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Munnelly v. Fordham University Faculty and Administration Hmo Insurance Plan

United States District Court, S.D. New York

March 30, 2018



          PAUL G. GARDEPHE, U.S.D.J.

         Plaintiff Kevin Munnelly brings this action under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132, challenging Defendants' denial of mental health benefits for residential treatment services provided to his 17-year old son, "CM." (See Cmplt. (Dkt. No. 1) ¶¶ 1-3, 12)[1] Plaintiffs only remaining claims are against Empire HealthChoice Assurance, Inc. ("Empire"), the claims administrator for Plaintiffs group health plan. (See Id. ¶ 8)[2]

         Plaintiff has moved for summary judgment, arguing that Empire's denial of * C.M.'s claim for mental health benefits was erroneous, because it was based solely on the Plan's residential treatment services exclusion without consideration of applicable federal and New York law. (Mot. (Dkt. No. 57)) According to Plaintiff, Empire's residential treatment services exclusion constitutes a separate treatment limitation that applies only to mental health benefits, and therefore violates the Mental Health Parity and Addiction Equity Act (the "Parity Act") and the New York Parity Law (also known as "Timothy's Law"). (See Pltf. Br. (Dkt. No. 57-1) at 1) Plaintiff asks this Court to order Empire to grant his claim for mental health benefits. (See Mot. (Dkt. No. 57); Pltf. Br. (Dkt. No. 57-1) at 2)

         Empire has cross-moved for summary judgment, arguing that it did not abuse its discretion in denying Plaintiff's claim for mental health benefits because (1) the Plan expressly excludes coverage for residential treatment services; (2) Plaintiff did not comply with the Plan's pre-certification requirement; (3) the Plan expressly excludes treatment for out-of-network inpatient mental health care treatment; (4) the Plan complied with the Parity Act; and (5) Plaintiff's attempts to invoke the New York Parity Law fail. (See Mot. (Dkt. No. 56); Def. Br. (Dkt. No. 59))

         BACKGROUND [3]

         Plaintiff Kevin Munnelly is employed by Fordham University. (Pltf. R. 56.1 Counterstmt. (Dkt. No. 67-1) ¶¶ 1-2) In 2014, Plaintiff and his dependents - including CM. - received health coverage issued by Empire, under group name Fordham University Local 153's health benefits plan (the "Plan"). (14 ¶ 3; Genovese Decl, Ex. C (Administrative Record) (Dkt. No. 58-3) at 000001, 000125, 000141-43) The Plan was in effect for "the period commencing on January 1, 2014 and ending on December 31, 2014." (Pltf. R. 56.1 Counterstmt. (Dkt. No. 67-1) ¶ 5) At all relevant times, Empire was the plan administrator as defined by 29 U.S.C. § 1002(16) of ERISA. (Id.¶4)

         It is undisputed that the Plan provides mental health benefits. (Pltf. R. 56.1 Stmt. (Dkt. No. 57-2) ¶ 3; Def R 56.1 Counterstmt. (Dkt. No. 63) ¶ 3)

         I. THE PLAN

         A. Overview and Relevant Definitions

         Article I of the Plan contains relevant definitions, including the following:

In this Contract, "we, " "us, " "our" and "the Plan" refer to Empire HealthChoice, Inc. "You, " "your" and "yours" refer to the Covered Member. "Group" refers to the Group that buys this Contract. Employees or members who are covered under this Contract... are referred to as "Members." Members and their covered family members are referred to as "Covered Persons." Use of the word "he" in this Contract refers to he or she.

(Genovese Decl, Ex. C (Administrative Record) (Dkt. No. 58-3) at 000035)

         "Covered Person" is defined as "[a] Member and his covered family dependents, as defined under Section B of this Article. The term 'Member' means either an employee or member of a group." (Id.) "Covered Services" is defined as "[t]he services for which the Covered Person is entitled to receive benefits under the terms of this Contract." (Id.)

         "Facilities" is defined as "providers which administer benefits for ambulatory surgery, outpatient treatment for alcoholism and substance abuse, home health care, dialysis, hospice care and skilled nursing facilities." (Id. at 000036) "Hospital" is defined as "a . .. fully licensed acute care general hospital that has on its own premises all of the following:"

a. A broad scope of major surgical, medical, therapeutic, and diagnostic services available at all times to treat almost all illnesses, accidents and sudden emergencies
b. 24-hour general nursing service by registered nurses who are on duty and present in the Hospital at all times
c. A fully-staffed operating room suitable for major surgery together with anesthesia service and equipment. The Hospital must perform major surgery frequently enough to maintain a high level of expertise with respect to such surgery in order to ensure quality care
d. Assigned emergency personnel and a "crash cart" to treat cardiac arrest and other medical emergencies
e. Diagnostic radiology facilities
f. A pathology laboratory
g. An organized medical staff of licensed doctors.


         The Plan further states "[t]he following providers are not considered Hospitals as defined in this Contract: nursing or convalescent homes and institutions; rehabilitation facilities (unless such a facility has a network agreement with us); institutions primarily for rest or for the aged; spas; sanitariums; infirmaries at schools, colleges or camps; and any institution primarily for the treatment of drug addiction, alcoholism, or mental or nervous disorders." (Id.)

         "Mental and Behavioral Health Care Manager" is defined as "the managed care program designed to provide advance, written authorization for mental health care benefits. This includes benefits for alcohol and substance abuse." (Id.)

         The Plan warns that "unless otherwise stated, we will not pay for any treatment, service or supply that we determine is not medically necessary. Medically Necessary means care which, according to our criteria, and in our judgment, is:"

• consistent with the systems or diagnosis and treatment of your condition, disease, ailment or injury;
• in accordance with standards of good medical practice;
• not solely for your convenience, or that of your physician or other provider;
• not primarily custodial; and
• the most appropriate supply or level of service which can safely be provided to you.


         "Out-of-Network Benefits" are defined as "covered services which have been provided by, (1) Hospitals and Facilities which are not In-Network Providers; or (2) professional providers who are not In-Network Providers." (Id.) "Provider means an individual (professional Provider) or entity (Hospital or Facility) that provides covered benefits to persons eligible for coverage under this Contract." (Id.)

         "Skilled Nursing Care" is defined as:

[M]edical or nursing care or rehabilitation services for injured, disabled or sick persons, which is received in a Skilled Nursing Facility, under the direct supervision of a doctor, registered professional nurse, physical therapist or other health care professional, when such care is, in our judgment, medically necessary and appropriate and is approved by us. Care which is primarily assistance with the activities of daily living does not qualify as Skilled Nursing Care.

(Id. at 000053)

         B. Medical Management Program

         The Plan contains a "Medical Management Program" that "the Covered Person must comply with in order to be eligible to receive the maximum In-Network and Out-of-Network benefits available under" the Plan. (Id. at 000040-45). "The Covered Person is responsible for ensuring that the pre-certification requirements are met unless th[e] contract specifically states otherwise." (Id. at 000040)

         The Medical Management Program requires the Covered Person to "call the Mental and Behavioral Health Care Manager for authorization prior to receiving the following services or a penalty will be imposed on benefits otherwise available:"

• Inpatient or outpatient mental health care (covered in-network only)
• Inpatient Alcohol and Substance Abuse Detoxification (covered in-network only)
• Outpatient alcohol and substance abuse care (covered both in-network and out-of-network)

(Id.) If the Covered Person does not comply with the pre-authorization requirement for an inpatient mental health admission, a "50% [penalty] on each admission up to $5, 000 per admission[]" will be applied. (Id.) "The penalty also applies to the professional visits for services rendered during an inpatient admission." (Id.)

         The following services are also covered "as in-network only and must be pre-authorized": (i) Hospice; (ii) Occupational and Speech Therapy; (iii) Physical Therapy; (iv) MRIs; (v) Skilled Nursing Facility; (vi) Home infusion therapy; and (vii) Durable Medical Equipment and Prosthetics and Orthotics. (Id. at 000041) As with inpatient mental health treatment, there is a "penalty of 50% up to $5, 000 on each visit or each admission[]" for "[f]ailure to precertify - and the penalty "also applies to the professional visits for services rendered during an inpatient admission." (Id.)

         A rider to the Plan modifies the penalty, however, stating that "[t]he penalty referred to in the Medical Management Program section ... is changed and all references to $5, 000 are deleted and replaced with $2, 500." (Id. at 000020)

         C. Out-of-Network Coverage Exclusion for Inpatient Mental Health Care

         The Plan states that a "Covered Person may elect to receive covered benefits from an Out-of-Network Provider. . . . Not all benefits are available on an Out-of-Network basis. The use of out-of-network providers may result in substantial out-of-pocket expenses.... Th[e Out-of-Network] Allowed Amount may be substantially less than the provider's charge." (Id. at 000001) The Plan further states that "[t]he level of reimbursement, and, at times, the availability of benefits described in this Contract will vary depending on whether the services are received In-Network or Out-of-Network" (id at 000037), and "[t]here are situations, as stated in this Contract, where no Out-of-Network benefits are available." (Id. at 000046)

         Out-of-Network Benefits provisions apply when (1) the "Covered Person receives services in a Hospital or Facility that is not an In-Network Provider, " or (2) the "Covered Person goes to a professional provider who is not an In-Network Provider." (Id.)

         The Plan states that "[n]o Out[-]of[-]Network benefits are available for inpatient mental and behavioral health care ... including inpatient alcoholism and substance abuse care." (Id.) Likewise, "[t]here are no out-of-network benefits for Skilled Nursing Facility or Hospice Care." (Id.)

         Article III of the Plan states that "[o]nly In-Network benefits are available for inpatient mental health care and inpatient alcohol and substance abuse" and "outpatient mental health care." Q± at 000045, 000056) Article IV of the Plan further explains that "[i]f the Covered Person does not go to an In-Network Hospital the benefits will be out of network subject to the network deductible and coinsurance requirements of this Contract. No. Out of Network benefits are available for inpatient mental and behavioral health care benefits including inpatient alcoholism and substance abuse care." (Id. at 000046) Article IV also states that "[i]f the Covered [P]erson does not go to participating facilities for benefits described in Articles VI, VII, VIII, and IX the benefits will be out of network. There are no out-of-network benefits for Skilled Nursing Facility or Hospice care." (Id.)

         Article V states that "[t]o qualify for inpatient Hospital benefits, as defined in Article I, Section B(9) of this Contract, a Covered Person must be a registered bed patient in a Hospital and under the care of a doctor for the treatment of illness, injury or pregnancy and for which treatment cannot be safely and effectively provided on an outpatient basis." (Id. at 000047) A subsection entitled "Mental Health Care and Care for the Treatment of Alcoholism and Substance Abuse" states that "[b]enefits must be received from an In-Network Provider and must be pre-authorized by the Mental and Behavioral Health Care Manager. In case of an emergency, the Covered Person must contact the Mental and Behavioral Care Manager within twenty four (24) hours of admission or as soon as the Covered Person is medically able to do so." (Id. at 000048)

         Article X and Article XI of the Plan likewise state that "[t]here are no out-of-network benefits under this Contract" for hospice care or Skilled Nursing Facility Care. (Id. at 000052-53)

         Article XII lists various medical benefits, and reiterates that mental health care benefits are "only available in-network, " and that "[t]here are no Out-of-Network benefits [for mental health care]." (Id. at 000056-57)

         Article XIII of the Plan "explains the limits and benefits and sets forth other services . . . that are excluded from coverage under th[e] Contract." (Id. at 000060) Article XIII states that "[t]here are no Out-of-Network benefits under this Contract for the inpatient treatment of mental and behavior disorders or alcohol detoxification, and rehabilitation." (Id. at 000063)

         There is a rider to the Plan regarding mental health care and alcohol and substance abuse care (the "Mental Health Care Rider"). (Id. at 000088) The Mental Health Care Rider provides that "[c]overage for inpatient services for mental health care is limited to facilities as defined by subdivision ten of section 1.03 of the New York Mental Hygiene Law." (Id.)

         D. Residential Treatment Services Exclusion

         The Plan also contains a chart - entitled "Your Benefits At A Glance" - which provides an "overview" of coverage. (Id. at 000330) A footnote to the section entitled "HOSPITAL SERVICES" states that the Plan "[d]oes not include inpatient or outpatient behavioral healthcare of physical therapy/rehabilitation. Residential treatment services are not covered." (Id. at 000334 n. 1 (emphasis added)) Various out-of-network services - including obstetrical care in a birthing center, durable medical equipment, orthotics, prosthetics, skilled nursing facility, hospice, occupational therapy, speech therapy, and vision therapy - are also listed as "[n]ot covered" under the Plan. (Id. at 000333-36)

         Subsection 5 of the Mental Health Care Rider - entitled "Services Not Covered" - states:

Nothing in the Rider shall be construed to cover benefits for mental health, alcohol and substance abuse services: for individuals who are presently incarcerated, confined or committed to a local correctional facility or prison, or to a custodial facility for youth operated by the Office of Children and Family Services; solely because such services are ordered by a court; that are cosmetic in nature on the grounds that changing or improving an individual's appearance is justified by the individual's mental health needs; that are experimental or investigational treatments; residential treatment services; or that are otherwise excluded under your Contract, Certificate or Group Health Plan.

(Id. at 000089 (emphasis added))


         CM. has a history of mental illness. (See Id. at 000276, 000285)

         In about April 2014, CM. received mental health care treatment at Telos Residential Retreat, LLC - a residential treatment facility. (See Id. at 000230, 000514) A claim was submitted to the Plan for these residential treatment services. (See Id. at 000514)

         On July 18, 2014, Empire issued a letter denying the claim. (Id. Pltf. R. 56.1 Counterstmt. (Dkt. No. 67-1) ¶¶ 40-41) The letter states that Empire is denying benefits for residential treatment services at Telos Residential Retreat because "[Residential [t]reatment [is] not... a covered service under your policy." (Genovese Decl., Ex. C (Administrative Record) (Dkt. No. 58-3) at 000514) The letter further states:

As noted in your Fordham University PPO plan benefit booklet under "Hospital Limitations & Exclusions" on page 17, it is stated as follows . .. [Residential treatment ...

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