Skip to main content

Providence Loses Autism Case in Federal District Court

But a separate lawsuit, brought against the Public Employees Benefit Board, burns on, as the state of Oregon argues that the mental health parity law doesn’t apply to it. Meanwhile, the Health Evidence Review Commission is expected to approve applied behavior analysis for the Oregon Health Plan at its meeting later this week.
August 12, 2014

Providence Health Plan has lost the federal class-action lawsuit brought by the parents of preschool-age autistic children after the insurer denied their physician-prescribed treatment, applied behavior analysis.

“The court finds that Providence cannot simultaneously purport to cover autism and yet deny coverage for medically necessary ABA therapy through its Developmental Disability Exclusion consistent with the Oregon Mental Health Parity Act,” wrote Judge Michael Simon, whom President Obama appointed to the federal district court of Oregon in 2011. “Because of the Developmental Disability Exclusion, which provides a blanket exclusion for an entire family of mental health diagnoses, Providence is not providing equal coverage of mental health and medical conditions.”

Paul Terdal of Autism Speaks, which closely followed the case of A.F. vs. Providence, said that children insured through the Catholic insurance company may not see any immediate effect -- the pressure of the lawsuit had already compelled Providence to begin covering such therapy. But it would lift a cap on the number of hours a child can see a behavior analyst each week, and it would signal to other insurers who might try the same tack to deny coverage of applied behavior analysis.

“Straight down the line, the judge agreed with everything we were saying all along,” Terdal said. “It’s great to have the support for the arguments we’ve been making.”

P.S. v. PEBB

The victory for autism advocates may mean bad news for the state of Oregon in its own effort to deny treatment for the children of public employees. State officials have agreed to cover applied behavior analysis for the Public Employee Benefits Board -- but not until next year.

Simon’s ruling does not directly affect PEBB, as the state health plan is subject neither to federal insurance law nor the Oregon Mental Health Parity Act. But Terdal said Oregon agreed to abide by the mental health law as part of its contract with labor unions. 

“They basically said that they have sovereign immunity and are exempt from mental health parity,” Terdal said. “It’s a strange policy shift. They’ve renounced mental health parity.”

PEBB and Providence, which administers the statewide, self-insured PEBB health plan, have retained top Seattle attorney Medora Marisseau of the law firm Karr Tuttle Campbell to fight their case in court. Marisseau earlier represented Regence BlueCross BlueShield of Oregon.

Terdal said that if Oregon and Providence lose this case, the state could be on the hook for reimbursing treatment that state employees have paid out-of-pocket.

The new PEBB contract assumes a slight rise in premium costs to pay for the intensive autism treatment, but advocates argue that those costs should be more than offset by reduced costs for the Department of Human Services and Department of Education to pay for special education and other social services for handicapped children who could otherwise become well or at least more independent or less self-destructive with the treatment.

The Providence vs. A.F. lawsuit was argued in federal district court on the grounds that Providence had violated the federal law overseeing employee-sponsored health insurance, commonly called ERISA. That law contains a mental health parity clause, but the parents argued Providence had also broken two state laws -- the Oregon Mental Health Parity Act and the Oregon Mandatory Coverage for Minors with Pervasive Developmental Disorders Act.

In response, Providence spokesman Gary Walker said that the health plan would review its next steps. He said his company had gone above and beyond what a new applied behavior analysis law set to begin in 2016 specifically requires.

“It’s important to note that we understand the needs of children with autism and their families,” Walker told The Lund Report. “In 2014, we began administering a benefit for 25 hours of applied behavioral therapy per week. This comes two years in advance of the state requirement enacted last year.”

Autism advocates and Sen. Alan Bates, D-Medford, worked to pass Senate Bill 365 last year, specifically mandating coverage for applied behavior analysis by 2016 for all commercial insurers, as well as directing PEBB and the Oregon Educators Benefit Board to cover the treatment in 2015. 

Oregon Health Plan Likely to Greenlight Treatment

For the 44 percent of Oregon children on the Oregon Health Plan, the Health Evidence Review Commission this week is expected to recommend coverage of intensive therapy for children up to 12 who are properly diagnosed and behavior analysis for specific problem areas in adolescent children with autism.

In Simon’s ruling, he cited both sides using past remarks from Oregon state legislators to make their case. The citations revealed a long and tortured history that children with autism have faced in getting health insurance companies to pay their claims.

Led by Rep. Sara Gelser, D-Corvallis, and Rep. Peter Buckley, D-Ashland, the Legislature passed the Oregon Mandatory Coverage for Minors with Pervasive Developmental Disorders Act in 2007, which was intended to stop health insurance companies from denying treatment for a medical or mental health condition just because that child has a developmental disorder. 

Yet six years later, Providence apparently flouted the law, insisting it doesn’t cover treatment related to a developmental disability.

Simon called this “absurd.”

“It permits Providence to deny coverage for services as “related to a developmental disability” that otherwise would be covered for other plan members who do not have developmental disabilities,” he wrote. “Because Providence does cover autism, it cannot use the Developmental Disability Exclusion to deny coverage of ABA therapy because it is a “separate treatment limitation” that applies only to mental health disorders.”

“The Court also notes that if Providence’s argument were accepted and insurance companies could cover a mental health condition but exclude coverage for medically necessary services “related to” that condition, the Oregon Mental Health Parity Act would have little to no meaning. For example, Providence could state that it covers depression, but refuse to cover psychotherapy or antidepressant medications, provided that it did not cover psychotherapy or antidepressant medications when those treatments were medically necessary to treat medical conditions.”

Chris can be reached at [email protected].