Category: Health Insurance

Washington Court of Appeals Rules Against Discriminatory Insurance Policy Exclusion

Washington State law generally prohibits unfair discrimination by insurance companies. But everyone knows that some degree of discrimination is part and parcel of the insurance business.

For example, auto insurers discriminate against young people by charging them higher premiums to reflect the risk presented by young drivers. Life insurers discriminate against smokers by charging them higher rates to reflect the health hazards of smoking. Homeowners insurers discriminate against folks in wildfire-prone areas by charging them higher premiums to reflect the increased risk of fire.

For that reason, the Washington Law Against Discrimination, which generally bars insurance companies from discriminating against policyholders, has an exception for so-called “fair discrimination” (which you could be forgiven for thinking is an oxymoron).

So when does the insurance company hedging against the increased risk presented by certain demographics of policyholders cross the line from reasonable underwriting practices to unlawful discrimination?

The Washington Court of Appeals’ recent decision in Herzog v. Kaiser Foundation Health Plan of Washington is an interesting example. Herzog sued his health insurer, Kaiser, for denying coverage for drugs his doctor prescribed to combat his obesity.

Nobody disputed that Kaiser’s insurance policy contained an exclusion for any kind of drug treatment for obesity, unless it was necessary to treat a secondary diagnosis such as diabetes.

But Herzog alleged that the exclusion violated the Washington Law Against Discrimination and Consumer Protection Act. Herzog claimed that obesity is a disability. Washington law generally prohibits insurers and other companies from discriminating against disabled persons.

Kaiser argued that its obesity treatment exclusion was expressly permitted under Washington’s insurance regulations. Basically, Kaiser pointed to rules showing that health insurance plans are not required to include services for obesity or weight loss in their general essential health benefits that benchmark health plans are required to offer.

Herzog pointed out that those rules have the narrow purpose of establishing benefit minimums. They did not, according to Herzog, act as an exception from general rules against disability discrimination.

The Court of Appeals agreed. It emphasized that the law permits insurers to exclude treatments for disabilities for valid reasons, like that they are not medically effective, not cost-effective compared to other treatment, etc. But insurers cannot exclude treatments for disabilities simply because they treat disabilities.

Nor did the fact that the Kaiser plan met the Affordable Care Act’s requirements for minimum essential health benefits permit the discriminatory exclusion. According to the appellate court, the regulations Kaiser relied on were intended to ensure that health plans that do not meet the requirements for essential health benefit coverage received a lower actuarial rating. They were not intended to immunize insurers who offer more than the minimum essential health benefits against claims their benefit plans contain discriminatory exclusions.

The ruling is “unpublished”, meaning it’s not precedent that binds courts in future decisions. But it is an interesting example that Washington courts are unwilling to find insurers’ compliance with minimum health plan regulations is a get-out-of-jail-free card when their health plans violate the law.

Ninth Circuit Reverses Dismissal of Health Insurance Lawsuit, Finds Insurance Company Violated ERISA

One of ERISA’s protections for insurance policyholders is the right to a meaningful dialogue with the insurance company about the claim. If the insurance company denies your claim, it must tell you why. If the company says that more information is needed before paying the claim, it must say so, and tell you what you need to provide in order to receive coverage.

This rule applies to any type of insurance governed by ERISA. But it is particularly important in health insurance claim disputes. Health claims are often decided in opaque explanations of benefits that shed little light on what the company is refusing to pay and why.

This was the situation in the Ninth Circuit Court of Appeals’ April 13, 2026 ruling in Campbell v. UnitedHealthcare. Campbell sued after UnitedHealthcare refused to pay her medical bills. After denying the claim, UnitedHealthcare failed to tell Campbell specifically why it refused to pay, refused to say what she needed to do in order to receive payment, and withheld documents about the claim that could have helped Campbell obtain coverage.

The trial court dismissed Campbell’s lawsuit, but the Ninth Circuit reversed. The appeals court found that UnitedHealthcare violated ERISA by refusing to meaningfully communicate with Campbell about the denial. The insurance stonewalled Campbell with “cookie-cutter” letters that ignored her arguments why her procedure was covered and just repeated the same rationale that her treatment was “not documented as performed.”

Further, the Court found UnitedHealthcare violated ERISA when it failed to tell her what additional information she needed to submit in order to get coverage. And, the insurance company failed to give Campbell the documents about her claim including those that evidenced her procedure should have been covered.

So, the Ninth Circuit sent the case back to the lower court with instructions to enter a ruling in Campbell’s favor. That decision is “unpublished,” meaning it is not binding precedent in future disputes. But it is a good reminder that ERISA’s procedural protections are important and that courts will enforce them.

Washington Legislature Passes New Protections for Mental Health Insurance Coverage

We’ve often discussed how difficult it is to get insurance companies to cover intensive mental health treatment. Insurers often find reasons to deny this treatment given it can be expensive and protracted. There are existing mental health parity rules intended to combat this problem, but they have been interpreted extremely narrowly by courts.

The Washington State Legislature is attempting to change that. In 2025, the legislature passed important amendments to our state’s mental health insurance parity laws. These amendments make several important changes to protect patients’ access to mental health coverage and treatment.

First, the legislature expressly declares that: “Access to mental health and substance use disorder treatment is critical to the health and well-being of individuals with these conditions.” It further declares that “access to appropriate care is important to reducing preventable emergency department visits [and] hospitalizations.” This recognizes that untreated mental health conditions can escalate and become emergencies.

The legislature also recognizes that health insurance coverage is “essential” to access to mental health care.

Therefore, the amendments declare that the legislature intends to increase acces to mental health treatment by removing certain roadblocks that insurers have placed to coverage for this treatment.

Second, the legislature addresses some of these roadblocks. One battle in procuring mental health treatment coverage concerns the phrase “medically necessary.” Virtually all health plans cover treatment that is medically necessary. This is often a ground for the insurance company to deny coverage.

One big problem for patients is that insurers often deny that treatment is medically necessary using secret and Byzantine internal guidelines.

These disputes often look like this:

Patient: Please cover this treatment. My doctor says I need it to manage my symptoms. Without it, my condition could get worse. I might not be able to keep working. In an extreme worst-case scenario, I might have to be hospitalized.

Insurance Company: Sorry, that’s not “medically necessary.”

Patient: How can it be not medically necessary? My doctor says I need it!

Insurance Company: We don’t really care what your doctor says. We have our own checklist for what’s medically necessary. And our checklist says we don’t have to pay for your treatment. Sorry!

Patient: Will you show me the checklist, so I can review it with my doctor and find out how to get my treatment covered?

Insurance Company: The checklist is secret. Have a great day!

Part of the new law aims to fix this problem. It requires that medical necessity decisions for certain mental health treatment must be made based on “criteria from nonprofit professional associations.” In other words, insurers now have to decide medical necessity for these kinds of treatment based on objective critera from doctors or providers with real-world experience. They can’t simply make up their own criteria.

Further, it requires insurers to disclose meaningful information about coverage denials for medical necessity. The carrier must provide “full details” about “the relevant criteria” used in the decision to the patient and their health care provider.

Additionally, the new law empowers Washington State’s Insurance Commissioner to review any internal criteria health insurance companies use to decide whether to pay for the treatment at issue.

Insurance coverage for mental health treatment will probably be a battle for many years. But these amendments should be a step in the right direction.

Health Plan Must Pay For Child’s Medically Necessary Mental Health Treatment, Says Ninth Circuit

Health insurance coverage for mental health treatment is contentious. Insurers historically resist covering these diganoses. Their treatment can be expensive and protracted. Legislation here in Washington State and federally has tried to push back on this, but the problem of getting insurers to cover mental health treatment remains.

A recent Washington Supreme Court ruling compounded the problem by limiting claimants’ ability to rely on legislation that was intended to improve access to coverage for mental health treatment. There’s still a lot of work to be done legislatively to give people tangible, systemic protections for mental health coverage.

Until that happens, most people faced with their health plan’s denial of critical mental health treatment will have no choice but to go to court. That’s what happened to the family of a nine-year-old child known in court filings as “R.C.” (Court filings typically use initials, rather than full names, in cases involving minor children in order to protect the family’s privacy).

In a May 14, 2025 decision, the Ninth Circuit Court of Appeals upheld R.C.’s success in a lawsuit against his health insurance plan.

R.C.’s parents sued their health plan after it denied coverage for his residential mental health treatment. R.C. had serious behavioral health problems. He threatened to hurt or kill others. He wielded objects like weapons. It’s easy to imagine that his parents wanted to provide him with effective treatment.

But the health plan claimed residential treatment wasn’t “medically necessary.” The court had two problems with this claim.

First, the court found that the treatment was “medically necessary” under the health plan’s own criteria. This boiled down to the plan’s claim that R.C. wasn’t a danger to himself or others. The court listed examples, including: stabbing his own mouth, threatening to kill other children, describing in detail how he intended to use household objects to murder others, and starting fistfights.

Second, the court found that the health plan failed to tell R.C.’s parents what they had to prove in order for the plan to cover residential treatment. Before the court, the plan claimed that R.C.’s parents failed to prove that outpatient treatment had been tried and failed, but the plan never told R.C.’s parents that this was a requirement when it was handling the claim.

In other words, the plan’s denial was wrong on the merits (R.C.’s treatment really was medically necessary) and procedurally unfair (the plan didn’t give the parents a fair shake at proving the treatment was needed). So the parents won. The health plan will have to pay for R.C.’s treatment. That’s a win, right?

Not exactly. The tail of the Ninth Circuit’s ruling declined to award R.C.’s parents any relief beyond the belated reimbursement for his treatment. The court ruled that R.C. could not force the plan to change its practices to make sure that the erroneous denial of benefits wasn’t repeated with other people with similar health claims.

This underscores the systemic problem. It took R.C.’s parents almost five years to get this ruling. During that time, they presumably had to pay for R.C.’s treatment out of pocket. And they had to hire lawyers and deal with the emotional rollercoaster of litigation. They received no compensation for this. It’s easy to imagine that many people with health insurance claims won’t have that kind of time or resources.

Unfortunately, absent sytemic reform, health insurance plans will remain incentivized to wrongfully deny claims with little reprecussion.

Washington Supreme Court Upholds Narrow Interpretation of Mental Health Parity Laws

We’ve previously blogged about the Mental Health Parity Act. This law forbids insurers from discriminating against mental health and substance addiction by covering treatment for those conditions less favorably than other medical treatment. A 2022 report noted insurers continue to violate this law.

A new Washington Supreme Court ruling restricts individuals’ ability to enforce this law. On December 21, 2023, the court ruled in P.E.L. v. Premera Blue Cross that the plaintiffs could not sue their health insurer for excluding certain mental health treatment.

In that case, two parents sued Premera Blue Cross for failing to cover their child’s mental health and substance abuse treatment. The child’s symptoms were so severe they required inpatient hospitalization. The child spent two months at a “wilderness therapy” program before transitioning to long-term treatment.

Premera denied coverage for the wilderness therapy program. The insurance policy generally covered “residential treatment” for mental health conditions. But it specifically excluded any kind of “wilderness” or similar therapy.

The parents alleged that exclusion violated the Mental Health Parity Act and its Washington State counterpart. The Washington Supreme Court disagreed.

The court acknowledged that mental health parity laws aim to fix a long history of discrimination against people diagnosed with mental health disorders which has manifested in the insurance industry. Insurance policies historically singled out these diagnoses for worse coverage. They charged higher premiums and provided lower benefits for them.

These laws began in 1996 with the federal Mental Health Parity Act and continued through Congress’ enactment of the Affordable Care Act in 2016, which included protections for mental health coverage. Washington State also enacted similar legislation in 2005.

The court found that the plaintiffs could not sue for violations of the federal laws. Congress decided not to include a private right of action with that legislation. So the plaintiffs could not pursue violations of those laws by alleging they became part of their insurance policy contracts.

The court also found the parents could not sue for violation of the Washington State version of these laws. Washington State’s mental health parity laws require insurance to cover mental health services equally. That means insurance must provide equal copays, out of pocket limits, deductibles, and similar provisions to mental health diagnoses as they do to other conditions.

In particular, the state law says that insurers cannot impose special exclusions for medically necessary mental health treatment. The parents argued Premera violated that rule when it refused to cover their child’s wilderness therapy without deciding it wasn’t medically necessary.

The problem for the parents is that the state parity law excludes “residential treatment” from these protections. Since “wilderness” therapy is a form of residential treatment, the parity law didn’t apply.