F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

S U Z A N N E S T O N E , Plaintiff-Appellant ,

v

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U N I T E D H E A L T H C A R

E I N S U R A N C E C O M P A N Y ; U.S. B E H A

V I O R A L H E A L T H P L

A N , C A L I F O R

N I A , DB A OptumHealth B ehavioral Solutions of California, Defendants-Appellees. N o. 19-16227

D.C. No. 3:17-cv-4832-RS

OPI NI ON

A ppeal from the United States District Court for the Northern District of California Richard Seeborg , District J udg e, Presiding
Arg u ed and Submitted September 16, 2020 San F rancisco, California

F iled November 9, 2020

B efore: J

. Clifford W allace, A. W allace Tashima, and

B ridg et S. B ade, Circuit J udg es. Opinion by

J u dg e TashimaS T O N E V

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SUMMARY *

Em ployee Retirem ent Incom e Security Act

The panel affirmed the district court’s g rant of summary judg ment in favor of the d e f e n d ants in an ERI SA action concerning the denial of health care coverag e for out-of-state residential treatment for anorex ia nervosa.

T h e p anel held that defendants’ denial of coverag e d i d not violate the Mental Health Parity a n d A ddiction Equity Act or the California Mental Health Parity A ct becau se the denial was based solely on the E R I SA plan’s ex c lusion o f coverag e for out-of-state treatment, w hich a pplied equally to mental and phy sical illnesses.

COUNSEL

Peter S. Ses s i o ns (arg

ued) and L isa S. Kantor, Kantor & Kantor L L P, Northridg e, California, for Plainti ff-Appellant.

Raul L

. Martinez (arg

ued) and E lise D. Klein, L ewis B risbois B isg a ard & Smith L L P, L os Ang eles, Califor n i a, for Defendants-Appellees.

* T h is su m m ary co n stitu

tes n o p art o f th e o pin io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.S T O N E V

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OP INION

TASHI MA, Circuit J udg e:

Plaintiff Suz anne Stone had an employ er-provided health

care plan (the “ Plan”) g overned by the Employ ee Retirement I ncome Security Act of 1974 ( “ERI SA ” ) , 2 9 U .S.C. §§ 100 1–1461, a

nd a dministered b y Defendant U.S. B ehavioral Health Plan, California, dba OptumH ealth Be havioral Solutions of California (“Optum”). The P l a n
ex c luded coverag e for any o u t -of-state treatment, ex c ept for

emer ge n c y o r urg ently needed services. Plaintiff, aware o f this ex clusion, sent her daug hter to a n out-of-state residential treatment prog ram for an o r ex ia nervosa. After Optum a nd U n i t e d H e a l t h c a r e I n s u r a n c e C o m p a n y ( t o g e t h e r , “Defendants”) denied coverag e, Plaintiff filed this action pursuant to ERI SA. She c laims that Defe ndants’ denial o f coverag e violated the Mental Health P a rity and Addiction Equity Act o f 2008 (“F e d eral Parity Act”), 29 U .S.C. § 1185a, and the Calif ornia Mental Health Parity A ct (“California Parity Act”), Cal. H ea l th & Safety Code § 1374.72 (amended 2020). T h e d i strict c ourt g ranted summary judg ment in favor of Defendants.

B o th the F ederal Parity Act a nd the California Parity A ct require that health p l a n s provide equal coverag e for mental illnesses and phy sical illnesses. Here, the denial of coverag e
was b ased solely on the Plan’s ex clusion of coverag e f or outof-state treatment, which applies equ a lly to mental a nd phy sical illnesses. W e therefore ag ree with the district court that the denial of coverag e did not violate the Parity Acts a nd affirm the judg ment.S T O N E V

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BACK G ROUND

I. The P lan

The Plan, a health maintenance org aniz ation ( “ HM O”) plan, provides that me n t a l health services are covered when medically necessary , preauthoriz ed by Optum, and provided at a participating facility

. As pertinent here, the Plan

exc l udes coverag e for mental health services rendered outside the servic e a re a , ex cept f or emerg ency services o r urg ently

ne e d e d services. The service area is defined as “[ t] he g eogr a p h i c area in which [Optum] is licensed to arrang e for B ehavioral Health Services in the State of California b y the California Department of Manag ed Health Care.”

The Plan similarly ex cludes coverag e for phy sical health services rendered outside the ser v ice area, e x cept for emerg ency services or urg ently neede d s e rvices. As with mental health services, the service a r ea is defined as “ [ t h e ] g eog raphic reg ion in the State of Calif o r n i a where United Healthcare is authoriz ed by the California De partment o f Manag ed Health Care to provide C o v e r ed Services to Members.”

II. F actual Background
G.S., Plaintiff’s minor daug h ter, beg an r e ce iving treatment in J une 2014 at an eating disorder prog ram run by the University of California San D iego ( “ U CSD”). Optum approved the cov e r a ge

. UCSD discharg ed G.S. on J uly 18, 2014, stating that she “require d a hig her level of care at an evidence based (family b a sed treatment) residential facility

. T here a re no known F B T residential facilities in CaliforniaS T O N E V

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and she was therefore referred to Eating Recovery Center [ “ERC”] in Denver, Colorado.”

On J uly 7, 2014, prior to G

. S.’s discharg e from UCSD, Plaintiff called Optum to ask about out-of-state resident i al treatment c enters and was told that the Plan did not cover outof-state treatment other than f or a n emerg ency

. Plaintiff told the Optum representative that a facility i n C o l orado offered “the Maud s l e y prog r am” and that no California facilities offered it. She was advised to c h e c k California f a cilities. She also was advised that s h e had a n HMO plan, which covered mental health services only in h e r state of residence.

On J uly 11, 2014, Plaintiff called Optum a g ain, asking if “out-of-state intermediate c overag e ” was possible a nd say ing that UCSD recommended resid e ntial treatment at ERC, a facility in Colorado. She was told t h a t her HMO plan was “limited by

state law” to provide care only in California.

On J uly 16 , 2 0 1 4 , Plaintiff called O ptum and said she planned to have her daug hter attend the residential treatment center in Colorado recommended by U CSD. She ag ain was told that her H MO plan covered treatment only in California. She r esponded that she was aware of that limitation, but “this specific prog ram is recommended and uses same modality a s current facility .”

Plaintiff admitted G.S. to ERC on J uly 21, 2 014. On J uly 2 3 , 2014, Plaintiff called Optum, asking for a referral t o a residential treatment center for G.S., eve n thoug h G.S. already had entered treatment at ERC. Plaintiff was told that Center for Discovery (“CF D”) was an in-network residential treatment c enter in California for adolescent eating disorders.S T O N E V

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On J uly 2 4, 2014, Optum informed ERC that Plaintiff h ad a California HMO and that there was no coverag e for G.S.’s treatment at ERC. Optum also told ERC that “ we w o uld be happy to a ssist the parents” in finding an in-network, mental health residential treatment center in California.

On J uly 30, 2014, Optum sent Plaintiff a letter, stating that G.S.’s treatment a t ERC was not covered because out-ofstate mental health treatmen t w as not covered, ex c ept for emerg ency inpatient a dmissions. G.S. remained at E RC until her discharg e on September 23, 2014.

E R C appealed the denial o f pay ment in October 2 0 1 4

. ERC stated that UCSD had prescribed a residential treatment center using family -based therapy a nd that G

. S

. required a nasog astric feeding tube a n d psy chiatric care when she arrived for treatment at ERC. I n De c e m ber 2014, Optum replied to ERC, ex plaining that coverag e wa s not available under Plaintiff’s plan for mental health residential treatment in an out-of-state facility , e x cept for emerg ency inpatient admissions.

Plaintiff appealed the denial of benefits in J anuary 2015, stating that h er research revealed that the only evidence-based treatment for anorex ia nervosa in adolescents is the Maudsely approach a

nd that UCSD used this treatment a n d recommended it for G.S. Plaintiff further wrote that she a nd he r husband v isited CF D, the residential treatment center in California c overed by the Plan, and d e c ided CF D was not acceptable for several reasons: (1) CF D does not follow the Maudsley method; (2) CF D’s u n i t s are p rivate residences in residential neig hborhoods, b ut G.S. needed a locked u n it; ( 3 ) CF D does not have a full-time psy chiatrist or me d i c al staff; (4) CF D does not have the ability to a d m i n i sterS T O N E V

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nasog astric feeding ; and (5) the CF D unit near their h ome has

a swimming p o o l , creating a hig h risk environment. B y contrast, ERC used the Maudsley method, was l o c k ed a nd alarmed, and had a full-time psy chiatrist and medical staff.

I n March 2 0 1 7 , Optum ag ain e x plained to Plaintiff that coverag e of G.S.’ s treatment w as not available because services rendere d o utside the service area are not covered,

ex c e pt for emerg ency or urg ently needed services. Optum stated that there were appropria te residential mental health services available within the state o f California and that G.S.’s treatment at ERC according ly was not covered.

III. P rocedural Background

Plaintiff filed her ERI SA complaint in Aug ust 2017. The parties cross-moved for summary j u dg ment. The district court g ranted Defendants’ summary judg ment mo t ion a nd d e nied Plaintiff’s c ross-motion. The court carefully

c o n sidered the evidence and the parties’ arg uments a nd concluded that Plaintiff’s actual rea s o n for sending G.S. to ER C w a s that her “parents really wanted a facility that offered the Maudsley prog r a m.” The court reasoned that Plaintiff h ad not shown that the Plan or the law obliged Optum “to provide benefits o f a particular t y p e simply to satisfy the beneficiaries’ preferences.” T he court concluded that the Parity A cts did no t a p ply because there was no disparity in the Plan between the coverag e for mental illness and phy sical illness. The district court ent e r e d j udg ment in favor of Defendants. Plaintiff timely appealed.S T O N E V

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STANDARD OF REVIEW
“[ A] denial of benefits challeng ed under [ 2 9 U

. S.C.] § 1132(a)(1)(B ) must be reviewed under a de novo standard unless the benefit p lan g ives the administrator or f iduci a ry discretionary authority to determine elig ibility for benefits o r to construe the terms of the plan.” F irestone Tire & Rubber Co. v. Bruch , 489 U.S. 101, 115 (1989). The parties ag r ee that de n ovo r eview is appropriate because the Plan does not g rant the plan administrator discretionary authority

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D ISCUSSION

I. F ederal P arity Act

The F ederal Parity Act requires that “bene fits a nd treatment limitations for mental health problems shall be ‘no

more restrictive’ than those for medical and s u r g i cal problems.” Danny P. v. Cath. Health I n i t iatives , 891 F .3d 1155, 1158 (9th Cir. 2018). The statute provides in part:

I n the case of a g roup health p l a n (or health insurance coverag e offered in connection with such a plan) that provides both me d i ca l a nd surg ical benefits and mental health o r substance use d isorder bene fi t s , such p lan o r coverag e shall ensure that –
(i) the financial requirements applic able to such mental h ealth or substance use disorder benefi t s a re no more restrictive than the p r e d o minant financial requirements applied t o substantially all medical a n d surg ical benefits covered by

the plan (or coverag e) . . . ; andS T O N E V

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(ii) the treatment limitation s applicable to such mental health or substance use disorder benefits are no more rest r i c t ive than the predominant tr e a tment limitations applied to substantially all medical a n d surg ical benefits covered by

the plan (or coverag e) . . . .
29 U.S.C. § 1185a(a)(3)(A).

Plaintiff ha s n o t shown that the Plan’s requirement that G.S. receive treatment at a residential treatment f acility in California is a more restrictive limitatio n on treatment than limitations on treatment for med i c al and surg ical issues. D a nny P

. , 891 F .3d at 1158 (stating that F ederal Parity A ct

“ directs that benefits and treatment limitations for m e n t al health p r oblems shall be ‘no more restrictive’ than those for medical and surg ical problems”); M uniz v. Amec Constr. Mgmt., Inc. , 6 23 F .3d 1290, 1294 (9th Cir. 2010) (“[ W ] h en the court reviews a plan administrator’s decision under the de

novo standard of review, the burden of proof is placed on the claimant.”). I n fact, she does n ot c o ntend that the Plan’s g e og raphic limitation applies unequally to phy sical a nd mental health issues. The F ederal Parity Act was not v iolated by Defendants’ denial of coverag e.

II. Calif ornia P arity Act

The California Parity A ct similarly was enacted to “combat [ the] disparity ” between the coverag e provided b y private health insurance policies for mental illness and that provided f

or phy sical illness. Harlick v. Blue S hield of Cal. , 686 F .3d 699, 710–11 ( 9 t h C ir. 2012); accord Rea v. Blue Shield of Cal. , 172 Cal. Rptr. 3d 823, 8 36 (Ct. App. 2 014) (“[ T] he stated intent o f the [ California] Parity Act is simple:S T O N E V

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to a ddress the imbalance in coverag e between m ental illnesses and phy sical illnesses.”).

The California Parity Act is worded differently than the F ederal Parity Act. I nstead o f generally requiring parity o f benefits between mental health and medical or surg ical issues, the statute requir e s h ealth c a re service p lans to “provide c overag e f

or the diag n osis and medically necessary treatment of severe mental illnesses

. . . under the same terms and conditions applied to o t h e r medical conditions a s specified in subdivision (c).” Cal. H ealth & Safety Code § 1374.72(a). 1 The term “severe mental illnesses” is defined to include anorex ia nervosa and eig ht other illnesses. 2 Id. § 1374.72(d)(8). The “terms and c o n d i tions” that must be applied equally to men t a l a nd phy sical illnesses “ shall include, but not be limited to,” max imum lifetime b enefits, copay ments, and deductibles. Id. § 1374.72(c).

The Plan on its face does not discrim i n a te b etween coverag e for mental illness and phy sical i l l ness. Plaintiff does not dispute that the Plan bars out-of-state treatment for

1 Calif o r n ia State Sen ate B ill No

. 8 5 5 , sig n ed in to l aw on S e p t e m b e r 2 5 , 20 2 0 , am en d s th e Calif o rn ia P arity A ct in v ario u s w ay s , su ch as b y in clu d in g a d ef in itio n o f “ m ed ically n ecessary treatm en t .” S ee A ct o f Sep t. 2 5 , 2 02 0 , 20 2 0 Cal. Stat. ch

. 1 51 (co d i f ied in scattered sectio n s of Cal. Health & Saf ety Co d e an d C a l

. In s. Co d e), h t t p : / / w w w

. leg in f o .leg islatu

re.ca.g o v /f aces/b illT ex tClien t.x h tm l? b i l l

_ i d =2 0 1 9 2 02 0 0 SB 8 5 5 (last v i sited Oct. 6 , 2 0 2 0 ). T h e am en d m en t ap p lies to h ealth in su

ran ce co n tracts issu ed , am en d ed , o r ren ew ed o n o r af ter J an u ary 1 , 2 0 2 1, id

. , an d th u s d o es n o t af

f ect th is case.

2 T h e o th ers are sch izo ph ren ia, sch izo af f ectiv e d is o rd er, bip o lar d iso rd er , m a

jo r d e p r e s s i v e d i s o r d e r s , p a n i c d i s o r d e r , o b sessiv e- co m p u lsiv e d iso rd er, p erv asiv e d ev elo p m en tal d i so rd er or au t ism , an d b u lim ia

n erv o s a. Cal. Health & Saf ety Co de § 1 3 7 4 .7 2 (d ).S T O N E V

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both phy sical and mental illness. I nstead, she asserts that coverag e is required b ecause the treatment w a s medically necessary , and Optum n ever disputed that it was. B y arg uing that the dispositive question is whether the treatment was medically necessary , Plaintiff, in effect, arg ues tha t the California Parity Act g uarantees a substantive rig ht to medically necess ary treatment of the listed mental illnesses, without a ny relationship to parity wit h phy sical illness. Her position is not supported by the lang uag e and p urpose of the statute.

Plaintiff relies on this c o urt’s const r uction of the California Parity Act in H arlick , 686 F .3d 699, in support o f her position. However, reading Harlick as a whole, it is clear that the California Parity Act d oes not, as Plaintiff contends, require coverag e of G.S.’s treatment solely on the g round that it was medically necessary , without reg ard to parity

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T h e q u estion in Harlick was whether the insurer, B lue Shield, was required to pay for the ins ured’s treatment for

anorex ia nervosa in a residential tre a t ment facility

. The insurance p lan covered care in sk i l l e d nursing facilities for phy sical illnesses, but it d i d n o t cover r esidential treatment for mental illnesses. Althoug h the p lan itself did not require coverag e of the residential treat m ent, the court held that coverag e was required under the C a l i f ornia Parity Act as a “medically necessary treatment” for one of the listed severe
me ntal illnesses.; Harlick , 686 F .3d at 719 (discussing Cal. Health & Safe t y Code § 1374.72(a)). The c ourt concluded B lue Shield forfeited the ability to as s e r t medical necessity because B lue Shield had d en i ed coverag e of the residential treatment solely o n the g r ound that residential treatment was not included in the health plan, rather than on the g round that it was not medically nec e s s ary

. H arlick , 6 8 6 F .3d at 721.S T O N E V

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The cou r t t h u s concluded that B lue Shield was oblig ated

u n d e r the California Parity Act to pay for the residenti al treatment, “subject to the same financial terms and conditions it imposes o n coverag e for phy sical i llnesses.” Id. Harlick according ly requires Optum to provide coverag e of medically necessary treatment on the same terms and conditions as the coverag e Optum provides for phy sical illnesses.

Plaintiff arg ues that the only distinction between Harlick and this case is that the plan in Harlick purported to ex clude coverag e f

or a ny residential treatment, whereas the Plan here

ex c ludes coverag e f

or out-of-st at e residential treatment. However, this distinction is c rucial a nd is what disting uishes this c ase from Harlick

. Residential treatment is a ty pe o f care, a medically necessary one under Harlick , and the P lan

covers this care. I t is not disputed that the Plan offers coverag e for treatment at CF D, an i n
- s tate residential treatment center. The out-of-state restriction is a t e r m o r condition of the Plan, akin to financial r e s t rictions, that applies equally to mental and phy sical illnesses. Ex clusion o f coverag e for out-of-state care is not a denial of a medically necessary treatment, but a condition of her H MO Plan. See Harold J

. B ressler & Rob B orchert, H e alth Law & Compliance Update § 9.02 ( 2020) (defining an HMO as “[ a] h e a lth care sy stem that assumes both the financial risks

asso c i ated with providing comprehensive medical services (insurance a

nd service risk) a

nd the responsibility for health

care d e l i v ery in a p articular geographic area to H MO members, u sually in return for a fix ed, prepaid fee” (emphasis added)).

Plaintiff relies on lang uag e in Harlick that the California P a r ity Act “requires coverag e for all medically nece s s a r y treatments for [ the listed] illnesses.” Harlick , 686 F .3d at 716S T O N E V

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(emphasis added). She arg ues that Optum thus was r equired to c o v er G.S.’s treatment because Optum never contested that G.S.’s treatment w as medically necessary

. However, the Plan do es co ver residential treatment for eating disorders, which is the medically necessar y t r eatment that Harlick held must b e covered. Plaintiff was g iven options for residential treatment in California, but she decided that they were unsuitable. I n fact, she sent G.S. to the Colorad o center before she even asked Optum what options were available in California and after she h ad been told that her HMO plan did not cover out-of-state care.

Harlick did not a ddre s s a limitation such as the out-ofstate ex clusion in the Plan because the ty pe s of terms a

nd conditions were not a t issue in that case. B ecause the statute l i s t s o n ly f

inancial conditions (max imum b en e f i t s , copay ments, and deductibles) as ex am p les of terms a nd conditions that must be applied equally , Harlick also focused

on financial conditions in its holding

. N o t a b l y , Harlick ’s ultimate conclusion was n ot that the C a l ifornia Parity A ct requires coverag e of any medically ne c e s s ary treatment for the listed illnesses, reg ardless of p arity , but t h at “plans that

come w ithin the scope of the Act must cover all ‘medically necessary ’ treatment for ‘severe mental illnesses,’

. . . but c an apply the same financial conditions – such as deductibles a nd lifet i m e b enefits – that are applied to coverag e for phy sical illnesses.” Harlick , 686 F .3d at 712 (emphasis added).

The list of terms and c onditions in the statute is not
ex h austive, and the statute does not s t a t e t h a t the terms a nd conditions must be financia l i n n a ture. See Cal. Health & Safety Code § 1374.72( c ) (providing terms and conditions

“ s h a l l include, but not be limited to” the listed conditions)

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(ex cept for emerg ency or urg ently needed services) is not an

ex c lusion of an entir e t y p e of medical treatment like the

ex c lusion o f residential treatment centers in Harlick

. I nstead, it i s a t e r m or condition, and it is “applied equally to all benefits” under the Plan, in compliance with the statute. Id.

T h e C a lifornia Court of Appeal also has construed th e California Parit y Act to require health care plans to cover residential treatment for eating disorders. Rea , 172 Cal. Rptr. 3d at 827, 8 45. Similar to Harlick , the court acknowledg ed that “‘medicall y necessary ’ coverag e is coverag e that is nonetheless limited by the p olicy limits.” I d. at 840. The

c o urt thus rejected B lue Shield’s arg ument that “there is a slippery slope onto which health plans will slide with respect to resi d e n tial treatment and where the promise of parity can easily turn into the creation of un limited services,” a nd

ex p lained that the California Parity Act “ contains no ex press provision c reating such a g ateway to unlimited c overag e.” Id.

The Plan complies w ith H a r l ick by providing coverag e for a residential treatment center for anorex ia nervosa. There is no dispute that the Plan’s limitation for out-of-state treatment a

pplies to any ty

pe of treatment, whether for mental health issues o r o t h e r medical conditions. Plaintiff has not presented any evidence that the Plan’s coverag e of mental illn e s s e s is less g enerous than its coverag e of phy sical illnesses, o r that the ex clusion for out-of-state t r e a tment limits coverag e of mental health conditions, but not phy sical health conditions. The California Parity Act therefore is not implicated here.S T O N E V

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CONCLUSION

Plaintiff has not shown that the Plan’s requirement of instate treatment is applied to mental health conditions, but not to other medical conditions. The Plan’s g eog raphical limitation according ly does not v iolate either the Fe d e r al Parity Act or the California Parity Act.
The judg ment is AF F IRMED.