Tenth Circuit Reviews Standing and Document Production for MHPAEA Claim

October 22, 2024

On October 1, 2024, in M.S., et al v. Premera Blue Cross, et al, the United States Court of Appeals for the Tenth Circuit (the Tenth Circuit) vacated a lower court’s MHPAEA violation judgment because the plaintiffs lacked standing to bring a MHPAEA claim against the defendants in federal court. Additionally, the Tenth Circuit found that the defendants violated ERISA’s document disclosure requirements and upheld the imposition of penalties and attorneys’ fees and costs.

As background, in order to bring a lawsuit in federal court, a plaintiff must demonstrate standing for each claim they seek to press and for each form of relief that is sought. This concept is known as “Article III standing,” in reference to the portion of the US Constitution that restricts federal court adjudication. Standing must be proven by a plaintiff by demonstrating that they have suffered a specific and concrete “injury in fact” that can be traced to the defendants and can be remedied by the court’s action.

In this case, the plaintiffs sought residential treatment facility benefits under the Microsoft Corporation Welfare Plan for their minor child’s mental health condition. The claims administrator, Premera Blue Cross, denied the claim and subsequent appeal as not medically necessary based upon the definition of “medical necessity” in the SPD and using a set of guidelines for evaluating medical appropriateness known as the “McKesson InterQual Criteria.” Plaintiffs argued that the denial was both a violation of the plan’s own written terms under ERISA and a violation of MHPAEA because the McKesson InterQual Criteria was an additional non-quantitative treatment limitation (NQTL) that did not apply to medical and surgical claims in the same category. The plaintiffs also sued under ERISA for failure to produce requested documentation used by Premera to come to its decision — namely, the Administrative Services Agreement and the McKesson InterQual Criteria guidelines. The district court ruled that there was no ERISA claims violation but found in favor of the plaintiffs with respect to the MHPAEA claim and the ERISA disclosure claim. The defendants appealed the latter two rulings.

Upon review, the Tenth Circuit found that the plaintiffs lacked Article III standing to bring the MHPAEA claim due to the fact that the district court had found that there was no ERISA claims violation. In other words, the plaintiffs had failed to demonstrate the medical necessity of their child’s treatment at the residential treatment facility, and the plan would have denied treatment in accordance with the written terms of the SPD — even without the application of the McKesson InterQual Criteria. Therefore, any violation of MHPAEA did not cause a loss of benefits and thus did not itself result in injury to the plaintiffs. As a result, the Tenth Circuit vacated the lower court’s judgment on the MHPAEA claim and remanded with instructions to dismiss the claim for lack of jurisdiction.

The Tenth Circuit looked at the merits of the plaintiff’s claim that the defendants failed to produce certain requested documents used by Premera Blue Cross in their decision to deny the residential treatment facility claims in a violation of ERISA disclosure requirements. ERISA requires plans to respond to a participant’s request for documents used to administer the plan - including the SPD, summary annual report, and any contract or other instrument under which the plan is established or operated - within 30 days. Failure to comply can result in penalties of up to $100 per day, plus any other relief deemed proper by the court. The Tenth Circuit found that the plan’s Administrative Services Agreement between Premera Blue Cross and the Microsoft Corporation Welfare Plan should have been provided under ERISA but that the McKesson InterQual Criteria documents were beyond what ERISA requires. The Tenth Circuit affirmed the $100 per day penalty against the defendants in the total amount of $123,100, plus the award of nearly $70,000 in attorneys’ fees and costs. 

ERISA plan sponsors, particularly those within the Tenth Circuit’s jurisdiction of Colorado, Kansas, New Mexico, Oklahoma, Utah, and Wyoming, should be aware of this development. Sponsors of self-insured plans should review their administrative procedures to ensure that participant requests for documents under ERISA are addressed by service providers in a timely manner in order to avoid costly penalties and litigation fees. Furthermore, though the Tenth Circuit declined to rule on the merit of the MHPAEA claim due to the lack of standing in this particular case, it is important to note that the district court found that the application of additional guidelines for residential treatment facility claims did constitute an impermissible NQTL under MHPAEA. Self-insured group health plan sponsors should review their NQTL comparative analyses with their TPA, carrier, and/or counsel as needed.

M.S., et al. v. Premera Blue Cross, et al.