McHenry v. PACIFICSOURCE HEALTH PLANS

• Decision Date: 05 January 2010
• Docket Number: No. CV-08-562-ST.,CV-08-562-ST.
• Citation: 679 F. Supp.2d 1226
• Parties: Lisa A. McHENRY, Plaintiff, v. PACIFICSOURCE HEALTH PLANS and the Metro Area Collection Service, Inc. Group Health/Dental Plan, Defendants.
• Court: U.S. District Court — Virgin Islands

679 F.Supp.2d 1226

Lisa A. McHENRY, Plaintiff, v. PACIFICSOURCE HEALTH PLANS and the Metro Area Collection Service, Inc. Group Health/Dental Plan, Defendants.

No. CV-08-562-ST.

United States District Court, D. Oregon, Portland Division.

January 5, 2010.

John C. Shaw, Megan E. Glor, Megan E. Glor Attorneys at Law, Nena Cook, Sussman Shank, LLP, Portland, OR, for Plaintiff.

Richard K. Hansen, Schwabe Williamson & Wyatt, PC, Portland, OR, for Defendants.

OPINION AND ORDER

STEWART, United States Magistrate Judge:

INTRODUCTION

Plaintiff, Lisa A. McHenry ("McHenry"), is a participant in the Metro Area Collection Service, Inc. Group Health/Dental Plan, which is insured by defendant, PacificSource Health Plans ("PacificSource"). McHenry's minor son, J.M., suffers from autism and receives Applied Behavioral Analysis ("ABA") therapy. This therapy has been effective in treating J.M.'s autism but at a substantial cost. PacificSource is the claims administrator and has denied coverage for J.M.'s ABA therapy. McHenry brings this action under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 USC §§ 1001-1461, to compel coverage.

On May 5, 2009, 643 F.Supp.2d 1236, this court ruled that because the Plan did not unambiguously grant PacificSource the power to determine eligibility, interpret Plan language, or making binding benefits determinations, the de novo standard of review applies to PacificSource's denial of benefits (docket # 27).

The parties have filed cross motions for summary judgment (dockets # 41 & # 47). All parties have consented to allow a Magistrate Judge to enter final orders and judgment in this case in accordance with FRCP 73 and 28 USC § 636(c). For the reasons set fourth below, McHenry's motion is denied and defendants' motion is granted.

UNDISPUTED FACTS

J.M. was diagnosed with autism in May 2006, at the age of one year and nine months. On or about November 20, 2006, J.M.'s pediatrician, Rupa K. Shah, M.D., submitted to PacificSource a request for coverage for ABA therapy. J.M. began receiving ABA therapy from Emily Hoyt, a Board Certified Behavior Analyst ("BCBA"), in January 2007. Hoyt submitted invoices to PacificSource for payment of services provided to J.M. from January through April 2007. SR 16-18.¹

In June 2007, PacificSource denied payment of these billings, explaining that the "provider is not eligible on this plan." SR 16. Later that same month, McHenry submitted to PacificSource an Initial Grievance of the denial. SR 20. In her grievance she inquired "what would make a therapist eligible to provide ABA therapy on our plan?" and whether PacificSource "offered a plan that included ABA therapy?" Id. She requested that her claim receive a medical, not administrative, review.

PacificSource submitted McHenry's grievance to its Medical Grievance Review Committee ("Grievance Committee"). SR 50-53. On August 2, 2007, the Grievance Committee notified McHenry that it had upheld PacificSource's denial of her claim on three bases: (1) the Plan "specifically excluded coverage for experimental or investigational procedures, services and treatments;" (2) "the plan excluded academic or social skills training;" and (3) BCBAs, "while professionally educated, are not medically trained clinicians and are not eligible providers for PacificSource." SR 54. It then explained:

This determination is based on the above exclusions and a lack of sufficient evidence-based peer-reviewed literature and other supporting data to establish this as a standard of care of coverage. The committee determined that Applied Behavior Analysis meets the plan definition of an experimental or investigational procedure.

Id.

McHenry appealed this decision on August 6, 2007. SR 70-71. She disagreed with the conclusion that ABA therapy was experimental or investigational in nature and cited to an article listing the many medical professionals, medical organizations, and government agencies that had accepted it as a scientifically based treatment for children with autism. SR 70, 72-77 (Erick V. Larsson, Ph.D., Intensive Early Intervention using Behavior Therapy is No Longer Experimental, available at http://rsaffran.tripod.com/ieibt.html) (last accessed Jan. 5, 2010).²

PacificSource submitted her appeal to its Policy and Procedures Review Committee ("Policy Committee"). SR 93. By letter dated August 28, 2007, the Policy Committee informed McHenry that it had upheld the denial, explaining that "after reviewing all of the available information in this case, the committee concluded that the services provided by ABA therapy are educationally based social/interactive skill training services" which were "specifically excluded" by the Plan. Id. If McHenry believed any covered services were being provided "in adjunct to ABA therapy," she would need to submit those services for a payment decision, but to be covered, "eligible services would need to be provided by an eligible medical or mental health provider. . . ." Id.

On September 24, 2007, McHenry submitted her written appeal of the Policy Committee's decision, disputing the conclusion that ABA therapy was primarily educational or social skills training. SR 108. She noted that while some of the results of the therapy included improvement in educational and social skills, "ABA therapy programs include speech and several hundreds of other therapeutic goals that are essential activities of everyday life." Id (emphasis in original). She compared the focus and improvement of everyday activities provided by ABA therapy to that provided by therapy for an orthopedic disability. Id. Additionally, she submitted letters in support of her claim from Dr. Shah and from Karen Grant, Psy.D., a psychologist with the Oregon Health Sciences University, Child Development and Rehabilitation Center Autism Clinic. SR 109-12.

PacificSource acknowledged McHenry's appeal by letter October 1, 2007, and informed her that the next and final level of PacificSource's internal review process was a hearing before the Membership Rights Panel ("MRP"). SR 196. McHenry appeared before the MRP on November 7, 2007. SR 219, 350. She presented testimony and documents which she believed refuted each of the three bases that had been cited for denying her claim at the three previous levels of review. SR 224-347.

On November 21, 2007, PacificSource notified McHenry of the MRP's conclusion that ABA therapy was "behavioral-educational social skill training" specifically excluded by the Plan. SR 351. It also informed her that she could request an independent external review. Id.

McHenry requested that review, and PacificSource randomly selected Independent Medical Expert Consulting Services, Inc. ("IMEDICS") to conduct it. SR 368. On December 12, 2007, IMEDECS notified McHenry that because her dispute did not involve an adverse determination based on medical necessity, experimental or investigational treatment, or continuity of care, Oregon external review law did not apply, and it would conduct no review. SR 381.

Having exhausted her remedies with PacificSource, McHenry filed this lawsuit on May 5, 2009.

STANDARDS

The parties have filed motions for summary judgment pursuant to FRCP 56. However, it is clear from the parties' briefing that they desire the court to issue final judgment based upon the stipulated record and the additional evidence submitted with their supporting memoranda. In an ERISA case, under the de novo standard of review, "the court simply proceeds to evaluate whether the plan administrator correctly or incorrectly denied benefits." Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th Cir.2006) (en banc.) In conducting this review the court "can evaluate the persuasiveness of conflicting testimony and decide which is more likely true." Kearney v. Standard Ins. Co., 175 F.3d 1084, 1095 (9th Cir.1999) (en banc), cert. denied, 528 U.S. 964, 120 S.Ct. 398, 145 L.Ed.2d 310 (1999). Moreover, given the nature of the issues in this case, to rule in favor of either party, this court must make factual findings by weighing the evidence in the record. Accordingly, FRCP 56, with its "genuine issue of material fact" standard, is inappropriate. See id. Instead, the proper procedural mechanism is a motion for judgment on the record pursuant to FRCP 52. See Thompson v. Ins. and Benefits Trust, 670 F.Supp.2d 1052, 1054-56 (E.D.Cal.2009); Rodgers v. Metro. Life Ins. Co., 655 F.Supp.2d 1081, 1085-86 (N.D.Cal.2009). The court construes the parties' motions as being brought pursuant to FRCP 52 and will decide this matter based upon the evidence contained in the stipulated record and such other evidence it finds is clearly "necessary to conduct an adequate de novo review." Mongeluzo v. Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 944 (9th Cir. 1995) (citation omitted).

DISCUSSION

I. Background

A. Nature of Autism

Autism is a neurobiological disorder that affects a child's development by severely limiting his or her ability to interact with others. See SR 267-68 (Dep't of Defense, Report and Plan on Services to Military Dependent Children with Autism 5 (July 2007) ("DOD Report").) Federal regulations define autism as a "developmental disability significantly affecting verbal and nonverbal communication and social interaction, generally evident before age three, that adversely affects a child's educational performance." 34 CFR § 300.8(c)(1)(i).

Autism is part of the larger class of Pervasive Developmental Disorders ("PDD") or Autistic Spectrum Disorders ("ASD"), synonymous terms which refer to a continuum of related cognitive and neurobehavioral disorders "characterized by severe and pervasive impairment in several areas of development: reciprocal social interaction skills, communication skills, or the presence of stereotyped behavior, interests, and activities." Diagnostic and Statistical Manual of Mental Disorders 69 (4th ed. text revision 2000) ("DSM-IV-TR"); SR 931 (...