Survey Course
Final Draft on 8.15.13
Earlier drafts on 2.16, 4.25 and 6.27.13
Michael Skindrud
INSURANCE PROBLEM
John and Mary Alexander are parents of Alex, a 4 year old child who has been diagnosed
with an autism spectrum disorder. They have enrolled him in a private academy for children
with autism. The Academy provides a private education for children with autism spectrum
disorders. Students attend full day classes, 5 days a week, including speech and occupational
therapy instruction, daily social skills training and dramatic play enhancement. Students will
gain basic school skills. Tuition is $30,000 for a school year.
John and Mary have family health coverage through John’s employment. They live and
he works in the State of Wisconsin. His employer’s benefit plan provides health coverage
through a group insurance plan purchased by John’s employer for its employees. The terms of
the benefit plan say nothing regarding coverage for any autism spectrum disorders.
The group insurance plan provides for coverage to the extent required by Wisconsin law.
Wisconsin law has mandated that both group and individual insurance policies sold in the state
include coverage for autism spectrum disorders, including coverage for at least $50,000 for
intensive-level services per insured per year, with a minimum of 30 to 35 hours of care per week
for a minimum duration of 4 years, and at least $25,000 for nonintensive-level services per
insured per year. "Intensive-level services" means evidence-based behavioral therapy that is
designed to help an individual with autism spectrum disorder overcome the cognitive, social, and
behavioral deficits associated with that disorder. "Nonintensive-level services" means evidencebased therapy that occurs after the completion of treatment with intensive-level services and that
is designed to sustain and maximize gains made during treatment with intensive-level services
or, for an individual who has not and will not receive intensive-level services, evidence-based
therapy that will improve the individual's condition. Note that other states may or may not
require coverage for autism spectrum disorders, and if they do, the required coverage may vary
from that of Wisconsin.
John and Mary have engaged you to help them obtain payment for their Academy
expenses for Alex. They filed a claim with their benefit plan administrator who wrote back
denying coverage and that their claim would not be paid. They then contacted the insurance
company providing coverage to the plan’s beneficiaries and they got a letter from the insurance
company medical director also refusing to pay the claim. What is your advice to them and what
are their options to force payment?
ANSWER
A. Issues:
i. Which law controls the coverage question, Federal or state law?
ii. Which courts, Federal or state, are the proper forum to force payment for the
autism services?
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iii. What services does the Academy provide that are within the autism mandate of
Wisconsin law and thus the group policy providing coverage for the family?
iv. Does the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)
apply to these facts and if so, how?
B. Where do you look?
Which law and courts control the coverage question?
Look at ERISA and its associated regulations to determine whether Federal law or
state law controls coverage under these facts, and therefore which courts will
determine the coverage question.
What autism services are within the Wisconsin coverage mandate?
Look at the Wisconsin statues and regulations of the Wisconsin Office of the
Commissioner of Insurance to determine what autism coverage is required.
Does MHPAEA apply?
Look at the Federal Mental Health Parity and Addition Equality Act of 2008, and
its associated regulations issued by the IRS, DOL, and DHHS, to determine its
application to the facts.
C. Possible Solutions:
Which laws and courts?
The failure of the benefit plan to mention autism coverage is of no consequence.
While ERISA leaves the question of what coverage to provide to the terms of the
plan, the ERISA saving clause saves state coverage mandates from federal
preemption. Thus state law controls what coverage the plan provides through its
regulation of the insurance policy the plan has purchased. Thus, the proper forum
for litigating the policy coverage for Alex’s expenses is the state courts of
Wisconsin.
You will also tell them that the plan administrator seems to have stepped outside
of the administrator’s authority to assert denial of coverage. However, the only
forum to litigate the rights and obligations of a plan administrator is federal court,
which has exclusive jurisdiction over such questions. You don’t see the need
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however to bring a federal case on the actions of the administrator as you expect
the state court ruling to prevail on the key question of payment for Alex’s tuition.
What services are within the autism mandate of state law?
You will tell your clients that they should bring a suit in state courts to obtain
payment of Alex’s expenses, and that you will argue that the entire $30,000
annual tuition is covered since this amount is within the maximum of $50,000
required by law, and especially since classes are modified to accommodate Alex’s
particular needs. However you will advise them that the insurer will contend that
most of what Alex gets at the Academy is simply preschool activities generally
provided to 4 year olds, and maybe only that portion of the Academy’s annual
tuition allocated to speech and occupational therapy instruction could be viewed
as specialized and then the question is whether such instruction is intensive or
non-intensive. The same arguments will be raised with respect to daily social
skills training and dramatic play enhancement. It is unlikely that any portion of
the tuition allocated to basic school skills will be paid for by the insurer. These
will be questions of fact to be determined in the state court litigation and even if
all the tuition were covered but as non-intensive, then the amount to be paid
would be capped at $20,000.
Does MHPAEA apply and if so, how?
An additional question is raised by the Mental Health Parity and Addiction Equity
Act of 2008 (MHPAEA), which requires that the financial requirements and
treatment limitations applicable to mental health or substance use disorder
benefits must be no more restrictive than the predominant treatment limitations
applied to substantially all medical and surgical benefits covered by those plans
and insurance policies within the scope of MHPAEA. This becomes an issue
under these facts if a Wisconsin court finds that all of the $30,000 tuition is for
non-intensive level services, which under the plan appears to have a cap of
$25,000, leaving $5,000 of the tuition uncovered. We would need to know more
facts about the medical and surgical benefits of the plan to determine what may be
the “predominant” financial requirements and treatment limitations applicable to
those medical and surgical benefits.
The Wisconsin law requires minimum coverage for autism spectrum disorders.
The MHPAEA treats autism as mental health disorder. The interim final rule
under the MHPAEA, issued jointly by the IRS, DOL, and DHHS, says that state
laws which mandate the offering of a minimum dollar amount of mental health or
substance use disorder benefits does not prevent the application of the MHPAEA,
noting that an issuer subject to the MHPAEA may be required to provide mental
health benefits beyond the state law minimum in order to comply with the
MHPAEA. See 75 Federal Register (2 February 2010), p. 5410.
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