throbber
Case: 1:19-cv-07162 Document #: 59 Filed: 03/04/20 Page 1 of 27 PageID #:219
`
`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`PAMELA SMITH, on behalf of her daughter,
`JANE SMITH (a pseudonym), and on behalf of all
`others similarly situated,
`
` Plaintiff,
`v.
`
`HEALTH CARE SERVICE CORPORATION,
`
` Defendant.
`
`Case No. 19-CV-7162-JZL
`
`Judge John Z. Lee
`
`SECOND AMENDED CLASS ACTION COMPLAINT
`
`Plaintiff Pamela Smith, on behalf of her daughter, “Jane Smith” (a pseudonym), and on
`
`behalf of all others similarly situated, complains as follows against Defendant Health Care
`
`Service Corporation (“HCSC” or “Defendant”).
`
`INTRODUCTION
`
`1.
`
`This case arises from Defendant HCSC’s adoption and use of certain clinical
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`coverage criteria for determining when residential treatment of mental health conditions and/or
`
`substance use disorders is medically necessary and, thus, covered by the welfare benefit plans it
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`administers. Although purporting to summarize accepted standards of medical practice, certain
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`criteria HCSC used in administering benefit plans were much more restrictive than those
`
`generally accepted standards. As such, they contradicted the plans’ written terms and violated the
`
`Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq.
`
`

`

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`THE PARTIES
`
`2.
`
`Plaintiff Pamela Smith is a participant in the Telephone and Data Systems, Inc.
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`Health and Well-Being Plan (the “Smith Plan”), which is sponsored by Ms. Smith’s employer.
`
`Plaintiff’s daughter, referenced herein by the pseudonym “Jane Smith,” is a beneficiary of the
`
`Smith Plan. Plaintiff Smith has been designated as her daughter’s agent pursuant to a Power of
`
`Attorney. Plaintiff Smith and her daughter, Jane, are residents of Wisconsin.
`
`3.
`
`Defendant HCSC is a Mutual Legal Reserve Company that is headquartered in
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`Chicago, Illinois. HCSC issues and administers health insurance plans in five states (Illinois,
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`Texas, Oklahoma, New Mexico and Montana) as a licensee of the Blue Cross Blue Shield
`
`Association.
`
`(a)
`
`HCSC is the fourth-largest health insurance administrator in the country,
`
`with more than 16 million members. As of January 2019, it was responsible for
`
`processing mental health claims on behalf of more than 1.7 million members, including
`
`more than 727,000 members suffering from depression.
`
`(b)
`
`As the benefit administrator for the health plans at issue herein, HCSC is
`
`responsible for determining that the services for which coverage is requested are
`
`medically necessary before it approves coverage.
`
`(c)
`
`HCSC licensed MCG’s Behavioral Health Care Guidelines (the “MCG
`
`Behavioral Health Guidelines”), including the MCG Guidelines for Residential Acute
`
`Behavioral Health Level of Care (the “MCG Acute RTC Guidelines”) described in this
`
`Complaint, and systematically used them to make the medical necessity determinations at
`
`issue in this case.
`
`2
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`

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`JURISDICTION AND VENUE
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`Subject matter jurisdiction exists pursuant to 28 U.S.C. § 1331.
`
`Personal jurisdiction exists over HCSC, and this District is the proper venue,
`
`4.
`
`5.
`
`because HCSC is headquartered in this District and regularly communicates with insureds who
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`reside in this District.
`
`I.
`
`The Smith Plan
`
`FACTUAL BACKGROUND
`
`6.
`
`The Smith Plan is governed by the Employee Retirement Income Security Act
`
`(“ERISA”), 29 U.S.C. § 1001, et seq.
`
`7.
`
`8.
`
`Jane Smith has been a beneficiary of the Smith Plan since 2002.
`
`The Smith Plan covers treatment for sickness, injury, mental illness, and
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`substance use disorders. Residential treatment is a covered benefit under the Smith Plan. The
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`Plan does not limit residential treatment services to acute or emergency services or to short-term
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`crisis intervention.
`
`9.
`
`HCSC is the benefit claims administrator for the Smith Plan. As such, the plan
`
`grants discretion to HCSC to interpret plan terms, including limitations and exclusions, in
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`determining whether services are covered and to cause any resulting benefit payments to be
`
`made by the Plan.
`
`10.
`
`Because HCSC exercises discretion with respect to the administration of the
`
`Smith Plan, and makes all final and binding benefit determinations under the plan, HCSC is a
`
`fiduciary within the meaning of ERISA, 29 U.S.C. § 1104. HCSC owed Jane Smith fiduciary
`
`duties in administering the Smith Plan at all times from the time she became a beneficiary of the
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`Smith Plan through the present.
`
`3
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`

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`11.
`
`Under the terms of the Smith Plan, one essential condition of coverage is that the
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`services for which coverage is sought must be “medically necessary.” The Smith Plan defines
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`“medically necessary” services to mean services that are, among other things, “appropriate and
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`consistent with the diagnosis and which, in accordance with accepted medical standards in the
`
`state in which the service is rendered, could not have been omitted without adversely affecting
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`the patient’s condition or the quality of medical care rendered. . . .” Thus, under the terms of the
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`Smith Plan, one essential condition of coverage is that the services for which coverage is sought
`
`must be consistent with accepted standards of medical practice.
`
`12.
`
`In addition, in making benefit determinations on behalf of all of its plans,
`
`including the Smith Plan, HCSC applies a uniform and internal definition of “medical necessity.”
`
`HCSC’s uniform definition also explicitly incorporates accepted standards of medical practice as
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`a requirement for coverage.
`
`13.
`
`Therefore, one of the essential determinations HCSC makes when reviewing
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`claims for coverage under the Smith Plan, and all other plans containing a medical necessity
`
`requirement, is whether the services for which coverage is sought are consistent with accepted
`
`standards of medical practice.
`
`II.
`
`MCG Health, LLC
`
`14. MCG Health, LLC (“MCG”) is a part of the Hearst Health Network and is
`
`headquartered in Seattle, Washington.
`
`15. MCG assists health insurance companies and claims administrators like HCSC to
`
`make medical necessity decisions by creating and selling clinical coverage guidelines that are
`
`designed as criteria for determining which services are consistent with accepted medical practice
`
`and, thus, medically necessary as required for coverage under the applicable plans.
`
`4
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`

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`16. MCG developed the defective MCG Acute RTC Guidelines at issue herein and
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`licensed them to HCSC with the understanding that HCSC would rely upon the MCG Acute
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`Residential Guidelines in making medical necessity determinations.
`
`III.
`
`Accepted Standards of Medical Practice
`
`17.
`
`Accepted standards of medical practice, in the context of mental health and
`
`substance use disorder services, are the standards that have achieved widespread acceptance
`
`among behavioral health professionals. The accepted medical standards at issue in this case do
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`not vary state-by-state.
`
`18.
`
`In the area of mental health and substance use disorder treatment, there is a
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`continuum of intensity at which services are delivered. There are accepted standards of medical
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`practice for matching patients with the level of care that is most appropriate and effective for
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`treating patients’ conditions. These accepted standards of medical practice are described in
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`multiple sources, including peer-reviewed studies in academic journals, consensus guidelines
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`from professional organizations, and guidelines and materials distributed by government
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`agencies, including: (a) the American Association of Community Psychiatrists’ (“AACP’s”)
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`Level of Care Utilization System (“LOCUS”); (b) the American Society of Addiction Medicine
`
`(“ASAM”) Criteria; (c) the Child and Adolescent Level of Care Utilization System
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`(“CALOCUS”) developed by AACP and the American Academy of Child and Adolescent
`
`Psychiatry (“AACAP”), and the Child and Adolescent Service Intensity Instrument (“CASII”),
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`which was developed by AACAP in 2001 as a refinement of CALOCUS; (d) the Medicare
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`Benefit Policy Manual issued by the Centers for Medicare and Medicaid Services; (e) the APA
`
`Practice Guidelines for the Treatment of Patients with Substance Use Disorders, Second Edition;
`
`(f) the APA Practice Guidelines for the Treatment of Patients with Eating Disorders, Third
`
`Edition; (g) the American Psychiatric Association’s Practice Guidelines for the Treatment of
`
`5
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`

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`Patients with Major Depressive Disorder; and (h) AACAP’s Principles of Care for Treatment of
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`Children and Adolescents with Mental Illnesses in Residential Treatment Centers.
`
`19.
`
`The accepted standards of medical practice for matching patients with the level of
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`care that is most appropriate and effective for treating patients’ mental health conditions and
`
`substance use disorders include the following:
`
`(a)
`
`First, many mental health and substance use disorders are long-term and
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`chronic. While current or acute symptoms are typically related to a patient’s chronic
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`condition, it is generally accepted in the behavioral health community that effective
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`treatment of individuals with mental health or substance use disorders is not limited to the
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`alleviation of the current or acute symptoms. Rather, effective treatment requires
`
`treatment of the chronic underlying condition as well.
`
`(b)
`
`Second, many individuals with behavioral health diagnoses have multiple,
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`co-occurring disorders. Because co-occurring disorders can aggravate each other, treating
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`any of them effectively requires a comprehensive, coordinated approach to all of the
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`individual’s conditions. Similarly, the presence of a co-occurring medical condition is an
`
`aggravating factor that may necessitate a more intensive level of care for the patient to be
`
`effectively treated.
`
`(c)
`
`Third, in order to treat patients with mental health or substance use
`
`disorders effectively, it is important to “match” them to the appropriate level of care. The
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`driving factors in determining the appropriate treatment level should be safety and
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`effectiveness. Placement in a less restrictive environment is appropriate only if it is likely
`
`to be safe and just as effective as treatment at a higher level of care.
`
`6
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`

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`(d)
`
`Fourth, when there is ambiguity as to the appropriate level of care,
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`generally accepted standards call for erring on the side of caution by placing the patient
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`in a higher level of care. Research has demonstrated that patients who receive treatment
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`at a lower level of care than is clinically appropriate face worse outcomes than those who
`
`are treated at the appropriate level of care. On the other hand, there is no research that
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`establishes that placement at a higher level of care than clinically indicated results in an
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`increase in adverse outcomes.
`
`(e)
`
`Fifth, while effective treatment may result in improvement in the patient’s
`
`level of functioning, it is well-established that effective treatment also includes treatment
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`aimed at preventing relapse or deterioration of the patient’s condition and maintaining the
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`patient’s level of functioning.
`
`(f)
`
`Sixth, the appropriate duration of treatment for behavioral health disorders
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`is based on the individual needs of the patient; there is no specific limit on the duration of
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`such treatment. Similarly, it is inconsistent with generally accepted standards of medical
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`practice to require discharge as soon as a patient becomes unwilling or unable to
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`participate in treatment.
`
`(g)
`
`Seventh, one of the primary differences between adults, on the one hand,
`
`and children and adolescents, on the other, is that children and adolescents are not fully
`
`“developed,” in the psychiatric sense. The unique needs of children and adolescents must
`
`be taken into account when making level of care decisions involving their treatment for
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`mental health or substance use disorders. One of the ways practitioners should take into
`
`account the developmental level of a child or adolescent in making treatment decisions is
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`7
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`

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`by relaxing the threshold requirements for admission and continued service at a given
`
`level of care.
`
`(h)
`
`Eighth, the determination of the appropriate level of care for patients with
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`mental health and/or substance use disorders should be made on the basis of a
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`multidimensional assessment that takes into account a wide variety of information about
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`the patient. Except in acute situations that require hospitalization, where safety alone may
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`necessitate the highest level of care, decisions about the level of care at which a patient
`
`should receive treatment should be made based upon a holistic, biopsychosocial
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`assessment that involves consideration of multiple dimensions.
`
`20.
`
`As a claims administrator and ERISA fiduciary, one of HCSC’s fiduciary duties is
`
`to use due care in interpreting its plans, including when selecting the criteria it will use to make
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`determinations about whether requested services are consistent with accepted standards and thus
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`medically necessary.
`
`21. When HCSC decided to use the MCG Acute RTC Guidelines to make medical
`
`necessity decisions under the Plaintiff’s and class members’ plans, HCSC had access to the
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`independent, publicly available sources referenced above, which describe the generally accepted
`
`standards of medical practice. In the exercise of due care, HCSC thus knew, or should have
`
`known, what the accepted standards of medical practice actually are.
`
`IV.
`
`The MCG Behavioral Health Guidelines
`
`22.
`
`HCSC licenses the MCG Behavioral Health Guidelines, including the MCG
`
`Acute RTC Guidelines, and systematically applies them to determine whether services for which
`
`coverage is sought are medically necessary, including whether the services are consistent with
`
`generally accepted standards of medical practice.
`
`8
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`

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`23. MCG develops its Behavioral Health Guidelines and licenses them to benefit
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`administrators, including HCSC, with the express purpose and intention that the administrator
`
`will rely upon the Guidelines to make medical necessity determinations under welfare benefit
`
`plans, including plans governed by ERISA.
`
`24. MCG explains its service as creating “care guidelines” to “provide fast access to
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`evidence-based medicine’s best practices and care plan tools across the continuum of treatment,
`
`providing clinical decision support and documentation which enables efficient transitions
`
`between care settings.” See https://www.mcg.com/about/company-overview/.
`
`25.
`
`The MCG Acute RTC Guidelines include numerous footnote citations to peer-
`
`reviewed medical literature and physician specialty society recommendations that purportedly
`
`“support” the MCG criteria. In reality, year after year, the MCG Acute RTC Guidelines have
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`been inconsistent with the primary sources on which they purport to rely and have distorted the
`
`accepted standards of medical practice for the treatment of behavioral health disorders, as
`
`explained below.
`
`26.
`
`In particular, MCG created guidelines for evaluating residential treatment services
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`that improperly heightened the relevance of acute behavioral health symptoms and conditions
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`while minimizing the relevance of non-acute behavioral health symptoms and conditions – that
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`is, chronic mental health conditions or substance use disorders that are persistent and/or
`
`pervasive and could not necessarily be effectively treated by short-term clinical interventions.
`
`V.
`
`The MCG Acute RTC Guidelines are Inconsistent with Accepted Standards of
`Medical Practice
`
`27.
`
`As of April 2018, the MCG Guideline used by HCSC that was applicable to
`
`residential treatment for adults with behavioral health disorders was entitled “Residential Acute
`
`Behavioral Health Level of Care, Adult (20th Edition)” (“MCG Acute RTC Guidelines”). Thus,
`
`9
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`

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`when HCSC licensed the MCG Behavioral Health Guidelines, which included the MCG Acute
`
`RTC Guidelines, it knew or should have known that its use of the MCG Acute RTC Guideline
`
`criteria would restrict the scope of available coverage for residential treatment of behavioral
`
`health conditions.
`
`28. MCG has from time to time issued revised versions of its Behavioral Health
`
`Guidelines, including the MCG Acute RTC Guidelines. The current version of the MCG
`
`Behavioral Health Guidelines is the 23rd Edition. At all times relevant to this Complaint, the
`
`applicable version of the MCG Acute RTC Guidelines was (and still is) inconsistent with
`
`accepted standards of medical practice, as described below.
`
`29.
`
`For example, the MCG Acute RTC Guidelines specify that, to be medically
`
`necessary upon admission, residential services must satisfy a number of threshold conditions:
`
`(a)
`
`First, “[a]round-the-clock behavioral care is necessary” because of:
`
`(1) “danger to self” due to auditory hallucinations or persistent thoughts of suicide or
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`serious harm to self that cannot be adequately monitored; (2) “danger to others” due to
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`auditory hallucinations or persistent thoughts of homicide or serious harm to self that
`
`cannot be adequately monitored; or (3) a behavioral health disorder characterized by
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`daily occurrence of “moderately severe psychiatric conditions requiring treatment,” such
`
`as hallucinations, delusions, disorganized speech, and so on, or “serious dysfunction in
`
`daily living,” such as impulsive or abusive behaviors, avoidance of almost all social
`
`interaction, failure to achieve self-care; inability to fulfill adult obligations, like work or
`
`parenting.
`
`(b)
`
`Second, all of the following must be true (in addition to other
`
`requirements): (1) treatment at a lower level of care is not “feasible”; (2) “[v]ery short-
`
`10
`
`

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`term crisis intervention and resource planning for continued treatment at a nonresidential
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`level is unavailable or inappropriate”; (3) “[p]atient is willing to participate in treatment
`
`within highly structured setting voluntarily”; and (4) “biopsychosocial stressors have
`
`been assessed and are absent or manageable at proposed level of care” (emphasis added).
`
`30.
`
`These requirements are much more restrictive than accepted standards. For
`
`example, contrary to accepted standards of medical practice, the MCG Acute RTC Guidelines
`
`condition admission to residential treatment on the presence of suicide/homicide factors that
`
`cannot be “monitored adequately” at lower levels of care, rather than on the presence of
`
`suicide/homicide factors that cannot be as effectively treated at lower levels of care.
`
`31.
`
`The MCG Acute RTC Guidelines also provide that persistent thoughts of suicide
`
`or homicide coupled with “ready access to lethal means” may be a basis for residential
`
`admission, while accepted standards indicate that those factors are far more consistent with the
`
`degree of lethality warranting hospitalization. Those criteria thus unjustifiably raise the acuity
`
`bar for admission to the residential level of care, and are inconsistent with the primary sources
`
`MCG cites in support of its Acute RTC Guideline criteria.
`
`32.
`
`The MCG Acute RTC Guidelines also improperly limit the behavioral health
`
`disorders that may warrant residential treatment to those involving “psychiatric symptoms which
`
`are acute,” including obsessions and compulsions, “or represent a worsening over baseline,”
`
`instead of acknowledging the accepted standard that conditions and symptoms may be chronic
`
`but still significantly impairing, such that residential treatment may be the most appropriate level
`
`of care even in the absence of acute symptoms.
`
`33.
`
`Even if patients meet the unjustifiably stringent acuity thresholds described
`
`above, the MCG Acute RTC Guidelines provide that residential treatment is not medically
`
`11
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`

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`necessary if treatment at a lower level of care is “feasible.” As described above, however, under
`
`accepted standards of medical practice, treatment at a less intensive level of care must be “as
`
`effective” as the more intensive level of care – not merely “feasible.”
`
`34.
`
`The MCG Acute RTC Guidelines’ stringent criteria also require that “very short-
`
`term crisis intervention” at a non-residential level be unavailable or inappropriate – thus
`
`indicating that care at a residential level is expected to be for “very short-term crisis
`
`intervention.” This requirement is inconsistent with accepted standards of medical practice,
`
`which do not restrict residential treatment to “crisis intervention” and which do not limit
`
`residential treatment to artificially predetermined durations, let alone to “very short-term” stays.
`
`35.
`
`The MCG Acute RTC Guidelines also improperly limit the scope and duration of
`
`residential treatment by providing that biopsychosocial stressors – which, according to MCG,
`
`include comorbid conditions – need only be “manageable” at the proposed level of care, thus
`
`setting the expectation that “management” of comorbid conditions is all that is required.
`
`Accepted standards of medical practice, however, recognize that biopsychosocial stressors, if
`
`present, must be “effectively treated” – not merely “managed.”
`
`36.
`
`Furthermore, to meet medical necessity under the MCG Acute RTC Guidelines,
`
`patients must be “willing” to participate in treatment in a highly structured setting “voluntarily.”
`
`This criterion, too, is inconsistent with accepted standards of medical practice, which recognize
`
`that a lack of motivation for treatment may necessitate higher levels of care and that treatment
`
`might not be sought at one’s own initiative (e.g., a court, conservator, or guardian may demand
`
`or require it).
`
`37.
`
`At the same time as the MCG Acute RTC Guidelines unjustifiably restrict
`
`admission to residential treatment, they generously allow for discontinuation of such care as soon
`
`12
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`

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`as risk of harm, functional impairments, and comorbidities can be “managed” – rather than
`
`“effectively treated” – at lower levels. As discussed above, under accepted standards of medical
`
`practice, treatment at a less intensive level of care is warranted only if it is just as effective as the
`
`more intensive level of care. Superficially “managing” a patient’s condition is not sufficient.
`
`38.
`
`In sum, on their face, the MCG Acute RTC Guidelines provide that residential
`
`behavioral health treatment is only medically necessary for crisis stabilization or other
`
`circumstances in which a patient is suffering from acute symptoms. As such, the MCG Acute
`
`RTC Guidelines are much more restrictive than the accepted standards of medical practice,
`
`which recognize that persistent and/or pervasive behavioral health disorders cannot necessarily
`
`be as effectively treated on a short-term and/or outpatient basis as they could be in residential
`
`care.
`
`39. MCG’s decision to develop guidelines only for “acute” residential care, and not
`
`for treatment of chronic conditions at the residential level of care, was knowing and intentional.
`
`As MCG admitted in a 2017 white paper, MCG views intermediate levels of care (including
`
`residential treatment) for behavioral health conditions very differently from intermediate levels
`
`of care for medical/surgical conditions:
`
`While inpatient and outpatient levels of care are common to both [mental health
`and substance use disorder (“MHSUD”) benefits] and physical health conditions,
`there is a divergence in how intermediate levels of care (e.g., services less
`intensive than would be available in an inpatient hospital setting, but more
`expansive than care that could be provided in most outpatient clinics) are
`managed.
`
`. . . Intermediate levels of care for medical/surgical conditions are designed to
`improve functional status among people with
`impairments
`that, while
`potentially significant, generally are not acute, and are not offered as
`alternatives to inpatient admission. As an example, the presence of an acute
`pulmonary infection, such as pneumonia, likely would lead to a denial of
`admission to a pulmonary rehabilitation program [an intermediate level of care].
`
`13
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`

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`In contrast, intermediate levels of care for MHSUDs are designed to support
`acute management of patients with MHSUDs. They often service as alternative
`to inpatient care, and are intended to have the ability address acute symptoms or
`provide crisis stabilization . . . (emphasis added).
`
`“Mental Health Parity: Where Have We Come From? Where Are We Now?,” available at
`
`https://www.ahip.org/wp-content/uploads/2017/06/MCG-White-Paper-Mental-Health-Parity.pdf.
`
`40.
`
`As the MCG white paper demonstrates, MCG takes the position that while
`
`intermediate care for medical/surgical services is designed to address sub-acute conditions in
`
`order to improve functional status, intermediate care for behavioral health services is only
`
`available “to support acute management” and to “address acute symptoms or provide crisis
`
`stabilization.”
`
`41. MCG’s website also reflects its view that residential treatment is only available
`
`for “acute” behavioral health conditions. MCG offers a set of “Level of Care Comparison
`
`Charts” that “allow[] a side by side comparison of behavioral health level of care criteria” to
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`“facilitate placement decisions for behavioral health levels of care.” As MCG’s own description
`
`makes clear, MCG recognizes only “5 levels of care” for behavioral health treatment: “inpatient,
`
`acute residential, partial hospital, intensive outpatient, and acute outpatient care.” See
`
`https://www.mcg.com/care-guidelines/behavioral-healthcare/ (emphasis added).
`
`VI.
`
`Financial Considerations Infected HCSC’s Decision to Adopt and Use MCG’s
`Behavioral Health Guidelines and to Make Medical Necessity Determinations
`
`42.
`
`HCSC has tremendous financial incentives to artificially suppress behavioral
`
`health costs by restricting coverage for treatment of chronic behavioral health conditions.
`
`43.
`
`HCSC makes money by charging fees for its services, including behavioral health
`
`claims administration.
`
`(a)
`
`For fully-insured plans, HCSC charges a premium, from which all
`
`approved benefits are paid. HCSC therefore bears the risk that benefit reimbursements
`
`14
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`will exceed the fixed premiums and/or any per-member, per-month rates that HCSC
`
`allocates for behavioral health expenditures.
`
`(b)
`
`For self-funded plans, HCSC is paid an administrative fee and the
`
`employer, as the plan sponsor, pays the medical expenses that HCSC approves. HCSC
`
`has an incentive to reduce such medical expenses in order to retain business and sell its
`
`services as a cost-effective claims administrator.
`
`44.
`
`By adopting the MCG Acute RTC Guidelines as its interpretation of the terms of
`
`the plans it administers, HCSC narrowed the scope of coverage otherwise available under the
`
`terms of those plans, decreased the number and value of covered claims, and shifted some of the
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`risk from itself and its employer-customers to the participants and beneficiaries of the plans.
`
`45.
`
`Residential treatment, though widely recognized as a critical component in the
`
`behavioral health continuum of care, can be quite expensive. Avoiding benefit expense
`
`associated with providing coverage for residential treatment, therefore, directly benefitted
`
`HCSC’s bottom line.
`
`46.
`
`On information and belief, these financial incentives have infected the MCG
`
`Behavioral Health Guidelines, including the Acute RTC Guidelines at issue herein, since these
`
`Guidelines are the primary clinical tool Defendant uses to reduce medical expense by rationing
`
`access to behavioral healthcare, including expensive residential treatment.
`
`VII. HCSC Used the Defective MCG Acute RTC Guidelines to Deny Benefits to Plaintiff
`in Contravention of Her Plan’s Written Terms
`
`47.
`
`As HCSC’s denial letters reflect, HCSC denied coverage for Jane Smith’s
`
`residential treatment based on the MCG Acute RTC Guidelines – i.e., acuity-driven, treatment-
`
`undermining criteria that are inconsistent with the “accepted standards of medical practice” that
`
`she was promised in her Plan. Prior to issuing those denial letters, while Jane Smith was a
`
`15
`
`

`

`Case: 1:19-cv-07162 Document #: 59 Filed: 03/04/20 Page 16 of 27 PageID #:234
`
`beneficiary of the Plan, HCSC licensed and adopted the MCG Acute RTC Guidelines. Those
`
`Guidelines constituted HCSC’s interpretation of the terms of Smith’s Plan discussed herein at all
`
`times from the time the Guidelines were adopted through the final denial of her request for
`
`residential treatment.
`
`48.
`
`HCSC’s adoption of the MCG Acute RTC Guidelines thus shifted risk to Jane
`
`that otherwise would have been borne by her Plan, thereby making her coverage less valuable.
`
`49.
`
`Jane Smith suffers from, among other conditions, major depression, substance
`
`use, and borderline personality disorder. On April 4, 2018, Jane was admitted for residential
`
`treatment of her mental health conditions at Rogers Memorial Hospital (“Rogers”), an in-
`
`network facility. She remained in residential treatment until May 16, 2018. Through Rogers,
`
`Plaintiff timely requested coverage for Jane’s residential treatment.
`
`50.
`
`By letter dated April 6, 2018, HCSC denied Plaintiff’s request for coverage, on
`
`the ground that residential treatment was not medically necessary. HCSC based its determination
`
`on the MCG Acute RTC Guidelines. Rogers submitted an urgent appeal of the denial the next
`
`day.
`
`51.
`
`In a letter dated April 8, 2018, HCSC denied the urgent appeal, citing the MCG
`
`Acute RTC Guidelines, again finding that the treatment was not medically necessary.
`
`52.
`
`On August 1, 2018, Plaintiff submitted a post-service appeal seeking coverage for
`
`Jane’s residential treatment. On August 10, 2018, HCSC approved six days of coverage, but
`
`denied coverage for Jane’s residential treatment from April 10, 2018 to May 16, 2018. Again,
`
`HCSC’s denial letter cited the MCG Acute RTC Guidelines as the basis for its determination.
`
`16
`
`

`

`Case: 1:19-cv-07162 Document #: 59 Filed: 03/04/20 Page 17 of 27 PageID #:235
`
`53.
`
`The Smith Plan provides that, after internal appeals are completed, members may
`
`also seek external review of a denial by a so-called Independent Review Organization (“IRO”).
`
`In fact, the IROs are selected by, contracted with, and paid by HCSC.
`
`54.
`
`Plaintiff sought external review of HCSC’s denial of her requests for coverage of
`
`Jane’s residential treatment. HCSC selected an IRO company called Dane Street to perform the
`
`review. On January 14, 2019, Dane Street upheld HCSC’s denial of coverage for Jane’s
`
`residential treatment from April 10, 2018 through May 16, 2018. In reaching this decision, the
`
`IRO stated:
`
`. . . MCG 20th Edition (p. 1-2) Residential Acute Behavioral Health Level of
`Care, Adult ORG: B-901-RES (BHG) coverage criteria have not been met.
`Therefore the medical records do not establish that the services performed were
`medically necessary according to generally accepted standards of care. (Emphasis
`added.)
`
`55.
`
`Furthermore, in upholding HCSC’s denial of coverage, Dane Street (the IRO
`
`company HCSC selected) stated that “[f]rom the clinical evidence, the member could be safely
`
`treated in a less restrictive setting such as mental health intensive outpatient.” In other words, the
`
`IRO company found (based on the restrictive MCG Behavioral Health Guidelines) that treatment
`
`at the intensive outpatient level of care was medically necessary.
`
`56.
`
`Treatment in an intensive outpatient program (“IOP”) typically consists of about

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