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Coalition for Parity, Inc. v. Sebelius

June 21, 2010


The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge


Plaintiff Coalition for Parity, Inc. ("Plaintiff" or the "Coalition") has filed this action against the Secretaries of Health and Human Services, Labor, and Treasury (the "Secretaries"), along with their respective Departments (collectively, "Defendants"), seeking to enjoin implementation of regulations promulgated to enforce the provisions of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 ("MHPAEA"), Pub. L. No. 110-343, Div. C §§ 511-12, 122 Stat. 3861, 3881 (codified in scattered sections United States Code titles 26, 29, and 42). Pursuant to the MHPAEA, Defendants are required to issue regulations to implement the Act's substantive provisions. Defendants did so on February 2, 2010, publishing Interim Final Rules ("IFR") in the Federal Register. The Interim Final Rules became effective on April 5, 2010, and are generally applicable to group health plans and group health insurance issuers for plan years beginning on or after July 1, 2010. Plaintiff claims that Defendants' promulgation of the Interim Final Rules violates the notice and comment requirements of the Administrative Procedure Act ("APA"), 5 U.S.C. § 553.

Plaintiff filed the Complaint on April 1, 2010, together with an [2] Application for Temporary Restraining Order ("TRO") and a [3] Motion for Preliminary Injunction. The Court held a hearing on the request for temporary relief and issued a [5] Memorandum Opinion denying the application for a TRO because the Court found that the Interim Final Rules do not have substantive effect until July 1, 2010. In light of this upcoming deadline, the parties agreed that the Court should proceed directly to the merits of the case after an expedited briefing schedule. Pursuant to that schedule, on April 14, 2010, Plaintiff filed a [12] Motion for Summary Judgment, and on May 3, 2010, Defendants filed a [23] Motion to Dismiss or, in the Alternative, for Summary Judgment. The motions are now fully briefed and are ripe for decision. For the reasons expressed below, the Court shall DENY Plaintiff's Motion for Summary Judgment and GRANT Defendants' Motion to Dismiss or, in the Alternative, for Summary Judgment.


A. Notice and Comment Procedures Under the Administrative Procedure Act

The APA requires that federal agencies, prior to the promulgation of any regulation, publish in the Federal Register a general notice of proposed rulemaking that includes: (1) a statement of the time, place, and nature of public rulemaking proceedings; (2) reference to the legal authority under which the rule is proposed; and (3) either the terms or substance of the proposed rule or a description of the subjects and issues involved. 5 U.S.C. § 553(b). This requirement does not apply to "interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice." Id. More importantly for this case, the APA's notice requirement also does not apply "when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest." Id. After such notice is published, "the agency shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation." Id. § 553(c). Agencies must consider the comments presented and provide a "concise general statement" of the basis and purpose for the final rules. Id. The notice requirements of § 553 "are designed (1) to ensure that agency regulations are tested via exposure to diverse public comment, (2) to ensure fairness to affected parties, and (3) to give affected parties an opportunity to develop evidence in the record to support their objections to the rule and thereby enhance the quality of judicial review." Int'l Union, United Mine Workers of Am. v. Mine Safety & Health Admin., 407 F.3d 1250, 1259 (D.C. Cir. 2005).

B. The Mental Health Parity and Addiction Equity Act

On October 3, 2008, Congress enacted the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 ("MHPAEA"), as sections 511 and 512 of the Tax Extenders and Alternative Minimum Tax Relief Act of 2008. See Pub. L. No. 110-343, Div. C §§ 511-12, 122 Stat. 3861, 3881 (Oct. 3, 2008). The MHPAEA amends the Employee Retirement Income Security Act of 1974 ("ERISA"), the Public Health Service Act, and the Internal Revenue Code, with parallel provisions. See 29 U.S.C. § 1185a; 42 U.S.C. § 300gg-5; 26 U.S.C. § 9812. The MHPAEA expands the scope of prior legislation, the Mental Health Parity Act of 1996 ("MHPA"), Pub. L. No. 104-204, §§ 701-02, 110 Stat. 2874, 2944 (Sept. 26, 1996). The MHPA and the MHPAEA are designed to end discrimination in the provision of coverage for mental health and substance use disorders as compared to medical and surgical conditions in employer-sponsored group health plans and health insurance coverage offered in connection with group health plans. The MHPA requires parity in aggregate lifetime and annual dollar limits for mental health benefits and medical and surgical benefits. The MHPAEA goes further than the MHPA and requires employer-sponsored group health plans to cover mental illness and substance abuse on the same basis as physical conditions. The MHPAEA does not require employers to provide benefits for mental health or substance use disorders, but group health plans with 50 or more employees that choose to provide mental health and substance use disorder benefits must do so in parity with medical and surgical benefits. Specifically, the MHPAEA requires group health plans (or insurers) to ensure that the "financial requirements" and "treatment limitations" that are applicable to mental health or substance use disorder benefits are "no more restrictive" than the predominant financial requirements or treatment limitations applied to substantially all medical and surgical benefits covered by the plan (or coverage). See 29 U.S.C. § 1185a(a)(3); 42 U.S.C. § 300gg-5(a)(3); 26 U.S.C. § 9812(a)(3). The MHPAEA defines "financial requirements" as including "deductibles, copayments, coinsurance, and out-of-pocket expenses" and defines "treatment limitations" as including "limits on the frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment." Id.

The MHPAEA went into effect one year after its enactment and is generally effective on a rolling plan year basis for insurance plan years beginning after October 3, 2009. Because most group health insurance plan years begin on either January 1 or July 1, the MHPAEA's substantive provisions affect most group health plans beginning on either January 1, 2010, or July 1, 2010. In § 512(d) of the MHPAEA, Congress called on Defendants to promulgate regulations to implement the statute's substantive provisions:

Not later than 1 year after the date of enactment of this Act, the Secretaries of Labor, Health and Human Services, and the Treasury shall issue regulations to carry out the amendments made by subsections (a), (b), and (c), respectively.

MHPAEA § 512(d). Although the deadline for the promulgation of regulations is the same as the effective date of the statute, Congress explicitly provided that the statute's provisions go into effect "regardless of whether regulations have been issued to carry out" the MHPAEA. Id. § 512(e).*fn1

C. Defendants' Regulatory Process

Shortly after the MHPAEA was enacted in October 2008, officials at the Departments of Health and Human Services, Labor, and Treasury began to discuss the promulgation of regulations to implement the statute. See Defs.' Mot., Decl. of James A. Mayhew ("Mayhew Decl.") ¶¶ 1-3. Due to the novel and complex issues raised by the MHPAEA, Defendants decided that they did not have sufficient information to develop a proposed regulation, and they determined to seek public input by issuing a request for information ("RFI") on the specific issues presented by the MHPAEA and its economic impact. Id. ¶¶ 3-4. Based on their experience with prior jointly-issued regulations, Defendants believed that it would take significantly longer than one year to issue an RFI with a comment period, review the comments, draft and issue a proposed rule with a comment period, and then draft and issue a final rule after reviewing comments on the proposed rule. Id. ¶ 4. Accordingly, Defendants chose to proceed with a practice used on several other jointly-issued regulations: issue an RFI followed by an interim final rule. Id. ¶ 3.

Although the drafting of the RFI was largely completed by the end of 2008, the Departments were not able to issue the RFI until April 28, 2009. See Mayhew Decl. ¶ 6. The approval and issuance of the RFI was delayed by the change in presidential administrations as new political appointees needed time to review and approve the proposed RFI. Id. The issuance of the RFI was also delayed by major legislative enactments that required the Departments' attention in early 2009. Id. ¶ 7. The RFI was published on April 28, 2009 in the Federal Register. See Request for Information Regarding the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, 74 Fed. Reg. 19155 (Apr. 28, 2009). Among other things, the RFI sought information from commenters about the types of "financial requirements" and "treatment limitations" currently applied to medical and surgical benefits and mental health and substance use disorder benefits. See id. at 19157. The RFI also asked what terms or provisions in the MHPAEA require additional clarification to facilitate compliance. Id. The RFI requested that comments be submitted by May 28, 2009. Id. at 19155.

The Departments received over 400 comments in response to the RFI. See Defs.' Mot., Decl. of George Christopher Cosby ("Cosby Decl.") ¶ 2. Two of Plaintiff's member organizations, Magellan Health Services, Inc. ("Magellan") and ValueOptions, Inc. ("ValueOptions"), submitted comments in response to the RFI. See id. ¶¶ 2-3. The Departments also received comments from the Association for Behavioral Health and Wellness ("ABHW"), a group which includes all three of Plaintiff's member organizations. Id. ¶ 3. In their comments, these three commenters shared the view that the MHPAEA's language should be read to allow separate deductibles for medical/surgical benefits and mental health/substance use disorder benefits. See J.A. Ex. 1 (Comments of ValueOptions) at MHP 0000934; J.A. Ex. 2 (Comments of ABHW) at MHP 0001153, 0001155-56; J.A. Ex. 3 (Comments of Magellan) at MHP 0001335-36. These commenters also expressed the view that the term "treatment limitation" should be construed as applying only to limitations that are temporally or durationally similar to limits on scope or duration of treatment. See J.A. Ex. 1 at MHP 0000939, 0000945-46; J.A. Ex. 2 at MHP 0001158-59; Ex. 3 at MHP 0001338; id. at MHP 0001344 ("We do not believe it was the intent of the legislation to include, nor does the actual language support inclusion of, non-numerical or non-quantifiable limits like type of treatment as a 'similar limit on the scope or duration of treatment.'") These are the same concerns expressed by Plaintiff in the pleadings in this case. During September and October 2009, officials from the Department of Labor contacted ABHW, Magellan, and various other commenters to discuss their concerns about the implementation of the MHPAEA. Id. ¶¶ 4-5. On August 4, 2009, ...

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