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Courtroom Case

Ensuring Autistic Children Get the Care They Need (Consumer Watchdog v. Dept. of Managed Health Care)

Case Status:
Active

Consumer Watchdog Sues California Department of Managed Health Care for Permitting HMOs to Deny Treatments to Autistic Children after Secret Meetings Between State Employees and HMO Execs

Los Angeles Superior Court BS 121397

UPDATE: Court Issues Preliminary Ruling Holding Autism Treatment Denials, Agency Actions Illegal.

Autism is a serious disease with no known cure. However, prompt treatment can often ameliorate its worst affects and enable its victims to lead more functional lives. One such treatment is known as Applied Behavioral Analysis (“ABA”); the medical community considers this an essential component of medical care for the autistic. However, for years, insurance companies refused to pay for ABA on the grounds that it was “experimental” and that there was insufficient medical evidence to show that it was an effective treatment for autism.  In recent years, however, the medical community has determined that ABA should no longer be considered experimental.

Until March of this year, health care consumers were able to appeal an insurer’s denial of ABA by going through a special Independent Medical Review (“IMR”) system required by state law and operated by the California Department of Managed Health Care (DMHC), which is an agency that reports to the Governor. Under the IMR process, a treatment denial is reviewed by a team of doctors that is unaffiliated with the insurance company that denied the treatment and independent of the DMHC. Most IMR appeals resulted in orders that the company pay for the ABA treatment.

In early 2009, Consumer Watchdog learned that the health insurance industry was mounting a lobbying campaign to convince the Schwarzenegger Administration that ABA is an “educational” program not covered by health insurance policies. In response, Consumer Watchdog wrote the DMHC a letter warning it that any change in the DMHC’s system would violate state laws. Nevertheless, on March 9, 2009, the DMHC issued a memo indicating that the agency would now review ABA and other autism treatment denials through the DMHC’s own internal grievance system as urged by insurers, rather than through the IMR process.

On July 1, 2009, Consumer Watchdog, and Los Angeles-based Strumwasser & Woocher LLP, sued the DMHC in Los Angeles Superior Court, charging that the DMHC wrongfully allowed insurance companies to refuse to pay for autism treatments, resulting in the denial of critically needed, medically necessary treatment for autistic children. The suit also alleges that the agency has illegally withheld public documents, properly requested by Consumer Watchdog under the California Public Records Act, which would expose how the DMHC conducted private meetings with HMOs and insurance company lobbyists prior to instituting the new policy encouraging treatment denials.

Download the complaint filed at the Los Angeles Superior Court here.

Download the lawsuit exhibits here.

Read the news release announcing the lawsuit.

CASE UPDATE: Court Issues Preliminary Ruling Holding Autism Treatment Denials, Agency Actions Illegal.

After the case was filed, the DMHC asked the Los Angeles Superior Court to dismiss key allegations in the suit. In a preliminary ruling issued on October 20, 2009, the Court refused the DMHC’s request, stating that the Schwarzenegger Administration has illegally sided with health insurance companies that deny access to care for autistic children.  The court also determined that a memo circulated by the Schwarzenegger Administration to health insurers was an illegal "underground regulation" because it violated state law requiring state agencies to follow a public hearing process when the agency seeks to adopt or change state regulations governing health care policies.

Read Consumer Watchdog’s opposition to DMHC’s motion to dismiss the case.

Read Consumer Watchdog’s press release on the ruling.