N.E. v. Blue Cross Blue Shield of N.C.

1

N.E., Individually and on behalf of H.E., a minor, Plaintiff, v. BLUE CROSS BLUE SHIELD OF NORTH CAROLINA and CARSON DELLOSA PUBLISHING, LLC, Defendants.

No. 1:21CV684

United States District Court, M.D. North Carolina

March 29, 2023

ORDER AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

JOI ELIZABETH PEAKE, UNITED STATES MAGISTRATE JUDGE

This ERISA case is before the Court on Defendant Blue Cross Blue Shield of North Carolina's (“BlueCross” or “Defendant”) Motion to Dismiss Second Amended Complaint for Failure to State a Claim [Doc. #43]. For the reasons set out below, the Court will recommend that Defendant's Motion to Dismiss be granted in part and denied in part, as further set out below.

I. FACTS, CLAIMS, AND PROCEDURAL HISTORY

The following facts are taken from Plaintiffs Second Amended Complaint (“Complaint”) [Doc. #42], During the time at issue in this action, Plaintiff N.E. was a participant in the Carson-Dellosa Publishing, LLC Welfare Benefit Plan (“the Plan”), a selffunded employee welfare benefits plan under Employee Retirement Income Security Act of 1974 (“ERISA”), and Plaintiff s son H.E. was a beneficiary of the Plan. (Compl. ¶8). Carson-Dellosa Publishing, LLC was the Plan Administrator and Defendant BlueCross was the third-party claims administrator for the Plan. (Compl. ¶2-4). Plaintiff also alleges that Defendant acted as an agent of Catson-Dellosa Publishing, LLC, the Plan Administrator. (Compl. ¶4.) Plaintiff alleges that H.E received medical care and treatment at Elements Wilderness Program from June 12, 2018 through September 4, 2018 and at Waypoint Academy from September 5, 2018 through December 16, 2019. (Compl. ¶9.) Plaintiff alleges that Elements and Waypoint are both “licensed treatment facilities” in Utah that provide “sub-acute inpatient treatment to adolescents with mental health, behavioral, and/or substance abuse problems.” (Compl. ¶9.) Plaintiff alleges that Defendant denied Plaintiff s claims for payment for the cost of H.E.'s treatment at Elements and Waypoint. (Compl. ¶ 10.)

i. H.E. 's Mental Health and Treatment

Plaintiff alleges that in 2012 and while still a minor, H.E. developed severe depression, anxiety, substance abuse, and a pattern of self-harm which escalated to suicidal ideation and suicide attempts, and he received treatment at a psychiatric hospital. (Compl. ¶¶14-17.) After H.E. was discharged from the psychiatric hospital, he initially showed signs of improvement in his mental health but ultimately overdosed on Benadryl in another attempt to end his life, which resulted in another hospitalization. (Compl. ¶l7.) At the hospital, H.E.'s medical team recommended “additional treatment with 24-hour monitoring and therapy,” and H.E. was taken direcdy from the hospital to Elements on June 12, 2018. (Compl. ¶¶17-18.) H.E. remained at Elements for just under 90 days, until September 4, 2018, and then transferred to Waypoint on September 5, 2018. (Compl. ¶9.)

ii. Defendant's Denial of Benefits for Treatment at Elements

Defendant initially denied coverage for H.E.'s treatment at Elements for lack of preauthorization. (Compl. ¶¶19-20.) On June 14, 2019, Plaintiff appealed the denial of benefits for treatment at Elements, citing the portion of the Plan providing for the possibility of retrospective authorization even if preauthorization was not obtained. (Compl. ¶¶19-20.) Plaintiff included letters from H.E.'s doctors and therapists supporting the need for care in a long term residential treatment center. (Compl. ¶22-23.) Plaintiff alleges that she also requested that, in the event of a denial of her appeal, Defendant provide her “with a copy of all documents under which the Plan was operated, including all governing plan documents, the summary plan description, any insurance policies in place for the benefits she was seeking, any administrative service agreements that existed, the Plan's mental health and substance abuse criteria, the plan's criteria for skilled nursing and inpatient rehabilitation facilities, and any reports or opinions from any physician or other professional concerning the claim[,]” which Plaintiff defines as the “Plan Documents.” (Id. ¶24.)

According to the Complaint, Defendant upheld its denial of payment for H.E.'s treatment at Elements in a letter dated July 19, 2019. (Compl. ¶25.) Specifically, the denial stated that:

Elements Wilderness Program is an out-of-network provider and although some of the claims were reprocessed all of the claims processed out-of-network and set to pay without pre-authorization. Therefore, there are no denials on file. For future reference, it is the responsibility of the member to obtain and verify that pre-authorization has been obtained when using providers outside the state of North Carolina and/or out-of-network. As for your request to review claim(s) for dates of service July 1, 2018 through July 15, 2018, no claim(s) were located in our system.

(Compl. ¶25.) Plaintiff submitted a complaint to the North Carolina Department of Insurance, stating that “despite multiple attempts at contact, [BlueCross] had not so much as told her whether or not her claims had been processed and she had no indication, when or if they would be processed.” (Compl. ¶26.) On December 31, 2019, Plaintiff submitted a level two appeal to BlueCross, asserting that (1) "outdoor behavioral health treatments like Elements were not listed among the service that explicitly required preauthorization”; (2) even if preauthorization were required, "the insurance contract allowed for a retrospective review to be performed in the event that preauthorization was not obtained”; (3) the language of the Plan was ambiguous and vague, and the pre certification process was difficult to understand and navigate in violation of BlueCross's responsibility under ERISA; (4) she had not been given a full and fair review; and (5) during calls with a BlueCross representative, she was told that BlueCross "had not processed the claims due to the use of the ‘1006' revenue code assigned to Elements.” (Compl. ¶27-32.) Finally, Plaintiff questioned whether Defendant's "apparent exclusion of these services constituted a violation of the MHPAEA [Mental Health Parity and Addiction Equity Act of 2008] and asked BCBSNC to perform a ‘formal parity analysis' of the Plan to determine MHPAEA compliance” and again requested copies of the Plan Documents. (Compl. ¶32.)

According to the Complaint, Defendant responded to the level two appeal on February 17, 2020, with a letter maintaining its denial of benefits on the grounds that, "Certain services, regardless of the location require PRIOR REVIEW and CERTIFICATION by BCBSNC in order to receive benefits.” (Compl. ¶33) (internal quotation marks omitted). However, the letter also said that:

The facility where you attended, Wilderness Camp, is non-covered by your benefit plan. Per your plan under what is not covered, you will see that your plan does not cover institution [sic] providing education in special environments and/or Inpatient confinements that are primarily intended as a change of environment.

The claims are filed as inpatient and the facility is not a licensed inpatient mental health facility. The provider is also not a licensed residential treatment facility.

The claims are filed with inpatient place of service, [sic] Inpatient services would require pre admission certification. There are no pre admission certifications on file for the residential mental health treatment or inpatient mental health services for these dates of services.

(Compl. ¶34.) Thus, this determination letter denied Plaintiffs claim for several reasons, including (1) Wilderness Camp was not covered because the Plan did not cover education in special environments or inpatient treatment intended as a “change of environment”; and (2) Elements was not a licensed inpatient mental health or residential treatment facility; and (3) inpatient services would have required pre admissions certification.

Plaintiff submitted another appeal on June 22, 2020, again arguing that the Plan “did not require preauthorization for the services H.E. received and, in any event, she had requested authorization multiple times now but BCBSNC continued to disregard her arguments.” (Compl. ¶¶35-36.) Plaintiff also argued that “Elements was not an excluded service nor was it an educational program, but it was a licensed and accredited outdoor behavioral health facility for which coverage was available,” that Defendant's denial “violated the MHPAEA which prohibited an insurer from imposing treatment limitations on mental health services which were not equally applied to analogous medical or surgical services” based on Defendant's apparent “restriction on facility type which was only applied to outdoor behavioral health programs” and apparent “preauthorization requirement for outdoor behavioral health programs when many comparable medical or surgical programs such as inpatient rehabilitation or hospice programs had no such requirement.” (Compl. ¶¶37-39.) Finally, Plaintiff alleges that she once again asked Defendant to provide the Plan Documents, and asked Blue Cross to forward that request to the appropriate plan fiduciary if it was not the appropriate entity to provide the materials. (Compl. ¶40.)

Defendant denied that appeal in a letter on June 29, 2020, and upheld the denial of benefits for H.E.'s treatment at Elements for the same reasons as the February 17, 2020 letter, because the facility was “non-covered” by the Plan, and:

Per your plan under what is not covered, you will see that your plan does not cover institution [sic] providing education in special environments and/or Inpatient confinements that are primarily intended as a change of environment. The claims

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