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Date: 06-09-2018

Case Style:

Danny P.; Angela P.; Nicole B. v. Catholic Health Initiatives

Western District of Washington Federal Courthouse - Seattle, Washington

Case Number: 16-35609

Judge: Ferdinand F. Fernandez

Court: United States Court of Appeals for the Ninth Circuti on appeal from the Western District of Washington (King County)

Plaintiff's Attorney: Brian King and John Wood

Defendant's Attorney: Michael Madden, Stephen E. Fox, Lilian H. Davis

Description: Danny P., Angela P. and Nicole B. (hereafter collectively
“P”) appeal the district court’s grant of summary judgment to
Catholic Health Initiatives (“CHI”) and Catholic Health
Initiatives Medical Plan–Blue Cross Blue Shield (collectively
“the Plan”). The Plan denied P’s claim for the cost of Nicole
B.’s inpatient stay in Island View Residential Treatment
Center (“Island View”), a residential mental health treatment
facility. We reverse and remand.
BACKGROUND
The Plan is a self-funded group health benefit plan
covering CHI employees and their dependents. The Plan
provides for coverage of “Mental Health Services,” which
includes coverage for services related to “the diagnosis and/or
treatment of an Illness Affecting Mental Health.” Illnesses
affecting mental health are those disorders identified in the
current Diagnostic and Statistical Manual of Mental
Disorders published by the American Psychiatric Association.
The Plan covers “[b]ed, board, and general nursing care”
as well as “[a]ncillary services” provided at skilled nursing
facilities. Skilled nursing facilities are those which are “an
institution or distinct part of an institution which is primarily
DANNY P. V. CATHOLIC 4 HEALTH INITIATIVES
engaged in providing comprehensive skilled services and
rehabilitative Inpatient care.” It also provides coverage at
“Residential Treatment Facilities,” which are duly licensed
facilities that deal with illnesses affecting mental health.1
Nicole B. was covered by the Plan and was admitted to
the Island View residential treatment program for the period
from July 6, 2011, to June 8, 2012. P sought to have the Plan
cover the cost of Nicole B.’s treatment there, including room
and board costs. The Plan denied room and board coverage
and, after exhausting the Plan’s administrative remedies, P
brought this action under the Employee Retirement Income
Security Act (“ERISA”).2 In due course, the parties filed
cross-motions for summary judgment and the district court
granted summary judgment in favor of the Plan on June 30,
2016. This appeal followed.
JURISDICTION AND STANDARDS OF REVIEW
The district court had jurisdiction pursuant to 28 U.S.C.
§ 1331 and 29 U.S.C. § 1132(e)(1). We have jurisdiction
pursuant to 28 U.S.C. § 1291.
We review the district court’s grant of summary judgment
de novo. See Collins v. Gee W. Seattle LLC, 631 F.3d 1001,
1004 (9th Cir. 2011). Summary judgment is only appropriate
1 At the outset, we note that the parties do not dispute the need for
residential treatment in this case, nor do they dispute that the facility in
question was licensed. Moreover, the Plan essentially concedes that,
despite some ambiguity, the Plan does provide some coverage at
residential treatment facilities for illnesses affecting mental health.
2 29 U.S.C. §§ 1001–1461.
DANNY P. V. CATHOLIC HEALTH INITIATIVES 5
if the moving party demonstrates “that there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). We also
review statutory interpretation issues de novo. Collins,
631 F.3d at 1004.
DISCUSSION
P asserts that the district court erred when it determined
that the Parity Act3 did not require that the Plan’s coverage
for stays at licensed inpatient residential treatment facilities
had to be no more restrictive than stays at skilled nursing
facilities. We agree.
The Parity Act requires that benefits in a plan that
provides for “both [(a)] medical and surgical benefits and
[(b)] mental health or substance use disorder benefits,” must
not impose more restrictions on the latter than it imposes on
the former. 29 U.S.C. § 1185a(a)(3)(A). Specifically, the
Parity Act states the following:
In the case of a group health plan (or health
insurance coverage offered in connection with
such a plan) that provides both medical and
surgical benefits and mental health or
substance use disorder benefits, such plan or
coverage shall ensure that–
(i) the financial requirements applicable to
such mental health or substance use disorder
benefits are no more restrictive than the
3 Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008, codified at 29 U.S.C. § 1185a.
DANNY P. V. CATHOLIC 6 HEALTH INITIATIVES
predominant financial requirements applied to
substantially all medical and surgical benefits
covered by the plan (or coverage), and there
are no separate cost sharing requirements that
are applicable only with respect to mental
health or substance use disorder benefits; and
(ii) the treatment limitations applicable to
such mental health or substance use disorder
benefits are no more restrictive than the
predominant treatment limitations applied to
substantially all medical and surgical benefits
covered by the plan (or coverage) and there
are no separate treatment limitations that are
applicable only with respect to mental health
or substance use disorder benefits.
Id. That language is quite clear,4 in general. Notably, it
directs that benefits and treatment limitations for mental
health problems shall be “no more restrictive” than those for
medical and surgical problems. However, unsurprisingly, it
does not specifically address the precise scope of the Parity
Act provisions for the myriad of situations that might arise.
That leaves room for interpretation. Put otherwise, it has
necessarily left some room for uncertainty or ambiguity
regarding its application to specific ERISA plan terms and
4 See Williams v. Taylor, 529 U.S. 420, 431, 120 S. Ct. 1479,
1487–88, 146 L. Ed. 2d 435 (2000); Robinson v. Shell Oil Co., 519 U.S.
337, 341, 117 S. Ct. 843, 846, 136 L. Ed. 2d 808 (1997).
DANNY P. V. CATHOLIC HEALTH INITIATIVES 7
situations.5 Nevertheless, as we read, interpret, and fill any
gap in the language of the Parity Act, we are satisfied that it
precludes the Plan from deciding, as the Plan does, that it will
provide room and board reimbursement at licensed skilled
nursing facilities for medical and surgical patients, but will
not provide room and board reimbursement at residential
treatment facilities for mental health patients.6
We note that Congress has conferred upon certain
agencies the power to issue rules that give guidance and
information regarding the application of the Parity Act;7 those
agencies have now cooperated in the proposal and issuance of
rules.8 In any event, a court will “impose its own
construction on the statute . . . in the absence of an
5 See United States v. Haggar Apparel Co., 526 U.S. 380, 392–94,
119 S. Ct. 1392, 1400, 143 L. Ed. 2d 480 (1999); Fournier v. Sebelius,
718 F.3d 1110, 1118 (9th Cir. 2013).
6 We have said that the notion that any necessary inpatient mental
health treatment could take place at a skilled nursing facility “lacks
support in common sense.” Harlick v. Blue Shield of Cal., 686 F.3d 699,
716 (9th Cir. 2012).
7 See 29 U.S.C. § 1185a(g); see also 26 U.S.C. § 9833; 29 U.S.C.
§ 1191c; 42 U.S.C. § 300gg-92. Those are the Department of Labor, the
Department of Health and Human Services, and the Department of the
Treasury. We will hereafter refer to those collectively as “the
Departments.”
8 See Final Rules Under the Paul Wellstone and Pete Domenici
Mental Health Parity and Addiction Equity Act of 2008; Technical
Amendment to External Review for Multi-State Plan Program, 78 Fed.
Reg. 68,240 (Nov. 13, 2013) (“Final Rules”); Interim Final Rules Under
the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction
Equity Act of 2008, 75 Fed. Reg. 5410 (Feb. 2, 2010) (“Interim Final
Rules” or “IFRs”).
DANNY P. V. CATHOLIC 8 HEALTH INITIATIVES
administrative interpretation.” Chevron, U.S.A., Inc. v. Nat.
Res. Def. Council, Inc., 467 U.S. 837, 843, 104 S. Ct. 2778,
2782, 81 L. Ed. 2d 694 (1984) (footnote omitted); see also
Christensen v. Harris County, 529 U.S. 576, 587–88, 120 S.
Ct. 1655, 1663, 146 L. Ed. 2d 621 (2000). We have done
that. However, to the extent that the Departments have now
interpreted the Parity Act, we will consider their
constructions.
We again note that nothing in the regulations definitively
answered the question before us for the period of Nicole B.’s
stay at the residential treatment facility (2011–2012), but
nothing in them was or is contrary to our interpretation. In
fact, while the IFRs expressly eschewed fully answering the
question,9 they did indicate that mental and medical/surgical
benefits must be congruent, and that limiting the former while
not placing a similar limitation on the latter would be
improper. As the IFRs declared: “Under these regulations, if
a plan provides any benefits for a mental health condition or
substance use disorder, benefits must be provided for that
condition or disorder in each classification for which any
medical/surgical benefits are provided.” IFRs at 5413. They
further declared:
If a plan provides benefits for a mental health
condition or substance use disorder in one or
more classifications but excludes benefits for
that condition or disorder in a classification
(such as outpatient, in-network) in which it
provides medical/surgical benefits, the
9 “These regulations do not address the scope of services issue
[regarding residential treatment facilities versus skilled nursing facilities].”
IFRs at 5416.
DANNY P. V. CATHOLIC HEALTH INITIATIVES 9
exclusion of benefits in that classification for
a mental health condition or substance use
disorder otherwise covered under the plan is a
treatment limitation. It is a limit, at a
minimum, on the type of setting or context in
which treatment is offered.
Id. Those statements strongly suggested that a plan cannot
allow room and board costs at a skilled nursing facility where
one is an inpatient, while denying them at a residential
treatment facility where one is an inpatient.
Moreover, the Final Rules explicitly state that coverage
at residential treatment facilities must, indeed, be like the
coverage at skilled nursing facilities. Final Rules at
68,246–47. Specifically:
Although the interim final regulations did
not define the scope of the six classifications
of benefits, they directed that plans and
issuers assign mental health and substance use
disorder benefits and medical/surgical
benefits to these classifications in a consistent
manner. This general rule also applies to
intermediate services provided under the plan
or coverage. Plans and issuers must assign
covered intermediate mental health and
substance use disorder benefits to the existing
six benefit classifications in the same way that
they assign comparable intermediate
medical/surgical benefits to these
classifications. For example, if a plan or
issuer classifies care in skilled nursing
facilities or rehabilitation hospitals as
DANNY P. V. CATHOLIC 10 HEALTH INITIATIVES
inpatient benefits, then the plan or issuer must
likewise treat any covered care in residential
treatment facilities for mental health or
substance user disorders as an inpatient
benefit.
Id. Plainly there is no antinomy between our reading and the
Departments’ reading. In short, the Plan should not have
denied Nicole B. coverage on the basis that her stay was at a
residential treatment facility.10

* * *

10 The Plan argues that the Parity Act is so vague that application of
its provisions to the Plan before the effective date of the Final Rules was
a violation of due process. See United States v. AMC Entm’t, Inc.,
549 F.3d 760, 768 (9th Cir. 2008). We disagree with that assessment of
any ambiguity in the statute. Even if statutes lack perfect clarity until a
court or agency speaks, that does not render their application
unconstitutional. See Rivers v. Roadway Express, Inc., 511 U.S. 298, 312,
114 S. Ct. 1510, 1519, 128 L. Ed. 2d 274 (1994); Grayned v. City of
Rockford, 408 U.S. 104, 110, 92 S. Ct. 2294, 2300, 33 L. Ed. 2d 222
(1972); Forbes v. Napolitano, 236 F.3d 1009, 1011 (9th Cir. 2000).

Outcome: The district court erred when it decided that during the
period from July 6, 2011, to June 8, 2012, the Plan was not
required to provide room and board coverage for stays at
residential treatment facilities, although it did provide room
and board at skilled nursing facilities. Were it otherwise, the
lack of equity that the Parity Act was designed to repress
would have become renascent. Therefore, we reverse the
district court’s judgment and remand for proceedings
consistent with this opinion.

REVERSED and REMANDED.

Plaintiff's Experts:

Defendant's Experts:

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