`COLLYER SMITH, individually and on behalf
`of all those similarly situated,
`
`
` Plaintiff,
`
` vs.
`
`
`)
`)
`)
`)
`)
`)
`)
`)
`GOLDEN RULE INSURANCE COMPANY,
`)
`SAVVYSHERPA ADMINISTRATIVE SERVICES,
`)
`LLC, and UNITED HEALTHCARE SERVICES,
`)
`INC.,
`)
`
` Defendants.
`)
`
`
`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 1 of 29 PageID #: 497
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF INDIANA
`INDIANAPOLIS DIVISION
`
`
`
`
`
`
` No. 1:20-cv-02066-JMS-TAB
`
`
`
`ORDER
`
`Plaintiff Collyer Smith ("Mr. Smith"), individually and on behalf of all those similarly
`
`situated, brings this action against Defendants Golden Rule Insurance Company, Savvysherpa
`
`Administrative Services, LLC, and United Healthcare Services, Inc. (collectively, "Golden
`
`Rule"),1 challenging Golden Rule's denial of health insurance coverage for certain substance-
`
`abuse-related treatments received by his son, Collyer C. Smith ("Collyer C."), and its alleged
`
`standardized practice of presumptively denying coverage for such services. Mr. Smith asserts
`
`claims for breach of contract and for violations of the Paul Wellstone and Pete Domenici Mental
`
`Health Parity and Addiction Equity Act of 2008 ("the Parity Act"). Defendants have filed a Partial
`
`Motion to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), [Filing No.
`
`30], which is now ripe for the Court's review.
`
`
`
`
`1 Mr. Smith in the Complaint and both parties in their briefing address Defendants collectively, so
`the Court will do the same for purposes of deciding the Motion to Dismiss. [See Filing No. 1;
`Filing No. 32 at 7; Filing No. 54 at 6 n.1.]
`
`
`
`1
`
`

`

`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 2 of 29 PageID #: 498
`
`I.
`STANDARD OF REVIEW
`
`Under Rule 12(b)(6), a party may move to dismiss a claim that does not state a right to
`
`relief. The Federal Rules of Civil Procedure require that a complaint provide the defendant with
`
`"fair notice of what the . . . claim is and the grounds upon which it rests." Erickson v. Pardus, 551
`
`U.S. 89, 93 (2007) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007)). In reviewing
`
`the sufficiency of a complaint, the Court must accept all well-pled facts as true and draw all
`
`permissible inferences in favor of the plaintiff. Alarm Detection Sys., Inc. v. Vill. of Schaumburg,
`
`930 F.3d 812, 821 (7th Cir. 2019). A Rule 12(b)(6) motion to dismiss asks whether the complaint
`
`"contain[s] sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on
`
`its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). "A
`
`claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw
`
`the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing
`
`Twombly, 550 U.S. at 556). "Threadbare recitals of the elements of a cause of action, supported
`
`by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S.
`
`at 555). Factual allegations must plausibly state an entitlement to relief "to a degree that rises
`
`above the speculative level." Munson v. Gaetz, 673 F.3d 630, 633 (7th Cir. 2012). This plausibility
`
`determination is "a context-specific task that requires the reviewing court to draw on its judicial
`
`experience and common sense." Id.
`
`"Federal Rule of Civil Procedure 12(b)(1) allows a party to move to dismiss a claim for
`
`lack of subject matter jurisdiction." Hallinan v. Fraternal Order of Police of Chicago Lodge No.
`
`7, 570 F.3d 811, 820 (7th Cir. 2009). When deciding a motion to dismiss under Rule 12(b)(1), the
`
`Court accepts the allegations in the plaintiff's complaint as true and draws all reasonable inferences
`
`in the plaintiff's favor. Long v. Shorebank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999). See
`
`
`
`2
`
`

`

`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 3 of 29 PageID #: 499
`
`also Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009) ("Facial
`
`challenges [to subject matter jurisdiction] require only that the court look to the complaint and see
`
`if the plaintiff has sufficiently alleged a basis of subject matter jurisdiction." (emphasis omitted)).
`
`II.
`BACKGROUND
`
`The following are the factual allegations contained in the Complaint, which the Court must
`
`
`
`accept as true at this time.
`
`A. The Policy
`
`
`
`On February 1, 2013, Mr. Smith, his wife, and Collyer C. entered into a health insurance
`
`contract with Golden Rule ("the Policy"). [Filing No. 1 at 2-3.] In relevant part, the Policy covers
`
`coinsurance in excess of the applicable deductible for certain covered and eligible expenses.
`
`[Filing No. 1-1 at 27.] However, the Policy also provides that "[e]ven if not specifically excluded
`
`by the policy, no benefit will be paid for a service or supply unless it is: (A) Administered or
`
`ordered by a doctor, and (B) Medically necessary to the diagnosis or treatment of an injury or
`
`illness." [Filing No. 1-1 at 41 (emphasis omitted).] As to the medical necessity requirement, the
`
`Policy states:
`
`"Medically necessary" means a treatment, test, procedure or confinement that is
`necessary and appropriate for the diagnosis or treatment of an illness or injury. This
`determination will be made by us based on our consultation with an appropriate
`medical professional. A treatment, test, procedure or confinement will not be
`considered medically necessary if: (A) it is provided only as a convenience for the
`covered person or provider; (B) it is not appropriate for the covered person's
`diagnosis or symptoms; or (C) it exceeds (in scope, duration, or intensity) that level
`of care which is needed to provide safe, adequate, and appropriate diagnosis or
`treatment of the covered person. The fact that any particular doctor may prescribe,
`order, recommend, or approve a treatment, test, procedure, or confinement does
`not, of itself, make the treatment, test, procedure or confinement medically
`necessary.
`
`
`[Filing No. 1-1 at 20 (emphasis omitted).]
`
`
`
`3
`
`

`

`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 4 of 29 PageID #: 500
`
`The Policy contains a rider which states:
`
`Covered expenses are amended to include charges incurred for the diagnosis and
`treatment of mental disorders, including substance abuse, to the same extent as any
`other illness under the policy/certificate. Unless specifically stated otherwise,
`benefits for mental disorders and substance abuse are subject to the terms and
`conditions of the policy, including any applicable deductible amounts, coinsurance
`and copayment amounts.
`
`[Filing No. 1-1 at 59 (emphasis omitted).] "Substance abuse" as defined by the Policy "means
`
`alcohol, drug or chemical abuse, overuse or dependency." [Filing No. 1-1 at 22.]
`
`B. Collyer C.'s History and Treatment
`
`At various times during his teenage years, Collyer C. was diagnosed with persistent
`
`depressive disorder, generalized anxiety disorder, specific learning disorder, developmental
`
`coordination disorder, and opiate use disorder. [Filing No. 1 at 7.] To treat these disorders, Collyer
`
`C. voluntarily became a patient at a wilderness therapy treatment center and regularly visited
`
`counselors and therapists. [Filing No. 1 at 8.]
`
`From September 11, 2017 to December 28, 2017, Collyer C. was a patient in an intensive
`
`outpatient program ("IOP") at PACE Recovery Center, a nationally recognized mental health and
`
`substance abuse treatment center in southern California. [Filing No. 1 at 12.] IOPs are treatment
`
`programs used to treat addictions and other conditions while the patient lives at home. [Filing No.
`
`1 at 11-12.] During his time as a patient in PACE's IOP program, Collyer C. incurred $44,290 in
`
`charges for services rendered. [Filing No. 1 at 12.] Mr. Smith paid these charges in full. [Filing
`
`No. 1 at 12.]
`
`As a part of his treatment, Collyer C. was regularly tested for drug use through urine
`
`analysis ("UA") tests. [Filing No. 1 at 8.] These tests were required by Collyer C.'s treatment
`
`providers to accurately assess and monitor his condition and were employed using conventional
`
`and appropriate UA testing methodology. [Filing No. 1 at 8.] Between late 2017 and early 2018,
`
`
`
`4
`
`

`

`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 5 of 29 PageID #: 501
`
`Collyer C. was given several dozen UA tests, for which Mr. Smith was charged a total of
`
`$1,560.30. [Filing No. 1 at 8.]
`
`On January 12, 2018, Collyer C. overdosed and died. [Filing No. 1 at 8.] His death
`
`certificate lists his cause of death as a lethal combination of heroin, cocaine, and fentanyl. [Filing
`
`No. 1 at 8.] Mr. Smith was billed for UA tests for months after his son died. [Filing No. 1 at 9.]
`
`C. Golden Rule's Refusal of Coverage
`
`Golden Rule refused to pay for any of Collyer C.'s UA tests or IOP services. [Filing No. 1
`
`at 8; Filing No. 1 at 12.] Mr. Smith invoked Golden Rule's internal appeals process to appeal the
`
`denials of coverage, resulting in three decisions affirming the original denials. [Filing No. 1 at 9.]2
`
`The first decision, dated February 21, 2018, concluded that the UA tests were not medically
`
`necessary. [Filing No. 31-1 at 1.] The accompanying "Peer Review Report" noted that Collyer C.
`
`received definitive, rather than presumptive, UA tests and concluded that the definitive tests were
`
`not medically necessary because "[p]resumptive urine drug screening is usually sufficient" and
`
`definitive screening should only be performed when the presumptive test is in conflict with the
`
`patient's own account of his drug use, when a specific drug needs to be tested for, or when the
`
`specific level of a drug needs to be known. [Filing No. 31-1 at 7.]
`
`Another decision, dated March 9, 2018, concluded that the IOP services were not medically
`
`necessary. [Filing No. 1 at 12; Filing No. 31-2 at 2.] The accompanying medical review states:
`
`
`2 Along with its Motion to Dismiss, Golden Rule submitted copies of the three decisions denying
`coverage. [Filing No. 31-1; Filing No. 31-2; Filing No. 31-3.] Because these documents are
`referenced in the Complaint and central to Mr. Smith's claims, the Court can consider them in
`ruling on Golden Rule's Motion to Dismiss. See, e.g., 188 LLC v. Trinity Indus., Inc., 300 F.3d
`730, 735 (7th Cir. 2002) ("It is also well-settled in this circuit that 'documents attached to a motion
`to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint
`and are central to his claim. Such documents may be considered by a district court in ruling on the
`motion to dismiss.'") (quoting Wright v. Assoc. Ins. Cos. Inc., 29 F.3d 1244, 1248 (7th Cir. 1994)).
`Where appropriate, the Court will cite to these documents in addition to the Complaint.
`5
`
`
`
`

`

`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 6 of 29 PageID #: 502
`
`The available documentation does not clearly detail the reasons for [Collyer C.'s]
`admission to the IOP level of care. Specifically, there is a lack of information
`concerning specific information related to the patient's frequency and intensity of
`substance abuse. In addition, there is no evidence of need for continued treatment
`at the IOP level of care.
`
`
`[Filing No. 31-2 at 5.]
`
`
`
`A third decision, dated May 3, 2018, similarly concluded that both the UA tests and the
`
`IOP services were not medically necessary. [Filing No. 1 at 12; Filing No. 31-3 at 2.] The
`
`accompanying medical review concluded that the IOP services were "in excess of the patient's
`
`needs," stating:
`
`[Collyer C.] had not used [drugs] since June[] of 2017 and had no withdrawal
`symptoms. The patient was medically stable and had social supports. The patient
`had some anxiety, but no acute functioning concerns that required a structured
`program. In addition, though IOP was billed, the patient appeared to be in a
`residential setting given the patient did not transition to a sober living environment
`(SLE) until the end of the week of 12/04/17. The case management notes also
`referenced that until December of 2017, the patient was in a residential setting. If
`the patient was in a structured environment or more of a residential setting, this is
`a misrepresentation of services and is a potential quality issue.
`
`In addition, all of the patient's UA's were negative and it appears that the patient
`was in a structured setting from September of 2017 – December of 2017 and there
`was no suspicion of use. None of these requests are recommended for approval as
`appropriate, efficient and accurate testing, screening and results could have been
`provided with office-based dip stick testing.
`
`All orders for confirmation testing require a positive screening test and shall be
`performed only for the drug class representative by the positive screening. When
`testing is done in high risk populations, including those in addiction treatment, the
`criminal justice system and return to work settings after addiction treatment,
`American Society of Addiction Medicine (ASAM) encourages the use of random
`rather than scheduled drug tests.
`
`[Filing No. 31-3 at 6.]
`
`
`
`Mr. Smith maintains that the UA tests and IOP services were medically necessary for
`
`Collyer C., and therefore should have been covered by the Policy. [Filing No. 1 at 1-2; Filing No.
`
`1 at 9-12.] Mr. Smith alleges that Golden Rule "consistently failed to apply the proper criteria in
`
`
`
`6
`
`

`

`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 7 of 29 PageID #: 503
`
`determining whether plaintiff's and class members' UA tests and IOP treatments were medically
`
`necessary." [Filing No. 1 at 12.] He alleges that, "[b]ased on a purported lack of medical necessity,
`
`defendants consistently single out mental disorders, including substance use disorders, for
`
`disparate treatment and refuse to cover charges incurred for the diagnosis and treatment of such
`
`disorders to the same extent as comparable charges arising out of medical/surgical services."
`
`[Filing No. 1 at 6.] He also alleges that Golden Rule does not cover charges related to the diagnosis
`
`and treatment of substance abuse to the same extent it covers comparable charges related to
`
`medical and surgical services. [Filing No. 1 at 6.] Mr. Smith asserts that Golden Rule
`
`"presumptively den[ies]" coverage for IOP services and in doing so uses "different coverage
`
`criteria" than the criteria considered when determining coverage for costs stemming from
`
`outpatient surgical facilities, intensive day rehabilitation, and rehabilitation. [Filing No. 1 at 6-7.]
`
`D. Class Allegations
`
`Mr. Smith brings his claims individually and "on behalf of two breach of contract classes
`
`and a direct Parity Act violation class." [Filing No. 1 at 13.] As for the breach of contract classes,
`
`Mr. Smith defines the proposed "UA Class" to include:
`
`All persons (a) insured by a certificate of coverage (b) underwritten by Golden Rule
`(c) whose coverage is not regulated by ERISA and (d) who were being treated for
`substance abuse and (e) whose urine drug tests were not covered (f) because the
`tests were deemed not "medically necessary" (or verbiage to the same effect).
`
`[Filing No. 1 at 13.] Similarly, he defines the proposed "IOP Class" to include:
`
`All persons (a) insured by a certificate of coverage (b) underwritten by Golden Rule
`(c) whose coverage is not regulated by ERISA and (d) who were being treated for
`substance abuse and (e) whose IOP treatments not covered (f) because the services
`were deemed not "medically necessary" (or verbiage to the same effect).
`
`[Filing No. 1 at 13.] Mr. Smith alleges that the contractual provisions contained in the Policy are
`
`common to all proposed class members' health insurance contracts with Golden Rule. [Filing No.
`
`
`
`7
`
`

`

`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 8 of 29 PageID #: 504
`
`1 at 6.] He asserts, in relevant part, that his and the class members' claims "are based on the
`
`common question of whether defendants engaged in a common course of conduct and business
`
`practice that resulted in its coverage denial for medically necessary drug tests and/or IOP services."
`
`[Filing No. 1 at 15.]
`
`E. Claims in the Complaint
`
`The Complaint contains four counts. In Count 1, Mr. Smith asserts a breach of contract
`
`claim, individually and on behalf of the UA Class, relating to the denial of coverage for UA tests.
`
`[Filing No. 1 at 15.] In Count 2, Mr. Smith asserts a second breach of contract claim, individually
`
`and on behalf of the IOP class, relating to the denial of coverage for IOP services. [Filing No. 1
`
`at 16.] In Count 3, Mr. Smith, individually and on behalf of the UA Class, alleges that Golden
`
`Rule breached the Policy and the class members' health insurance contracts by violating the Parity
`
`Act, which is incorporated by law into all of Golden Rule's health insurance contracts. [Filing No.
`
`1 at 16-18.] Specifically, Mr. Smith alleges:
`
`74. The limitation at issue is the manner in which defendants interpret and calibrate
`its "medically necessary" standard applicable to UA tests. Defendants do not
`presumptively conclude that UA tests are medically necessary even when treating
`physicians recommend it and even when such tests are considered standard and
`medically appropriate by the overwhelming majority of relevant providers.
`
`75. In contrast, defendants presumptively authorize coverage for comparable
`medical surgical services such as diagnostic tests, for blood glucose monitoring,
`for urine tests for diabetics, for insulin, for injection aids, syringes and needles, all
`used in the treatment of diabetes. This disparate treatment results in defendants
`being out of parity with how it covers UA tests used to monitor persons with drug
`and/or alcohol addiction and/or abuse issues. This disparate treatment in
`comparable services violates the federal Parity Act as incorporated into
`defendants' certificates of coverage.
`
`[Filing No. 1 at 18.] Similarly, in Count 4, Mr. Smith individually and on behalf of the IOP Class,
`
`asserts a claim for breach of contract for violations of the Parity Act. [Filing No. 1 at 19-21.]
`
`Specifically, he alleges:
`
`
`
`8
`
`

`

`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 9 of 29 PageID #: 505
`
`84. The limitation at issue is the manner in which defendants interpret and
`calibrate[] its "medically necessary" standard applicable to IOP services.
`Defendants do not presumptively conclude that IOP services are medically
`necessary even when treating physicians recommend it and even when such
`services are considered standard and medically appropriate by the overwhelming
`majority of relevant providers.
`
`85. In contrast, defendants do not presumptively deny coverage for comparable
`medical surgical services such as services rendered at outpatient surgical facilities,
`intensive day rehabilitation and rehabilitation and chemotherapy treatment. This
`disparate treatment results in defendants being out of parity with how it covers IOP
`services. This disparate treatment in comparable services violates the federal Parity
`Act as incorporated into defendants' certificates of coverage.
`
`[Filing No. 1 at 20-21.]
`
`Mr. Smith "and class members seek to recover coverage for charges incurred to pay for the
`
`[UA] tests and IOP services and, further, to enjoin defendants from breaching the terms of its
`
`contract that promises to cover services that are 'medically necessary.'" [Filing No. 1 at 2.] Golden
`
`Rule seeks dismissal of Counts 3 and 4 in their entirety, and seeks dismissal of Counts 1 and 2
`
`only to the extent that Mr. Smith requests injunctive or declaratory relief. [Filing No. 30 at 1.]
`
`III.
`DISCUSSION
`
`
`A. Parity Act Claims
`
`Golden Rule argues that Mr. Smith failed to allege a violation of the Parity Act in Counts
`
`3 and 4, and therefore those counts should be dismissed. [Filing No. 32 at 13-20.] Specifically,
`
`Golden Rule asserts that in order to state a claim under the Parity Act, a plaintiff must: (1) identify
`
`the treatment limitation that applies to mental health coverage; and (2) "allege a flaw in this
`
`limitation based on a comparison to a relevant analogue." [Filing No. 32 at 14 (quoting Welp v.
`
`Cigna Health & Life Ins. Co., 2017 WL 3263138, at *4-5 (S.D. Fla. July 20, 2017)).] According
`
`to Golden Rule, Mr. Smith fails to identify a treatment limitation that applies only to mental health
`
`coverage, and he cannot rely on the Policy's medical necessity requirement because that
`
`
`
`9
`
`

`

`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 10 of 29 PageID #: 506
`
`requirement expressly applies equally to mental health coverage and medical treatment coverage.
`
`[Filing No. 32 at 15.] Golden Rule also argues that Mr. Smith's vague assertion "that there was
`
`something about 'the manner' in which Golden Rule applied the medical necessity requirement that
`
`violated the Parity Act" is insufficient because he does not specifically point to anything in the
`
`denial letters or medical reviews to support such a violation. [Filing No. 32 at 15.] In addition,
`
`Golden Rule asserts that although Mr. Smith vaguely suggests that Golden Rule should apply a
`
`pro-coverage presumption in evaluating mental health costs, it is unclear what presumptions
`
`should exist or why, given that the Policy does not refer to any presumptions for or against
`
`coverage, either for mental health and substance abuse treatment or for medical treatment. [Filing
`
`No. 32 at 15-16.] As for the second element, Golden Rule argues that Mr. Smith failed to allege
`
`any specific facts concerning the coverage of analogous medical services. [Filing No. 32 at 16-
`
`20.] According to Golden Rule, Mr. Smith makes the conclusory assertion that Golden Rule used
`
`different criteria to evaluate substance-abuse-related services without specifying what those
`
`different criteria were or explaining how certain covered medical services are analogous to the
`
`UAs or IOP services at issue. [Filing No. 32 at 16-17.]
`
`In response, Mr. Smith argues that Golden Rule errs in relying on Welp to provide the
`
`relevant standard for stating a claim under the Parity Act. [Filing No. 54 at 15-16.] Instead, he
`
`asserts, a plaintiff states a claim under the Parity Act by demonstrating that: (1) the health insurance
`
`plan includes a treatment limitation for mental health or substance use disorder benefits that is
`
`more restrictive than the treatment limitation for medical or surgical benefits; and (2) the mental
`
`health or substance use disorder benefit being limited is in the same classification as the medical
`
`or surgical benefit to which it is being compared. [Filing No. 54 at 14-15 (citing Michael W. v.
`
`United Behavioral Health, 420 F. Supp. 3d 1207, 1234 (D. Utah 2019)).] Mr. Smith contends that
`
`
`
`10
`
`

`

`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 11 of 29 PageID #: 507
`
`the Complaint plausibly alleges that Golden Rule violated the Parity Act in two separate ways
`
`when it denied coverage of the UA tests and IOP services: first by applying a separate treatment
`
`limitation applicable only to mental health and substance use disorder benefits, and second by
`
`applying a more restrictive medical necessity limitation to mental health and substance use
`
`disorder benefits than the limitation it applies to medical and surgical benefits. [Filing No. 54 at
`
`12-13.] Regarding the first alleged violation, Mr. Smith argues that although the Policy required
`
`Golden Rule to apply the same medical necessity requirement to both mental health and medical
`
`benefits, the allegations in the Complaint lay out a plausible claim that Golden Rule in fact applied
`
`a separate standard to presumptively deny coverage for IOP treatment and UA testing. [Filing No.
`
`54 at 16-17.] Specifically, he argues that his allegations plausibly allege that Golden Rule's
`
`justifications for its denial of coverage "are insincere and bolster the plausibility that Golden Rule
`
`presumptively denies coverage to 'single out mental disorders, including substance use disorders,
`
`for disparate treatment,' by applying separate criteria other than medical necessity." [Filing No.
`
`54 at 17 (quoting Filing No. 1 at 6).] Mr. Smith asserts that Golden Rule ignores the Parity Act
`
`requirement that it not place separate limitations on mental health coverage and instead focuses
`
`solely on the requirement that the limitations on mental health treatments not be more restrictive,
`
`which Mr. Smith argues is "a mistake of law." [Filing No. 54 at 18.] Mr. Smith also argues that
`
`although the medical necessity requirement on its face applies equally to mental health and medical
`
`coverage, the requirement as applied is not the same. [Filing No. 54 at 18-19.] He asserts that
`
`"Golden Rule in operation applied a presumption to deny coverage for IOP treatment and UA drug
`
`testing benefits—a separate treatment limitation applied only to mental health and substance use
`
`disorder benefits." [Filing No. 54 at 19.] In addition, Mr. Smith contends that the Complaint states
`
`a plausible claim that Golden Rule applied a more restrictive medical necessity requirement to UA
`
`
`
`11
`
`

`

`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 12 of 29 PageID #: 508
`
`drug testing and IOP treatments than it did to medical and surgical benefits. [Filing No. 54 at 20-
`
`23.] He argues that he need not demonstrate that the medical services identified in the
`
`Complaint—outpatient surgical facilities, intensive day rehabilitation, and medical services
`
`including urine tests used to treat diabetes—are analogous to IOP treatment and UA drug testing,
`
`but rather must allege that they are in the same classifications, which he believes he has done.
`
`[Filing No. 54 at 21-22.] Mr. Smith also asserts that specific information or statistics concerning
`
`how often certain costs are covered is known by Golden Rule alone and can only be obtained
`
`through discovery. [Filing No. 54 at 22.] He argues that whether a disparity exists between
`
`coverage of particular types of services is a topic of expert opinion, and such opinions are not
`
`required at the pleading stage. [Filing No. 54 at 22.] Mr. Smith argues that the Seventh Circuit
`
`has "squarely rejected the premise of Golden Rule's argument—that a plaintiff must plead all legal
`
`elements of the Parity Act plus facts corresponding to each factor—as "materially inappropriate."
`
`[Filing No. 54 at 22-23 (citing Chapman v. Yellow Cab Coop., 875 F.3d 846, 848 (7th Cir. 2017)).]
`
`He argues that his Complaint provides Golden Rule fair notice of plausible Parity Act violations,
`
`and there is nothing vague about his allegations. [Filing No. 54 at 23.] Finally, Mr. Smith
`
`discusses ten different decisions from other district courts, arguing that they are "better-reasoned"
`
`than the cases cited by Golden Rule and that they support the denial of Golden Rule's motion to
`
`dismiss. [Filing No. 54 at 23-27.]
`
`In reply, Golden Rule asserts that "[a]ll of the cases cited by both sides show that, to state
`
`a claim under the Parity Act, the Complaint needs to identify a discriminatory 'treatment
`
`limitation'—i.e., a coverage guideline, process, or standard through which a plan discriminates
`
`against behavioral health coverage, as compared to medical coverage," but Mr. Smith fails to do
`
`so both in his Complaint and in his response to the motion to dismiss. [Filing No. 59 at 5.] Golden
`
`
`
`12
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`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 13 of 29 PageID #: 509
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`Rule argues that although Mr. Smith attempts to assert two separate violations of the Parity Act—
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`"(1) that Golden Rule applies a 'separate' limitation consisting of 'the policy's medical necessity
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`treatment limitation standard as applied' to substance abuse treatment and (2) that Golden Rule
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`uses a 'more restrictive' application of the same medical necessity limitation"—the allegations are
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`so vague that no practical difference can be discerned between these two purported violations.
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`[Filing No. 59 at 7-8 (emphasis in original).] Regardless, Golden Rule argues, Mr. Smith fails to
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`identify a specific treatment limitation because he merely asserts that the manner in which Golden
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`Rule applies the medical necessity requirement is problematic, but "never explains what it is about
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`'the manner' that he is challenging." [Filing No. 59 at 8.] According to Golden Rule, the Complaint
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`contains "a series of confusing, unexplained assertions about presumptions" and it is "entirely
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`unclear from the Complaint what these 'presumptions' are or how they work, and there are no
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`factual allegations to support the existence of any presumptions." [Filing No. 59 at 8 (emphasis
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`in original).] Golden Rule argues that the fact that Mr. Smith disagrees with the denial of coverage
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`under the Policy does not transform this case into a Parity Act case and Mr. Smith failed to identify
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`any guidelines, standard, or other "treatment limitation" that caused any or all of the denials.
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`[Filing No. 59 at 9.] Golden Rule asserts that Mr. Smith provides "no response" to the cases it
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`cited in its opening brief demonstrating that courts repeatedly dismiss Parity Act claims based on
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`vague assertions similar to those in the Complaint, and that the cases cited by Mr. Smith are easily
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`distinguishable. [Filing No. 59 at 10-11.] Golden Rule also reiterates its argument that Mr. Smith
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`failed to plead facts regarding the coverage of analogous medical services, as would be required
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`to show a disparity between medical and substance-abuse-related services. [Filing No. 59 at 11-
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`13.] Golden Rule contends that Mr. Smith cannot rely on discovery to supply the details missing
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`from his Complaint and he should not be permitted to conduct a fishing expedition in search of a
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`Case 1:20-cv-02066-JMS-TAB Document 65 Filed 03/11/21 Page 14 of 29 PageID #: 510
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`discriminatory treatment limitation that he has not pled and that does not exist. [Filing No. 59 at
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`13.] Finally, Golden Rule asserts that all of the cases cited by Mr. Smith are distinguishable.
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`[Filing No. 59 at 13-16.]
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`1. Statutory Background
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`The Parity Act, Pub. L. No. 110–343, Div. C §§ 511–12, 122 Stat. 3861, 3881 (Oct. 3,
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`2008), was codified in parallel amendments to the Employee Retirement Income Security Act of
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`1974 ("ERISA"), the Public Health Service Act ("PHSA"), and the Internal Revenue Code. See,
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`e.g., Coal. for Parity, Inc. v. Sebelius, 709 F. Supp. 2d 10, 13 (D.D.C. 2010) (citing 29 U.S.C.
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`§ 1185a; 42 U.S.C. § 300gg-5; 26 U.S.C. § 9812); see also Natalie V. v. Health Care Serv. Corp.,
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`2016 WL 4765709, at *2-*6 (N.D. Ill. Sept. 13, 2016) (discussing the enactment of the Parity Act
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`and the implementing regulations). Because the Policy is a group plan provided through a
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`consumer association, not an employer-sponsored plan, it is not subject to ERISA and Mr. Smith
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`brings his claims pursuant to the PHSA parity provision, 42 U.S.C. § 300gg-26, which is
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`enforceable through 42 U.S.C § 18031(j) and 45 C.F.R. § 147.160(a).3 [Filing No. 1 at 3; Filing
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`No. 1 at 17-20; Filing No. 54 at 12-13.]
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`The Parity Act expanded the scope of prior legislation, the Mental Health Parity Act of
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`1996 ("MHPA"), Pub. L. No. 104–204, §§ 701-02, 110 Stat. 2874, 2944 (Sept. 26, 1996). Coal.
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`for Parity, 709 F. Supp. 2d at 13. The MHPA and the Parity Act were "designed to end
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`discrimination in the provision of coverage for mental health and substance use disorders as
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`compared to medical and surgical conditions in employer-sponsored group health plans and health
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`insurance coverage offered in connection with group health plans." Id.
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`3 Both parties cite caselaw discussing and analyzing 29 U.S.C. § 1185a, the parity provision
`applicable to employer-sponsored plans under ERISA. Because the parity provisions