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Self-Funded Health Plans (ERISA)

Pending Litigation & Settled Law

Potter v. Blue Cross Blue Shield of Michigan
Case No. 10-cv-14981 (S.D. Mich. March 30, 2013)
Granting Plaintiffs’ motion for judgment on ERISA claims and holding that BCBS’ denial of ABA claims on grounds that ABA is “experimental or investigative” was arbitrary and capricious.
The court rejected BCBS’ arguments that effectiveness of ABA for certain autism spectrum disorders had not been established and that there were not enough long-term studies to demonstrate ABAs clinical utility. The court found that studies” overwhelmingly” concluded that ABA is effective and did not make any distinction between types of ASDs in terms of effectiveness.   Also, long term studies supported ABAs effectiveness and an insurance industry report suggesting otherwise was contradicted by the evidence).
Prior historyPotter v. Blue Cross Blue Shield of Michigan, 2011 U.S. Dist. LEXIS 92076 (S.D. Mich. 2011) (holding that plaintiff did not have to exhaust administrative remedies before bringing ERISA suit because defendant’s uniform policy that ABA is uncovered experimental treatment rendered internal appeals futile and external appeal to the Michigan Office of Insurance Regulation was not mandatory). The court also ruled that the case could proceed as a class action not only on behalf of insureds whose ABA claims were denied but also those who refrained from making claims in light of BCBS uniform policy of denial.   

McHenry v. PacificSource Health Plans
679 FR. Supp.2d 1226 (D. Or.  2010)
Finding in an ERISA case involving a self-funded policy that ABA was medically necessary to treat plaintiff’s autism and was not subject to policy exclusions for “experimental or investigational” procedures  or “academic skills training” or “social skills training”.
The court concluded that “ABA therapy is firmly supported by decades of research and application and is a well-established treatment modality of autism and other PDDs. It is not an experimental or investigational procedure.”  679 F. Supp.2d at 1237.  Also, “[w]hile ABA therapy may have beneficial effects on an autistic child's social and academic skills, its defining characteristic is application of techniques to modify behavior in every area of an autistic child's life.”  Id. at 1241.  “Accordingly, it is not subject to the exclusions under the Plan for academic or social skills training.” Id.

Wheeler v. Aetna
No. 01 C 6064 (N.D. Ill. July 21, 2003)
Holding in ERISA case that insurers denial of physical, occupational and applied behavior analysis therapies was arbitrary and capricious; exclusion of coverage of conditions caused by developmental delays did not apply to autism because it would render coverage of autism meaningless.

Kunin v. Benefit Trust Life Ins. Co.
910 F.2d 534 (9th Cir. 1990)
Following general rule construing ambiguous language in insurance policy against the insurer, the court held that autism was not a “mental illness” within the meaning of a policy limitation and denial of benefits was arbitrary and capricious in violation of ERISA.

Churchill v. CIGNA
2011 U.S. Dist. LEXIS 90716 (E.D. Pa. Aug. 12, 2011)
Granting class certification in ERISA case challenging insurer’s policy of denying  ABA claims on grounds that ABA treatment is experimental or investigational.
Subsequent historyChurchill v. CIGNA, 2012 U.S. Dist. LEXIS 117794 (Aug. 21, 2012)Adding additional subclass of plaintiffs consisting of current plan participants whose claims for Applied Behavior Analysis (ABA) or Early Intensive Behavioral Treatment (EIBT) were denied by CIGNA on the grounds that such treatments are investigative or experimental.

Z.D. v. Group Health Cooperative
2012 U.S. Dist. LEXIS 76503 (W.D. Wa. Jun 1, 2012)
Granting permanent injunction requiring insurer to cover neurodevelopmental therapies for DSM-IV conditions pursuant to Washington state’s mental health parity law.
The court held that a separate statute which required such coverage up to age 6 served as a floor, not a ceiling. The court also ruled that plaintiffs had sufficiently complied with ERISA’s exhaustion of internal appeal requirements through their attempts to get coverage prior to filing suit. It was clear that plaintiffs had tried to access coverage, and it was the responsibility of insurer to advise if it believed that claims were defective and what would be the proper procedures. The court did not reach whether exhaustion was also excused on grounds of futility but noted that defendants suggestion that plaintiffs should have been required to internally appeal because the company sometimes paid claims notwithstanding its policy limiting coverage to age 6, suggested that administration of the plan was arbitrary and capricious.