Aetna Insurance Must Pay Back Benefits for Eating Disorder Denials

This week, U.S. District Judge Faith Hochberg approved a class action settlement that awarded nearly $300,000 to 119 Aetna Insurance Company policyholders who were denied benefits for eating disorders, reports the New Jersey Law Journal. Hochberg also allowed $350,000 in attorneys’ fees for plaintiff counsel Nagel Rice that Aetna must pay directly. In the settlement, Aetna agreed to consider future claims more liberally and institute reforms to resolve benefits disputes about eating disorders.

Plantiffs’ counsel estimated that about 530,000 of Aetna’ 1.2 million policyholders are eligible for the new claims procedures. That could amount to $2 million in recoveries.

Aetna isn’t the only insurer that systematically denies benefits for eating disorders. California is among the few states that have done something about this, passing a mental health parity statute that forces insurers to provide the same treatment for mental illness they provide for physical diseases. The recent economic bailout package approved by Congress contained a federal mental health parity provision.

Still, insurers attempt to get away with as much as they think they can. We have been fighting insurers for benefits for clients with eating disorders for a number of years and winning cases at the appellate level. In fact, we had the first published decision in California involving denial of benefits for in-patient treatment of an eating disorder. Thompkins v. BC Life and Health Ins. Co., 414 F.Supp2d 953, (C.D.Cal. 2006).

Early this year, we won an appellate decision for a client suffering from bulimia. Jacobs v. Kaiser Foundation Health Plan, Inc., 04-57131 (C.D. Cal. Jan. 30, 2008). In that case, medical plan provider Kaiser, which did not offer adequate treatment for plan participants, declined to refer Ms. Jacobs to an out-of-plan treatment facility and refused to pay for the cost of treatment when Ms. Jacobs’ mother obtained the care her daughter desperately needed by checking her into an eating-disorder treatment facility. Although the lower court found that Kaiser had not abused its discretion, the California Court of Appeal ruled that her mother’s “decision to take Laura outside the Kaiser treatment system may have saved her daughter’s life.” The case was reversed and remanded with instructions for the lower court to reimburse the Jacobs for the non-plan services and to pay attorney fees and costs.

It is gratifying to see other courts around the country agree with the Jacobs decision. Perhaps this most recent ruling against Aetna will make the fight for mental health parity for eating disorders much less contentious.

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