In 1999, the California legislature enacted the California Mental Health Parity Act (Health & Saf. Code, § 1374.72) (Parity Act) to address the imbalance between medical coverage for physical illnesses and mental illnesses. The Parity Act mandated that every health care service plan contract “provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses ... under the same terms and conditions applied to other medical conditions.” (§ 1374.72(a).) The statute specifically stated that anorexia nervosa and bulimia must be covered. (§ 1374.72(d)(7), (8).) The statute stated that medically necessary treatment “shall include the following” four categories of benefits: outpatient services, inpatient hospital services, partial hospitalization services, and prescription drugs (if the plan otherwise included prescription drugs). The Parity Act's implementing regulation stated that the mental health services included, when medically necessary, all health care services required under the Act including, but not limited to, basic health care services.
Two women suffered from eating disorders (either anorexia nervosa or bulimia nervosa). Both were covered by the same insurer's health plans that cover the treatment of mental illness, but exclude coverage for residential treatment. Both women were advised by their treating medical professionals that residential treatment for their eating disorders was medically necessary and they met the criteria for such treatment. The insurer denied coverage.
The two women brought a putative class action against the insurer for breach of contract, breach of the covenant of good faith and fair dealing, unfair business practices, and violation of the Unruh Civil Rights Act. The Los Angeles County Superior Court dismissed the complaint without leave to amend. The trial court reasoned that the statutory language of the Parity Act and the statutory scheme of the Knox-Keene Health Care Service Plan Act of 1975 (§§ 1340–1399) (Knox-Keene Act) (of which the Parity Act is a part), as well as the Parity Act's legislative history, did not support coverage for a treatment not specifically enumerated in the Parity Act.
On appeal, the women argued that the Parity Act's “medically necessary treatment” language must be read broadly to include residential treatment for the mental illnesses anorexia nervosa and bulimia because there was no treatment analog in the realm of treatments for physical illnesses, and thus the trial court's limited reading of the statute failed to take into account the legislature's goal of achieving parity. The insurer argued that nothing in the statutory language indicated the legislature intended to cover all treatments for mental illness simply because they were medically necessary. Alternatively, the insurer claimed that the language should be read narrowly in light of the Knox-Keene Act which defined required coverage for physical illnesses to consist of “basic health services,” which included physician services, hospital inpatient services, diagnostic laboratory services, home health services, and preventive health services.
The Second District California Court of Appeal, Division 1, reversed. The court held that the Mental Health Parity Act required health care service plans to provide residential treatment for eating disorders where medically necessary.
The Parity Act required coverage for residential treatment for the eating disorders anorexia nervosa and bulimia nervosa where medically necessary even where the health plan did not provide coverage. The trial court's dismissal of the action was based on its incorrect conclusion that a statutory list of required benefits was exclusive. The Parity Act's list of mandated mental illness services for health care service plans was not exhaustive. In statutory construction, “include” is generally used as a word of enlargement and not of limitation. Both the statute and the implementing regulation used words of enlargement.
The legislature in crafting the Parity Act, which used broad statutory language to mandate the provision of medically necessary services for mental health conditions, recognized that most mental health conditions have a physical basis, and also recognized the fundamental difference between the most effective treatments of mental and physical conditions. As a result the legislature chose to delimit the scope of the Parity Act's reach with the concept of “medically necessary” rather than relying on the Knox-Keene Act's limiting principle of “basic health services.”
The Second District California Court of Appeal, Division 1, reversed the trial court’s dismissal of the complaint and held that the Mental Health Parity Act required health care service plans to provide residential treatment for eating disorders where medically necessary.
See: Rea v. Blue Shield of California, 2014 WL 2584433, 14 Cal. Daily Op. Serv. 6378 (Cal.App. 2 Dist., June 10, 2014) (not designated for publication).