Federal Court Rules That Exclusion of Residential Treatment May Violate Federal Parity Act

The United States District Court for the Northern District of Illinois has ruled that an insurer’s blanket exclusion of residential treatment is “arguably at odds with [the Federal Parity Act’s] purpose to achieve coverage parity whenever a plan offers both mental-health and medical/surgical benefits.”

The federal court held that “[t]he practical effect of the [residential treatment] exclusion is that Jane Doe receives fewer hours (or days) of coverage for medically necessary nursing care than, for example, an elderly person would receive to rehabilitate a broken hip.”

In the fall of 2014, Psych-Appeal, along with the law firms of Barnhill & Galand P.C. and Zuckerman Spaeder LLP, filed a class-action suit, Craft et al v. Health Care Service Corporation, on behalf of an adolescent struggling with anorexia, depression, and post-traumatic stress disorder whose claims for residential treatment were categorically denied following nine psychiatric hospitalizations. Residential treatment is often the most appropriate, if not the only suitable level of care for individuals with chronic mental health or substance use disorders, which are frequently under-diagnosed and under-treated.

“When patients do not have access to all levels of mental health services across the continuum of care, their welfare can be imperiled,” said Meiram Bendat of Psych-Appeal.

Additional information is provided in the press release.