Court of Appeal Rules HMO Regulator Cannot Discriminate Against Autistic Children by Erecting Hurdles to Key Treatments

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Santa Monica, CA — In a complex opinion issued yesterday, the California Court of Appeal ended the Department of Managed Health Care’s (DMHC) discriminatory practice of allowing HMOs to deny treatment for autistic children of state employees and low-income families enrolled in the Healthy Families program on the basis that such treatment can only be administered through state-licensed providers.

The case was brought by the non-profit Consumer Watchdog and Strumwasser & Woocher LLP.

The treatment at issue, known as Applied Behavioral Analysis (ABA), has been found to be the most effective treatment for autistic children, as yesterday’s opinion acknowledged. After the lawsuit was filed, the California Legislature agreed with Consumer Watchdog by passing a law in 2011 clarifying that HMOs and health insurers must provide coverage for ABA for children enrolled in private health insurance plans and that such treatment could be provided through providers who are certified by a national board, but not state-licensed. However, the Legislature did not include public employees and Healthy Families enrollees.

The remaining issue to be decided by the Court of Appeal was whether the DMHC could allow HMOs to deny ABA for children enrolled in public health plans if an ABA provider does not hold a state license.  As Consumer Watchdog and Strumwasser & Woocher LLP pointed out in the lawsuit, no state licensing currently exists for ABA therapists.

The Court of Appeal agreed with Consumer Watchdog and Strumwasser & Woocher LLP, stating that the “DMHC cannot uphold a denial of coverage for ABA. . . on the basis that the therapist is unlicensed, even when the plan is exempted from the requirements of the ABA statute.”

“This decision is a victory for autistic children of firefighters, police officers, and low-income parents as it clarifies that they can’t be treated differently than those covered under private health plans,” said Consumer Watchdog attorney Jerry Flanagan.

The California Department of Insurance—led by insurance Commissioner Dave Jones —which oversees a different segment of the health insurance market, supported the position that no state license is required to administer ABA, and that privately certified practitioners can provide the treatment regardless of whether a child is covered under a private or public health plan.  The California Department of Insurance, Autism Speaks, Autism Deserves Equal Coverage, and the California Association for Behavior Analysis contributed amicus briefs supporting Consumer Watchdog. No supporting briefs were filed on behalf of the DMHC.

“As a result of legislative action ignited by our lawsuit and the Court of Appeal decision, the DMHC can no longer use licensure as a barrier to ABA treatments for autistic children,” said Fredric D. Woocher of Strumwasser & Woocher LLP. “When we filed this lawsuit, HMOs were denying autistic children the most effective medical treatment that is available, with severe consequences for them, their families, and the state’s taxpayers. HMOs were blatantly violating California law.  Yet the Department of Managed Health Care’s practice of requiring licensure led to the agency’s upholding HMOs’ denials and delays of this critical treatment for autistic children and their families at the time they need it the most.”

In the same decision, Court of Appeal also dismissed the DMHC’s appeal of a trial court ruling that the DMHC had illegally adopted its discriminatory rule in 2009.

Read a letter from public employee unions, including the California Profession Firefighters, urging Governor Brown to end the DMHC’s discriminatory rule now barred by the court decision:

The case, Consumer Watchdog et al v. Department of Managed Health Care et al (2d Civ. No. B232338), was decided by a panel of three judges in Division 3 of the California Court of Appeal’s Second District, which included Justices Klein, Croskey, Kitching.

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Consumer Watchdog is a non-partisan and non-profit public interest organization with offices in Washington D.C. and Santa Monica.  For more information, go to:

Strumwasser & Woocher LLP is known for its successful litigation and resolution of major public policy matters.  The firm’s trial and appellate civil litigation practice focuses on government and electoral law, consumer law, environmental protection, land use, and administrative law. For more information, go to:

Jerry Flanagan
Jerry Flanagan
Jerry Flanagan is Consumer Watchdog's Litigation Director. Flanagan leads Consumer Watchdog’s litigation efforts in the areas of health insurance coverage and access to treatments. He has over 20 years experience working in public interest and health care policy, legislation and litigation.

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