The Mental Health Parity Act (“MHPA”) was enacted in 1996. The principal goal of MHPA was to bring parity to the treatment of mental health disorders by imposing the same aggregate lifetime and annual dollar limits for mental health benefits as for medical and surgical benefits. In Munnelly v. Fordham Univ. Faculty and Admin. HMO Ins. Plan, 2018 WL 1628839 (S.D.N.Y. 2018), the application of this goal was tested to determine whether a group health plan could legally exclude from coverage residential mental health treatment services that were provided before final MHPA regulations specifically required such services to be covered to the same degree as skilled nursing facility services.
Background. The participant in Munnelly sued the plan administrator after his son’s residential treatment claims were denied. The participant argued that the residential treatment exclusion was a separate treatment limitation applicable only to mental health benefits and that such exclusion violated the federal mental health parity rules.
In response, the plan administrator maintained that the plan expressly excluded coverage for both residential treatment services and out-of-network inpatient mental health treatment. The plan administrator contended that the interim final regulations in effect when the claim was filed did not address the scope of mental health services (including restrictions on treatment settings). Based on the regulations’ silence on coverage for residential treatment services on the date when the claim was filed, the plan administrator contended that the plan was not required to cover such services. Furthermore, the plan administrator argued that the participant did not comply with the plan’s medical management program, which required precertification for mental health care.
Court Holding. The United States District Court for the Southern District of New York held that the plan’s residential treatment exclusion violated MHPA’s mental health parity requirements. In so holding, the court rejected the plan administrator’s argument that the exclusion was permissible for services provided while the interim final regulations were in effect. The court explained that MHPA specifically prohibits treatment limitations on mental health benefits that are more restrictive than limitations applied to medical and surgical benefits, as well as separate treatment limitations applicable only to mental health benefits. Moreover, the interim final regulations clearly indicated that separate limitations on the scope of treatment and treatment settings are impermissible if applied only to mental health benefits. The court found that the plan’s residential treatment services exclusion ran afoul of these requirements because the limitation on residential treatment services applied only to treatment of mental health conditions, with no corresponding limitation on analogous treatment for medical and surgical conditions. However, the court reserved judgment as to the appropriate remedy, noting that arguments remained regarding compliance with the plan’s precertification requirement and application of the exclusion for out-of-network treatment.
Takeaway. The court’s holding in Munnelly illustrates the extent to which the courts will strictly interpret MHPA to ensure that mental health benefits are provided to covered individuals to the same degree as are medical and surgical benefits, even when regulations MHPA are silent on specific areas of coverage.