Court Orders Aetna to Boost Coverage for Mental Health Treatment in ERISA Case

A North Carolina federal judge found that Aetna Life Insurance Co. abused its discretion and violated ERISA in underpaying and denying claims for coverage for two mental health facilities in Texas. In doing so, Aetna violated the terms of the Bank of America Group Benefits Program and its medical necessity criteria. 

Alan R. and J.R., beneficiaries of the health plan, filed suit against Aetna in April 2020. J.R., the daughter of Alan R., had a history of mental health disorders and substance abuse. As a result, J.R. sought treatment at Fulshear Treatment to Transition, which consisted of initial treatment at a residential treatment program called Fulshear Ranch, followed by a transitional care apartment living program. 

Aetna was inconsistent in paying claims for the residential phase of the treatment program, reimbursing the fees at varying rates each month, even though Fulshear was providing the same services each month. When it came to the transitional phase of the program, Aetna denied coverage for any of the costs. 

The judge rejected the claim of the plan beneficiaries that Aetna’s denial of coverage for mental health and substance abuse treatment violated federal mental health parity laws. These laws require that insurers place limitations on coverage for mental health and substance abuse treatment that are no more stringent than those that it places on medical or surgical treatment. The judge stated that the parity law claim was duplicative of the ERISA denial of benefits claim. 

In R. et al. v. Aetna Life Insurance Company et al., case number 3:20-cv-00441, U.S. District Court for the Western District of North Carolina, the judge granted partial summary judgment to Aetna on the claims under the parity law. The judge then remanded the remaining claims back to Aetna to determine the properly allowable amount of coverage for both phases of the Fulshear program, consistent with his findings. 

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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