Harlick v. Blue Shield of California

California’s Mental Health Parity Act requires that a plan within the scope of the Act cover medically necessary residential treatment for mental disorders including anorexia nervosa.

Harlick suffered from anorexia nervosa and was instructed to obtain residential treatment. Blue Shield (“BS”), Harlick’s insurer, only covered inpatient hospitalization. Harlick attended Castlewood Treatment Center, a self-described “Residential Treatment Facility” for nine months. BS paid for the first eleven days of Harlick’s treatment but refused any other payment, this decision was based on the care being “residential” in the view of BS. Harlick filed a complaint in district court in which BS’s motion for summary judgment was granted. The Ninth Circuit held that Harlick’s plan did not provide coverage for residential care. The Court found that BS’s administrator’s denial of benefits under an ERISA plan did not exceed the standard of abuse of discretion despite the fact that the same entity that made the coverage decision pays the benefits. The Court found that Harlick’s treatment at Castlewood was residential care and that the plan did not cover that type of treatment. The Court also held that under the California Parity Act, plans within the scope of the Act must provide coverage of all “medically necessary treatment” for “severe mental illnesses.” The Court concluded that Harlick’s treatment was medically necessary, and BS failed to assert during the administrative process that Harlick’s treatment was not medically necessary. Therefore, BS’s argument is precluded in the current claim. The Court concluded that California’s Mental Health Parity Act requires that BS shall provide for mental health treatment including anorexia nervosa, and BS is foreclosed from arguing that Harlick’s treatment was not necessary. REVERSED.