Employer Health Plan Litigation over Residential Treatment and Wilderness Therapy

Time for a Review of Your Plan's Compliance with the MHPAEA

November 9, 2018

If you keep tabs on employer group health plan litigation, you have perhaps noticed a substantial increase in lawsuits over plans denying coverage for various types of out-of-network residential treatment and "wilderness therapy" benefits during the last 18 months. These suits generally revolve around whether a plan has improperly denied some type of mental health or substance abuse residential treatment benefit that includes a non-traditional outdoor therapy component (i.e., wilderness or adventure therapy). A majority of these cases turn on whether the benefit denial is a violation of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). Because of the MHPAEA factor in these cases, now is a good time to review guidance recently issued by the Department of Labor (DOL), the Internal Revenue Service (IRS), and Health and Human Services (HHS).

The MHPAEA, applicable to group health plans with more than 50 employees, generally provides that the financial requirements (e.g., co-pays and co-insurance) and treatment limitations (e.g., visit limits) for a plan's mental health or substance abuse disorder benefits cannot be more restrictive than the predominant financial requirements and treatment limitations for traditional medical and surgical benefits offered under the plan.

On April 23, 2018, the DOL, in conjunction with the IRS and HHS, released a set of proposed frequently asked questions (FAQs), along with a number of other items including:

Proposed FAQs

The DOL’s proposed FAQs focus heavily on non-quantitative treatment limitation issues under the MHPAEA, as amended by the Affordable Care Act and the 21st Century Cures Act, and address the following issues:

Other Guidance Items

The DOL also released a self-compliance tool that will be updated every other year, allowing plans to evaluate whether they comply with the MHPAEA. The self-compliance tool is the same audit checklist used by investigators in an enforcement action. It includes expanded guidance concerning non-quantitative treatment limitations and disclosure, along with additional examples regarding the scope of the MHPAEA.

The DOL also published a form for participants to request information from group health plans regarding limitations affecting a participant's access to mental health or substance use disorder benefits. This form will be used in claim situations where more information is needed by the participant in order to understand the claims process or why a claim was denied. The form is available here via the DOL website

The DOL enforcement fact sheet notes that in 2017 the DOL completed more than 180 investigations on the MHPAEA compliance issues. It found 92 identified violations, the majority of which were failures to comply with non-quantitative treatment limitations. The report to Congress states explicitly that enforcement of the MHPAEA is one of the DOL's primary enforcement priorities.

Action Items

With the uptick in litigation involving “wilderness therapy,” along with the DOL, IRS, and HHS’s guidance highlighting the priority of MHPAEA enforcement, it is of the utmost importance that employers, especially those with self-insured plans, review their plans to determine MHPAEA compliance. The self-compliance tool provided by the DOL is the perfect place to start since it includes the same audit checklist used by the agency in its enforcement actions. It would also be a good idea to review the MHPAEA information request form to understand what types of information a plan must provide to participants, a process that will yield further insight into compliance obligations. Importantly, plans and SPDs may need to change language or clarify language to ensure MHPAEA compliance and avoid potential penalties for MHPAEA violations as well as costly litigation over “wilderness therapy” benefits.