Autistic child can sue parents’ employer for denied therapy coverage, 7th Circuit affirms

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A Hoosier child diagnosed with an autism disorder who was denied coverage for related therapy through his parents’ health plan may proceed with his suit against the parents’ employer, the 7th Circuit Court of Appeals has affirmed.

T.S., a minor child diagnosed with Autism Spectrum Disorder, was enrolled as a beneficiary of his parents’ self-funded group health plan that they received through their employer, Heart of CarDon LLC.

The health plan’s third-party administrator had initially authorized six months of applied behavioral analysis therapy for T.S.’s autism to help maintain and advance his motor, speech and communication skills. That changed when a new plan administrator took over.

T.S.’s treatment was denied just a few months later, with the administrator citing the plan’s “Behavioral Health” section, which specifically excludes “Charges for services, supplies, or treatment for Autism, Asperger’s and Pervasive Development Disorders” and “Charges for [ABA therapy].”

Unable to pay out of pocket for the therapy, T.S., by and through his parents and guardians, sued. They alleged that CarDon intentionally discriminated against T.S. on the basis of his disability by designing and, through its administrator, enforcing the plan, which categorically excludes coverage for autism and the ABA therapy used to treat it.

CarDon moved for judgment on the pleadings, but the U.S. District Court for the Southern District of Indiana rejected the argument that T.S. wasn’t in a class of plaintiffs authorized to sue under Section 1557 of the Patient Protection and Affordable Care Act. The district court concluded that his claim fell within the zone of interests protected by the ACA provision and therefore declined to reconsider its ruling.

The 7th Circuit affirmed in the interlocutory appeal of T.S., by and through his parents and guardians, T.M.S. and M.S., individually and derivatively on behalf of the Heart of CarDon, LLC Employee Benefit Plan v. Heart of CarDon, LLC & Heart of CarDon, LLC Employee Benefit Plan, 21-2495.

The appellate panel noted that section 1557 extends a cause of action to individuals who have been subjected, based on their disabilities, to discrimination by health care entities.“T.S.’s allegations bring him well within that class of plaintiffs,” Circuit Judge Daniel Manion wrote. “He asserts that CarDon, a healthcare entity, designed and controlled the Plan so as to exclude him from certain coverage because of his autism. This type of claim falls within the zone of interests that section 1557 protects.”

The appellate court then rejected CarDon’s disagreement with that straightforward analysis and its argument that only intended beneficiaries of the federal funds it receives — namely, its patients — are permissible plaintiffs under section 1557.

“Since T.S. is not a patient of CarDon, he isn’t a permissible plaintiff, or so the reasoning goes,” Manion wrote. “But this argument is not supported by section 1557’s text.”

The court also found that T.S.’s interests and section 1557’s goals squarely align and that, contrary to CarDon’s reading, the phrase “program or activity” in section 1557 is not limited to the discrete portion of its operations that receives Medicare and Medicaid reimbursements.

“Because section 1557’s prohibition on discrimination is not, by its own terms, limited to the discrete portion of a covered entity that receives federal financial assistance, the right to sue under section 1557 is not limited to plaintiffs who are intended to benefit from that assistance,” Manion wrote. “T.S.’s claim that he was the victim of intentional disability discrimination in one part of CarDon’s operations falls within the zone of interests protected by section 1557. The provision’s purpose and text foreclose a different conclusion.”

Finally, the 7th Circuit rejected CarDon’s argument that T.S.’s claim falls outside section 1557’s zone of interests because of Simpson v. Reynolds Metals Co., 629 F.2d 1226 (7th Cir. 1980). The 7th Circuit pointed to decisions made by Congress that effectively abrogated Simpson through legislation that rejected the decision’s relevant reasoning.

“We do not decide whether T.S.’s allegations against CarDon constitute prohibited discrimination under section 1557 of the ACA on the ground of disability,” the court concluded. “The merits of that claim will be addressed by the district court in due course, and we express no opinion on the question.

“But we conclude that T.S. has plausibly alleged an interest that comes within the zone of interests section 1557 seeks to protect. The district court correctly determined that T.S. is a permissible plaintiff against CarDon and that his suit may continue on that basis.”

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