LOS ANGELES, CA — A lawsuit claiming the California Department of Managed Care improperly allowed health insurers to decline payment for autism treatments will proceed to trial after a Los Angeles County Superior Court judge rebuked the state in a preliminary ruling.

In Consumer Watchdog et. al. vs. California Department of Managed Health Care et. al., Judge James C. Chalfant found the plaintiffs showed a viable cause of action in their allegation that a March 9, 2009, memorandum from Department Director Cindy Ehnes amounted to an "underground regulation" and illegally permitted insurers to deny coverage for Applied Behavioral Analysis, a common autism treatment, in violation of the California Mental Health Parity Act. The case partly involved a denial of payment for ABA by Kaiser Permanente, which cited DMHC’s advice.

Chalfant set a Nov. 5 trial scheduling date.

A Consumer Watchdog representative said regulators should stop denying coverage on the grounds that ABA providers are certified not by the state but by a national board. Continuing to do so would risk legal damages, the advocacy group said in a statement.

"The DMHC has to change its practices going forward, and the department should immediately reverse its previous denials," Pam Pressley, litigation director for Consumer Watchdog, said in a statement. "Gov. Schwarzenegger, a long-time and vocal supporter of the Special Olympics and developmentally disabled children, should require his regulators to abide by the law."

The department did not return messages seeking comment. A Kaiser spokesman declined to comment on the case.

Health maintenance organizations and most Blue Cross Blue Shield plans are regulated by DMHC. Other plans are regulated by the Department of Insurance.

More than a dozen states have adopted mandates that address insurance for autism spectrum disorders. In August, New Jersey Gov. Jon Corzine signed legislation to mandate coverage of screening for autism and other developmental disabilities, as well as coverage for therapeutic services deemed to be medically necessary. The new law also includes therapeutic services, including any medically necessary occupational, physical and speech therapy (BestWire, Aug. 17, 2009).

According to the Centers for Disease Control and Prevention, one in 150 American children has autism, and almost one in 94 boys. A study published Oct. 5 in the American Academy of Pediatrics’ journal Pediatrics found an autism prevalence rate of 1 in every 91 American children, including 1 in 58 boys. As of December 2007, the California Department of Developmental Services provided care to nearly 37,000 Californians with autism.

Contact the author, Sean P. Carr, Washington Correspondent, at: [email protected]