P.E.L. v. Premera Blue Cross
| Docket Number | 101561-5 |
| Decision Date | 21 December 2023 |
| Parties | P.E.L.; and P.L. and J.L., a married couple and parents of P.E.L., Respondents, v. PREMERA BLUE CROSS, Petitioner. |
| Court | Washington Supreme Court |
1
P.E.L.; and P.L. and J.L., a married couple and parents of P.E.L., Respondents,
v.
PREMERA BLUE CROSS, Petitioner.
No. 101561-5
Supreme Court of Washington, En Banc
December 21, 2023
YU, J.
This case concerns a health insurer's alleged violation of mental health parity laws. Broadly speaking, "parity laws" require health insurance plans to provide equal coverage for mental health and substance use disorder services as compared to other medical and surgical services.
In early 2016, plaintiff P.E.L. experienced severe mental health symptoms requiring inpatient hospitalization. Following her release from the hospital, P.E.L. spent two months in the Evoke at Cascades Wilderness Program (Evoke) before transitioning to long-term residential treatment. The parties dispute whether P.E.L.
is entitled to health insurance coverage for Evoke. At all relevant times, P.E.L. was a beneficiary of her parents' (plaintiffs P.L. and J.L.) health insurance plan, which was issued by defendant Premera Blue Cross. The plan covers "residential treatment" for mental health conditions. Clerk's Papers (CP) at 110. However, Premera denied coverage for Evoke based on a specific exclusion for "[o]utward bound, wilderness, camping or tall ship programs or activities" (the wilderness exclusion). Id. at 112.
The plaintiffs sued Premera, alleging that the wilderness exclusion violates federal and state parity laws. The trial court dismissed the suit on summary judgment, but the Court of Appeals reversed in part, partially reinstating the plaintiffs' claims for breach of contract, insurance bad faith, and violation of the Consumer Protection Act (CPA), ch. 19.86 RCW. P.E.L. v. Premera Blue Cross, 24 Wn.App. 2d 487, 520 P.3d 486 (2022). We reverse in part and affirm in part.
Premera is entitled to summary judgment on the plaintiffs' breach of contract action. The plaintiffs assert claims based on both federal and state parity laws. However, they do not show that a violation of federal parity law gives rise to a viable common law action for breach of contract. Violations of state parity laws are actionable in contract, but the specific state parity claim in this case cannot succeed given the statutory language in effect during the relevant time period. We
therefore reverse the Court of Appeals in part and remand the plaintiffs' breach of contract action to the trial court for dismissal.
Nevertheless, we affirm the Court of Appeals' holding that the plaintiffs are not required to produce evidence of objective symptomatology to support their insurance bad faith claim for emotional distress damages. Therefore, we remand the insurance bad faith and CPA actions to the trial court for further proceedings.[1]
OVERVIEW OF MENTAL HEALTH PARITY LAWS
Because mental health parity laws are rarely addressed in Washington appellate opinions, it is necessary to begin with a brief overview.
A. General background on federal health insurance law
In the United States, private health insurance coverage is generally divided into "three market segments: individual, small group, or large group." U.S. GOV'T ACCOUNTABILITY OFF., GAO-20-150, MENTAL HEALTH AND SUBSTANCE USE: STATE AND FEDERAL OVERSIGHT OF COMPLIANCE WITH PARITY REQUIREMENTS VARIES 6 (Dec. 2019) [hereinafter GAO-20-150] [https://perma.cc/MS7L-RQCA]. The "individual" market refers to those who "purchase private health insurance
plans directly from a state-regulated issuer." Id. The "group" market refers to those who "obtain health insurance coverage through a group health plan offered through a plan sponsor (typically an employer)." Id.
Different market segments are subject to different federal laws. For instance, health insurance plans sponsored by private employers in the "large group" market are subject to ERISA (the Employee Retirement Income Security Act of 1974, Pub. L. No. 93-406, 88 Stat. 829). The plaintiffs in this case are in the "individual" market because they purchased their health insurance plan directly from Premera on the Washington Health Benefit Exchange pursuant to the Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119 (Affordable Care Act or ACA). Thus, the plaintiffs' insurance plan is subject to the Affordable Care Act, but it is not subject to ERISA.
B. History of mental health parity laws
Historically, mental health treatment options were limited to "institutions and asylums," which were "rarely covered" by private health insurance because mental health treatment was "regarded as the province of the states." Suann Kessler, Mental Health Parity: The Patient Protection and Affordable Care Act and the Parity Definition Implications, 6 HASTINGS SCI. &TECH. L.J. 145, 148 (2014). However, the 20th century "deinstitutionalization" movement led to the release of many individuals from state-run institutions, and advances in treatment
have led to a growing "[a]cceptance of psychiatry and psychology as legitimate branches of medicine." Id. at 148-49. Despite recent advances, discrimination against individuals with mental health conditions and substance use disorders continues, "including in social interactions, access to housing, access to health care, and employment." Id. at 150.
One area of persistent discrimination is "in the provision of insurance coverage for mental health and substance use disorders as compared to coverage for [other] medical and surgical conditions."[2] Am. Psychiatric Ass'n v. Anthem Health Plans, Inc., 821 F.3d 352, 356 (2d Cir. 2016). Historically, insurers could impose "higher premiums, fewer services, and shorter coverage periods" for mental health and substance use disorder services or they could simply "choose not to offer mental health coverage." Kessler, supra, at 151. Parity laws seek to address such disparities by "requir[ing] that insurance coverage be at parity for mental health services, which means this coverage be delivered under the same terms and conditions as medical and surgical services." LAWS OF 2005, ch. 6, § 1.
The first federal parity legislation was the Mental Health Parity Act of 1996, Pub. L. No. 104-204, 100 Stat. 2874. Kessler, supra, at 153-54. The act restricted insurers' "ability to set unequal annual and lifetime aggregate spending limits," but insurers had the "option of completely dropping coverage of mental health services if they did not want to comply." Id. at 154. Moreover, it "contained a sunset provision which completely eliminated the parity requirements by 2006." Id. at 155.
Before the federal parity act expired, our legislature enacted Washington's first state-level parity statute, finding "that the costs of leaving mental disorders untreated or undertreated are significant," as are "the potential benefits of improved access to mental health services." LAWS OF 2005, ch. 6, § 1. The statute "require[s] health insurers to cover treatment for mental health disorders and to do so in parity with the medical and surgical services it covers." O.S.T. v. Regence BlueShield, 181 Wn.2d 691, 699, 335 P.3d 416 (2014). Specific provisions of our state parity statute are discussed in more detail as relevant to the analysis below.
The next major piece of federal legislation was the 2008 Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act, Pub. L. No. 110343, 122 Stat. 3765 (MHPAEA). Kessler, supra, at 156. MHPAEA "both strengthened and broadened federal parity requirements enacted in 1996." GAO-20-150, supra, at 7. However, MHPAEA applied only to "group health plans
sponsored by large employers," such as ERISA plans. Id. Moreover, like the Mental Health Parity Act of 1996, MHPAEA did not actually "require insurers to cover mental health services." Kessler, supra, at 157.
Finally, the 2010 Affordable Care Act "introduc[ed] sweeping changes to the health care structure." Id. at 158. Among other reforms, the Affordable Care Act "extended MHPAEA parity requirements to individual insurance plans and some small group health plans." GAO-20-150, supra, at 8; see 42 U.S.C. §§ 300gg-26, 18031(j). In addition, the Affordable Care Act requires coverage for "ten essential health benefits categories," one of which is "[m]ental health and substance use disorder services, including behavioral health treatment." GAO-20150, supra, at 8; 42 U.S.C. § 18022(b)(1)(E).
Thus, the Affordable Care Act requires most[3] insurance plans to cover mental health and substance use disorder services and to do so on an equal basis as compared to other medical and surgical services. Specific federal parity provisions are discussed in more detail as relevant to the analysis below.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
A. P.E.L.'s enrollment in Evoke
At all relevant times, P.E.L. was a minor and a beneficiary of her parents' health insurance plan. In February 2016, P.E.L. "was hospitalized for depression and suicidality." CP at 400. Following her release from the hospital, P.E.L. started outpatient therapy, but her parents soon determined that "more intensive interventions" were needed. Id. To find an appropriate program, P.E.L.'s parents hired an "Independent Educational and Therapeutic Consultant," who recommended the Evoke program. Id. at 1673.
P.E.L. was admitted to Evoke on April 27, 2016 and discharged on June 28, 2016. At all relevant times, Evoke was a licensed "Outdoor Youth Program" in Bend, Oregon. Id. at 1690. Pursuant to Oregon law, outdoor youth programs "provide[ ], in an outdoor living setting, services to children who have behavioral problems, mental health problems or problems with abuse of alcohol or drugs." Former OR. REV. STAT. § 418.205(2)(a)(A)(v), (5)(a) (2016).
There is no information in the record from P.E.L. about her experience at Evoke. Information provided by P.E.L.'s parents and Evoke staff indicates that P.E.L. engaged in daily group activities and learned...
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