On June 10th, 2014, the Second District of the California Court of Appeal issued an opinion requiring that all California health insurance policies and health care plans provide all “medically necessary” treatments for mental health patients.  In Rea v. Blue Shield of California, the Second Appellate District clarified what the California Mental Parity Act, which was passed in 1999, requires health plans to provide for the nine specific mental illnesses covered by the Act.  The Second Appellate District’s opinion in Rea mirrors closely an opinion from the Federal Ninth Circuit Court of Appeals in Harlick v. Blue Shield of California.  Please call our toll-free number at (855) 977-1212 to see how one of our attorney members can provide you a FREE CONSULTATION on your legal issue.

In 1975, California passed the Knox-Keene Act which provided for the regulation of individual and group health insurance plans, including those provided by Health Maintenance Organizations (HMOs) and structured Managed Care Organizations (MCOs).  The most important provision of that law for this case is the requirement that all health care plans provide “basic health care services.”  By 1999, many researchers, policy makers and legislators had discovered that health insurance policies treated mental illnesses differently than physical illnesses.  As one of the legislative findings of the Mental Parity Act states “[m]ost private health insurance policies provide coverage for mental illness at levels far below coverage for other physical illnesses.”  The legislature noted that the differences in coverage can lead to great societal problems, such as homelessness and involvement in the criminal justice system due to relapses of mental health patients.  To counteract the negative effects of the untreated mentally ill, the legislature passed the California Mental Parity Act in 1999.

The California Mental Parity Act was designed to ensure that private health plans provided greater coverage for treatment of severe mental illness.  The California Legislature limited the number of mental illnesses that were covered by the Act to nine specifically named illnesses.  These illnesses included the eating disorders anorexia nervosa and bulimia nervosa.  The Mental Parity Act stated that “every health plan providing hospital, medical or surgical coverage must also ‘provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses of a person of any age’” (emphasis in original).  Although the Act does not define what “medically necessary treatment” is, it does provide a list of services that are included in what are “medically necessary treatment”.  Residential care is not specifically included in that list.

The plaintiffs in Rea suffer from anorexia nervosa and bulimia nervosa.  The plaintiffs’ doctors recommended that the plaintiffs receive treatment in a residential care facility.  Blue Shield of California, which administrates the plaintiffs’ health plans, did not cover residential care facilities for eating disorders. The plaintiffs sued Blue Shield for failing to provide coverage as mandated by the Mental Parity Act.  Blue Shield demurred to the plaintiffs’ complaint and was successful in having the suit dismissed by the trial court.  The plaintiffs appealed to the Second Appellate District.

The plaintiffs argued that the list of services in the Mental Parity Act (the one that did not include residential facilities) was not an exhaustive list of what California health plans were required to provide.  The plaintiffs said that the Act requires that the health plans provide “all medically necessary treatments” for the mental illnesses listed in the Act.  According to the plaintiffs, failure to provide residential care facilities for eating disorders would violate the intent of the Mental Parity Act since residential treatment for eating disorders is the widely accepted therapy for eating disorders.

Blue Shield, on the other hand, believes that the list of services provided in the Mental Parity Act constitutes an exhaustive list of all services that health plans are required to cover.  Furthermore, Blue Shield argues that since the Mental Parity Act was adopted as part of the statutory scheme created by the Knox-Keene Act health plans only need to provide “basic health care services.”  Finally, Blue Shield stated that providing coverage for residential facilities for eating disorders would lead to unlimited coverage for all mental illnesses.  Blue Shield asserted that unlimited coverage would lead to an explosion in health care premiums and other costs for health insurance policies.  

The Second Appellate District agreed with the plaintiff’s that the Mental Parity Act required coverage of residential care for eating disorders and reversed the trial court’s ruling on Blue Shield’s demurrer.  The Court notes that the diagnosis and treatment of mental and physical illnesses have a different method and scope. Thus, the Court states that the Legislature wrote the Mental Parity Act with less precision so that the differences between treating mental and physical illnesses would not distract from efforts at ensuring parity between the types of illnesses. Therefore, the Court held that treatments for physical and mental illnesses do not need to be identical to conform to the Mental Parity Act.  Furthermore, the Court provides a definition for parity that the statute lacks.  According to the Second Appellate District, “parity [as referred to in the Mental Parity Act] . . . requires treatment of mental illnesses sufficient to reach the same quality of care afforded physical illnesses.”  Continue to come to LA Jewish Lawyer blog for the latest legal news.  And please call our toll-free number (855) 977-1212 for a FREE CONSULTATION about your legal matter from one of our Los Angeles network of attorneys.