$2.1 million: Judge rules autism therapy denial illegal under ERISA

Treatment is supported by several organizations, plaintiffs’ class asserts

Two families of children with autism brought suit against Blue Cross Blue Shield of Michigan in federal court on behalf of all other similarly situated families who were denied coverage for applied behavior analysis therapy by defendant.
It was argued that ABA therapy is supported by the U.S. Surgeon General, the National Institutes of Health, the American Academy of Pediatrics, the American Psychological Association, Medicare and Medicaid studies, and hundreds of other medical and scientific authorities.
Further, plaintiff contended, providing this therapy to children with autism actually saves societal and insurance money in the long run, as the therapy enables children with autism spectrum disorder to gain their greatest functioning. However, plaintiff asserted that Blue Cross had long denied coverage for this life-changing therapy by designating it “experimental.”
After extensive briefing and arguments, the court granted class certification to the families.  Blue Cross petitioned the 6th U.S. Circuit Court of Appeals to appeal the order granting class certification, but the petition was denied.
Blue Cross also moved for summary judgment early on in the case, arguing that plaintiffs had failed to exhaust their administrative remedies.  The court denied this motion, finding that “BCBS has not identified one instance in which it has voluntarily paid benefits for ABA treatment.”
On March 30, 2013, U.S. District Judge Stephen J. Murphy III rendered a classwide judgment on the administrative record, holding that Blue Cross’ designation of ABA therapy as “experimental” was, and is, arbitrary and capricious and therefore illegal under ERISA.
The Court held that, “BCBS’s medical policy [characterizing ABA therapy as ‘experimental’] is internally inconsistent, ambiguous, and most fatally, not supported by the evidence in the record.”
The Court granted the families’ motion for judgment, issued declaratory relief by holding that Blue Cross’ policy was “arbitrary and capricious,” overturned Blue Cross’ denials of the families’ claims for ABA coverage, ordered Blue Cross to reprocess the families’ claims, and to provide notice of the court’s ruling to the families at Blue Cross’ expense. The ruling is expected to confer approximately $2.1 million in benefits on the approximately 120 individuals in the class.

Type of action: Claim under ERISA alleging that plan administrator acted arbitrarily and capriciously
Type of injuries: Denial of insurance benefits
Court/Case no./Date: U.S. District Court, Eastern District of Michigan; 10-CV-14981; March 30, 2013

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