N. Khalil, with whom Kate S. O'Scannlain, Solicitor of Labor, G. William Scott, Associate Solicitor for Plan Benefits Security, and Thomas Tso, Counsel for Appellate and Special Litigation, were on brief, for Eugene Scalia, Secretary of Labor, amicus curiae.

Martha Jane Perkins, Daniel Unumb, Abigail Coursolle, and Elizabeth Edwards were on brief for National Health Law Program, Autism Legal Resource Center, LLC, Bazelon Center for Mental Health Law, Center for Health Law & Policy Innovation of Harvard Law School, Center for Public Representation, Disability Rights Education and Defense Fund (DREDF), Health Law Advocates, Inc., National Autism Law Center, and The Kennedy Forum, amici curiae.

Before Howard, Chief Judge, Thompson and Gelpí, Circuit Judges.

THOMPSON, Circuit Judge.

Plaintiffs S.R. and T.R. are the parents of N.R., who was four years old at the start of our story. The family had health insurance through T.R.’s employment at defendant Raytheon Company. Raytheon enlisted defendant United Healthcare to administer this health insurance plan (simply called the "Plan" from here on out) and assigned defendant William Bull to be the Plan's administrator. Everyone seemed happy with this arrangement until United Healthcare refused to pay for N.R.’s speech therapy. After S.R. and T.R. could not get United Healthcare to change its mind, the family sued for various violations of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. The district court dismissed the case in full, buying into the defendants’ representations of how the Plan works too much for this stage in the litigation. Ever mindful that all well-pleaded factual allegations in the complaint are accepted as true when reviewing a motion to dismiss, we affirm as to Count 1, and reverse and remand as to the remaining counts. See Ezra Charitable Tr. v. Tyco Int'l, Ltd., 466 F.3d 1, 6 (1st Cir. 2006) (in addition to accepting well-pleaded factual allegations in the complaint, we also construe reasonable inferences in favor of the plaintiffs).

I.Relevant Details of the Plan

The Plan includes a list entitled "Exclusions," and explains that "[t]he [United Healthcare] plans do not cover any expenses incurred for services, supplies, medical care, or treatment relating to, arising out of or given in connection with [those excluded services.]" Among those excluded expenses are "[h]abilitative services for maintenance/preventive treatment" and "speech therapy for non-restorative purposes."

The "Exclusions" list also includes a nested sub-list of "mental health (including Autism Spectrum Disorder (ASD) services)/substance-related and addictive disorders services [that] are not covered[.]" That "mental health" list includes the following relevant text:

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[.]

... Intensive behavioral therapies other than Applied Behavior Analysis (ABA) therapy for Autism Spectrum Disorders (ASD)[.]

N.R.’s Treatment and Denial of Coverage

In 2017, a doctor diagnosed N.R. with Autism Spectrum Disorder ("ASD") and prescribed that N.R. "receive speech therapy services." And so, N.R. began treatment with a licensed speech pathologist, Ann Kulichik, to treat his ASD, "[m]ixed receptive-expressive language disorder, [and] phonological disorder." Each of those diagnoses was recorded and reported to United Healthcare using its classification number from the International Statistical Classification of Diseases and Related Health Problems, 10th Revision (apparently known as the "ICD-10"). ASD, mixed receptive-expressive language disorder, and phonological disorder are each classified within the "Mental, Behavioral, and Neurodevelopmental" section of the ICD-10. The ICD-10 also contains a section for "Symptoms, Signs and Abnormal Clinical and Laboratory Findings, Not Elsewhere Classified." Kulichik noted (in documentation eventually submitted to United Healthcare) that N.R. had several symptoms that fell within this category, namely: "dysarthria, [ ] anarthria and dysphagia, oral phase." Those symptoms are not diagnoses of "either ‘mental health’ or ‘medical/surgical’ conditions."

Kulichik submitted N.R.’s claims for speech therapy to United Healthcare using a general code that "is used to describe the delivery of treatment for speech, language, voice, communication and/or auditory processing disorders." That treatment code (described as "very comprehensive" by the American Speech-Language-Hearing Association), is used when speech therapy is provided to treat a developmental health condition, like ASD, or a medical condition, like a stroke. Kulichik also submitted at least one claim for N.R.’s speech therapy using a code "for treatment of swallowing dysfunction and/or oral function for feeding." Like the more general code, this swallowing and feeding code can be used when the speech therapy is to treat a developmental health condition or a medical condition.

United Healthcare denied each of these claims, simply explaining that "this service is not covered for the diagnosis listed on the claim" and referring N.R.’s parents to the "[P]lan documents" for further explanation.

N.R.’s parents appealed these denials through United Healthcare's internal process. The appeal included several letters of medical necessity, including letters from Kulichik and N.R.’s board-certified behavior analyst. N.R.’s parents also argued that the Plan's exclusion of treatment for N.R.’s ASD violated the Mental Health Parity and Addition Equity Act (simply the "Parity Act" after this), an amendment to ERISA aimed at mitigating disparities between mental health and physical health insurance coverage (and the subject of much discussion later).

United Healthcare denied this appeal and offered the following statement from Dr. Samuel Wilmit, a Medical Director at United Healthcare who specialized in pediatrics:

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.

The denial did not address the argument that these denials violated the Parity Act.

N.R.’s parents filed a second-level appeal, again with documentation about the medical necessity of this treatment and with a more thorough explanation of their Parity Act argument. United Healthcare was unmoved. The denial letter included this statement from Dr. Meenakshi LaCorte, a Medical Director at United Healthcare who specialized in pediatric neonatology:

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 had speech that was lost. Based on your health plan guidelines, your request is denied.

Again, the denial letter did not mention the Parity Act argument.

After the conclusion of the appeal process, N.R.’s parents requested all documents and internal communications and notes upon which United Healthcare relied when it denied coverage of N.R.’s treatment. The provided documents revealed that United Healthcare did not conduct a "Medical Necessity Review" and never attempted to communicate with any of N.R.’s medical providers, including Kulichik.

Also within those documents were the notes from Dr. Wilmit's review of the first appeal. Dr. Wilmit concluded that N.R.’s "speech or nonverbal communication function" was not "previously intact" and, therefore, the Plan does not cover speech therapy. Dr. Wilmit's notes and United Healthcare's records, generally, did not reflect the source for the conclusion that N.R. had no "previously intact" speech or other communication. In the complaint, the plaintiffs allege that the most reasonable conclusion is that Dr. Wilmit assumed that N.R. had no previously intact speech (and therefore treatment was not covered) because of his ASD diagnosis and not based on any actual documentation of N.R.’s condition.

The internal notes from the second-level appeal include the following summary:

This request is for speech therapy for a [four-year-old] boy. This child has autism and a speech disorder. There is no documentation that speech therapy is needed for restoration of speech. The speech therapy is not a covered benefit and the request is denied.

Nothing in the internal documents discussed N.R.’s parents’ Parity Act argument.

After the last denial of their appeal, N.R.’s parents contacted Raytheon and United Healthcare and requested the list of "non-mental health conditions to which the Plan applies the ‘non-restorative’ speech therapy exclusion," "the medical necessity criteria" for applying the non-restorative speech therapy exclusion to medical or mental health benefits, and the "processes, strategies, evidentiary standards, and other factors" used to apply the exclusion. N.R.’s parents received no response.

Resultant Litigation

ERISA authorizes a plan participant or beneficiary to bring a civil action "to recover...