LEGROME D. DAVIS, District Judge.
AND NOW, this 26th day of February 2014, upon consideration of Plaintiff's Complaint (Doc. No. 1), Defendant's Motion for a Protective Order Staying Discovery and to Quash Subpoena (Doc. No. 14), Plaintiffs responses thereto (Doc. Nos. 16 & 39), and Defendant's Motion to Dismiss or, in the Alternative, for Summary Judgment (Doc. No. 25), Plaintiffs response (Doc. No. 29), Defendant's reply (Doc. No. 32), and Plaintiffs sur-reply (Doc. No. 37), it is hereby ORDERED as follows:
Congress enacted the Federal Employee Health Benefits Act (FEHBA) in 1959 to provide federal employees with subsidized health insurance coverage. 5 U.S.C. §§ 8901-8914; Empire Health-choice Assur., Inc. v. McVeigh, 547 U.S. 677, 682, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006). "The Act authorizes the Office of Personnel Management ... to contract with private carriers to offer federal employees an array of health-care plans" through the Federal Employee Health Benefits Program (FEHBP). Empire, 547 U.S. at 682, 126 S.Ct. 2121 (citing 5 U.S.C. § 8902(a)). Under the statute, the U.S. Office of Personnel Management (OPM) has "broad authority" to administer the FEHBP. Dyer v. Blue Cross & Blue Shield Ass'n, Inc., 848 F.2d 201, 203 (D.C.Cir.1988). "Each enrollee, as FEHBA directs, receives a statement of benefits conveying information about the Plan's coverage and conditions." Empire, 547 U.S. at 684, 126 S.Ct. 2121 (citing 5 U.S.C. § 8907(b)).
At issue in this case is the relationship between OPM's administration of the FEHBP and the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). 42 U.S.C. § 300gg-26. The MHPAEA applies to health insurance plans that cover "both medical and surgical benefits" and "mental health or substance use disorder benefits." Id. § 300gg-26(a). Plans that cover both forms of benefits must ensure that:
Id. § 300gg-26(a)(3)(A)(ii). Treatment limitations include: "limits on the frequency of treatment, number of visits, days of coverage, or other similar limits on the
In April 2010, the Department of the Treasury, the Department of Labor, and the Department of Health and Human Services (the administering agencies) issued Interim Final Rules interpreting the MHPAEA; the regulations divide the types of treatment patients receive into six categories: (1) inpatient, in-network; (2) inpatient, out-of-network; (3) outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and (6) prescription drugs. 45 C.F.R. § 146.136(c)(2)(ii)(A)(1)-(6) (2013). The regulations provide that "mental health or substance use disorder benefits must be provided in every classification in which medical/surgical benefits are provided." Id. § 146.136(c)(2)(ii)(A). "In determining the classification in which a particular benefit belongs, a plan (or health insurance issuer) must apply the same standards to medical/surgical benefits and to mental health or substance use disorder benefits." Id. Treatment limitations may be quantitative, for example, a limit of two visits, or nonquantitative, such as "[m]edical management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative." Id. § 146.136(a), (c)(4)(ii).
After this suit was filed, the administering agencies issued Final Rules. 45 C.F.R. § 146.136 (2014). These rules became effective in January 2014 and "appl[y] to group health plans and health insurance issuers offering group health insurance coverage on the first day of the first plan year beginning on or after July 1, 2014." Id. § 146.136(i). The Final Rules are more comprehensive than the Interim Final Rules. Relevant for this case because of factual similarities, the Final Rules include the following example:
45 C.F.R. § 146.136(c)(4)(iii) (emphasis added). This example, or one like it, was not included in the Interim Final Rules.
Plaintiff John Smith (a pseudonym) is an employee of a federal agency; at the time
Before his transfer from the detoxification program to the residential treatment program, Smith's providers requested preauthorization from IBC's mental healthcare subcontractor, Magellan Behavioral Health (Magellan). (Compl. 8-9.) Magellan denied the request. (Id. at 9.) On September 5, 2013, Smith appealed to IBC and OPM simultaneously. (Id. at 9-10.) On November 8, 2013, OPM issued a final denial of Smith's request for treatment coverage.
Smith brings this action against OPM to challenge its decisions (1) to deny him benefits for a residential addiction treatment program, and (2) to approve federal health insurance plans, including his own, that do not cover non-hospital residential addiction treatment facilities. Count I of the Complaint, challenging the denial of benefits, is brought under 5 C.F.R. § 890.107; count II challenges OPM's decision to enter into the allegedly unlawful
Defendant OPM moves to dismiss Smith's Complaint or, in the alternative, for summary judgment. The issues raised in the motions to limit discovery and to dismiss are intertwined; however, we address OPM's motion to dismiss first because it contains arguments that could be dispositive of whether discovery is necessary.
A district court should grant a 12(b)(6) motion to dismiss "if, accepting all wellpleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court concludes that the allegations in a complaint, however true, could not raise a claim of entitlement to relief[.]'" Mariotti v. Mariotti Bldg. Prods., Inc., 714 F.3d 761, 764-65 (3d Cir.2013) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The plaintiff must plead "sufficient factual allegations, taken as true, to `state a claim to relief that is plausible on its face.'" Fleisher v. Standard Ins. Co., 679 F.3d 116, 120 (3d Cir.2012) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). "[R]ote recitals of the elements of a cause of action, legal conclusions, and mere conclusory statements" should be disregarded by the court. James v. City of Wilkes-Barre, 700 F.3d 675, 679 (3d Cir.2012).
Under the Administrative Procedure Act (APA), "we `hold unlawful and set aside agency action, findings, and conclusions' that are found to be `arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.'" CBS Corp. v. FCC, 663 F.3d 122, 137 (3d Cir.2011) (quoting 5 U.S.C. § 706(2)(A)), cert. denied, ___ U.S. ___, 132 S.Ct. 2677, 183 L.Ed.2d 712 (2012); see also Nazareth Hosp. v. Sebelius, 938 F.Supp.2d 521, 532 (E.D.Pa.2013); Arrington v. Grp. Hospitalization & Med. Servs., Inc., 806 F.Supp. 287, 290-91 (D.D.C.1992) (reviewing OPM's denial of benefits); NVE, Inc. v. Dep't of Health & Human Servs., 436 F.3d 182, 189 (3d Cir.2006) (stating that "the APA's standards for scope of review and discovery" apply when it is the mechanism by which the plaintiff brings his claim unless
OPM argues that "the Blue Cross Plan's benefits, exclusions, and limitations do not violate MHPAEA and the regulations" for four reasons. (Doc. No. 25, at 9-11.) We address each argument in turn.
First, OPM argues that the insurance plan does not violate the MHPAEA's "parity" requirement or "treatment limitation" prohibition. (Id. at 9.) Under the MHPAEA's parity requirement, "the treatment limitations applicable to ... mental health or substance use disorder benefits [must be] no more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits covered by the plan[.]" 42 U.S.C. § 300gg-26(a)(3)(A)(ii). OPM argues that the parity requirement is not violated because the MHPAEA "`does not [r]equire a group health plan ... to provide any mental health benefits or substance use disorder benefits' and does not `affect the terms and conditions relating to the amount, duration or scope of mental health or substance use disorder benefits under the plan[.]'" (Doc. No. 25, at 9 (quoting 45 C.F.R. § 146.136(e)(3)(i)-(ii)).) However, OPM's argument misses the mark. Although OPM is correct that the MHPAEA does not require every health insurance plan to cover mental health benefits, the language OPM quotes is taken out of context because the Act applies to plans that do cover those benefits. Thus, OPM misses the broader point that the IBC plan, which does offer some mental health benefits, is subject to the MHPAEA's parity analysis. Absent a substantive argument from OPM that IBC's plan satisfies the parity analysis,
Third, OPM contends that the MHPAEA's prohibition on treatment limitations is not violated because "the regulations' definition of treatment limitation expressly eliminates exclusions from parity analysis." (Doc. No. 25, at 9 (citing 45 C.F.R. § 146.136(a)), 10.) However, the regulations do not go that far. The regulation defines treatment limitations as:
45 C.F.R. § 146.136(a) (emphasis added). OPM argues that the last sentence of this definition means that IBC's plan may lawfully exclude certain residential treatment facilities. (Doc. No. 25, at 9-10.) OPM's reading of the text is too broad. Instead of eliminating all "exclusions" from the definition of treatment limitation as OPM contends, the regulation eliminates "[a] permanent exclusion of all benefits for a particular condition or disorder." 45 C.F.R. § 146.136(a). We interpret "a particular condition or disorder" to mean a medical condition like anorexia nervosa or post-traumatic stress disorder; a residential treatment facility is not fairly categorized as a "condition or disorder." See Merriam-Webster Dictionary (condition), available at http://www.merriam-webster. com/dictionary/condition; Black's Law Dictionary (9th ed.2009) (disorder). Thus, we find this argument, which OPM relied on
Fourth, OPM argues that the MHPAEA regulations do not require non-hospital residential treatment as part of a continuum of care. (Doc. No. 25, at 10-11.) We agree with this interpretation, given the administering agencies' recognition that the continuum of care for mental health benefits is not the same as the continuum of care for medical and surgical benefits, and their express decision not to reach that issue in the Interim Final Rules. Interim Final Rules Under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, 75 Fed.Reg. 5410-01, at 5416-17 (Feb. 2, 2010) ("The Departments recognize that not all treatments or treatment settings for mental health conditions or substance use disorders correspond to those for medical/surgical conditions .... The Departments invite comments on whether and to what extent MHPAEA addresses the scope of services or continuum of care provided by a group health plan or health insurance coverage."). Although this argument is responsive to the Complaint, it is not a dispositive one that entitles OPM to dismissal of the Complaint. Thus, we deny OPM's motion to dismiss.
A motion under Rule 12(b)(1) challenges whether the district court has proper subject matter jurisdiction over the claims. See Fed.R.Civ.P. 12(b)(1). Rule 12(b)(1) motions "may attack the complaint facially or may attack the factual basis for standing." Askew v. Trustees of Gen. Assembly of Church of the Lord Jesus Christ of the Apostolic Faith Inc., 684 F.3d 413, 417 (3d Cir.2012), cert. denied, ___ U.S. ___, 133 S.Ct. 947, 184 L.Ed.2d 728 (2013). In the absence of an Answer from the defendants or discovery, the district court may construe the challenge as facial. Id. "In reviewing a facial challenge, which contests the sufficiency of the pleadings, the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff." In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 243 (3d Cir.2012) (quotation marks omitted). The district court applies the same familiar standard of review that is applied to a Rule 12(b)(6) motion to dismiss. Id. However, the plaintiff bears the burden of Hedges v. United States, 404 F.3d 744, 750 (3d Cir.2005). "With respect to 12(b)(1) motions in particular, `[t]he plaintiff must assert facts that affirmatively and plausibly suggest that the pleader has the right he claims (here, the right to jurisdiction), rather than facts that are merely consistent with such a right.'" In re Schering Plough, 678 F.3d at 244 (quoting Stalley v. Catholic Health Initiatives, 509 F.3d 517, 521 (8th Cir.2007)).
OPM argues that Smith is not within the "zone of interests" of the statute under which he brings his claim. (Doc. Nos. 25, at 16-19 & 32, at 7-8.) Smith responds that he is within the statute's zone of interests because his claim is based on his treatment at a residential treatment facility that the MHPAEA requires OPM and IBC plans to cover. (Doc. No. 29, at 24-25.) We find that Smith has standing to sue.
"As interpreted by the Supreme Court, a person is adversely affected or aggrieved within the meaning of a relevant statute and hence has standing to sue under [§]10 if he alleges (1) that he has or will sustain some actual or threatened injury in fact resulting from the challenged agency action, and (2) that the alleged injury is to an interest arguably within the zone of interests to be protected or regulated by the statute in question." Concerned Residents of Buck Hill Falls v. Grant, 537 F.2d 29, 33 (3d Cir.1976) (quotation marks omitted). Here, we find that Smith is within the zone of interests of the MHPAEA and the FEHBA. Smith is a federal employee enrolled in a federal health insurance plan, and he suffers from addiction; these facts bring him within the zone of interests of the FEHBA, which concerns providing affordable healthcare to government employees, and , the MHPAEA, which concerns parity in health insurance coverage. See id. (holding that residents that lived near areas affected by flood dangers had standing to sue under statute that preserves the nation's land and water resources); Ass'n of Data Processing Serv. Orgs. v. Camp, 397 U.S. 150, 154, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970) ("Where statutes are concerned, the trend is toward enlargement of the class of people who may protest administrative action.").
OPM contends that Smith's second count must fail because Congress has not waived sovereign immunity for the contract-based claim that Smith brings. (Doc. No. 25, at 12-16.) Specifically, OPM argues that the structure and intent of the FEHBA precludes judicial review of OPM's contracts with health insurance providers. (Id. at 13-16.) In response, Smith argues that OPM's contracting authority is reviewable because "OPM's actions here are not committed wholly to OPM's discretion, but rather are constrained and limited by the MHPAEA."
The APA waives the United States' sovereign immunity, provides a cause of action, and grants a right of judicial
Here, we find that OPM has not carried its burden of showing that Congress intended to preclude judicial review.
Further, we find evidence in the statute that suggests that Congress did not intend to preclude judicial review. The FEHBA provides: "A contract may not be made or a plan approved which excludes an individual because of race, sex, health status, or, at the time of the first opportunity to enroll, because of age." 5 U.S.C. § 8902(f). If OPM's stance were adopted, this provision would be a mere request by
OPM moves to stay all discovery in this matter unless the party seeking discovery receives leave of this Court. (Doc. No. 14.) We have previously resolved all but one of the issues presented in Defendant's motion, see Doc. No. 15, and the remaining issue is whether discovery without leave of court is proper in this matter. The parties agree that, under the APA, the district court should usually rely upon the record that was developed at the administrative level. (Doc. Nos. 14, at 7 & 39, at 1.) OPM cites case law stating that if the record is incomplete, remand to the administrative agency is usually appropriate; and it argues that the two exceptions that allow a court to look beyond the administrative record do not apply here. (Doc. No. 14, at 7-9.) Smith argues in response that discovery is needed to complete or supplement the record because there is no record related to count II.
The Third Circuit and Supreme Court have provided guidance about whether and to what extent discovery at the trial court level is appropriate in APA cases:
Horizons Int'l, Inc. v. Baklrige, 811 F.2d 154, 162 (3d Cir.1987) (quoting Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743-44, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985)) (parallel citations omitted).
Here, we find that remand of this case to OPM is appropriate. With regard to count I, OPM has not evaluated whether the IBC plan violates the law in a way that allows us to determine whether its decision was arbitrary or capricious. When passing on Smith's allegation that the IBC plan violates the MHPAEA, OPM stated that such allegations were beyond the scope of its review and gave a short explanation for why the IBC plan does not violate the MHPAEA. (A.R. OPM00002.) Thus, by only briefly evaluating whether the IBC plan violates the MHPAEA, OPM has not fully considered an important factor in whether benefits should be provided to Smith. United States v. Rohm & Haas Co., 669 F.Supp. 672, 684 (D.N.J.1987). OPM should have the opportunity to engage in this analysis in the first instance, and it is better equipped to analyze the factual issues Smith's claim raises. Horizons Int'l, 811 F.2d at 162; see Bridge v. U.S. Parole Comm'n, 981 F.2d 97, 105 (3d Cir.1992) (discussing when agency should expand its record). Further, no administrative record exists related to count II. We decline to allow the parties to engage in discovery related to this count because OPM should have the opportunity to compile the administrative record in support of its position that its contract is not unlawful. See Horizons Int'l, 811 F.2d at 162-63 (holding that district court improperly expanded record); Doe v. Devine, 545 F.Supp. 576, 581 (D.D.C.1982) (noting that D.C. Circuit had "order[ed] OPM to articulate its reasoning process" related to contract that reduced mental health benefits for FEHBP enrollees), aff'd, 703 F.2d 1319 (D.C.Cir.1983). Thus, we conclude that OPM, with its expertise in health insurance coverage, will be in a better position than this Court to evaluate the legal and factual issues that Smith raises.
For the reasons stated above, we conclude that remand to OPM is appropriate. Remand will allow OPM to consider in more depth whether IBC's plan violates the MHPAEA, determine whether and how the MHPAEA affects Smith's appeal from the denial of benefits, and develop an administrative record related to count II of Smith's Complaint.